Amentum Holdings, Inc.

Ladies and gentlemen, thank you for standing by. Good morning, and welcome to Amentum's fourth quarter and full fiscal year 2025 earnings conference call. Today's call is being recorded. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session, and instructions will be provided at that time. I would now like to turn the call over to Nathan Rutledge, Senior Vice President of Investor Relations. Please go ahead, sir.

Thank you, and good morning, everyone. We hope you've had an opportunity to read our earnings release, which we issued yesterday afternoon and is posted on our investor relations website. We have also provided presentation slides to facilitate today's call, so let's move to slide two. Please note, this morning's discussion will contain forward-looking statements that are subject to important factors that could cause actual results to differ materially from anticipated. I referred you to our SEC filings for a discussion of these factors, including the risk factors section of our annual report on Form 10-K. The statements represent our views as of today, and subsequent events may cause our views to change. We may elect to update the forward-looking statements at some point in the future, but specifically disclaim any obligation to do so. In addition, we will discuss pro forma financial measures prepared in accordance with Article 11 of Regulation SX. as well as non-GAAP financial measures, which we believe provide useful information for investors. Both our earnings release and supplemental presentation slides include reconciliations to the most comparable GAAP measures. We do not provide reconciliations of forward-looking non-GAAP financial measures due to the inherent difficulty in forecasting and quantifying certain significant items. These pro forma and non-GATT financial measures should not be considered in isolation or as a substitute for financial measures prepared in accordance with GATT. Our safe harbor statement included on this slide should be incorporated as part of any transcript of this call. With me today to discuss our business and financial results are John Heller, Chief Executive Officer, and Travis Johnson, Chief Financial Officer. We are also joined by other members of management, including Steve Arnett, Chief Operating Officer. With that, moving to slide three, it's my pleasure to turn the call over to our CEO, John Heller.

Thank you, Nathan, and thank you, everyone, for joining us today. Fiscal year 2025 marked Amentum's first full year as a public company, a transformational year that helped define who we are, our differentiated position in the marketplace, and where we're going. It was a year of disciplined execution, strong performance, and meaningful progress across every part of our business. I am so proud of our people and what we've accomplished together. At Capital Markets Day in August of last year, we established our objective to successfully integrate and deliver end-to-end advanced engineering and technology solutions to government, international, and commercial customers across key end markets, including defense, nuclear energy, intelligence, and space, and we're executing exactly as we had envisioned. As a result, Amentum has established a solid foundation for sustainable growth. This morning, I will detail how Amentum has proven our ability to operate with agility, deliver for our customers, and create long-term value for our shareholders. I will focus on three key areas. First, an overview of how this exceptional year unfolded and how it positions Amentum for a promising future. Second, highlights from an impressive quarter, including strategic awards and key performance metrics. And finally, our strategy to drive Amentum's growth in fiscal year 2026 and beyond. Let's begin on slide four. which captures the core of our fiscal year 2025 performance, centering around momentum's people, operational excellence, financial performance, and effective execution of our strategy. First, our people. Fiscal year 2025 tested our resilience and our people delivered. Against the backdrop of evolving customer priorities, our team stayed focused and delivered without pause. Our leadership maintained its steady focus on the fundamentals, protecting the long-term health of the business, ensuring continuity for our customers, and ensuring that our people continue to thrive regardless of the market environment. Through a dynamic operating environment, our teams continue designing and delivering critical solutions for our customers. That resilience is reinforced by our ability to hire thousands of skilled professionals worldwide, maintaining attrition well below the industry average and in our continued recognition as an employer of choice. We take pride in being a company where people want to build their careers while having a positive impact on our world. To that end, we're continuing to expand our Centers of Excellence, which provide specialized technology to drive innovation and progress. For example, we recently opened our Nuclear Center of Excellence in Oak Ridge, Tennessee, which serves as a strategic hub for nuclear expertise for North America. We've launched technical connection teams and mobilized an AI expert community network supporting upskilling and innovation at every level across the globe. The integration of our legacy businesses was one of the most significant in our industry's history, a massive undertaking that demanded focus, collaboration, and discipline across every part of the company. Thanks to our team, we have exited all transition service agreements, completed all of our key integration milestones on time and within budget, and are on track to deliver at least $60 million in net run rate synergies by the end of fiscal year 2026. That operational readiness, anchored in the strength of our people and culture, is one of Momentum's defining advantages, and it translated directly into strong financial performance. As a result, we met or exceeded guidance across every key metric, underscoring our consistency and discipline, starting with revenues, which increased to $14.4 billion, representing pro forma growth of 4%. Adjusted EBITDA of $1.1 billion, an increase of 5% year-over-year. Adjusted diluted earnings per share of $2.22 was up 11%. And free cash flow of $516 million, supporting acceleration of our debt reduction objectives, bringing net leverage to 3.2 times. These results demonstrate the strength of our operations and the reliability of our business model. And taken together, this year's achievements underscore the strength and breadth of our platform. In short, we executed with precision and strength, delivering on our commitments while positioning a momentum for sustained success. Please turn to slide five. Our disciplined execution and focus on growth translated into a series of strategically significant wins that strengthened our position across key markets. During fiscal year 25, we submitted $35 billion in bids, achieving a full-year book-to-bill ratio of 1.2 times and a quarterly book-to-bill ratio of 1.6 times, Our backlog grew 5%, reaching over $47 billion, and at year-end, we had $20 billion in proposals awaiting awards. Our quarterly book-to-bill ratio was driven by $6.4 billion in total bookings, reflecting continued demand and several strategically important wins, including... the U.S. Space Force Range Contract, a new $4 billion 10-year single award IDIQ. This award, now adjudicated and booked into backlog, is one of the largest services contracts ever awarded by this customer. It cements Amentum's leadership in space systems and technology and solidifies our position in this fast-growing market. In the UK, Sellafield selected Amentum as a remediation partner for the site under a $1.8 billion 15-year contract, where we are leveraging our advanced decommissioning solutions, systems engineering, and next-generation nuclear material processing and disposition capabilities. Another exciting win came from the civilian side of our space portfolio with the NASA Cosmos Contract, which is a nine-year, $1.8 billion joint venture award to deliver critical mission operations, systems, and training solutions supporting NASA's current spaceflight programs and enabling future deep space explorations. In the quarter, we were notified that this award is being protested. Therefore, it is not included in our fourth quarter backlog or book-to-bill results. We are confident in the strength of our bid and look forward to its resolution. And finally, we secured nearly $700 million in awards providing a range of advanced engineering and technology solutions for intelligence customers. including a win developing and delivering AI-enabled software coding solutions. Together, these results underscore the trust that our customers have placed in Amentum to execute complex programs at scale. And we enter fiscal year 2026 with strong momentum, preparing to bid at least $35 billion. Turning to slide six. Fiscal year 2025 brought significant change, not just in Washington, but across the globe and throughout our industry. The transition to a new administration introduced a new set of priorities and objectives, impacting contracting timelines, funding cycles, and future spending direction. For Amentum, this environment reinforced the strength and resilience of our business model, Our work is anchored in mission-critical long-duration programs that are essential to national defense, energy security, and space superiority. Our diverse portfolio, which includes 20% of revenue tied to commercial and international work, provides a degree of insulation from sector volatility. Combined with our strong backlog and robust pipeline, we have high visibility into future revenues. This structural agility allows Amentum to rapidly adapt to shifting priorities while delivering consistent results for customers. As the government refocuses on efficiency, speed, and accountability, Amentum is well positioned. Our scale, performance record, and proven operational discipline make us a trusted partner to our customers. For investors, that combination represents a low-risk, high-visibility opportunity at a time when consistency and reliability are at a premium. Simply put, Momentum represents stability in a period of transition. Let's turn to slide seven to discuss Momentum's growth strategy. Our core growth areas, where we have longstanding leadership positions across large, stable, mission-critical areas, provide dependable revenue, strong cash flow, and predictable returns, and they remain central to the steady performance that defines our company. These areas, underpinned by several core capabilities, are deployed across multi-year, often multi-decade programs, and some notable areas include RDT&E, intelligence operations and analysis, homeland security and border protection, environmental remediation, and defense engineering logistics and modernization. As an example, you can see this in work on our ITeams program in Indo-PACOM, where we're strengthening C5ISR capabilities for the U.S. Armed Forces by applying rapid prototyping and digital engineering methods to accelerate speed to mission. It's also reflected in our support to the Naval Surface Warfare Center crane, where we integrate next-generation sensors and apply model-based systems engineering to enhance reliability and lifecycle management. Whether we're leveraging machine learning solutions in support of customers across homeland and national security missions, delivering digital engineering tools on behalf of intelligence customers, or deploying advanced environmental solutions around the world, our core growth areas deliver consistent performance and create the platform from which the rest of our business continues to scale. Turning to slide eight, complementing that foundation are our accelerating growth markets powering our future growth, space systems and technologies, critical digital infrastructure, and global nuclear energy. They are growing rapidly, fueled by generational investments in national security, energy resilience, and advanced technologies such as AI, robotics, and automation. They are also margin accretive, relying on advanced engineering, AI-enabled integration, and high-value technical expertise. And they are global, creating opportunities across the U.S., U.K., Europe, and other allied nations where Amentum's credibility and scale make us a natural choice for government and commercial customers seeking a trusted partner. Now, let me provide a bit more detail on these markets. First, a rapidly evolving market for space systems and technologies is generating demand signals from both the national security community and a fast-growing commercial sector. Our work in launch infrastructure, systems integration, and spaceflight operations positions Amentum at the intersection of government and commercial space, supporting missions that will define the next generation of space exploration and defense readiness. Next, we're excited about our growing work providing digital infrastructure solutions. Here, we're supporting advanced telecom systems, deploying next-generation data center solutions, and engineering the backbone of networks for national security and commercial customers alike. For example, commercial awards in fiscal year 2025 encompass the design, deployment, and optimization of 5G networks and critical infrastructure management. Through strategic partnerships and capabilities, including MDSE-enabled platforms often leveraged from work in our core growth areas, we're future-proofing networks and data centers to meet the demands of low-latency, data-intensive mission environments. By combining our engineering depth with turnkey connectivity and resilient cloud architectures, Momentum is positioning itself as a trusted provider of mission-critical digital infrastructure for the world's most demanding users. And finally, turning to slide nine, As I reviewed during last quarter's call, Momentum is well positioned to lead the next generation of nuclear power. Our teams deliver full lifecycle nuclear engineering capabilities, including design and licensing to construction, operations, modernization, and life extension and decommissioning. The global resurgence of nuclear energy driven by energy security needs and the explosive demand from artificial intelligence and next-generation manufacturing is creating a market with substantial tailwinds. For Amentum, this represents a multi-decade opportunity for sustained double-digit growth and meaningful margin expansion. I look forward to providing future updates on our work in the nuclear market and diving deeper into the space systems and technologies and critical digital infrastructure markets on future earnings costs. When you combine the durability of our core growth areas with the momentum of our accelerating growth markets, the result is a portfolio that delivers both stability and scalability. Our lower-risk, long-cycle businesses generate the cash flow and institutional strength that allow us to incubate high-growth opportunities without compromising financial discipline or balance sheet flexibility. This is how we think of a momentum strategy for growth, a well-positioned portfolio that consistently delivers growth, margin expansion, sustainable free cash flow, and compounding returns year after year. With that, I'll turn it over to Travis.