Amentum Holdings, Inc.

Thank you. Thank you. Thank you. I don't know. Thank you. Thank you. © transcript Emily Beynon Thank you. ¶¶ Thank you. Thank you. Thank you. Thank you.

Good morning, ladies and gentlemen, and welcome to the Momentum Q1 Fiscal Year 2026 Results Conference Call. At this time, all lines are in listen only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Tuesday, February 10th, 2026. I would now like to turn the conference over to Nathan Rutledge.

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 that 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 refer you to our FTC filings for discussion of these factors, including the risk factor 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 statement at some point in the future, but specifically disclaim any obligation to do so. In addition, we will discuss 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 non-GAAP financial measures should not be considered in isolation or as a substitute for financial measures prepared in accordance with GAAP. 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. We entered the new fiscal year continuing our strong momentum, including another robust quarter of bookings that reinforce our alignment to the high-demand mission areas of nuclear energy, space, and critical digital infrastructure. As a result, this morning, I'm pleased to share another quarter of results that put Aventum on track toward achieving both our near-term fiscal year 2026 outlook and our longer-term strategic growth objectives. Our differentiated business continues to perform, and as a management team, we're setting clear priorities and expectations, and we're executing. Bottom line, momentum continues to deliver. So let's jump right in with our quarterly results. While the longest government shutdown in history impacted performance in the quarter, I am especially proud of our teams around the world who remain focused delivering exceptional outcomes for our customers and results largely in line with our expectations. Key highlights, which Travis will cover in more detail shortly, include revenue of $3.2 billion, reflecting normalized growth of 3%, adjusted EBITDA of $263 million, with robust margins of 8.1%, and adjusted diluted earnings per share of 54 cents, up 6% year over year. This performance is a direct result of our agile business model, disciplined execution, consistent focus on our strategic priorities, and continued demand across our end markets. Let's turn to slide four, where I'll highlight how Amentum's focus on growth translated into a series of strategically significant wins this quarter. We delivered $3.3 billion in net bookings, resulting in a first quarter and last 12 months book-to-bill of one times and 1.1 times respectively. Including strategic joint venture awards, our imputed book-to-bill was 1.3 times for the last 12 months. This consistent performance enabled our industry-leading backlog to grow 4%, reaching over $47 billion. At quarter end, we had $23 billion in proposals awaiting award, the majority of which are new business to momentum, including nearly $2 billion already won and under protest or awaiting corrective action. As I'll discuss in more detail, we continue to make meaningful progress, advancing large multi-year opportunities directly aligned with our higher margin accelerating growth markets, appoint evidence by our consistent book-to-bill performance, At or above one times, our business development engine prioritizes scale, duration, and strategic relevance, grounded in deep customer relationships, shaping solutions, and building long cycle programs where customers value trusted partners. We are particularly encouraged by our progress in nuclear energy, an accelerating growth market for Amentum, which is showing robust demand signals both overseas and in the United States. Years of technical investment in program execution have led to tangible awards, including nearly $1 billion in the first quarter alone, reinforcing our role as a trusted partner across both existing facilities and new build programs. Leveraging our technical leadership in nuclear energy, Amentum was selected by Rolls-Royce as the global program delivery partner for its small modular reactors, including initial deployments in the UK and Czech Republic. Under this partnership, we will apply decades of experience in nuclear engineering and design, systems integration, and program governance. Amentum was also awarded a 10-year, $730 million contract by EDF Nuclear Power to support new and existing power stations in the UK, reinforcing our role as a trusted partner to one of the world's largest nuclear utilities. In the Netherlands, Momentum secured a five-year, $207 million contract to provide planning and engineering services supporting the future development of up to two gigawatt-scale power plants, strengthening our position in Europe's energy transition. Beyond nuclear, we continue to win work that reflects the breadth and diversification of our portfolio across customers, geographies, and contract types. Our capabilities in digital engineering advanced sustainment, and other mission-critical operations are resonating with customers both domestically and internationally. Award highlights include a U.S. Air Force six-year single-award IDIQ with a ceiling value of up to $995 million for unmanned sustainment, modernization, and training. Under this contract, Amentum will deploy specialized solutions and expertise in the U.S. and globally to reinforce readiness and training capabilities. Next, we were awarded VISTA's Compute as a Service contract, a five-year $120 million award to deliver scalable computing power on demand. We're excited to support our customer's mission through this unique outcome-based contract and see it as a potential model for shaping future proposals. Finally, we secured a three-year, $270 million contract from a foreign military customer to provide advanced C5ISR solutions. Our progress this quarter demonstrates consistent execution against our strategy and reinforces our competence and our ability to continue building a high-quality backlog and delivering durable, long-term growth. Before we dive into our space systems and technologies market, let's turn to slide five. to step back and re-anchor our discussion in the growth framework we introduced last quarter. We outlined three accelerating growth markets where Amentum is particularly well-positioned, space systems and technologies, critical digital infrastructure, and global nuclear energy. These markets are characterized by strong demand visibility, attractive margin profiles, and long-term growth potential across government and commercial customers. These markets also align with enduring macro trends and support the technological needs of a growing global economy. Please turn to slide six to cover in more detail space systems and technologies, which we view as a set of interconnected markets that scale together across satellites, launch, integrated systems, and satellite communications. Together, they represented approximately $90 billion market projected to grow around 9% annually over the next five years, driven by higher launch cadence and increasing mission demand. Starting with satellites, demand continues to shift towards proliferated low Earth orbit constellations. Smaller satellites now dominate launch volumes across broadband, sensing, and national security missions. These architectures enhance resilience but also increase integration and lifecycle complexity, areas where customers value experienced system integrators. Integrated systems are also changing rapidly. Infrastructure is becoming more software-defined, virtualized, and cloud-integrated. While this improves scalability, it also raises the importance of integration, cybersecurity, automation, and end-to-end mission operations as data volumes and mission tempo increase. Launch activity is accelerating. Lower-cost commercial launch, reusable vehicles, and increased competition are driving a higher cadence across government and commercial customers. As launch volumes expand, operational demands increase across mission integration, safety, and sustainment. Satellite communications, or SATCOM, is also expanding as a foundational layer of global connectivity. Growth in broadband constellations, mobile communications, and sovereign networks is driving higher throughput and adoption of multi-orbit architectures. SATCOM underpins mission critical defense, mobility, and commercial applications worldwide. Taken together, These trends are expanding the space market and increasing demand for companies like Amentum that can integrate, operate, and sustain complex systems across their full lifecycle. Moving to slide seven, let's discuss how Amentum is uniquely positioned with robust experience and capabilities to advance the future of space. Beginning with missile defense and command and control integration and modernization, Demand continues to rise for resilient space domain awareness and integrated missile warning and tracking. These priorities are central to U.S. and allied national security strategies and are driving sustained investment. Amentum supports these national security missions today through programs such as IRIS, providing advanced engineering sustainment, and NIST2, supporting global surveillance, missile warning, and classified communications. As hypersonic and ballistic threats evolve, demand for satellite-based tracking will only increase. Outperformance and expanding capabilities positions Amentum well for space-enabled missile defense opportunities, such as Golden Dome, under the $151 billion shield IDIQ, on which Amentum was recently awarded its position. Amentum plays a critical role providing full lifecycle solutions for human exploration, and has numerous active programs supporting Orion, the Space Launch System, and Exploration Ground Systems. These programs require continuous engineering, integration, operations, and sustainment across multi-year mission cycles. They are not one-time development efforts, but long-duration recurring opportunities supported by sustained demand across multiple human spaceflight missions. These efforts require advanced propulsion, power, autonomy, and payload integration, areas where Amentum brings deep expertise and where we see growth across both national security and commercial customers. Finally, in deep space research and development, Amentum focuses on robotic exploration and early-stage systems that extend human reach beyond Earth's orbit. Our work includes missions such as space vehicles designed to operate in extreme lunar environments. We also see growing opportunities to support emerging technologies, including propulsion systems that will leverage advances in nuclear energy and in Mars-related ascent and sample return technologies, where early research and systems engineering are critical to reducing risk. We're positioned to lead mission-critical space integration today while scaling and extending our capabilities to capture long-term growth across the space economy of tomorrow. In summary, Amentum enters the remainder of the fiscal year from a position of strength. Our results, backlog, and pipeline reflect disciplined execution, durable customer demand, and the value of our differentiated capabilities across complex mission-critical environments. As global needs evolve across defense, energy, space, and digital infrastructure, we are well positioned to support our customers' most important missions while creating long-term value for our stakeholders. We remain focused on execution, growth, and delivering on the commitments we've made. With that, I'll turn it over to Travis.

Thank you, John, and good morning, everyone. I'm excited to discuss with you today. I'm in some solid first quarter performance our continued trajectory to achieve net leverage less than three times by year-end, enabling a more flexible and opportunistic capital deployment posture, and our confidence in achieving full-year results in line with the guidance provided in November. To echo John's sentiment, I'm particularly encouraged by the continued successful execution of our strategy, evidenced by another quarter of robust bookings and by outstanding margin performance. both of which were enabled by the relentless focus and dedication to operational excellence from our employees around the globe. With that, let's begin with an overview of our financial performance on slide eight. Revenue in the first quarter totaled $3.24 billion, reflecting the joint venture transitions and divestitures previously discussed, as well as impacts from the government shutdown. Underlying growth normalizing for these items was approximately 3%, driven by the ramp-up of new contract awards in our critical digital infrastructure and space systems and technologies accelerating growth markets. Adjusted EBITDA of $263 million benefited from a 40 basis point year-over-year increase in adjusted EBITDA margins to 8.1%. Alongside continued strategic progress to prioritize higher margin work, margin expansion was enabled by strong program performance and reduced indirect spending as a result of realized cost energies and disciplined expense management during the shutdown. Adjusted debited earnings per share of 54 cents was up 6% from a year ago and reflects lower interest expense driven by our debt reduction initiative. Moving to our reportable segment results on slide nine. Digital Solutions delivered revenue of $1.34 billion. representing 4% growth on a reported basis and a robust 8% after normalizing for the items mentioned previously. The year-over-year increase was driven by the continued ramp-up of new contract awards, led by strength from commercial programs and critical digital infrastructure. Adjusted EBITDA increased to $103 million as a result of the higher revenue volume, resulting in adjusted EBITDA margins of 7.7%. Turning to global engineering solutions, revenue was $1.9 billion, reflecting the impacts from JV transitions, the divestiture, and the government shutdown. Normalizing for these items, underlying revenue was consistent with the prior year, as revenue from new contract awards were offset by the expected ramp down of certain historical programs. Adjusted EBITDA of $160 million reflects an 80 basis point year-over-year increase in adjusted EBITDA margins to 8.4%. The strong profitability was enabled by prioritizing higher margin growth opportunities, disciplined program execution, and delivering against cost synergy initiatives. Now turning to slide 10 to cover our cash flow and capital structure highlights. First quarter free cash flow included an additional pay cycle compared to the prior year quarter and was impacted by temporary collections timing from the government shutdown and holiday closures, resulting in a use of $142 million. It is important to emphasize that this is only timing related. In fact, collections in the first five days of the second quarter more than doubled compared to the same period in the prior year. As a result, we anticipate strong free cash flow in the second quarter and remain confident in meeting our full year free cash flow guidance. From a liquidity perspective, our position remains healthy, with Q1 ending cash on hand of $247 million, a fully undrawn $850 million revolver, and no near-term maturities. We're also pleased with the recent Moody's credit rating upgrade, which underscores our improving financial profile, immediately reduces interest expense in our term loan B by 25 basis points, and positions us for enhanced financial flexibility and market access moving forward. With a strong balance sheet, robust liquidity, and focus on generating sustainable free cash flow, we are well positioned to deliver enduring value for our shareholders. Achieving our target net leverage of less than three times by the end of the fiscal year remains a priority. In looking into fiscal year 2027 and beyond, we will remain disciplined in our approach, maintaining a prudent capital structure that enables flexible and opportunistic deployment. On slide 11, let's now turn to our fiscal year 2026 full-year outlook. As a result of Q1 performance, backlog of $47 billion, including $7 billion in funded backlog of 23% from last quarter, and with 95% of revenue expected to come from existing or re-compete business, We remain confident in the outlook provided in November. We are reaffirming guidance for the year, including revenue in the range of $13.95 to $14.3 billion, adjusted EBITDA between $1.1 and $1.14 billion, adjusted diluted earnings per share between $2.25 and $2.45, and free cash flow between $525 and $575 million. All metrics reflect healthy underlying organic growth, and the primary guidance assumptions remain unchanged. From a timing perspective, we continue to expect quarterly sequential increases in revenue, adjusted EBITDA, and adjusted diluted earnings per share as we move beyond the government shutdown and will benefit from additional working days in the remaining quarters. To assist with modeling, we have included a breakout of working days by quarter in the appendix. And I will also note that for Q2, consensus estimates are in line with our expectations. From a free cash flow perspective, as previously shared, we have seen a rebound in collections and therefore expect approximately 25% of our to-go free cash flow generation in the second quarter. Wrapping up on slide 12, we are pleased with our start to the year, which reflects our ability to deliver solid results through disciplined operational execution and strategic focus. With continued robust bookings, strong market demand signals, and progress towards our leverage reduction goals, we are confident in achieving our full-year outlook and in positioning momentum for sustained value creation. With that, operator, please open the line for questions.

Thank you so much. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the one on your touchtone phone. You'll hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the two. If you're using a speakerphone, please lift the handset before pressing any key. One moment for your first question. Your first question comes from Colin with cancer. Please go ahead.

Hey, thank you for the question. Travis, do you mind focusing on the pre-cash flow progression through the year and maybe talk about how you think about this quarter's performance, second half performance, and then maybe discussing how you think about potentially selling receivables in order to kind of bolster the pre-cash for that. Thank you.

Hey, Colin. Good morning. So as stated in my prepare more, so we're two primary drivers for Q1 cash performance. both of which were simply timing related and have no impact on our expectations for the full year. And so first, as noted on our last earnings call, we had an additional pay cycle relative to Q1 of last year, which obviously will normalize as we move through the rest of the fiscal year. And second, there was an unexpected government holiday closure, which you guys may be familiar with. So the administration gave government employees an additional two days off in addition to Christmas and New Year's at the end of December and headed into the new year. And so that pushed some collections into the first part of January due to delays in customer approvals and processing. So really, again, just timing related, and perhaps to provide some more context, collections in the first week of the second quarter were $100 million higher than they were in the first week of Q2 of last year, kind of just reemphasizing that it was just collections timing that was pushed due to delays in approvals. And so looking ahead for the rest of the year, given the rebound we've already seen in the results that are in line with the guidance that we reaffirmed for the full year, with the midpoint being at $550 million. And roughly 25% of that to-go free cash flow we do expect in the second quarter. And then obviously Q4, as it always has been, will be our strongest free cash flow quarter as a result of our alignment with government fiscal year-end. And then just to touch on your comment on AR factoring, as you're aware, we do have a an AR factoring program in place, and we do leverage that to manage working capital as we move throughout the year.

Got it. Thank you. That's great, Keller. And then maybe following up, if you can kind of refresh how you think about the award outlook by EndMarket, particularly focusing on funded awards and how you think about kind of the magnitude and timing of those funded awards. Thank you.

Sure. I'll start with just saying You noticed that we had an uptick in funded backlog during the quarter. It's something we've talked about really since last year, and we saw some administrative delays on the contracting side just with having funding. So we're pleased to see that bounce back up to nearly $7 billion, a 23% increase from Q4. But as we've said, we're comfortable with funded backlog in that range of, you know, $5 to $7 billion with, you know, what it means for the rest of our full-year outlook. And in terms of kind of looking ahead, obviously with $23 billion in pending awards and $35 billion or more of bids expected to be submitted this year, you know, we're on track to achieve our full year book to bill greater than one. And a lot of those key awards we expect will come from the accelerating growth market that John highlighted in his prepared remarks. In fact, just this quarter, we had over a billion dollars in awards in our global nuclear energy business. So really highlighting the strength of that piece of the portfolio. And I'll just mention, I think the kind of history of our consistent book-to-bill performance speaks for itself, right? Five straight quarters of book-to-bill, one times or greater, including imputed book-to-bill of 1.3 times on an LTN basis.

That's great. Thank you. Appreciate it.

Thank you so much. As a reminder, all those with questions, please ask just one question and one follow-up question. Your next question comes from Tovery with Truist. Please go ahead.

Thank you very much. I wanted to ask a question about nuclear, where you've had a nice string of new business announcements. How do we think about how that folds into the P&L and starts to contribute to revenue and profit growth? I was wondering if you could comment on what nuclear bids either submitted or sort of pipeline looks like and is it indicative of more rapid growth there versus the overall metrics for the firm?

Well, the first thing that we highlight is I think, you know, we highlighted in the prepared marks just the fact in Q1 with a billion dollars of awards in the nuclear space. And, you know, given the fact that nuclear of our over $14 billion business represents just over 2 billion, you can see we're making really good progress and see acceleration in that market overall as it relates to our portfolio. But of course, we're 14 billion, so it's going to take time to see the nuclear business really have a significant impact on a, say, quarter by quarter. But on a year by year basis, we do expect these accelerating growth markets, including nuclear space and digital, all to have a positive impact on margins. We're still looking for margin improvement year over year. It's going to be driven by those three areas. And nuclear is certainly stepping up and contributing there with The contract awards we announced, including kind of EDF and the Netherlands contract award. Of course, we announced Rolls-Royce, but that was an award after the quarter. You know, we're continuing to see progress on the nuclear side, and we would expect that to be a big story for the business with the European market still robust, you know, as we've Talked about a couple big awards there this quarter. But the U.S. market is just really starting to accelerate as these bigger deals, new starts, extensions for existing plants, and the SMR market are all starting to get some momentum. And we have a lot of inbound demand in these areas. But that's probably going to take a few more quarters to see the money come together, those projects get greenlit. But nonetheless, we are working with a lot of companies that are working to put these U.S. projects on track to begin. So that's going to really help accelerate the future. And of course, just a final point I'll make is the timeline on these. You know, the upfront work on a nuclear project is typically in the engineering, the governance, getting regulatory approvals, preparing for construction, and then the revenue on these projects accelerates quite a bit once you move into construction. And that can take anywhere from one to five years to move into those stages. So these are really five- to ten-year projects, which then have kind of a tail that can go decades. But in terms of getting to the peak, it usually takes years. two to five years to see the peak revenue opportunity on nuclear.

Thank you very much for that, John. When you look at your bid submitted and pipeline for the whole firm, is there an embedded favorable mix shift from a margin perspective based on the complexion of those bids and pipeline?

Hey, Toby, this is Travis. I would characterize it like this. Obviously, we're starting to strategically prioritize higher margin work, both in the accelerated growth markets that John highlighted, but also in our core markets. We still have $10 billion worth of the markets which we're a leader in. Great work and still growth opportunity there. But we're also looking to expand margins in that part of the portfolio, which will be a big part of the story. And as we look at the bids going in, including things like contract mix, We are certainly seeing a shift over time. As we've stated, it will take time with $47 billion in backlog. It's a big shift this year, but we are seeing that. You'll see in our contract mix composition in the 10Q, you'll see we've started to progress towards a higher percentage of fixed price work. So we are starting to see that as awards and that strategic shift in prioritization unfold.

Thank you very much.

Thank you. Our next question comes from Seth with JP Mortgage. Please go ahead.

Hey, thanks very much and good morning. I wanted to ask in cash flow about the investing cash flows that go into the JVs.

uh is a you know significant amount in in the quarter um how do we think about those cash requirements going forward and and how they should uh be relative to your um capex in free cash flow hey seth good morning yeah this quarter was a abnormally large contribution to our equity method investments and it's really a direct result of the big joint venture awards that we had last year uh they're they're all kind of starting to ramp up and at the initial phases of those joint ventures. You have initial capital contributions from partners and had our piece in that. The two larger ones for the quarter were in Portsmouth and our Hanford work. We don't expect that level as we move throughout the rest of the year. And then you also saw some return of contributions, which we would also expect over time as those programs ramp up and mature.

Okay. Okay. Great. And then just a quick follow-up in global engineering solutions. Obviously, Very tight margin there, historically, in that mid-7% range, and then nearly 100 basis points higher in this quarter. What happened there that would make us not think that the margin that we saw in Q1 is not sustainable in Global Engineering Solutions?

Certainly, the margin performance for the entire company, and obviously led by Global Engineering Solutions, was a highlight for the quarter. you know, things like revenue and cash flow timing that, you know, are out of our control impacted from the government shutdown happened. Luckily, that's behind us. But the margin performance is, you know, something we're really proud of the team for delivering. And it wasn't really just one area. It was a few different areas. First, it's, you know, progress on our strategic objective to prioritize higher margin work. And as I stated a little bit earlier, you'll see in our 10Q that we've got a higher percentage of fixed price work that contributed to that. Also, there was some mixed benefits from the government shutdown and just the work that was impacted from the shutdown with some lower margin work, and obviously continued benefits from our cost synergy initiatives, and then overall just strong program performance. So, you know, a lot of different variables driving the positive outcome there for global engineering solutions. And then as we look to the rest of the year, obviously our implied to-go margins at the enterprise level are in line with the midpoint of our full-year guidance. But as you know, that contemplates a range of outcomes and The top end of that could be up to 8.2%. So we feel really good about the quarter and obviously the path that we have to meet our full year objectives as it relates to EBITDA and EBITDA margin.

Great. Great. Thank you very much.

Thank you. Your next question comes from Christine with Morgan Stanley. Please go ahead.

Hi. Good morning, everyone. John, we're seeing over 100 gigawatts of industrial gas turbine power capacity to enter the market by 2030, and it looks like this capacity is expected to come in sooner than nuclear projects. I mean, they're a little bit at shorter duration than nuclear. I was wondering how applicable your core capabilities in nuclear is for these kinds of projects. I mean, these are still fairly large builds. Is this an opportunity for you?

Yeah, thanks, Christine. And we're very aware that to meet the power needs of the nation, and frankly, the world, that you're going to have to look, and there's a big article today, of course, in Wall Street Journal on coal, restarting coal plants, extending coal plants, and other sources to create the bridge to where nuclear can step in. And Our focus is on bringing that nuclear infrastructure online. And what you're seeing, and this administration is very active in supporting using kind of the existing infrastructure and bringing that infrastructure online that is more carbon-based while we bring these SMR or gigawatt-sized plant projects online in parallel. So we're seeing projects being discussed and planned and the money coming together behind the overall plan to bring all this additional power online. And nuclear is a huge part of that, which is going to keep us extremely busy. So our focus is on that nuclear power, which is happening absolutely in parallel. And these types of projects are, you know, not necessarily behind the scenes. I mean, you're hearing about some of this with SoftBank getting involved and Japan and other large projects. And you hear about the nuclear element of that, but to get to the ability to have that nuclear power, which is five, six, seven years down the road, you're going to have to have some bridge power capability brought online. And that's where you're seeing this additional capacity you're mentioning. But the nuclear projects are going to keep us very busy that they're working on to really facilitate the accelerating demand. It's going to go far beyond what these near-term fossil fuel projects can handle.

Thanks, John. Super helpful. And also, on this Compute as a Service contract that you won in the quarter, How is this structured? Are the economics of this contract similar to a traditional contract? And providing this as a service, is this business model also repeatable for the commercial end market?

Yes. We decided about the DISA award. I think if you take it in a larger context, it's one of the great examples of how the government is really focusing on trying to get to more outcomes-based contracting. And so it's inherently on demand to provide compute capacity and power for DISA and their clients. And so that scalable kind of outcome-based, you can think in terms of not as an overall effort, you know, kind of fixed price, but rather a unit-based fixed price that allows us to deliver outcomes. And we think it's a great contract model, very much in line with how the government is trying to modernize procurement models. And so we think it is a structure that could replicate across other opportunities.

Great. Thank you very much.

Your next question comes from Ken with RBC Capital Markets. Please go ahead.

Yeah. Hi. Good morning. Travis, maybe I wondered if you can size the mix impact on margins in the quarter. I think you called that out as a headwind as a result of the shutdown and some of the maybe lower margin work that wasn't booked in the quarter, wasn't built in the quarter. How do we think about that? And how do we think about that then playing out as we think about the progression of margins through the remainder of the year?

Yeah, good morning. So between kind of the four drivers that I mentioned earlier being You know, just overall strategic progress to prioritize higher margin work, which means that we have lower margin work falling off and we're winning work that's coming online that's higher margin. The kind of one-time impact from the quarter of the mix from the government shutdown impact realized cost synergies and then strong program performance. It was really, especially in global engineering solutions, kind of evenly spread across those drivers. So not one kind of outsized contribution relative to those four things, but rather a combination of all of them. And then as we look to the rest of the year, again, the midpoint of our guidance is 7.9%, but the whole range contemplates even margins up to 8.2%. So obviously, we put out guidance that contemplates a range of different outcomes. And while we're pleased with the Q1 performance, we're obviously just being prudent in our approach to you know, look at the variety of outcomes that could happen for the year.

Thanks, Travis. And maybe as a follow-up, John, to some of your comments on the space market in the prepared remarks, as we track your progress here, obviously we'll see the releases, but are there one or two things, whether it be launch activity or other aspects of this market as they evolve, that you'd call out as maybe better or more indicative of how you could ramp in the space market more broadly. I'm just trying to get a sense as to what you view as perhaps some of the most important indicators as we track this moving forward.

Yeah, no, we're real excited to highlight that this quarter. Our teams are working across the space domain in very different areas that we outlined in the presentation. We thought that would be really good to share them. Glad that you brought that up because we were real excited to make that a centerpiece of the quarter. And, you know, our position in the market is really built on longstanding roles in mission critical programs, really on missile warning systems, missile defense, space domain awareness, command and control. I mentioned programs like IREDS and NIST2, great examples of our advanced engineering sustainment. Hypersonic and ballistic missile development, another area. You know, we recently won a contract to support the UK's hypersonic program. We're real excited about that. So, you know, we see that the strength of our history positions us in these areas that we highlighted. And, you know, we think there's some real good opportunities as Obviously, the U.S. government is very much focused in these areas. The space race is real with China. The opportunity to get back to the moon and Artemis II's mission and then Artemis III. So a lot of things happening that align well with our strengths.

Yeah, maybe just to add a quick, a little bit of context to John's remarks, I think that we very much see that, in fact, your question, for us, it's not a single opportunity, or I would even say it's not a single part of the system lifecycle. As John indicated, it's really kind of more of a broad approach to the opportunities across the space market. We broke it into, you know, satellites launch, SATCOM integrated systems. And today we're driving those critical missions with, you know, Missile Defense Agency and other parts of the Department of Defense, but even NASA. And so we're excited about really the in-house expertise that we've built across these critical missions. I think the real theme at this point in time is all of these critical missions are becoming more complex. And so a partner that can deliver agile and scalable systems, all these missions require more rapid tech insertion, and that's really the momentum team that we've built in the space portfolio. And moving forward, there's just three things that give us a lot of optimism. I think, number one, if you look at where we're deploying our proven expertise today we're deployed in areas where the spending is becoming more durable that's something we see across commissions we're supporting secondly we are excited about we are on and hold the right contract vehicles we talked about existing dod and nasa contracts of course we picked up a position on the shield contract where we'll have the chance to compete and win work in support of golden dome even recent months we've had the nice new win on the cosmos contract with nasa where we're waiting for protest disposition but all these things give us kind of line of sight on growth in 26 and into 27 but maybe in the biggest picture the third point we're excited about is all the capabilities we have mentally have developed in-house translate across these missions whether it's national security space whether it's deep space exploration or even some of the emerging commercial opportunities And we really worked on networking that expertise to be able to bring the best solution to all of these opportunities in the space market.

Great. Thank you.

All right. Your next question comes from Trevor with Citizens. Please go ahead.

Great. Hi, team. Thanks for taking my call or my questions. Can you maybe just bridge some of the comments, Travis and John, that you made around the timing of the nuclear contribution and then just the overall new business that's coming in for 26. It sounds like that's probably not so much a factor of the revenue that's beyond the visibility that you had from the existing contracts. How are you bridging that upside or the extra? What's that coming from and what are the puts and takes around what could be the gotchas there as far as not meeting your expectations. Thanks.

I'll just make a quick comment. Maybe Travis can get into the numbers, but a quick comment that's a little tongue-in-cheek on the industry. 21% of our revenue right now is non-U.S. government. In the U.S. government, you still have protests on new awards. We've mentioned we have $2 billion of New awards sitting in protest. So our BD engine is working. We're real excited with our strategy that we've outlined. Our win rates are strong and our backlog is growing. But we have protests. But what's interesting is in the non-U.S. government business, we really have no protests. So we're able to transition those awards, whether it's in the nuclear space or foreign government space, immediately into revenue and contribution to margin improvement. And so that's kind of another exciting part about the nuclear market is, you know, we announced a billion dollars awards. We still have the Rolls Royce that came in after. We have other things happening in our nuclear market we're really excited about, and we're not seeing any protests. So we get to translate that into project work and see that contribute. But of course, in 26, As Travis said, we only have about 5% of new business to fill the gap. But if you can get the work that we're winning in our accelerated growth market started, that can have a greater impact on the fiscal year.

I'll just add, I think John covered it really well, but as we look at kind of bridging Q1 to the rest of the year run rate, there's really just a couple of mechanical things that are going to get us there. Obviously, first and foremost, there's going to be no government shutdown impact in the remaining quarters. That was roughly $150 million. We're also going to benefit from additional working days in the remaining quarters. So in Q1, there were 60 working days. In Q2 and Q3, there'll be 63 working days. And in Q4, there's 64 working days. So just kind of math on average daily run rate, right? That's an additional $150 million a quarter. And then obviously the other net organic contributions, including things like ramp up of new contract awards. We've mentioned our Space Force range contract previously that only had one month worth of revenue in the first quarter and will obviously have full quarter benefit in the remaining quarter. So fairly simple bridge to kind of get you to how we see the rest of the year playing out. And then in terms of where we fall within the guidance range, I think John hit it really well. It's really just continuing to submit high quality bids and expect to still submit over $35 billion this year. But we have $23 billion in pending awards, and we have pretty good visibility into those, but there can always be variability of timing of those and the course process, as John mentioned. So I'd say if we're looking at variability within kind of our guidance ranges, it would be just that. And how does that play out during the rest of the year?

Awesome. That's a perfect color. Thanks so much, guys.

Your next question comes from Mariana with Bank of America. Please go ahead.

Good morning, everyone. Thank you for taking my question. So the first one is going to be about, you mentioned the Golden Dome Shield contract that you have been down selected. We haven't seen much awards yet. How are you thinking about timing of those awards and opportunities?

Yes, good morning. I think for us, the Golden Dome story begins with kind of what we're doing today. In January, General Gutlein, the Pentagon's appointed leader for the whole Golden Dome system realization, he made some great comments about the priorities for the first two years, and he really focused on the baseline command and control capability for this integrated system of systems that is Golden Dome and incorporating interceptors into the systems. And so if you look at them from today, we're already doing a lot of work that's I'll say bringing that to life. We're supporting certainly the Missile Defense Agency. John mentioned our I-RES contract where we've established now the digital backbone that's going to allow those systems to be integrated into our missile defense architecture and even developing prototype systems like, as has been in the media, the hypersonic trafficking and ballistic space sensors. So those prototype systems we're working to bring to life. And so already, In conjunction with the Missile Defense Agency, Amintim's doing a lot of that work. And I would quickly mention our work also with the Space Force in their NORAD mission, where we're advancing their ability to detect and track and have missile warning capabilities. That is a, we're continuing to sustain and advance their systems to carry out those parts of the missions. And so we, Amintim, are even on our current contract seeing tasking that is relevant the future solution that is golden dome and so in parallel as you correctly mentioned now we along with many other companies have a seat on the shield contract we have begun just to see some of the plans for some of the procurements that will come out under shield we like others are positioning for those and so we do expect as we progress into 26 that we'll see increased activity there and um But we're excited about the current work and the view ahead on the upcoming procurements.

Thank you so much. And then if we can switch gears to NASA. Earlier this week, they announced the solicitation for the second iteration of NASA engineering support contract that you guys have. And I understand you probably cannot comment on a particular contract. How should we think about opportunities and challenges going on for your NASA exposure going forward, especially as we think about new leadership and a focus on more commercial terms, the same that we're seeing at the Department of War? What are the opportunities and challenges there and competitive dynamics going forward?

Yes, we are really pleased that we've had the chance, even just within the past couple weeks, to meet with the new administrator and his team. And at the top level, let me just say, we're excited to continue supporting NASA to achieve the president's national space policy goals and maintain US leadership in space exploration. And everybody's aligned around that. And even more specifically, just within the past couple of weeks, we've enjoyed interacting with the new NASA leadership at the Kennedy Space Center in Florida, where the integrated team is working to prepare for the Artemis II mission. And if you're following, you know, it's now slated for the March launch window. And so we're very proud of our current role in supporting NASA with this historic mission, which, by the way, will take humans deeper into space than they've ever before traveled and will bring them home safely. So rest assured that, you know, proper preparation for Artemis II is a priority for us. Administrator Isaacman, he did recently, just as you noted, he committed to say, hey, NASA's got to focus on rebuilding internal talent, strengthening contractual provisions, and fostering their culture of technical resilience. These are all positive objectives, and we are fully in alignment. NASA has, you know, a unique leadership role in the world, and never, never before in history Has it been more important that NASA lead in this area? So we're very excited about that. I think for us, as we've interacted with new NASA leadership, the administrator, we think, is focused on pushing the agency to deliver successful missions, to do that in alignment with cost constraints as well as schedule imperatives. We admit them. We believe our proven expertise, coupled with our highly advantaged cost posture, We think we're positioned. We're a big part of those solutions today, but we think even be a bigger part of that in the future. So we're really excited about the direction of the agency under Administrator Isaacson's leadership. And I just want to close by having been at Kennedy with our team and the NASA team and seeing the preparations for Artemis II. We are really thankful for that team, how they're approaching every aspect of the mission to ensure it's executed safely and well. And I know all eyes of the nation will be on TAP as soon as we undertake that historic mission in March.

Thank you so much.

Your next question comes from Gavin with UBS. Please go ahead.

Thank you. Morning. Morning. You pointed out U.S. nuclear is still in early stages of acceleration, and I think I heard you say maybe a few more quarters until we see some tangible progress there. Is that the timeframe we should expect for sort for some potential award announcements?

Yeah, I would say there's a lot of activity. We are extremely busy. We haven't made any announcements, but trust me, our team could not be busier given the support of this administration, as well as the need, the demand that is there from the hyperscalers and the whole community understanding that energy and meeting the energy needs of our industry is a national security issue. So it's all hands on deck. Great relationship with the government and commercial business as well as foreign investment and really working together to allow this to happen in the United States, this resurgence of nuclear, call it the second nuclear renaissance and bringing that on. And part of it is the excitement around small modular reactors. So SMR development is really happening. We have in the US some great companies that are leading that effort. And for Mentum, we're working with these companies. And we're a key part of the supply chain to allow these projects to happen. We're doing that in Europe. We have all that expertise. We've been working in the nuclear industry, going back to the Manhattan Project here in the U.S., developing next-generation energy capability here in the U.S., and now seeing the demand for electricity and bringing nuclear back on. Mentum is extremely well-positioned to be a part of that success here in the U.S. So we think 26 is going to see some real progress and growth. that will really create momentum into 26, 27 and beyond.

Okay, that's great. And then just back to the shutdown impact briefly, the full year assumes some headwind. I think the first quarter was a little bit light of where you guys guided. Was that larger shutdown impact than you expected? And what gives you confidence that that can be recaptured this year instead of slipping to the right?

Yeah, so when we issued guidance back in November, we contemplate an approximate 1% impact from the government shutdown. And that kind of played out with the majority of that occurring in the first quarter, as we stated. So it was in line with kind of what our expectations were when we set the guidance range, which obviously, you know, is the reason why we reaffirmed the guidance. But we're really confident with, you know, again, only 5% of revenues, you know, expected to come from new business. You know, 93% is firm, only 2% recompete. with the 23 billion dollars in pending awards we have good line of sight and so where the revenue is going to come from for the rest of the year okay appreciate it thank you so much your last call is from andre with ptig please go ahead yep good morning good morning in uh

In much of the same way that you previously broke down the different pieces of the nuclear end market, are you willing to share just how big each of the four space end markets are for you now and how big they could become?

I think it's a great deeper look into the way we've laid out the space market. I'll be forthcoming. The way we are kind of omnipresent across all of those areas, It can be a little bit challenging to segregate revenue between the four. I think that you could argue that the majority, if not all of our revenue in the space market kind of all points toward that integrated systems bubble or segment of the market where we're, you know, whether it's front end design all the way through development, integration and test, all of it headed toward integrated systems. But the other piece that we've got to factor in that's really a new term in our momentum equation is the Space Force Range Contract, where we are today now have just ramped up that contract and are having such an increased activity in the launch portion of the total market. And so we think as we get to a little bit of normalization moving forward, it'll be a much easier task for us to quantify exactly where the revenues fall in the four buckets.

Got it. Got it. That makes sense. And then I guess just to zoom out into just the accelerated growth markets overall, are you able to provide a book to bill for those markets as a collective? And maybe just through that, talk about more of the opportunities you're seeing there.

Yeah, on the book to bill, and I'll let John elaborate on the opportunities moving forward. Obviously, Q1 was a highlight, over a billion dollars or right around a billion dollars of the $3.3 billion in net bookings tied to just the global nuclear energy part of the accelerating growth market. So I think it's fair to say if you look at over the last 12 months, there's been proportionally outsized contribution from our accelerating growth markets, as you would expect with awards such as Space Force Range, a lot of the other international nuclear opportunities. So, you know, certainly they are the leading factor in our book to build performance. You know, that said, We still are excited about what our core growth markets are contributing, and they continue to have robust bookings as well.

We don't divide the book to bill, but we did this quarter did say we had a billion dollars of nuclear awards. We will continue to kind of share some of the color on where these awards are coming from. We think the one highlight of what of Amentum is that we have been delivering what we say we're going to deliver. We have been consistent. This team has developed a very solid strategy. We've used the last two quarters to share that strategy with the marketplace. It is working. It is delivering. We think the diversification of Amentum is a key strength. And we're showing that across our core markets and across our accelerating growth markets, our ability to compete on the largest and most complex contracts in these areas. And I think as we go forward, we will continue to share more detail. You know, things are happening in the digital infrastructure market. We're going to talk about that next quarter. We talked about the global nuclear last quarter. We talked about space systems and technologies. And we're seeing momentum in these accelerating growth markets, as well as continued strength in our core markets that we've been delivering for decades. So, yes, we plan to continue to share more of the details aligning to these accelerating growth markets as we go forward. And, you know, because we just see our pipeline is shaping up across these areas between core and the three accelerating growth markets. which is part of our strategy to continue to prioritize the higher margin areas while still taking advantage of our leadership position in the core markets. So we're excited about how the pipeline is pulling together and our focus on new business scale are all starting to work and pay off. And we saw it in margins this quarter, something we couldn't control with respect to additional days off for the government that impacted our cash flow. But in things that we can control, that tie to our strategy, we continue to deliver. And I'm really proud of what this team is doing every quarter to live up to the expectations we're setting in the marketplace.

That's really helpful. Thank you, John. I appreciate it. I'll leave it there.

Thank you for joining today's call. There are no further questions at this time. Thank you for joining. You may now disconnect.