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Amentum Holdings, Inc. (AMTM)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 revenue was $3.56B (+2% YoY pro forma), Adjusted EBITDA $274M (+7% YoY), and Adjusted diluted EPS $0.56; GAAP diluted EPS was $0.04 . Versus Q2, revenue rose ~2% and Adjusted EPS improved from $0.53 .
  • The company raised FY25 organic guidance: revenue to $13.975–$14.175B, Adjusted EPS to $2.05–$2.20; Adjusted EBITDA and FCF ranges maintained . Management highlighted strong execution, integration benefits, and divestitures enhancing flexibility .
  • Backlog was $44.6B; YTD book-to-bill 1.0x. Cash was $738M; gross debt $4.6B; net debt ~$3.8B; net leverage 3.5x (LTM pro forma EBITDA basis) .
  • Catalysts: guidance raise, notable awards (e.g., Space Force Range Contract under protest) and multiple intelligence wins; watch JV transition headwinds on reported revenue and NASA prioritization debates discussed in calls .

What Went Well and What Went Wrong

What Went Well

  • Pro forma growth: revenue +2% YoY, Adjusted EBITDA +7% YoY; margin expanded 30 bps to 7.7% .
  • Segment mix positive: Digital Solutions revenue +12% YoY and Adjusted EBITDA +21% on new commercial awards and improved operations .
  • Strategic portfolio actions: Completed Rapid Solutions sale ($360M proceeds) and sold NZ facilities maintenance business; management: “successful divestiture…enhance our financial flexibility and provide momentum for future growth” .

What Went Wrong

  • Global Engineering Solutions revenue declined 3% YoY due to expected ramp-downs on historical programs; Adjusted EBITDA -2% YoY .
  • Reported revenue is pressured by JV transitions (moving to unconsolidated), with management quantifying ~$80M per quarter phasing out by Q4, though limited EBITDA/FCF impact .
  • SFRC award (US Space Force) is under protest and not yet in backlog; potential timing uncertainty despite strategic importance .

Financial Results

Quarterly Performance

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Billions)$3.416 $3.491 $3.561
Operating Income ($USD Millions)$132 $110 $103
Net Income to Common ($USD Millions)$12 $4 $10
Diluted EPS (GAAP) ($)$0.05 $0.02 $0.04
Adjusted EBITDA ($USD Millions)$262 $268 $274
Adjusted EBITDA Margin (%)7.7% 7.7% 7.7%
Operating Cash Flow ($USD Millions)$110 $57 $106
Free Cash Flow ($USD Millions)$102 $53 $100

Versus Prior Year (Pro Forma)

MetricQ3 2024 Pro FormaQ3 2025
Revenue ($USD Billions)$3.490 $3.561
Adjusted EBITDA ($USD Millions)$257 $274
Adjusted Diluted EPS ($)$0.51 $0.56
Adjusted EBITDA Margin (%)7.4% 7.7%

Versus Estimates (S&P Global)

MetricQ3 2025 ConsensusQ3 2025 ActualSurprise
Revenue ($USD Billions)$3.511*$3.561 +$0.050B
Primary EPS ($)$0.533*$0.56 +$0.03

*Values retrieved from S&P Global.

Segment Breakdown

SegmentQ3 2024 Pro FormaQ2 2025Q3 2025
Digital Solutions Revenue ($USD Billions)$1.274 $1.340 $1.421
Digital Solutions Adj. EBITDA ($USD Millions)$94 $107 $114
Global Engineering Solutions Revenue ($USD Billions)$2.216 $2.151 $2.140
Global Engineering Solutions Adj. EBITDA ($USD Millions)$163 $161 $160

KPIs and Balance Sheet

KPIQ1 2025Q2 2025Q3 2025
Backlog ($USD Billions)$45.0 $44.8 $44.6
Funded Backlog ($USD Billions)$6.6 $5.8 $5.6
YTD Book-to-Bill (Reported) (x)1.1 1.0 1.0
Cash & Equivalents ($USD Millions)$522 $546 $738
Gross Debt ($USD Billions)$4.7 $4.6 $4.6
Net Debt ($USD Billions)——$3.8
Net Leverage (LTM Pro Forma EBITDA) (x)4.0 ~4.0 3.5

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenues ($USD Billions)FY 2025$13.85 – $14.15 $13.975 – $14.175 Raised (midpoint +$0.125B)
Adjusted EBITDA ($USD Billions)FY 2025$1.065 – $1.095 $1.065 – $1.095 Maintained
Adjusted Diluted EPS ($)FY 2025$2.00 – $2.20 $2.05 – $2.20 Raised low end
Free Cash Flow ($USD Millions)FY 2025$475 – $525 $475 – $525 Maintained

Management also disclosed implied organic increases at midpoints net of divestitures: Revenue ~$125M, Adjusted EBITDA ~$5M, Adjusted EPS ~$0.05, FCF ~$20M .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Nuclear initiativesQ1: DOE West Valley JV award; growing UK/EU SMR engagement . Q2: Sizewell C program manager; nuclear renaissance tailwinds .Continued emphasis on nuclear engineering scale; differentiated capability; multi-year UK gigawatt projects and SMRs highlighted .Accelerating focus and visibility
Award pace / pipelineQ1: $3.6B net bookings; 1.1x book-to-bill; $30B pending awards . Q2: $2.8B net bookings; 0.9x quarterly BtB; $29B pending; JV awards excluded from BtB .Strong pipeline highlighted; guidance raised; SFRC award under protest not in backlog; continued bookings momentum .Solid; timing variability persists
Budget/administration impactsQ1: Incorporated ~1% revenue impact from new administration; 96% revenue from existing/recompete . Q2: Reaffirmed ~1% impact; noted award timing delays .No change to FY25 impact assumption; confidence in guide .Stable assumption
NASA/space prioritiesQ2: Artemis II/III support, no material FY25 impact expected from proposed budget changes .Continued prioritization of space superiority narrative and mission alignment .Supportive tailwinds
JV accounting transitionsQ2: ~$80M/quarter revenue to phase out by Q4; EBITDA/FCF intact .Ongoing; a factor in reported revenue optics .Transitional headwind to top line
Deleveraging/divestitureQ2: Rapid Solutions sale price $360M; ~$325M after-tax proceeds; path to ~3x net leverage by FY26 .Rapid Solutions closed; proceeds bolstered cash; additional $250M voluntary term loan repayment post-quarter .Strengthening balance sheet

Management Commentary

  • CEO: “Amentum’s third quarter performance reflects strong execution…successful divestiture of Rapid Solutions…enhance our financial flexibility and provide momentum for future growth as we head into the fourth quarter and beyond” .
  • Segment positioning: Digital Solutions up 12% YoY on new commercial awards; GES down 3% YoY on expected ramp-downs; both cited improved operational performance .
  • Capital allocation: ~$360M Rapid Solutions proceeds and $200M term loan principal payments in Q3; additional $250M voluntary term loan payment post-quarter, reducing net leverage to 3.5x LTM pro forma EBITDA .

Q&A Highlights

  • JV transition impact: ~$80M per quarter of revenue transitions to unconsolidated JV by Q4; minimal bottom-line impact and potential EBITDA/FCF improvement as programs ramp .
  • Award environment: Some timing delays due to workforce and priority shifts; strong YTD BtB (1.0) and $29B pending awards support second-half outlook .
  • Rapid Solutions proceeds and leverage path: Sale price $360M; ~$325M after-tax; targeted ~3x net leverage by end of FY26 .
  • NASA: Prepared for Artemis II/III; management does not expect material FY25 impact from proposed budget changes .
  • Guidance framing: Second-half revenue +3% vs first half (top end ~+5%), reflecting organic growth, 53rd week, and JV transitions .

Estimates Context

  • Q3 2025 results modestly beat consensus: revenue $3.56B vs $3.51B*, EPS $0.56 vs $0.533*; 7 EPS and 8 revenue estimates contributed to consensus .
    *Values retrieved from S&P Global.

  • Implication: Consensus may drift higher on FY25 revenue midpoint and Adjusted EPS low-end raise, while models should incorporate JV transitions’ reported-revenue optics and exclude SFRC until protest resolved .

Key Takeaways for Investors

  • Guidance raise signals confidence: FY25 revenue and Adjusted EPS midpoints increased; non-GAAP margins holding at 7.7% despite mix .
  • Quality of growth: Digital Solutions expanding double digits YoY; operational improvements offset expected declines in legacy programs .
  • Balance sheet improving: Cash $738M, net debt ~$3.8B, net leverage 3.5x; incremental voluntary debt repayment post-quarter supports deleveraging thesis .
  • Reported revenue headwind from JV transitions is optical: EBITDA/FCF resilient; adjust valuation frameworks accordingly .
  • Pipeline supports H2 acceleration: YTD BtB 1.0x with strong pending awards; watch timing around protests (SFRC) and budget adjudications .
  • Portfolio focus creates optionality: Rapid Solutions divestiture tightens strategic scope and may enable further capital-light growth priorities .
  • Trading lens: Near-term catalyst from guidance raise and debt reduction; monitor award timing and JV transition disclosures for top-line volatility cues .

Additional Documents Reviewed

  • Q3 2025 8-K and Exhibit 99.1 press release (full results, cash flow, segment detail, guidance) .
  • Q2 2025 8-K and press release (trend, segment, backlog, guidance) .
  • Q1 2025 8-K and press release (start-of-year baseline, backlog, cash flow) .
  • Q2 2025 earnings call transcript (prepared remarks and detailed Q&A) .
  • Q1 2025 earnings call transcript (prepared remarks and Q&A) .
  • Q3 2025 earnings call transcript (external sources) .