Amentum’s Q4 2025 Earnings Call: Contradictions in Nuclear Revenue, Space Contracts, and Divestiture Plans

Date of Call: November 25, 2025

Financials Results

• Revenue: $14.4B for FY2025 (pro forma growth of 4% YOY; Q4 revenue $3.9B)
• EPS: $2.22 adjusted diluted EPS for FY2025, up 11% YOY (Q4 $0.63)
• Operating Margin: Adjusted EBITDA margin ~7.6% for FY2025, expanded 10 basis points YOY

Guidance:

• FY2026 revenue expected $13.95B to $14.3B (≈3% growth at midpoint after normalizations)
• Adjusted EBITDA expected $1.10B to $1.14B (≈5% underlying growth at midpoint; ~20 bps margin expansion)
• Adjusted diluted EPS $2.25 to $2.45 (≈12% underlying growth at midpoint; assumes 245M shares and ~24.5% tax rate)
• Free cash flow $525M to $575M (~12% underlying growth at midpoint)
• Guidance assumes ~1% near-term impact from government shutdown; <10% revenue from new business

Business Commentary:

• Financial Performance and Revenue Growth:
• Amentum reported revenue of $14.4 billion for fiscal year 2025, representing a 4% pro forma growth.

• The growth was driven by strong performance across strategic awards, key performance metrics, and a full year book-to-bill ratio of 1.2x.

• Backlog and Pipeline Development:

• Amentum's backlog grew by 5%, reaching over $47 billion, with $20 billion in proposals awaiting awards at year-end.

• This was supported by significant contract wins, including a $4 billion U.S. Space Force Range contract and a $1.8 billion Sellafield contract in the U.K.

• Operational Synergies and Integration:

• The company achieved at least $60 million in net run rate synergies, exiting all transition service agreements, and completing key integration milestones on time and within budget.

• This was made possible by the successful integration of legacy businesses, ensuring operational readiness and stability.

• Focus on Accelerating Growth Markets:

• Amentum's expanding work in space systems and technologies, critical digital infrastructure, and global nuclear energy is expected to drive substantial growth and margin expansion.
• The strategic focus on these areas is supported by strong demand signals from national security, energy resilience, and advanced technologies such as AI.

Sentiment Analysis:

Overall Tone: Positive

• Management emphasized exceeding guidance across key metrics, reporting $14.4B revenue (+4% pro forma), $1.1B adjusted EBITDA (+5%) and $516M free cash flow; reiterated targets (>$60M net run-rate synergies by end FY26, net leverage to <3x by end FY26) and provided FY26 guidance showing growth, margin expansion and double-digit FCF trajectory.

Q&A:

• Question from Colin Canfield (Cantor Fitzgerald & Co.): Can you discuss perhaps the level of kind of timing or onetime margin and cash flow dynamics in the quarter? And then how much Section 174 benefits were included in fiscal 4Q versus the guide? And then maybe talk through if there are any kind of pull forward or pushout dynamics around margins and cash related to the merger?
  Response: Q4 included ~$20M incremental cash from additional working days; expect ~$35M FY26 tax cash benefit from recent tax law changes (R&D immediate expensing, disallowed interest, bonus depreciation); no material merger push/pull on margins beyond planned synergy trajectory; targeting double-digit FCF growth.

• Question from Colin Canfield (Cantor Fitzgerald & Co.): Got it. And then maybe level setting us on the multiyear margin progression in terms of the synergy targets. I think one of the thesis that kind of folks are focused on is essentially shutdown-related dynamics just pushing everything 1 year to the right, but still fundamentally happening. So perhaps if you could talk through kind of how you think about FY '26 margin progression, the synergy contribution and perhaps kind of the multiyear framework set out at the Investor Day?
  Response: Target remains 8.5%–9% margins by FY28; achieved +10 bps in FY25; FY26 midpoint expects +20 bps; aggregate ~30 bps in first two years per plan; on track to exceed $60M net run-rate cost synergies by end of FY26.

• Question from Colin Canfield (Cantor Fitzgerald & Co.): Got it. And maybe sneaking in a third, if you could just update us on how you think about kind of the timing, magnitude and multiple of any potential divestitures as well as the timing and magnitude of the upcoming SLS award.
  Response: Space Force Range contract cleared protest and execution/phase-in begins in December; portfolio-shaping is ongoing but no active broad divestiture plan—Rapid Solutions (NZ) is noncore and being considered; management is pleased with current portfolio.

• Question from Brian Gesuale (Raymond James & Associates, Inc.): Can you remind us how you play throughout the entire kind of nuclear life cycle, how big that business is today? And maybe as you lay out these broad ambitions for nuclear power in the future that have been put forward, when you'll start to see some of those things inflect for your business?
  Response: Amentum supports the full nuclear lifecycle (design, construction, operations, maintenance, decommissioning); nuclear is ~17% of revenue today; gigawatt plant activity could accelerate toward 2030 and SMR-related construction later in the decade—near-term work will be engineering-heavy and multi-year.

• Question from Brian Gesuale (Raymond James & Associates, Inc.): Great. Really helpful. I want to talk also maybe about one of the other growth areas that we're really excited about on the space side of things. Can you maybe help us understand how much of that business is commercially oriented in defense given there's just so much activity in both those areas? And maybe if you could help us think a little bit about how Golden Dome from a presence and a launch activity perspective would drive your business and maybe the timing of that, whether that's part of '26 or part of an unfolding '27 story that's yet to reveal itself.
  Response: Space work spans civilian (NASA) and defense; Cosmos win (NASA) is under corrective action; company is active on Space Force Range and with Missile Defense/NORAD; engaged in the Shield/Golden Dome procurement (large multiple-award IDIQ) and expects related tasking to materialize deeper into FY26.

• Question from Tobey Sommer (Truist Securities, Inc.): The company has reduced leverage faster than we anticipated. When do you think you'd be at a point where you may be able to go on offense with capital deployment and start incorporating inorganic growth into the story?
  Response: Expect to reach net leverage <3x by end of FY26 (back-half weighted); once reached, capital deployment will be opportunistic—options include M&A, debt paydown, or buybacks after restriction period, depending on valuation and opportunities.

• Question from Tobey Sommer (Truist Securities, Inc.): I appreciate that. And I just sort of have a modeling question since some of the growth areas have already been discussed of interest. Are there timing or mix issues for us to contemplate near term in modeling the quarterly cadence of revenue and EBITDA across fiscal '26?
  Response: Q1 will show shutdown impact then normalize; expect sequential quarterly revenue, profitability and cash increases through FY26; Digital Solutions will drive growth (Space Force Range included) while margin expansion is expected more from Global Engineering Solutions.

• Question from Mariana Perez Mora (BofA Securities): I wanted to follow up on the nuclear opportunities. In the prepared remarks, you mentioned double-digit growth and margin accretive type of work. When you talk about these margins, are they accretive because they are coming like significant like EBITDA pure to the contract? Or it's mostly because a lot of them come through nonconsolidated like joint venture type of EBITDA added to the segment? And then as a follow-up to that, when we think about these opportunities, how fast can they actually come? For example, on the $20 billion that you have in the pipeline expecting to be awarded, how much of that is related to nuclear?
  Response: Front-end nuclear work is margin-accretive as consolidated EBITDA (not primarily JV); decommissioning/back-end can include JV structures; nuclear is a sizable, established business for Amentum (~17% today) but large commercial projects take time—SMR construction and gigawatt pipelines will unfold over the rest of the decade.

• Question from Mariana Perez Mora (BofA Securities): And then as a follow-up to margins, fourth quarter and fiscal '26 margins came in a little bit lighter than expected according to what you said in the Investor Day. Besides the nuclear opportunity that will come with this accretive margins, what are the other drivers that will get you to the 8.5% to 9% that you expect to have by '28?
  Response: Margin expansion drivers are the accelerating growth markets (space systems, critical digital infrastructure, global nuclear) plus cost synergies; combined impact expected to deliver ~30–50 basis points of expansion into FY27–FY28.

• Question from Andre Madrid (BTIG, LLC): [ DOGE ] came to an earlier-than-expected end, it seems, probably 8 months ahead of schedule there. I think previously, you were anticipating that maybe there's going to be a 1% headwind going into '26 based on policy changes. I see that there's a 1% headwind based on the shutdown. Is it kind of just shifting towards that where it's like maybe you could have clawed some back on the policy shift side given the end of Dodge, but it's now headwind from the shutdown. I'm just trying to understand the moving pieces there. Should we expect kind of both layered on top of each other or.
  Response: They are separate effects: the administration/policy transition impact (~1%, back-half weighted) is independent of the government shutdown (~1% FY26 impact due to spending delays); underlying business still projects ~4% underlying growth excluding shutdown noise.

• Question from Andre Madrid (BTIG, LLC): Got it. Got it. And then maybe -- I mean, just in terms of debt paydown, you've still got a ways to go -- a little ways to go until you get to less than 3 turns. I mean, how should we think about the pace of that through the year? Is it also -- are you guys thinking of going a step further? Should we think it's still a sizable portion of free cash flow for the year or.
  Response: Cash generation is back-half weighted and that's when net leverage will fall below 3x; expect continued meaningful deleveraging in 2H FY26, consistent with guidance.

• Question from Andre Madrid (BTIG, LLC): Got it. Got it. And maybe if I could squeeze one more in. I mean you talked about organic investments. I mean, which areas do you think are poised for the most?
  Response: Primary organic investment priorities are core markets plus the three accelerating growth areas: space systems & technologies, critical digital infrastructure, and global nuclear energy.

• Question from Kenneth Herbert (RBC Capital Markets): I wanted to see first on the '26 and maybe midterm growth outlook, can you get more specific on what kind of growth you're expecting in -- I guess, from the accelerating growth portfolio, as you outlined it here as we think about sort of the 3% to 4% organic growth in '26. Are you at the high single digits for that market, the accelerating growth businesses? And then maybe how much does that accelerate into '27 and '28?
  Response: FY26 underlying revenue growth expected ~3% at midpoint (guidance 3%–5% range); accelerating markets are expected to outpace the company average and to further accelerate into FY27–FY28, though no granular rates were provided.

• Question from Kenneth Herbert (RBC Capital Markets): Great. That's helpful. And just if you could remind us, what's the recompete risk or recompete exposure you have here as part of fiscal '26?
  Response: Over 90% of FY26 revenue is firm or follow-on work; less than 10% from new business and under 5% recompete exposure.

Contradiction Point 1

Nuclear Energy Revenue Exposure and Growth Potential

It involves differing perspectives on the proportion of revenue attributed to nuclear energy and the potential growth momentum in the sector, which are crucial for understanding Amentum's market positioning and growth strategy.

Can you explain the commercial aspects of your space business and how Golden Dome fits into your growth strategy? - Mariana Perez Mora (BofA Securities)

2025Q4: Nuclear exposure is 17% of annual revenue, with margins accretive from an EBITDA perspective. - Travis Johnson(CFO)

Can you quantify Amentum's nuclear revenue exposure and discuss the growth momentum of SMRs and their impact on margins? - Mariana Perez Mora (Bank of America)

2025Q3: Nuclear engineering capabilities contribute over $2 billion, with $700 million from nuclear power projects. - John Heller(CEO)

Contradiction Point 2

Space Force Range Contract Impact on Revenue and Growth

It concerns the expected impact of the Space Force Range contract on Amentum's revenue and growth, which are key factors for investor expectations and strategic planning.

What is your role in the nuclear energy life cycle and when to anticipate commercial space growth? - Brian Gesuale (Raymond James & Associates)

2025Q4: We're excited about its potential for future growth and capabilities. - John Heller(CEO)

What was the JV-adjusted book-to-bill ratio for the quarter? Can you update us on the Space Force and NASA pipelines? - Colin Canfield (Cantor Fitzgerald)

2025Q3: The Space Force Range Contract puts Amentum at the center of commercial space integration, enhancing capabilities in launching and commercial space interactions. - John Heller(CEO)

Contradiction Point 3

Divestiture of Rapid Solutions

It involves the impact of a significant divestiture on Amentum's financials, which is crucial for investors to assess the company's financial health and strategy.

Update on timing, magnitude, and multiple of potential divestitures and the SLS award? - Colin Canfield(Cantor Fitzgerald)

2025Q4: No plans to divest significant assets; current portfolio is strong, and we're leveraging capabilities across the business. - John Heller(CEO)

What is the expected impact of the Rapid Solutions divestiture on Amentum's financials? - Colin Canfield(Cantor Fitzgerald)

2025Q2: The sale of Rapid Solutions is expected to close in the second half of 2025 and will generate $325 million in after-tax proceeds. - Travis Johnson(CFO)

Contradiction Point 4

Margin Expansion and Synergy Targets

It involves the company's financial projections and growth strategy, which are critical for investors to evaluate Amentum's future performance.

How should we assess multiyear margin trends and synergy goals given shutdown delays shifting timelines by a year? - Colin Canfield(Cantor Fitzgerald)

2025Q4: Achieved 10 basis points margin expansion in FY '25, 20 basis points expected in FY '26, totaling 30 basis points by the end of FY '27. - Travis Johnson(CFO)

What are the specific headwinds to revenue growth in the second half of the year? - Kenneth Herbert(RBC Capital Markets)

2025Q2: We expect to deliver 30 basis points of margin expansion across fiscal 2025. - Travis Johnson(CFO)

Contradiction Point 5

Shutdown Impact on Revenue Growth

It revolves around the impact of government shutdowns on Amentum's revenue growth, which is crucial for investors to understand the company's resilience amid external challenges.

How will government shutdowns vs. policy changes impact Fiscal '26 growth? - Andre Madrid(BTIG)

2025Q4: Shutdown impacts are separate from policy changes. Expect approximately 1% impact on FY '26 revenue, but our underlying business remains strong despite these dynamics. - Travis Johnson(CFO)

How are federal workforce disruptions affecting the award environment? - Andre Madrid(BTIG)

2025Q2: There is a $29 billion backlog of pending awards, suggesting that the current disruptions are temporary. - Travis Johnson(CFO)