Amentum’s first quarter results were met with a negative market reaction, as its GAAP profit came in well below Wall Street’s consensus despite revenue surpassing expectations. Management cited steady demand for its mission-focused solutions and highlighted progress on cost synergies from the recent integration with Jacobs. However, executives acknowledged that delays in government contract awards and ongoing transitions in joint venture structures weighed on growth. CEO John Heller pointed to recent wins in intelligence, nuclear, and naval sectors, but also recognized award timing and administrative shifts as significant factors shaping quarterly performance.
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Amentum (AMTM) Q1 CY2025 Highlights:
- Revenue: $3.49 billion vs analyst estimates of $3.42 billion (flat year on year, 2% beat)
- EPS (GAAP): $0.02 vs analyst expectations of $0.07 (71.4% miss)
- Adjusted EBITDA: $268 million vs analyst estimates of $255.9 million (7.7% margin, 4.7% beat)
- The company reconfirmed its revenue guidance for the full year of $14 billion at the midpoint
- EBITDA guidance for the full year is $1.08 billion at the midpoint, in line with analyst expectations
- Operating Margin: 3.5%, up from 2.1% in the same quarter last year
- Backlog: $44.8 billion at quarter end
- Market Capitalization: $5.85 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Amentum’s Q1 Earnings Call
- Tobey Sommer (Truist): asked about demand for nuclear solutions across geographies; CEO John Heller and COO Steve Arnette described expanding opportunities in the UK, Europe, and Australia, emphasizing long-term engagements in both gigawatt and small modular reactor projects.
- Andre Madrid (BTIG): inquired about the pace of contract awards amid industry-wide delays; CFO Travis Johnson confirmed timing impacts but cited strong year-to-date book-to-bill and robust pending award pipeline.
- Colin Canfield (Cantor Fitzgerald): questioned proceeds from the Rapid Solutions divestiture and implications for leverage; Johnson detailed after-tax proceeds and stressed the transaction’s role in accelerating debt reduction.
- Ken Herbert (RBC Capital Markets): asked for specifics on headwinds affecting second half revenue growth, including joint venture transitions; Johnson explained that shifting joint ventures to unconsolidated status would reduce reported revenue but not free cash flow or EBITDA.
- Kristine Liwag (Morgan Stanley): pressed on risks from potential NASA budget cuts; Heller and Johnson indicated that space-related work for Artemis II and III is prioritized and they do not expect material impact to 2025 guidance.
Catalysts in Upcoming Quarters
In the coming quarters, our team will track (1) the pace at which delayed government contract awards are resolved and converted into revenue, (2) the impact of the Rapid Solutions divestiture on debt and capital deployment flexibility, and (3) progress on cost synergy realization from the Jacobs integration. Additionally, we will watch for any shifts in government funding priorities that could affect Amentum’s core defense, intelligence, and energy markets.
Amentum currently trades at $24.63, up from $22.14 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).
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