Amentum (AMTM) Q3 FY26 earnings call: guidance and Q&A

How does Amentum plan to deploy capital in the next fiscal year, given the achievement of deleveraging targets?

Amentum is pleased with achieving 3x net leverage a quarter early and is preparing for broader capital deployment. Options include M&A, share repurchases, and continued debt reduction, with decisions based on maximizing long-term shareholder value and considering stock valuation. Organic growth opportunities in nuclear and digital infrastructure mean transformational M&A is not required.

“As you can imagine, we've been preparing in recent months to be ready as our capital opportunities broaden for deployment. And that obviously includes working internally and with our Board on the various strategic options, including M&A, share repurchases and continued debt reduction.”

asked by Tobey Sommer · answered by Travis Johnson

Does Amentum expect top-line organic growth in FY28, beyond the preliminary FY27 outlook?

Management is pleased with business development momentum and sees attractive opportunities, particularly in nuclear energy and critical digital infrastructure. The portfolio, excluding NASA impact, is growing at a mid-single-digit rate. The strategy of focusing on higher-margin, technology-enabled solutions is working, and they are comfortable with the business trajectory.

“Aside from the impact we're seeing from NASA, it's growing at that mid-single-digit rate. And we're really excited about the trajectory and what that means for momentum in the medium and long term.”

asked by Tobey Sommer · answered by Travis Johnson

How should the split between Digital Solutions (DS) and Global Engineering Solutions (GES) growth be considered for FY27, given past trends?

It's too early for segment-specific guidance for FY27. However, the NASA impact will put pressure on Digital Solutions growth. Setting that aside, both segments are expected to see organic growth opportunities and EBITDA margin expansion in FY27.

“Obviously, it's a little bit early to get into any segment specific guidance. But what I would say at a macro level is from an underlying perspective, obviously, NASA, which is in our digital solutions, segment will put some pressure on the growth in that segment.”

asked by Unknown Analyst · answered by Travis Johnson

How much of the FY27 revenue outlook is covered by current backlog and pending awards, and what level of on-contract growth is assumed?

Approximately 92% of FY27 revenue is expected to come from existing or follow-on work, providing good visibility. The company feels good about the eventual conversion of bookings into revenue, despite some new business delays due to protests and the firm fixed-price executive order.

“As we sit here today, we expect approximately 92% of the revenue in FY '27 to come from existing or follow-on work. So that's a really good place to be in terms of a level of visibility this early, right?”

asked by Colin Canfield · answered by Travis Johnson

What specifically changed at NASA to increase the revenue impact to 3%, and how confident is management that it won't expand further?

NASA has solidified its plan to bolster scientific and engineering expertise, and Amentum has detailed views from contract-by-contract discussions. The insourcing is at the upper bound of prior scenarios, leading to the 3% impact. The affected contracts are margin dilutive, so EBITDA impact will be less. Remaining work will transition to firm fixed-price, further lessening EBITDA impact. Amentum remains a trusted partner with future growth opportunities.

“The in-sourcing goes to the upper bound of what we originally thought could possibly occur. But now that we understand to kind of sum it up the impacts, we have good visibility on the 3% impact, and we're confident in that estimate.”

asked by Gavin Parsons · answered by Travis Johnson

Can Amentum lean more into the digital infrastructure opportunity, or is it a finite set of opportunities?

Amentum is excited about accelerating progress in critical digital infrastructure and is incrementally biasing resources there, including strategic hires. They are scaling with one hyperscaler client, finding entree with a second, and approaching others. The market is receptive due to the volume and complexity of projects, where Amentum's engineering and systems integration expertise optimizes schedules and minimizes risks.

“We are incrementally [ biasing ] resources there. We continue to make key strategic hires to bolster not only the business development, but also the project leadership part of that team. So really excited about the quarters to come for critical digital infrastructure.”

asked by Trevor Walsh · answered by Travis Johnson

How does Amentum view its national security business (50% of revenue) – is it an anchor, or can it achieve mid-single-digit growth and margin expansion?

National security is not an anchor; it's undergoing exciting transformation with more technology solutions and a shift from cost-plus to solution-based, fixed-price work. While higher growth is expected in accelerating markets like nuclear and digital infrastructure, the base case for national security is stable budgets, and Amentum's global presence (UK, Australia) provides broader defense opportunities beyond the US.

“We absolutely would not characterize that as an anchor. I mean I think there are large parts of the portfolio that are really going through some pretty exciting transformation.”

asked by Kenneth Herbert · answered by Unknown Executive