Q3 2026 Amentum Holdings, Inc. Earnings Call Transcript
Key Points
- Adjusted EBITDA margins reached a record 8.3% in Q3, up 60 basis points year-over-year, driven by favorable mix and strong operational performance.
- Adjusted diluted EPS increased 20% year-over-year to $0.67, supported by lower interest expense from debt repayments and refinancing.
- Net leverage reduced to 3.0x at quarter-end, one quarter ahead of the Capital Markets Day target, positioning for more flexible capital deployment.
- Book-to-bill of 1.1x in Q3 and 1.3x trailing twelve months, with funded backlog up 10% year-over-year to $6.2 billion, indicating strong future revenue visibility.
- Strategic wins in nuclear energy, including a $400 million+ commercial nuclear bookings and the Savannah River AI data center project, underscore leadership in a high-growth market.
- Raised FY2026 adjusted EBITDA guidance to $1.115-$1.14 billion and EPS to $2.40-$2.50, reflecting strong year-to-date performance.
- Preliminary FY2027 outlook expects 20 basis points margin expansion, with NASA insourcing impact accretive to margins and low-margin program exits improving mix.
- Q3 revenue of $3.5 billion came in slightly below expectations due to protest delays and lower material volume, with normalized growth of only 1%.
- NASA workforce directive insourcing is now expected to impact FY2027 revenue by 3%, higher than the prior 1% estimate, creating a near-term top-line headwind.
- FY2026 revenue guidance was revised down to $13.8-$13.95 billion, removing contributions from new business awards under protest and reflecting lower materials volume.
- The company is intentionally exiting low-margin programs, representing approximately 1% of revenue, which will reduce top-line growth in FY2027.
- Near-term growth is impacted by extended protest periods and procurement delays, including effects from the firm-fixed-price executive order, slowing award conversions.
- Free cash flow guidance for FY2026 remains at $525-$575 million, with no increase despite higher EBITDA, indicating working capital pressures.
- The company expects only mid-single-digit growth in the remaining portfolio for FY2027, which may not fully offset the NASA and program exit impacts.
Ladies and gentlemen, thank you for standing by. Good morning, and welcome to Amentum's third quarter fiscal year 2026 earnings conference call. Today's call is being recorded.
(Operator Instructions) I would like to turn the call over to Joe DeNardi, Senior Vice President of Investor Relations. Please go ahead.
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 SEC filings for a discussion of these factors, including the Risk Factors section of our annual report on Form 10-K.
The statements represent our views as of today, and
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