Amentum Holdings, Inc.

Amentum reported Q3 FY26 revenue of $3.5 billion, up 1% on a normalized basis, adjusted EBITDA of $290 million, up 6% year over year, adjusted EBITDA margin of 8.3%, up 60 basis points, and adjusted diluted EPS of $0.67, up 20% year over year. Free cash flow was $135 million in the quarter and $213 million year to date. Business development remained solid with net bookings of $3.9 billion, quarterly book-to-bill of 1.1x, trailing 12-month book-to-bill of 1.3x, ending backlog of $48 billion, and funded backlog up 10% year over year to $6.2 billion. For FY26, the company now expects revenue of $13.8 billion-$13.95 billion, adjusted EBITDA of $1.115 billion-$1.14 billion, adjusted diluted EPS of $2.40-$2.50, and free cash flow of $525 million-$575 million. Looking to FY27, management said NASA insourcing is expected to reduce revenue by 3%, it has also chosen to exit about 1% of revenue in low- and no-margin domestic programs, and it expects mid-single-digit growth in the remaining portfolio, with a 20 basis point year-over-year margin increase.

John Heller emphasized that the quarter showed strong operational execution even though revenue was a bit light. He framed the strategy around shifting toward higher-margin, technology-enabled work and said the company is seeing real momentum in nuclear energy, critical digital infrastructure, and global defense. His tone was confident and constructive, stressing that the business does not require transformational M&A to execute its growth plan.

Travis Johnson focused on the financial strength of the quarter and the revised outlook. He said margins benefited from favorable mix, strong operations, and lower interest expense from nearly $700 million of debt repayments over the last 12 months plus the April refinancing. He also pointed to free cash flow of $135 million in the quarter, $213 million year to date, $125 million of debt repayments in the quarter, and net leverage of 3x at quarter-end, with the company expecting to get below 3x in Q4 and remaining focused on capital deployment toward the highest long-term returns.

Analysts pressed on how capital will be deployed now that deleveraging is near completion, and management said it is weighing M&A, share repurchases, and continued debt reduction, but will be disciplined and value-driven. They also asked about FY27 growth by segment, backlog conversion, NASA, and portfolio shaping; management said 92% of FY27 revenue is expected to come from existing or follow-on work, NASA is now assumed to be a 3% revenue headwind, and the low-margin exits are intentional and only about 1% of revenue. On nuclear and digital infrastructure, management said both markets are seeing strong pipelines and that the Savannah River project, Rolls-Royce, and Westinghouse partnerships could become major long-term growth drivers.