Amentum (NYSE:AMTM) reported what executives described as solid second-quarter fiscal 2026 results, supported by growth in key markets, strong bookings and a rebound in free cash flow.
CEO John Heller said the company delivered revenue of $3.5 billion in the quarter, reflecting normalized growth of 3%. Adjusted EBITDA was $275 million, with an adjusted EBITDA margin of 7.9%, while adjusted diluted earnings per share rose 13% year over year to $0.60. Free cash flow totaled $220 million.
Heller opened the call by recognizing Amentum employees supporting customers globally, including teams in the Middle East. He also congratulated NASA, Amentum employees and industry partners on the successful Artemis II mission, calling it an example of the company’s long-running relationship with NASA.
Bookings and backlog reach new highs
Amentum reported $4 billion in net bookings during the quarter, producing a quarterly and last-12-months book-to-bill ratio of 1.2 times. Heller said ending backlog reached nearly $48 billion, up 7% from the prior-year quarter and an all-time high for the company. Funded backlog was $6.9 billion, up 20% year over year.
The company also reported more than $20 billion in first-half submits, putting it on track to exceed its fiscal 2026 target of $35 billion. Amentum ended the quarter with $26 billion in proposals awaiting award, about 65% of which represented new business to the company.
Heller highlighted several second-quarter awards, including:
- A 14-year, $406 million contract from Great British Nuclear to an Amentum-led joint venture supporting small modular reactors in the United Kingdom.
- A two-year, $112 million European Commission Joint Research Centre contract for decommissioning and waste management solutions.
- A five-year, $425 million contract from CAL FIRE for aviation fleet sustainment using predictive analytics and data-driven tools.
- Multiple intelligence contracts totaling more than $300 million.
- More than $600 million in critical digital infrastructure awards tied to telecom, hyperscaler and national security customers.
In response to a question from Morgan Stanley’s Greg Parrish, Heller said the company believes its book-to-bill can remain consistent with recent levels, supported by more than $35 billion in expected bids this year. He said bidding activity in fiscal 2026 is also important for positioning Amentum for fiscal 2027.
Digital infrastructure identified as growth driver
Amentum used part of the call to outline its opportunity in critical digital infrastructure, which Heller said is being driven by demand for artificial intelligence, data and mission-critical applications across commercial and government markets.
Heller said Amentum’s work in the area focuses on smart commercial infrastructure and data centers, next-generation digital connectivity, and cyber and network defense. He said the company supports hyperscalers in retrofitting legacy data centers for AI workloads and also works on large-scale wireless and fiber network deployments.
Chief Operating Officer Steve Arnette said Amentum is not a new entrant in telecom-related infrastructure, describing it as a business the company has built for more than a decade. He said the company supports major telecom providers with capacity planning, engineering and deployment across population centers.
Heller said Amentum’s capabilities in data transmission, data center support and cybersecurity are being applied to commercial markets as AI-related demand grows.
Segment performance and margins
CFO Travis Johnson said Digital Solutions revenue was $1.5 billion, up 10%, driven by new contract awards in critical digital infrastructure and space systems and technologies. Adjusted EBITDA for the segment was $105 million, with margins of 7.2%. Johnson said adjusted EBITDA was slightly lower year over year due to a fiscal 2025 divestiture, timing factors related to new program starts and higher net write-ups in the prior-year quarter.
Global Engineering Solutions revenue was $2 billion, reflecting impacts from joint venture transitions, a divestiture and expected ramp-downs on certain historical programs, partly offset by new awards. Adjusted EBITDA was $170 million, and adjusted EBITDA margin improved 100 basis points year over year to 8.5%.
Johnson told Parrish that margin improvement in Global Engineering Solutions was driven by a focus on higher-margin work, a higher mix of fixed-price work, disciplined program execution, stronger joint venture performance and cost synergy initiatives. He said most of the drivers appear sustainable, although timing of program write-ups can vary from quarter to quarter.
Capital structure and fiscal 2026 outlook
Johnson said free cash flow of $220 million in the second quarter benefited from recovered collections, consistent with the company’s prior commentary. First-half free cash flow was $78 million, which he said was in line with expectations.
After quarter end, Amentum issued a new $1.4 billion Term Loan A facility and used the proceeds to pay down and reprice its Term Loan B. The company also increased revolving credit capacity to $1 billion. Johnson said those actions, along with a Moody’s rating upgrade in December, reduced the company’s weighted average cost of debt by about 50 basis points.
Amentum reaffirmed its fiscal 2026 guidance, including revenue of $13.95 billion to $14.3 billion, adjusted EBITDA of $1.1 billion to $1.14 billion, adjusted diluted EPS of $2.25 to $2.45 and free cash flow of $525 million to $575 million.
Johnson said the company remains on track to achieve net leverage below three times by the end of the fiscal year. In response to Truist’s Tobey Sommer, he said future capital deployment could include organic investments, accretive mergers and acquisitions, further debt reduction or capital returns to shareholders, depending on the circumstances.
NASA, nuclear and portfolio outlook
Arnette said Amentum remains enthusiastic about NASA’s Artemis program and is already working on hardware processing for Artemis III. He said a NASA workforce directive to incrementally insource some expertise is expected to have an immaterial effect on fiscal 2026 results and an estimated roughly 1% revenue impact in fiscal 2027, with a smaller impact on EBITDA.
On nuclear opportunities, Heller said Amentum is in discussions on multiple U.S. projects, including those involving small modular reactor technologies. He said he expects a number of nuclear projects to move from design and theoretical stages toward practical construction in the second half of the year and into 2027.
Asked by RBC Capital Markets analyst Kevin Liu about further divestitures, Heller said the company has been pleased with its overall portfolio but will continue to assess its businesses through its normal strategic planning process, including whether portfolio changes could support growth or margin expansion.
About Amentum (NYSE:AMTM)
Amentum is a government services provider specializing in mission-critical solutions for defense, federal civilian and commercial customers around the globe. The company delivers integrated services that span the full lifecycle of complex programs and facilities, including engineering, program and project management, logistics, operations, maintenance and environmental remediation.
Core offerings include infrastructure support, energy and facilities management, environmental solutions and nuclear services.
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