Total backlog as of June 27, 2025, reached $44.6 billion, a significant increase of $17.7 billion (66%) from $26.9 billion as of June 28, 2024. This substantial growth is primarily attributed to the completed merger with the CMS business, enhancing future revenue visibility.

The Company completed the sale of its Rapid Solutions hardware and product business to Lockheed Martin Corporation for $360 million in cash on June 26, 2025. This divestiture, while not a strategic shift, provided a significant cash inflow and contributed to the positive investing cash flow.

In the first quarter of fiscal year 2025, Amentum realigned its reporting structure into two segments: Digital Solutions (DS) and Global Engineering Solutions (GES). This change reflects the Company's strategic focus on advanced digital and data-driven solutions and large-scale engineering services.

The substantial increases in revenues and net income are primarily attributed to the successful integration of the CMS merger. Management's ability to leverage the acquired volume and operational performance is evident in the improved profitability and cash flows.

Management made voluntary principal payments on the Term Loan of approximately $191 million on June 27, 2025, and an additional $250 million on July 31, 2025. These actions demonstrate a commitment to deleveraging and strengthening the capital structure.

Selling, general, and administrative (SG&A) expenses as a percentage of revenues increased to 4.6% for the three months ended June 27, 2025, from 3.6% in the prior year. This rise is primarily due to acquisition, transaction, and integration costs associated with the CMS merger.

The Company acknowledges significant uncertainty regarding global tariffs and trade policies, which could impact its supply chain and costs. While no material negative impact has been experienced to date, management continues to monitor developments and assess potential future impacts.

Decreases or delays in federal government budget approvals, contract awards, and continuing resolutions (CRs) could negatively impact the Company's business. Although the budget environment is viewed as constructive, timely appropriations are not guaranteed.

A significant portion of the Company's debt, including the Term Loan and Revolver, is subject to variable interest rates. A 1% fluctuation in applicable interest rates would impact interest expense by approximately $28 million for the nine months ended June 27, 2025, despite the use of interest rate swaps to mitigate risk.

The merger with CMS has significantly expanded Amentum's capabilities, positioning it as a global advanced engineering and technology solutions provider to a broad base of U.S. and allied government agencies, enhancing its competitive standing.

Amentum emphasizes its 'repertoire of deep customer knowledge' and 'differentiated technology solutions' as core competitive advantages. This enables the Company to engage customers across multiple capabilities and markets effectively.

Approximately 90% of the Company's revenues are derived from contracts with the U.S. federal government, either as a prime or subcontractor. This strong focus indicates a specialized market position and reliance on government spending priorities.

The cost of revenues as a percentage of total revenues slightly decreased to 89.7% for the three months ended June 27, 2025, from 90.4% in the comparable prior year period. This indicates a minor improvement in cost efficiency relative to revenue generation.

The Global Engineering Solutions (GES) segment's Adjusted EBITDA increased by 36% for the three months and 38% for the nine months ended June 27, 2025, compared to the prior year, partially attributed to 'improved operational performance' in addition to revenue growth.

Given that 64% of revenues are from cost-plus-fee contracts, which include provisions to adjust revenues for cost increases, the Company expects the impact of inflation on its business to be limited. This contract mix provides a degree of protection against rising operational costs.

The newly realigned Digital Solutions (DS) segment is dedicated to providing advanced digital and data-driven solutions, including intelligence analytics, space system development, cybersecurity, and next-generation IT, highlighting a strong commitment to technological advancement.

Amentum believes it is well-positioned to win new business due to increasing government spending on 'government-wide modernization priorities' and 'increased investment in advanced technologies' such as hypersonics and microelectronics, indicating a focus on cutting-edge areas.

Amortization of intangibles increased significantly to $118 million for the three months and $358 million for the nine months ended June 27, 2025, primarily due to the CMS merger. This reflects the substantial value attributed to acquired backlog and customer relationship intangible assets, which are key to future innovation and growth.

The Company's primary capital allocation decision was the acquisition of the CMS business on September 27, 2024, with a total consideration of $4,032 million. This large-scale M&A activity reshaped the Company's asset base and strategic direction.

Amentum made voluntary principal payments of $191 million on its Term Loan by June 27, 2025, and an additional $250 million by July 31, 2025. This proactive approach to debt reduction demonstrates a commitment to optimizing its capital structure.

The sale of the Rapid Solutions business for $360 million in cash on June 26, 2025, provided a significant boost to cash and cash equivalents, contributing to the positive net cash from investing activities and enhancing overall liquidity.

Amentum's Global Engineering Solutions (GES) segment provides 'large-scale environmental remediation' and 'clean energy' solutions. Additionally, the Company's overview mentions a focus on 'environment and climate sustainability' as part of its broad capabilities.

The Company states it is 'underpinned by a strong culture of ethics, safety and inclusivity,' indicating a commitment to social responsibility and sound governance practices within its operations.

While the Company highlights its involvement in environmental solutions and ethical culture, the 10-Q filing does not provide specific quantitative metrics, targets, or detailed initiatives regarding its ESG performance beyond general statements.

Management views the U.S. federal budget environment as 'constructive,' with core funding sources for its primary customer-based markets expected to experience 'bipartisan tailwinds.' The GFY 2025 appropriations bill included a 1% increase for defense and non-defense discretionary spending.

The 'One Big, Beautiful Bill Act,' passed on July 4, 2025, includes significant provisions such as $150 billion in additional defense spending and increased spending related to energy production, directly benefiting Amentum's core markets.

Amentum believes its capabilities are strategically aligned with key market trends, including increasing demand for outsourced federal services, global demand for clean energy solutions, and increased government investment in modernization and advanced technologies.