Amentum Reports Mixed Q1 Results, Reaffirms Full-Year Outlook Amid Market Sell-Off
Amentum Holdings Inc (NYSE:AMTM) reported financial results for its first quarter of fiscal year 2026, delivering adjusted earnings that edged past Wall Street expectations while revenue fell short. The advanced engineering and technology company also reaffirmed its full-year guidance. Despite the earnings beat, the stock faced significant selling pressure in after-hours trading.
Quarterly Performance vs. Estimates
The company's first-quarter results presented a split picture when measured against analyst forecasts. On the bottom line, Amentum's performance was solid, but top-line growth was challenged by several transient factors.
- Revenue: Reported revenue was $3.24 billion, a 5% decrease compared to the prior-year quarter. This result came in below the analyst consensus estimate of approximately $3.41 billion.
- Adjusted EPS: The company reported adjusted diluted earnings per share (EPS) of $0.54. This exceeded the analyst estimate of $0.53 and represented a 6% increase from the $0.51 reported in Q1 of the previous fiscal year.
Management attributed the revenue decline primarily to an approximately 8% impact from contract transitions from consolidated to unconsolidated joint ventures, recent divestitures, and effects from a government shutdown. These headwinds were partially offset by the ramp-up of new contracts in high-demand areas like critical digital infrastructure and space systems.
Market Reaction and Segment Analysis
The immediate market reaction was sharply negative, with shares of Amentum declining over 11% in after-hours trading following the report. This suggests investor focus may be centered on the revenue miss and the company's cash flow performance for the quarter, which showed a use of $142 million in free cash flow compared to positive free cash flow a year ago. The company cited an extra pay cycle, timing of collections due to the government shutdown, and holiday closures as primary reasons for the cash outflow.
A segment breakdown reveals divergent trajectories within the business:
- Digital Solutions: Revenue grew 4% year-over-year to $1.34 billion, driven by new contracts in digital infrastructure and space technologies.
- Global Engineering Solutions: Revenue declined 11% to $1.90 billion, largely due to the contract transitions and divestitures mentioned earlier.
Adjusted EBITDA remained nearly flat at $263 million, but the margin improved to 8.1% from 7.7% a year ago, reflecting what CEO John Heller called "solid operational performance."
Backlog and Full-Year Guidance
A key positive from the report was the continued strength in Amentum's future business pipeline. The company ended the quarter with a total backlog of $47.2 billion, a 4% annual increase, supported by $16.3 billion in net bookings and a book-to-bill ratio of 1.1x.
Crucially, Amentum reaffirmed its fiscal year 2026 guidance, suggesting management views the Q1 revenue shortfall as situational rather than indicative of a broader trend. The outlook implies underlying growth when adjusted for divestitures and contract transitions.
- Revenue Guidance: $13.95 billion to $14.30 billion (Implied underlying growth: ~3%)
- Adjusted EBITDA Guidance: $1.10 billion to $1.14 billion (Implied underlying growth: ~5%)
- Adjusted Diluted EPS Guidance: $2.25 to $2.45 (Implied underlying growth: ~12%)
This guidance range can be compared to the current analyst consensus estimate for full-year 2026 sales of approximately $14.48 billion. The company's midpoint of $14.13 billion sits slightly below this consensus, which may also be influencing investor sentiment.
Notable Contract Awards
The earnings release highlighted several significant first-quarter contract wins that support its strategic focus on nuclear energy, space, and digital infrastructure, including:
- A partnership with Rolls-Royce as the global program delivery partner for Small Modular Reactor (SMR) deployments.
- A ten-year, $730 million professional services contract with Électricité de France (EDF) for UK nuclear power stations.
- A position on the Missile Defense Agency's SHIELD contract, a multiple-award IDIQ with a ceiling value of $151 billion.
Conclusion
Amentum's first quarter was characterized by operational efficiency that drove an earnings beat and improved margins, overshadowed by revenue that missed targets due to non-recurring items. The market's negative after-hours reaction appears to penalize the top-line miss and weak quarterly cash flow, despite the company's robust backlog and reaffirmed confidence in its full-year targets. The coming quarters will be critical for demonstrating that the Q1 revenue pressures are indeed transient and that the company can capitalize on its strong book of new business.
For a detailed look at Amentum's upcoming earnings estimates and historical performance, visit the earnings and estimates page.
Disclaimer: This article is for informational purposes only and does not constitute investment advice, financial analysis, or a recommendation to buy or sell any security. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.
