Amentum Raises Profit Guidance Despite Revenue Decline
Amentum Holdings posted a 2% revenue decline to $3,490 million in its fiscal third quarter even as it raised full-year earnings guidance on margin gains and a $125 million debt paydown.
Amentum Holdings (AMTM) reported fiscal third-quarter revenue of $3,490 million, down 2% from a year earlier, while raising its full-year profit guidance on the strength of expanding margins. The engineering and technology services provider cut its fiscal 2026 revenue guidance to a range of $13,800 million to $13,950 million from a prior $13,950 million to $14,300 million.
The revenue decline marked a reversal from the flat-to-slightly-negative trend of the prior two quarters, in which second-quarter revenue was flat year-over-year at $3,478 million and first-quarter revenue fell 5% to $3,237 million. Even so, adjusted EBITDA margin expanded to 8.3% in the quarter, up 60 basis points from a year earlier and extending a streak of year-over-year margin gains that included a 20-basis-point improvement in the second quarter and 40 basis points in the first.
Net income climbed to $66 million from $10 million a year earlier, a 560% increase, while diluted earnings per share rose to $0.27 from $0.04. The gain extended a run of large year-over-year net income growth that included a 1,250% increase in the second quarter, to $54 million from $4 million, and a 267% increase in the first quarter, to $44 million from $12 million. Free cash flow rose 35% year-over-year to $135 million, though it declined sequentially from $220 million in the second quarter, a pattern the company characterized as normal quarterly variability rather than a trend break. Full-year free-cash-flow guidance held at $525 million to $575 million.
Amentum's two reporting segments moved in different directions. Global Engineering Solutions revenue fell 5% year-over-year to $2,033 million, a smaller decline than the 7% drop in the second quarter and the 11% drop in the first, while segment adjusted EBITDA grew 9% year-over-year, up from 6% growth in the second quarter and a 1% decline in the first — margin expansion accelerating even as the revenue contraction eased. Digital Solutions revenue grew 3% year-over-year to $1,457 million, decelerating from 10% growth in the second quarter and roughly in line with 4% growth in the first, as segment adjusted EBITDA growth slowed to 2% from a 2% decline in the second quarter and 3% growth in the first.
Backlog rose to $48.2 billion as of July 3, 2026, up 8% from a year earlier and continuing sequential growth from $47.8 billion in the second quarter and $47.2 billion in the first. Book-to-bill was 1.1x for the quarter, compared with 1.2x in the second quarter and 1.0x in the first. The backlog figure reflected the resolution, in Amentum's favor, of two previously protested contract awards: NASA's roughly $500 million COSMOS contract and the $974 million NASA Langley CMOE II contract, both booked into backlog and book-to-bill for the first time this quarter. The company also disclosed more than $400 million in new bookings for global nuclear energy engineering and design work, a category not previously called out in its releases.
Despite the lower revenue outlook, Amentum raised its fiscal 2026 adjusted EBITDA guidance to $1,115 million to $1,140 million from a prior $1,100 million to $1,140 million, and lifted adjusted diluted earnings-per-share guidance to $2.40 to $2.50 from $2.25 to $2.45.
Net leverage stood at 3.0x trailing-twelve-month adjusted EBITDA, improved from 3.2x at the end of fiscal 2025, after the company made a $125 million voluntary prepayment on its Term Loan B during the quarter.