Earnings Call Transcript
Amentum Holdings, Inc. (AMTM)
Earnings Call Transcript - AMTM Q2 2025
Operator, Operator
Ladies and gentlemen, thank you for standing by. Good morning, and welcome to Amentum's Second Quarter Fiscal Year 2025 Earnings Conference Call. Today's call is being recorded. At this time, all participants are in listen-only mode. After the speakers' presentation, there will be a question-and-answer session. And at this time, I would now like to turn the call over to Nathan Rutledge, Senior Vice President of Investor Relations. Please go ahead, sir.
Nathan Rutledge, Senior Vice President of Investor Relations
Thank you, and good morning, everyone. We hope you've had an opportunity to read the press release we issued yesterday afternoon, which is posted on our Investor Relations website. We have also provided presentation slides to facilitate today's call. So, let's move to slide 2 Please note that this morning's discussion will contain forward-looking statements that are subject to important factors that could cause actual results to differ materially from anticipated. I refer you to our SEC filings for a discussion of these factors, including the Risk Factors section on our annual report on Form 10-K. These statements represent our views as of today, and subsequent events may cause our views to change. We may elect to update the forward-looking statements at some point in the future, but specifically disclaim any obligation to do so. In addition, we will discuss pro forma financial measures prepared in accordance with Article 11 of Regulation S-X, as well as non-GAAP financial measures, which we believe provide useful information for investors. Both our press release and supplemental presentation slides include reconciliations to the most comparable GAAP measures. These pro forma and non-GAAP financial measures should not be considered in isolation or as a substitute for financial measures prepared in accordance with GAAP. Our safe harbor statement included on this slide should be incorporated as part of any transcript of this call. With me today to discuss our business and financial results are John Heller, Chief Executive Officer, and Travis Johnson, Chief Financial Officer. We are also joined by other members of management including Steve Arnette, Chief Operating Officer. With that moving to slide 3, it's my pleasure to turn the call over to our CEO, John Heller.
John Heller, CEO
Thank you, Nathan, and good morning, everyone. We appreciate you joining us today. Welcome to Amentum's second quarter earnings conference call. As we closed the first half of the fiscal year, it's rewarding to see the progress we've made notably staying on track with our integration plan and the solid execution of our strategy to enhance our position as a global leader in advanced engineering and technology solutions. Our operational results reflect the strength of our underlying business, the continued demand for our mission-focused capabilities and our ability to deliver differentiated solutions that help our customers achieve their objectives more efficiently and effectively. We also recently announced the divestiture of our Rapid Solutions product business, a positive step that is aligned with our core strategy and strengthens our balance sheet position, which I'll discuss in more detail shortly. I'm especially proud of our team, working closely with our customers around the globe as we stay focused on our shared vision of advancing critical missions. The disciplined execution of Amentum's strategy, agile business model and unwavering commitment to our customers' missions have enabled us to deliver solid financial results for the second quarter. As shown on slide 3, we delivered revenue of $3.5 billion, adjusted EBITDA of $268 million, reflecting 3% year-over-year growth and free cash flow of $53 million. We are encouraged by our results and understand that long-term success will be driven by disciplined execution and by managing variables within our control. By staying focused on these priorities, we are positioning ourselves to deliver sustained growth for our customers and stakeholders. Looking ahead to the second half of the year and beyond, we remain confident in our strategy and our ability to drive long-term growth and superior value for our shareholders. Now let's move to slide 4, which highlights the continued strong demand for Amentum's mission-focused solutions across our diversified end-markets. We reported $2.8 billion in net bookings this quarter, resulting in a quarterly book-to-bill ratio of 0.9 times, bringing our year-to-date book-to-bill to one-times. As noted on our first quarter earnings call, awards to unconsolidated joint ventures are excluded from our reported book-to-bill ratio. Including Amentum's proportional share of joint venture revenues and bookings, our year-to-date imputed book-to-bill ratio is a robust 1.2 times. Finally, we ended the quarter with a total backlog of $45 billion representing 3.2 times our annual revenue. Enduring demand for our work is fueled by Amentum's diverse end market exposure and our proven ability to deliver impactful mission-focused solutions. This positions us to carry strong momentum in the months and years ahead. In the second quarter, we converted a strong pipeline into new awards that align with our key growth markets and priority customers. To illustrate this momentum, I'd like to highlight a few notable wins. First, Amentum was awarded multiple intelligence contracts totaling over $1 billion, which are aligned with national security priorities and will deliver a range of innovative mission-focused solutions, including critical infrastructure management, cyber security, and intelligence analysis. At Capital Markets Day last August, we called out intelligence as a key market where our combined scale and capabilities will give Amentum a competitive strength. These awards demonstrate the demand for high-impact intelligence and cyber security solutions, which we expect will drive sustainable growth. This reflects the quality of our work and underscores our expertise in providing high-quality security engineering solutions, enabling our customers in their mission to defend and protect our national interests. Second, Amentum was selected as the program manager and lead design engineer for Sizewell C, a new nuclear power station that will strengthen the United Kingdom's energy solutions. We're supporting customers at the forefront of the nuclear renaissance and we are proud to be part of this mission. It draws directly on our advanced engineering and deep technical expertise to help deliver the next generation in reliable and secure nuclear power generation. This long-term contract will culminate with a station that has two 1.6 gigawatt reactors enough electricity to power 6 million homes each year. Lastly, I'd like to highlight over $500 million in IDIQ task orders awarded in the quarter, including a program with the Naval Surface Warfare Center. Through this award, we'll apply our proven expertise in electromagnetic environmental effects to strengthen the Navy's decision-making in spectrum dominance. Our solutions will enhance battle force interoperability by addressing electromagnetic interference challenges, delivering a strategic edge in naval operations. With extensive capabilities spanning digital transformation, modernization and sustainment and space systems, and deep relationships across the customer landscape, Amentum is unlocking meaningful cross-selling opportunities. We have positions on more than $450 billion in contract vehicles, many of which span multiple mission areas. These broad scope awards allow us to deliver a wide range of integrated solutions to a single customer under a single task order. Our recent selection to OASIS+ is a prime example, covering eight domains from R&D to enterprise solutions. It enables us to align our capabilities with a diverse set of mission requirements. Opportunities like this strengthen customer intimacy and enhance our programmatic alignment leading to faster value delivery and simpler, more effective solutions. These are just a few examples of our growth success but we continue to see strength across the broader pipeline. Demand for high-value mission-focused solutions remains a clear priority for our customers. With our proven differentiated capabilities, strong customer relationships, and deep technical expertise, we are confident in our ability to deliver across the broad set of resilient end-markets. We currently have $29 billion in pending awards and we remain on track to submit over $35 billion for the full fiscal year. Now, I would like to take a moment to address the broader budget and policy environment impacting our market. While we are encouraged by healthy year-to-date demand from across our customer base, we recognize that we're living in a time of rapid transformation. The combination of evolving geopolitical dynamics and the direction of the new administration is reinforcing the need for mission-focused solutions, many of which are directly aligned with Amentum's strategy and capabilities. On the budget front, visibility is improving. For the fiscal year 2025, we feel confident in our ability to successfully navigate our way through the full year continuing resolution and meet our financial objectives. We've seen positive signals in the defense and border security allocations included in the reconciliation bills from both chambers. And while it's still early, last week's release of the fiscal year 2026 White House budget proposal clearly articulates the importance of national security as this administration's top priority. In February, Secretary of Defense, Hegseth, outlined 17 priority areas for the Department of Defense. These areas are critically important to national security, which is why Amentum is already supporting several of them including: first, missile defense. We're supporting the Missile Defense Agency's evolving mission through integrated test, training and operational support under our Integrated Research and Development for Enterprise Solutions contract. As a result, we're also well positioned to play a significant role in the development and deployment of the Golden Dome missile defense initiative. Second, combating transnational criminal organizations we're deploying AI/ML-powered analytics under our Counternarcotics and Global Threats contract to disrupt the financial networks of cartels and terrorist groups and at the border where Amentum is enhancing U.S. border surveillance and patrol capabilities through aviation support. Third, nuclear modernization, advancing strategic radiation-hardened microelectronics to improve the resilience of the Navy's nuclear deterrence systems. Finally, through our ITEAMS contract, Amentum is advancing USINDOPACOM mission objectives by enhancing operational readiness and command support in the Indo-Pacific theater. These are just a few examples of how Amentum is contributing to critical national security priorities today and where we are well-positioned to support future opportunities. Beyond the defense and intelligence markets, we are strategically expanding into enduring missions experiencing rapid growth. We're especially pleased with the strong and consistent growth in our commercial and international markets, which represent 20% of revenue. As I noted earlier, our targeted growth in high potential sectors like nuclear engineering and commercial 5G places us at the cutting edge of evolving markets. At our core, Amentum is in the business of delivering solutions that enable our government and commercial customers to achieve their objectives faster and more effectively. These are capabilities that align with the priorities of any administration or corporation validating our strategic direction. In short, while the environment remains dynamic, Amentum's strategy, capabilities, and mission focus position us well for the future. Let's now turn to Slide 5. Building on the strength of our end-market diversification, a little more than two weeks ago, we announced the planned divestiture of our Rapid Solutions product business, a transaction that illustrates the capital-light nature of our go-to-market strategy and commitment to disciplined balance sheet management. Technology agnostic capabilities and solutions are key ingredients in our strategy to deliver high-impact high-value solutions that meet customer needs and maintain Amentum's position as the premier pure-play government and commercial services provider. This transaction is an extension and reaffirmation of our existing operating model. This business is better suited to a product-centric model that depends on steady capital investment, an approach that differs from our asset-light integrated solution-driven model. With a more streamlined portfolio we are better positioned to pursue opportunities, align with our core strengths, and deliver differentiated value in complex mission-critical environments. While Travis will speak in detail about the financial benefits of the transaction, I'll note that the divestiture is aligned with our deleveraging objectives, accelerating our ability to flexibly redeploy capital toward value-accretive opportunities. To conclude I would like to underscore three takeaways from Amentum's second quarter. First, demand for our mission-critical solutions is strong and growing as demonstrated by recent wins, including in the intelligence and environment markets. Second, we're executing with discipline, streamlining our portfolio, advancing our debt reduction goals, and staying focused on markets where we can lead. Third, our integration plan remains firmly on track positioning us to fully realize the benefits of scale, talent, and capability that our platform brings together. With strong momentum and a clear strategy, I remain confident in our future and excited about the value we are creating for all stakeholders. With that, I'll turn it over to Travis to walk you through the financials in more detail.
Travis Johnson, CFO
Thank you, John and good morning everyone. I'm pleased to discuss with you today Amentum's solid second quarter performance, expected financial benefits from the recently announced Rapid Solutions divestiture, and our continued confidence in achieving full year results, in line with the commitments we originally set back in August at Capital Markets Day. As John noted, our results for the quarter evidenced the underlying strength of Amentum's diversified business and go-to-market strategy and were enabled by the dedication and commitment from our employees across the globe. The relentless focus on excellence yielded strong business development results and importantly, outstanding operational performance for our customers. With that, let's talk about our financial performance on Slide 6. I'd like to again highlight that while our GAAP results provide an accounting view of Amentum's legacy business excluding CMS, today's discussion will focus on our non-GAAP results compared to pro forma results from the second quarter of fiscal 2024. These figures offer a combined view of the new Amentum business and provide performance insights on a more comparable basis. Second quarter results were in line with our expectations. Revenues of $3.5 billion reflect 1% growth and were driven by continued strong demand and year-over-year increases in Digital Solutions. Adjusted EBITDA was $268 million, reflecting year-over-year growth of 3%, supported by a 20 basis point increase in adjusted EBITDA margins to 7.7%. In addition to the strong program performance in both segments, we're beginning to see benefits from our cost synergy initiatives, which remain on track with our previously communicated objectives. Adjusted diluted earnings per share were $0.53, up 4% from a year ago, with revenue growth and strong operating performance more than offsetting higher interest and tax expense. Moving to our reportable segment results on Slide 7, Digital Solutions generated revenues of $1.3 billion, representing 3% growth. The year-over-year increase was driven by higher volume on new contract awards, particularly in the commercial infrastructure market, which more than offset the expected ramp down of other historical programs. Excluding the previously discussed impact of Cytec, Digital Solutions revenues grew 8% on an underlying basis. Adjusted EBITDA increased to $107 million, reflecting a 30 basis point increase in adjusted EBITDA margins to 8% as a result of the higher revenue volume and improved operating performance. Global Engineering Solutions generated revenues of $2.2 billion, a year-over-year decrease of 1%. The decrease was driven by the expected ramp-down of certain historical programs, partially offset by the ramp-up of new contract awards and growth on existing programs. Adjusted EBITDA increased to $161 million despite the revenue volume impact as a result of a 10 basis point increase in adjusted EBITDA margins from strong operating performance. Turning to Slide 8, to cover our cash flow performance and capital structure highlights. Second quarter free cash flow of $53 million was impacted by the anticipated timing of interest and tax payments and came in slightly higher than expected as a result of solid operating performance and disciplined working capital management. Our liquidity position remains strong, with ending cash on hand of $546 million and no outstanding balances on our $850 million revolving credit facility. Further, net leverage is trending as expected at four times, a reduction from 4.1 times at the end of fiscal year 2024. With expiration of the six-month soft call on our Term Loan B, we are now positioned to repay debt without incremental cost in the second half of fiscal year and beyond. In terms of strengthening our balance sheet position, as John noted earlier, we recently announced the divestiture of our Rapid Solutions product business. The sale, which is strategically aligned to our capital-light business model and will be accretive to adjusted earnings per share and free cash flow, is expected to close in the second half of 2025 and to generate approximately $325 million in after-tax proceeds. In addition, as is customary in M&A transactions and was expected, we have finalized a net working capital true-up in connection with the Jacobs transaction, which resulted in a $70 million payment to Jacobs in the third quarter. Together, these investing activities are expected to result in approximately $255 million of incremental cash, which will accelerate our deleveraging objectives and path to a flexible and opportunistic capital deployment posture. We continue to believe our balance sheet strength, strong liquidity position, and robust free cash flow profile, which will be enhanced by the Rapid Solutions divestiture, will act as fundamental drivers in the creation of long-term shareholder value. On Slide 9, let's now turn to our fiscal year 2025 full-year outlook. As a result of our solid first-half performance and with 98% of revenues expected to come from existing or re-compete business, we remain confident in our outlook and are therefore narrowing guidance ranges for both revenues and adjusted EBITDA. We now expect revenues in the range of $13.85 billion to $14.15 billion and adjusted EBITDA between $1.065 billion to $1.095 billion. Adjusted earnings per share remained unchanged at $2 to $2.20. And we still expect free cash flow between $475 million and $525 million. Based on the expected close timing, our guidance currently assumes no significant impact from the Rapid Solutions divestiture. However, following the close of the transaction, we will reassess our forecast and update the outlook if necessary. In addition, guidance continues to reflect the revenues impact of approximately 1%, as a result of the new administration initiatives. From a time-phasing perspective, consistent with the prior year, we expect third-quarter revenues and profitability to be in line with our second quarter results and to accelerate in the fourth quarter. Second half revenues are expected to grow 3% relative to first half performance, driven by organic growth including a 53rd week in the fourth quarter partially offset by joint venture transitions and administration change impacts. We expect cash flow will follow normal seasonality with the fourth quarter being the strongest quarter as a result of robust collections given our alignment with the government fiscal year-end. Other key assumptions in connection with fiscal year 2025 guidance are included on Slide 9 and today's presentation posted on our Investor Relations website. Wrapping up on Slide 10. We are pleased with our first half performance which reflects the strength of our combined company. We are well positioned to meet our fiscal year 2025 financial objectives and remain confident in our ability to deliver significant free cash flow growth and long-term value for stakeholders.
Operator, Operator
Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Your first question comes from Tobey Sommer with Truist. Please go ahead, sir.
Tobey Sommer, Analyst
Thank you. I was wondering if we could start out by digging into the nuclear opportunity not just the one you cited in terms of new business wins, but thematically how you see demand percolating across different geographies? Thanks.
John Heller, CEO
Good morning Tobey. How have you been?
Tobey Sommer, Analyst
Very well. Thank you. Hope you are as well.
John Heller, CEO
Thank you. We are very excited about this area since merging the two companies. Amentum is highly recognized in the U.S. for nuclear remediation, and we also support many labs in developing next-generation nuclear energy capabilities. By integrating the Jacobs team, we have created a robust global engineering capability that we believe is among the strongest worldwide. In the U.K., we are a key leader in the energy market, working on large gigawatt plants like Sizewell C, as well as with Small Modular Reactors (SMRs) and emerging SMR Original Equipment Manufacturers who are conducting significant research, where we are actively participating in both the U.S. and Europe. Additionally, we have partnerships across various European countries involved in energy projects. We are very enthusiastic about this aspect of our strategy, especially considering the increasing demand driven by hyperscale companies, which require more energy to support their growth. The U.S. economy will necessitate a greater energy supply to allow our leading technology companies to expand and integrate new technologies, particularly in AI and large computing centers that enhance computational power, all of which require energy. Nuclear energy is a substantial source that can be rapidly deployed. There is a lot happening in our business, and Steve, perhaps you can discuss Sizewell specifically and other developments taking place.
Steve Arnette, COO
Thank you, John. I appreciate the opportunity to address a few points. John provided a solid overview, but I'd like to highlight some geographic opportunities as noted in your question. In the U.K., we had a significant win with Sizewell C, a project that will require a program manager and designer for several years. This follows our success with a similar role in the Hinkley Point C reactor, which is now entering the construction phase. The exciting aspect of these gigawatt power stations is that our involvement usually spans from design to ongoing engineering and monitoring of the plant’s health, including end-of-life diagnostics. These engagements are typically long-term, and we're thrilled about that. Additionally, in the U.K., we're supporting various SMR developers as there is a major initiative underway to make substantial investments, and we're excited to be part of several teams involved in that. There is a lot happening in the U.K., as mentioned by John. I'd also like to highlight the developments in the U.S., where we're seeing early-stage initiatives around nuclear power, much of which is focused on enabling AI, as John noted. We are currently engaged in several projects primarily at the engineering stage, exploring advanced fuel processing and fuel fabrication facilities, which are now in the design phase. This positioning puts us at the forefront to support the ramp-up in the U.S., and we're looking forward to our role in it. Lastly, I want to mention Australia, especially in the context of AUKUS and our efforts to assist this key ally in equipping nuclear submarines. This creates a requirement for an entirely new nuclear regime, including how to manage nuclear fuel safely. Our team is actively helping the government navigate these challenges. Overall, Momentum is experiencing a broad global market revitalization in nuclear energy.
Tobey Sommer, Analyst
Perfect. Thank you. If I could just ask one housekeeping question, and then I'll get back in the queue. The guidance, does it include the revenue and profit from the announced upcoming divestiture?
Travis Johnson, CFO
Hey, Tobey. Good morning.
Tobey Sommer, Analyst
Good morning.
Travis Johnson, CFO
So based on the expected close timing, which we publicly stated we're expecting to occur in the second half of calendar year 2025. Our guidance currently assumes that there's no significant impact this year as a result of the divestiture based on that expected close timing. And as a reminder, the business in aggregate only makes up around 1% of our revenues and adjusted EBITDA. So to the extent that it does happen this fiscal year, I wouldn't expect it to have a significant impact. And certainly, any impact to be well within our guidance range.
Operator, Operator
Thank you. The next question comes from Andre Madrid with BTIG. Please go ahead.
Andre Madrid, Analyst
Good morning, gentlemen. Thanks for taking my question. We've heard some competitors call out a slowing award environment, and I'm curious to hear your thoughts on how you're finding the pace of things as of now?
Travis Johnson, CFO
Thanks, Andre. Good morning. I think I'll start and then John can certainly add on. As a result of what we're seeing in terms of federal workforce disruption and obviously, changes in priorities and adjusting to the various executive orders that are out there and the new administration priorities, we certainly have seen some impacts to timing of awards and also extensions on some of our existing work. But what I will say is we're really pleased with our year-to-date business development performance, both from a book-to-bill perspective, which is 1.0 on a year-to-date. And I think it really demonstrates the diversification and strength of our mission-focused portfolio and what we're doing to support our customers, not only with the US government, but as John noted in his prepared remarks, 20% of our business is international and commercial. And we've certainly seen good tailwinds and bookings from that perspective as well. And we're also excited about the $29 billion of pending awards and what that can mean for the second half. So to kind of summarize, yes, we've seen some impacts to the timing of awards, but we expect it to be just that timing. Eventually, the $29 billion of pending awards will be adjudicated. So we're just staying laser-focused on developing the best solutions and putting the best proposal forward to support our customers.
John Heller, CEO
I want to emphasize that while awards are delayed, our existing programs continue. If awards cannot be issued, additional work is being added to those existing contracts, and we're seeing significant contributions to our year-to-date performance from these additions. It's always crucial for us each year to assist customers in identifying opportunities for operational improvements and to incorporate those modifications into existing contracts.
Andre Madrid, Analyst
Got it. Very helpful. Thank you. If I could ask one more question, Rapid Solutions did an excellent job. Are you continuing to evaluate the broader portfolio for any similar assets that might be worthwhile to divest in order to strengthen capital?
John Heller, CEO
When considering a company with $14 billion in revenue that is very broad and diversified, we felt a strong sense of excitement about that diversity as we began our discussions at the end of September. As we have come together, the leadership team has had the chance to thoroughly examine our portfolio. As is typical for any company, we go through a strategic planning process annually, assessing our priorities and ensuring that all aspects of our portfolio align with those priorities. Upon reviewing Rapid Solutions, we realized that while it is a strong segment of our business and we are thrilled for the employees involved, it does not align with our strategic priorities. Moving forward, we will continue to evaluate our priorities and our portfolio on a yearly basis to determine what aligns and what does not, making informed decisions as we proceed.
Operator, Operator
Thank you. The next question comes from Colin Canfield with Cantor Fitzgerald. Please go ahead.
Colin Canfield, Analyst
Thanks. Maybe asking the divestiture question in a different way. Travis, you mentioned about future debt paydown. Is there a right way to think about the level of proceeds in terms of a range that you might expect? And then also, is there a right way to think about the potential valuation that's being considered on those proceeds? Thanks.
Travis Johnson, CFO
Good morning. So speaking of Rapid Solutions specifically, as we had in our press release the sale price is expected to be $360 million. And then on an after-tax basis, we expect the net around $325 million. We were able to take advantage of some tax attributes that were obviously positive to the taxes we'll have to pay on that which is a positive. And we're really excited about the proceeds. Obviously, we need to get to close, but it will certainly strengthen our balance sheet position and accelerate both our deleveraging objectives. And as John said on the call, a path to more flexible and opportunistic capital deployment posture. So we're excited about that. And really from an overall perspective we remain focused on delivering our prior commitment of three times net operating leverage by the end of FY 2026.
Colin Canfield, Analyst
Got it. Got it. And then in terms of the bookings maybe walk us through what was quarterly book-to-bill with the included bookings from the JVs? And then what was that – like how should we think about the bookings number quarter-to-date thus far?
Travis Johnson, CFO
Yes Colin, thanks. Book-to-bill both on a reported basis and on an imputed basis was 0.9 for the quarter. As John noted in his prepared remarks, it was on a reported basis 1.0 year-to-date and 1.2 on an imputed basis, so we really saw the strength of those joint venture awards in the first quarter across not only in the environment business with Hanford and West Valley but also with our COSMIC win that we announced. So that was really concentrated in the first quarter. But really pleased with the performance of the business since we came together back in September.
Colin Canfield, Analyst
And any sense of bookings thus far this quarter?
Travis Johnson, CFO
So we haven't commented on anything in regards to post quarter. We've – I will say that we've continued to see both submits and awards take place as we've gone through the first month of the third quarter.
Operator, Operator
Thank you. The next question comes from Ken Herbert with RBC Capital Markets. Please go ahead.
Ken Herbert, Analyst
Good morning. Maybe just to start just wanted to follow up on the sort of the revenue guidance for the year, I think it implies about a 3% sequential step up from first half to second half. Obviously, the growth in the second half is limited. You talked about the joint venture transitions and some of the other changes as potential headwinds. Can you just go into any more detail on sort of the specific headwinds and maybe quantifications there? But I guess more importantly, as you look at the sequential step-up first to second half maybe some seasonality or other aspects to it but underpinning that confidence in the full year guide? Thank you.
Travis Johnson, CFO
Hey, Ken. Good morning. Thank you for the question. So I'll start by just saying first of all we're really pleased with the financial performance in the first half of the year, which as I noted really just demonstrates the diversity and the strength of our mission-focused portfolio. And as we look ahead to the second half of the year, I think you hit a couple of the dynamics spot on, right? And we're expecting revenue to increase 3% relative to the first half. And I'll kind of piece it out for you a little bit. First, we're expecting around 6% organic growth including the impact of the 53rd week, and that is partially offset by the joint venture award that we announced earlier this year as well as the kind of folding in of the administrative change impacts that we previously discussed. And maybe to provide a little bit more context on the joint venture dynamics. So both – actually all three of the joint venture awards I noted earlier West Valley, Hanford, COSMIC, really great wins for the company and a continuation of the work that we've previously been doing. However, they are now transitioning from what was historically consolidated joint ventures, which we reported revenue on to unconsolidated joint ventures. So it will impact the revenue top line but have no impact on the bottom line in free cash flow obviously. And in fact, we expect probably stronger performance on those, especially as they ramp up over the transition period and head into FY 2026 with EBITDA and free cash flow increasing on these opportunities in aggregate. So really excited about those. But obviously, as we noted we'll have an impact on the revenue profile. And then the last thing I'll note, it's important to note that we provide guidance ranges that obviously contemplate a variety of different scenarios. And at the top end of our guidance range, 2H revenues would actually grow around 5%. So we feel really good again about the first half performance and obviously, reaffirming the midpoint of our guidance for the full fiscal year demonstrates the confidence we have in delivering the numbers we set back in August.
John Heller, CEO
And I would add that we merged these two companies just six months ago, and we discussed the potential synergies and the benefits of having enhanced engineering and technology capabilities within a single entity. We are leveraging this for every new and existing project, applying our combined capabilities to current opportunities. This gives us confidence in our business strength and our ability to pursue opportunities we could not chase before, and we are actively building our pipeline around these prospects. Although this may not significantly affect fiscal year '25 since the contracts are still being bid, we are thrilled about the potential growth in '26 and '27 as these projects develop.
Ken Herbert, Analyst
No, that's great. I really appreciate the color. And just as a final question. Have you seen any impact yet from some of the GSAs push on the consulting front? Is it possible to maybe bracket or frame how much of your revenues would be perhaps pure consulting? And has this been anything that's come up yet for you guys?
John Heller, CEO
Yes, this has not been an issue for Amentum. Our focus has purely been on mission operations, mission delivery, and key technology capabilities that do not involve consulting work. It's not part of our business model and is not something we are considering as part of our strategy for the future.
Ken Herbert, Analyst
Perfect. I appreciate the color and nice results. Thank you.
Operator, Operator
Thank you. The next question comes from Noah Poponak with Goldman Sachs. Please go ahead.
Noah Poponak, Analyst
Hi, good morning everyone. Travis, apologies for not getting this, but what's the 5% that you were just referencing that you walked back to adjusting for things to sort of get to a core growth rate?
Travis Johnson, CFO
The comment around 5% Noah is just at the top end of our guidance range for revenues at $14.15 billion. The growth from the first half of the year to the second half of the year will be 5%.
Noah Poponak, Analyst
That's first half to second half?
Travis Johnson, CFO
Correct.
Noah Poponak, Analyst
Okay. What is the growth rate impact to the full year growth rate from this change in the JV accounting?
Travis Johnson, CFO
In total, the joint ventures were generating approximately $80 million per quarter during the first half of the year. We anticipate that they will completely transition out by the end of the third quarter, resulting in no revenue contribution for the fourth quarter. This is the appropriate way to consider the impact of the joint venture transitions on quarterly and full year results.
Noah Poponak, Analyst
So that takes out maybe $100 million of like-for-like year-over-year '25 versus '24?
Travis Johnson, CFO
Yes, that's correct, a little over $100 million.
Noah Poponak, Analyst
I wanted to ask about growth from a broader perspective. You made a compelling case in your remarks regarding your market position, capabilities, and customer relationships, but the growth rates seem low. In the first half of the year, there's Cytec, and in the second half, there are various moving parts. Listening to your prepared remarks, it indicates a high growth potential, yet the actual rates are low. How do I reconcile that? Additionally, regarding the multiyear CAGR you mentioned, is it still firmly projected? Will you be within that range in 2026, or will that year also involve some transitions? How do I make sense of all this?
John Heller, CEO
Given the government's ongoing transformational activities, there is some added uncertainty for everyone. However, when you take a step back and examine what we've built at Amentum, it's clear that we have a highly diversified company with a leadership position in various market areas. These areas have the opportunity to capitalize on the changing priorities in both the US government and our key allies. Our strategy focuses on key sectors such as space, defense, intelligence, energy, and the environment, all of which present opportunities for growth. The US government's priorities in missile defense, data analytics related to unmanned aerial vehicles, and border security align well with Amentum's strengths and past capabilities. Additionally, energy is a key demand area for the commercial economy, not only in the US but globally. Within our commercial business, we see several critical areas, such as infrastructure management and the shift to 5G, that can drive strategic growth. We're pleased with our current positioning, with nearly $30 billion in bids awaiting award and a strong pipeline of opportunities aligned with key US government priorities.
Noah Poponak, Analyst
Okay. Okay John, I appreciate all that detail. I guess the 1% you've referenced as an impact to the year from changes happening at your customer. You spoke to that previously and then today you're speaking to the same number, so it's not changing. So that implies that has stabilized. What's your sense of or your view on if that is now kind of as bad as that gets? Or how much risk do you see through the rest of this year going into your fiscal 2026 that that 1% becomes something larger?
Travis Johnson, CFO
So you're absolutely right, Noah. Obviously, we'll acknowledge that we're still operating in a dynamic environment. But based on the information we have today, we still feel comfortable that 1% is the right estimate for the expected impact on our FY 2025 revenues, which obviously we've fully contemplated in the guidance that we reaffirmed today. The other thing I'd say is that, while we've contemplated that in our guidance, we're tracking several potential opportunities where Amentum is well aligned to the new administration priorities, many of which John noted in his prepared remarks and in the Q&A responses, which we haven't factored into our expectations or guidance yet. So as we look forward and move into FY 2026, as you noted, those will provide potential tailwinds as they become more real and get adjudicated through the system.
Noah Poponak, Analyst
Okay. Last one Travis. A 1% change is significant, but depending on how Rapid Solutions impacted your EBITDA percentage, whether it was 0.6% or 1.4%, it makes a big difference. Did you sell Rapid Solutions for approximately 30 times EBITDA?
Travis Johnson, CFO
So we'll stick to what we have in the press release Noah, which is exactly what we've said, which is a sale price of $360 million and adjusted EBITDA around 1% of revenue. Yes, 1% of overall EBITDA.
Operator, Operator
Thank you. The next question comes from Kristine Liwag with Morgan Stanley. Please go ahead.
Kristine Liwag, Analyst
Hey. Good morning, guys. I just want to close the loop here on DOGE and the risk that you're seeing. From your commentary, it seems like there's a lot of confidence in the 2025 guide. But when I look at the DOGE wall of receipts, there are a few AECOM and Jacobs contracts terminated just in the past few days, including two Department of Homeland Security contracts adding up to the $46 million. So I want to understand is the confidence in the guide, because these aren't part of Amentum today? Or are they part of the guidance range? Any more commentary would be helpful.
Travis Johnson, CFO
Thanks Kristine. Good morning. So a couple of different comments there. Just to Noah's question we feel really good about the 1%, we previously stated and do feel confident in the guidance range we reaffirmed, and over 98% of our revenues are expected to come from firmer recompete work. And the 2% that is new business is more in the commercial area which is typical at this point in the year to have that. So I'll reiterate we feel good about the 1% in our guidance for fiscal year 2025.
Kristine Liwag, Analyst
Great. Thanks. And if I could do a follow-up. I mean, 10% of total revenue today is space-related and NASA faces a 24% budget cut from the proposed budget. Can you provide color on how that's factored into that 1%? Or is this something different?
John Heller, CEO
Thank you for the question. To provide some context, we are currently very excited about our teams supporting NASA. We are making significant progress in preparing for the Artemis II mission, which is set for early 2026 and aims to safely transport a crew of astronauts to the moon and back. The assembly of the flight vehicle at NASA Kennedy is going well, along with the testing of avionics and launch flight software. Recently, we've also noted that the new administration is prioritizing the Artemis III mission, which will see astronauts return to the moon's surface. Essentially, we are focusing on Artemis II while also ensuring that Artemis III proceeds on schedule, which will be our primary mission at the Kennedy Space Center over the next few years. Additionally, we have seen in the President's recent budget proposal a strong emphasis on both Moon and Mars missions beyond Artemis III, which may lead to changes in the schedule of ongoing Artemis missions. We will be monitoring these developments closely. Overall, the administration's strong commitment to space superiority, both for national security and exploration, is encouraging for us. We believe that Amentum is well positioned for this work with NASA, the Missile Defense Agency, and other clients, and we are optimistic about Amentum's future in the space sector.
Travis Johnson, CFO
We do not expect any material impact to FY 2025.
Operator, Operator
Thank you. There are no further questions at this time. I would now like to turn the call over to John Heller, Chief Executive Officer for closing remarks.
John Heller, CEO
Thank you, operator, and thank you all for your interest in Amentum. We are very encouraged by our progress thus far. Amentum is delivering great value to our customers and we look forward to keeping you updated in the quarters to come.
Operator, Operator
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.