Amentum Holdings, Inc.

Previous wording

In May 2025, the President’s U.S. federal government fiscal year (“GFY”) 2026 budget request was submitted to Congress, which, as compared to GFY 2025 enacted level, maintained defense discretionary spending at $892 billion, reduced non-defense discretionary spending by approximately 21% to $557 billion, and increased defense spending by approximately 13% to $1.01 trillion. Following a government shutdown from October 2, 2025 to November 12, 2025 and a partial government shutdown from January 31, 2026 to February 3, 2026, final appropriations legislation for GFY 2026 was passed on February 3, 2026, excluding the Department of Homeland Security which was funded via a continuing resolution (“CR”) through February 13, 2026. While we view the budget environment as constructive and believe core funding sources for our primary customer-based markets will continue to experience bipartisan tailwinds, there can be no certainty about the level of funding for any particular GFY or that appropriations bills will be passed in a timely manner. During those periods of time when appropriations bills have not been passed and signed into law, government agencies operate under a CR, a temporary measure allowing the government to continue operations at prior year funding levels. Depending on their scope, duration, and other factors, CRs can negatively impact our business due to delays in new program starts, delays in contract awards decisions, and other factors.

Current wording

Following a government shutdown from October 2, 2025 to November 12, 2025 and a partial government shutdown from January 31, 2026 to February 3, 2026, final appropriations legislation for the U.S. federal government fiscal year (“GFY”) 2026 was passed on February 3, 2026, excluding the Department of Homeland Security which was shutdown on February 14, 2026, following the expiration of a continuing resolution (“CR”). On April 30, 2026, GFY 2026 funding for the Department of Homeland Security was passed, ending the partial shutdown. The final bill provided $900 billion for defense discretionary spending and $700 billion for non-defense discretionary spending. In April 2026, the GFY 2027 budget request was submitted to Congress, which, as compared to GFY 2026 enacted levels, would increase defense discretionary spending by $250 billion to $1.15 trillion and reduce non-defense discretionary spending by $25 billion to $675 billion. Additionally, the budget request assumes an increase in defense spending based on the defense reconciliation legislation currently pending in Congress, which would result in total GFY 2027 defense spending of $1.5 trillion, an increase of 43% from the GFY 2026 enacted level. While we view the budget environment as constructive and believe core funding sources for our primary customer-based markets will continue to experience bipartisan tailwinds, there can be no certainty about the level of funding for any particular GFY or that appropriations bills will be passed in a timely manner. During those periods of time when appropriations bills have not been passed and signed into law, government agencies operate under a CR, a temporary measure allowing the government to continue operations at prior year funding levels. Depending on their scope, duration, and other factors, CRs can negatively impact our business due to delays in new program starts, delays in contract awards decisions, and other factors.

Previous wording

Under the Trump administration, the Department of Government Efficiency was created, the One Big, Beautiful Bill Act was passed which made certain tax cuts permanent, reduced healthcare spending and increased spending related to border security, defense, NASA and energy production, and the U.S. Government is in the process of, or has announced its intent to, increase current tariffs, impose additional tariffs, and expand tariffs on goods imported from various countries into the United States. We continue to monitor the actions of the administration which could result in a change to budgetary priorities or impact federal government procurement timing. Although a limited number of our contracts for the U.S. Government have been affected by changes in budgetary priorities by the administration, the impact has not been material to date. Decreases in, or delays in approving, the federal government’s budget, decreases in government spending on the types of programs that we support, delays in government contract awards, and pauses on government contracts on which we are currently performing could have an adverse impact on our business.

Current wording

We continue to monitor the actions of the administration which could result in a change to budgetary priorities or impact federal government procurement timing. Although a limited number of our contracts for the U.S. Government have been affected by changes in budgetary priorities by the administration, the impact has not been material to date. Decreases in, or delays in approving, the federal government’s budget, decreases in government spending on the types of programs that we support, delays in government contract awards, and pauses on government contracts on which we are currently performing could have an adverse impact on our business.

Previous wording

Selling, general, and administrative expenses (“SG&A”) — The decrease in SG&A was primarily attributable to synergies arising from the spin-off of the Jacobs Solutions Inc. (“Jacobs”) Critical Mission Solutions business and portions of the Jacobs Divergent Solutions business (and, together with the Critical Mission Solutions business, referred to as “CMS”). SG&A as a percentage of revenues decreased to 3.6% for the three months ended January 2, 2026 from 3.8% for the three months ended December 27, 2024 primarily due to the reduction in SG&A discussed above.

Current wording

Selling, general, and administrative expenses (“SG&A”) — The decrease in SG&A was primarily attributable to synergies arising from the merger of the Jacobs Solutions Inc. (“Jacobs”) Critical Mission Solutions business and portions of the Jacobs Divergent Solutions business (and, together with the Critical Mission Solutions business, referred to as “CMS”). SG&A as a percentage of revenues decreased to 3.6% for the three months ended April 3, 2026 from 4.2% for the three months ended March 28, 2025 primarily due to the reduction in SG&A discussed above.

Previous wording

Provision for income taxes — The effective tax rate for the three months ended January 2, 2026 was 31.3%, as compared to 53.3% for the three months ended December 27, 2024. The change in the effective tax rate was primarily due to the recognition of a valuation allowance against a disallowed interest expense deferred tax asset relative to income before income taxes in the respective period.

Current wording

Provision for income taxes — The effective tax rate for the three months ended April 3, 2026 was 30.8%, as compared to 91.7% for the three months ended March 28, 2025. The change in the effective tax rate was primarily due to the recognition of a valuation allowance against a disallowed interest expense deferred tax asset relative to income before income taxes in the respective period.

Previous wording

Revenues — The decrease in revenues was primarily attributable to the impacts from the government shutdowns ($150 million), as well as the transition of certain contracts from consolidated to unconsolidated joint ventures and fiscal year 2025 divestitures ($110 million). The reduction in revenue was partially offset by growth on existing programs and the ramp up of new contract awards.

Current wording

Revenues — The decrease in revenues was primarily attributable to the transition of certain contracts from consolidated to unconsolidated joint ventures, impacts from the government shutdown, and fiscal year 2025 divestitures. The reduction in revenues was partially offset by the net impact of the expected ramp-down of historical programs and the ramp up of new contract awards and growth on existing programs.

Previous wording

Cost of revenues — The decrease in cost of revenues was primarily attributable to the decrease in revenues discussed above. As a percentage of revenues, cost of revenues was 89.9% for the three months ended January 2, 2026 compared to 89.4% for the three months ended December 27, 2024.

Current wording

Cost of revenues — The decrease in cost of revenues was primarily attributable to the decrease in revenues discussed above. As a percentage of revenues, cost of revenues was 90.0% for the six months ended April 3, 2026 compared to 89.5% for the six months ended March 28, 2025.

Previous wording

Equity earnings of non-consolidated subsidiaries — Equity earnings of non-consolidated subsidiaries include our proportionate share of the income from equity method investments partially offset by the utilization of fair market value adjustments assigned to certain equity method investments based on the remaining period of performance for the related contract and was consistent with the three months ended December 27, 2024.

Current wording

Equity earnings of non-consolidated subsidiaries — Equity earnings of non-consolidated subsidiaries include our proportionate share of the income from equity method investments partially offset by the utilization of fair market value adjustments assigned to certain equity method investments based on the remaining period of performance for the related contract and increased primarily due to the transition of certain contracts from consolidated to unconsolidated joint ventures during the six months ended April 3, 2026.

Previous wording

Segment Results for the Three Months Ended January 2, 2026 and December 27, 2024

Current wording

Segment Results for the Three and Six Months Ended April 3, 2026 and March 28, 2025

Previous wording

The increase in revenues for the three months ended January 2, 2026, as compared to the three months ended December 27, 2024, was primarily attributable to the ramp up of new contract awards partially offset by the fiscal year 2025 divestiture of Rapid Solutions.

Current wording

The increase in revenues for the three and six months ended April 3, 2026, as compared to the three and six months ended March 28, 2025, was primarily attributable to the ramp up of new contract awards and growth on existing programs and partially offset by the fiscal year 2025 divestiture of Rapid Solutions.

Previous wording

The decrease in revenues for the three months ended January 2, 2026, as compared to the three months ended December 27, 2024, was primarily attributable to the transition of certain contracts from consolidated to unconsolidated joint ventures, a fiscal year 2025 divestiture, and impacts from the government shutdown in the first quarter of fiscal year 2026. The reduction in revenue was partially offset by growth on existing programs and the ramp up of new contract awards.

Current wording

The decrease in revenues for the three months ended April 3, 2026, as compared to the three months ended March 28, 2025, was primarily attributable to the transition of certain contracts from consolidated to unconsolidated joint ventures, a fiscal year 2025 divestiture, and the expected ramp-down of historical programs. The reduction in revenues was partially offset by the ramp up of new contract awards and growth on existing programs. The decrease in revenues for the six months ended April 3, 2026, as compared to the six months ended March 28, 2025, was primarily attributable to the factors described above and from the government shutdown in the first quarter of fiscal year 2026.

Previous wording

The decrease in Adjusted EBITDA for the three months ended January 2, 2026, as compared to the three months ended December 27, 2024, was primarily attributable to the change in revenue described above partially offset by strong operational performance.

Current wording

The increase in Adjusted EBITDA for the three and six months ended April 3, 2026, as compared to the three and six months ended March 28, 2025, was primarily attributable to strong operational performance partially offset by the change in revenues described above.

Previous wording

As of January 2, 2026, the Company had total backlog of $47.2 billion, compared with $45.2 billion as of December 27, 2024, an increase of $2.0 billion primarily due to new contract wins partially offset by revenue recognized on current contracts. Funded backlog as of January 2, 2026 was $6.9 billion.

Current wording

As of April 3, 2026, the Company had total backlog of $47.8 billion, compared with $44.8 billion as of March 28, 2025, an increase of $3.0 billion primarily due to new contract wins partially offset by revenue recognized on current contracts. Funded backlog as of April 3, 2026 was $6.9 billion.

Previous wording

Given the nature of our operations and contract type mix, we expect the impact of inflation on our business may be limited for some of our contracts. During the three months ended January 2, 2026, 57% of our revenues was generated under cost-plus-fee type contracts that have limited inflation risk as they include provisions that adjust revenues to cover costs affected by inflation. The remainder of our revenues was generated under time-and-materials or fixed-price type contracts which we have historically been able to price in a manner that accommodates inflation and cost increases over the period of performance but changes in our expectations with respect to inflation rates or in the overall mix of our contract types could cause future results to differ substantially.

Current wording

Given the nature of our operations and contract type mix, we expect the impact of inflation on our business may be limited for some of our contracts. During the six months ended April 3, 2026, 57% of our revenues was generated under cost-plus-fee type contracts that have limited inflation risk as they include provisions that adjust revenues to cover costs affected by inflation. The remainder of our revenues was generated under time-and-materials or fixed-price type contracts which we have historically been able to price in a manner that accommodates inflation and cost increases over the period of performance but changes in our expectations with respect to inflation rates or in the overall mix of our contract types could cause future results to differ substantially.

Previous wording

The Credit Facility consists of our term facility (“Term Loan”) maturing on September 27, 2031 and a $850 million revolving facility (“Revolver”) maturing on September 27, 2029, which includes a $200 million letter of credit subfacility and a $100 million swingline subfacility. The Term Loan requires quarterly principal amortization payments of $9 million, which commenced on March 31, 2025, with the remainder of the principal thereunder being due at maturity. In August 2024, the Company also completed an offering of $1,000 million in aggregate principal amount of 7.250% senior notes due August 1, 2032 (the “Senior Notes”).

Current wording

The Credit Facility consisted of our term facility (“Term Loan”) maturing on September 27, 2031 and a $850 million revolving facility (“Revolver”) maturing on September 27, 2029, which included a $200 million letter of credit subfacility and a $100 million swingline subfacility. The Term Loan required quarterly principal amortization payments of $9 million, which commenced on March 31, 2025, with the remainder of the principal thereunder being due at maturity. The interest rates applicable to the Term Loan were floating interest rates equal to an Alternate Base Rate or Adjusted Term Secured Overnight Financing Rate (“SOFR”) plus an applicable margin based upon our net leverage ratio. On April 24, 2026, we entered into the first amendment to the Credit Facility. The amendment established a new $1,400 million senior secured term loan A facility (“Term Loan A”) due April 2031, amended the existing Term Loan, including a reduction in outstanding principal and revised terms, into a new $1,591 million senior secured term loan B facility (“Term Loan B”) due September 2031 and increased the Revolver by $150 million. See Note 14 — Subsequent Events of the notes to the condensed consolidated financial statements contained within this Quarterly Report on Form 10-Q. In August 2024, the Company also completed an offering of $1,000 million in aggregate principal amount of 7.250% senior notes due August 1, 2032 (the “Senior Notes”).

Previous wording

Net cash used in investing activities increased by $25 million for the three months ended January 2, 2026 when compared to the three months ended December 27, 2024 primarily due to contributions to equity method investments.

Current wording

Net cash used in investing activities increased by $12 million for the six months ended April 3, 2026 when compared to the six months ended March 28, 2025 primarily due to contributions to equity method investments partially offset by returns of capital from equity method investments.

Previous wording

Net cash used in financing activities increased by $4 million for the three months ended January 2, 2026 when compared to the three months ended December 27, 2024 primarily due to the principal payment on our Term Loan, which was not required in first quarter of fiscal year 2025, partially offset by distributions to non-controlling interests.

Current wording

Net cash used in financing activities increased by $16 million for the six months ended April 3, 2026 when compared to the six months ended March 28, 2025 primarily due to the principal payments on our Term Loan, which were not required in first and second quarters of fiscal year 2025.