Amentum Holdings, Inc.

Previous 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.

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 for all government agencies except the Department of Homeland Security, which remained shutdown until funding was passed on April 30, 2026. 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 based on defense reconciliation legislation currently pending in Congress, 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 support, 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 continuing resolution (“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

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, including NASA’s increased focus on insourcing certain activities, 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

Cost of revenues — The increase in cost of revenues was primarily attributable to the timing of expenses. As a percentage of revenues, cost of revenues was 90.1% for the three months ended April 3, 2026 compared to 89.5% for the three months ended March 28, 2025.

Current wording

Cost of revenues — The decrease in cost of revenues was primarily attributable to decrease in revenues discussed above. As a percentage of revenues, cost of revenues was 89.7% for both the three months ended July 3, 2026 and June 27, 2025.

Previous 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.

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 3.5% for the three months ended July 3, 2026 from 4.6% for the three months ended June 27, 2025 primarily due to the reduction in SG&A discussed above.

Previous wording

Interest expense and other, net — The decrease in interest expense and other, net was primarily due to the reduction to our term loan principal balance as compared to the six months ended March 28, 2025.

Current wording

Interest expense and other, net — The decrease in interest expense and other, net was primarily due to the reduction to our term facility principal balance as compared to the three months ended June 27, 2025 and more favorable rates due to the first amendment to the Credit Facility (the “Amendment”).

Previous 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.

Current wording

Provision for income taxes — The effective tax rate for the three months ended July 3, 2026 was 29.8%, as compared to 108.3% for the three months ended June 27, 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

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.

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 89.9% for the nine months ended July 3, 2026 compared to 89.5% for the nine months ended June 27, 2025.

Previous wording

Selling, general, and administrative expenses (“SG&A”) — The decrease in SG&A was primarily attributable to synergies arising from the CMS merger. SG&A as a percentage of revenues decreased to 3.6% for the six months ended April 3, 2026 from 4.0% for the six months ended March 28, 2025 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 CMS merger. SG&A as a percentage of revenues decreased to 3.5% for the nine months ended July 3, 2026 from 4.2% for the nine months ended June 27, 2025 primarily due to the reduction in SG&A discussed above.

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 increased primarily due to the transition of certain contracts from consolidated to unconsolidated joint ventures during the six months ended April 3, 2026.

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 nine months ended July 3, 2026.

Previous wording

Interest expense and other, net — The decrease in interest expense and other, net was primarily due to the reduction to our term loan principal balance as compared to the three months ended March 28, 2025.

Current wording

Interest expense and other, net — The decrease in interest expense and other, net was primarily due to the reduction to our term facility principal balance as compared to the nine months ended June 27, 2025 and more favorable rates due to the Amendment.

Previous wording

Provision for income taxes — The effective tax rate for the six months ended April 3, 2026 was 31.0%, as compared to 66.7% for the six 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.

Current wording

Provision for income taxes — The effective tax rate for the nine months ended July 3, 2026 was 30.5%, as compared to 72.8% for the nine months ended June 27, 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

Net income attributable to non-controlling interests — Net income attributable to non-controlling interests includes the utilization of fair market value adjustments assigned to certain non-controlling interests based on the remaining period of performance for the related contract partially offset by the minority interests in our consolidated joint ventures that are not wholly-owned and was consistent with the three months ended March 28, 2025.

Current wording

Net income attributable to non-controlling interests — Net income attributable to non-controlling interests includes the utilization of fair market value adjustments assigned to certain non-controlling interests based on the remaining period of performance for the related contract partially offset by the minority interests in our consolidated joint ventures that are not wholly-owned and decreased due to the completion of certain contracts with follow-on contracts which transitioned to equity method investments.

Previous wording

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

Current wording

Segment Results for the Three and Nine Months Ended July 3, 2026 and June 27, 2025

Previous 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.

Current wording

The increase in revenues for the three and nine months ended July 3, 2026, as compared to the three and nine months ended June 27, 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

Adjusted EBITDA as a percentage of revenues decreased for the three and six months ended April 3, 2026 due to the divestiture and higher net program write-ups in the prior year quarter, partially offset by the increased revenue volume.

Current wording

The increase in Adjusted EBITDA for the three and nine months ended July 3, 2026, as compared to the three and nine months ended June 27, 2025, was primarily attributable to increased revenue volume, partially offset by the divestiture of Rapid Solutions and higher net program write-ups in the prior year.

Previous 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.

Current wording

The decrease in revenues for the three months ended July 3, 2026, as compared to the three months ended June 27, 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 nine months ended July 3, 2026, as compared to the nine months ended June 27, 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 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.

Current wording

The increase in Adjusted EBITDA for the three and nine months ended July 3, 2026, as compared to the three and nine months ended June 27, 2025, was primarily attributable to strong operational performance partially offset by the change in revenues described above.

Previous 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.

Current wording

As of July 3, 2026, the Company had total backlog of $48.2 billion, compared with $44.6 billion as of June 27, 2025, an increase of $3.6 billion primarily due to new contract wins partially offset by revenue recognized on current contracts. Funded backlog as of July 3, 2026 was $6.2 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 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.

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 nine months ended July 3, 2026, 56% 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 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”).

Current wording

On April 24, 2026, we entered into the Amendment to the Credit Facility. As amended, the Credit Facility consists of a $1,400 million senior secured term loan A facility (“Term Loan A”) due April 24, 2031, a $1,591 million senior secured term loan B facility (“Term Loan B”) due September 27, 2031 and a $1 billion revolving facility (“Revolver”) maturing on April 24, 2031, which includes a $250 million letter of credit subfacility and a $150 million swingline subfacility. Quarterly principal amortization payments on Term Loan A are equal to (a) 0.625% of the original principal amount of Term Loan A commencing September 30, 2026 through June 30, 2028, (b) 1.25% of the original principal amount of Term Loan A from September 30, 2028 through June 30, 2030, and (c) 1.875% of the original principal amount of Term Loan A thereafter with the remainder of the principal being due at maturity. Quarterly principal amortization payments on Term Loan B are equal to 0.25% of the original principal amount of Term Loan B commencing September 30, 2026, with the remainder of the principal being due at maturity. The interest rates applicable to the Term Loan A and Term Loan B are floating interest rates equal to an Alternate Base Rate or Adjusted Term Secured Overnight Financing Rate plus an applicable margin based upon our net leverage ratio.

Previous wording

Each of the credit agreement and indenture requires us to comply with certain representations and warranties, customary affirmative and negative covenants and, in the case of the Revolver, under certain circumstances, a financial covenant. We were in compliance with all covenants as of April 3, 2026.

Current wording

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”). The Credit Facility and the Senior Notes are guaranteed by substantially all of our wholly owned material domestic restricted subsidiaries, subject to customary exceptions set forth in the credit agreement and indenture, respectively. Each of the credit agreement and indenture requires us to comply with certain representations and warranties, customary affirmative and negative covenants and, in the case of the Term Loan A and Revolver, under certain circumstances, a financial covenant. We were in compliance with all covenants as of July 3, 2026.

Previous wording

Over the longer term, our ability to generate sufficient cash flows from operations necessary to fulfill the obligations under the Credit Facility, Senior Notes and any other indebtedness we may incur will depend on our future financial performance which could be affected by factors outside of our control, including, but not limited to, worldwide economic and financial market conditions.

Current wording

As part of our debt reduction initiatives, we made a $125 million voluntary principal payment on the Term Loan B on June 30, 2026. Over the longer term, our ability to generate sufficient cash flows from operations necessary to fulfill the obligations under the Credit Facility, Senior Notes and any other indebtedness we may incur will depend on our future financial performance which could be affected by factors outside of our control, including, but not limited to, worldwide economic and financial market conditions.

Previous wording

Net cash provided by operating activities decreased by $78 million for the six months ended April 3, 2026 when compared to the six months ended March 28, 2025 as a result of a $38 million increase in cash earnings offset by $116 million in changes in operating assets and liabilities.

Current wording

Net cash provided by operating activities decreased by $38 million for the nine months ended July 3, 2026 when compared to the nine months ended June 27, 2025 as a result of a $129 million increase in cash earnings offset by $167 million in changes in operating assets and liabilities.

Previous 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.

Current wording

Net cash used in financing activities decreased by $66 million for the nine months ended July 3, 2026 when compared to the nine months ended June 27, 2025 primarily due to the reduction in voluntary principal payments on the Term Loan B, which were $125 million and $191 million for the nine months ended July 3, 2026 and June 27, 2025, respectively.