AMTM - NYSE

Ladies and gentlemen, thank you for standing by. Good morning, and welcome to Amentum's Fiscal Year 2024 Earnings Conference Call. Today's call is being recorded. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session, and instructions will be provided at that time. I would now like to turn the call over to Nathan Rutledge, Senior Vice President of Investor Relations. Please go ahead, sir.

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.

Thank you, Nathan, and good morning, everyone. Thanks for joining us today and welcome to Amentum's earnings conference call. This is an exciting moment for us as we embark on a new chapter and I want to start by expressing my gratitude to the new Amentum team. I am proud of their dedication, expertise and preparation that made this milestone possible. Together, we have set a new course for the future of our business. Before getting started, let me first outline our agenda and key topics that we will cover on today's call. To kick off, I'll provide an overview of Amentum, including our differentiated position within the market and the incredible advantages of our transformative merger. Next, I'll highlight key metrics related to our fiscal 2024 performance. Then, speak in-depth about our growth opportunities and strategic priorities. And lastly, I'll provide thoughts on the evolving industry dynamics before passing the call to Travis to discuss our financial results in more detail. Amentum is a global leader in advanced engineering and technology, trusted to deliver mission-critical solutions with roots deeply tied to a legacy of operational excellence. Through one of the largest mergers in our industry's history, we created a sector leader with unique capabilities and a steadfast commitment to delivering critical solutions to our customers. With impressive scale and a highly skilled and talented team of over 53,000 employees across over 80 countries, we are well placed to drive exceptional value and innovation in the industry. You'll hear me talk a lot about our people, and it's because I believe they are our greatest asset and a true differentiator. Our team includes a robust network of engineers specializing in disciplines such as environmental, software, aerospace, computer and systems engineering, along with approximately 15,000 STEM professionals. This deep and technical talent base provides the skills required to develop the comprehensive solutions our customers and their complex missions require. In spending time traveling around the world, meeting with employees and customers, I've seen firsthand the innovative work we are doing executing many of our customers' most critical projects, and it gives me great confidence in the future that lies ahead for the new Amentum. Underpinning this depth of technical expertise is a culture of innovation, supporting the growth of our people and capabilities, ensuring we continue to attract and retain the best talent in the industry. I'm also extremely grateful to have an exceptional leadership team working alongside me leading the way forward. Turning to Slide 4, I first want to take a moment to reflect back on the landmark multi-billion dollar merger with Jacobs' Critical Mission Solutions and Cyber and Intelligence units. This transformative combination has created a larger, more diversified company poised to tackle the most complex global challenges. And thanks to our team's exceptional effort, we were ready to execute from day one with a harmonized organizational structure and go-to-market platform. On October 1st, we celebrated this milestone by ringing the bell at the New York Stock Exchange, marking the public launch of the new Amentum. Looking ahead, our integration efforts are progressing well and our teams have aligned well around shared goals and values, actively collaborating to unlock new areas of opportunity across the business. On our financials, fiscal year 2024 results reflect the strength of our business and provide a solid foundation to start this next phase of our journey. I'll touch on the headlines briefly here and Travis will take you through a more detailed analysis later in the presentation. We are pleased to report strong pro forma financial results above our Capital Markets Day expectations. For the full year, we delivered revenues of $13.9 billion, representing 4% organic growth and adjusted EBITDA of $1.05 billion, representing 7% year-over-year growth, driven by a 20-basis-point year-over-year margin improvement. We ended fiscal year 2024 with $45 billion in backlog, representing 3.2 times annual revenue coverage. Net bookings totaled $12 billion, which further underscores the strength of our end markets and the full lifecycle solutions we provide for our diverse base of customers. To demonstrate Amentum's depth and breadth of advanced engineering and technology solutions expertise, I'd like to highlight a few recent awards. First, Amentum was awarded a task order to deliver microelectronics capabilities to the U.S. Navy through the IAC-MAC award vehicle. For years, Amentum has focused on cutting-edge RDT&E programs for customers like DARPA. By growing our base of technical experts, combining advanced sensor networks with model-based systems engineering to develop next-generation systems, we are driving strong demand from defense customers. And because these capabilities are in high demand, we see opportunities to capture new work with a broad set of customers. Second, the U.S. Department of Energy awarded the Hanford Integrated Tank Disposition Contract, a 10-year $45 billion single-award IDIQ to a joint venture partnership, which includes Amentum. This award is an excellent example of Amentum's long history and extensive experience bringing advanced technical solutions to safely manage waste and advance our country's most complex cleanup missions. Third, we secured a position on the UK's Hypersonic Technologies and Capabilities Development Framework, drawing on our success delivering value to U.S. defense customers through digital engineering solutions. This work will support the creation of a UK hypersonic capability is another example of what Amentum is seeking to replicate, leveraging expertise gained from delivering solutions to customers in one part of our business and win business in an adjacent government, commercial or international market. On the commercial side, Amentum was awarded contracts of more than $1 billion in fiscal year 2024 to support a variety of Fortune 500 customers in areas, including advanced product research and development, next-gen wireless network design and optimization, critical infrastructure management, and clean energy solutions, such as support for small modular reactors, or SMRs. To bring it all together, our scale, diversity and deep customer relationships give us a competitive advantage to win in the U.S. and internationally. This unique positioning, in particular, our end market diversification, ensures we have a strong foundation to navigate changing market environments. Turning to Slide 5, we have identified several key areas where the end-to-end solution capabilities unlocked through the merger strategically aligned the new Amentum with mega trends and customer priorities. Together, we have increased our ability to deliver mission critical support across a wider scope of customer offerings. This broader range of advanced engineering and technology solutions, supported by our multi disciplined engineering centers of excellence, enables us to expand our pipeline of large enterprise contracts and opens the door to growing addressable markets, such as the energy transition and digital modernization. We also see significant growth potential in new markets through existing capabilities, leveraging a successful track record of delivering critical engineering and technology solutions to customers in different industries. This includes commercial opportunities where we can leverage large customers with growing needs, in many cases, driven by next-gen infrastructure. These white space opportunities enhanced by Amentum's end-to-end capabilities are areas that can support our future growth. To build on the point of addressable market expansion, we also see an opportunity to accelerate international growth by leveraging security initiatives like AUKUS. With a strong footprint in the U.S. and a presence around the globe, including the UK and Australia, we are well positioned to pursue the largest and most important global contracts for the U.S. and allied governments. We also see a significant opportunity for growth through our portfolio of IDIQs. Both Amentum and CMS had IDIQ vehicles with contracts representing a combined $450 billion in contract ceiling. This strengthened position with more experienced capabilities and stronger customer relationships will enable us to expand our addressable market inside these IDIQs to accelerate revenue growth and enhance margins. And finally, global mega trends provide a compelling backdrop for Amentum's continued success, shaped by several key accelerators. An increasingly complex geopolitical landscape, including the rise of near-peer adversaries, is growing demand for critical solutions, particularly in defense and intelligence. This rapid pace of technological advancement underscores the urgent need for modernization to ensure both the public and private sector can adapt. Together, this will continue to drive strong customer demand for Amentum's core capabilities. Let's turn now to Slide 6 to discuss how Amentum is positioned to address recent developments following the election and the newly announced Department of Government Efficiency. The incoming Trump administration has outlined plans to reduce waste, streamline processes and modernize the federal government. As you're all likely aware, the specifics of this plan are yet to be released, but we believe this strategy focuses on creating efficiencies through innovation and technology and, therefore, aligns well with Amentum's core strengths. Amentum benefits from an industry-leading backlog position of $45 billion. We have a diversified customer base across areas of critical importance, including international and commercial markets, which together account for approximately 20% of our revenues. In the defense, intelligence and space markets, Amentum is delivering solutions that are well aligned with national security priorities. In environment, we are providing engineering capabilities vital to addressing global environmental challenges in the energy transition. In our civilian market, we provide highly complex solutions critical to some of our government's most important functions. This diversity in backlog positions Amentum well to adapt to shifting customer priorities. Our ability to respond effectively to shifting customer needs is rooted in our expertise combining technology-enabled engineering and mission critical performance. We also have a successful track record across various contract types, including over $5 billion of revenues from fixed price and time and materials contracts. Finally, it is important to note that Amentum benefits from a highly flexible cost structure and capital-light business model. For all these reasons, we believe that Amentum is well positioned to navigate potential changes and to deliver impactful solutions that align with the administration's stated goals. Before I hand it over to Travis, I want to emphasize that while it is early days as a public company, we are very pleased with our progress and believe we have set a strong foundation and culture for future growth. Our priorities are clear, drive growth, leverage our expertise to meet evolving customer needs and deliver long-term value for our stakeholders. By focusing on this strategy, supporting our valuable innovative and customer-focused culture and executing effectively, we are well positioned to strengthen our market leadership and deliver long-term growth. With that, I will hand it over to Travis who will take you through the financials in more detail.

Thank you, John, and good morning, everyone. I'm pleased to discuss with you today Amentum's financial performance that reflects the strong momentum we are seeing across the business. We're operating at the forefront of a dynamic market and we are energized by the opportunities ahead for Amentum. I look forward to keeping you updated on our progress as we execute our strategy and capitalize on an incredible opportunity to drive long-term value for our stakeholders. Before diving into the details, I'd like to note that while our GAAP results provide an accounting view of Amentum's legacy business, including CMS, today's discussion will focus on pro forma results. These figures offer a combined view of the new Amentum business and will provide performance insight on a more comparable basis going forward. Let's turn to Slide 7, which highlights the strong fiscal year 2024 performance John mentioned earlier. Pro forma results were above our Capital Markets Day expectation as a result of robust revenues of $13.9 billion, representing 4% organic growth. The year-over-year increase was driven by the ramp up of new programs and on-contract growth, partially offset by the expected winddown of other historical programs. Pro forma adjusted EBITDA was $1.05 billion, reflecting a 7% increase year-over-year and benefited from a 20-basis-point increase in adjusted EBITDA margin as a result of strong operational performance. Fiscal year 2024 ending backlog was $45 billion, representing 3.2 times annual revenue coverage. The pro forma book-to-bill was 0.8 times and excludes the Hanford contract John mentioned earlier, as well as over $2 billion of recompete awards that were under protest and over $23 billion of submitted bids awaiting award decision. It is important to highlight that given Amentum's longer-than-average contract duration, book-to-bill can experience greater variability from recompete timing without impacting our revenue outlook. Looking ahead, we expect to submit over $35 billion of bids in fiscal year 2025 and remain confident that our strong backlog and robust pipeline position us well to achieve our future growth objectives. Moving to Slide 8, we continue to be excited about the prudent capital structure put in place through the well-received debt offering executed in connection with the merger. We believe our balance sheet strength and strong liquidity position will help fuel continued growth as our priorities remain the same, driving sustainable growth while maintaining a disciplined approach to capital deployment. With the earliest maturity in 2029, the offering solidified our capital structure over the next several years while at the same time allowing flexibility to pay down debt to meet our leverage objectives. Fiscal year 2024 ending net leverage of 3.9 times, including the impact of expected run rate net cost synergies, came in slightly better than expected. We remain committed to prioritizing free cash flow to pay down debt and to achieving our target net leverage of approximately 3 times by the end of fiscal year 2026. On Slide 9, let's now discuss our fiscal year 2025 outlook. I'll start by noting that the forecast was developed through a rigorous bottoms-up process, incorporating detailed program-by-program inputs from across the business and expectations for recompetes and new business on a specific opportunity basis. We are affirming guidance provided at Capital Markets Day, including revenues in the range of $13.8 billion to $14.2 billion, and adjusted EBITDA between $1.06 billion and $1.1 billion. Growth driven by new program awards and on-contract growth is expected to be partially offset by the winddown of certain historical programs, including [indiscernible]. With only 8% of revenues expected to come from new business and with over $23 billion of submitted bids award awaiting decision, we have good line of sight and are confident in our position starting the fiscal year. In addition, we are introducing adjusted net income and adjusted diluted earnings per share metrics, as disclosed and defined in our press release and supplemental financial slides. These adjusted measures reflect how management evaluates the underlying performance of the business and provide a basis for comparison with similar companies in our industry. For fiscal year 2025, we expect adjusted diluted earnings per share between $2 and $2.20. From a modeling perspective, you should expect a non-GAAP effective tax rate of approximately 24%, interest expense between $355 million and $365 million, depreciation and amortization expense between $510 million and $520 million, and approximately 244 million diluted weighted average shares outstanding. We are also affirming our free cash flow guidance, which is projected to be between $475 million and $525 million, supported by our capital-light business model and enhanced by targeted operational efficiencies. The cash flow guidance contemplates cash interest between $325 million and $340 million, tax payments between $145 million and $165 million, and capital expenditures between $40 million and $50 million. I will note that we expect quarterly sequential increases in all metrics through fiscal year 2025, primarily as a result of newly awarded programs ramping up as well as from a 53rd week in the fourth quarter. Further, we expect cash flow will follow normal seasonality with the majority generated in the second half of the fiscal year as a result of fringe benefit and payroll timing and as a result of expected strong collections in the fourth quarter, given our alignment with the government fiscal year-end. Finally, on Slide 10, I would like to introduce the two reportable segments, Digital Solutions and Global Engineering Solutions, that we are excited to begin reporting on in fiscal year 2025. For more information, including a recast of historical performance, please refer to the supplementary financial information which will be available on our Investor Relations website. Closing on Slide 11, we are pleased with our fiscal year 2024 performance, which reflects the strength of our business and track record of execution. As we look forward to fiscal year 2025 and beyond, we are well positioned to meet our financial objectives and remain confident in our ability to deliver strong free cash flow growth and long-term value for stakeholders. With that, operator, please open the line for questions.

[Operator Instructions] We'll take our first question from Tobey Sommer with Truist. Your line is open.

Thank you. Good morning. I was hoping you could elaborate on your comments on DOGE, which I did appreciate in the prepared remarks, and maybe draw a spectrum of the areas that you think are least likely to come under budget pressure where other ones that may come under budget pressure, and understanding that your specific activities, hard to discern what will happen there. And then, maybe could you comment on what you're hearing from your legislative affairs people for how long a CR is likely to last into next year?

Yeah. Hi, this is John. Obviously, DOGE is a big topic for the entire industry as we wait to hear what the details are. And I think that's probably the first thing I would say is, it's really too early to make a call as to where DOGE is going to focus or what the potential impact will be. I would say from our perspective, we have 80% of our focus on the U.S. government, 20% between international governments and commercial. And then, even our 80% of the U.S. government, primarily national security focused, we feel very strongly that the work we do for the U.S. government is very much focused on critical missions. We've seen that like in sequestration, other shutdowns where vast majority of our work just is deemed a priority and keeps going. With that said, we know that DOGE is a real element within the incoming administration. We are very much waiting to hear more details. I think when you look at the portfolio mix of our business, a very small percentage of our overall portfolio focused on civilian agencies. So, we do think that we have limited exposure to what might be the priority focus of DOGE. Even what we do for the civilian agencies, very national security focused, homeland security, rocket technology, things that are priority. And even, I guess, if you look at NASA and that area of the business, we do believe that the U.S. is in a kind of a space race with the Chinese, very much a priority, in terms of national security, just keeping up with the Chinese. So, I think overall, we're pretty confident that Amentum is in a very strong position. With respect to the continuing resolution, our understanding is that the administration is working on a plan to kind of kick that ball further into the future far beyond the administration's transition to something between February and April will be our expectations of where the CR will take us.

Thanks. I appreciate that. If I could just get a couple more in? I'm wondering, I know you're fresh off of the merger. It hasn't been that many months. What have you learned since the combined company that maybe you didn't fully know at the Capital Markets Day? And I'm curious from a leverage perspective -- well, I see you're affirming your guidance to delever over the next couple of years. Is there any opportunity to do it a little bit more quickly by, I don't know, any portfolio shaping or anything that you could do on a proactive basis?

Really a key topic. Appreciate you raising it. I think first -- Steve Arnette here, Tobey. First, I would say that we knew coming into the merger. We can see kind of academically, if you will, that the combined company would have a significantly strengthened position in the market, both from an expanded set of broader scope, if you will, of customer offerings, but also from the fact that both incoming businesses will gain access to a lot of new customers. So, we were excited about the potential there. I would say internally, as we've now come together and had two-plus months of working together, we're really energized by what we've seen. We see across the breadth of the combined company, the opportunity to really accelerate and continue advancing our digital capabilities, which position us well for larger contracts in key growth markets. We have, in bringing that to life, been able to identify and really connect experts from across the business and emerging technology areas. We formalized nine centers of excellence. We've already stood up a host of technical advisory groups and key technology areas, and we have put that into motion. And so, what we've really mobilized right away is a set of experts that bring knowledge of a multitude of use cases in some of these advanced technology areas. It's almost become like an internal crowdsourcing, if you will, and being able to bring the best solutions to all of our customer opportunities. We think it creates higher key win for the business and mobilizing the growth engine, and it really results in the key solutions that customers need. So, we're excited about that. And just quickly by way of specific opportunities, if you think about the white space from both businesses, there's a kind of, as we come together, big opportunities in terms of kind of clean energy transition, a lot around nuclear and SMRs that were addressed in the prepared remarks, but global opportunities for intelligence, analytics and specialized operations, a lot in the way of national security space that we are now together well positioned to go win and execute as well as a lot of international opportunity around AUKUS and other programs. So, we have kind of brought that to life in a way that's been, I would say, better than we could even have known before we were joined together as one company. And Travis, maybe you want to comment on the leveraging question?

Yeah. Thank you. Good morning. In regards to leverage, we're definitely excited about first and foremost where we ended fiscal year 2024, which was slightly better-than-expected, really driven by EBITDA that was slightly higher than expectations as well as better-than-expected cash performance. And so, as we look forward, and you're right, we're committed to that 3 times net leverage target by the end of FY '26. There are a couple areas that we see that we aren't counting on that could accelerate our ability to delever, maybe just to name a couple. First is, as we look at working capital, we've kind of assumed a stable working capital environment, but even as we come together, we see opportunities to take best practices from both legacy organizations perhaps perform a little bit better on DSO and days working capital efficiency. And then, obviously, we provided a range of outcomes in our guidance related to EBITDA. And if we're able to perform at the higher end of that range, obviously, that will help accelerate deleveraging. And as part of that, the cost synergy commitments that we've made, we're making good progress there. We see great line of sight into kind of how we've thought about that will time phase out over the next few years, and that could certainly be a catalyst to help us accelerate our leverage targets headed into fiscal year 2026.

Thank you. I'll get back in the queue.

Thank you. We'll take our next question from Trevor Walsh with Citizens JMP. Your line is open.

Great. Good morning, team. Thanks for taking my questions, and congrats on a solid public market debut. Maybe just at a high level, there were some really good announcements during the quarter around environmental/kind of nuclear-focused deals. And just curious kind of how you guys are viewing that opportunity with kind of with respect to AI more specifically, and if nuclear becomes more of a priority for whether it's here domestically or internationally, if you feel like you're well positioned kind of in the current set of capabilities to help kind of, I guess, reinvigorate that area, or if there might be some more training or people to bring on board in order to kind of better attack that opportunity and kind of just what you feel kind of that kind of longer term sort of picture of what that might look like over time from an opportunity perspective?

Yeah. This is John. Very strong area for Amentum, as I think everyone knows, and bringing these two companies together only strengthened our ability to deliver in this environmental and energy market in the U.S., very strong presence, but now even in Europe, Asia presence around the world as a leader in environmental remediation and energy -- in the energy sector and great success as well. Our track record of winning is very strong. We're a leader in the U.S., a very significant partner to the UK government in this area and governments across Europe and now even in Japan. But of course, the biggest significant event for us was the Hanford contract win. We've been doing that work for some time, great partnership, and we're able to kind of bring that after a few protests to conclusion and have that in our business for the next 10 years is really exciting, $45 billion contract. So, large strong track record. We do see continued growth. We see that in the energy area, in particular, across Europe where we're partnered with companies, OEMs that are developing small modular reactors and there's really a push to get out of the development of fossil fuels as a source of electricity and expand and invest in those areas. And our engineering capability is well known and opening up opportunities in the energy sector. But we also see opportunities with NNSA here in the U.S., where we have a great footprint with the Department of Energy and there's a whole host of opportunities on the NNSA side that we see as growth going forward. And then, using technology, as you mentioned, we think is key and an opportunity with the broader footprint of Amentum to leverage that. I don't know Steve, maybe you want to talk about some of the things we're doing in the technology area to help spur growth?

Really appreciate that, John. I think that these emerging tech areas, and I addressed it earlier, are one of the most compelling findings that we've unearthed as we've come together and began collaborating as the new Amentum. You mentioned AI, and it's really been a little bit, pretty powerful actually to see all of the different use cases. And the striking characteristic is maybe you think of AI as being something that's mobilized in the intel sector. It really cuts across sectors, where our teams are deploying AI across intel, defense, several different commercial applications, even getting into some of the energy areas. And if you look at it and we kind of built out and connected that network of experts, the kinds of things we're doing with AI, certainly data collection and processing being able to take in rapid fashion, multiple streams of data, enhanced data analysis, even getting into predictive analytics. But a couple of things that to get to the next level is that we have been successful in being able to use the technology for real-time threat detection, really making a positive impact on some of the missions we support, as well as being able to start integrating this technology with existing security systems. Now, we know our teams highlight how, as you get into AI, you have to be very cyber security aware, because you're potentially, if you don't do it right, exposing data to potential attack. So, it's a premium on cybersecurity, and our teams have developed great processes for isolated implementations for critical missions of national importance. So, we're very excited about the momentum around AI across the business.

Great. Thanks, both, for the color. That's terrific. Maybe just a quick follow-up for Travis, if I can. The guidance assumptions that you laid out in the presentation called for 8% new business as part of that, kind of top-line estimate. Just for the comments around the incoming administration, I understand it's early days, et cetera, but how much of that 8% of new business kind of is there either wiggle room or kind of optionality? I think you had said $35 billion in contracts being submitted. I'm not sure if that was just for this coming fiscal year, if that has a longer term on it, but I guess how of that 8%, where I'm assuming there's multiple avenues to kind of get there, but how much does that maybe flux or change based on kind of what changes the kind of the incoming administration may or may not do?

Yeah, great. It's an important topic. The first thing that I highlight, as we put together our position to affirm the guidance we originally provided at Capital Markets Day is obviously the guidance reflects many different assumptions and scenarios in terms of how things could actually play out, which is obviously why we provide a range. And we feel confident in that range with everything that we know today. In terms of the composition of where we think the revenue can come from, you're right as we sit here today, over 92% we believe will come from existing work or from recompete awards. And then, what I would say about the new business that we have in our outlook, it's not concentrated in any one particular large opportunity that we need to win to be inside that guidance range. It really is a well-diversified set of opportunities, and it's aligned with what John talked about earlier really matters of critical importance for our nation as well as our commercial and international customers. So, we feel really good about where things stand at this point in the fiscal year and look forward to keeping you updated as the year progresses.

Great. Thanks for the questions. I'll get back in the queue.

Thank you. We'll take our next question from Brian Gesuale with Raymond James. Your line is open.

Hey, good morning, everyone. Thanks for taking my questions here. Just want to get maybe start with a housekeeping item. Hanford's not in book to bill. Was it in backlog? And if it's not, how would you mechanically add that into backlog with it being such a big contract?

Yeah, good morning, Brian. So, glad you asked the question. It is a unique dynamic as you look at Amentum's backlog by and large. As you know, in our environmental market, those customers do tend to procure a little bit differently than perhaps some of the other customers in our business through really joint venture partnerships to bring the strengths of both Amentum and our partners to bear on those opportunities. So -- and sometimes, they're consolidated joint venture opportunities where we do recognize revenue and they are reflected in backlog, and then other times, they're unconsolidated joint venture opportunities that, to your point, are not reflected in backlog. So, they represent really good opportunity for long-term solid cash flow that provides that stability that's really a fundamental thing in our business. So, Hanford, you're right, is not included in that, but we have contemplated obviously the earnings contributions both in our FY '25 and longer-term outlook.

Great. Appreciate that. Maybe just sticking on the kind of the bookings thread, you have $23 billion that you talked about that's waiting adjudication. Can you maybe break down, put a little bit finer point on new versus recompete, and then, talk about some of the bigger recompetes and the timing within that pipeline?

So, as of year-end, we had $23 billion of submitted bids award awaiting decision. Approximately 80% of those pending awards were new business. And then, I'll also just take this opportunity to reemphasize that we also had $2 billion worth of recompete awards. They were outstanding at year-end. Obviously, recompetes are a thing that naturally happen in our industry, but the $2 billion is a little bit higher. In fact, actually, it's almost nearly double what it was a year ago. So, something that we don't typically expect to see on recompete awards. And in terms of kind of looking forward and where the recompete opportunities are, there's no large kind of recompete award in that pending decision. As we've talked about, as we look at our top 10 contracts specifically, only one of those is up for recompete in fiscal year 2025. And in fact, it probably will get extended beyond then. So, we feel really good about the revenue composition and where it's going to come from within our guidance range for 2025.

And $2 billion of recompete awards under protest. We typically see protests on large bids and that's just part of the industry, but typically when they're recompetes and you win them, we see less of a probability, but that's, in some respects, not surprising. It just happens. But we feel pretty good about those -- that $2 billion of recompetes that's -- we were awarded and that are under protest and should be re-awarded shortly.

Great. That's helpful. And then, maybe John, just one for you. I'm pretty excited about the opportunities in your new intel footprint. Seems like the business has scale and some new contract vehicles. Can you maybe give us some thoughts on how you can kind of reaccelerate your intel footprint across the new enterprise?

This is a very significant focus for us, and I talked about it at Capital Markets Day, where when you step back and look at Amentum coming together very broad, we're in five core markets that we have talked about. And we do believe the intelligence market probably represents one of the larger growth opportunities of bringing these two companies together, partly because when you looked at the two businesses individually, neither of us were at scale. We each were just under $1 billion of footprint in the intelligence community, doing missions of significance, but just not at scale. The Jacobs' C&I business, very strong in cybersecurity, really well known in the community, both in kind of the regular three letter agency, civilian side, but also defense side and homeland security. And then, the Amentum side, very mission focused, data analytics and mission support. You bring the two together, more of an end-to-end capability, more customer reach, now a business that scale closer to about $1.7 billion. And our opportunity, we think, is on those enterprise mission support contracts, information technology focused enterprise contracts that we really weren't putting in our pipeline before. We didn't have the confidence. We didn't have the kind of backlog of experience doing those large enterprise contracts with the technology expertise that we needed. Now combined, we are looking to expand our backlog pipeline opportunities in those areas. And when you think of the breadth of the community, the NRO, as an example, was a customer, but something we weren't really focused on the big enterprise contracts. The NSA, the same, was a customer, but not really on those large enterprise contracts. DIA is a customer that we think with the SIA-3 contract as a prime that now opens up the door to do more together as a prime bidder, not a contract vehicle that we were focused as a prime before. So, we think there are lots of opportunity to expand our pipeline and that you will see that in the coming quarters our focus there.

Great. Looking forward to seeing that matriculate. Thanks so much for taking my questions.

Thank you. We'll take our last question from Tobey Sommer with Truist. Your line is open.

Thank you. Just wanted to solicit any kind of commentary you would have from a modeling perspective as far as seasonality or factors to consider, things that have changed. We know that you are affirming your annual guidance, but there may be inputs that have changed. Certainly, the rate outlook seems to be different than it was in August. And then, maybe wondering if you could give us the quarterly book to bill for the fourth quarter?

Yeah. In terms of seasonality, Tobey, based on the timing of our fiscal year and typical holiday and vacation timings, and then obviously, we have the dynamic of the ramp up of our new programs, the first half always tends to be a little bit lighter than the second half in terms of revenue, profitability, as well as cash, say, in that 48% range in the first half of the fiscal year and 52% in the second half of the fiscal year. In FY '25, that's also impacted by more business days that actually fall in the fourth quarter this fiscal year. So, those are just a couple of things to keep in mind. And then, in addition, we obviously have the ramp down of [indiscernible] that will be an impact through Q2 of fiscal year '25. And then, on the cash front, in addition to that, as you know, there's cyclicality sometimes in benefits, timing as well as payroll. And then, the fact that our fourth quarter aligns with the government fiscal year-end, that tends to be our strongest cash flow quarter with collections and DSO coming in better than the first three quarters of the fiscal year.

In the fourth quarter book to bill, I think we saw the fiscal commentary, but I was curious how that final quarter shaped up. And the last thing from me is, I was wondering if you could comment about if peace sort of breaks out in the Russia-Ukraine war as well as the multiple fronts that have been active in the Middle East calm down, do you -- what kind of direct or indirect exposure do you think that you have relative to sort of the high op tempo that even domestic customers may have in helping support those allies?

On the first part of that follow-up, Tobey, Q4 book to bill was less than 1, and it was really impacted by the $2 billion worth of recompete awards that were under protest, as well as the significant volume of submitted pending award of $23 billion. And then, I'll let John take the second part of that question.

Yeah. And I would just add that, I mean, we're very much focused on leveraging this combined business to expand our addressable market and see bidding improve and have a more consistent book to bill. But I mean, I could tell -- I could say, we are -- really kind of have a light of sight on bidding $35 billion this year. When you look at last year, we did win $12 billion, and we had over $30 billion of submits. So, we're expecting that number to grow. Now that was on a pro forma basis, but not leveraging the combined entity. Now, I think we've set a target of bidding $35 billion, and you can think once we really get our arms around what we brought together, we think that number can grow. So, thinking about years into the future, seeing $35 billion go up. So, we really think the opportunity, the power of these two companies together, the opportunity to reach into other addressable markets is going to give us the ability to bid more and win more. And then, just thinking of the second part of the question on kind of outside exposure, yeah, we have a diverse kind of business, which is our benefit, where international customers, commercial markets, and then, a range of customers within the U.S. government. So, we don't really have any one contract that drives the future of the business. And when you think of exposure to, say, conflict in Ukraine, as an example, we have a small amount of work that really is it -- doesn't even kind of rise up to a top part of our portfolio. One contract that we do that supports equipment that is U.S.-type equipment that still needs to be maintained that we do some logistics work on. But other than that, just no real exposure to conflict-related work. We just don't have much that, for instance, LOGCAP is not a significant factor in our business that we even could report on unlike some other companies.

Thank you very much.

Thank you. The question-and-answer session has concluded. I will now turn the program back over to John Heller, CEO, for closing remarks.

Well, thank you, Shelby. Great job, and thank you all for your interest in Amentum. We wish everyone a safe and healthy holiday season, and look forward to continuing to update you on our progress over the coming quarters. Thank you.