New Jacobs, Amentum creation puts focus on large enterprise contracts

The new company being formed through the merger of Amentum with two of Jacobs' government-facing business units will eventually have a name as the completion date draws closer.

But even with that detail TBD, the agreement to bring those three teams together and form a larger government services provider certainly has a blueprint for making the most out of the combination that all parties expect to close in the second or third quarter of calendar year 2024.

During a conference call with reporters Tuesday, Amentum's chief executive (and CEO-to be of the new company) John Heller described the new entity as a "global systems integration and technology solutions business" positioned in modernization efforts by the U.S. and allied governments.

Amentum has been on that pathway itself since the company's spinout in 2020 from then-parent AECOM, after which it acquired former competitors DynCorp International and PAE within less than two years of each other.

From the Jacobs side, the two units that are part of this combination are its Critical Mission Solutions segment and the Cyber & Intelligence business unit.

Dubbed internally as "C&I," the Cyber & Intelligence unit resides within Jacobs' Divergent Solutions segment that stood up over the course of 2022 to focus on data-centric programs.

The C&I team and Divergent Solutions as a whole also has been working on product development efforts as part of their larger offering. While Jacobs is retaining part of the product portfolio within C&I, Heller said the new company will also have a portion of that.

But contract opportunities on the horizon is where the new company will evidently focus much of its energy after it opens for business, and is a main driver of the rationale behind the merger.

Those opportunities are not just of a technology variety either, but are certainly part of the equation as Amentum and the Jacobs CMS and C&I teams have made tech central to their strategies.

"We will have the relationships with customers and the capabilities that they need and want a contractor to have, to compete and perform in these large enterprise contracts," Heller said on the call. "Our government and our allies are continuing to be challenged in areas like space, in cyber and mission operations."

Those three mission areas are where this new company wants to be a leader in.

As for the other areas, Heller provided a short list that includes engineering, science, data fusion and global energy.

That global energy leg involves a push by many U.S. and international governments to reduce or even eliminate their carbon footprints.

Inside "NewCo's" numbers

Amentum and Jacobs are touting the new entity as around $13.4 billion in combined annual revenue, a workforce of 53,000 employees across 83 countries.

The revenue figure is based on the fiscal years of Amentum and Jacobs, which run in concurrency with that of the federal government from October to September.

What everyone involved is currently calling "NewCo" would be placed between Leidos and Booz Allen Hamilton in terms of annual sales, according to Jacobs' presentation for investors on the transaction.

Leidos posted $15 billion in sales for the government's most recent year ended Sept. 30 and Booz Allen's top line was described as $10 billion in that presentation.

Amentum's fiscal year 2023 revenue totaled $7.9 billion, while the Jacobs CMS and C&I sales contributions to NewCo are at around $5.5 billion.

Amentum and Jacobs also estimate the new company's profit figure at $1.1 billion in projected 2024 combined adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), which translates to an 8% projected adjusted EBITDA margin.

Post-close, the new company expects to realize between $50 million and $70 million of net cost synergies. Amentum's corporate infrastructure is poised to continue in that role for the new company.