Amentum Holdings (AMTM) risk factors, FY2024 10-K

Risks Related to our Business and Industry

1. 01OCIs, and any OCIs that may develop, could preclude our competition for or performance on a significant contract, which could limit our opportunities
2. 02These various uncertainties, restrictions, and regulations including oversight audits by government authorities as well as profit and cost controls, could have a material adverse impact on our business, financial condition and results of operations
3. 03A delay in the completion of the federal government’s budget process, a decline in the federal government budget, changes in spending or budgetary priorities or delays in contract awards may materially adversely affect our business, financial condition and results of operations
4. 04A significant portion of our revenue is derived from task orders under IDIQ contract vehicles where we perform in either a prime or subcontractor position
5. 05We engage in a highly competitive business. If we are unable to compete effectively, we could lose market share and our business and results of operations could be negatively impacted
6. 06Our results of operations depend on the award of new contracts and the timing of the award of these contracts
7. 07Continuing elevated inflation, rising or continued high interest rates, and/or costs could reduce the demand for our services as well as decrease our profit on our existing contracts, in particular with respect to our fixed-price contracts
8. 08Our safety record is critical to our reputation. Many of our customers require that we meet certain safety criteria to be eligible to bid for contracts, and our contracts may provide for automatic termination or forfeiture of some or all of our contract fees or profit in the event we fail to meet certain measures
9. 09The nature of our contracts, particularly any fixed-price contracts, subjects us to risks of cost overruns
10. 10Our failure to meet performance requirements or contractual schedules could adversely affect our business, financial condition and results of operations
11. 11The contracts in our backlog may be adjusted, canceled or suspended by our customers and, therefore, our backlog is not necessarily indicative of our future revenues or earnings
12. 12We are dependent on third parties to complete many of our contracts
13. 13Employee, agent or partner misconduct, or our overall failure to comply with laws or regulations, could weaken our ability to win contracts, which could result in reduced revenues and profits
14. 14Cybersecurity or privacy breaches, or systems and information technology interruption or failure could adversely impact our ability to operate or expose us to significant financial losses and reputational harm
15. 15If we do not have adequate indemnification for our nuclear services, it could adversely affect our business, financial condition and results of operations

Risks Related to International Operations

1. 16Our international operations are exposed to additional risks and uncertainties, including unfavorable political developments and weak foreign economies
2. 17Changes in domestic and foreign governmental laws, regulations and policies, changes in statutory tax rates and laws, and unanticipated outcomes with respect to tax audits could adversely affect our business, profitability and reputation
3. 18We work in international locations where there are high security risks, which could result in harm to our employees or unanticipated costs

Risks Related to Acquisitions, Investments, Joint Ventures and Divestitures

1. 19Our use of joint ventures, partnerships and strategic investments in entities exposes us to risks and uncertainties, many of which are outside of our control
2. 20An impairment charge on our goodwill or intangible assets could have a material adverse impact on our financial position and results of operations
3. 21Our business strategy relies in part on acquisitions and strategic investments to sustain our growth. These transactions present certain risks and uncertainties
4. 22If our leadership is unable to successfully integrate acquired companies or implement our growth strategy with respect to acquisitions and/or strategic investments, our operating results could be harmed. Moreover, we may not continue to successfully expand or the growth or expansion may not result in profitability

Risks Related to Regulatory Compliance

1. 23As a U.S. federal government contractor, we are subject to various procurement and other laws and regulations and could be adversely affected by a failure to comply with these laws and regulations or changes in such laws and regulations
2. 24The U.S. federal government may adopt new contract rules and regulations or revise its procurement practices in a manner adverse to us at any time

Risks Related to Our Indebtedness and Credit Markets

1. 25We have a significant amount of indebtedness, which could adversely affect our financial condition or decrease our business flexibility
2. 26Restrictions imposed by our senior credit facility limit our ability to operate the business and to finance our future operations or capital needs or to engage in other business activities
3. 27Our credit facility includes variable rates, which subject us to interest rate risk and could cause our debt service obligations to increase and net income and cash flows to correspondingly decrease

Risks Related to the Transaction

1. 28We may not realize the anticipated financial and other benefits, including growth opportunities, expected from the Transaction
2. 29factors and a number of factors beyond our control, including, without limitation, general economic conditions, increased operating costs and regulatory developments
3. 30The integration following the Transaction may present significant challenges, and the failure to successfully integrate could have a material adverse effect on our business, financial condition or results of operations
4. 31The CMS Business may not be successfully integrated. The failure to do so could have a material adverse effect on our business, financial condition or results of operations
5. 32Under the terms of the Transaction, we are restricted from taking certain actions that could adversely affect the intended tax treatment of the transactions, and such restrictions could limit our ability to implement strategic initiatives that otherwise would be beneficial
6. 33The Transaction could have an adverse effect on our business, financial condition and results of operations
7. 34We have incurred significant costs related to the Transaction and the transition to becoming a standalone public company, which could have a material adverse effect on our liquidity, cash flows and operating results
8. 35We may be unable to make, on a timely or cost-effective basis, the changes necessary to operate as an independent publicly traded company, and we may experience increased costs due to the Transaction
9. 36In connection with the Transaction, we are responsible for all the CMS Business assets and liabilities on an “as is,” “where is” basis
10. 37The CMS Business may be negatively impacted if we are unable to provide benefits and services, or access to equivalent financial strength and resources, to the CMS Business that historically have been provided by Jacobs
11. 38We may have been able to receive better terms from unaffiliated third parties than the terms we received in our agreements with Jacobs
12. 39Certain of our directors and officers may have conflicts of interest because of their former positions with or financial interests in Jacobs
13. 40Our amended and restated certificate of incorporation contain a provision renouncing our interest and expectancy in corporate opportunities
14. 41Delaware law and anti-takeover provisions in our amended and restated articles of incorporation, amended and restated bylaws, stockholders agreement and other governance documents may impede or discourage a takeover or change of control and limit the power of our shareholders
15. 42Jacobs may fail to perform under various transaction agreements or we may fail to have the necessary systems and services in place when the transition services agreement expires

Risks Related to Our Common Stock

1. 43Amentum Equityholder owns a significant percentage of our common stock
2. 44Our quarterly results may fluctuate significantly, which could have a material negative effect on the price of our common stock
3. 45There can be no assurance that we will pay dividends on our common stock
4. 46Your percentage of ownership in Amentum may be diluted in the future
5. 47A significant number of shares of our common stock may be sold or otherwise disposed of, including the shares of our common stock that Jacobs initially owns, which may cause our stock price to decline
6. 48We cannot predict whether large amounts of our common stock will be sold in the open market. We are also unable to predict whether a sufficient number of buyers of our common stock to meet the demand to sell shares of our common stock at attractive prices would exist at that time
7. 49Our stock price may be volatile
8. 50Stock markets in general have experienced volatility that has often been unrelated to the operating performance of a particular company. These broad market fluctuations could adversely affect the trading price of our common stock

Risks Related to Climate Change

1. 51Climate change-related weather issues could have a material adverse impact on our, or our customers’, equipment and infrastructure which could negatively impact our business, financial condition and results of operations
2. 52We may be affected by market or regulatory responses to climate change
3. 53We may be unable to achieve our climate commitments and targets
4. 54Demand for our services is impacted by economic downturns, reductions in government or private spending and times of political uncertainty
5. 55uncertainty. Consequently, our results have varied, and may continue to vary, depending upon the demand for future projects in the markets and the locations in which we operate
6. 56We may not be able to protect our intellectual property or that of our customers
7. 57We also hold licenses to third-party technology or intellectual property which may be utilized in our business operations. If we are no longer able to license such technology or intellectual property on commercially reasonable terms or at all, our business and financial performance could be adversely affected
8. 58Indemnity provisions in various agreements to which we are party potentially expose us to substantial liability for infringement, misappropriation or other violation of intellectual property rights, data protection and other losses
9. 59Impairment of long-lived assets or restructuring activities may require us to record a significant charge to earnings
10. 60Our success depends, in part, on our ability to work with complex and rapidly changing technologies to meet the needs of our customers
11. 61We may use artificial intelligence, machine learning, data science and similar technologies in our business, and challenges with properly managing such technologies could result in reputational harm, competitive harm, and legal liability, and adversely affect our business, financial condition and results of operations
12. 62Increasing scrutiny and changing and conflicting expectations from governmental organizations, customers, and our employees with respect to our environmental, social, and governance (“ESG”) and diversity and inclusion-related practices may impose additional costs on us or expose us to new or additional risks
13. 63We maintain our cash at financial institutions, often in balances that exceed federally insured limits
14. 64Our businesses could be materially and adversely affected by events outside of our control
15. 65The expiration of our collective bargaining agreements could result in increased operating costs or work disruptions, which could potentially affect our results of operations
16. 66Our benefit plan expenses and obligations may fluctuate depending on various factors, including inflation and changes in levels of interest rates
17. 67Current and future environmental, health, and safety laws could require significant additional costs to achieve or maintain compliance and/or to address liabilities
18. 68A failure to attract, train, retain and utilize skilled employees and our senior management team would adversely affect our ability to execute our strategy and may disrupt our operations