Amentum Holdings LLC

The negative outlook reflects our expectation that Amentum's debt to EBITDA will be elevated through 2021 as a result of the DynCorp International acquisition. We estimate that credit measures will improve in 2022. We expect debt to EBITDA to be in the 6x-7x range in 2021, then improve to the 6x-6.5x range in 2022. We could lower our rating on Amentum if we expect leverage to elevate above 7x and remain there without prospects for improvement. This could occur if: The company's revenue and EBITDA margins were to decline significantly because of contract delays or contract losses; or The company pursues a large debt-financed acquisition, higher-than-expected capital improvement, or dividend. We could revise the outlook to stable if we expect

...Credit metrics will likely remain stable in 2021 and improve modestly in 2022 as the company continues the integration of DynCorp; however, stability and improvement could be limited by some pandemic-related award and request for proposal (RFP) delays. Since acquiring DynCorp International in late 2020, Amentum Holdings LLC has focused on identifying and implementing cost efficiencies, as well as best practice identification and implementation. We believe cost efficiencies such as system and platform integration, should benefit Amentum's operational cost structure in fiscal 2022 and beyond. Amentum continues to experience some COVID-19-related delays in contract awards, driven by the lagging effects of the pandemic on its government clients, although impacts to date have not been material. The lag is also affecting Amentum's RFP process as the time for responses continues to exceed normal and expected time frames. Delays in both contract awards and RFP response times could delay or limit...

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