(Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2025 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ___________________________ (Address of principal executive offices) (Zip Code) Delaware 88-1611079 (I.R.S. Employer Identi ...

Financial Data and Key Metrics Changes - Sales for Q1 2025 were $417 million, a decrease of 2.4% compared to $427 million in the same period last year, primarily due to unfavorable foreign exchange and lower volumes [15][24] - Adjusted EBITDA was $82 million, or 19.6%, compared to $80 million, or 18.8% in the prior period, reflecting improved operational efficiency [16][25] - Adjusted earnings per share increased to $0.63 from $0.60 last year, while adjusted free cash flow improved to $20 million from an outflow of $13 million in the prior year [26] Business Line Data and Key Metrics Changes - The company continues to focus on aftermarket sales, which account for over 80% of revenue, demonstrating resilience despite market challenges [9] - The first fit market is expected to decline, with heavy-duty market projections down 5% to 15% and medium-duty down 10% to 20% [21][22] Market Data and Key Metrics Changes - The overall market outlook remains uncertain, with expectations for total company revenue in 2025 to be flat to up 4% compared to the prior year, with global sales projected between $1.67 billion and $1.735 billion [22] - The impact of tariffs is estimated to contribute approximately 1.5% to pricing, with additional pricing actions expected to offset input costs [19][20] Company Strategy and Development Direction - The company is executing a four-pillar growth strategy focused on growing share in first fit, accelerating aftermarket growth, transforming the supply chain, and expanding into industrial filtration through acquisitions [10][12][14] - The operational separation from Cummins is progressing, with expectations to complete remaining activities in 2025 [5] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the evolving tariff environment, although the overall impact on end markets remains unclear [16][17] - The company anticipates a flat year-over-year performance in aftermarket revenue, with pricing expected to provide a 3.2% increase [19][20] Other Important Information - The company has repurchased $10 million of stock in Q1 2025, totaling $30 million since the program's announcement, with $120 million remaining under board authorization [5] - The effective tax rate for Q1 2025 was 21.3%, a decrease from 22% in the previous year, driven by a change in the mix of earnings among tax jurisdictions [27] Q&A Session Summary Question: Potential manufacturing transitions due to tariffs - Management indicated that while they are monitoring the tariff situation closely, no long-term manufacturing changes are currently planned [33][34] Question: M&A opportunities in the industrial filtration market - Management acknowledged that while the market is challenging, they remain focused on evaluating M&A targets as part of their growth strategy [36] Question: Revenue outlook amidst market changes - Management confirmed that the revenue outlook remains near the midpoint of their guidance, despite softening market conditions [41][42] Question: Pricing expectations for the year - Management expects pricing to ramp up throughout the year, with a gradual increase leading to the anticipated 3.2% for the full year [48] Question: Impact of potential regulatory changes on emissions - Management is closely monitoring EPA reviews and believes they are well-positioned to support customers regardless of regulatory outcomes [70][71]

Atmus Filtration Technologies (ATMU) came out with quarterly earnings of $0.63 per share, beating the Zacks Consensus Estimate of $0.59 per share. This compares to earnings of $0.60 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 6.78%. A quarter ago, it was expected that this industrial filtration product company would post earnings of $0.53 per share when it actually produced earnings of $0.58, delivering a surprise of 9.43% ...

Public Steph Disher First Quarter 2025 Earnings Call Chief Executive Officer May 2, 2025 Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995, including, without limitation, those that are based on current expectations, estimates and projections about the industries in which we operate and management's views, plans, objectives, projections, beliefs and assumption ...

Financial Performance - Atmus reported net sales of $417 million for Q1 2025, a decrease of 2.4% compared to $427 million in Q1 2024[4] - Gross margin was $111 million, representing 26.5% of net sales, compared to $112 million and 26.2% in the same period last year[5] - GAAP net income for Q1 2025 was $45 million, with diluted earnings per share of $0.54, unchanged from Q1 2024[8] - Net income for the three months ended March 31, 2025, was $44.7 million, slightly down from $45.5 million in the same period of 2024, reflecting a decrease of 1.8%[30] - EBITDA for Q1 2025 was $72.4 million, compared to $74.2 million in Q1 2024, indicating a decline of 2.4%[30] - The net income margin remained stable at 10.7% for both Q1 2025 and Q1 2024[30] Earnings and Cash Flow - Adjusted earnings per share increased to $0.63 in Q1 2025, up from $0.60 in Q1 2024[8] - Adjusted EBITDA was $82 million, with an adjusted EBITDA margin of 19.6%, compared to $80 million and 18.8% in Q1 2024[7] - Adjusted EBITDA increased to $81.7 million in Q1 2025, up from $80.2 million in Q1 2024, showing a growth of 1.9%[30] - Free cash flow for Q1 2025 was $16.3 million, a significant improvement from a negative $18.8 million in Q1 2024[34] - Adjusted free cash flow was $20 million in Q1 2025, compared to $(13) million in Q1 2024[10] Cash and Assets - Cash provided by operating activities was $29 million, a significant improvement from cash used in operating activities of $8 million in Q1 2024[9] - Cash and cash equivalents at the end of Q1 2025 were $183.3 million, down from $184.3 million at the beginning of the period[26] - Total assets increased to $1,228.1 million as of March 31, 2025, up from $1,190.3 million at December 31, 2024, representing a growth of 3.2%[24] Shareholder Returns - Atmus repurchased $10 million of common stock during the quarter, with $120 million remaining under the share repurchase program[3] - A quarterly cash dividend of $0.05 per share was paid during the quarter[3] Guidance and Capital Expenditures - The company reaffirmed its 2025 revenue guidance in the range of $1,670 million to $1,735 million[5] - Capital expenditures for Q1 2025 were $12.4 million, compared to $10.6 million in Q1 2024, reflecting an increase of 16.9%[34] Liabilities - Total current liabilities increased to $351.8 million as of March 31, 2025, from $344.9 million at December 31, 2024, representing a rise of 2.7%[24]

Core Viewpoint - Atmus Filtration Technologies (ATMU) is anticipated to report a year-over-year decline in earnings and revenues for the quarter ended March 2025, which could significantly influence its stock price depending on the actual results compared to estimates [1][2]. Earnings Expectations - The upcoming earnings report is scheduled for May 2, 2025, with a consensus estimate of $0.59 per share, reflecting a -1.7% change year-over-year. Revenues are projected to be $420.68 million, down 1.4% from the previous year [3][2]. Estimate Revisions - Over the last 30 days, the consensus EPS estimate has been revised down by 1.02%, indicating a collective reassessment by analysts regarding the company's earnings outlook [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that the Most Accurate Estimate for Atmus Filtration is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -5.09%. This suggests a bearish sentiment among analysts regarding the company's earnings prospects [10][11]. Historical Performance - In the last reported quarter, Atmus Filtration exceeded the expected earnings of $0.53 per share by delivering $0.58, resulting in a surprise of +9.43%. The company has beaten consensus EPS estimates in the last four quarters [12][13]. Investment Considerations - Despite the potential for an earnings beat, Atmus Filtration does not currently appear to be a compelling candidate for such an outcome, especially given its Zacks Rank of 4, which complicates predictions of beating the consensus EPS estimate [16][11].

Core Insights - Atmus Filtration Technologies Inc. has strong growth potential due to its ability to expand in core and adjacent markets, as noted by JPMorgan analyst Tami Zakaria [1] - The stock price forecast has been raised from $44 to $46, maintaining an Overweight rating [1] Financial Performance - Atmus Filtration earns over 80% of its revenue from the aftermarket, yet its valuation is currently discounted compared to peers [2] - The planned move into industrial filtration is expected to narrow this valuation gap over time, aligning it with direct filtration competitors [2] Strategic Initiatives - Management is confident in offsetting potential cost increases from tariffs by adjusting prices in the aftermarket if current exemptions are removed after April 2 [3] - The company intends to implement flexible pricing adjustments to counter any tariff-related cost hikes [3] Regulatory Environment - The possible cancellation of the 2027 NOx regulation is unlikely to significantly affect this year's industry outlook, but it may lead to a more balanced production schedule in the coming years [4] - Atmus Filtration expects the NOx regulation to still go into effect, although the extended warranty requirement might be eliminated [4] Growth Projections - Management aims for organic revenue growth at approximately 4%, which is expected to generate a 25% incremental margin [5] - Further growth potential is anticipated from significant wins with major OEMs and acquisitions in the industrial filtration market [5] - Estimates have been adjusted upward due to the latest foreign exchange rates [5]

Industry Overview - The Zacks Pollution Control industry is expected to grow due to strong demand for air pollution control products driven by rising greenhouse gas emissions and health risks associated with it [1] - Stringent regulations and emission standards globally are anticipated to further boost demand for industry participants [1][5] - The industry includes companies providing filtration systems, waste management solutions, energy recovery devices, and other products across various sectors [3] Major Trends - There is a strong demand for air pollution control systems due to rapid urbanization and increased greenhouse gas emissions from the industrial sector [4] - Growing public awareness of health risks related to air pollution is contributing to market growth [4] - The expansion of infrastructure projects in developing countries is increasing the demand for pollution abatement technologies [4] - Strict government regulations aimed at reducing ozone layer depletion are expected to sustain demand for pollution control equipment [5] - The rise of alternative energy sources is negatively impacting the demand for industrial emission-abatement products [7] Current Industry Performance - The Zacks Pollution Control industry currently holds a Zacks Industry Rank of 89, placing it in the top 36% of over 250 Zacks industries, indicating solid near-term prospects [8] - Over the past year, the industry has underperformed compared to the S&P 500 and the broader Industrial Products sector, declining by 3.8% while the S&P 500 increased by 19.8% [11] Valuation Metrics - The industry is currently trading at a forward P/E ratio of 17.69X, which is lower than the S&P 500's 21.53X and the sector's 18.36X [13] Key Companies - **Energy Recovery, Inc. (ERII)**: Focuses on energy efficiency technology solutions for water desalination, with strong growth prospects in desalination and industrial wastewater sectors [15][16] - **Donaldson Company, Inc. (DCI)**: Engaged in manufacturing filtration systems, benefiting from strong aftermarket demand and performance in aerospace and defense markets [18][19] - **Atmus Filtration Technologies Inc. (ATMU)**: A leading designer of filtration solutions, expected to grow due to effective pricing and a strong global presence [21][22] - **CECO Environmental Corp. (CECO)**: Provides solutions in industrial air quality and water treatment, with growth supported by strategic acquisitions and rising demand for air and ventilation products [24][25]

Financial Data and Key Metrics Changes - Sales for Q4 2024 were $407 million, an increase of 1.8% from $400 million in Q4 2023 [19][29] - Adjusted EBITDA for Q4 2024 was $78 million, representing a margin of 19.1%, compared to $71 million and 17.9% in the prior year [21][33] - For the full year 2024, sales reached $1.67 billion, a 2.5% increase from $1.63 billion in 2023 [22][35] - Adjusted EBITDA for the full year was $330 million, up from $302 million in 2023, with an adjusted EBITDA margin of 19.7% [22][38] - Adjusted earnings per share for Q4 2024 was $0.58, compared to $0.49 in Q4 2023 [21][34] Business Line Data and Key Metrics Changes - The company outperformed the aftermarket market by approximately two percentage points in 2024 [13] - The new NanoNet product portfolio was launched, enhancing technology leadership in fuel filtration [11] - The company completed the transition of its Belgian warehouse, achieving 95% transition of the distribution network from Cummins [15] Market Data and Key Metrics Changes - The U.S. heavy-duty market is expected to be flat to down 10% in 2025, while medium-duty production is anticipated to decline by 5% to 15% [26] - In China, weak market conditions are expected to persist, with low visibility into recovery [27] Company Strategy and Development Direction - The company is focused on a four-pillar growth strategy, including growing share in first fit, accelerating aftermarket growth, transforming the supply chain, and expanding into industrial filtration [10][17] - The capital allocation program includes share repurchases and dividends, with $20 million repurchased in 2024 [8] Management's Comments on Operating Environment and Future Outlook - Management anticipates a recovery in freight activity but acknowledges uncertainty regarding timing due to fluid global economic conditions [24] - For 2025, total company revenue is expected to be flat to up 4%, with adjusted EBITDA margin projected between 19% and 20% [28] Other Important Information - The company incurred one-time costs of $4 million related to restructuring actions in Q4 2024 [20][30] - The effective tax rate for 2024 was 21%, down from 24.3% in 2023, due to a change in earnings mix and one-time foreign tax credits [39] Q&A Session Summary Question: Can you provide insight on EBITDA margin and its future outlook? - Management indicated that the 19.7% EBITDA margin in 2024 was above guidance, with expectations of headwinds from foreign exchange and input costs impacting future margins [46][50] Question: What is the outlook for aftermarket and first fit growth? - Management expressed confidence in a 2% growth in aftermarket revenue, supported by committed business and new partnerships [56][58] Question: How are you managing tariff exposure in manufacturing? - The company has modeled various scenarios regarding tariffs and has implemented pricing actions to mitigate impacts, particularly from China tariffs [96][100] Question: What is the status of your industrial filtration expansion? - The primary path for industrial filtration growth remains through acquisitions, although initial product launches are in early stages with limited revenue expected [108][110] Question: Can you discuss the first fit market assumptions, particularly in China? - Management expects continued weak conditions in China, with a range of flat to down 5% for the year, but is prepared to scale if demand improves [126]

Financial Performance - For the year ended December 31, 2024, Atmus generated $1,669.6 million in net sales, $185.6 million in net income, and $329.5 million in adjusted EBITDA[13]. - The Company reported cash and cash equivalents of $184.3 million as of December 31, 2024, compared to $168.0 million in 2023, an increase of 9.0%[301]. - Net income for 2024 reached $185.6 million, compared to $171.3 million in 2023, marking an increase of 8.0%[296]. - Basic earnings per share (EPS) for 2024 was $2.23, up from $2.06 in 2023, representing an increase of 8.2%[296]. - Total assets as of December 31, 2024, were $1,190.3 million, an increase from $1,088.6 million in 2023, reflecting a growth of 9.4%[300]. - Total liabilities decreased to $962.9 million in 2024 from $1,007.9 million in 2023, a reduction of 4.5%[300]. - Operating income for 2024 was $266.2 million, up from $248.4 million in 2023, reflecting a growth of 7.3%[296]. - The gross margin for 2024 was $462.1 million, compared to $432.7 million in 2023, indicating a year-over-year increase of 6.5%[296]. - Cash provided by operating activities decreased to $105.4 million in 2024 from $189.0 million in 2023, a decline of 44.3%[303]. - Total current income tax expense decreased to $56.9 million in 2024 from $65.1 million in 2023, a reduction of 11.8%[387]. - The effective tax rate for 2024 was 21.0%, down from 24.3% in 2023, driven by a favorable change in the mix of earnings among tax jurisdictions[388]. Sales and Market Position - Approximately 68% of Atmus' net sales in 2024 came from leading OEMs, with Cummins accounting for 17.6% of net sales[23][24]. - Atmus estimates that approximately 86% of its net sales in 2024 were generated in the aftermarket, with core markets representing 60% on-highway and 40% off-highway[25]. - Major customers, including Cummins, PACCAR, and the Traton Group, accounted for 17.6%, 16.5%, and 12.2% of net sales in 2024, indicating a stable reliance on these key clients[381]. - Revenue from the United States was $782.3 million in 2024, up from $746.5 million in 2023, while other international sales reached $887.3 million, slightly increasing from $881.6 million in 2023[378]. - The fuel product category generated $720.2 million in 2024, a growth of 2.1% from $705.2 million in 2023, while lube and air categories also saw increases to $326.8 million and $288.6 million, respectively[380]. Cost and Expenses - Material costs represented approximately 61% of Atmus' cost of sales in 2024, up from 57% in 2023[35]. - Research, development, and engineering expenses for Atmus were $40.6 million, $42.5 million, and $38.6 million for the years ended December 31, 2024, 2023, and 2022, respectively[41]. - Research, development, and engineering expenses totaled $40.6 million in 2024, a decrease from $42.5 million in 2023, reflecting a focus on cost management[360]. - Capital expenditures for 2024 were $48.6 million, compared to $45.8 million in 2023, reflecting a 6.1% increase[303]. - Operating lease costs increased to $15.7 million in 2024, compared to $10.5 million in 2023, representing a growth of 49.5%[397]. - Total lease liabilities increased to $40.1 million in 2024 from $26.4 million in 2023, indicating a growth of 51.4%[398]. Investments and Patents - Atmus has over 1,200 worldwide active or pending patents and over 650 trademark registrations as of December 31, 2024[38]. - Investments in equity method investees amounted to $84.9 million as of December 31, 2024, compared to $84.8 million in 2023, indicating stable investment levels[382]. - Dividends received from unconsolidated equity investees increased to $25.5 million in 2024, up from $19.8 million in 2023, showcasing improved returns from these investments[383]. Risk Management - Atmus' interest rate risk is primarily related to a $600 million term loan facility and a $400 million revolving credit facility, with a 0.125% change in SOFR potentially impacting annual interest expense by $0.7 million[278]. - Atmus' foreign currency exchange risk is managed through financial derivative instruments, with no material impact expected from a hypothetical 10% fluctuation in currency rates[275]. Corporate Governance and Culture - Atmus' leadership team has extensive industry experience and a proven track record of driving growth and innovation[30]. - The company has a diverse leadership team, with three out of seven directors being female and 38% of the executive team being female[58]. - The company emphasizes a positive safety culture, aiming for zero serious injury fatalities and adhering to international standards for health and safety[55]. - Atmus' annual variable compensation plans encourage collaboration and align employee performance with overall business results[52]. - The company is committed to inclusion and diversity, continuously seeking to attract and retain diverse talent globally[58]. Compliance and Accounting - The company maintained effective internal control over financial reporting as of December 31, 2024, based on COSO criteria[283]. - The company adopted new accounting standards in Q4 2024, which did not materially impact disclosures or financial results, indicating compliance with evolving regulations[373]. - The company operates as one reportable segment, with performance assessed based on consolidated net income, ensuring a streamlined approach to resource allocation and performance evaluation[362]. Shareholder Returns - The company repurchased $20.0 million in common stock during the year[305]. - Cash dividends declared amounted to $8.3 million, equating to $0.10 per share[305]. - The company authorized a $150.0 million share repurchase program effective July 17, 2024, with approximately $130.0 million remaining for repurchases as of December 31, 2024[417][418].