Summary of Atmus Filtration Technologies Inc (ATMU) 2025 Conference Call Company Overview - **Company**: Atmus Filtration Technologies Inc (ATMU) - **Event**: 2025 Conference Call held on May 13, 2025 Key Industry Insights - **Market Resilience**: Atmus has demonstrated resilience in earnings compared to OEMs and other component providers, maintaining guidance despite a 510% cut to U. Machinery stocks EBITDA estimates [3][4] - **Aftermarket Revenue**: Over 80% of Atmus's revenues are derived from the aftermarket, which provides stability during cyclical market downturns [3][4] - **First Fit Revenue**: First fit revenue is currently down in double digits, with guidance indicating a 12% decline year-on-year at the midpoint [6][11] Financial Performance - **Revenue Mix**: First fit accounted for 14% of revenue in 2024, down from previous years, with expectations of 15% to 20% on an annual basis [5][9] - **Flat Revenue Guidance**: The low end of 2025 guidance calls for flat revenue, with no recession anticipated [10] Geographic Market Trends - **North America**: Medium and heavy-duty markets are expected to decline, with ongoing challenges in Latin America and Europe [20][21][22] - **Asia Pacific**: Continued softness in Asia Pacific markets, with India seen as a potential leader out of the downturn [23][24] Growth Strategies - **Latin America Success**: Atmus has achieved a 14% CAGR in Latin America since 2021 by expanding distribution channels and leveraging brand strength [25][27] - **European Market Potential**: Europe is viewed as an underpenetrated market, with opportunities in off-highway sectors like construction and agriculture [28][30] Pricing and Cost Management - **Pricing Strategy**: Atmus plans to implement a 1.7% annual price increase in 2025, responding to inflationary pressures and tariffs [36] - **Tariff Mitigation**: The company is utilizing exemptions under USMCA to offset tariff impacts and is exploring shipping lane reconfigurations [37][39] Regulatory Environment - **Emissions Regulations**: Ongoing reevaluation of emissions regulations may influence market dynamics, with potential impacts on first fit volumes [78][81] Market Sentiment and Outlook - **Uncertainty in the Market**: The overarching sentiment is one of uncertainty, particularly regarding trade policies and market cyclicality [68][69] - **Potential for Recovery**: There is cautious optimism that clarity in trade policies could lead to a resurgence in economic activity [69][70] Conclusion - Atmus Filtration Technologies Inc is navigating a challenging market landscape with a focus on aftermarket resilience, strategic growth in underpenetrated regions, and proactive pricing strategies to mitigate inflation and tariff impacts. The company remains vigilant in monitoring regulatory changes and market conditions to adapt its strategies accordingly.

Financial Performance - Net sales for the three months ended March 31, 2025, were $416.5 million, a decrease of $10.1 million or 2.4% compared to $426.6 million in the same period of 2024, primarily due to unfavorable currency impacts of $11.4 million and lower volumes of approximately $3.5 million [104]. - Gross margin decreased by $1.3 million to $110.5 million, with a gross margin percentage of 26.5%, an increase of 0.3 percentage points from 26.2% in the prior year [105][103]. - Operating income for the three months ended March 31, 2025, was $64.9 million, down $3.7 million or 5.4% from $68.6 million in the same period of 2024 [102]. - For the three months ended March 31, 2025, net income was $44.7 million, compared to $45.5 million for the same period in 2024 [131]. - EBITDA for Q1 2025 was $72.4 million, with an EBITDA margin of 17.4%, consistent with the 17.4% margin in Q1 2024 [131]. - Adjusted EBITDA for Q1 2025 increased to $81.7 million, with an Adjusted EBITDA margin of 19.6%, up from 18.8% in Q1 2024 [131]. - Diluted earnings per share for Q1 2025 remained at $0.54, while Adjusted earnings per share rose to $0.63 from $0.60 in Q1 2024 [132]. - Free cash flow for Q1 2025 was $16.3 million, a significant improvement from a negative $18.8 million in Q1 2024 [134]. - Adjusted free cash flow for Q1 2025 was $19.8 million, compared to a negative $12.7 million in Q1 2024 [134]. - Cash provided by operating activities for Q1 2025 was $28.7 million, a recovery from a cash outflow of $8.2 million in Q1 2024 [134]. Expenses and Costs - The company incurred approximately $9.3 million in one-time expenses during the three months ended March 31, 2025, with expectations of incurring an additional $10 million to $15 million in 2025 related to becoming a standalone public company [101]. - Selling, general and administrative expenses increased due to higher people-related and consulting expenses during the first three months of 2025 [99]. - Research, development, and engineering expenses were $9.1 million, a decrease of $1.0 million or 9.9% compared to $10.1 million in the prior year, representing 2.2% of net sales [107][103]. - Interest expense decreased to $8.4 million, down $2.1 million or 20.0% from $10.5 million in the same period of 2024, due to lower outstanding borrowings [110]. - The company incurred one-time separation costs of $9.3 million in Q1 2025, up from $6.0 million in Q1 2024 [131]. Market Conditions - Approximately 14% of net sales in 2024 were generated through first-fit sales to OEMs, while 86% were from the aftermarket, indicating a strong recurring revenue base [85]. - Market demand for aftermarket and first-fit products softened in early 2025 due to economic uncertainties related to recent U.S. government tariff announcements [96]. - The U.S. announced a new universal baseline tariff of 10% and a 145% tariff on products of Chinese origin, leading to significant volatility and uncertainty in global demand [86]. Currency and Economic Impact - The appreciation of the U.S. dollar against foreign currencies negatively impacted the company's consolidated results of operations in the first three months of 2025 [100]. - Direct material cost pressures have generally stabilized, although rising costs were observed in the latter portions of the period [98]. - Overall supply chain conditions have stabilized with minimal disruptions and backorders largely recovered [97]. - The company continues to monitor and evaluate factors affecting its business, including economic conditions, commodity prices, and supply chain challenges [95]. Capital Expenditures and Debt - The company expects to incur capital expenditures of approximately $5 million to $10 million in 2025 in connection with the Separation from Cummins [101]. - Capital expenditures for the three months ended March 31, 2025, were $12.4 million, corresponding to approximately 3.0% of net sales, compared to $10.6 million or 2.5% of net sales in the prior year [119]. - Total debt was $588.8 million as of March 31, 2025, down from $600 million at December 31, 2024 [124]. Taxation - The effective tax rate for the three months ended March 31, 2025, was 21.3%, a decrease of 0.7 percentage points from 22.0% in the prior year [111]. Interest Rate Risk - The company is exposed to interest rate risk related to a $600 million term loan facility and a $400 million revolving credit facility, with a potential $0.7 million annual impact from a 0.125% change in SOFR [139].

Atmus Filtration Technologies Inc (ATMU) Q1 2025 Earnings Call May 02, 2025 11:00 AM ET Company Participants Todd Chirillo - Executive Director of Investor RelationsSteph Disher - President & CEOJack Kienzler - SVP & CFOJerry Revich - Senior Investment Leader & Head of US Machinery, Infrastructure, Sustainable Tech franchiseTami Zakaria - Executive DirectorBobby Brooks - Vice President Conference Call Participants Robert Mason - Senior Research AnalystDavid Ridley-Lane - Analyst Operator Technologies First ...

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]

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 [16][26] - Adjusted EBITDA was $82 million, or 19.6%, compared to $80 million, or 18.8%, in the prior period [17][28] - Adjusted earnings per share was $0.63 in Q1 2025, up from $0.60 last year [29] - Adjusted free cash flow was $20 million, compared to an outflow of $13 million in the prior year [29] Business Line Data and Key Metrics Changes - The company reported a gross margin of $111 million for Q1 2025, slightly down from $112 million in Q1 2024 [26] - Selling, administrative, and research expenses increased to $55 million, up by $2 million from the same period last year [27] - Joint venture income was $9 million, down $1 million from the previous year [27] Market Data and Key Metrics Changes - The company expects the heavy-duty market in the U.S. to decline by 5% to 15% and medium-duty production to decrease by 10% to 20% [23][24] - The overall expected total company revenue for 2025 remains in a range of flat to up 4% compared to the prior year, with global sales expected between $1.67 billion and $1.735 billion [24] Company Strategy and Development Direction - The company is executing a four-pillar growth strategy focused on growing share in first fit, accelerating profitable growth in the aftermarket, transforming the supply chain, and expanding into the industrial filtration market [11][12][15] - The company is actively pursuing inorganic growth opportunities in industrial filtration, although economic uncertainty is softening M&A activity [15] 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 [18][19] - The company anticipates a flat year-over-year performance in aftermarket revenue, with pricing expected to contribute approximately 3.2% to revenue growth [20][21] - The management is closely monitoring regulatory changes and their potential impacts on the business, particularly regarding emissions standards [75][76] Other Important Information - The company has repurchased $10 million of stock in Q1 2025, bringing the total repurchased since the program announcement to $30 million [6] - The effective tax rate for Q1 2025 was 21.3%, down from 22% the previous year [30] - The company ended the quarter with $183 million in cash and $583 million in available liquidity [31] Q&A Session Summary Question: Potential manufacturing transitions due to tariffs - Management indicated that they are not planning long-term manufacturing changes but are focused on short-term mitigation actions such as utilizing USMCA certifications and adjusting delivery routes [35][36] Question: M&A opportunities in the current environment - Management acknowledged that while the market has made M&A activity more challenging, they remain focused on building a strong pipeline of potential targets [39] Question: Revenue outlook amidst currency and market changes - Management confirmed that the revenue outlook remains near the midpoint of their guidance, despite market softness and changes in freight activity expectations [44][45] Question: Pricing expectations for the year - Management expects pricing to ramp up throughout the year, with a gradual increase leading to an overall expectation of 3.2% for the full year [50] Question: Impact of potential rollback of emission standards - Management is monitoring the regulatory review closely and believes they are well-positioned to support customers regardless of the outcome [76][78] Question: Shipping route reconfigurations to mitigate tariffs - Management confirmed that they have already enacted some shipping route adjustments and are continuously looking for additional mitigation strategies [85]

Core Insights - Atmus Filtration Technologies (ATMU) reported quarterly earnings of $0.63 per share, exceeding the Zacks Consensus Estimate of $0.59 per share, and showing an increase from $0.60 per share a year ago [1] - The company experienced an earnings surprise of 6.78% for the quarter, having surpassed consensus EPS estimates in all four of the last quarters [2] - Revenues for the quarter were $416.5 million, which fell short of the Zacks Consensus Estimate by 0.99% and decreased from $426.6 million year-over-year [3] Earnings Performance - The earnings surprise of 6.78% indicates strong performance relative to expectations, with a previous quarter's surprise of 9.43% [2] - Over the last four quarters, Atmus Filtration has consistently exceeded consensus EPS estimates [2] Revenue Analysis - The reported revenue of $416.5 million missed the consensus estimate, marking a decline from the previous year's revenue of $426.6 million [3] - The company has topped consensus revenue estimates twice in the last four quarters [3] Stock Performance and Outlook - Atmus Filtration shares have declined approximately 10% since the beginning of the year, compared to a 4.7% decline in the S&P 500 [4] - The future performance of the stock will largely depend on management's commentary during the earnings call and the earnings outlook [4][5] Earnings Estimates and Industry Context - The current consensus EPS estimate for the upcoming quarter is $0.65, with expected revenues of $430.11 million, and for the current fiscal year, the estimate is $2.46 on $1.68 billion in revenues [8] - The Pollution Control industry, to which Atmus Filtration belongs, is currently ranked in the bottom 9% of over 250 Zacks industries, indicating potential challenges ahead [9]

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]