Financial Data and Key Metrics Changes - Sales for Q3 2024 were $404 million, an increase of approximately 2% compared to $396 million in the same period last year [7] - Adjusted EBITDA for the quarter was $79 million, or 19.6%, compared to $73 million, or 18.3%, in the prior period [7][26] - Adjusted earnings per share was $0.61 in Q3 2024, up from $0.52 last year [27] - Adjusted free cash flow was $65 million, compared to $50 million in the prior year [27] - The effective tax rate for Q3 2024 was 18.4%, down from 23.1% in 2023 [28] Business Line Data and Key Metrics Changes - The aftermarket segment continues to experience softness, but the company gained market share, offsetting some market weakness [9] - U.S. heavy-duty first-fit market demand is expected to decline by 7% to 12% for the full year, while medium-duty demand remains flat to up 5% [13] - Global aftermarket revenue is expected to grow by approximately 2% to 4% compared to last year, despite overall market declines [10][11] Market Data and Key Metrics Changes - The India market has softened, and China shows no signs of recovery [9] - The overall global aftermarket is expected to decline by approximately 2% to 3% due to soft freight activity and weakness in off-highway markets [11] - The company anticipates a revenue range of $1.65 billion to $1.675 billion for the year, reflecting a 1% to 3% increase compared to the prior year [14] Company Strategy and Development Direction - The company is focused on growth in core business and expansion into industrial filtration, with a balanced approach to capital allocation including share repurchases and dividends [6] - The growth strategy includes four pillars: growing share in first-fit, accelerating aftermarket growth, transforming the supply chain, and expanding into industrial filtration markets [15][21] - The company is transitioning to a dedicated supply chain network, with 85% of volume distributed through Atmus facilities [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in revenue growth opportunities despite challenging market conditions, with expectations for continued outperformance [10][11] - The company is experiencing downward pressure on volumes due to fewer working days and a decline in heavy-duty truck demand [33] - Management anticipates that both first-fit and aftermarket markets will be at the bottom of the cycle, with potential improvements expected in the second half of 2025 [40][41] Other Important Information - The company repurchased $10 million of shares as part of a $150 million program [6] - The transition from Cummins is approximately 80% complete, with expectations to reach 90% by the end of the year [8] - Onetime costs related to separation from Cummins are expected to total between $20 million and $25 million in 2024 [26] Q&A Session All Questions and Answers Question: Discussion on expectations for the fourth quarter - Management noted that revenue is expected to be relatively flat sequentially, with downward pressure from fewer working days and a decline in heavy-duty truck demand impacting volumes [33][34] Question: Visibility on 2025 margin profile - Management indicated that while they cannot provide specific guidance for 2025, they expect to sustain margin expansion achieved in 2024 [38][42] Question: Insights on international business performance - Management highlighted that all markets are experiencing downside, with India being the strongest but still softening, while China remains challenged [55][56] Question: Breakdown of onetime costs - Onetime costs for Q3 were $9 million, with $5 million in cost of sales and $4 million in SG&A, primarily related to IT and supply chain separation costs [49][50] Question: Organic expansion into industrial filtration - Management mentioned that while organic growth in industrial filtration is in early stages, it is seen as a spark for innovation, with a focus on acquisitions for significant growth [72][73]

Financial Performance - Net sales for the three months ended September 30, 2024, were $403.7 million, an increase of $7.5 million or 1.9% compared to $396.2 million for the same period in 2023 [103]. - For the nine months ended September 30, 2024, net sales were $1,262.9 million, an increase of $34.5 million or 2.8% compared to $1,228.4 million in 2023 [112]. - Gross margin increased to $111.3 million for the three months ended September 30, 2024, up $8.4 million or 8.2% from $102.9 million in 2023, with a gross margin percentage of 27.6%, an increase of 1.6 percentage points [104][102]. - Gross margin for the nine months ended September 30, 2024, was $355.0 million, an increase of $27.9 million or 8.5% from $327.1 million in 2023, with a gross margin percentage of 28.1%, up 1.5 percentage points [113][111]. - Operating income for the three months ended September 30, 2024, was $63.2 million, an increase of $4.4 million or 7.5% compared to $58.8 million in 2023 [1]. - Net income for the three months ended September 30, 2024, was $43.8 million, representing a $6.2 million increase or 16.5% from $37.6 million in 2023 [1]. - The net income margin improved to 11.5% for the nine months ended September 30, 2024, compared to 11.1% in the prior year [143]. - Diluted earnings per share for Q3 2024 was $0.52, up from $0.45 in Q3 2023, representing a 15.6% increase [144]. - Adjusted earnings per share for the nine months ended September 30, 2024, was $1.92, compared to $1.82 for the same period in 2023, reflecting a 5.5% growth [144]. Expenses and Costs - The company incurred approximately $8.9 million in one-time expenses during the three months ended September 30, 2024, and approximately $18.7 million during the nine months ended September 30, 2024, related to becoming a standalone public company [99]. - The company expects to incur one-time expenses of approximately $20 million to $25 million in 2024 in connection with becoming a standalone public company [99]. - Selling, general and administrative expenses were $46.4 million for the three months ended September 30, 2024, an increase of $5.1 million or 12.3% compared to $41.3 million in 2023 [105]. - Research, development, and engineering expenses decreased to $9.7 million for the three months ended September 30, 2024, down $1.4 million or 12.6% from $11.1 million in 2023 [106]. - Interest expense for the nine months ended September 30, 2024, was $31.4 million, an increase of $16.2 million compared to $15.2 million in 2023, primarily due to the timing of borrowings [118]. - Higher working capital requirements resulted in a cash outflow of $81.9 million for the nine months ended September 30, 2024, compared to a cash inflow of $2.0 million in the same period of 2023 [127]. Cash Flow and Capital Expenditures - Net cash provided by operating activities was $85.4 million for the nine months ended September 30, 2024, a decrease of $61.9 million compared to $147.3 million in the same period of 2023 [127]. - Capital expenditures for the nine months ended September 30, 2024, were $38.6 million, representing approximately 3.1% of net sales, compared to $29.6 million or 2.4% of net sales in the prior year [129]. - Capital expenditures for Q3 2024 were $16.4 million, up from $10.5 million in Q3 2023, representing a 56.2% increase [146]. - Adjusted free cash flow for the nine months ended September 30, 2024, was $86.1 million, down from $122.5 million in the same period of 2023, indicating a decrease of 29.6% [146]. - Free cash flow for Q3 2024 was $54.3 million, compared to $47.8 million in Q3 2023, marking a 13.6% increase [146]. Debt and Financing - As of September 30, 2024, total debt was $596 million, a slight decrease from $600 million at December 31, 2023, with a weighted-average term of 2.9 years [134]. - The company borrowed $650 million from a credit agreement upon completion of its IPO to pay Cummins in partial consideration for the Separation [88]. - The company has a revolving credit facility capacity of $400 million as of September 30, 2024, with no outstanding borrowings [122]. - The company has a $600 million term loan facility and a $400 million revolving credit facility, with interest rates tied to SOFR [152]. - A 0.125% change in SOFR would result in a $0.7 million annual impact on interest expense based on outstanding borrowings as of September 30, 2024 [152]. Market Conditions - Aftermarket demand remained depressed in the first nine months of 2024, reflecting soft market conditions, with uncertainty regarding recovery [94]. - Overall supply chain conditions have largely stabilized from a year ago, with minimal disruptions and backorders largely recovered [95]. - Direct material cost pressures have stabilized, but labor impacts continue to affect the company's Selling, general and administrative expenses, which increased during the first nine months of 2024 [97]. - The appreciation of the U.S. dollar against foreign currencies had a slightly unfavorable impact on the company's condensed consolidated results of operations in the first nine months of 2024 [98]. Taxation - The effective tax rate for the three months ended September 30, 2024, was 18.4%, a decrease of 4.7 percentage points from 23.1% in 2023, driven by a change in the mix of earnings among tax jurisdictions [108]. - The effective tax rate decreased to 20.9% for the nine months ended September 30, 2024, down 2.9 percentage points from 23.8% in the prior year, driven by a change in the mix of earnings among tax jurisdictions [121]. - The tax impact of one-time separation costs for Q3 2024 was $1.6 million, slightly lower than $1.7 million in Q3 2023 [144].

Company Performance - Atmus Filtration Technologies (ATMU) reported quarterly earnings of $0.61 per share, exceeding the Zacks Consensus Estimate of $0.52 per share, and up from $0.52 per share a year ago [1] - The earnings surprise for this quarter was 17.31%, following a previous quarter where the company reported earnings of $0.71 per share against an expectation of $0.58, resulting in a surprise of 22.41% [2] - The company posted revenues of $403.7 million for the quarter ended September 2024, which was 1.31% below the Zacks Consensus Estimate, but an increase from $396.2 million in the same quarter last year [3] Stock Performance - Atmus Filtration shares have increased approximately 76.5% since the beginning of the year, significantly outperforming the S&P 500's gain of 25.2% [4] - The current consensus EPS estimate for the upcoming quarter is $0.52, with expected revenues of $406.42 million, and for the current fiscal year, the estimate is $2.34 on revenues of $1.67 billion [8] Industry Outlook - The Pollution Control industry, to which Atmus Filtration belongs, is currently ranked in the bottom 17% of over 250 Zacks industries, indicating potential challenges ahead [9] - The performance of Atmus Filtration's stock may be influenced by the overall outlook for the industry, as historical data shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [9] Future Expectations - The trend of estimate revisions for Atmus Filtration is currently mixed, leading to a Zacks Rank 3 (Hold) for the stock, suggesting it is expected to perform in line with the market in the near future [7] - Investors are encouraged to monitor how estimates for the coming quarters and the current fiscal year may change following the recent earnings report [8]

Financial Performance - Net sales for Q3 2024 were $404 million, a 1.9% increase from $396 million in Q3 2023[3] - GAAP net income was $44 million, or $0.52 diluted earnings per share, compared to $38 million, or $0.45 diluted earnings per share in the same period last year[6] - Adjusted EBITDA was $79 million with an adjusted EBITDA margin of 19.6%, up from $73 million and 18.3% in Q3 2023[5] - Net income for the nine months ended September 30, 2024, was $145.5 million, compared to $136.5 million for the same period in 2023, reflecting an increase of 6.6%[29] - Basic earnings per share for the nine months ended September 30, 2024, were $1.75, up from $1.64 for the same period in 2023, an increase of 6.7%[31] - The company reported a net income margin of 11.5% for the nine months ended September 30, 2024, compared to 11.1% for the same period in 2023[32] Revenue Guidance - The company raised its 2024 revenue guidance to a range of $1,650 million to $1,675 million[2] - Adjusted earnings per share for 2024 is projected to be between $2.35 and $2.50[2] Cash Flow and Operating Activities - Cash provided by operating activities was $71 million, compared to $58 million in Q3 2023[7] - Cash provided by operating activities for the three months ended September 30, 2024, was $70.7 million, an increase of 21.0% compared to $58.3 million for the same period in 2023[35] - For the nine months ended September 30, 2024, cash provided by operating activities totaled $85.4 million, down 42.0% from $147.3 million in 2023[35] Free Cash Flow - Adjusted free cash flow increased to $65 million from $50 million in the same quarter last year[8] - Free cash flow for the three months ended September 30, 2024, was $54.3 million, up 13.6% from $47.8 million in the prior year[35] - The adjusted free cash flow for the nine months ended September 30, 2024, was $86.1 million, a decrease of 29.6% compared to $122.5 million in the same period of 2023[35] Capital Expenditures - The company incurred capital expenditures of $38.6 million for the nine months ended September 30, 2024, compared to $29.6 million for the same period in 2023, an increase of 30.2%[29] - Capital expenditures for the three months ended September 30, 2024, were $16.4 million, representing a 56.2% increase from $10.5 million in the prior year[35] - One-time separation capital expenditures amounted to $5.1 million for the three months ended September 30, 2024, compared to $2.2 million in the same period of 2023[35] Assets and Liabilities - Total assets increased to $1,218.1 million as of September 30, 2024, up from $1,088.6 million at December 31, 2023, representing a growth of 11.9%[26] - Total current liabilities decreased to $368.3 million as of September 30, 2024, from $375.0 million at December 31, 2023, a reduction of 1.8%[26] - Long-term debt decreased to $577.5 million as of September 30, 2024, down from $592.5 million at December 31, 2023, a decline of 2.5%[26] Stock Repurchase - The company repurchased $10 million of common stock under its $150 million share repurchase program[2] - The company repurchased $10.0 million of common stock during the nine months ended September 30, 2024[29] Tax and Margins - The effective tax rate for Q3 2024 was 18.4%[6] - Gross margin was $111 million, representing 27.6% of net sales, compared to 26.0% in Q3 2023[4] Other Costs - Other one-time separation related costs for the nine months ended September 30, 2024, were $26.9 million, with no comparable figure for the previous year[35] - The company experienced one-time working capital inefficiencies associated with the transition from intercompany settlement terms with Cummins to standalone practices[35]

Atmus Filtration Technologies (ATMU) is expected to deliver flat earnings compared to the year-ago quarter on higher revenues when it reports results for the quarter ended September 2024. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price. The earnings report, which is expected to be released on November 8, 2024, might help the stock move higher if the ...

Momentum investing revolves around the idea of following a stock's recent trend in either direction. In the 'long' context, investors will be essentially be "buying high, but hoping to sell even higher." With this methodology, taking advantage of trends in a stock's price is key; once a stock establishes a course, it is more than likely to continue moving that way. The goal is that once a stock heads down a fixed path, it will lead to timely and profitable trades. While many investors like to look for momen ...

Momentum investing revolves around the idea of following a stock's recent trend in either direction. In the 'long' context, investors will be essentially be "buying high, but hoping to sell even higher." With this methodology, taking advantage of trends in a stock's price is key; once a stock establishes a course, it is more than likely to continue moving that way. The goal is that once a stock heads down a fixed path, it will lead to timely and profitable trades. Even though momentum is a popular stock cha ...

The Zacks Pollution Control industry is poised for growth from increasing demand for air pollution control products due to rising greenhouse gas emissions and growing public awareness of health-related risks. Stringent regulations and emission standards enacted by countries globally should continue boosting the demand for industry players. However, the increased adoption of renewable sources of energy, with the rising preference for alternative fuels, has marred the outlook of the industry. Tetra Tech, Inc. ...

Have you been paying attention to shares of Atmus Filtration Technologies (ATMU) ? Shares have been on the move with the stock up 9.5% over the past month. The stock hit a new 52-week high of $34.2 in the previous session. Atmus Filtration Technologies has gained 44% since the start of the year compared to the 5.8% move for the Zacks Industrial Products sector and the 24.2% return for the Zacks Pollution Control industry. What's Driving the Outperformance? The stock has a great record of positive earnings s ...

Atmus Filtration Technologies (ATMU) reached a significant support level, and could be a good pick for investors from a technical perspective. Recently, ATMU broke through the 20-day moving average, which suggests a short-term bullish trend. The 20-day simple moving average is a well-liked trading tool because it provides a look back at a stock's price over a 20-day period. Additionally, short- term traders find this SMA very beneficial, as it smooths out short-term price trends and shows more trend reversa ...