Atmus Filtration Technologies, Inc. (NYSE:ATMU) Q4 2023 Earnings Conference Call February 14, 2024 11:00 AM ET Company Participants Todd Chirillo - Executive Director, IR Steph Disher - CEO Jack Kienzler - CFO Conference Call Participants Joe O'Dea - Wells Fargo Rob Mason - Baird Jerry Revich - Goldman Sachs Andrew Obin - Bank of America Bobby Brooks - Northland Capital Markets Operator Thank you for standing by and welcome to the Atmus Filtration Technologies' Fourth Quarter and Full Year 2023 Earnings Cal ...

Fourth Quarter and Full Year 2023 Earnings Call 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 assumptions. Forward-looking statements may be iden ...

NASHVILLE, Tenn.--(BUSINESS WIRE)--Atmus Filtration Technologies Inc. (Atmus; NYSE: ATMU) today announced that it will file a Form S-4 Registration Statement with the Securities and Exchange Commission (the “SEC”) in connection with Cummins’ (NYSE: CMI) offer to exchange up to 67,054,726 shares of Atmus common stock that Cummins owns, representing 80.5% of the total outstanding shares of Atmus common stock, for outstanding shares of Cummins common stock. Pursuant to the exchange offer, Cummins shareholders ...

COLUMBUS, Ind.--(BUSINESS WIRE)--Today, Cummins Inc. (NYSE: CMI) (“Cummins”) announced that it will commence an exchange offer to fully split off its remaining interest in Atmus Filtration Technologies Inc. (NYSE: ATMU) (“Atmus”). In May 2023, Atmus completed its initial public offering where 19.5%, or 16,243,070 shares, of Atmus’ common stock was sold, with Cummins retaining the remaining 80.5% of Atmus’ common stock. Through the planned exchange offer, Cummins shareholders will have the option to exchange ...

Financial Performance - For the year ended December 31, 2023, Atmus generated $1,628.1 million in net sales, $171.3 million in net income, and $302.3 million in adjusted EBITDA[13]. - Atmus achieved a net income margin of 10.5% and an Adjusted EBITDA margin of 18.6% in 2023, demonstrating strong financial performance[44]. - The company reported a 16.7% increase in net sales in 2021, followed by an 8.6% increase in 2022, and a 4.2% increase in 2023 compared to the previous years[44]. - The gross margin for 2023 was $432.7 million, representing a gross margin percentage of approximately 26.6%, compared to $359.2 million in 2022[342]. - Operating income for 2023 was $248.4 million, up from $203.9 million in 2022, indicating a growth of 21.8%[342]. - The company reported a net income of $171.3 million for 2023, slightly up from $170.4 million in 2022, reflecting a growth of 0.5%[342]. - Total assets increased to $1,088.6 million in 2023 from $867.4 million in 2022, marking a growth of 25.5%[349]. - Total liabilities rose to $1,007.9 million in 2023, compared to $411.8 million in 2022, indicating a significant increase of 144.3%[349]. - The company reported a net transfer to Parent of $595.5 million in 2023, compared to $128.2 million in 2022, reflecting a significant increase in capital movement[355]. - The cash and cash equivalents at the end of the period stood at $168.0 million, marking a net increase of $168.0 million during the year[352]. - Other comprehensive loss for 2023 was minimal at $0.4 million, compared to $14.2 million in 2022, indicating improved financial stability[355]. Sales and Market Presence - Atmus estimates that aftermarket net sales represented approximately 81% of its total net sales in 2023[19]. - Atmus' largest customer, Cummins, accounted for approximately 17.4% of its net sales in 2023[35]. - Atmus serves approximately 49% of its net sales from outside the United States and Canada in 2023[24]. - The company supports a diverse customer base across various markets, including oil and gas, agriculture, and construction, with products available in over 140 countries[358]. - Related party sales to Cummins represented 17.4% of net sales in 2023, amounting to $282.5 million, compared to 19.3% in 2022[418]. Product Development and Innovation - Atmus launched approximately 300 new products annually over the last three years, focusing on targeted product releases[19]. - Atmus is focused on enhancing product content per vehicle by offering integrated solutions and smart filtration technologies[17]. - Atmus' research and development expenses were $42.3 million in 2023, $38.5 million in 2022, and $41.6 million in 2021, reflecting ongoing investment in innovation[58]. - Research and development expenses were $42.3 million, $38.5 million, and $41.6 million for the years ended December 31, 2023, 2022, and 2021, respectively, indicating a focus on product improvements and innovations[401]. Market Expansion and Strategy - Atmus plans to expand into the industrial filtration market, which had a total addressable market of approximately $48 billion in 2022, growing at a CAGR of approximately 7%[26]. - Atmus' core markets had a total addressable market of approximately $14 billion in 2022, growing at a CAGR of approximately 4% over the last five years[26]. - The company is focused on expanding its geographic coverage and investing in distribution expansion to better serve its customers[39]. - Atmus has entered into three joint ventures, two in India and one in China, to enhance market penetration and reduce capital spending[79]. - Atmus' joint venture Fleetguard Filters Private Ltd. operates seven manufacturing facilities in India, with Atmus holding 49.491% economic interest[80]. Operational Efficiency - Atmus operates 11 distribution centers and 10 manufacturing sites globally, enhancing its market coverage and operational efficiency[42]. - Material costs represented approximately 57% of Atmus' cost of sales in 2023, a decrease from 61% in 2022[52]. - The company has a large installed base that generates recurring revenue, with aftermarket product sales typically having higher profit margins compared to first-fit systems[40]. Leadership and Workforce - Atmus' leadership team has extensive industry experience, which is crucial for executing its strategic vision and driving growth[45]. - Atmus has a diverse leadership team with 44% of its executive team being female and 22% being ethnically diverse[73]. - Atmus emphasizes leadership development and employee support to enhance workforce capabilities and performance[67]. - Atmus conducts annual compensation studies to ensure competitive pay and incorporates living wage assessments to maintain fair compensation[69]. - Atmus' benefit programs include flexible medical benefits and various paid time-off options to meet employee needs[70]. - Atmus aims for zero serious injury fatalities and promotes a positive safety culture across its operations[72]. Environmental Sustainability - Atmus is committed to environmental sustainability, implementing initiatives like solar panels at its manufacturing sites and water conservation programs[76][77]. - Atmus is focused on reducing environmental impacts through pollution prevention and energy efficiency improvements[74]. Financial Reporting and Compliance - The company plans to provide a management report on internal control over financial reporting starting with the annual report for the year ending December 31, 2024[330]. - The company expects to file tax returns independently post-separation from Cummins, which may result in different effective income tax rates[370]. - The new accounting standards issued by FASB are expected to impact disclosures but not the results of operations or financial condition[411][412]. Taxation and Deferred Taxes - Total current income tax expense increased to $65.1 million in 2023 from $54.3 million in 2022, an increase of 19.5%[430]. - The effective tax rate for 2023 was 24.3%, up from 19.6% in 2022, primarily due to changes in income mix between U.S. and foreign operations[432]. - Total deferred tax assets amounted to $42.1 million in 2023, an increase from $37.6 million in 2022[436]. - Net deferred tax assets increased to $12.8 million in 2023, compared to $7.0 million in 2022[436].

Atmus Filtration Technologies Inc. (ATMU) is scheduled to release fourth-quarter 2023 results on Feb 14, before market open.The company’s earnings surpassed the Zacks Consensus Estimate in each of the last two quarters, the average surprise being 23.4%. In the last reported quarter, its earnings of 52 cents per share beat the Zacks Consensus Estimate of 45 cents by 15.6%.Image Source: Zacks Investment ResearchIn the past three months, ATMU’s shares have gained 11.3% compared with the industry’s growth of 20 ...

If you are looking for a stock that has a solid history of beating earnings estimates and is in a good position to maintain the trend in its next quarterly report, you should consider Atmus Filtration Technologies (ATMU) . This company, which is in the Zacks Pollution Control industry, shows potential for another earnings beat.When looking at the last two reports, this industrial filtration product company has recorded a strong streak of surpassing earnings estimates. The company has topped estimates by 23. ...

Atmus Filtration Technologies Inc. (NYSE:ATMU) Q3 2023 Results Conference Call November 3, 2023 11:00 AM ET Company Participants Todd Chirillo - Head of Investor Relations Steph Disher - Chief Executive Officer Jack Kienzler - Chief Financial Officer Conference Call Participants Tami Zakaria - JPMorgan Joe O'Dea - Wells Fargo Rob Mason - Baird Jerry Revich - Goldman Sachs David Ridley-Lane - Bank of America Operator Good morning. My name is Krista, and I'll be your conference operator today. At this time, I ...

Financial Performance - Net sales for Q3 2023 were $396.2 million, a decrease of 1.2% compared to $401.2 million in Q3 2022[96] - Gross margin increased to $102.9 million in Q3 2023, up 3.2% from $99.7 million in Q3 2022[96] - Operating income decreased to $58.8 million in Q3 2023, down 9.4% from $64.9 million in Q3 2022[96] - Net income for Q3 2023 was $37.6 million, a decline of 25.4% compared to $50.4 million in Q3 2022[96] - Basic and diluted earnings per share were both $0.45 in Q3 2023, down 26.2% from $0.61 in Q3 2022[96] - For the nine months ended September 30, 2023, net sales were $1,228.4 million, an increase of $51.5 million compared to $1,176.9 million for the same period in 2022[111] - Gross margin for the nine months ended September 30, 2023, was $327.1 million, an increase of $50.6 million from $276.5 million in 2022, with a gross margin percentage of 26.6%, up 3.1%[112] - Net income margin for the nine months ended September 30, 2023, was 11.1%, slightly down from 11.4% in the same period of 2022[140] - EBITDA margin for the nine months ended September 30, 2023, was 17.1%, compared to 15.9% for the same period in 2022, showing an improvement of 1.2 percentage points[140] Expenses - Selling, general and administrative expenses increased to $41.3 million in Q3 2023, up 27.9% from $32.3 million in Q3 2022[96] - Research, development, and engineering expenses rose to $11.1 million in Q3 2023, an increase of 13.3% from $9.8 million in Q3 2022[96] - Selling, general and administrative expenses rose to $41.3 million in Q3 2023, an increase of $9.0 million from $32.3 million in Q3 2022, with expenses as a percentage of net sales increasing to 10.4%[102] - Research, development and engineering expenses were $11.1 million in Q3 2023, up $1.3 million from $9.8 million in Q3 2022, representing 2.8% of net sales[103] - Selling, general and administrative expenses for the nine months ended September 30, 2023, were $126.4 million, an increase of $29.1 million from $97.3 million in 2022, with a percentage of net sales at 10.3%[113] - Research, development and engineering expenses for the nine months ended September 30, 2023, were $33.2 million, an increase of $3.5 million from $29.7 million in 2022, representing 2.7% of net sales[114] Cash Flow and Debt - Net cash provided by operating activities increased to $147.3 million for the nine months ended September 30, 2023, up from $87.9 million in the same period of 2022, representing a growth of 67.5%[125] - Net cash provided by financing activities for the nine months ended September 30, 2023, was $21.1 million, a significant improvement from a net cash used of $65.5 million in the same period of 2022[129] - Free cash flow for the nine months ended September 30, 2023, was $117.7 million, up from $65.5 million in the same period of 2022, indicating a growth of 79.8%[144] - Total debt at September 30, 2023, was $600.0 million, with a weighted-average term of 4.2 years, compared to zero debt at December 31, 2022[131] - Capital expenditures for the nine months ended September 30, 2023, were $29.6 million, which is approximately 2.4% of net sales, compared to $22.4 million or 1.9% of net sales for the same period in 2022[127][128] One-Time Expenses - The company incurred approximately $7.4 million in one-time expenses during Q3 2023 related to becoming a standalone public company[94] - The company expects to incur one-time expenses of approximately $30 million to $50 million between December 31, 2022, and December 31, 2024[94] Interest and Tax - Interest expense for Q3 2023 was $11.0 million, a significant increase from $0.3 million in Q3 2022, primarily due to borrowings under the Credit Agreement[105] - The effective tax rate for Q3 2023 was 23.1%, an increase of 1.1% from 22.0% in Q3 2022, driven by a change in the mix of earnings among tax jurisdictions[107] Foreign Currency and Risk Management - The company is exposed to foreign currency exchange rate risks due to its international business presence, which is managed through financial derivative instruments[146] - The company uses foreign currency forward contracts to minimize income volatility from remeasurement of net monetary assets and liabilities[147] - A hypothetical 10% fluctuation in the currencies of outstanding foreign currency contracts would not materially impact the unaudited condensed consolidated financial statements for the three and nine month periods ended September 30, 2023[148] - A 0.125% change in SOFR would result in an annual impact of $0.8 million on interest expense based on outstanding borrowings as of September 30, 2023[149] Outlook - The company anticipates that operating cash flow and other sources of liquidity will be sufficient to meet both short- and long-term financial commitments[123]

Table of Contents Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, $0.0001 par value ATMU New York Stock Exchange UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________ FORM 10-Q ___________________________ (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITI ...