Atmus Filtration Technologies (ATMU)2024-02-13 16:00Financial Performance - For the year ended December 31, 2023, Atmus generated 171.3 million in net income, and 432.7 million, representing a gross margin percentage of approximately 26.6%, compared to 248.4 million, up from 171.3 million for 2023, slightly up from 1,088.6 million in 2023 from 1,007.9 million in 2023, compared to 595.5 million in 2023, compared to 168.0 million, marking a net increase of 0.4 million, compared 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 38.5 million in 2022, and 42.3 million, 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 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 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 37.6 million in 2022[436]. - Net deferred tax assets increased to 7.0 million in 2022[436].