Financial Data and Key Metrics Changes - Sales for Q4 2025 were $447 million, a 9.8% increase from $407 million in Q4 2024, driven by pricing, higher volumes, and favorable foreign exchange [10][16] - Full year sales reached $1.764 billion, up 5.7% from $1.67 billion in 2024, supported by higher volumes and pricing actions [11][18] - Adjusted EBITDA for Q4 was $85 million (19.1% margin), compared to $78 million (19.1% margin) in the prior year [10][18] - Full year adjusted EBITDA was $354 million (20% margin), up from $330 million (19.7% margin) in 2024 [11][20] - Adjusted earnings per share for Q4 was $0.66, compared to $0.58 in the previous year [10][18] - Full year adjusted EPS was $2.73, an increase from $2.50 in 2024 [11][20] Business Line Data and Key Metrics Changes - The company will report on two segments in 2026: Power Solutions and Industrial Solutions, following the acquisition of Koch Filter [4] - The Power Solutions segment is expected to generate revenue between $1.79 billion and $1.85 billion, reflecting a 3% increase at the midpoint from the previous year [14] - The Industrial Solutions segment is projected to generate revenue between $155 million and $165 million, including one week of sales from Koch Filter [14][25] Market Data and Key Metrics Changes - The heavy-duty market is expected to be flat to up 10% compared to 2025, while the Industrial Solutions segment is anticipated to contribute 1%-4% to growth in 2026 [12][14] - Overall pricing is expected to provide approximately 1% of revenue growth, with a weaker U.S. dollar contributing an additional 1% revenue tailwind [13][14] Company Strategy and Development Direction - The company is focused on a four-pillar growth strategy: growing share in first fit, accelerating profitable growth in the aftermarket, transforming the supply chain, and expanding into industrial filtration markets [7][9] - The acquisition of Koch Filter is expected to enhance the company's industrial air filtration platform and provide opportunities for organic and inorganic growth [4][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate challenging global markets and achieve strong performance through disciplined execution [3][22] - The outlook for 2026 includes expectations for continued strong operational performance and investment for growth, with total company revenue projected to increase by 10%-14% [14][22] Other Important Information - The company returned $78 million to shareholders in 2025, consisting of $61 million in share buybacks and $17 million in dividends [5] - The company has $69 million remaining on its share repurchase authorization and expects to repurchase $20-$40 million in 2026 [5] Q&A Session Summary Question: Update on Koch Filter acquisition and data center growth - Management indicated that 8% of revenue is tied to data centers, with growth in that market expected to be in the high-teens rate [24][27] Question: Impact of tariffs on pricing - Management clarified that the 1% pricing expectation is core pricing, not directly related to tariffs, and adjustments will be made if tariff costs change [28][29] Question: Opportunities for insourcing filtration media at Koch - Management highlighted that synergies from the acquisition will primarily come from procurement and innovation workshops to enhance product offerings [33][36] Question: Outlook for off-highway markets - Management expects the off-highway markets to remain flat year-over-year, with more impact seen in the aftermarket business [37][38] Question: Adjusted EBITDA guidance and self-help levers - Management noted that the flat year-over-year adjusted EBITDA reflects strong incremental growth and ongoing evaluations for cost reductions [48][50]

Financial Data and Key Metrics Changes - In Q4 2025, sales increased to $447 million, up 9.8% from $407 million in Q4 2024, driven by a 5% increase in pricing, 4% higher volumes, and 1% favorable foreign exchange [10][16] - For the full year 2025, sales reached $1.764 billion, a 5.7% increase from $1.67 billion in 2024, with adjusted EBITDA of $354 million, up from $330 million, resulting in an adjusted EBITDA margin of 20% [11][20] - Adjusted earnings per share for Q4 2025 was $0.66, compared to $0.58 in Q4 2024, while full-year adjusted EPS was $2.73, up from $2.50 in 2024 [11][20] Business Line Data and Key Metrics Changes - The company will report on two business segments in 2026: Power Solutions and Industrial Solutions, following the acquisition of Koch Filter [4] - The Power Solutions segment is expected to generate revenue between $1.79 billion and $1.85 billion in 2026, while Industrial Solutions is projected to contribute between $155 million and $165 million [14] Market Data and Key Metrics Changes - The heavy-duty market is expected to be flat to up 10% in 2026, while the Industrial Solutions segment anticipates a growth contribution of 1%-4% [12][14] - The company expects overall pricing to provide approximately 1% of revenue growth in 2026, with a weaker U.S. dollar expected to offer a 1% revenue tailwind [13] Company Strategy and Development Direction - The company is focused on a four-pillar growth strategy: growing share in first fit, accelerating profitable growth in the aftermarket, transforming the supply chain, and expanding into industrial filtration markets [7][9] - The acquisition of Koch Filter is seen as a strategic move to enhance the industrial air filtration platform and drive growth [4] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenging global market conditions but expressed confidence in the company's ability to unlock growth potential through disciplined execution and cultural strength [3][7] - The outlook for 2026 includes expectations for total company revenue to be in the range of $1.945 billion to $2.015 billion, reflecting a 10%-14% increase compared to 2025 [14] Other Important Information - The company returned $78 million to shareholders in 2025, consisting of $61 million in share buybacks and $17 million in dividends, with $69 million remaining on the share repurchase authorization [5] - The company has a strong liquidity position with an estimated $701 million available after financing the Koch Filter acquisition [21] Q&A Session Summary Question: Update on Koch Filter acquisition and data center revenue - Management indicated that 8% of revenue is tied to data centers, growing at a high-teens rate, with a focus on commercial and industrial HVAC markets [24][27] Question: Impact of tariffs on pricing - Management clarified that the 1% pricing guidance is core pricing, not directly related to tariffs, and they aim to remain price-cost neutral [28][30] Question: Opportunities for insourcing filtration media at Koch - Management highlighted that synergies from the acquisition include procurement synergies and innovation workshops to enhance product development [33][36] Question: Outlook for off-highway markets - Management expects off-highway markets to remain flat year-over-year, with more significant impacts seen in the aftermarket [37] Question: Sales guidance for Industrial Solutions - Management provided a conservative sales guidance for Industrial Solutions, emphasizing transparency and the potential for growth based on market conditions [40][42] Question: Customer response to emissions regulation changes - Management noted that while recent regulatory changes may impact the market, they expect NOx standards to hold for the 2027 engine launch [44][46] Question: Adjusted EBITDA guidance - Management indicated that the flat year-over-year adjusted EBITDA reflects strong incrementals and ongoing investments to fuel top-line growth [48][50]

Financial Data and Key Metrics Changes - In Q4 2025, sales increased to $447 million, up 9.8% from $407 million in Q4 2024, driven by pricing, higher volumes, and favorable foreign exchange [10][16] - For the full year 2025, sales reached $1.764 billion, a 5.7% increase from $1.67 billion in 2024, supported by higher volumes and pricing actions [11][18] - Adjusted EBITDA for Q4 was $85 million, maintaining a margin of 19.1%, compared to $78 million in Q4 2024 [10][18] - Full year adjusted EBITDA was $354 million, up from $330 million in 2024, resulting in a margin of 20% [11][20] - Adjusted earnings per share for Q4 was $0.66, compared to $0.58 in the prior year [10][18] - Adjusted free cash flow for the full year was $158 million, an increase from $115 million in 2024 [11][20] Business Line Data and Key Metrics Changes - The company will report on two business segments in 2026: Power Solutions and Industrial Solutions, following the acquisition of Koch Filter [4] - The Power Solutions segment is expected to generate total revenue between $1.79 billion and $1.85 billion, reflecting a 3% increase year-over-year [12][14] - The Industrial Solutions segment is projected to contribute revenue between $155 million and $165 million, including one week of sales from Koch Filter [12][14] Market Data and Key Metrics Changes - The heavy-duty market is expected to be flat to up 10% compared to 2025, while the Industrial Solutions segment anticipates growth of 1%-4% in 2026 [12][14] - Overall pricing is expected to contribute approximately 1% to revenue growth, with the U.S. dollar anticipated to weaken, providing a 1% revenue tailwind [13][14] Company Strategy and Development Direction - The company is focused on a four-pillar growth strategy: growing share in first fit, accelerating profitable growth in the aftermarket, transforming the supply chain, and expanding into industrial filtration markets [6][9] - The acquisition of Koch Filter is expected to enhance the company's industrial air filtration platform and provide opportunities for organic and inorganic growth [4][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate challenging global markets and achieve growth through disciplined execution [3][5] - The outlook for 2026 includes expectations of strong operational performance and continued investment for growth, with total company revenue projected to be between $1.945 billion and $2.015 billion [14][15] Other Important Information - The company returned $78 million to shareholders in 2025 through share buybacks and dividends, with $69 million remaining on its share repurchase authorization [5] - The company has entered into a $1 billion term loan and a $500 million revolving credit facility to support the acquisition of Koch Filter [21] Q&A Session Summary Question: Update on Koch Filter acquisition and data center market growth - Management indicated that 8% of revenue is tied to data centers, which are growing at a high-teens rate, with a focus on product development to support this market [25][28] Question: Impact of tariffs on pricing - Management clarified that the 1% pricing expectation is core pricing, not directly related to tariffs, and they aim to be price-cost neutral [29][30] Question: Opportunities for insourcing filtration media at Koch - Management highlighted the focus on integration and identified procurement synergies, with plans for innovation workshops to leverage combined expertise [33][36] Question: Sales guidance for industrial solutions - Management provided a conservative sales guidance for industrial solutions, emphasizing transparency and the potential for growth based on market conditions [40][42] Question: Customer response to emissions regulation changes - Management noted that while recent regulatory changes may impact the market, they expect NOx standards to hold for the 2027 engine launch, with no immediate changes to product development [44][46] Question: Adjusted EBITDA guidance and self-help levers - Management acknowledged that the adjusted EBITDA guidance is flat year-over-year, reflecting strong incrementals and ongoing cost reduction strategies [48][50]

Financial Data and Key Metrics Changes - Sales for Q4 2024 were $407 million, an increase of 1.8% compared to $400 million in Q4 2023 [19][29] - Adjusted EBITDA for Q4 2024 was $78 million, representing a margin of 19.1%, up from $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, with an adjusted EBITDA margin of 19.7%, an increase of 110 basis points from the previous year [22][38] Business Line Data and Key Metrics Changes - The company outperformed the aftermarket market by approximately two percentage points in 2024, indicating strong growth in this segment despite overall market softness [13] - The company launched a new product, NanoNet N3, enhancing its fuel filtration technology, which is expected to drive growth in both first fit and aftermarket segments [11][12] 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][126] - Overall, total company revenue for 2025 is projected to be flat to up 4%, with global sales expected between $1.67 billion and $1.735 billion [28] Company Strategy and Development Direction - The company is focused on a four-pillar growth strategy, which includes growing share in first fit, accelerating aftermarket growth, transforming the supply chain, and expanding into industrial filtration markets [10][17] - The company has initiated a capital allocation program, balancing share repurchases with dividends, having repurchased $20 million of stock since July 2024 [8] Management's Comments on Operating Environment and Future Outlook - Management anticipates a recovery in freight activity throughout 2025, but the timing remains uncertain due to fluid global economic conditions [24] - The company expects continued strength in the U.S. dollar, which will create a revenue headwind of approximately 2% [25] - Management expressed confidence in achieving a 2% growth in aftermarket revenue driven by ongoing execution of their growth strategy [24][57] Other Important Information - The company incurred one-time restructuring costs of $4 million in Q4 2024, which are excluded from adjusted results [20][30] - The effective tax rate for 2024 was 21%, down from 24.3% in 2023, due to a change in the mix of earnings among tax jurisdictions [39] Q&A Session Summary Question: Can you provide insight on EBITDA margin and its future outlook? - Management noted 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 indicated that the guidance for aftermarket growth is 0% to 3%, while first fit is expected to decline by 0% to 10% [82] 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 company is primarily pursuing inorganic growth through acquisitions for industrial filtration, with initial product launches in infancy and not expected to contribute significantly in 2025 [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 operations if demand improves [126]