Atmus Filtration Technologies (US:ATMU)2026-02-13 17:02Financial 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]