Atmus Filtration Technologies Reports Fourth Quarter and Full Year 2024 Results

Atmus Filtration Technologies Inc. ((Atmus, NYSE:ATMU), a global leader in filtration and media solutions, today reported financial results for its fourth quarter and full year that ended December 31, 2024.

Fourth Quarter and Full Year Highlights

• Net sales of $407 million for the fourth quarter and $1,670 million for the full year
• GAAP net income of $40 million for the fourth quarter and $186 million for the full year
• Diluted earnings per share of $0.48 for the fourth quarter and $2.22 for the full year
• Adjusted earnings per share of $0.58 for the fourth quarter and $2.50 for the full year
• Adjusted EBITDA of $78 million and Adjusted EBITDA margin of 19.1% for the fourth quarter
• Adjusted EBITDA of $330 million and Adjusted EBITDA margin of 19.7% for the full year
• Cash provided by operating activities was $20 million for the fourth quarter and $105 million for the full year
• Adjusted free cash flow was $28 million for the fourth quarter and $115 million for the full year

2025 Outlook

The company is providing guidance for year 2025 as follows:

• Revenue to be in the range of $1,670 million to $1,735 million
• Adjusted EBITDA margin to be in the range of 19.0% to 20.0%
• Adjusted earnings per share in the range of $2.35 to $2.60

During the quarter, Atmus repurchased $10 million of common stock under the $150 million share repurchase program authorized by the Board of Directors in July 2024. As of December 31, 2024, $130 million was remaining under the authorization. Additionally, Atmus paid a quarterly cash dividend of $0.05 per share of common stock.

"The Atmus team delivered strong financial results for fourth quarter and full year 2024 by providing our customers industry leading filtration solutions," said Steph Disher, Chief Executive Officer of Atmus. "We continue to build long-term shareholder value through execution of our growth strategy and delivering cash returns to investors."

Fourth Quarter Results

For the fourth quarter of 2024, Atmus posted net sales of $407 million, compared to $400 million in the fourth quarter of 2023, an increase of 1.8%. The increase in sales was primarily driven by higher volume and increases in pricing, partially offset by the unfavorable impacts of currency.

Gross margin was $107 million, compared to $106 million in the fourth quarter of fiscal year 2023. Gross margin as a percent of net sales was 26.3% compared to 26.4% in the same period last year. The increase in gross margin was primarily driven by increases in pricing, favorable manufacturing costs and higher volumes, partially offset by higher logistics, material and one-time restructuring costs.

Adjusted EBITDA was $78 million, compared to $71 million in the fourth quarter of 2023. Adjusted EBITDA margin was 19.1% compared to 17.9% in the same period last year. Adjusted EBITDA in the fourth quarter excludes $7 million of one-time costs associated with the separation of our business from Cummins Inc. compared to the prior year quarter which excludes $8 million of one-time costs. Additionally, Adjusted EBITDA in 2024 excludes $4 million of one-time restructuring costs.

Net income was $40 million, or $0.48 of diluted earnings per share in the fourth quarter of 2024, compared to $35 million, or $0.42 of diluted earnings per share in the same period last year.

Adjusted earnings per share was $0.58 in the fourth quarter of 2024, compared to $0.49 of Adjusted earnings per share in the same period last year.

The effective tax rate for the fourth quarter was 21.2%.

Cash provided by operating activities was $20 million in the fourth quarter of 2024, compared to cash provided by operating activities of $42 million in the fourth quarter of 2023.

Adjusted free cash flow was $28 million in the fourth quarter of 2024, compared to $30 million in the fourth quarter of 2023. Adjusted free cash flow in the fourth quarter of 2024 excludes $3 million of one-time capital expenditures associated with our separation from Cummins compared to $4 million in the prior year. Additionally, Adjusted free cash flow in the fourth quarter of 2024 excludes $12 million of other one-time separation expenditures primarily comprised of working capital inefficiencies associated with the move from intercompany settlement terms with Cummins to standalone practices. Adjusted free cash flow in 2024 also excludes $4 million of one-time restructuring costs.

Full Year 2024 Results

For the full year 2024, Atmus posted sales of $1,670 million, up $42 million, or 2.5% from the prior year. The increase in sales was driven by an increase in pricing and higher volume, partially offset by an unfavorable impact of currency.

Gross margin was $462 million, compared to $433 million for year 2023, an increase of 6.8%. Gross margin as a percent of net sales was 27.7% compared to 26.6% in the same period last year. The increase in gross margin and gross margin as a percent of net sales was driven by an increase in pricing, higher volumes, lower variable compensation and favorable material costs, partially offset by unfavorable manufacturing and logistics costs, unfavorable impact of currency and one-time restructuring costs.

Adjusted EBITDA was $330 million, compared to $302 million in 2023. Adjusted EBITDA margin was 19.7% compared to 18.6% in the same period last year. Adjusted EBITDA in 2024 excludes $25 million of one-time costs associated with the separation of our business from Cummins compared to the prior year which excludes $29 million of one-time costs. Additionally, Adjusted EBITDA in 2024 excludes $4 million of one-time restructuring costs.

Net income was $186 million, or $2.22 of diluted earnings per share in 2024, compared to $171 million, or $2.05 of diluted earnings per share last year.

Adjusted earnings per share was $2.50 in 2024, compared to $2.31 of Adjusted earnings per share last year.

The effective tax rate for 2024 was 21.0%.

Cash provided by operating activities was $105 million in 2024, compared to cash provided by operating activities of $189 million in 2023.

Adjusted free cash flow was $115 million in 2024, compared to $152 million in 2023. Adjusted free cash flow in 2024 excludes $15 million of one-time capital expenditures associated with our separation from Cummins compared to $9 million in the prior year. Additionally, Adjusted free cash flow in 2024 excludes $39 million of other one-time separation expenditures primarily comprised of working capital inefficiencies associated with the move from intercompany settlement terms with Cummins to standalone practices. Adjusted free cash flow in 2024 also excludes $4 million of one-time restructuring costs.

Fourth Quarter and Full Year 2024 Conference Call and Webcast

Atmus will host a conference call and webcast to discuss the company's fourth quarter and full year 2024 results on Friday, February 21, 2025, at 10:00 a.m. CT.

A live webcast and replay of the conference call can be accessed from the Atmus investor relations website at http://investors.atmus.com.

About Atmus Filtration Technologies Inc.

Atmus Filtration Technologies Inc. is a global leader in filtration and media solutions. For more than 65 years, the company has combined its culture of innovation with a rich history of designing and manufacturing filtration solutions. With a presence on six continents, Atmus serves customers across truck, bus, agriculture, construction, mining, marine and power generation vehicle and equipment markets, along with providing comprehensive aftermarket support and solutions. Headquartered in Nashville, Tennessee (U.S.), Atmus employs approximately 4,500 people globally who are committed to creating a better future by protecting what is important. Learn more at https://www.atmus.com.

Forward-looking disclosure statement

This press release 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 identified by the use of words such as "anticipates," "expects," "forecasts," "intends," "plans," "believes," "seeks," "estimates," "could," "should," "may" or words of similar meaning. All statements other than statements of historical fact are forward-looking statements, including, without limitation, statements regarding the outlook for our future business and financial performance, discussions of future operations, our strategy for growth and market position. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict. If the underlying assumptions prove inaccurate, or known or unknown risks or uncertainties materialize, our actual outcomes, results and financial condition may differ materially from what is expressed, implied or forecasted in such forward-looking statements. Risks and uncertainties include, but are not limited to, those reflected in Part I, Item 1A, "Risk Factors," and elsewhere in our Annual Report on Form 10-K for our fiscal year ended December 31, 2024 and also as may be described from time to time in future reports we file with the Securities and Exchange Commission (SEC). You are cautioned not to place undue reliance on forward-looking statements. The forward-looking statements made herein are made only as of the date hereof and we undertake no obligation to publicly update or to revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Non-GAAP measures

We use non-GAAP financial information and believe it is useful to investors as it provides additional information to facilitate comparisons of historical operating results, identify trends in our underlying operating results and provide additional insight and transparency on how we evaluate our business. We use non-GAAP financial measures to budget, make operating and strategic decisions and evaluate our performance. We have detailed the non-GAAP adjustments that we make in our non-GAAP definitions below. We believe the non-GAAP measures should always be considered along with the related U.S. GAAP financial measures. We have provided the reconciliations between the U.S. GAAP and non-GAAP financial measures and we also discuss our underlying U.S. GAAP results throughout our Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K.

Our primary non-GAAP financial measures are listed below and reflect how we evaluate our current and prior-year operating results. As new events or circumstances arise, these definitions could change. When our definitions change, we provide the updated definitions and present the related non-GAAP historical results on a comparable basis.

• "EBITDA" is defined as earnings or losses before interest expense, income taxes, depreciation and amortization and "EBITDA margin" is defined as EBITDA as a percent of net sales. We believe EBITDA and EBITDA margin are useful measures of our operating performance as they assist investors and debt holders in comparing our performance on a consistent basis without regard to financing methods, capital structure, income taxes or depreciation and amortization methods, which can vary significantly depending upon many factors. Additionally, we believe these metrics are widely used by investors, securities analysts, ratings agencies and others in our industry in evaluating performance.
• "Adjusted EBITDA" is defined as EBITDA after adding back certain one-time expenses, reflected in cost of sales and selling, general and administrative expenses, associated with becoming a standalone public company and one-time restructuring and "Adjusted EBITDA margin" is defined as Adjusted EBITDA as a percent of net sales. We believe Adjusted EBITDA and Adjusted EBITDA margin are useful measures of our operating performance as it allows investors and debt holders to compare our performance on a consistent basis without regard to one-time costs attributable to our becoming a standalone public company.
• "Adjusted earnings per share" is defined as diluted earnings per share (the most comparable U.S. GAAP financial measure) after adding back certain one-time expenses, reflected in cost of sales and selling, general and administrative expenses, associated with becoming a standalone public company and one-time restructuring costs less the related tax impact of the same one-time expenses. We believe Adjusted earnings per share provides improved comparability of underlying operating results.
• "Free cash flow" is defined as cash flows provided by (used for) operating activities less capital expenditures and "Adjusted free cash flow" is defined as Free cash flow after adding back certain one-time capital expenditures and other separation related costs associated with becoming a standalone public company and one-time restructuring costs. We believe Free cash flow and Adjusted free cash flow are useful metrics used by management and investors to analyze our ability to service and repay debt and return value to shareholders.

The metrics defined above are not in accordance with, or alternatives for, U.S. GAAP financial measures and may not be consistent with measures used by other companies. It should be considered supplemental data; however, the amounts included in the EBITDA, EBITDA margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted earnings per share, Free cash flow and Adjusted free cash flow calculations are derived from amounts included in the consolidated statements of net income and cash flows.

We do not consider our non-GAAP financial measures as superior to, or a substitute for, the equivalent measures calculated and presented in accordance with GAAP. Some of the limitations are: such measures do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments; such measures do not reflect changes in, or cash requirements for, our working capital needs; such measures do not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our debt; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and such measures do not reflect any cash requirements for such replacements; and other companies in our industry may calculate such measures differently than we do, limiting their usefulness as comparative measures. To properly and prudently evaluate our business, we encourage you to review the unaudited condensed consolidated financial statements included in our SEC filings and not rely on a single financial measure to evaluate our business.

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