• Fourth Quarter Revenue: $407 million, up 1.8% from $400 million in the same period last year.
• Fourth Quarter Adjusted EBITDA: $78 million, or 19.1%, compared to $71 million, or 17.9%, in the prior period.
• Fourth Quarter Adjusted Earnings Per Share (EPS): $0.58.
• Fourth Quarter Adjusted Free Cash Flow: $28 million.
• Full Year Revenue: $1.67 billion, an increase of 2.5% from 2023.
• Full Year Adjusted EBITDA: $330 million, up from $302 million in 2023, with a margin increase of 110 basis points to 19.7%.
• Full Year Adjusted EPS: $2.50, compared to $2.31 in 2023.
• Full Year Adjusted Free Cash Flow: $115 million, compared to $152 million in 2023.
• Net Debt to Adjusted EBITDA Ratio: 1.2x as of December 31, 2024.
• Cash on Hand: $184 million, with $584 million of available liquidity including a $400 million revolving credit facility.

• Warning! GuruFocus has detected 1 Warning Sign with ATMU.

Release Date: February 21, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Atmus Filtration Technologies Inc (NYSE:ATMU) achieved strong financial results for the fourth quarter and full year 2024, with sales increasing by 2.5% to $1.67 billion.
• The company successfully completed its operational separation from Cummins, becoming a fully independent entity, which has accelerated its growth strategy.
• Atmus Filtration Technologies Inc (NYSE:ATMU) expanded its technology leadership with the launch of the NanoNet N3 product portfolio, enhancing its fuel filtration capabilities.
• The company outperformed the market by approximately 2 percentage points in the aftermarket segment, demonstrating its ability to grow market share.
• Atmus Filtration Technologies Inc (NYSE:ATMU) maintained a strong balance sheet with $184 million in cash and a net debt to adjusted EBITDA ratio of 1.2x, providing operational flexibility.

Negative Points

• The company is experiencing soft end market conditions in both its aftermarket and first-fit markets, leading to cost reduction measures.
• Atmus Filtration Technologies Inc (NYSE:ATMU) incurred $4 million in one-time restructuring costs related to employee severance in the US and China.
• The company faces significant foreign exchange headwinds, which are expected to impact both top-line and bottom-line results in 2025.
• There is uncertainty regarding the timing of a recovery in freight activity, which is dependent on global economic conditions.
• The company anticipates continued weak market conditions in China, with low visibility into potential improvements.

Q & A Highlights

Q: Can you provide insights into the EBITDA margin performance in 2024 and expectations for 2025? A: (Jack Kienzler, CFO) The 19.7% EBITDA margin in 2024 was above our initial guidance. For 2025, we anticipate headwinds from foreign exchange and input costs, particularly steel and labor. We expect the first half of the year to be challenging, with improvements in the second half as market conditions recover and pricing adjustments take effect.

Q: How confident are you in achieving the projected growth in aftermarket and first-fit segments for 2025? A: (Stephanie Disher, CEO) We are confident in our projected 2% growth, supported by committed business and new partnerships. Our aftermarket segment has shown strong performance, and we expect this to continue into 2025. Both aftermarket and first-fit segments are expected to contribute to our growth.

Q: Can you elaborate on the impact of restructuring costs and their expected benefits? A: (Stephanie Disher, CEO) The restructuring actions were targeted in the US and China due to market downturns. In China, these actions are structural, given the prolonged weak market conditions. In the US, we will reassess as markets rebound, with potential reinvestments in growth areas. The benefits will be realized over a longer term as we reinvest in growth initiatives.

Q: What is the outlook for pricing in 2025, especially considering potential increases in steel prices? A: (Stephanie Disher, CEO) Our current guidance includes a 1% price increase, with no additional pricing actions planned for the second half. We will monitor input costs, foreign exchange, and tariff developments to determine if further pricing adjustments are necessary.

Q: How is Atmus positioned to handle potential tariff impacts, particularly concerning manufacturing in China and Mexico? A: (Stephanie Disher, CEO) We have modeled various scenarios and are prepared to respond dynamically. Our manufacturing strategy is region-specific, minimizing exposure. For instance, our Mexico facility supports the US market, and we have plans to adjust pricing and sourcing strategies if tariffs are implemented.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.