Atmus Filtration Technologies Inc.

Investor Relations, you may begin.

Thank you, Kayla. Good morning, everyone, and welcome to the Atmos Filtration Technologies first quarter 2025 earnings call. On the call today, we have Steph Fisher, Chief Executive Officer, and Jack Kinzler, Chief Financial Officer. Certain information presented today will be forward-looking and involve risks and uncertainties that could materially affect expected results. Please refer to the slides on our website for the disclosure of the risks that could affect our results and for reconciliation of any non-GAAP measures referred to on our call. For additional information, please see our SEC filings and the investor relations pages available on our website at ATMIS.com. Now, I'll turn the call over to Steph.

Thank you, Todd, and good morning, everyone. Our team achieved another quarter of solid results by delivering industry-leading filtration solutions for our customers. I want to thank our global team for their dedication and hard work to start 2025. On the call today, I will provide a summary of our first quarter financial results and our outlook for 2025. I will also share our progress on executing our four pillar growth strategy. Jack will then provide a detailed review of our financial results. We continue to execute our capital allocation program, balancing share repurchases with a consistent dividend return. During the first quarter, we repurchased another $10 million of stock, bringing our total amount repurchased since the program announcement last July to $30 million. We have $120 million remaining under our board authorization and expect to continue returning capital to shareholders throughout the remainder of the year. We have also made significant progress on our operational separation from our former parent Cummins and intend to complete remaining separation activities in 2025. Before providing an update on our growth strategy, I want to share our views on the current tariff environment. We have dedicated teams closely monitoring and taking action in an environment which is fluid. We largely produce in region for region, which has had the effect of reducing the impact of tariffs. This model allows us to efficiently serve our customers when and where they need us. In North America, we have manufacturing facilities in Tennessee and Wisconsin to support the United States, along with a manufacturing facility in Mexico. The majority of our products from Mexico for the US market are certified compliant or expected to be certified compliant under the USMCA trade agreement. While we have taken a regional focus, there are some products we source globally. The most substantial impact to date has been the significant tariffs implemented on China. We have acted swiftly to adjust our pricing to reflect our increased costs and minimize the tariff impact on our business. Our pricing goal is to remain margin dollar neutral and pass through the increased costs we incur to the market. We have a demonstrated ability to adjust pricing to reflect inflationary input costs. The estimated pricing from tariffs in 2025 is approximately 1.5%. This incorporates announced tariffs on China of 145%, US broad-based 10% tariffs on other countries and assumes substantially all Mexico products will be certified USMCA compliant. It does not incorporate any impact from the Section 232 investigation the administration announced last week, which may impact tariffs for medium and heavy duty trucks and related parts. The outcome of this investigation is unknown. While pricing is an immediate action we can take, we are also assessing medium and long-term actions which can be implemented to reduce the impact of tariffs to our customers. With over 80% of our revenue derived from supporting our customers in the aftermarket, our business is fundamentally resilient. We will adapt as needed and continue to support our customers while focusing on our growth strategy to drive shareholder value. Now let's turn to the four pillars of our growth strategy and our progress in the first quarter. Our first pillar is to grow share in first fit. We have realigned our organization and added resources to our account management teams to focus on first fit growth, which is allowing us to achieve increased bid rates for new business opportunities. We continue to win with the winners as we partner with industry-leading OEMs as they grow their business and take market share. We are leaders in fuel filtration and crankcase ventilation. This leadership expanded earlier this year with the launch of our next generation of Nanonet N3. This media enables compact filter designs while delivering superior service life in the harshest environments across a wide variety of fuels. The reorientation of our organization for growth, coupled with product and technology leadership, allows us the continued opportunity to expand with new and existing OEMs around the world. Our second pillar is focused on accelerating profitable growth in the aftermarket. Through our multi-channel path to market, we are expanding market coverage of our industry-leading FleetGuard products. Additionally, we are increasing brand awareness through our We Protect campaign launched in the first quarter that focuses on our strengths. Science that safeguards championing a cleaner world and securing a better future. Furthermore, we are expecting the use or expanding the use of advanced data analytic tools, increasing our ability to provide industry leading fleet guard products for our customers, when and where they need them. Our third pillar is focused on transforming our supply chain. We have transitioned 95% of our distribution network from Cummins, with our most recent facility having opened late last year in Belgium. We expect to transition our remaining facility in South Africa during the second quarter. During the first quarter, our team focused on bringing our Belgian location to a normalised operating level with a focus on improving customer experience. We celebrated the grand opening of our newest media manufacturing facility in Mado, South Korea. The facility is designed to economically manufacture Nanonet Plus multi-layer media and increase production capacity for our existing nanofiber line to meet growing market demands for premium performance filters. The plan also allows us to broaden our capabilities and make a large variety of media configurations to support a diverse range of our customer needs. Our fourth pillar is to expand into industrial filtration markets. Our strategy remains focused on growth into industrial filtration, primarily through inorganic acquisitions. As a reminder, we are broadly looking at three verticals, industrial air, industrial liquids excluding water, and industrial water. In the near term, economic uncertainty and market volatility is softening M&A activity. However, we continue to review opportunities for inorganic expansion with a disciplined approach and a focus on delivering long-term shareholder value. Now let's discuss our first quarter results. Despite challenging market conditions, our team delivered solid financial performance to start 2025. Sales were $417 million compared to $427 million during the same period last year, a decrease of 2.4%. While unfavourable foreign exchange was the most significant driver of lower overall sales, we continue to see soft market conditions in most of our global markets. Adjusted EBITDA was $82 million or 19.6% compared to $80 million or 18.8% in the prior period. Adjusted EBITDA excludes $9 million of one-time standalone costs. Adjusted earnings per share was $0.63 in the first quarter of 2025 and adjusted free cash flow was $20 million. Adjusted free cash flow excludes $4 million of one-time separation related items in the quarter. Now let's turn to our market outlook for 2025. While we are confident in our ability to navigate the evolving tariff environment and adapt quickly, the overall impact on our end markets is less clear. We feel it is helpful to provide the market with guidance. However, our visibility in the current environment is limited. Given the heightened uncertainty, we want to provide as much transparency as possible regarding our underlying assumptions. As and when those assumptions change, we will adjust future guidance appropriately. Our guidance does not assume a broad-based economic recession. and reflects tariff impacts which are effective as of today. We expect tariff impacts to continue to evolve in response to ongoing policy and trade negotiations. Starting with the market guidance for aftermarket, a recovery of freight activity is less certain than when we started the year. Previously, we expected freight activity to strengthen as the year progressed. Now we expect freight activity to continue at current levels and the midpoint of our guidance is flat year over year with a range of down 1.5% to up 1.5%. We continue to execute our growth strategy, which will enable us to outperform the underlying markets. Our outlook remains unchanged and we expect our performance to add 2% of aftermarket revenue growth. Pricing is expected to provide approximately 3.2% of year-over-year revenue increase. Pricing is comprised of two components. The first is base pricing actions to offset certain input costs, including steel, which is expected to be approximately 1.7%. The second component is tariff pricing. As I noted earlier, we are adjusting pricing approximately 1.5% in response to tariffs. While we expect to be margin neutral over the full year, we do expect some lag in the implementation of mitigation actions. While the US dollar has weakened from the strength we saw in the first quarter, the currency environment remains fluid. We expect the full year of a strong US dollar to be an approximate 1.5% revenue headwind. Let's now turn to our first fit markets. In addition to economic uncertainty, the US EPA announced in March a number of reviews of regulations for the US heavy duty market. Given these dynamics, we have not assumed any pre-buy activity in our first fit market outlook. In the US, we now expect the heavy duty market to be down 5% to 15%. For US medium duty, we expect production to be down 10% to 20%. We continue to expect demand for trucks in India to be flat to down, as we have yet to see the ramp up in government infrastructure spending. And in China, where we have low visibility to the market, we anticipate weak market conditions to continue. Overall, while the components of our revenue algorithm have changed, our expected total company revenue for 2025 remains in a range of flat to up 4% compared to the prior year, with global sales in an expected range of 1.67 to 1.735 billion. We expect to react swiftly to changing market conditions and continue delivering strong operational performance. Our expected adjusted EBITDA margin remains in a range of 19% to 20%. Lastly, adjusted EPS is expected to be in a range of $2.35 to $2.60. While the tariff environment remains fluid, we are confident in our ability to navigate these challenges and deliver strong shareholder value. Now, I will turn the call over to Jack, who will discuss our financial results in more detail.