Atmus Filtration Technologies Inc.

Thank you for standing by. My name is Kate and I will be your conference operator today. At this time, I would like to welcome everyone to Atmos Filtration Technologies' second quarter 2025 earnings call. All lines have been placed on you to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Tad Chiarello, Executive Director, Investor Relations. Please go ahead.

Thank you, Kate. Good morning, everyone, and welcome to the Atmos Filtration Technologies second quarter 2025 earnings call. On the call today, we have Steph Disher, 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-GATT measures referred to on the 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. On the call today, Jack and I will update you on our second quarter results and progress executing our four pillar growth strategy. We will also provide an update on our global market and our outlook for the remainder of 2025. I continue to be impressed with the ability of the ADMIS team to navigate uncertainty and continuously provide our customers with industry-leading filtration solutions. Our team delivered record sales and strong financial results in the second quarter. We mitigated the impact of tariffs in the quarter and will continue to take appropriate operational actions to be price-cost neutral in relation to tariffs. We continue to make progress on our operational separation from our former parent Cummins. I am pleased to report we are on track for full completion of separation in the third quarter. Now let's turn to our capital allocation strategy. We continue to deploy capital to create long-term shareholder value. We accelerated our share repurchase program in the second quarter, repurchasing $20 million of stock, bringing our year-to-date total to $30 million. Since the announcement of our share repurchase program last July, we have repurchased a total of $50 million of stock. We remain committed to investing for organic growth and executing our inorganic industrial filtration strategy. However, the timing of these opportunities can vary and we will continue to deploy capital in a manner that creates value for our shareholders. We expect share repurchases to remain an important component of our capital allocation strategy and anticipate our full year repurchases will be in a range of approximately one to 3% of our current market capitalization. Now let's turn to the four pillars of our growth strategy and our progress in the second quarter. Our first pillar is to grow share in first bit. We continue to win with the winners by building on our long-term partnerships with industry-leading OEMs. We are delivering increased content with global OEMs as we work collaboratively on a train of development opportunities. These partnerships allow us to grow our share and provide our customers with industry-leading filtration products to solve their filtration challenges. While we continue to increase our bid rate for new business opportunities, the speed of decision making by our customers has been impacted by ongoing uncertainty in the trade and regulatory environment. We expect continued growth from new first fit business. However, the timing of awards may be elongated as our customers adjust to current market conditions. Our second pillar is focused on accelerating profitable growth in the aftermarket. We are winning share in the aftermarket as our distribution partners continue to grow their businesses and we expand our product coverage through a multi-channel path to market. This growth is supported with our expanded use of advanced data analytic tools, which increases our ability to provide industry-leading FleetGuard products for our customers, when and where they need them. Our third pillar is focused on transforming our supply chain. We are now fully on the Atmos distribution network as we recently completed the transition of our final distribution location from Cummins in South Africa. Additionally, our Belgium distribution location is now operating at a normalised level and providing our customers with the product and service levels we expect. this location with our most complex distribution transition, and I am proud of our team for their focus on our customers. With 100% of our distribution network now under our direct control, we are focused on continuing to improve on-shelf availability and ensure we have the right products for our customers when and where they need our filtration solutions. Our fourth pillar is to expand into industrial filtration markets. Our strategy is unchanged and remains focused on growth into industrial filtration, primarily through inorganic acquisition. As a reminder, we are broadly looking at three verticals, industrial air, industrial liquids excluding water, and industrial water. We are reviewing a robust pipeline of opportunities for inorganic expansion. We will continue to take a disciplined approach and focus on transactions that will build long-term shareholder value. Now let's discuss our second quarter results. Sales were a record $454 million compared to $433 million during the same period last year, an increase of 4.8%. Our performance drove higher sales along with benefits of increased pricing, despite challenging conditions in most of our global markets. Unfavorable foreign exchange partially offset these increases. Adjusted EBITDA was 95 million or 21% compared to 93 million or 21.4% in the prior period. Adjusted earnings per share was 75 cents in the second quarter of 2025 and adjusted free cash flow was 36 million. Now let's turn to our market outlook for 2025. Our guidance reflects tariff impacts as of July 31. We expect tariffs to continue to fluctuate and we will adjust future guidance as the tariff and regulatory environment evolves. starting with market guidance for aftermarket. We expect freight activity to generally continue at current levels and the midpoint of our guidance to be slightly positive year over year and be within a range of down 0.5% to up 1.5%. We continue to execute our growth strategy, which will enable us to outperform the underlying market. Our outlook remains unchanged and we expect share gains to add 2% of revenue growth. Overall pricing is expected to provide approximately 2.2% revenue growth. Pricing is inclusive of both our base pricing actions to offset certain input costs, including steals, and tariff pricing. The US dollar continues to weaken from the strength we saw early in the year. we anticipate the full year impact of a strong US dollar to now be an approximate half percent revenue headwind. Let's now turn to our first bit market. In the US, a lack of clarity surrounding regulatory emissions requirements, the continued evolution of tariff policies, along with an uncertain economic backdrop is leading to weak markets. This is driving our expectations that both the heavy and medium duty markets in the US will be down 15% to 25%. We continue to expect demand for trucks in India to be flat to down, as we've yet to see the ramp up in government infrastructure spending. In China, the market has reflected some growth in the second quarter. However, we view this as temporary and expect continued challenging conditions. Overall, we have raised our expectations for total company revenue in 2025 to be in a range of up 1% to up 4%, compared to the prior year with global sales in an expected range of $1.685 billion to $1.735 billion. Our demonstrated ability to quickly adapt to changing market conditions and the expected continuation of strong operational performance results in us raising our expectations for adjusted EBITDA margins to be in a range of 19.25% to 20%. Lastly, adjusted EPS is expected to be in a range of $2.40 to $2.60. I would like to take a moment to thank our Atlas team for delivering record performance in the second quarter. and their sustained commitment to building a great company. I am looking forward to the completion of the operational separation from Cummins later this quarter. This is a significant multi-year accomplishment, one which was made possible by the entire Atmos team. Now I will turn the call over to Jack, who will discuss our financial results in more detail.