Atmus Filtration Technologies Inc.

Ladies and gentlemen, thank you for standing by. My name is Krista and I will be your conference operator today. At this time, I would like to welcome you to the UTMIS Filtration Technologies first quarter 2026 earnings call. All lines have been placed on mute 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 at that time, simply press star, then the number one on your telephone keypad. And if you'd like to withdraw that question, again, press star one. Thank you. I would now like to turn the conference over to Todd Chirulio, Executive Director of Investor Relations. Todd, please go ahead.

Thank you, Krista. Good morning, everyone, and welcome to the Atmos Filtration Technologies first quarter 2026 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 a reconciliation of any non-GAAP measures referred to on this call. For additional information, please see our SEC filings and the investor relation pages available on our website at atmus.com. Now I'll turn the call over to Steph.

Thank you, Todd, and good morning, everyone. Today, I will provide an update on our first quarter results and share details of our progress executing our four-pillar growth strategy. I will also provide updates to our outlook for 2026. Jack will then speak to our financial results and segment performance. I want to begin by recognising Atmosonians for their ability to navigate continued challenging market conditions, all while delivering strong financial results to start the year. Our global team remains focused on solving our customer filtration challenges and delivering on our four pillar growth strategy. During the first quarter, we completed the acquisition of Cook Filter. which represents our first step toward advancing our strategy to expand into industrial filtration. This establishes our industrial air filtration platform and expands our portfolio into commercial industrial HVAC and high growth end markets, including data centers and healthcare. We have made significant progress integrating Cook Filter into the Atmos organization. We have exited over 50% of the transition services agreement and expect all remaining integration activities to be completed early in the third quarter. The combination of Cookfilter's deep industry experience with our filtration expertise and footprint, along with a strong cultural alignment will provide benefits for all stakeholders. With the acquisition, we will report on two business segments in 2026. power solutions, which serves global on-highway and off-highway equipment markets, and industrial solutions, where the Cook filter acquisition will be reported. Now, let me provide an update on our capital allocation strategy. During the first quarter, we returned $12 million of cash to shareholders, consisting of $7 million of share buybacks and $5 million of dividends. We have 62 million remaining on our share repurchase authorisation and expect share repurchases to be 20 to 40 million in 2026. Behind our strong performance is our people. And I want to take a moment to provide some insight into how the culture at Atmos is driving momentum in the overall business. As I have shared previously, we have developed and embedded the Atmos way as a way of working which incorporates our purpose, our values, our behaviors, and our strategy. As part of the Atmos way, we are committed to being learning-oriented. Embracing a learning mindset will enable our growth strategy and support the scaling of our operations. During the first quarter of 2026, we continue to invest in building future generations of leadership for Atmos. At an executive level, we launched our second cohort of our executive development program. This program is focused on building executive leadership capability over two years. Additionally, we launched our leadership foundations program focused on developing frontline leaders with foundational leadership skills grounded in our Atmos values. We have 200 managers and supervisors currently in the program and anticipate all frontline leaders to complete this by the end of 2027. I am inspired as our leaders around the world participate in these programs and develop both personal and professional skills to lead our organization. Now let's turn to our four pillar growth strategy. Our first pillar is to grow share in first bid. We continue to win with the winners by growing our long-term partnerships with leading global and regional OEMs across a broad range of applications. Recently, we announced the opening of a new state of the art laboratory facility at our Compare France location, reinforcing our commitment to advancing filtration technology and reducing testing lead times for our customers. This modernized testing facility strengthens our global laboratory network, which allows us to work collaboratively with our customers. Our second pillar is focused on accelerating profitable growth in the aftermarket. We are partnered with leading global and regional OEMs who continue to grow their aftermarket business and expand market share. These OEMs trust our industry-leading products to solve their filtration challenges and protect what is important. Additionally, we are expanding our product coverage in independent channels with new distributors. This allows us to provide our industry-leading SweetGuard and Cook Filter branded products to our customers in their desired service channel. Our third pillar is focused on transforming our supply chain. We have established a strong distribution network, which has enabled us to enhance the customer experience. We have raised our delivery and on-shelf availability metrics to all-time highs, ensuring our customers have the right products when and where they need them. Our fourth pillar is to expand into industrial filtration markets. The execution of our first acquisition with Cook Filter enables us to unlock operational, commercial and growth synergies through the alignment of Cook Filter's leading industrial air filtration brands and our advanced technology capabilities in filtration media. As we continue to review a robust pipeline of opportunities we will focus on industrial air to build a platform of scale by leveraging cook filter and creating value through targeted bolt-on acquisitions. While our primary focus is industrial air, we will remain opportunistic in evaluating industrial water and liquid filtration assets with the goal of identifying an anchor investment that can serve as the foundation as we build out our broader industrial platform over time. As demonstrated by the Cook Filter acquisition, we remain focused on executing a disciplined approach to develop opportunities which deliver long-term shareholder value. Now let's discuss our first quarter financial results. Sales were $478 million compared to $417 million during the same period last year, an increase of 14.6%, largely driven by the acquisition of Cook Filter. Adjusted EBITDA was $95 million or 19.8% compared to $82 million or 19.6% last year. Adjusted earnings per share was $0.69 in the first quarter of 2026 and adjusted pre-cash flow was $33 million. Now I will discuss our market outlook for 2026. The conflict in the Middle East introduces uncertainties to the outlook for the year. This includes uncertainties regarding impact on input costs, our ability to sell products in the Middle East and broader macroeconomic impact. At this stage, we have not incorporated adverse impacts into our guidance associated with the Middle East conflict, but it is an ongoing risk factor that we will continue to monitor. Now let's turn to our outlook for the power solution segment. In the aftermarket, overall freight activity remains muted and we expect the market to continue at current levels and be relatively flat year over year. In our first fit market, customers have indicated strengthening activity as the year progresses related to cyclical market recovery and pre-buy activity ahead of 2027 US regulatory changes. Our outlook for heavy and medium duty markets in the US is now expected to be in a range of up 5% to up 15% compared to 2025. In our industrial solution segment, we continue to expect favorable market conditions and we anticipate the market to contribute 1% to 4% of growth. We expect share gains to deliver an additional 1% to 2% of share growth and overall pricing is expected to provide approximately 1% of revenue growth. As we noted last quarter, some tariff pricing implemented in 2025 will not carry into 2026 due to changes in status of global trade agreements, implementation of offset, and the actions we have taken to mitigate tariff impact. Based on tariffs in effect as of April 30, We expect the impact of tariff pricing to be flat relative to 2025 on a full year basis. We will continue to be nimble and adjust pricing as necessary should the tariff environment change, and we expect to remain price cross neutral. The US dollar is expected to weaken year over year and provide an approximate 1% revenue tailwind. In summary, our expectations for Power Solutions total revenue will be in a range of $1.79 billion to $1.85 billion, an increase of approximately 3% at the midpoint from the prior year. In Industrial Solutions, we expect revenue to be in the range of $155 million to $165 million, which includes revenue from the Cook filter closing date of January 7th. Taken together, we expect total company revenue to be in a range of 1.945 to 2.015 billion, an increase of 10 to 14% compared to 2025. We are maintaining our full year adjusted EBITDA guidance of 19.5% to 20.5%. As noted, the conflict in the Middle East is expected to put pressure on commodity prices throughout our supply chain, most notably in petroleum-based components such as plastics. Should this occur, we would expect to recover these inflationary costs. However, there may be a timing lag for recovery. Lastly, adjusted EPS is expected to be in a range of $2.75 to $3. Before I turn the call over to Jack, I want to thank our team members around the world for delivering a strong quarter and for your continued focus on our customers. Now, I will turn the call over to Jack.