Atmus Filtration Technologies Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics

Sales: Achieved a record $528 million, up 16.4% from $454 million in Q2 2025.

Adjusted EBITDA: Reported at $109 million (20.7% margin), slightly down from $95 million (21% margin) year-over-year.

Adjusted EPS: Increased to $0.82 from $0.75 in Q2 2025.

Adjusted Free Cash Flow: Rose to $67 million, compared to $36 million in the prior year.

Shareholder Returns: $18 million returned through share buybacks and dividends.

2Strategic Updates and Business Highlights

Acquisition Integration: Successfully integrated Koch Filter, with over 95% of transition services agreements completed. Focus is now on growth initiatives in the Industrial Solutions segment.

4-Pillar Growth Strategy:

First-Fit Market: Strengthening partnerships with OEMs and expanding customer reach using advanced filtration technologies.

Aftermarket Growth: Developing a robust pipeline for aftermarket sales, although current conditions remain flat.

Supply Chain Transformation: Implementing "Lean the Atmus Way" to enhance productivity and margins.

Industrial Filtration Expansion: Exploring opportunities in industrial air and water filtration markets.

3Forward Guidance and Outlook

Power Solutions Revenue: Expected to be between $1.82 billion and $1.865 billion, reflecting a growth of approximately 4.5% at the midpoint.

Total Company Revenue: Projected to be between $1.975 billion and $2.03 billion, representing a 13.5% increase at the midpoint.

Adjusted EBITDA Guidance: Narrowed to a range of 19.75% to 20.25%.

Adjusted EPS Forecast: Expected to be between $2.85 and $3 for the full year.

4Bad News, Challenges, or Points of Concern

Market Conditions: The aftermarket segment remains flat, with subdued conditions in Europe and Asia (excluding China).

Middle East Conflict: Ongoing conflict is impacting sales and joint venture income, particularly in India, which is expected to persist into the second half of the year.

Cost Pressures: Inflationary pressures from commodity costs are anticipated, particularly due to the Middle East conflict, which may affect margins in the latter half of the year.

Declining Segment Margins: Industrial Solutions segment EBITDA margin decreased to 18.9%, attributed to operational inefficiencies and transitional costs.

5Notable Q&A Insights

Aftermarket and First-Fit Performance: Aftermarket remains flat globally, while first-fit markets are showing signs of cyclical recovery, particularly in the U.S.

Pricing Dynamics: Full-year pricing guidance is set at 1.5%, with expectations for a moderating pricing environment in the second half of the year.

Joint Venture Income: Flat year-over-year, with strong performance in China offset by weaker conditions in India due to the Middle East conflict.

Integration of Koch Filter: The team is optimistic about growth prospects and is actively pursuing new market opportunities in high-growth sectors like healthcare and data centers. Overall, Atmus Filtration Technologies reported strong financial performance in Q2 2026, driven by record sales and effective integration of Koch Filter. However, ongoing market challenges, particularly related to geopolitical tensions and cost pressures, pose risks to future growth and profitability.