Atmus Filtration Technologies (ATMU) investor relations material

Market trends and outlook

• Aftermarket represents 84% of revenue, with market volumes flat and no signs of near-term inflection; 2026 guidance assumes flat aftermarket trends.

• On-highway aftermarket is tepid globally, with India and Latin America showing pockets of growth, while agriculture remains weak across regions.

• First-fit markets are expected to recover in the second half of 2026, driven by anticipated pre-buy activity ahead of 2027 EPA regulations, though the pre-buy may be less significant than previously expected.

• Off-highway and power generation markets show some optimism for late 2026, but outlooks remain cautious and dependent on macroeconomic and geopolitical factors.

Strategic initiatives and growth drivers

• Latin America growth attributed to expanding relationships with independent distributors, increasing shelf presence, and improving delivery capabilities, especially in Brazil.

• Focus on increasing share of wallet with independent distributors and leveraging OE dealer networks to expand aftermarket presence.

• Supply chain transformation and improved delivery statistics have enabled higher on-shelf availability and support further market share gains.

• Growth strategy includes expanding first-fit customer base, accelerating aftermarket growth, supply chain transformation, and industrial market expansion.

Financial performance and margin dynamics

• Aftermarket sales are higher margin than first-fit; margin expansion is driven by plant activity and fixed cost absorption, with ongoing efforts to improve cost base and efficiency.

• Recent Indian labor law changes resulted in a $3 million one-time EBITDA hit, with a small ongoing cost increase.

• Pricing actions are evaluated biannually, with a preference for maintaining market share over aggressive price increases; aim to remain price-cost neutral or positive.

• Significant margin expansion achieved post-IPO, with continued focus on procurement, automation, and efficiency gains.