Atmus Filtration Technologies Q2 Earnings Call Highlights

Key Points

• Record Q2 performance: Atmus Filtration Technologies reported sales of $528 million, up 16.4% year over year, with adjusted EBITDA of $109 million and adjusted EPS of $0.82. Growth was driven by the Koch Filter acquisition and a 7% increase in Power Solutions revenue.
• Koch Filter integration is nearly complete: Atmus has exited more than 95% of related transition-service activities, while the new Industrial Solutions segment generated $42 million in sales and $8 million in adjusted EBITDA. The company is now evaluating additional industrial filtration acquisitions, particularly in industrial air.
• 2026 outlook maintained but margins narrowed: Atmus kept its total revenue guidance at $1.975 billion to $2.03 billion and adjusted EPS guidance at $2.85 to $3, while narrowing adjusted EBITDA margin expectations to 19.75%–20.25%. The company plans to repurchase $20 million to $40 million of shares and reduce debt using surplus cash.

Atmus Filtration Technologies NYSE: ATMU reported record second-quarter sales of $528 million, up 16.4% from $454 million a year earlier, driven by the acquisition of Koch Filter and growth in its Power Solutions business. The company also reported adjusted EBITDA of $109 million, adjusted earnings per share of $0.82, and adjusted free cash flow of $67 million.

Chief Executive Officer Steph Disher said the company’s results reflected progress across its four-pillar growth strategy: expanding first-fit market share, accelerating profitable aftermarket growth, transforming the supply chain, and building an industrial filtration platform.

“We achieved record sales in the second quarter and delivered strong results among our key metrics, including adjusted EBITDA, free cash flow, and EPS,” Disher said.

Koch Filter Integration Nears Completion

Atmus said it has exited more than 95% of the transition service agreement activities associated with its Koch Filter acquisition, which closed earlier in 2026. The company expects to complete the remaining integration work during the third quarter.

The acquisition established Atmus’ Industrial Solutions segment, which recorded $42 million in second-quarter sales and $8 million in adjusted EBITDA, representing an 18.9% margin. The company said Industrial Solutions is performing in line with expectations, and it continues to target full-year revenue of $155 million to $165 million for the segment.

Disher said Atmus is shifting attention toward growth initiatives in industrial filtration, particularly industrial air. The company is evaluating bolt-on acquisition opportunities to build scale around Koch Filter while remaining open to potential industrial water and liquid-filtration investments that could provide an anchor for a broader platform.

Chief Financial Officer Jack Kienzler said the company sees opportunities to expand Koch Filter’s distributor relationships, introduce products to address coverage gaps, and target higher-growth end markets including data centers and healthcare.

Power Solutions Sales Rise 7%

Power Solutions, Atmus’ larger operating segment, generated $486 million in second-quarter revenue, up 7% from the prior-year period. Kienzler attributed the increase to 3% higher pricing, 2% volume growth and a 2% favorable foreign-exchange effect.

Disher said the company’s aftermarket conditions remained broadly flat during the quarter, though it is seeing stronger sentiment in the U.S. and Mexico. The aftermarket represents approximately 85% of Power Solutions revenue, with roughly half of that business located in the U.S., according to Disher.

Markets in Europe, the Middle East and Asia-Pacific excluding China remained subdued, she said. Atmus continues to expect market-share gains of roughly 1% to 2%, supported by its multi-channel distribution strategy, product availability and customer relationships.

In first-fit markets, the company began seeing the cyclical recovery it had anticipated at the end of the second quarter. Disher said Atmus tends to see changes in its supply-chain activity about four to six weeks ahead of vehicle production data. The first-fit improvement reflected a mix of stronger market conditions and share gains, she said.

The U.S. Environmental Protection Agency has also provided more clarity around 2027 emissions standards, the company said. The agency has proposed allowing current engines to be sold into 2027 with a non-conformance penalty, a development Atmus expects could reduce some pre-buy pressure. Still, customers have indicated a stronger second half as market conditions improve and the industry moves through a cyclical recovery.

Margins, Costs and Middle East Effects

Second-quarter gross margin increased to 29.2% from 28.9% a year earlier. Atmus cited favorable pricing, Koch Filter’s incremental margin contribution, foreign exchange, higher volumes and the end of one-time separation costs. Those benefits were partly offset by higher material and manufacturing expenses.

Adjusted EBITDA margin was 20.7%, compared with 21% in the year-earlier quarter. Power Solutions adjusted EBITDA totaled $101 million, or 20.8% of segment sales.

Kienzler said the company expects margin comparisons to moderate in the second half as pricing and foreign-exchange benefits become less favorable than in the first half. Atmus also expects continued commodity-cost pressure tied to the Middle East conflict, particularly in chemicals and plastics.

The conflict has also affected business conditions in India and the Middle East. Joint venture income was $8 million, unchanged from the prior-year quarter, as strong performance in China offset weaker conditions in India. Disher said the company did not fully recover lost Middle East sales during the second quarter and expects recovery during the second half. The Middle East represents about 2% of overall revenue, she said.

Atmus received an immaterial amount of tariff refunds through the end of the second quarter, Kienzler said. The company has applied for refunds it believes it is entitled to receive and continues to expect the overall tariff impact on EBITDA to be substantially neutral.

Guidance Narrowed and Capital Returns Continue

Atmus maintained its Power Solutions revenue outlook of $1.82 billion to $1.865 billion for 2026. The company expects Power Solutions volume to range from flat to up 2%, with pricing contributing about 1.5% and foreign exchange providing an approximately 2% tailwind.

The company expects total 2026 revenue of $1.975 billion to $2.03 billion, representing approximately 13.5% growth at the midpoint. It narrowed its adjusted EBITDA margin outlook to 19.75% to 20.25% and maintained adjusted EPS guidance of $2.85 to $3.

During the quarter, Atmus invested $13 million in capital expenditures and returned $18 million to shareholders, including $13 million in share repurchases and $5 million in dividends. The company said it expects 2026 share repurchases of $20 million to $40 million and intends to direct surplus cash toward reducing gross debt.

Atmus estimated its net-debt-to-adjusted-EBITDA ratio at 1.9 times for the trailing 12 months ended June 30. Disher said the company’s cash generation provides flexibility to fund growth investments, return capital to shareholders and reduce debt over time.

About Atmus Filtration Technologies (NYSE:ATMU)

Atmus Filtration Technologies is a global developer and manufacturer of high-performance filter media and filtration solutions. The company designs and produces advanced materials that capture airborne particles across a range of applications, from heating, ventilation and air-conditioning (HVAC) systems to industrial and cleanroom environments. By focusing on proprietary meltblown and nanofiber technologies, Atmus delivers media that balances efficiency, airflow and durability for both original equipment manufacturers (OEMs) and aftermarket customers.

The company’s product portfolio encompasses pleated and panel filter media, depth filtration products and specialty laminates used in industries such as commercial buildings, healthcare, transportation and power generation.

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