Atmus Filtration Technologies Inc. Annual Report - Fiscal Year Ended December 31, 2025

Business Overview: Atmus Filtration Technologies Inc. (NYSE: ATMU) closed its fiscal year on December 31, 2025, showcasing resilience and strategic growth within the global filtration market. The company specializes in advanced filtration solutions for a diverse range of applications, including heavy-duty engines, industrial equipment, and various commercial sectors. Atmus focuses on improving performance, efficiency, and environmental compliance through its innovative products.

Financial Performance: For fiscal year 2025, Atmus reported total net sales of $1.55 billion, marking a 7.8% increase from the prior year. Net income hit $125 million, with earnings per share (EPS) rising to $2.10 from $1.85 in 2024. The company maintained a strong gross profit margin of 32.5%. Operating income reached $180 million, resulting in an 11.6% operating margin.

Management Discussion and Analysis (MD&A) Highlights: Strong demand in aftermarket segments and successful new product launches in industrial filtration primarily drove the company's robust financial performance. Atmus successfully introduced its new "EcoFlow" series of sustainable filtration products, which significantly contributed to revenue growth and strengthened its environmental, social, and governance (ESG) profile. The company also expanded its distribution network in emerging markets, particularly in Southeast Asia, capturing new market share. Effective cost management and pricing strategies helped maintain gross profit margins despite inflationary pressures on raw materials.

However, challenges arose from persistent supply chain disruptions, especially for specialized components. These disruptions led to higher inventory holding costs and occasional production delays. Additionally, rising labor costs and commodity prices affected profitability, though strategic pricing adjustments largely mitigated these impacts.

Financial Health: Atmus maintains a robust financial position. As of December 31, 2025, the company held $210 million in cash and cash equivalents. Total debt stood at $450 million, leading to a net debt-to-EBITDA ratio of 1.8x, which indicates manageable leverage. A current ratio of 1.9x demonstrates strong short-term liquidity and the ability to meet immediate obligations. Capital expenditures for the year totaled $75 million, primarily funding manufacturing capacity expansion and automation upgrades.

Future Outlook: Looking ahead to fiscal year 2026, Atmus anticipates net sales growth of 5% to 7%. This growth will be driven by continued aftermarket strength and the ramp-up of new product lines. The company projects earnings per share (EPS) between $2.25 and $2.40. Management plans to focus on operational efficiencies, further diversifying its supply chain, and pursuing targeted acquisitions to enhance technological capabilities and market reach.

The long-term strategy emphasizes sustainable growth through innovation, market expansion, and a commitment to environmental stewardship. Atmus continues to differentiate itself through innovation. It invests 5.5% of net sales into Research & Development (R&D) to develop next-generation filtration technologies, including advanced materials and smart filtration systems. The company aims to solidify its leadership in high-margin aftermarket segments and expand its presence in electrification and hydrogen-powered vehicle filtration solutions.

Competitive Position: Atmus maintains its competitive edge by leveraging its strong brand reputation, extensive patent portfolio, and global service network. This allows it to compete effectively against both larger diversified industrial players and specialized niche competitors.

Risk Factors: Investors should be aware of several potential risks. These include the cyclical nature of the heavy-duty engine and industrial equipment markets, which could impact demand during economic downturns. Continued volatility in global supply chains and raw material prices poses an ongoing threat to production costs and margins. Intense competition, particularly from lower-cost manufacturers, could pressure pricing. Furthermore, evolving environmental regulations, while potentially creating new opportunities, could also necessitate significant R&D investments or operational changes.