管理層發言
Hello everyone, thank you for joining us and welcome to Atmus Filtration Technologies Second Quarter 2026 Earnings Call. The operator provided instructions. I will now hand the conference over to Todd Chirillo, Executive Director of Investor Relations. Please go ahead, Todd.
Thank you, Percy. Good morning, everyone, and welcome to the Atmus Filtration Technologies Second Quarter 2026 Earnings Call. On the call today, we have Stephanie Disher, Chief Executive Officer; and Jack Kienzler, 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 Relations pages available on our website at atmus.com. Now I'll turn the call over to Stephanie.
Thank you, Todd, and good morning, everyone. Today, I will review our second quarter results and share details of our progress executing our 4-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 am pleased to share that we achieved record sales in the second quarter and delivered strong results among our key metrics, including adjusted EBITDA, free cash flow and EPS. I want to thank our global team for their dedication to our customers and their efforts in delivering these impressive results. Now let me provide you an update on the integration of Koch Filter, our first Industrial Filtration acquisition, which we closed earlier this year. Our team has made tremendous progress, and we have exited more than 95% of the transition services agreement. We expect all remaining integration activities to be completed during the third quarter. With the integration nearly complete, we are turning our attention to growth initiatives in our Industrial Solutions segment. We continue to see value creation opportunities from Koch Filter's deep industry experience, combined with our filtration capabilities and global footprint, which will provide ongoing benefits for all stakeholders. Let's now turn to an update on our capital allocation strategy. Our strong cash generation provides us with balance sheet flexibility for both growing the business and returning capital to shareholders. With this balanced approach, we expect share repurchases to be $14 million to $20 million in 2026, aligned with our previous guide. Looking forward, we intend to allocate surplus cash towards paying down gross debt. This will position us for investing in future growth opportunities. Now let's turn to our 4-pillar growth strategy. Our first pillar is to grow share in first-fit. 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. We are leaders in filtration science with our latest generation NanoNet N3 Filtration Media and advanced testing capabilities strategically located around the world. This allows us to expand our first-fit customer reach across a broad range of applications and provide advanced filtration solutions for OEMs. Our second pillar is focused on accelerating profitable growth in the aftermarket. Our global aftermarket consists of thousands of customers across many applications. We have dedicated teams located where our customers need us. We have developed a robust pipeline of opportunities and are working every day to bring our industry-leading Fleetguard and Koch Filter products to current and new customers. Our third pillar is focused on transforming our supply chain. We have launched Lean the Atmus Way, our lean-based production system. The program includes implementation of standardized management systems and lean operating practices, which improves productivity and supports sustainable margin expansion. I want to recognize our team in Mexico for becoming the first Atmus site to achieve certification in Lean the Atmus Way. In addition, our focus on relentless improvement has allowed us to continue raising our delivery and on-shelf availability metrics to all-time highs through the Atmus controlled distribution network. We have the right products for our customers when and where they need us. Our fourth pillar is to expand into industrial filtration markets. Following the acquisition of Koch Filter, we continue to review a robust pipeline of opportunities with a focus on industrial air to build a platform of scale by leveraging Koch Filter and creating value through targeted bolt-on acquisitions. While our primary focus is Industrial Air, we 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. We are focused on delivering long-term shareholder value through the disciplined development and execution of industrial filtration opportunities. Now let's discuss our second quarter financial results. Sales were a record $528 million compared to $454 million during the same period last year, an increase of 16.4% and driven by the acquisition of Koch Filter and strong performance in Power Solutions. Adjusted EBITDA was $109 million or 20.7% and compared to $95 million or 21% last year. Adjusted earnings per share was $0.82 in the second quarter of 2026, and adjusted free cash flow was $67 million. Also during the second quarter, we returned $18 million of cash to shareholders through share buybacks and dividends. Now let's turn to our outlook for the Power Solutions segment. In the aftermarket, we are starting to see signs of health in the overall freight market, including higher spot rates and increasing optimism for improved freight activity. However, we have yet to see a significant inflection and therefore continue to expect the market to be relatively flat year-over-year. In our first-fit market, the U.S. EPA has provided the industry with some regulatory clarity surrounding the implementation of 2027 emission standards. The agency has proposed allowing current engines to be sold into 2027 with a nonconformance penalty. While this is expected to ease some pre-buy pressure, customers have indicated a stronger second half driven by improved market conditions and a cyclical recovery. We are already seeing the benefits of this cyclical recovery in our second quarter results and have good visibility through the end of the year. We also expect continued market share gains in both aftermarket and first-fit through our multichannel distribution strategy, improved on-shelf availability and winning with new and existing customers. For Power Solutions, overall, we expect volume growth in a range of approximately flat to 2%, inclusive of global markets and share gains. Additionally, pricing is expected to add approximately 1.5% and foreign exchange is expected to be a tailwind of approximately 2%. In total, we expect Power Solutions revenue to be in a range of $1.82 billion to $1.865 billion, which represents growth of approximately 4.5% at the midpoint. In our Industrial Solutions segment, we expect favorable market conditions and strong performance to continue with total revenue to be in a range of $155 million to $165 million. Taken together, we expect total company revenue to be in a range of $1.975 billion to $2.03 billion, an increase of approximately 13.5% at the midpoint. We are narrowing our full year adjusted EBITDA guidance and now expect to be in a range of 19.75% to 20.25%. Lastly, adjusted EPS is expected to be in a range of $2.85 to $3. In summary, our team continues to successfully execute our 4-pillar growth strategy and provide the protection our customers need and value most. I want to thank all Atmusonians for their strong performance in the first half. I remain confident in the ability of our team to continue to deliver for all our stakeholders. Now I will turn the call over to Jack.
Thank you, Stephanie, and good morning, everyone. I also want to recognize our global team for delivering another quarter of strong financial performance, all while successfully navigating challenging market conditions. Sales in the second quarter were a record $528 million compared to $454 million during the same period last year, an increase of 16.4%. Power Solutions delivered sales of $486 million compared to $454 million in the prior year, an increase of 7%. The increase was primarily due to higher pricing of 3%, higher volumes of 2% and favorable foreign exchange of 2%. Industrial Solutions sales were $42 million, resulting from the acquisition of Koch Filter. Gross margin for the second quarter was $154 million or 29.2% compared to $131 million or 28.9% in the second quarter of 2025. The increase was primarily due to favorable pricing, incremental margin from the acquisition of Koch Filter, favorable foreign exchange, higher volumes and the cessation of one-time separation costs. This was partially offset by higher materials and manufacturing costs. Selling, administrative and research expenses for the second quarter were $62 million compared to $57 million in the prior year. The increase was primarily due to people-related expenses and information technology consulting. Joint venture income was $8 million in the second quarter, flat compared to prior year. Strong performance in China offset weaker markets in India, which has been impacted by the Middle East conflict. Other income (expense) was unfavorable by $1 million compared to favorable by $4 million in the second quarter of 2025. The increase in expense was primarily due to foreign exchange losses and a nonoperating gain that did not repeat. Excluded from the adjusted results are one-time costs related to the integration of Koch Filter, which for the full year is expected to be in the range of $3 million to $6 million. We also exclude intangible asset amortization resulting from the Koch Filter acquisition, which is expected to be in the range of $11 million to $13 million for 2026. Total enterprise adjusted EBITDA in the second quarter was $109 million or 20.7% compared to $95 million or 21% in the prior period. Segment adjusted EBITDA for Power Solutions was $101 million or 20.8% compared to $95 million or 21% last year. Industrial Solutions segment adjusted EBITDA was $8 million or 18.9%. Adjusted earnings per share was $0.82 compared to $0.75 last year. Adjusted free cash flow was $67 million this quarter compared to $36 million in the prior year. Now let's turn to our capital deployment strategy. The combination of strong cash flow and continued robust adjusted EBITDA performance has resulted in an estimated net debt to adjusted EBITDA ratio of 1.9x for the trailing 12 months ended June 30. We also invested $13 million in capital expenditures for continued growth, and we returned $18 million to shareholders consisting of $13 million in share repurchases and $5 million of dividends. As Stephanie highlighted, we will continue to strategically deploy capital through investment in growth and paying down debt to provide balance sheet flexibility. Our cash flow allows us to take this balanced approach for both growth opportunities and returning capital to shareholders. In closing, I want to thank and applaud all of our teams around the world for all of your hard work and dedication in delivering a strong first half of 2026. Now we will take your questions.
分析師問答
The operator provided instructions for the question-and-answer session. The first question comes from the line of Quinn Fredrickson with Baird.
Could you discuss how aftermarket and first-fit revenues performed in the quarter and also give us an estimate for how much share gains contributed in Power Solutions and whether there is any change to the assumption for the year?
Thanks, Quinn. Great question. Let me start by saying, as I was saying in my prepared remarks, our team delivered a really strong quarter. In the Power Solutions segment, overall, record revenues up 16.4% versus the same period last year. In Power Solutions specifically, we delivered revenue growth of 7.1%. As Jack highlighted, that was broken down between 3% price, 2% volume and 2% FX. If I take that volume growth year-on-year and break that down as requested to aftermarket and first-fit performance, what we saw in aftermarket I would describe as still flattish conditions. To give you a view of aftermarket around the world, aftermarket is roughly 85% of our revenues within the Power Solutions segment, and within that, about 50% of those revenues are in the U.S. We are seeing stronger sentiment in the U.S. and in Mexico. But as I look around the rest of the world from an aftermarket perspective, Europe, the Middle East and Asia Pacific outside China are still subdued. That balance really gives us a flat aftermarket outlook and only a slight improvement in aftermarket through the quarter. We continue to deliver strong gains with our customers, and I continue to see us within the range of 1% to 2% for our share gains outlook. If I turn to the first-fit market, we did start to see the cyclical recovery in first-fit markets that we have been anticipating and that was previously incorporated in our guidance. We started to see that uptick in our business in the second quarter. As context, the APT data that we often refer to with vehicle build is about 4 to 6 weeks; we are about 4 to 6 weeks ahead of that in terms of the supply chain cycle. So we started to see the cyclical upturn in first-fit markets here at the end of the second quarter. I would say it was a balanced performance in first-fit between market improvement and share gains through our ongoing strategy of winning winners.
Thanks, Steph. Jack, could we get an updated view on price-cost expectations for the year? I think you said maybe 2% price year-to-date. Is that the right way to think about for the full year? It sounds like you may have taken some pricing actions in July; could you clarify that?
Yes, absolutely. From a pricing perspective, we continuously assess our pricing and make strategic adjustments where necessary, both in terms of gross pricing as well as rebate programs, and rebates can drive some timing nuances. We saw good price realization through the first half, just over 2%. Our full-year guide is 1.5% for the full year, and that reflects the mix of carryover from prior year as well as some new pricing and an anticipated moderating price realization environment as you compare year-over-year in the third and fourth quarters. There is also some rollback of certain tariff-related pricing that occurred last year that we have continued to implement or remove as policies change. As always, we'll take a balanced approach to pricing and share gains and are certainly doing that over the balance of the year. Regarding cost dynamics in the second half, we continue to see some elevation in our cost base associated with some commodities and a lot of that is driven by the ongoing conflict in the Middle East. That's probably the biggest headwind embedded in our second half. As you look at the first half year-to-date margin compared to the second half, that is one of the contributors leading to the implied softening in the second half versus the first half. Another dynamic to call out is the conflict's contribution to weaker overall conditions in India, which is leading to a lower joint venture income outlook than we originally anticipated for the full year. I hope that combination helps you bridge the first-half, second-half dynamic and get a better sense of price-cost dynamics as we move through the year.
The next question comes from the line of David Ridley-Lane with Bank of America.
Thank you very much. On behalf of Andrew Obin. Just really quickly, on the Middle East since you mentioned that, did you catch up on any of the lost sales from the first quarter? And what's embedded in the guide — do you assume you catch up or not catch up in the second half?
Thanks, David. Good morning. We didn't fully catch up on the Middle East in the second quarter. The conflict is ongoing, as we noted in our first quarter earnings, and we remain uncertain as to how the conflict will play out. We're still seeing underperformance versus our expectations for our Middle East business, driven by overall market conditions. We do anticipate it recovering into the second half. It's a smaller proportion of our business — approximately 2% of overall revenues. As I mentioned earlier, we are also seeing some subdued conditions in Europe that may be related to the conflict, and, as Jack referred to, we have seen challenges in our India business through joint venture income that are also related to the Middle East conflict.
Got it. And then on pricing, first, can you confirm there's no material tariff refunds in second quarter results? And then when tariffs come off and you lower pricing mechanically, how much of a drag might that be in the second half, ballpark? I realize there are a lot of moving parts.
Yes. Let me start with the tariff refund question, David, and then I'll address pricing more broadly. As of the end of the second quarter of 2026, we've received an immaterial amount of tariff refund. We have applied for all the refunds we believe we're entitled to and we'll continue to evaluate the treatment of those refunds as and when we receive them, including whether a portion should be allocated to expenses we've already incurred and what might be left over for customer refunds. Overall, we continue to expect the net impact on EBITDA from tariffs to be substantially neutral. The tariff environment will continue to evolve with policy changes. Our strategy remains unchanged: avail ourselves of exemptions to protect customers, continue to evaluate and optimize our supply chain, and, where appropriate, pass the impact of tariffs through pricing. We are guided by a cost-neutral principle as it relates to tariffs. Regarding pricing more generally, it's hard to parse every element given all the moving pieces from last year, but if you look at the full-year guide relative to year-to-date price realization, you can see price realization moderating in the third and fourth quarters versus the first half — roughly just over 0.5% in those later quarters compared to the same periods last year.
The next question comes from the line of Bobby Brooks with Northland Capital Markets.
So Industrial Solutions, is the run rate at that orderly sale level versus Koch's 2020 flows when you acquired it? Is there any seasonality that would make this an odd way of looking, or qualitatively, anything that drove the sequential improvement?
Good morning, Bobby. I'll try my best to make out your question — I must say the line is breaking up a little on my end. I think your question relates to Industrial Solutions revenues, whether it's performing to expectations and whether there is any seasonality in those revenues. Industrial Solutions is performing right where we would expect it to. Broadly speaking, we've talked about pricing in Industrial Solutions and expect roughly 1% to 2% pricing dynamics and market growth for Industrial Solutions that is closely linked to GDP on the order of roughly 3%. Overall, our guide for Industrial Solutions is unchanged and we see revenues as relatively steady across the quarters; I wouldn't call out any specific cyclicality. We're confident and pleased with ongoing performance relative to our original business case assumptions.
I apologize for the breaking up. Maybe a quick follow-up: you spoke earlier about the business. I just want to give you the floor to speak to what might be some exciting growth opportunities in this business?
I'll take that. We continue to be very excited about the acquisition of Koch Filter and see strong cultural fit with our organization. As we noted, we're through about 95% of the TSAs and expect to fully exit those TSAs in the third quarter. We remain encouraged about growth prospects and are pursuing multiple initiatives: building out distributor relationships, launching new products to fill gaps in coverage, and exposing the business to high-growth end markets such as data centers and health care. The team is collaborating closely with Koch to cultivate new market share opportunities and to leverage complementary strengths. We're energized about the long-term potential.
The next question comes from the line of Tami Zakaria with JPMorgan India Private Limited.
Question on your EBITDA margin guide. I think you narrowed the range and the top end came down by 25 basis points. Is that because your first-fit expectation is now better, creating a mix headwind, or how should we think about that lowering of the top end of the range?
Good morning, Tami. I'll pass that one to Jack.
Thanks, Tami. First, we've seen really strong operational execution through the first half of the year — year-to-date margins are about 20.3% from an EBITDA perspective over the first six months, and we're pleased with that performance. Let me bring to life performance in the second quarter and then speak to the balance of the year and a couple of the moving pieces. In Q2, we saw benefits from pricing, volume and FX that were partially offset by higher material and manufacturing costs. We also had a small amount of elevated incentive compensation costs in the quarter as we're outperforming plan. Down in other income (expense), there were a couple of nonoperational items in Q2 of 2025 that didn't repeat this year. To bridge to the full-year guide, our guidance implies more favorability in the first half from pricing and FX than we will have in the second half — so a moderating effect. We also expect the ancillary effects of the Middle East conflict to persist longer than we anticipated, driving inflationary pressures on raw materials like chemicals and plastics. Additionally, the conflict has impacted joint venture income, most notably in India, which is part of the reason for the slightly lower outcome. Regarding mix, while strengthening first-fit relative to aftermarket does impart a modest mix dynamic, the change to the top end of the EBITDA range is a combination of these factors: moderating pricing, commodity cost pressures, JV income dynamics and some elevated incentive compensation from outperformance.
Understood. That's helpful. I wanted some clarity on the Industrial Solutions segment: the EBITDA margin for that segment is down almost 200 basis points sequentially. Is that seasonality? If not, what drove the sequential decline? How should we think about that segment's EBITDA margin for the back half versus the second quarter?
I'll take that as well. On a year-to-date basis, margin performance for Industrial Solutions is about 20% when you average Q1 and Q2, and that's how we would have you think about the third and fourth quarters relative to the full year — that is the guide. As you noted, second quarter margins were 18.9%, a sequential step down below the full-year guide. That was driven by some one-off impacts that created inefficiencies we expect to be nonrecurring. In particular, there were operational inefficiencies as volumes shifted, some inefficiencies associated with the transition off the TSA, and some redundant expenses. We remain confident in the full-year guide for the business and view the Q2 margin step-down as a temporary nuance.
The next question comes from the line of Kevin Uherek with Wells Fargo.
I wanted to double-click on the North America truck aftermarket market. How have your expectations changed from the beginning of the year and what are you seeing currently?
Kevin, thanks for the question. Our guide remains the same as we came out of the year from a market perspective on aftermarket in the U.S. We are reading improving sentiment across the market, which gives us optimism, but we are not yet seeing that translate into visibility in aftermarket orders at this stage. The visibility we have today does not show a material uptick in outcomes or market conditions yet. So the way we see it is really flat year-on-year for aftermarket. We will continue to deliver share gains as previously guided, and that hasn't significantly changed from where we started the year.
Understood. And maybe going back to the Middle East conflict: can you help us think about the margin impact on the quarter and the moving pieces there?
Yes. Think about it this way: the commodity cost impacts tied to the conflict take time to work through the system, and it is more of a second-half dynamic than a Q2 dynamic. It's one of the drivers of the step-down in margin percentage outlook in the second half. If you look at our joint venture income year-over-year, it's flat compared to the same period last year; this reflects a strong market in China in the first half offset by weakness in our India market, which has depressed JV income. At the beginning of the year, like many, we had an assumption that some resolution to the conflict might arrive sooner; that's not the case, so we'll continue to mitigate impacts through cost actions and efforts to get product to customers. That combination of commodity inflation and JV income effects is the primary mechanism by which the conflict impacts margins.
There are no further questions at this time. I will now turn the call back to Todd Chirillo for closing remarks.
Thank you, Percy. That concludes our teleconference for today. Thank you for participating and for your continued interest. Have a great day.
This concludes today's call. Thank you for attending. You may now disconnect.