Atmus Filtration Technologies Inc.

Previous wording

The following is our discussion and analysis of changes in our financial condition and results of operations for thethree months ended March 31, 2026 compared to thethree months ended March 31, 2025.

Current wording

The following is our discussion and analysis of changes in our financial condition and results of operations for thethree and six months ended June 30, 2026, compared to thethree and six months ended June 30, 2025.

Previous wording

We are one of the global leaders of filtration products and solutions. Our reportable operating segments consist of Power Solutions and Industrial Solutions. The Power Solutions Segment consists of products for on-highway commercial vehicles and off-highway agriculture, construction, mining vehicles and equipment. We design and manufacture advanced filtration products, principally under the Fleetguard brand, that provide superior asset protection and enable lower emissions. We estimate that approximately 14% of our net sales in 2025 were generated through first-fit sales to OEMs, where our products are installed as components for new vehicles and equipment. We estimate that approximately 86% of our net sales in 2025 were generated in the aftermarket, where our products are installed as replacement or repair parts, leading to a strong recurring revenue base. The Industrial Solutions segment was created with the acquisition of Koch Filter on January 7, 2026. The Industrial Solutions segment addresses high-growth end markets including commercial and industrial HVAC, data centers and power generation environments. Products include a broad portfolio of air filtration solutions. Building on our more than 65-year history, we continue to grow and differentiate ourselves through our global footprint, comprehensive offering of premium products, technology leadership and multi-channel path to market.

Current wording

We are one of the global leaders of filtration products and solutions. Our reportable operating segments consist of Power Solutions and Industrial Solutions. The Power Solutions Segment consists of products for on-highway commercial vehicles and off-highway agriculture, construction, mining vehicles and equipment. We design and manufacture advanced filtration products, principally under the Fleetguard brand, that provide superior asset protection and enable lower emissions. We estimate that approximately 14% of our net sales in 2025 were generated through first-fit sales to OEMs, where our products are installed as components for new vehicles and equipment. We estimate that approximately 86% of our net sales in 2025 were generated in the aftermarket, where our products are installed as replacement or repair parts, leading to a strong recurring revenue base. The Industrial Solutions segment was created with the acquisition of Koch Filter on January 7, 2026. The Industrial Solutions segment addresses commercial and industrial HVAC applications, and high-growth end markets including data centers, power generation and healthcare environments. Products include a broad portfolio of air filtration solutions. Building on our more than 65-year history, we continue to grow and differentiate ourselves through our global footprint, comprehensive offering of premium products, technology leadership and multi-channel path to market.

Previous wording

During 2025, the United States announced changes to U.S. trade policy, including increasing tariffs on imports, in some cases significantly, and potentially negotiating or terminating existing trade agreements. The United States also indicated that tariffs may change and that additional measures are under consideration to be introduced. These tariff and tariff-related measures include potential impacts to the industry in which we operate and the commodities to which our products are exposed. These actions, along with corresponding retaliatory tariffs imposed by other countries on U.S. exports, have led to significant volatility and uncertainty in global demand in both aftermarket and first-fit. In response to these developments, we mitigated the cost impact on our business by employing any exemptions for which we were eligible, such as compliance under the United States-Mexico-Canada Agreement (“USMCA”), adjusting our supply chain, and implementing select price adjustments. In February of 2026, the U.S. Supreme Court held that tariffs imposed pursuant to the International Emergency Economic Powers Act (“IEEPA”) exceeded the statutory authority granted under that law. The ruling, however, did not address potential refunds of any previous tariffs. On March 4, 2026, the Court of International Trade ordered U.S. Customs and Border Protection to begin the refund process for all importers who were subject to IEEPA duties.

Current wording

During 2025, the United States announced changes to U.S. trade policy, including increasing tariffs on imports, in some cases significantly, and potentially negotiating or terminating existing trade agreements. The United States also indicated that tariffs may change and that additional measures are under consideration to be introduced. These tariff and tariff-related measures include potential impacts to the industry in which we operate and the commodities to which our products are exposed. These actions, along with corresponding retaliatory tariffs imposed by other countries on U.S. exports, have led to significant volatility and uncertainty in global demand in both aftermarket and first-fit. In response to these developments, we mitigated the cost impact on our business by employing the exemptions for which we were eligible, such as compliance under the United States-Mexico-Canada Agreement (“USMCA”), adjusting our supply chain, and implementing select price adjustments. In February of 2026, the U.S. Supreme Court held that tariffs imposed pursuant to the International Emergency Economic Powers Act (“IEEPA”) exceeded the statutory authority granted under that law. The ruling, however, did not address the timing, availability or extent of any refunds of previously paid tariffs. On March 4, 2026, the Court of International Trade ordered U.S. Customs and Border Protection to begin the refund process for all importers who were subject to IEEPA duties.

Previous wording

Aftermarket demand remained soft in the first three months of 2026. We continue to be in a period of slow growth in global aftermarkets, and this trend is expected to continue for the remainder of 2026. First-fit demand continues to reflect depressed market conditions with recovery expected in the latter half of 2026.

Current wording

Aftermarket demand remained soft in the first six months of 2026. We continue to be in a period of slow growth in global aftermarkets, and this trend is expected to continue for the remainder of 2026. First-fit demand continues to reflect depressed market conditions with recovery expected in the latter half of 2026.

Previous wording

We have experienced general variability in direct material costs through the first three months of 2026. While the costs of our principal materials fluctuate, generally we believe there will continue to be an adequate supply of the materials we use and that they will broadly remain available.

Current wording

We have experienced general variability in direct material costs through the first six months of 2026, and various key commodities have been exposed to inflationary pressures. While the costs of our principal materials fluctuate, generally we believe there will continue to be an adequate supply of the materials we use and that they will broadly remain available.

Previous wording

Logistics and warehousing costs increased during the first three months of 2026, primarily due to macro-economic conditions and the transition to a standalone distribution network as part of ourseparation from Cummins Inc. (“Cummins”) into a standalone publicly traded company (the “Separation”). Our management team continues to monitor and evaluate all of the factors affecting our supply chain condition and the related impacts on our business and operations, and we continue to minimize any supply chain impacts to our business and to our customers.

Current wording

Logistics and warehousing costs increased during the first six months of 2026, primarily due to macro-economic conditions and the transition to a standalone distribution network as part of ourseparation from Cummins Inc. (“Cummins”) into a standalone publicly traded company (the “Separation”). Our management team continues to monitor and evaluate all of the factors affecting our supply chain condition and the related impacts on our business and operations, and we continue to minimize any supply chain impacts to our business and to our customers.

Previous wording

Additionally, the appreciation of the U.S. dollar against certain foreign currencies had a favorable impact on our condensed consolidated results of operations in the first three months of 2026 due to translation impacts. We remain in a volatile currency environment and as such, there can be no assurances that this trend will continue for the remainder of 2026.

Current wording

Additionally, the appreciation of the U.S. dollar against certain foreign currencies had a favorable impact on our condensed consolidated results of operations in the first six months of 2026 due to translation impacts. We remain in a volatile currency environment and as such, there can be no assurances that this trend will continue for the remainder of 2026.

Previous wording

Net sales were$477.5 million for the three months ended March 31, 2026, an increase of$61.0 million compared to$416.5 million for the three months ended March 31, 2025. The increase in Net sales was mainly due to incremental sales of $38.4 million recorded by Koch Filter, acquired in January 2026, favorable impacts of currency of $16.3 million and favorable pricing of $8.3 million, partially offset by lower volumes of $2.0 million. The favorable impact from pricing is primarily driven by normal pricing initiatives and select increases as a result of tariffs.

Current wording

Net sales were$527.9 million for the three months ended June 30, 2026, an increase of$74.4 million compared to$453.5 million for the three months ended June 30, 2025. The increase in Net sales was mainly due to incremental sales of $42.4 million recorded by Koch Filter, acquired in January 2026, favorable pricing of $12.9 million, favorable impacts of currency of $10.8 million and favorable volumes of $8.3 million. The favorable impact from pricing is primarily driven by normal pricing initiatives and select adjustments as a result of tariffs.

Previous wording

Selling, general and administrative expenses were$51.0 million for the three months ended March 31, 2026, an increase of$5.1 million compared to$45.9 million for the three months ended March 31, 2025. The increase was primarily driven by higher people-related and consulting expenses and an increase in amortization of internal-use software. Selling, general and administrative expenses as a percentage of Net sales were 10.7% for the three months ended March 31, 2026, a decrease of 0.3 percentage points compared to 11.0% for the three months ended March 31, 2025. The decrease in Selling, general and administrative expenses as a percentage of Net sales was primarily driven by the items noted above increasing at a lower rate in relation to the change in Net sales.

Current wording

Selling, general and administrative expenses were$51.7 million for the three months ended June 30, 2026, an increase of$5.6 million compared to$46.1 million for the three months ended June 30, 2025. The increase was primarily driven by higher people-related and consulting expenses and an increase in amortization of internal-use software. Selling, general and administrative expenses as a percentage of Net sales were 9.8% for the three months ended June 30, 2026, a decrease of 0.4 percentage points compared to 10.2% for the three months ended June 30, 2025. The decrease in Selling, general and administrative expenses as a percentage of Net sales was primarily driven by the items noted above increasing at a lower rate in relation to the increase in Net sales.

Previous wording

Research, development and engineering expenses were$8.1 million for the three months ended March 31, 2026, a decrease of$1.0 million compared to $9.1 million for the three months ended March 31, 2025. The decrease was primarily due to timing of engineering projects. Research, development and engineering expenses as a percentage of Net sales were 1.7% for the three months ended March 31, 2026 a decrease of 0.5 percentage points compared to 2.2% for the three months ended March 31, 2025. The decrease in Research, development and engineering expenses as a percentage of Net Sales was mainly due to the items noted above.

Current wording

Research, development and engineering expenses were$9.8 million for the three months ended June 30, 2026, a decrease of$0.9 million compared to $10.7 million for the three months ended June 30, 2025. The decrease was primarily due to timing of engineering projects. Research, development and engineering expenses as a percentage of Net sales were 1.9% for the three months ended June 30, 2026 a decrease of 0.5 percentage points compared to 2.4% for the three months ended June 30, 2025. The decrease in Research, development and engineering expenses as a percentage of Net Sales was mainly due to the items noted above.

Previous wording

Interest expense was$14.1 million for the three months ended March 31, 2026, an increase of$5.7 million compared to$8.4 million for the three months ended March 31, 2025. The increase was primarily driven by the increased outstanding borrowings on our credit facility as additional borrowings were made during the quarter due to the Koch Filter acquisition.

Current wording

Interest expense was$13.7 million for the three months ended June 30, 2026, an increase of$5.2 million compared to$8.5 million for the three months ended June 30, 2025. The increase was primarily driven by the increased outstanding borrowings on our credit facility as additional borrowings were made in January 2026 for the Koch Filter acquisition.

Previous wording

Our effective tax rate for the three months ended March 31, 2026 was 20.9%, a decrease of 0.4 percentage points compared to 21.3% for the three months ended March 31, 2025. The variance in the effective tax rate is primarily attributable to higher excess tax benefits on stock compensation due to stock price appreciation and an increase in U.S. tax deductions and foreign tax credits due to the adoption of the One Big Beautiful Bill Act (“OBBBA”), partially offset by unfavorable change in the mix of earnings among tax jurisdictions.

Current wording

Our effective tax rate for the three months ended June 30, 2026 was 22.8%, an increase of 0.9 percentage points compared to 21.9% for the three months ended June 30, 2025. The increase in the effective tax rate is primarily attributable to discrete tax items from foreign tax filings, which is partially offset by a favorable change in the mix of earnings among tax jurisdictions.

Previous wording

Gross margin was$136.8 million for the three months ended March 31, 2026, an increase of$26.3 million compared to$110.5 million for the three months ended March 31, 2025. The increase in Gross margin was mainly due to incremental margin of $10.9 million recorded by Koch Filter, favorable pricing of $8.3 million as described above, a $6.3 million decrease in one-time costs, favorable impacts of currency of $5.6 million and a $3.0 million decrease in warranty costs, partially offset by unfavorable logistics and duties costs of $6.2 million, unfavorable manufacturing and other costs of $0.8 million and lower volumes of $0.7 million. Gross margin as a percentage of Net sales was 28.6% for the three months ended March 31, 2026, an increase of 2.1 percentage points compared to 26.5%for the three months ended March 31, 2025. The increase in Gross margin as a percentage of Net sales was primarily driven by the items noted above.

Current wording

Gross margin was$290.7 million for thesix months ended June 30, 2026, an increase of$49.2 million compared to$241.5 million for thesix months ended June 30, 2025. The increase in Gross margin was mainly due to incremental margin of $21.7 million recorded by Koch Filter, favorable pricing of $21.2 million as described above, favorable impacts of currency of $9.2 million, a $7.7 million decrease in one-time separation costs, favorable volumes of $2.2 million, and a $2 million decrease in warranty costs, partially offset by unfavorable manufacturing and other costs of $5.8 million, $5.2 million of unfavorable material costs, and unfavorable logistics costs of $4.1 million. Gross margin as a percentage of Net sales was 28.9% for thesix months ended June 30, 2026, an increase of 1.1 percentage points compared to 27.8% for thesix months ended June 30, 2025. The increase in Gross margin as a percentage of Net sales was primarily driven by the items noted above, partially offset by the incremental margins of Koch Filter, which resulted in an unfavorable impact on gross margin percentage.

Previous wording

Equity, royalty and interest income from investees was$7.6 million for the three months ended March 31, 2026, a decrease of$1.6 million compared to$9.2 million for the three months ended March 31, 2025. The decrease was primarily due to lower earnings from one of our joint ventures in India. These lower earnings were driven by a remeasurement of benefit obligations in India due to recent labor law changes.

Current wording

Equity, royalty and interest income from investees was$15.2 million for thesix months ended June 30, 2026, a decrease of$1.5 million compared to$16.7 million for thesix months ended June 30, 2025. The decrease was primarily due to lower earnings from our joint ventures in India. These lower earnings were driven by a remeasurement of benefit obligations in India due to recent labor law changes.

Previous wording

Other operating expense (income), net was$6.1 million for the three months ended March 31, 2026, an increase of $6.3 million compared to $(0.2) million for the three months ended March 31, 2025. The increase was primarily due to transaction costs of $6.3 million associated with the acquisition of Koch Filter.

Current wording

Other operating expense (income), net was$6.0 million for thesix months ended June 30, 2026, an increase of$6.2 million compared to$(0.2) million for thesix months ended June 30, 2025. The increase was primarily due to transaction costs of $6.3 million associated with the acquisition of Koch Filter.

Previous wording

(expense) income, net was due to an increase in the net loss on foreign exchange rate hedging which offset interest income that remained stable between the comparable periods.

Current wording

income, net was due to gains recognized in 2025 that did not recur and an increase in the net loss on foreign exchange rate hedging.

Previous wording

On January 7, 2026, we entered into an Amended and Restated Credit Agreement (the “2026 Credit Agreement”). Our facilities under the 2026 Credit Agreement provide for $1.5 billion in total availability, which includes a $1.0 billion term loan and a $500 million revolving credit facility. The term loan facility was drawn on fully for the amount of $1.0 billion with proceeds used to refinance the outstanding term loan facility and finance in part the acquisition of Koch Filter. As of March 31, 2026, we have outstanding borrowings of $1.0 billion on the term loan and no amount was drawn on the revolving credit facility. As a result, we had capacity under our revolving credit facility of $500.0 million as of March 31, 2026.

Current wording

On January 7, 2026, we entered into an Amended and Restated Credit Agreement (the “2026 Credit Agreement”). Our facilities under the 2026 Credit Agreement provide for $1.5 billion in total availability, which includes a $1.0 billion term loan and a $500 million revolving credit facility. The term loan facility was drawn on fully for the amount of $1.0 billion with proceeds used to refinance the outstanding term loan facility and finance the acquisition of Koch Filter. As of June 30, 2026, we have outstanding borrowings of $1.0 billion on the term loan and no amount was drawn on the revolving credit facility. As a result, we had capacity under our revolving credit facility of $500.0 million as of June 30, 2026.

Previous wording

Net cash provided by operating activities was$38.1 million for thethree months ended March 31, 2026, an increase of$9.4 million compared to$28.7 million for thethree months ended March 31, 2025. The increase was driven primarily by a favorable change in other assets of $5.6 million and higher net income adjusted for non-cash items of $4.3 million, partially offset by higher working capital requirements of $1.1 million. During the three months ended March 31, 2026, higher working capital requirements resulted in a cash outflow of$23.2 million compared to a cash outflow of$22.1 million for thethree months ended March 31, 2025. The higher working capital cash outflow for the three months ended March 31, 2026 wasmainly due to lower accounts payable, partially offset by lower trade and other receivables and higher accrued expenses.

Current wording

Net cash provided by operating activities was$115.9 million for thesix months ended June 30, 2026, an increase of$42.8 million compared to$73.1 million for thesix months ended June 30, 2025. The increase was driven primarily by higher net income adjusted for non-cash items of$24.7 million and lower working capital requirements of $13.5 million. During thesix months ended June 30, 2026, lower working capital requirements resulted in a cash outflow of$27.8 million compared to a cash outflow of$41.3 million for thesix months ended June 30, 2025. The lower working capital cash outflow for the six months ended June 30, 2026 wasmainly due to higher accounts payable, partially offset by higher trade and other receivables and prepaid expenses and other current assets.

Previous wording

There were no dividends received from our unconsolidated equity investees for the three months ended March 31, 2026. Dividends received from our unconsolidated equity investees were$5.7 million for thethree months ended March 31, 2025.

Current wording

Dividends received from our unconsolidated equity investees were$6.2 million for the six months ended June 30, 2026. Dividends received from our unconsolidated equity investees were$5.7 million for thesix months ended June 30, 2025.

Previous wording

Net cash used in investing activities for thethree months ended March 31, 2026 and March 31, 2025 was primarily used for the acquisition of Koch Filter and capital expenditures. Our capital expenditures were$12.6 million for thethree months ended March 31, 2026 and$12.4 million (of which approximately$3.5 million related to one-time separation capital expenditures) for thethree months ended March 31, 2025, corresponding to approximately 2.6% and 3.0% of Net sales for thethree months ended March 31, 2026 and March 31, 2025, respectively.

Current wording

Net cash used in investing activities for thesix months ended June 30, 2026 was primarily used for the$453.9 million acquisition of Koch Filter and capital expenditures. Net cash used in investing activities for the six months ended June 30, 2025 was primarily used for capital expenditures. Our capital expenditures were$25.6 million (of which approximately $1.3 million related to one-time integration capital expenditures) for thesix months ended June 30, 2026 and$24.4 million (of which approximately$6.6 million related to one-time separation capital expenditures) for thesix months ended June 30, 2025, corresponding to approximately 3% and 3% of Net sales for thesix months ended June 30, 2026 and June 30, 2025, respectively.

Previous wording

Net cash provided by (used in) financing activities for thethree months ended March 31, 2026 was$402.6 million compared to$(17.9) millionfor thethree months ended March 31, 2025. Net cash provided by financing activities for thethree months ended March 31, 2026 consisted of net debt proceeds of $995.6 million from our term loan, partially offset by payments made in the refinancing of our previous term loan of $570.0 million, withholding taxes paid on stock-based compensation, repurchases of common stock and dividends paid. Net cash used in financing activity for the three months ended March 31, 2025 consisted primarily of repurchases of common stock, dividends paid and payments made on our term loan.

Current wording

Net cash provided by (used in) financing activities for thesix months ended June 30, 2026 was$384.8 million compared to$(45.9) millionfor thesix months ended June 30, 2025. Net cash provided by financing activities for thesix months ended June 30, 2026 consisted of net debt proceeds of $995.6 million from our term loan, partially offset by payments made in the refinancing of our previous term loan of $570.0 million, withholding taxes paid on stock-based compensation, repurchases of common stock and dividends paid. Net cash used in financing activity for the six months ended June 30, 2025 consisted primarily of repurchases of common stock, dividends paid and payments made on our term loan.

Previous wording

We paid dividends of$4.4 million in the first three months of 2026 and$4.1 million in the first three months of 2025. The first quarter 2026 dividend of $0.055 per share, declared on February 9, 2026 for shareholders of record as of February 20, 2026, was paid on March 4, 2026. The declaration of dividends is subject to the discretion of our Board of Directors and depends on various factors, including our net earnings, financial condition, cash requirements, future prospects and other factors that our Board of Directors deems relevant to its analysis and decision making.

Current wording

We paid dividends of$9.0 million in the first six months of 2026 and$8.3 million in the first six months of 2025. The first quarter 2026 dividend of $0.055 per share, declared on February 9, 2026 for shareholders of record as of February 20, 2026, was paid on March 4, 2026. The second quarter 2026 dividend of $0.055 per share, declared on May 13, 2026 for shareholders of record as of May 26, 2026, was paid on June 10, 2026. The declaration of dividends is subject to the discretion of our Board of Directors and depends on various factors, including our net earnings, financial condition, cash requirements, future prospects and other factors that our Board of Directors deems relevant to its analysis and decision making.

Previous wording

Our total debt was$998.1 million at March 31, 2026 and$570.0 million at December 31, 2025. At March 31, 2026, the weighted-average term of our outstanding long-term debt was 4.8 years. Refer to Note 8, Debt and Borrowing Arrangements, to the Condensed Consolidated Financial Statements for more information on our debt and debt covenants.

Current wording

Our total debt was$998.3 million at June 30, 2026 and$570.0 million at December 31, 2025. At June 30, 2026, the weighted-average term of our outstanding long-term debt was 4.6 years. Refer to Note 8, Debt and Borrowing Arrangements, to the Condensed Consolidated Financial Statements for more information on our debt and debt covenants.

Previous wording

•“Free cash flow” is defined as cash flows provided by (used in) operating activities less capital expenditures and “Adjusted free cash flow” is defined as Free cash flow after adding back certain one-time items associated with becoming a standalone public company, transaction costs associated with the Koch Filter acquisition and costs related to the integration of Koch Filter. We believe Free cash flow and Adjusted free cash flow are useful metrics used by management and investors to analyze our ability to service and repay debt and return value to shareholders.

Current wording

•“Free cash flow” is defined as cash flows provided by (used in) operating activities less capital expenditures and “Adjusted free cash flow” is defined as Free cash flow after adding back certain one-time capital expenditures and other separation costs associated with becoming a standalone public company, transaction costs associated with the Koch Filter acquisition and capital expenditures and other costs related to the integration of Koch Filter. We believe Free cash flow and Adjusted free cash flow are useful metrics used by management and investors to analyze our ability to service and repay debt and return value to shareholders.

Previous wording

(a)Primarily comprised of transaction costs associated with the Koch Filter acquisition and other Information Technology, Human Resources and manufacturing costs related to the integration of Koch Filter. The tax impact of acquisition and integration costs for the three months ended March 31, 2026 were $1.3 million and $0.2 million, respectively.

Current wording

(a)Primarily comprised of transaction costs associated with the Koch Filter acquisition and other Information Technology, Human Resources and manufacturing costs related to the integration of Koch Filter. The tax impact of acquisition and integration costs for the three and six months ended June 30, 2026, was $0.3 million and $1.9 million, respectively.

Previous wording

(b)Primarily comprised of one-time expenses related to Information Technology, warehousing, manufacturing and Human Resources separation costs and the related tax impact of those expenses. The tax impact of one-time separation costs for the three months ended March 31, 2025 were $2.0 million.

Current wording

(b)Primarily comprised of one-time expenses related to Information Technology, warehousing, manufacturing and Human Resources separation costs and the related tax impact of those expenses. The tax impact of one-time separation costs for the three months and six months ended June 30, 2025, was $0.5 million and $2.6 million, respectively.

Previous wording

(c)Amortization expense of the intangible assets acquired in the Koch Filter acquisition were$2.9 million for the three months ended March 31, 2026. The tax impact of the amortization expense for the three months ended March 31, 2026 was $0.6 million.

Current wording

(c)Amortization expense of the intangible assets acquired in the Koch Filter acquisition were$2.9 million and$5.8 million for the three and six months ended June 30, 2026, respectively. The tax impact of the amortization expense for the three and six months ended June 30, 2026, was $0.7 million and $1.3 million, respectively.

Previous wording

Identifiable intangible assets include customer relationships and trade names acquired during business combinations. Identifiable intangible assets are amortized on a straight-line bases with estimated useful lives ranging from 15-20 years. See Note 2, Acquisitions for additional information.

Current wording

Identifiable intangible assets include customer relationships and trade names acquired during business combinations. Identifiable intangible assets are amortized on a straight-line basis with estimated useful lives ranging from 15-20 years. See Note 2, Acquisitions for additional information.