Atmus Filtration Technologies Inc Q4 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Joseph O'Dea - Wells Fargo Securities - Analyst : Can we just start on EBITDA margin, the 19.7% in 2024 was clearly very good. It was above the high end of the initial guidance range. Just to sort of put in perspective, any kind of non-repeats that you saw in '24 to re-baseline that number and help us think about 2025? And then just from a quarterly cadence perspective, Q2 of last year was obviously very strong. should every other quarter in '25 be up year-over-year? Just any color there on the quarters.

Question: Joseph O'Dea - Wells Fargo Securities - Analyst : That's great color. And then Steph, just wanted to touch on the outlook for our growth and a little -- maybe additional color on the aftermarket side in the first-fit side. As you sit here today and those expectations for outgrowth, the visibility that you have into that, how much of that is carryover from things that happened in 2024? How much of that is sort of new wins in 2025?

Question: Joseph O'Dea - Wells Fargo Securities - Analyst : And that's both aftermarket and first fit in terms of share gain?

Question: Robert Mason - Robert W. Baird & Co. Incorporated - Analyst : Yes. Maybe I'll revisit the prior question, ask it in a little bit different way, just around the cadence and seasonality. You may have different numbers, but my math is based on historical seasonality, if I run -- kind of run that out at historical seasonal, I kind of land at the midpoint of your revenue guidance. But I guess, Jack, you're saying we should wait -- we should shift though that weighting more towards the second half. And I'm just curious if you have any more granularity on how maybe the first half should -- how much it should be underweighted versus history?

Question: Robert Mason - Robert W. Baird & Co. Incorporated - Analyst : Understood. And then just, again, a question as you think about maybe the latter part of your four strategies, our fourth strategy to diversify the business. Maybe on the -- just internally, the new media technology, new NanoNet that's introducing, can you speak to any opportunities there to leverage that to move into new markets? And maybe how quickly that could be on the horizon, if that's an opportunity.

Question: David Ridley - Bank of America - Analyst : This is David Ridley-Lane on for Andrew. Just on sort of the restructuring costs that you took, are these more structural in nature? Or could some of these costs come back as volumes come back? And then what's a payback period for you on a program similar to this?

Question: David Ridley - Bank of America - Analyst : Got it. And just in terms of payback, should we think of this as all else being equal, providing about $4 million benefit to you in 2025? Or is it a little bit longer term than that.

Question: David Ridley - Bank of America - Analyst : Got it. And just a quick one, I just clarify the guidance a little bit on the aftermarket. So aftermarket up 1% to 4%, your aftermarket revenue for full year 2025, up 4%? And what would that imply on the first-fit side?

Question: Tami Zakaria - JPMorgan Chase & Co - Analyst : First question is on pricing. I think I heard you say about 1% for the year and also pricing is lagged. So are we expecting pricing 1% throughout the year? Or is it the expectation that pricing would actually accelerate in the back half? Especially if steel prices go up because of all this tariff noise.

Question: Tami Zakaria - JPMorgan Chase & Co - Analyst : Understood. That's very helpful. And my second question is, it's almost a year since your separation. How are you evaluating your efforts in winning the new first IP new first-fit deals. The reason I ask -- do you expect any OEM wins in the near term that could help you outperform the weak OEM build forecast for this year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 21, 2025 / 4:00PM, ATMU.N - Q4 2024 Atmus Filtration Technologies Inc Earnings Call

Question: Robert Brooks - Northland Capital Markets - Analyst : First, I just want to start, could you maybe help us understand what actions you could take a limited exposure to tariffs that would impact your manufacturing footprints in both China and Mexico. And maybe just remind us what markets those products that are made there ultimately are then sold into?

Question: Robert Brooks - Northland Capital Markets - Analyst : Got it. That's terrific color. I do kind of want to double-click on that a little because it seems like you guys do have plans in place, and I think it would be helpful for investors to maybe just hear about maybe some of those perpetual plans. So could you just specifically with Mexico, given the largest manufacturing facility in that supply in the US market? So could you maybe just walk us through maybe one example of maybe some levers that you guys have modeled out that you could pull to help insulate the business a bit?

Question: Robert Brooks - Northland Capital Markets - Analyst : I can appreciate that answer. And I think investors should give you guys the confidence you Jack have really executed excellently since the separation. So having the next question here for me is how has the initial reception been from your first industrial filter kind of first step into the industrial market that you guys did organically that you mentioned on the last call? How have sales gone versus expectations? And could you maybe remind us what type of industrial environment that, that product is being used in?

Question: Robert Brooks - Northland Capital Markets - Analyst : Understood. And maybe just last one is on the organic expansion in the industrial -- could you maybe just give us a sense of what's kind of been the biggest delta between your -- what you guys are willing to pay and stuff that you've been looking at? Because it seems like that's probably the reason you guys haven't made any actions? And any color on what you see happening now in the market that could maybe change that?

Question: Jerry Revich - Goldman Sachs Group, Inc. - Analyst : So you folks have hit your, I think, aspirational margin targets a couple of years ahead of plan. Can we just talk about -- do you see incremental margin improvement opportunities from here? Or are we at the point that we are targeting that pre-IPO? Is this essentially the cruising altitude?

Question: Jerry Revich - Goldman Sachs Group, Inc. - Analyst : Okay. And separately, I'm wondering if you folks can talk about the first fit end market assumptions and particularly what you're assuming in China? And if demand in China does surprise to the upside, I'm assuming you folks would be in a strong position to respond, but maybe you can just back check me on that. And talk about how quickly folks can scale if demand does surprise to the upside.