Atmus Navigates Tariff Shifts Without Raising Prices

Date of Call: Feb 13, 2026

Financials Results

• Revenue: Q4: $447M, up 9.8% YOY; Full Year: $1.764B, up 5.7% YOY
• EPS: Q4 adjusted EPS: $0.66, up from $0.58 prior year; Full Year adjusted EPS: $2.73, up from $2.50 prior year
• Gross Margin: Q4: $127M (calculated from revenue and margin % not explicitly stated); Full Year: $498M, up from prior year
• Operating Margin: Q4 adjusted EBITDA margin: 19.1%, same as prior period; Full Year adjusted EBITDA margin: 20%, up from 19.7% prior year

Guidance:

• Total company revenue expected to be $1.945B to $2.015B, up 10% to 14% YOY.
• Adjusted EBITDA margin expected to be 19.5% to 20.5%.
• Adjusted EPS expected to be $2.75 to $3.00.
• Power Solutions revenue expected to be $1.79B to $1.85B, up ~3% YOY.
• Industrial Solutions revenue expected to be $155M to $165M.
• Expect 1% to 2% share growth and ~1% pricing growth overall.

Business Commentary:

Revenue Growth and Strategic Acquisitions:

• Atmus Filtration Technologies reported sales of $447 million for Q4 2025, an increase of 9.8% year-on-year, and full-year sales of $1.764 billion, up 5.7% from 2024.
• The growth was driven by disciplined execution despite challenging global markets, increased pricing, favorable foreign exchange, and the acquisition of Koch Filter, which closed in early January 2026.

Segment Performance and Market Outlook:

• The company's Power Solutions segment is expected to see total revenue in a range of $1.79 billion to $1.85 billion, an increase of approximately 3%, while the new Industrial Solutions segment, including Koch Filter, is projected to generate revenue between $155 million to $165 million.
• This outlook reflects expectations of flat to up 10% growth in the heavy and medium-duty markets in the U.S., favorable market conditions in the industrial sector, and a focus on integrating the Koch Filter business.

Capital Allocation and Shareholder Returns:

• Atmus returned $78 million to shareholders in 2025, consisting of $61 million in share buybacks and $17 million in dividends, with $69 million remaining on its share repurchase authorization.
• The company plans to repurchase shares in the range of $20 million to $40 million in 2026, reflecting its ongoing capital allocation strategy to enhance shareholder value.

Pricing Strategy and Tariff Impacts:

• Overall pricing is expected to contribute approximately 1% of revenue growth, with a focus on core pricing as opposed to tariff-related increases.
• The company aims to remain price cost-neutral on tariffs, adjusting pricing as necessary based on changes in global trade agreements and cost mitigation strategies.

Supply Chain and Operational Efficiency:

• The transition to the global Atmus distribution network was completed in 2025, optimizing the aftermarket business and increasing product availability.
• Continuous evaluation of cost reduction opportunities and supply chain efficiencies is planned to support future growth and maintain competitive positioning.

Sentiment Analysis:

Overall Tone: Positive

• CEO stated: 'I am proud and honored to lead an impressive team who are committed to solving our customers' filtration challenges.' and 'Our strong liquidity and balance sheet will fuel our 4-pillar growth strategy throughout the year ahead as we continue to focus on creating value for all of our stakeholders.' CFO noted: 'Our team delivered strong financial performance in 2025 despite continuing uncertain market conditions.'

Q&A:

• Question from Tami Zakaria (JPMorgan Chase & Co): Very nice results. I wanted to ask about your acquisition Koch Filters. I think I remember one of the slides said 8% of revenues tied to data centers. Can you give us an update on what kind of growth you're seeing there? And what kind of filters specifically are being serviced in that market?
  Response: The data center market is growing at a high teens rate and represents 8% of Koch's business; the main business is commercial/industrial HVAC, with growth expected around GDP. The company plans to invest in product development to support this market.

• Question from Tami Zakaria (JPMorgan Chase & Co): Understood. That's very helpful. And I think you're expecting 1% pricing for the year. Just wanted to understand, if some of the existing tariffs get rolled back, does that mean pricing, at some point, could turn negative this year as you give back some of it or this 1% is just core pricing and isn't really related to tariffs?
  Response: The 1% pricing is core pricing, not related to tariffs. The higher 2025 pricing was largely from tariffs; the company aims to be price-cost neutral and will not pass on tariff costs if they are not incurred.

• Question from David Ridley-Lane (BofA Securities): This is David Ridley-Lane on for Andrew Obin. Congratulations on the close of the Koch Filter acquisition. You're very deliberate and it seems like a really good fit. And I know you said you will focus on integration in the near term. But could you walk through the opportunity that you have to in-source filtration media at Koch?
  Response: The first six months are focused on integration to support Koch's continued strong performance. Synergies will be realized through procurement and innovation workshops combining Atmus's media expertise with Koch's end-market knowledge.

• Question from David Ridley-Lane (BofA Securities): And then just as a quick follow-up, the -- you were kind enough to give your view on the first-fit markets being flat to up 10%, could we get perhaps a little more color on if you see any rebound or signs of life in the off-highway markets?
  Response: Off-highway markets are expected to be flat year-over-year, with most first-fit impact coming from on-highway; the aftermarket off-highway business is also flat.

• Question from Robert Brooks (Northland Capital Markets): I wanted to dive a little bit more on the guide and specifically on the sales for Industrial Solutions. It seems pretty conservative, Steph, you mentioned the favorable market conditions in that end market of 1% to 4% growth, I believe. And then if I take into account Koch's fiscal year '25, they did $155 million in sales. I know that you're missing $3 million of sales based on the timing of the close. But ultimately, that $155 million to $165 million guide for Industrial Solutions sales in '26 just seems a little bit conservative. So I was just hoping to get a little bit more clarity on that.
  Response: The guidance range (1% to 8% growth excluding a $3M stub) is based on factors like 1% pricing, 1-2% share growth, and a market pulsing around GDP (~2.5% growth). The team sees the target as achievable.

• Question from Robert Brooks (Northland Capital Markets): Absolutely. Appreciate it. That's great color and can definitely appreciate the moving factors of getting everything integrated and a lot of -- some hurdles there. But going to the next question is the administration rolled back some pretty significant emission or kind of emissions legality pieces. I was just curious to hear like how do you think the customers are thinking of that roll back kind of how I think about it as it seems like there's probably already been a lot of engineering to spec in your filtration pieces. So it's kind of the very costly to then spec it out. But I just wanted to kind of hear your guys' broad thoughts on that piece.
  Response: The recent EPA rule change does not affect NOx standards for 2027, so product development for that launch is unchanged. The longer-term impact may relate to electrification, which could provide tailwinds.

• Question from Shubham Srivastava (RW Baird): Just a quick one around your adjusted EBITDA guidance. It seems to be like flat year-over-year. Just wondering any puts and takes around that? Also, I was wondering if you had any self-help levers that you're planning on implementing throughout the year?
  Response: Adjusted EBITDA guidance is flat at the midpoint, reflecting strong incrementals but also planned investments to fuel growth. The company continuously evaluates cost-saving opportunities and is focused on supply chain efficiency.

Contradiction Point 1

Market Growth Outlook for Off-Highway

Contradiction on the expected trajectory for off-highway markets.

What are your thoughts on the company's recent earnings performance? - David Ridley-Lane (BofA Securities)

2025Q4: Off-highway markets are expected to be flat year-over-year in 2026. - Stephanie Disher(CEO)

Can you provide details on the off-highway markets and any signs of a rebound? - Joseph O'Dea (Wells Fargo Securities, LLC)

2025Q3: Industry indicators suggest the flattish aftermarket activity will persist through Q4 2025 and likely into the first half of 2026. - Stephanie Disher(CEO)

Contradiction Point 2

The Nature of Pricing Guidance

Contradiction on whether pricing guidance is core or includes tariff impacts.

What are your thoughts on the earnings report? - Tami Zakaria (JPMorgan Chase & Co)

2025Q4: The 1% pricing guidance is core pricing, not related to tariffs. - Stephanie Disher(CEO)

Is the 1% pricing guidance for 2026 core, or could pricing turn negative if tariffs are rolled back and adjustments are made? - Tami Zakaria (JPMorgan Chase & Co)

2025Q3: The 3% pricing guide for full-year 2025 already includes the expected tariff impact. - Stephanie Disher(CEO)

Contradiction Point 3

Pricing Guidance and Tariff Impact

Contradiction on whether pricing guidance includes tariff-related costs.

What are your thoughts on Tami Zakaria's (JPMorgan Chase & Co) comments? - Tami Zakaria (JPMorgan Chase & Co)

2025Q4: The 1% pricing guidance is core pricing, not related to tariffs. - Stephanie Disher(CEO)

Is the 1% pricing guidance for 2026 core or tariff-dependent, and could pricing become negative if tariffs are rolled back? - Robert W. Mason (Robert W. Baird & Co. Incorporated)

2025Q2: The pricing adjustment is primarily related to tariffs. - Stephanie Disher(CEO)

Contradiction Point 4

Market Outlook for Industrial Solutions

Contradiction on whether guidance for Industrial Solutions is conservative or appropriate.

What are your key takeaways from the earnings report? - Robert Brooks (Northland Capital Markets)

2025Q4: The guidance range... reflects... The Koch team does not view the guidance as conservative. - Stephanie Disher(CEO)

Why is the Industrial Solutions sales guidance ($155M–$165M) considered conservative relative to the market outlook? - Tami Zakaria (JPMorgan Chase & & Co)

2025Q2: The company is excited to continue identifying efficiencies post-supply chain transformation. - Jack Kienzler(CFO)

Contradiction Point 5

Tariff Impact and Pricing Strategy

Contradiction on whether tariff-related pricing is included in core guidance.

Tami Zakaria (JPMorgan Chase & Co)? - Tami Zakaria (JPMorgan Chase & Co)

2025Q4: The 1% pricing guidance is core pricing, not related to tariffs... No additional tariff pricing is assumed in the 2026 guidance. - Stephanie Disher(CEO)

If existing tariffs are rolled back, could pricing turn negative as some is given back, and is the 1% pricing guidance core or related to tariffs? - Rob Mason (Baird)

2025Q1: The updated guidance... includes a new addition of ~1.5% pricing impact from tariffs... partially offset by margin-neutral pricing actions. - Stephanie Disher(CEO)