Atmus Filtration Q1 2025 slides: Margins improve despite revenue dip

Introduction & Market Context

Atmus Filtration Technologies Inc (NYSE:ATMU) presented its first quarter 2025 earnings results on May 2, showing improved profitability metrics despite a slight revenue decline. The filtration solutions provider’s stock jumped 7.77% in premarket trading to $38.00, reflecting positive investor sentiment toward the company’s margin expansion and strong cash flow generation.

The company, which became fully independent in 2024, continues to execute on its strategic growth initiatives while maintaining a robust balance sheet and returning capital to shareholders through dividends and share repurchases.

Quarterly Performance Highlights

Atmus reported first quarter 2025 sales of $417 million, down 2.3% from $427 million in the same period last year. Despite the revenue decline, the company improved its profitability metrics, with adjusted EBITDA increasing to $82 million from $80 million in Q1 2024, and adjusted EBITDA margin expanding to 19.6% from 18.8%.

As shown in the following financial highlights slide, the company achieved adjusted earnings per share of $0.63, up from $0.60 in the prior-year period, while maintaining stable GAAP earnings per share of $0.54:

A deeper look at the quarterly results reveals that Atmus maintained a stable gross margin of 26.5%, slightly up from 26.2% in Q1 2024. However, selling, general and research expenses increased to 13.2% of sales compared to 12.5% in the prior year. The company’s joint venture income remained steady at $10 million.

The detailed quarterly comparison with the prior year is illustrated in this comprehensive results slide:

One of the most significant improvements came in cash flow generation, with adjusted free cash flow of $20 million in Q1 2025, compared to negative $13 million in Q1 2024. This substantial improvement demonstrates the company’s enhanced operational efficiency and working capital management.

Strategic Initiatives

Atmus continues to position itself as an attractive investment opportunity based on its mission-critical products, strong market position, consistent financial results, and clear growth strategy, as outlined in their investor presentation:

The company’s growth strategy revolves around four key pillars: growing share in first-fit core markets, accelerating profitable growth in the aftermarket, transforming the supply chain, and expanding into industrial filtration markets. This multi-faceted approach aims to drive sustainable growth across diverse market segments.

The following slide details the company’s strategic growth initiatives:

This strategy builds on Atmus’s performance in 2024, where the company delivered strong results despite challenging market conditions in regions like China and India, as noted in previous earnings reports.

Financial Position

Atmus maintains a strong balance sheet with $583 million in liquidity and a net debt to adjusted EBITDA ratio of 1.2x. The company continues to prioritize shareholder returns through its quarterly dividend of $0.05 per share and an active share repurchase program.

In the first quarter of 2025, Atmus repurchased $10 million worth of shares, following $20 million of repurchases in 2024. The company still has $120 million remaining from its $150 million authorization program, which has no expiration date.

The following slide illustrates Atmus’s balance sheet strength and capital return initiatives:

This financial flexibility allows Atmus to invest in growth opportunities while simultaneously returning capital to shareholders, positioning the company for long-term success.

Forward-Looking Statements

For the full year 2025, Atmus maintains its guidance with expected sales between $1,670 million and $1,735 million, adjusted EBITDA margin between 19.0% and 20.0%, and adjusted earnings per share between $2.35 and $2.60.

Additional planning assumptions include joint venture income of $32-$37 million, an effective tax rate of 22%-24%, interest expense of $30-$35 million, depreciation and amortization of approximately $30 million, and capital expenditures of $45-$50 million.

The company’s full-year outlook is presented in the following slide:

This guidance suggests that Atmus expects to maintain its revenue levels compared to 2024, when it reported full-year sales of $1.67 billion, while continuing to focus on margin expansion and operational efficiency.

As Atmus progresses through 2025, investors will be watching closely to see if the company can maintain its margin improvements while potentially returning to revenue growth in the latter half of the year. The positive market reaction to these first quarter results indicates confidence in management’s ability to execute on its strategic initiatives despite ongoing challenges in certain global markets.

Full presentation:

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