What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-11-08 compared with 2024-08-02 · 180 added, 154 removed, 651 unchanged (34% of the section changed)

5 unchanged sentences

dollars, except per share data)

For the Three Months Ended June 30, For the Six Months Ended June 30,

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2024 2023 2024 2023

7 unchanged sentences

Equity, royalty and interest income from investees 8.1 8.1 26.7 24.8

Other operating expense, net 0.8 0.2 1.0 0.3

Other operating expense (income), net 0.1 ( 0.2 ) 1.1 0.1

OPERATING INCOME 63.2 58.8 211.6 192.2

9 unchanged sentences

Diluted earnings per share $ 0.52 $ 0.45 $ 1.74 $ 1.64

(a) Includes sales to related parties of $ 17.4 million and $ 99.7 million for the three and six months ended June 30, 2024, respectively, compared with $ 87.2 million and $ 176.3 million for the three and six months ended June 30, 2023, respectively.

(a) Includes sales to related parties of $ 12.5 million and $ 112.2 million for the three and nine months ended September 30, 2024, respectively, compared with $ 86.9 million and $ 263.2 million for the three and nine months ended September 30, 2023, respectively.

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

3 unchanged sentences

(in millions of U.S.

For the Three Months Ended June 30, For the Six Months Ended June 30,

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2024 2023 2024 2023

NET INCOME $ 43.8 $ 37.6 $ 145.5 $ 136.5

Other comprehensive (loss) income, net of tax

Other comprehensive income (loss), net of tax

Change in pension and other postretirement defined benefit plans — 0.8 — 0.8

Foreign currency translation adjustments 10.2 ( 6.9 ) ( 0.6 ) ( 9.0 )

Total other comprehensive loss, net of tax ( 4.0 ) ( 3.0 ) ( 10.8 ) ( 2.1 )

Total other comprehensive income (loss), net of tax 10.2 ( 6.1 ) ( 0.6 ) ( 8.2 )

COMPREHENSIVE INCOME $ 54.0 $ 31.5 $ 144.9 $ 128.3

5 unchanged sentences

dollars, except share data)

September 30,

2024 December 31,

20 unchanged sentences

Commitments and contingencies (Note 10)

Common stock, $ 0.0001 par value ( 2,000,000,000 shares authorized and 83,359,426 shares issued and outstanding as of June 30, 2024)

Common stock, $ 0.0001 par value ( 2,000,000,000 shares authorized, 83,384,194 and 83,297,796 shares issued at September 30, 2024 and December 31, 2023, respectively)

Additional paid-in capital 59.5 49.7

1 unchanged sentence

Accumulated other comprehensive loss ( 56.8 ) ( 56.2 )

Treasury stock, at cost ( 307,591 shares at September 30, 2024 and no shares at December 31, 2023)

TOTAL EQUITY 221.2 80.7

5 unchanged sentences

(in millions of U.S.

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

19 unchanged sentences

Long-term debt proceeds — 650.0

Payments on long-term debt ( 3.8 ) ( 50.0 )

Repurchases of Common stock ( 10.0 ) —

Dividends paid ( 4.2 ) —

Net transfers to Parent — ( 580.3 )

Net cash provided by financing activities — 69.7

Net (decrease) increase in cash and cash equivalents ( 7.5 ) 139.6

Other, net — 1.4

Net cash (used in) provided by financing activities ( 18.0 ) 21.1

Net increase in cash and cash equivalents 28.8 138.8

Cash and cash equivalents at beginning of period 168.0 —

2 unchanged sentences

Non-cash investing and financing activities:

Non-cash Other accrued expenses (a)

$ ( 2.8 ) $ —

Non-cash Changes in other liabilities (a)

Non-cash Other, net (a)

Non-cash settlements with Parent — 29.4

Non-cash Capital expenditures $ ( 1.1 ) $ —

(a) Includes non-cash adjustments associated with the assumption of leases related to our production facility in Mexico.

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

6 unchanged sentences

Comprehensive

Three Months Ended June 30, 2024

Balances at April 01, 2024 $ — $ — $ 52.1 $ 132.7 $ ( 63.0 ) $ 121.8

Loss Treasury Stock Total Equity

Three Months Ended September 30, 2024

Balances at July 01, 2024 $ — $ — $ 56.2 $ 188.9 $ ( 67.0 ) $ — $ 178.1

Net income — — — 43.8 — — 43.8

Other comprehensive loss, net of tax — — — — ( 4.0 ) ( 4.0 )

Other comprehensive income, net of tax — — — — 10.2 — 10.2

Share-based awards — — 3.3 — — — 3.3

Balances at June 30, 2024 $ — $ — $ 56.2 $ 188.9 $ ( 67.0 ) $ 178.1

Six Months Ended June 30, 2024

Common stock repurchased — — — — — ( 10.0 ) ( 10.0 )

Cash dividends declared ($ 0.05 per share)

— — — ( 4.2 ) — — ( 4.2 )

Balances at September 30, 2024 $ — $ — $ 59.5 $ 228.5 $ ( 56.8 ) $ ( 10.0 ) $ 221.2

Nine Months Ended September 30, 2024

Balances at January 01, 2024 $ — $ — $ 49.7 $ 87.2 $ ( 56.2 ) $ — $ 80.7

2 unchanged sentences

Share-based awards — — 9.8 — — — 9.8

Balances at June 30, 2024 $ — $ — $ 56.2 $ 188.9 $ ( 67.0 ) $ 178.1

Three Months Ended June 30, 2023

Balances at April 01, 2023 $ — $ 527.7 $ — $ — $ ( 54.9 ) $ 472.8

Common stock repurchased — — — — — ( 10.0 ) ( 10.0 )

Cash dividends declared ($ 0.05 per share)

— — — ( 4.2 ) — — ( 4.2 )

Balances at September 30, 2024 $ — $ — $ 59.5 $ 228.5 $ ( 56.8 ) $ ( 10.0 ) $ 221.2

Three Months Ended September 30, 2023

Balances at July 01, 2023 $ — $ — $ 44.6 $ 14.8 $ ( 57.9 ) $ — $ 1.5

Net income — — — 37.6 — — 37.6

Other comprehensive loss, net of tax — — — — ( 6.1 ) — ( 6.1 )

Net transfers to Parent — ( 559.1 ) 44.6 — — ( 514.5 )

Balances at June 30, 2023 $ — $ — $ 44.6 $ 14.8 $ ( 57.9 ) $ 1.5

Six Months Ended June 30, 2023

Share-based awards — — 1.4 — — — 1.4

Balances at September 30, 2023 $ — $ — $ 46.0 $ 52.4 $ ( 64.0 ) $ — $ 34.4

Nine Months Ended September 30, 2023

Balances at January 01, 2023 $ — $ 511.4 $ — $ — $ ( 55.8 ) $ — $ 455.6

1 unchanged sentence

Other comprehensive loss, net of tax — — — — ( 8.2 ) — ( 8.2 )

Net transfers to Parent — ( 595.5 ) 44.6 — — ( 550.9 )

Balances at June 30, 2023 $ — $ — $ 44.6 $ 14.8 $ ( 57.9 ) $ 1.5

Share-based awards — — 1.4 — — — 1.4

Net transfers (to) from Parent — ( 595.5 ) 44.6 — — — ( 550.9 )

Balances at September 30, 2023 $ — $ — $ 46.0 $ 52.4 $ ( 64.0 ) $ — $ 34.4

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

6 unchanged sentences

Atmus designs and manufactures advanced filtration products, principally under the Fleetguard brand, that provide superior asset protection and enable lower emissions.

Atmus estimates that approximately 19 % of its net sales in 2023 were generated through first-fit sales to OEMs, where its products are installed as components for new vehicles and equipment.

Atmus estimates that approximately 81 % of its net sales in 2023 were generated in the aftermarket, where its products are installed as replacement or repair parts, leading to a strong recurring revenue base.

Approximately 19 % of Atmus’ net sales in 2023 were generated through first-fit sales to OEMs, where its products are installed as components for new vehicles and equipment.

Approximately 81 % of Atmus’ net sales in 2023 were generated in the aftermarket, where its products are installed as replacement or repair parts, leading to a strong recurring revenue base.

Building on its more than 65-year history, Atmus continues to grow and differentiate itself through its global footprint, comprehensive offering of premium products, technology leadership and multi-channel path to market.

1 unchanged sentence

(“Cummins”) announced its intention to separate its filtration business (the “Filtration Business”) into a standalone publicly traded company (the “Separation”).

In preparation for separation from Cummins, Atmus, as its predecessor in interest, was incorporated as a wholly-owned subsidiary of Cummins in Delaware on April 1, 2022 in connection with the planned Separation.

In preparation for the Separation from Cummins, Atmus, as its predecessor in interest, was incorporated as a wholly-owned subsidiary of Cummins in Delaware on April 1, 2022 in connection with the planned Separation.

Prior to the completion of Atmus’ initial public offering (the “IPO”), Cummins completed, in all material respects, the transfer of the assets and liabilities of the Filtration Business to Atmus and its subsidiaries as detailed in the separation agreement Atmus entered into with Cummins.

3 unchanged sentences

Atmus’ Registration Statement on Form S-1, as amended, filed with the Securities and Exchange Commission (“Commission”) on May 16, 2023, was declared effective on May 25, 2023, and Atmus’ common shares began trading on the New York Stock Exchange under the symbol “ATMU” on May 26, 2023.

On May 30, 2023, the IPO was completed through the sale on behalf of certain commercial paper holders of Cummins of 16,243,070 shares of common stock, including the underwriters’ full exercise of their 30-day option to purchase 2,118,661 shares to cover over-allotments.

None of the proceeds of the IPO were for the benefit of Atmus.

40 unchanged sentences

Post IPO, Atmus filed a consolidated Federal income tax return and returns in certain other jurisdictions with Cummins.

Post IPO, Retained earnings began to accumulate and the balance reflected on the Condensed Consolidated Balance Sheets reflects earnings for the period May 26, 2023 through June 30, 2024.

Post IPO, Retained earnings began to accumulate and the balance reflected on the Condensed Consolidated Balance Sheets reflects earnings for the period May 26, 2023 through September 30, 2024.

Periods Post Full Separation

35 unchanged sentences

Net sales attributed to geographic areas were based on the location of the customer.

For the Three Months Ended June 30, For the Six Months Ended June 30,

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2024 2023 2024 2023

5 unchanged sentences

The table below presents Atmus’ combined sales by product category:

For the Three Months Ended June 30, For the Six Months Ended June 30,

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2024 2023 2024 2023

7 unchanged sentences

Equity, royalty and interest income from investees, net of applicable taxes, was as follows:

For the Three Months Ended June 30, For the Six Months Ended June 30,

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2024 2023 2024 2023

10 unchanged sentences

In connection with the Separation, the Company entered into a tax matters agreement with Cummins that, among other things, formalized our agreement related to the responsibility for historical tax positions for the period prior to the IPO for jurisdictions where our business was included in the consolidated or combined tax returns of Cummins.

Atmus’ effective tax rate for the three and six months ended June 30, 2024 , was 21.8 % and 21.9 %, respectively .

Atmus’ effective tax rate for the three and six months ended June 30, 2023 , was 24.5 % and 24.1 %, respectively .

Atmus’ effective tax rate for the three and nine months ended September 30, 2024 , was 18.4 % and 20.9 %, respectively .

Atmus’ effective tax rate for the three and nine months ended September 30, 2023 , was 23.1 % and 23.8 %, respectively .

The decrease in the effective tax rate was driven by a change in the mix of earnings among tax jurisdictions and discrete tax items.

1 unchanged sentence

statutory rate primarily due to differences in rates applicable to foreign subsidiaries, withholding taxes and state income taxes.

The Organization for Economic Co-operation and Development (“OECD”) introduced Base Erosion and Profit Shifting (“BEPS”) Pillar 2 rules that impose a global minimum tax rate of 15%.

Numerous countries have enacted legislation that is effective as of January 1, 2024.

We have evaluated the impact of this legislation based on Atmus’ current global landscape and have determined it will not have a material impact.

We will continue to update our analysis and monitor the ongoing legislation throughout the year.

The Organization for Economic Co-operation and Development introduced a framework to impose a global minimum tax rate of 15% for certain companies, referred to as Pillar 2, with certain aspects of Pillar 2 effective as of January 1, 2024.

During 2023, numerous countries enacted legislation to incorporate Pillar 2 model rule concepts into their domestic laws and other countries are in the process of introducing legislation to implement Pillar 2.

Based on our evaluation of the impact of this legislation, based on Atmus’ current global landscape, Pillar 2 has not yet had, nor do we expect it to have, a material impact on our effective tax rate or our business, financial condition, results of operations or cash flows.

We will continue to update our analysis and monitor the ongoing legislation.

Inventories are stated at the lower of cost or net realizable value.

Inventories included the following:

September 30,

2024 December 31,

7 unchanged sentences

A tabular reconciliation of the product warranty liability, including accrued product campaigns, was as follows:

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

(in millions)

6 unchanged sentences

Warranty liabilities included in Atmus’ Condensed Consolidated Balance Sheets were as follows:

September 30,

2024 December 31,

11 unchanged sentences

dollar-denominated loans bear interest at an adjusted term Secured Overnight Financing Rate (“SOFR”) (which includes a 0.1 percent credit spread adjustment to SOFR) for the applicable interest period plus a rate ranging from 1.125 percent to 1.75 percent depending on Atmus’ net leverage ratio.

As of June 30, 2024, $ 600 million has been drawn on the term loan and no amount was drawn on the revolving credit facility.

As of September 30, 2024, $ 596.2 million has been drawn on the term loan and no amount was drawn on the revolving credit facility.

These amounts are included within Long-term debt and Current maturities of long-term debt on the Balance Sheet.

As of June 30, 2024, Atmus’ fair value of Long-term debt was approximately $ 600 million, which was derived from Level 2 input measures.

Our credit lines available as of June 30, 2024 and December 31, 2023 include:

As of June 30, 2024 As of December 31, 2023

As of September 30, 2024, Atmus’ fair value of Long-term debt was approximately $ 596.2 million, which was derived from Level 2 input measures.

Our credit lines available as of September 30, 2024 and December 31, 2023 include:

As of September 30, 2024 As of December 31, 2023

Facility Amount Borrowed Amount Facility Amount Borrowed Amount

8 unchanged sentences

The Credit Agreement includes financial covenants that Atmus maintain certain net leverage, secured net leverage and interest coverage ratios.

At June 30, 2024, Atmus was in compliance with all financial covenants under the Credit Agreement.

At September 30, 2024, Atmus was in compliance with all financial covenants under the Credit Agreement.

The Credit Agreement also contains customary representations, events of default and covenants, including restrictions on the level of borrowing.

14 unchanged sentences

ACCUMULATED OTHER COMPREHENSIVE LOSS

Following are the changes in Accumulated other comprehensive (loss) income by component for the three and six months ended June 30, 2024 and June 30, 2023 :

For the Three Months Ended June 30, For the Six Months Ended June 30,

Following are the changes in Accumulated other comprehensive (loss) income by component for the three and nine months ended September 30, 2024 and September 30, 2023 :

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2024 2023 2024 2023

3 unchanged sentences

Currency translation adjustments 10.2 ( 6.9 ) ( 0.6 ) ( 9.0 )

Other comprehensive loss, net ( 4.0 ) ( 3.0 ) ( 10.8 ) ( 2.1 )

Other comprehensive income (loss), net 10.2 ( 6.9 ) ( 0.6 ) ( 9.0 )

Balance at end of period ( 56.7 ) ( 65.7 ) ( 56.7 ) ( 65.7 )

5 unchanged sentences

Balance at beginning of period $ ( 67.0 ) $ ( 57.9 ) $ ( 56.2 ) $ ( 55.8 )

Total other comprehensive loss, net ( 4.0 ) ( 3.0 ) ( 10.8 ) ( 2.1 )

Total other comprehensive income (loss), net 10.2 ( 6.1 ) ( 0.6 ) ( 8.2 )

Balance at end of period $ ( 56.8 ) $ ( 64.0 ) $ ( 56.8 ) $ ( 64.0 )

SHARE REPURCHASE PROGRAM

Effective July 17, 2024, Atmus’ Board of Directors authorized a $ 150 million share repurchase program.

The program does not have an expiration date and may be suspended or discontinued at any time.

Repurchases under the program are determined by management and are wholly discretionary.

Since inception of the program, the Company repurchased approximately 0.3 million shares of Common stock at an average cost of $ 32.53 per share, or an aggregate cost of approximately $ 10.0 million, all of which was paid during the period.

All share repurchases were funded through available cash on hand.

As of September 30, 2024, the Company had approximately $ 140 million in remaining share repurchase capacity.

RELATIONSHIP WITH RELATED PARTIES

As described in Note 1, Description of the Business , prior to the IPO, Atmus had been managed and operated in the normal course of business with other subsidiaries of Cummins.

As described in Note 1, Description of the Business , prior to the IPO, Atmus had been managed and operated in the normal course of business with other subsidiaries of Cummins until March 18, 2024, when the Full Separation was completed.

Accordingly, certain shared costs prior to the IPO have been allocated to Atmus and reflected as expenses in the Condensed Consolidated Financial Statements.

5 unchanged sentences

We pay Cummins mutually agreed-upon fees for the services provided under the transition services agreement.

The fees paid to Cummins may not be indicative of costs for the same services provided by another provider.

Corporate Costs/Allocations

11 unchanged sentences

All corporate charges and allocations have been deemed paid by Atmus to Cummins in the period in which the cost was recognized in the Condensed Consolidated Statements of Income.

Total corporate costs allocated to Atmus were zero for the three and six months ended June 30, 2024 compared with $ 5.5 million and $ 13.7 million for the three and six months ended June 30, 2023, respectively.

Allocated corporate costs are included in Net sales, Cost of sales, Selling, general and administrative expenses, Research, de velopment and engineering expenses and Other income, net.

Total corporate costs allocated to Atmus were zero for the three and nine months ended September 30, 2024 compared with zero and $ 13.7 million for the three and nine months ended September 30, 2023, respectively.

Allocated corporate costs are included in Net sales, Cost of sales, Selling, general and

administrative expenses, Research, de velopment and engineering expenses and Other income, net.

Post-IPO, Atmus has and will continue to incur its own corporate costs associated with being a standalone publicly traded company.

2 unchanged sentences

Atmus had trade receivables of $ 37.9 million for products sold to, and accounts payable of $ 54.8 million for products and services purchased in the ordinary course from Cummins as of December 31, 2023 .

Atmus’ sales to Cummins from January 1, 2024 through the date of full separation, March 18, 2024, were $ 65.4 million compared to $ 72.7 million and $ 149.4 million for the three and six months ended June 30, 2023, respectively .

Atmus’ sales to Cummins from January 1, 2024 through the date of Full Separation, March 18, 2024, were $ 65.4 million compared to $ 71.7 million and $ 221.1 million for the three and nine months ended September 30, 2023, respectively .

EARNINGS PER SHARE

Basic and diluted earnings per share (“EPS”) were calculated as follows:

For the Three Months Ended June 30, For the Six Months Ended June 30,

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2024 2023 2024 2023

6 unchanged sentences

Diluted earnings per share $ 0.52 $ 0.45 $ 1.74 $ 1.64

Basic and diluted earnings per share for the three and six months ended June 30, 2024 was calculated using the shares of common stock that were issued and outstanding as of the completion of the IPO.

Basic and diluted earnings per share for the three and nine months ended September 30, 2024 was calculated using the shares of common stock that were issued and outstanding as of the completion of the IPO.

For the periods prior to the IPO, it is assumed that there were no dilutive equity instruments as there were no equity awards of Atmus outstanding prior to the IPO.

2 unchanged sentences

Other assets included the following:

September 30,

2024 December 31,

6 unchanged sentences

Other accrued expenses included the following:

September 30,

2024 December 31,

1 unchanged sentence

Marketing accruals $ 40.7 $ 42.6

Income taxes payable 10.3 10.3

Other taxes payables 11.7 12.7

Current portion of operating lease liabilities 11.6 7.1

Income taxes payable 7.1 10.3

Current portion of finance lease liabilities 0.5 0.3

2 unchanged sentences

Other liabilities included the following:

September 30,

2024 December 31,

5 unchanged sentences

Other liabilities $ 43.3 $ 31.8

SUBSEQUENT EVENTS

On July 17, 2024, Atmus’ Board of Directors declared a quarterly cash dividend of $ 0.05 per share of Common Stock.

This dividend is payable on August 14, 2024, to shareholders of record at the close of business on August 1, 2024.

The declaration of dividends is subject to the discretion of our Board of Directors and depends on various factors, including our Net income, financial condition, cash requirements, future prospects and other factors that our Board of Directors deems relevant to its analysis and decision making.

On July 17, 2024, Atmus’ Board of Directors authorized a $ 150 million share repurchase program.

Under the share repurchase program, the Company’s common shares may be repurchased in the open market or in privately negotiated transactions, at prices that the Company deems appropriate and subject to numerous factors, including share price, trading volume, general market conditions, applicable law and other factors deemed relevant by the Company.

The program does not have an expiration date and may be suspended or discontinued at any time.

No shares have been repurchased through the filing of this Quarterly Report on Form 10-Q.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

1 unchanged sentence

The discussion and analysis presented below refers to and should be read in conjunction with the unaudited condensed consolidated financial statements and the accompanying notes included elsewhere in this Quarterly Report on Form 10-Q.

The following is our discussion and analysis of changes in our financial condition and results of operations for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023 .

The following is our discussion and analysis of changes in our financial condition and results of operations for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023 .

Cautionary Note Regarding Forward-Looking Statements

4 unchanged sentences

If the underlying assumptions prove inaccurate, or known or unknown risks or uncertainties materialize, our actual outcomes, results and financial condition may differ materially from what is expressed, implied or forecasted in such forward-looking statements.

Risks and uncertainties include, but are not limited to:

Future factors and uncertainties include, but are not limited to:

• Significant customer concentration among Cummins, PACCAR, and the Traton Group;

62 unchanged sentences

Our Registration Statement on Form S-1, as amended, filed on May 16, 2023, was declared effective on May 25, 2023, and our common shares began trading on the New York Stock Exchange under the symbol “ATMU” on May 26, 2023.

On May 30, 2023, the IPO was completed through Cummins’ exchange of 16,243,070 shares of our common stock, including the underwriters’ full exercise of their option to purchase

2,118,661 shares to cover over-allotments.

None of the proceeds of the IPO were for the benefit of Atmus.

On May 30, 2023, the IPO was completed through Cummins’ exchange of 16,243,070 shares of our common stock, including the underwriters’ full exercise of their option to purchase an additional 2,118,661 shares to cover over-allotments.

None of the proceeds of the IPO were for the benefit of

As of the closing of the IPO, Cummins owned approximately 80.5% of the outstanding shares of our common stock.

11 unchanged sentences

Refer to Note 2, Basis of Presentation , to the Condensed Consolidated Financial Statements included elsewhere in this report for additional information.

For the period subsequent to May 26, 2023, as a standalone public company, we present our financial statements on a consolidated basis.

For the period subsequent to our IPO on May 26, 2023, as a standalone public company, we present our financial statements on a consolidated basis.

The condensed consolidated financial statements have been prepared in conformity with U.S.

7 unchanged sentences

Market demand

Aftermarket demand remained depressed in the first half of 2024 reflecting soft market conditions.

It is uncertain if a recovery can be expected in the second half of 2024.

First-fit demand remained stable during the first half of 2024.

In the second half of 2024, we expect first-fit demand to soften across many of our key markets.

Aftermarket demand remained depressed in the first nine months of 2024 reflecting soft market conditions.

It is uncertain when a recovery can be expected.

First-fit demand softened across many of our key markets during the third quarter of 2024 which we expect to continue into the fourth quarter of 2024.

Global supply chain

While overall supply chain conditions continue to affect inventory and backlog levels, they have largely stabilized from a year ago with minimal disruptions now being experienced and backorders largely recovered in the first half of 2024.

Our management team continues to monitor and evaluate all of these factors and the

related impacts on our business and operations and we are diligently working to continue to minimize any supply chain impacts to our business and to our customers.

Our management team continues to monitor and evaluate all of these factors and the related impacts on our

business and operations, and we are diligently working to continue to minimize any supply chain impacts to our business and to our customers.

Commodity prices, labor, inflation and foreign currency exchange rates

We continued to experience generally high inflation in the first half of 2024.

We have seen inflationary impacts largely subside in the third quarter.

Direct material cost pressures, driven largely by steel, resin and other petrochemical products, have stabilized, but we continue to see impacts from labor.

During the first six months of 2024, our Selling, general and administrative expenses increased as a result of increased people-related and consulting expenses.

During the first nine months of 2024, our Selling, general and administrative expenses increased as a result of increased people-related and consulting expenses.

Additionally, the appreciation of the U.S.

dollar against foreign currencies had a slightly unfavorable impact on our condensed consolidated results of operations in the first half of 2024 due to translation impacts;

there can be no assurances that this trend will continue throughout 2024 .

dollar against foreign currencies had a slightly unfavorable impact on our condensed consolidated results of operations in the first nine months of 2024 due to translation impacts;

there can be no assurances that this trend will continue the remainder of 2024 .

Standalone costs

We have incurred, and expect to continue to incur, additional costs associated with becoming a standalone public company.

During the three months ended June 30, 2024 , we incurred approximately $3.8 million of one-time expenses including $(0.3) million within Cost of sales and $4.1 million within Selling, general and administrative expenses.

During the six months ended June 30, 2024 , we incurred approximately $9.8 million of one-time expenses including $3.0 million within Cost of sales and $6.8 million within Selling, general and administrative expenses.

During the three months ended September 30, 2024 , we incurred approximately $8.9 million of one-time expenses including $5.0 million within Cost of sales and $3.9 million within Selling, general and administrative expenses.

During the nine months ended September 30, 2024 , we incurred approximately $18.7 million of one-time expenses including $8.0 million within Cost of sales and $10.7 million within Selling, general and administrative expenses.

We expect to incur one-time expenses of approximately $20 million to $25 million in 2024 in connection with becoming a standalone public company.

In addition, we expect to incur capital expenditures in connection with the Separation of approximately $13 million to $18 million in 2024.

These expenses and capital expenditures primarily relate to the establishment of functions previously co-mingled with Cummins, such as information technologies, distribution centers and human resources.

These expenses and capital expenditures are expected to be substantially complete by the end of 2024 but some expenses and capital expenditures may potentially be incurred in 2025.

These expenses and capital expenditures are expected to be substantially complete by the end of 2024 but some expenses and capital expenditures will be incurred in 2025.

The actual amount of the expenses and capital expenditures we will incur as a stand-alone public company may be higher, perhaps significantly, from our current estimates for a number of reasons, including, among others, the final terms we are able to negotiate with service providers, as well as additional costs we may incur that we have not currently anticipated.

1 unchanged sentence

Results of Operations

Three Months Ended June 30, 2024 Compared to the Three Months Ended June 30, 2023

For the Three Months Ended June 30, Favorable

Three Months Ended September 30, 2024 Compared to the Three Months Ended September 30, 2023

For the Three Months Ended September 30, Favorable

(Unfavorable)

8 unchanged sentences

Equity, royalty and interest income from investees 8.1 8.1 — — %

Other operating expense, net

Other operating expense (income), net

0.1 (0.2) (0.3) 150.0 %

9 unchanged sentences

Diluted earnings per share $ 0.52 $ 0.45 $ 0.07 16.2 %

For the Three Months Ended June 30, Favorable

For the Three Months Ended September 30, Favorable

(Unfavorable)

3 unchanged sentences

Research, development and engineering expenses 2.4% 2.8% 0.4

Net sales were $432.6 million for the three months ended June 30, 2024 , an increase of $19.0 million compared to $413.6 million for the three months ended June 30, 2023 .

Net sales were $403.7 million for the three months ended September 30, 2024 , an increase of $7.5 million compared to $396.2 million for the three months ended September 30, 2023 .

The increase in Net sales was mainly due to higher volumes of approximately $7.5 million and $5.2 million of favorable pricing impacts, partially offset by the unfavorable impacts of currency of $5.2 million.

Gross margin was $131.9 million for the three months ended June 30, 2024 , an increase of $17.5 million compared to $114.4 million for the three months ended June 30, 2023 .

The increase in Gross margin was mainly due to approximately $7.9 million of favorable pricing as described above, higher volumes of approximately $4.1 million, lower one-time separation costs of $2.8 million, $1.8 million of favorable commodities and freight costs and a $1.2 million decrease in manufacturing and other costs, partially offset by $0.3 million in unfavorable currency impacts.

Gross margin as a percentage of Net sales was 30.5% for the three months ended June 30, 2024 and 27.7% for the three months ended June 30, 2023 .

Gross margin was $111.3 million for the three months ended September 30, 2024 , an increase of $8.4 million compared to $102.9 million for the three months ended September 30, 2023 .

The increase in Gross margin was mainly due to approximately $5.2 million of favorable pricing impacts as described above, $4.1 million of favorable commodities costs and higher volumes of approximately $2.6 million, partially offset by $1.4 million in unfavorable currency impacts, higher one-time separation costs of $1.2 million and a $0.9 million increase in manufacturing and other costs.

Gross margin as a percentage of Net sales was 27.6% for the three months ended September 30, 2024, an increase of 1.6 percentage points compared to 26.0% for the three months ended September 30, 2023 .

The increase in Gross margin as a percentage of Net sales was primarily due to the items noted above.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $49.1 million for the three months ended June 30, 2024 , an increase of $3.1 million compared to $46.0 million for the three months ended June 30, 2023 .

The increase was primarily driven by increased people-related and consulting expenses, partially offset by lower one-time separation costs of $2.0 million.

Selling, general and administrative expenses as a percentage of Net sales were 11.3% for the three months ended June 30, 2024 , an increase of 0.2 percentage points compared to 11.1% for the three months ended June 30, 2023 .

Selling, general and administrative expenses were $46.4 million for the three months ended September 30, 2024 , an increase of $5.1 million compared to $41.3 million for the three months ended September 30, 2023 .

The increase was primarily driven by increased people-related and consulting expenses and higher one-time separation costs of $0.4 million, partially offset by lower variable compensation costs.

Selling, general and administrative expenses as a percentage of Net sales were 11.5% for the three months ended September 30, 2024 , an increase of 1.1 percentage points compared to 10.4% for the three months ended September 30, 2023 .

The increase in Selling, general and administrative expenses as a percentage of Net sales was primarily driven by the items noted above increasing at a higher rate in relation to the increase in Net sales.

Research, Development and Engineering Expenses

Research, development and engineering expenses were $10.4 million for the three months ended June 30, 2024 , a decrease of $1.9 million compared to $12.3 million for the three months ended June 30, 2023 .

The decrease was primarily due to standalone costs being favorable to previously allocated expenses under Cummins.

Research, development and engineering expenses as a percentage of Net sales were 2.4% for the three months ended June 30, 2024 , a decrease of 0.6 percentage points compared to 3.0% for the three months ended June 30, 2023 .

Research, development and engineering expenses were $9.7 million for the three months ended September 30, 2024 , a decrease of $1.4 million compared to $11.1 million for the three months ended September 30, 2023 .

The decrease was primarily due to the timing of design projects and lower variable compensation costs.

Research, development and engineering expenses as a percentage of Net sales were 2.4% for the three months ended September 30, 2024 , a decrease of 0.4 percentage points compared to 2.8% for the three months ended September 30, 2023 .

The decrease in Research, development and engineering expenses as a percentage of Net sales was mainly due to the item noted above.

Equity, Royalty and Interest Income From Investees

Equity, royalty and interest income from investees was $8.2 million for the three months ended June 30, 2024 , a decrease of $0.1 million compared to $8.3 million for the three months ended June 30, 2023, due to lower earnings from our joint ventures, primarily in India.

Interest Expense

Interest expense was $10.5 million for the three months ended June 30, 2024 , an increase of $6.3 million compared to $4.2 million for the three months ended June 30, 2023 .

The increase in Interest expense was primarily due to interest on our borrowings under the Credit Agreement beginning with our IPO in May 2023.

Income Tax Expense

In connection with the Separation, we entered into a tax matters agreement with Cummins that, among other things, formalized our agreement related to the responsibility for historical tax positions for the period prior to the IPO for jurisdictions where our business was included in the consolidated or combined tax returns of Cummins.

Our effective tax rate for the three months ended June 30, 2024 was 21.8% , a decrease of 2.7 percentage points compared to 24.5% for the three months ended June 30, 2023 .

Our effective tax rate for the three months ended September 30, 2024 was 18.4% , a decrease of 4.7 percentage points compared to 23.1% for the three months ended September 30, 2023 .

The decrease in the effective tax rate was driven by a change in the mix of earnings among tax jurisdictions and discrete tax items.

1 unchanged sentence

statutory rate primarily due to differences in rates applicable to foreign subsidiaries, withholding taxes and state income taxes.

Six Months Ended June 30, 2024 Compared to the Six Months Ended June 30, 2023

For the Six Months Ended June 30, Favorable

Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023

For the Nine Months Ended September 30, Favorable

(Unfavorable)

18 unchanged sentences

Diluted earnings per share $ 1.74 $ 1.64 $ 0.10 6.3 %

For the Six Months Ended June 30, Favorable

For the Nine Months Ended September 30, Favorable

(Unfavorable)

3 unchanged sentences

Research, development and engineering expenses 2.4% 2.7% 0.3

Net sales were $859.2 million for the six months ended June 30, 2024 , an increase of $27.0 million compared to $832.2 million for the six months ended June 30, 2023 .

The increase in Net sales was mainly due to $16.7 million of favorable pricing impacts, higher volumes of $9.6 million and the favorable impacts of currency of $0.8 million.

Gross margin was $243.7 million for the six months ended June 30, 2024 , an increase of $19.5 million compared to $224.2 million for the six months ended June 30, 2023 .

The increase in Gross margin was mainly due to approximately $16.7 million of favorable pricing as described above, higher volumes of approximately $3.3 million, $2.6 million of favorable commodities and freight costs and $0.5 million of lower one-time separation costs, partially offset by higher manufacturing and other costs of $3.4 million and $0.2 million in unfavorable currency impacts.

Gross margin as a percentage of Net sales was 28.4% for the six months ended June 30, 2024 , an increase of 1.5 percentage points compared to 26.9% for the six months ended June 30, 2023 .

Net sales were $1,262.9 million for the nine months ended September 30, 2024 , an increase of $34.5 million compared to $1,228.4 million for the nine months ended September 30, 2023 .

The increase in Net sales was mainly due to $21.9 million of favorable pricing impacts and higher volumes of $17.1 million, partially offset by the unfavorable impacts of currency of $4.5 million.

Gross margin was $355.0 million for the nine months ended September 30, 2024 , an increase of $27.9 million compared to $327.1 million for the nine months ended September 30, 2023 .

The increase in Gross margin was mainly due to approximately $21.9 million of favorable pricing impacts as described above, $6.9 million of favorable commodities and freight costs and higher volumes of approximately $5.9 million, partially offset by higher manufacturing and other costs of $4.7 million, $1.6 million in unfavorable currency impacts and $0.5 million of higher one-time separation costs.

Gross margin as a percentage of Net sales was 28.1% for the nine months ended September 30, 2024 , an increase of 1.5 percentage points compared to 26.6% for the nine months ended September 30, 2023 .

The increase in Gross margin as a percentage of Net sales was primarily due to the items noted above.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $92.4 million for the six months ended June 30, 2024 , an increase of $7.3 million compared to $85.1 million for the six months ended June 30, 2023 .

The increase was primarily driven by increased people-related and consulting expenses, partially offset by lower one-time separation costs of $2.4 million.

Selling, general and administrative expenses as a percentage of Net sales were 10.8% for the six months ended June 30, 2024 , an increase of 0.6 percentage points compared to 10.2% for the six months ended June 30, 2023 .

Selling, general and administrative expenses were $138.8 million for the nine months ended September 30, 2024 , an increase of $12.4 million compared to $126.4 million for the nine months ended September 30, 2023 .

The increase was primarily driven by increased people-related and consulting expenses, partially offset by lower one-time separation costs of $2.0 million and lower variable compensation costs.

Selling, general and administrative expenses as a percentage of Net sales were 11.0% for the nine months ended September 30, 2024 , an increase of 0.7 percentage points compared to 10.3% for the nine months ended September 30, 2023 .

Research, Development and Engineering Expenses

Research, development and engineering expenses were $20.5 million for the six months ended June 30, 2024 , a decrease of $1.6 million compared to $22.1 million for the six months ended June 30, 2023 .

The decrease was primarily due to standalone costs being favorable to previously allocated expenses under Cummins.

Research, development and engineering expenses as a percentage of Net sales were 2.4% for the six months ended June 30, 2024 , a decrease of 0.3 percentage points compared to 2.7% for the six months ended June 30, 2023 .

Research, development and engineering expenses were $30.2 million for the nine months ended September 30, 2024 , a decrease of $3.0 million compared to $33.2 million for the nine months ended September 30, 2023 .

The decrease was primarily due to standalone costs being favorable to previously allocated expenses under Cummins and lower variable compensation costs.

Research, development and engineering expenses as a percentage of Net sales were 2.4% for the nine months ended September 30, 2024 , a decrease of 0.3 percentage points compared to 2.7% for the nine months ended September 30, 2023 .

The decrease in Research, development and engineering expenses as a percentage of Net sales was mainly due to the items noted above.

Equity, Royalty and Interest Income from Investees

Equity, royalty and interest income from investees was $18.6 million for the six months ended June 30, 2024 , an increase of $1.9 million compared to $16.7 million for the six months ended June 30, 2023 .

Equity, royalty and interest income from investees was $26.7 million for the nine months ended September 30, 2024 , an increase of $1.9 million compared to $24.8 million for the nine months ended September 30, 2023 .

The increase was primarily due to higher earnings of $1.9 million from our joint ventures in India and China.

Other Operating Expense, Net

Other operating expense, net was $1.0 million for the six months ended June 30, 2024 , an increase of $0.7 million compared to $0.3 million for the six months ended June 30, 2023 .

Other operating expense, net was $1.1 million for the nine months ended September 30, 2024 , an increase of $1.0 million compared to $0.1 million for the nine months ended September 30, 2023 .

The increase in Other operating expense, net was primarily due to inventory write-offs related to warehouse transitions made during the year.

Interest Expense

Interest expense was $21.0 million for the six months ended June 30, 2024 , an increase of $16.8 million compared to $4.2 million for the six months ended June 30, 2023 .

The increase in Interest expense was primarily due to the interest on our borrowings under the Credit Agreement beginning with our IPO in May 2023.

Interest expense was $31.4 million for the nine months ended September 30, 2024 , an increase of $16.2 million compared to $15.2 million for the nine months ended September 30, 2023 .

The increase in Interest expense was primarily due to the timing of borrowings under the Credit Agreement which began with our IPO in May 2023 compared to 2024 where we have had outstanding borrowings for the duration of the year.

Other Income, Net

Other income, net was $2.8 million for the six months ended June 30, 2024 , an increase of $1.7 million compared to $1.1 million for the six months ended June 30, 2023 .

The increase in Other income, net was primarily due to higher interest income.

Other income, net was $3.7 million for the nine months ended September 30, 2024 , an increase of $1.5 million compared to $2.2 million for the nine months ended September 30, 2023 .

The increase in Other income, net was primarily due to higher interest income, as a result of higher cash balances.

Income Tax Expense

In connection with the Separation, we entered into a Tax Matters Agreement with Cummins that among other things, formalized our agreement related to the responsibility for historical tax positions for the period prior to the IPO for jurisdictions where our business was included in the consolidated or combined tax returns of Cummins.

Our effective tax rate for the six months ended June 30, 2024 was 21.9% , a decrease of 2.2 percentage points compared to 24.1% for the six months ended June 30, 2023 .

Our effective tax rate for the nine months ended September 30, 2024 was 20.9% , a decrease of 2.9 percentage points compared to 23.8% for the nine months ended September 30, 2023 .

The decrease in the effective tax rate was driven by a change in the mix of earnings among tax jurisdictions and discrete tax items.

3 unchanged sentences

Our facilities under the Credit Agreement provide for $1.0 billion in total availability, which includes a $600 million term loan and a $400 million revolving credit facility.

As of June 30, 2024, we have outstanding

borrowings of $600 million on the term loan and zero on the revolving credit facility.

As a result, we had capacity under our revolving credit facility of $400 million as of June 30, 2024.

We believe that cash from operations and the facilities under our Credit Agreement will continue to provide sufficient liquidity for our working capital needs, planned capital expenditures and future payments of our contractual, tax and benefit plan obligations in both the short and long term.

As of September 30, 2024, we have outstanding borrowings of $596 million on the term loan and zero on the revolving credit facility.

As a result, we had capacity under our revolving credit facility of $400 million as of September 30, 2024.

Overall, we do not expect negative effects to our funding sources that would have a material effect on our liquidity.

However, if a serious economic or credit market crisis ensues or other adverse developments arise, it could have a material adverse effect on our liquidity, financial condition, results of operations and cash flows.

Our most significant ongoing short-term cash requirements relate primarily to funding operations (including expenditures for raw materials, labor, manufacturing and distribution, trade and promotions, advertising and marketing, tax liabilities, benefit plan obligations and lease expenses) as well as periodic expenditures for anticipated capital investments, interest payments on our long-term debt and supporting any future acquisitions.

Our most significant ongoing short-term cash requirements relate primarily to funding operations (including expenditures for raw materials, labor, manufacturing and distribution, trade and promotions, advertising and marketing, tax liabilities, benefit plan obligations and lease expenses) as well as periodic expenditures for anticipated capital investments, shareholder returns (such as dividend payments and share repurchases), interest payments on our long-term debt and supporting any future acquisitions.

Long-term cash requirements primarily relate to funding long-term debt repayments and our long-term benefit plan obligations.

2 unchanged sentences

Our cash flow activity is noted below:

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

(in millions)

2 unchanged sentences

Net cash used in investing activities (38.6) (29.6)

Net cash provided by financing activities

Net cash (used in) provided by financing activities

Operating Cash Flow

Net cash provided by operating activities was $14.7 million for the six months ended June 30, 2024 , a decrease of $74.3 million compared to Net cash provided by operating activities of $89.0 million for the six months ended June 30, 2023 .

The decrease was driven primarily by higher working capital requirements of $68.0 million .

During the six months ended June 30, 2024 , higher working capital requirements resulted in a cash outflow of $91.7 million compared to a cash outflow of $23.7 million for the six months ended June 30, 2023 , mainly due to lower other accrued expenses, driven by variable compensation of $23.7 million and one-time working capital inefficiencies associated with the move from intercompany settlement terms with Cummins to standalone practices of $21.6 million, higher inventories and higher trade receivables.

Dividends received from our unconsolidated equity investees were $9.6 million and $14.8 million for the six months ended June 30, 2024 and June 30, 2023 , respectively.

During the first quarter of 2024, we received a partial dividend from our joint venture in India which is included in Net cash used in operating activities.

Net cash provided by operating activities was $85.4 million for the nine months ended September 30, 2024 , a decrease of $61.9 million compared to Net cash provided by operating activities of $147.3 million for the nine months ended September 30, 2023 .

The decrease was driven primarily by higher working capital requirements of $83.9 million, partially offset by higher net income and higher other liabilities primarily related to leases of $7.4 million .

During the nine months ended September 30, 2024 , higher working capital requirements resulted in a cash outflow of $81.9 million compared to a cash inflow of $2.0 million for the nine months ended September 30, 2023 , mainly due to lower other accrued expenses, driven by one-time working capital inefficiencies associated with the move from intercompany settlement terms with Cummins to standalone practices of $26.9 million and variable compensation, higher inventories, lower trade payables and higher trade receivables.

Dividends received from our unconsolidated equity investees were $22.6 million and $17.3 million for the nine months ended September 30, 2024 and September 30, 2023 , respectively.

Dividends are typically paid in the second through the fourth quarters and are included in Net cash provided by operating activities.

Investing Cash Flow

Net cash used in investing activities for the six months ended June 30, 2024 and June 30, 2023 was primarily used for capital expenditures.

Our capital expenditures were $22.2 million (of which approximately $7.3 million related to one-time separation costs) and $19.1 million for the six months ended June 30, 2024 and June 30, 2023 , respectively, corresponding to approximately 2.6% of Net sales for the six months ended June 30, 2024 and approximately 2.3% of Net sales for the six months ended June 30, 2023 .

Net cash used in investing activities for the nine months ended September 30, 2024 and September 30, 2023 was primarily used for capital expenditures.

Our capital expenditures were $38.6 million (of which approximately $12.4 million related to One-time separation costs) and $29.6 million (of which approximately $4.8 million related to One-time separation costs) for the nine months ended September 30, 2024 and September 30, 2023 , respectively, corresponding to approximately 3.1% of Net sales for the nine months ended September 30, 2024 and approximately 2.4% of Net sales for the nine months ended September 30, 2023 .

Financing Cash Flow

Net cash provided by financing activities for the six months ended June 30, 2024 was zero and Net cash provided by financing activities for the six months ended June 30, 2023 was $69.7 million .

Net cash provided by financing activities for the six months ended June 30, 2023 consisted primarily of long-term debt proceeds from our borrowings of $650 million under our Credit Agreement, partially offset by net transfers of $580.3 million to Cummins as part of the Separation.

Net cash used in financing activities for the nine months ended September 30, 2024 was $18.0 million and Net cash provided by financing activities for the nine months ended September 30, 2023 was $21.1 million .

Net cash used in financing activities for the nine months ended September 30, 2024 consisted primarily of repurchases of common stock, dividends paid and payments made on our term loan.

Net cash provided by financing activities for the nine months ended September 30, 2023 consisted primarily of long-term debt proceeds from our borrowings of $650 million under our Credit Agreement, partially offset by net transfers of $580.3 million to Cummins as part of the Separation and $50 million repayment on our revolving credit facility.

We paid dividends of $4.2 million in the first nine months of 2024 and none in the first nine months of 2023.

The third quarter 2024 dividend of $0.05 per share, declared on July 17, 2024 for shareholders of record as of August 1, 2024, was paid on August 14, 2024.

On October 17, 2024, the Board of Directors declared a quarterly cash dividend of $0.05 per share of Common stock.

This dividend is payable on November 13, 2024 to shareholders of record as of October 31, 2024.

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.

We anticipate that the 2024 distributions will be characterized as dividends under the U.S.

federal income tax rules.

The final determination will be made on an IRS Form 1099-DIV we expect to issue early 2025.

Contractual Obligations

Our commitments consist of lease obligations for real estate and equipment.

For more information regarding our lease obligations, see Note 9, Leases , to the historical consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023, which provides a summary of our future minimum lease payments.

Our total debt was $600 million at both June 30, 2024 and December 31, 2023 .

At June 30, 2024 , the weighted-average term of our outstanding long-term debt was 3.4 years.

For more information regarding our lease obligations, see Note 9, Leases , to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023, which provides a summary of our future minimum lease payments.

Our total debt was $596 million at September 30, 2024 and $600 million at December 31, 2023 .

At September 30, 2024 , the weighted-average term of our outstanding long-term debt was 2.9 years.

Refer to Note 9, Debt and Borrowing Arrangements , to the Condensed Consolidated Financial Statements for more information on our debt and debt covenants.

15 unchanged sentences

• “Adjusted EBITDA” is defined as EBITDA after adding back certain one-time expenses, reflected in Cost of sales and Selling, general and administrative expenses, associated with becoming a standalone public company and “Adjusted EBITDA margin” is defined as Adjusted EBITDA as a percent of Net sales.

We believe Adjusted EBITDA and Adjusted EBITDA margin are useful measures of our operating performance as it allows investors and debt holders to compare our performance on a consistent basis without regard to one-time costs attributable to our becoming a standalone public company.

We believe Adjusted EBITDA and Adjusted EBITDA margin are useful measures of our operating performance as they allow investors and debt holders to compare our performance on a consistent basis without regard to one-time costs attributable to our becoming a standalone public company.

• “Adjusted earnings per share” is defined as diluted earnings per share (the most comparable U.S.

16 unchanged sentences

A reconciliation of Net income to EBITDA and Adjusted EBITDA is shown in the table below:

For the Three Months Ended June 30, For the Six Months Ended June 30,

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2024 2023 2024 2023

12 unchanged sentences

Adjusted EBITDA margin (non-GAAP) 19.6 % 18.3 % 19.9 % 18.8 %

(a) Primarily comprised of one-time expenses related to Information Technology, warehousing and Human Resources separation costs.

(a) Primarily comprised of one-time expenses related to Information Technology, warehousing, manufacturing and Human Resources separation costs.

A reconciliation of Diluted earnings per share to Adjusted earnings per share is shown in the table below:

For the Three Months Ended June 30, For the Six Months Ended June 30,

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2024 2023 2024 2023

5 unchanged sentences

Adjusted earnings per share $ 0.61 $ 0.52 $ 1.92 $ 1.82

(a) Primarily comprised of one-time expenses related to Information Technology, warehousing 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 June 30, 2024 and 2023 were $0.8 million and $2.2 million, respectively, and for the six months ended June 30, 2024 and 2023 were $2.1 million and $3.1 million, respectively.

(a) 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 September 30, 2024 and 2023 were $1.6 million and $1.7 million, respectively, and for the nine months ended September 30, 2024 and 2023 were $3.8 million and $4.8 million, respectively.

A reconciliation of Net cash provided by operating activities to Free cash flow and Adjusted free cash flow is shown in the table below:

For the Three Months Ended June 30, For the Six Months Ended June 30,

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2024 2023 2024 2023

5 unchanged sentences

Other one-time separation related (a)

18.3 — $ 21.6 $ —

Adjusted free cash flow $ 64.7 $ 50.0 $ 86.1 $ 122.5

4 unchanged sentences

Actual results could differ from those estimates and assumptions.

Our significant accounting policies are described in Note 3, Summary of Significant Accounting Policies , to our historical consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2023.

Our significant accounting estimates are described in the section entitled Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2023 .

Our critical accounting policies and estimates which affect our more significant estimates and assumptions used in preparing our consolidated financial statements are identified and described in our Annual Report on Form 10-K for the year ended December 31, 2023.

There have been no material changes to our critical accounting policies and estimates from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023 .

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements