What changed in this filing

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Item 1. Financial Statements

2025-05-02 compared with 2024-11-08 · 152 added, 274 removed, 557 unchanged (43% of the section changed)

5 unchanged sentences

dollars, except per share data)

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

2024 2023 2024 2023

For the Three Months Ended

NET SALES (a)

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Equity, royalty and interest income from investees 9.2 10.4

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

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

OPERATING INCOME 64.9 68.6

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Diluted earnings per share $ 0.54 $ 0.54

(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.

(a) Includes sales to related parties of $ 13.7 million for the three months ended March 31, 2025, compared with $ 82.3 million for the three months ended March 31, 2024.

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

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(in millions of U.S.

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

2024 2023 2024 2023

For the Three Months Ended March 31,

NET INCOME $ 44.7 $ 45.5

Other comprehensive income (loss), net of tax

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

Foreign currency translation adjustments 5.0 ( 6.8 )

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dollars, except share data)

September 30,

2025 December 31,

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Commitments and contingencies (Note 10)

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)

Common stock, $ 0.0001 par value ( 2,000,000,000 shares authorized, 83,457,896 and 83,403,813 shares issued at March 31, 2025 and December 31, 2024, respectively)

Additional paid-in capital 64.2 61.9

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Accumulated other comprehensive loss ( 74.0 ) ( 79.0 )

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

Treasury stock, at cost ( 793,971 shares at March 31, 2025 and 537,643 at December 31, 2024)

( 30.0 ) ( 20.0 )

TOTAL EQUITY 265.3 227.4

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(in millions of U.S.

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

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Equity in income of investees, net of dividends ( 1.9 ) 0.8

Share-based compensation 2.3 2.0

Foreign currency remeasurement and transaction exposure ( 0.5 ) 1.1

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Other, net ( 1.1 ) ( 7.3 )

Net cash provided by operating activities 85.4 147.3

Net cash provided by (used in) operating activities 28.7 ( 8.2 )

CASH USED IN INVESTING ACTIVITIES

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Net cash used in investing activities ( 12.4 ) ( 10.6 )

CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

Long-term debt proceeds — 650.0

CASH USED IN FINANCING ACTIVITIES

Payments on long-term debt ( 3.8 ) —

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Dividends paid ( 4.1 ) —

Net transfers to Parent — ( 580.3 )

Other, net — 1.4

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

Net cash used in financing activities ( 17.9 ) —

Effect of exchange rate changes on cash and cash equivalents 0.6 —

Net increase in cash and cash equivalents ( 1.0 ) ( 18.8 )

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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 183.3 $ 149.2

SUPPLEMENTAL CASH FLOW INFORMATION:

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

(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.

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(in millions of U.S.

Common Stock Net Parent

Investment Additional Paid-in Capital Retained Earnings Accumulated

Common Stock Additional Paid-in Capital Retained Earnings Accumulated

Comprehensive

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 income, net of tax — — — — 10.2 — 10.2

Share-based awards — — 3.3 — — — 3.3

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

Three Months Ended March 31, 2025

Balances at January 01, 2025 $ — $ 61.9 $ 264.5 $ ( 79.0 ) $ ( 20.0 ) $ 227.4

Net income — — 44.7 — — 44.7

Other comprehensive loss, net of tax — — — — ( 0.6 ) — ( 0.6 )

Other comprehensive income, net of tax — — — 5.0 — 5.0

Share-based awards — 2.3 — — — 2.3

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— — ( 4.1 ) — — ( 4.1 )

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 )

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 March 31, 2025 $ — $ 64.2 $ 305.1 $ ( 74.0 ) $ ( 30.0 ) $ 265.3

Three Months Ended March 31, 2024

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

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Share-based awards — 2.4 — — — 2.4

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

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

Balances at March 31, 2024 $ — $ 52.1 $ 132.7 $ ( 63.0 ) $ — $ 121.8

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

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These interim statements should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2024.

Certain prior year balances have been reclassified to conform to current year presentation.

Periods Prior to the IPO

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Allocation of other such expenses was based on a reasonable reflection of the utilization of the service provided or benefit received by the Filtration Business for the periods presented prior to the Separation, on a consistent basis, such as a relative percentage of headcount and third-party sales.

The aggregate costs allocated for these functions to the Filtration Business are included within the unaudited Condensed Consolidated Statements of Net Income for the periods presented prior to the Separation.

Management believes these cost allocations were a reasonable reflection of the utilization of services provided to, or the benefit derived by, the Filtration Business during the period prior to the IPO, though the allocations may not be indicative of the actual costs that would have been incurred had the Filtration Business operated as a standalone public company.

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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 September 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 March 31, 2025.

Periods Post Full Separation

Following Full Separation, Cummins will continue to provide certain services to Atmus under the transition services agreement.

The transition services agreement relates primarily to administrative services, which are generally to be provided through May 2025.

The transition services agreement relates primarily to administrative services, which are generally to be provided through August 2025.

Atmus will continue to pay Cummins mutually agreed upon fees for these services.

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Recent Accounting Pronouncements Not Yet Adopted

Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (ASU) No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and provide in interim periods all disclosures about a reportable segment’s profit

or loss and assets that are currently required annually.

Additionally, it requires a public entity to disclose the title and position of the Chief Operating Decision Maker.

The ASU does not change how a public entity identifies its operating segments, aggregates them, or applies the quantitative thresholds to determine its reportable segments.

The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

A public entity should apply the amendments in this ASU retrospectively to all prior periods presented in the financial statements.

We expect this ASU to impact our disclosures with no impact to our results of operations, cash flows or financial condition.

Income Taxes (Topic 740):

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Improvements to Income Tax Disclosures that requires entities to disclose additional information about federal, state, and foreign income taxes primarily related to the income tax rate reconciliation and income taxes paid.

The new standard also eliminates certain existing disclosure requirements related to uncertain tax positions and unrecognized deferred tax liabilities.

The new standard also eliminates certain existing disclosure requirements related to uncertain tax positions and unrecognized deferred

tax liabilities.

The guidance is effective for our fiscal year ending December 31, 2025, with early adoption permitted.

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We expect this ASU to impact our disclosures with no impact to our results of operations, cash flows or financial condition.

REVENUE FROM CONTRACTS WITH CUSTOMERS

Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 2020-40):

Disaggregation of Income Statement Expenses

In November 2024, the FASB issued ASU No.

2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses, which requires disclosure of certain costs and expenses on an interim and annual basis in the notes to the consolidated financial statements.

The guidance is effective for annual reporting periods beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027.

Early adoption is permitted.

The guidance is to be applied either prospectively to financial statements issued for reporting periods after the effective date or retrospectively to any or all prior periods presented in the financial statements.

We expect this ASU to impact our disclosure with no impact to our results of operations, cash flows or financial condition.

Disaggregation of Revenue

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

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

2024 2023 2024 2023

For the Three Months Ended March 31,

(in millions)

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

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

2024 2023 2024 2023

For the Three Months Ended March 31,

(in millions)

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

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

2024 2023 2024 2023

For the Three Months Ended March 31,

(in millions)

Fleetguard Filters Pvt.

$ 5.3 $ 5.5 $ 17.5 $ 16.3

Shanghai Fleetguard Filter Co.

Ltd 1.2 1.2 4.2 3.8

Filtrum Fibretechnologies Pvt.

Ltd 0.1 — 0.3 0.2

Atmus share of net income 7.6 8.8

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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 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.

Atmus’ effective tax rate for the three months ended March 31, 2025 , was 21.3 %.

A tmus’ effective tax rate for the three months ended March 31, 2024 , was 22.0 % .

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

The Company’s effective tax rate differs from the U.S.

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 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.

The international tax framework introduced by the Organization for Economic Co-operation and Development under its Pillar Two initiative includes a global minimum tax of 15 percent.

Legislation adopting these provisions has been enacted in certain jurisdictions where the Company operates and was effective as of the Company’s 2024 fiscal year.

The Company has assessed this legislation and the Pillar Two provisions do not have a material impact on the Company’s tax expense.

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

Inventories included the following:

September 30,

2025 December 31,

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

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

(in millions)

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

September 30,

2025 December 31,

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dollar-denominated loans bear interest at an adjusted term Secured Overnight Financing Rate (“SOFR”) (which includes a 0.10 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 September 30, 2024, $ 596.2 million has been drawn on the term loan and no amount was drawn on the revolving credit facility.

As of March 31, 2025, $ 588.8 million has been drawn on the term loan and no amount was drawn on the revolving credit facility.

The revolving credit facility includes an allowance of up to $ 50.0 million for outstanding letters of credit drawn under the facility that reduces the availability of funds.

As of March 31, 2025, no letters of credit were outstanding.

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

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

As of March 31, 2025, Atmus’ fair value of Long-term debt was approximately $ 588.8 million, which was derived from Level 2 input measures.

Our credit lines available as of March 31, 2025 and December 31, 2024 include:

As of March 31, 2025 As of December 31, 2024

Facility Amount Borrowed Amount Facility Amount Borrowed Amount

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

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

At March 31, 2025, 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.

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The Company does not have any currently pending claims or litigation that the Company believes, individually or in the aggregate, will have a material adverse effect on its financial position, results of operations, cash flows, liquidity or capital resources.

Atmus carries various forms of commercial, property and casualty, product liability and other forms of insurance;

however, such insurance may not be applicable or adequate to cover the costs associated with a judgment against Atmus with respect to these lawsuits, claims and proceedings.

The Company carries various forms of commercial, property and casualty, product liability and other forms of insurance;

however, such insurance may not be applicable or adequate to cover the costs associated with a judgment against the Company with respect to these lawsuits, claims and proceedings.

While the Company believes it has established adequate accruals for our expected future liability with respect to pending lawsuits, claims and proceedings, where the nature and extent of any such liability can be reasonably estimated based upon presently available information, there can be no assurance that the final resolution of any existing or future lawsuits, claims or proceedings will not have a material adverse effect on Atmus’ business, results of operations, financial condition or cash flows.

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ACCUMULATED OTHER COMPREHENSIVE LOSS

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

Following are the changes in Accumulated other comprehensive (loss) income by component for the three months ended March 31, 2025 and March 31, 2024 :

For the Three Months Ended March 31,

(in millions)

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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.

Since inception of the program, the Company repurchased approximately 0.8 million shares of Common stock at an average cost of $ 37.80 per share, or an aggregate cost of approximately $ 30.0 million.

During the three months ended March 31, 2025, the Company repurchased approximately 0.3 million shares of Common stock at an average cost of $ 39.03 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.

As of March 31, 2025, the Company had approximately $ 120.0 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 until March 18, 2024, when the Full Separation was completed.

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.

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

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

Corporate Costs/Allocations

The Condensed Consolidated Financial Statements include corporate costs incurred by Cummins for services that were provided to or on behalf of Atmus for the period prior to IPO.

Such costs represent shared services and infrastructure provided by Cummins, including administrative, finance, human resources, information technology, legal, and other corporate and infrastructure services.

The corporate costs reflected in the Condensed Consolidated Financial Statements consist of direct charges to the business and indirect allocations to Atmus.

The costs that were directly charged to Atmus, such as the shared services for finance provided by Cummins Business Services, were primarily determined based on actual usage.

Indirect allocations are related to shared services and infrastructure provided by Cummins that would benefit Atmus but were not directly charged to Atmus in a manner discussed above.

These corporate costs were allocated to Atmus using methods management believes are consistent and reasonable.

The primary allocation factor was third-party revenue;

however, other relevant metrics were also utilized based on the nature of the underlying activities.

For example, headcount was used as the allocation driver to allocate the human resource departmental costs.

The expenses allocated and directly charged reflect all expenses that Cummins incurred on behalf of the Company.

The expenses reflected in the Condensed Consolidated Financial Statements prior to the IPO may not be indicative of the actual expenses that would have been incurred during the period presented if Atmus historically operated as a separate, stand-alone entity.

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 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.

Related Party Balances

Following the Full Separation, Cummins is no longer considered a related party.

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 $ 71.7 million and $ 221.1 million for the three and nine months ended September 30, 2023, respectively .

Atmus’ sales to Cummins from January 1, 2024 through the date of Full Separation, March 18, 2024, were $ 65.4 million .

EARNINGS PER SHARE

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

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

2024 2023 2024 2023

Basic net earnings per share (“EPS”) is computed by dividing net earnings by the weighted average number of outstanding common shares.

Diluted net EPS reflects the increase in weighted common shares outstanding that would result from the assumed exercise of outstanding stock incentive plan awards calculated using the treasury stock method.

Basic and diluted EPS were calculated as follows:

For the Three Months Ended March 31,

(in millions, except per share data)

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Diluted earnings per share $ 0.54 $ 0.54

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.

Post-IPO, there were no anti-dilutive shares.

SEGMENT REPORTING

We operate our business as one operating segment and also one reportable segment.

The profit or loss measure used by the chief operating decision maker is net income that is reported on the income statement as consolidated net income.

All expense categories reported within the consolidated income statement are significant expenses.

The measure of business assets is reported on the balance sheet as total consolidated assets.

SUPPLEMENTAL BALANCE SHEET DATA

Other assets included the following:

September 30,

2025 December 31,

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Other accrued expenses included the following:

September 30,

2025 December 31,

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Marketing accruals $ 41.3 $ 46.9

Other taxes payables 11.7 12.7

Current portion of operating lease liabilities 14.0 12.0

Other taxes payables 9.0 14.9

Income taxes payable 8.1 6.8

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Other liabilities included the following:

September 30,

2025 December 31,

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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 nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023 .

The following is our discussion and analysis of changes in our financial condition and results of operations for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 .

Cautionary Note Regarding Forward-Looking Statements

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• The loss of a top OEM relationship, or changes in the preferences of Atmus’ aftermarket end-users;

• Atmus deriving significant earnings from investees that Atmus does not directly control;

• Deriving significant earnings from investees that Atmus does not directly control;

• Significant competition in the markets Atmus serves;

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• Inability or failure to adequately protect and enforce Atmus’ intellectual property rights and the cost of protecting or enforcing Atmus' intellectual property rights;

• Ineffective internal control over financial reporting;

• Unexpected events, including natural disasters;

• Difficulty operating as a standalone company;

• Sales of counterfeit versions of products, as well as unauthorized sales of products;

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• Foreign currency exchange rate;

• Potential economic downturns that could cause the impairment of recorded goodwill;

• Potential economic downturns that could cause the balances of recorded goodwill to decrease;

• Increased tariffs or the imposition of other barriers to international trade;

• Political, economic, and social uncertainty in geographies where Atmus has significant operations or large offerings of products;

• Uncertain worldwide and regional market and economic conditions;

• The loss of Cummins’ reputation, economies of scale, capital base and other resources as a result of the Separation from Cummins;

• Potential failure of performance by Atmus or Cummins under transaction agreements executed as part of the Separation;

• Actual or potential conflicts of interests for certain of Atmus’ executive officers and directors because of their equity interests in Cummins;

• Limited liability to Atmus from Cummins and its directors for breach of fiduciary duty;

• Potential indemnification liabilities to Cummins pursuant to the Separation Agreement;

• Potential liability for responsibilities that Cummins agreed to indemnify Atmus for pursuant to the separation agreement;

• Agreements with Cummins that do not reflect terms from arm’s-lengths negotiations between unaffiliated third parties;

• Potential indemnification from Cummins may be insufficient to insure Atmus against the full amount of such liabilities;

• Terms from unaffiliated third parties may have been better than what Atmus received in agreements with Cummins;

• Changes in capital and credit markets;

• Substantial indebtedness from Atmus’ term loan, which may impact Atmus’ ability to service all its indebtedness and react to changes in the industry;

• Substantially all of Atmus’ assets being pledged as security for its term loan and revolving credit facility;

• The price of Atmus’ common stock may fluctuate substantially;

• The extent to which Atmus will pay dividends or the timing or amount of such dividends;

• Applicable laws and regulations, provisions of Atmus’ amended and restated certificate of incorporation and bylaws and certain contractual rights granted to Cummins that may discourage takeover attempts;

• The designation of the Court of Chancery in the State of Delaware and the federal district courts for the District of Delaware as the exclusive forums for certain types of lawsuits;

• Atmus’ historical consolidated financial statements are not necessarily representative of the results Atmus would have achieved as a standalone company;

• The obligations associated with being an independent, publicly traded company will require significant resources and management attention.

• Substantial indebtedness from Atmus’ term loan and revolving credit facility, which may impact Atmus’ ability to service all its indebtedness and react to changes in the industry;

• Substantially all Atmus assets pledged as security for its term loan and revolving credit facility.

Additional information about these future factors and the material factors or assumptions underlying such forward-looking statements may be found under the section entitled Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2024 and the section entitled Risk Factors in this Quarterly Report on Form 10-Q.

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The forward-looking statements made herein are made only as of the date hereof and we undertake no obligation to publicly update or to revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

General Overview

General Overview and Recent Developments

Company Overview

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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.

The United States has recently announced changes to U.S.

trade policy, including increasing tariffs on imports, in some cases significantly, and potentially negotiating or terminating existing trade agreements.

For example, on April 2, 2025, the United States announced a new universal baseline tariff of 10%, plus an additional country-specific tariff for select trading partners, most notably, a 145% tariff on substantially all products of Chinese origin, on all U.S.

These actions, and 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.

We are continuing to evaluate demand for our products in affected markets, along with these developments, and our ability to offset a portion of these costs to mitigate the impact on our business, consolidated results of operations, and financial condition.

For more information, see Item 1A, Risk Factors.

Separation from Cummins

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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

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

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

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Borrowings under the Credit Agreement did not become available until the IPO occurred.

Upon completion of the IPO, we borrowed $650 million, consisting of proceeds of the term loan and amounts drawn under the revolving credit facility, and paid such amounts to Cummins in partial consideration for the Separation.

completion of the IPO, we borrowed $650 million, consisting of proceeds of the term loan and amounts drawn under the revolving credit facility, and paid such amounts to Cummins in partial consideration for the Separation.

In connection with the Separation, we entered into various agreements with Cummins, including a separation agreement.

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Economic downturns in markets we serve generally result in reduced sales of our products and can result in price reductions in certain products and/or markets.

As a worldwide business, our operations are also affected by currency exchange rate changes, political and economic uncertainty, public health crises (epidemics or pandemics) and regulatory matters, including adoption and enforcement of environmental and emission standards in the countries we serve.

As a worldwide business, our operations are also affected by currency exchange rate changes, political and economic uncertainty (including tariffs and trade barriers), public health crises (epidemics or pandemics) and regulatory matters, including adoption and enforcement of environmental and emission standards in the countries we serve.

Some of the more important factors affecting our performance are briefly discussed below.

Market demand

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.

Aftermarket and first-fit demand continued to soften in the first three months of 2025 reflecting depressed market conditions across many of our key markets.

These market conditions reflect the general economic uncertainties attributable to the recent U.S.

government tariff announcement and the retaliatory measures of certain other countries.

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.

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.

While overall supply chain conditions continue to affect inventory and backlog levels, they have largely stabilized with minimal disruptions now being experienced and backorders largely recovered.

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

Direct material cost pressures, driven largely by steel, resin and other petrochemical products, have generally stabilized, though rising costs were observed in the latter portions of the period.

During the first three months of 2025, 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 nine months of 2024 due to translation impacts;

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

dollar against foreign currencies had an unfavorable impact on our condensed consolidated results of operations in the first three months of 2025 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 2025 .

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 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.

During the three months ended March 31, 2025 , we incurred approximately $9.3 million of one-time expenses including $6.8 million within Cost of sales and $2.5 million within Selling, general and administrative expenses.

We expect to incur one-time expenses of approximately $10 million to $15 million in 2025 in connection with becoming a standalone public company.

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These expenses and capital expenditures primarily relate to the establishment of functions previously co-mingled with Cummins, such as information technologies, distribution centers, manufacturing 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 will be incurred in 2025.

The one-time costs incurred during the three months ended March 31, 2025, were primarily associated with establishing our own standalone warehouse in Belgium as we worked to ensure we were supporting customer needs.

These expenses and capital expenditures are expected to be complete by the end of 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.

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Results of Operations

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

For the Three Months Ended September 30, Favorable

Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024

For the Three Months Ended

March 31, Favorable

(Unfavorable)

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Equity, royalty and interest income from investees 9.2 10.4 (1.2) (11.5) %

Other operating expense (income), net

Other operating (income) expense, net

(0.2) 0.2 0.4 200.0 %

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Diluted earnings per share $ 0.54 $ 0.54 $ (0.01) (1.3) %

For the Three Months Ended September 30, Favorable

For the Three Months Ended

March 31, Favorable

(Unfavorable)

3 unchanged sentences

Research, development and engineering expenses 2.2% 2.4% 0.2

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 $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.

Net sales were $416.5 million for the three months ended March 31, 2025 , a decrease of $10.1 million compared to $426.6 million for the three months ended March 31, 2024 .

The decrease in Net sales was mainly due to unfavorable impacts of currency of $11.4 million and lower volumes of approximately $3.5 million, partially offset by $4.8 million of favorable pricing impacts.

Gross margin was $110.5 million for the three months ended March 31, 2025 , a decrease of $1.3 million compared to $111.8 million for the three months ended March 31, 2024 .

The decrease in Gross margin was mainly due to $4.8 million in unfavorable currency impacts, a $3.5 million increase in one-time separation costs, $2.2 million of unfavorable logistic costs and lower volumes of approximately $1.2 million, partially offset by $4.8 million of favorable pricing impacts as described above, a $3.9 million decrease in manufacturing and other costs and a $1.7 million decrease in warranty costs.

Gross margin as a percentage of Net sales was 26.5% for the three months ended March 31, 2025, an increase of 0.3 percentage points compared to 26.2% for the three months ended March 31, 2024 .

The increase in Gross margin as a percentage of Net sales was primarily driven by the items noted above decreasing at a higher rate in relation to the change in Net sales.

Selling, General and Administrative Expenses

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.

Selling, general and administrative expenses were $45.9 million for the three months ended March 31, 2025 , an increase of $2.6 million compared to $43.3 million for the three months ended March 31, 2024 .

The increase was primarily driven by increased people-related and consulting expenses of $2.6 million.

Selling, general and administrative expenses as a percentage of Net sales were 11.0% for the three months ended March 31, 2025 , an increase of 0.8 percentage points compared to 10.2% for the three months ended March 31, 2024 .

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

Research, Development and Engineering Expenses

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 .

Research, development and engineering expenses were $9.1 million for the three months ended March 31, 2025 , a decrease of $1.0 million compared to $10.1 million for the three months ended March 31, 2024 .

The decrease was primarily due to lower people-related expenses.

Research, development and engineering expenses as a percentage of Net sales were 2.2% for the three months ended March 31, 2025 , a decrease of 0.2 percentage points compared to 2.4% for the three months ended March 31, 2024 .

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

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 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.

Our effective tax rate differs from the U.S.

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

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

For the Nine Months Ended September 30, Favorable

(Unfavorable)

2024 2023 Amount %

(in millions)

NET SALES $ 1,262.9 $ 1,228.4 $ 34.5 2.8 %

Cost of sales 907.9 901.3 (6.6) (0.7) %

GROSS MARGIN 355.0 327.1 27.9 8.5 %

OPERATING EXPENSES AND INCOME

Selling, general and administrative expenses 138.8 126.4 (12.4) (9.8) %

Research, development and engineering expenses 30.2 33.2 3.0 9.0 %

Equity, Royalty and Interest Income From Investees

Other operating expense, net 1.1 0.1 1.0 1,000.0 %

OPERATING INCOME 211.6 192.2 19.4 10.1 %

Interest expense 31.4 15.2 (16.2) (106.6) %

Other income, net 3.7 2.2 1.5 68.2 %

INCOME BEFORE INCOME TAXES 183.9 179.2 4.7 2.6 %

Income tax expense 38.4 42.7 4.3 10.1 %

NET INCOME $ 145.5 $ 136.5 $ 9.0 6.6 %

PER SHARE DATA:

Basic earnings per share $ 1.75 $ 1.64 $ 0.11 6.6 %

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

For the Nine Months Ended September 30, Favorable

(Unfavorable)

Percent of Net sales 2024 2023 Percentage Points

Gross margin 28.1% 26.6% 1.5

Selling, general and administrative expenses 11.0% 10.3% (0.7)

Research, development and engineering expenses 2.4% 2.7% 0.3

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 $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 $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 $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 $1.1 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.

Equity, royalty and interest income from investees were $9.2 million for the three months ended March 31, 2025 , a decrease of $1.2 million compared to $10.4 million for the three months ended March 31, 2024 .

decrease was due to lower earnings of $1.2 million from our joint ventures, primarily driven by market conditions in India.

Interest Expense

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 $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.

Interest expense was $8.4 million for the three months ended March 31, 2025 , a decrease of $2.1 million compared to $10.5 million for the three months ended March 31, 2024 .

The decrease was primarily driven by lower outstanding borrowings on our Credit Agreement as principal payments are made.

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 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.

Our effective tax rate for the three months ended March 31, 2025 was 21.3% , a decrease of 0.7 percentage points compared to 22.0% for the three months ended March 31, 2024 .

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

Our effective tax rate differs from the U.S.

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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 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.

As of March 31, 2025, we have outstanding borrowings of $588.8 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 March 31, 2025.

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 and payments for share repurchases and quarterly dividends in both the short and long term.

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.

However, if a serious economic or credit market crisis ensues or other adverse development arises, 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, shareholder returns (such as dividend payments and share repurchases), interest payments on our long-term debt and supporting any future acquisitions.

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Our cash flow activity is noted below:

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

(in millions)

Net cash provided by operating activities

Net cash provided by (used in) operating activities

$ 28.7 $ (8.2)

Net cash used in investing activities (12.4) (10.6)

Net cash (used in) provided by financing activities

Net cash used in financing activities

Operating Cash Flow

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.

Net cash provided by operating activities was $28.7 million for the three months ended March 31, 2025 , an increase of $36.9 million compared to Net cash used in operating activities of $8.2 million for the three months ended March 31, 2024 .

The increase was driven primarily by lower working capital requirements of $37.0 million, partially offset by lower income from equity method investees of $2.7 million .

During the three months ended March 31, 2025 , lower working capital requirements resulted in a cash outflow of $22.1 million compared to a cash outflow of $59.1 million for the three months ended March 31, 2024 , mainly due to higher trade payables, lower inventory and lower prepaids.

Dividends received from our unconsolidated equity investees were $5.7 million and $9.6 million for the three months ended March 31, 2025 and March 31, 2024 , respectively.

Investing Cash Flow

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 .

Net cash used in investing activities for the three months ended March 31, 2025 and March 31, 2024 was primarily used for capital expenditures.

Our capital expenditures were $12.4 million (of which approximately $3.5 million related to one-time separation costs) and $10.6 million (of which approximately $2.8 million related to one-time separation costs) for the three months ended March 31, 2025 and March 31, 2024 , respectively, corresponding to approximately 3.0% and 2.5% of Net sales for the three months ended March 31, 2025 and March 31, 2024, respectively .

Financing Cash Flow

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.

Net cash used in financing activities for the three months ended March 31, 2025 was $17.9 million compared to $0.0 million for the three months ended March 31, 2024 .

Net cash used in financing activities for the three months ended March 31, 2025 consisted primarily of repurchases of common stock, dividends paid and payments made on our term loan.

We paid dividends of $4.1 million in the first three months of 2025 and none in the first three months of 2024.

The first quarter 2025 dividend of $0.05 per share, declared on February 19, 2025 for shareholders of record as of March 4, 2025, was paid on March 19, 2025.

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.

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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, 2024, 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.

Our total debt was $588.8 million at March 31, 2025 and $600 million at December 31, 2024 .

At March 31, 2025 , the weighted-average term of our outstanding long-term debt was 2.6 years.

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

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We use non-GAAP financial measures to budget, make operating and strategic decisions and evaluate our performance.

We have detailed the non-GAAP adjustments that we make in our non-GAAP definitions below.

detailed the non-GAAP adjustments that we make in our non-GAAP definitions below.

We believe the non-GAAP measures should always be considered along with the related U.S.

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

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

2024 2023 2024 2023

For the Three Months Ended March 31,

(in millions)

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One-time separation costs (a)

$ 8.9 $ 7.4 $ 18.7 $ 20.4

Adjusted EBITDA (non-GAAP) $ 81.7 $ 80.2

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

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

2024 2023 2024 2023

For the Three Months Ended March 31,

Diluted earnings per share $ 0.54 $ 0.54

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(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.

The tax impact of one-time separation costs for the three months ended March 31, 2025 and 2024 were $2.0 million and $1.3 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 September 30, For the Nine Months Ended September 30,

2024 2023 2024 2023

For the Three Months Ended March 31,

(in millions)

Cash provided by operating activities $ 70.7 $ 58.3 $ 85.4 $ 147.3

Cash provided by (used in) operating activities $ 28.7 $ (8.2)

Capital expenditures $ 12.4 $ 10.6

Free cash flow $ 54.3 $ 47.8 $ 46.8 $ 117.7

Free cash flow (non-GAAP) $ 16.3 $ (18.8)

One-time separation capital expenditures $ 3.5 $ 2.8

Other one-time separation related (a)

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

Adjusted free cash flow (non-GAAP) $ 19.8 $ (12.7)

(a) Primarily comprised of one-time working capital inefficiencies associated with the move from intercompany settlement terms with Cummins to standalone practices.

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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