What changed in this filing

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Item 1. Financial Statements

2025-11-07 compared with 2025-08-08 · 173 added, 155 removed, 657 unchanged (33% 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,

2025 2024 2025 2024

10 unchanged sentences

Interest expense 8.5 10.4 25.4 31.4

Other income, net 3.5 2.6 3.8 2.8

Other (expense) income, net ( 1.7 ) 0.9 2.1 3.7

INCOME BEFORE INCOME TAXES 71.7 53.7 205.2 183.9

6 unchanged sentences

Diluted earnings per share $ 0.66 $ 0.52 $ 1.91 $ 1.74

(a) Includes sales to related parties of $ 14.8 million and $ 28.5 million for the three and six months ended June 30, 2025, respectively, compared with $ 17.4 million and $ 99.7 million for the three and six months ended June 30, 2024, respectively.

(a) Includes sales to related parties of $ 13.7 million and $ 42.2 million for the three and nine months ended September 30, 2025, respectively, compared with $ 12.5 million and $ 112.2 million for the three and nine months ended September 30, 2024, 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,

2025 2024 2025 2024

NET INCOME $ 54.8 $ 43.8 $ 159.4 $ 145.5

Other comprehensive income (loss), net of tax

Other comprehensive (loss) income, net of tax

Foreign currency translation adjustments ( 3.5 ) 10.2 14.6 ( 0.6 )

Unrealized loss on derivatives ( 0.4 ) — ( 0.4 ) —

Total other comprehensive income (loss), net of tax 12.7 ( 4.0 ) 17.7 ( 10.8 )

Unrealized gain on derivatives 0.5 — 0.1 —

Total other comprehensive (loss) income, net of tax ( 3.0 ) 10.2 14.7 ( 0.6 )

COMPREHENSIVE INCOME $ 51.8 $ 54.0 $ 174.1 $ 144.9

5 unchanged sentences

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, 82,159,427 and 83,403,813 shares issued at June 30, 2025 and December 31, 2024, respectively)

Common stock, $ 0.0001 par value ( 2,000,000,000 shares authorized, 81,489,954 and 83,403,813 shares issued at September 30, 2025 and December 31, 2024, respectively)

Additional paid-in capital 70.5 61.9

1 unchanged sentence

Accumulated other comprehensive loss ( 64.3 ) ( 79.0 )

Treasury stock, at cost ( 1,321,666 shares at June 30, 2025 and 537,643 at December 31, 2024)

Treasury stock, at cost ( 1,995,964 shares at September 30, 2025 and 537,643 at December 31, 2024)

( 80.7 ) ( 20.0 )

6 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

22 unchanged sentences

Dividends paid ( 12.7 ) ( 4.2 )

Other, net ( 0.6 ) —

Net cash used in financing activities ( 88.1 ) ( 18.0 )

Effect of exchange rate changes on cash and cash equivalents 4.5 —

Net increase (decrease) in cash and cash equivalents 6.5 ( 7.5 )

Net increase in cash and cash equivalents 34.0 28.8

Cash and cash equivalents at beginning of period 184.3 168.0

8 unchanged sentences

Loss Treasury Stock Total Equity

Three Months Ended June 30, 2025

Balances at April 01, 2025 $ — $ 64.2 $ 305.1 $ ( 74.0 ) $ ( 30.0 ) $ 265.3

Three Months Ended September 30, 2025

Balances at July 01, 2025 $ — $ 67.2 $ 360.8 $ ( 61.3 ) $ ( 50.4 ) $ 316.3

Net income — — 54.8 — — 54.8

Other comprehensive income, net of tax — — — 12.7 — 12.7

Other comprehensive loss, net of tax — — — ( 3.0 ) — ( 3.0 )

Share-based awards — 3.3 — — — 3.3

2 unchanged sentences

— — ( 4.4 ) — — ( 4.4 )

Balances at June 30, 2025 $ — $ 67.2 $ 360.8 $ ( 61.3 ) $ ( 50.4 ) $ 316.3

Six Months Ended June 30, 2025

Balances at September 30, 2025 $ — $ 70.5 $ 411.2 $ ( 64.3 ) $ ( 80.7 ) $ 336.7

Nine Months Ended September 30, 2025

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

Net income — — 159.4 — — 159.4

Other comprehensive loss, net of tax — — — 17.7 — 17.7

Other comprehensive income, net of tax — — — 14.7 — 14.7

Share-based awards — 8.6 — — — 8.6

2 unchanged sentences

— — ( 12.7 ) — — ( 12.7 )

Balances at June 30, 2025 $ — $ 67.2 $ 360.8 $ ( 61.3 ) $ ( 50.4 ) $ 316.3

Three Months Ended June 30, 2024

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

Balances at September 30, 2025 $ — $ 70.5 $ 411.2 $ ( 64.3 ) $ ( 80.7 ) $ 336.7

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

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

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

57 unchanged sentences

Periods Post IPO

Following the IPO, certain services continue to be provided by Cummins under the transition services agreement.

Following the IPO, certain services continued to be provided by Cummins under the transition services agreement.

The Company incurred certain costs in its establishment as a standalone public company and expects to incur ongoing additional costs associated with operating as an independent, publicly traded company.

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, 2025.

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, 2025.

Periods Post Full Separation

Following Full Separation, Cummins has continued and 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 September 2025.

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

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

The transition services agreement related primarily to administrative services, which were provided through September 2025.

Atmus paid Cummins mutually agreed upon fees for these services.

Post Full Separation, Cummins is no longer considered a related party and activity post March 18, 2024, between Atmus and Cummins has been treated as arm’s-length transactions.

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

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

The guidance does not affect recognition or measurement in our consolidated financial statements.

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

Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) - Targeted Improvements to the Accounting for Internal Use-Software

In September 2025, the FASB issued ASU No.

2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) - Targeted Improvement to the Accounting for Internal-Use Software, which modernizes the accounting for software costs that are accounted for under ASC 350-40, Intangibles - Goodwill and Other Internal Use-Software.

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

The guidance can be applied on a prospective basis, a modified basis, a modified basis for in-process projects or on retrospective basis.

We are assessing the effect of this update on our consolidated financial statements and related disclosures.

Disaggregation of Revenue

2 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,

2025 2024 2025 2024

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,

2025 2024 2025 2024

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,

2025 2024 2025 2024

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, 2025 , was 21.9 % and 21.6 %, respectively.

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

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

Atmus’ effective tax rate for the three and nine months ended September 30, 2025 , was 23.6 % and 22.3 %, respectively.

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

The variance in the effective tax rate is driven by an unfavorable change in the mix of earnings among tax jurisdictions and reductions to U.S.

tax incentives and credits due to the adoption of the One Big Beautiful Bill Act (“OBBBA”), partially offset by discrete tax items.

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

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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.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S.

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

On July 4, 2025, the OBBBA was enacted in the U.S.

The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cut and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions.

The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027.

We are currently assessing its impact on our consolidated financial statements.

The Company has evaluated the OBBBA enacted during the quarter and reflected its impact on the

consolidated financial statements.

We will continue to evaluate the full impact of these legislative changes as additional guidance becomes available.

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

Inventories included the following:

September 30,

2025 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,

2025 December 31,

10 unchanged sentences

Generally, U.S.

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 June 30, 2025, $ 585.0 million has been drawn on the term loan and no amount was drawn on the revolving credit facility.

from 1.125 percent to 1.75 percent depending on Atmus’ net leverage ratio.

As of September 30, 2025, $ 577.5 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 June 30, 2025, no letters of credit were outstanding.

As of September 30, 2025, no letters of credit were outstanding.

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

As of June 30, 2025, Atmus’ fair value of Long-term debt was approximately $ 585.0 million, which was derived from Level 2 input measures.

Our credit lines available as of June 30, 2025 and December 31, 2024 include:

As of June 30, 2025 As of December 31, 2024

As of September 30, 2025, Atmus’ fair value of Long-term debt was approximately $ 577.5 million, which was derived from Level 2 input measures.

Our credit lines available as of September 30, 2025 and December 31, 2024 include:

As of September 30, 2025 As of December 31, 2024

Facility Amount Borrowed Amount Facility Amount Borrowed Amount

1 unchanged sentence

Credit facilities:

September 30, 2027 (1)

September 30, 2027 (a)

$ 600.0 $ 577.5 $ 600.0 $ 592.5

Revolving credit facility

September 30, 2027 (1)

September 30, 2027 (a)

400.0 — 400.0 —

(1) Atmus maintains a term loan facility and a revolving credit facility as part of the Credit Agreement.

(a) Atmus maintains a term loan facility and a revolving credit facility as part of the Credit Agreement.

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

At June 30, 2025, Atmus was in compliance with all financial covenants under the Credit Agreement.

At September 30, 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 is subject to lawsuits and claims arising out of the ordinary course of its business.

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.

The Company does not have any currently pending lawsuits or claims 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.

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.

however, such insurance may not be applicable or adequate to cover the costs associated with a judgment against the Company with respect to any lawsuit, claim or proceeding.

While the Company believes it has established adequate accruals for its 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.

Indemnifications

3 unchanged sentences

ACCUMULATED OTHER COMPREHENSIVE LOSS

Following are the changes in Accumulated other comprehensive income (loss) by component for the three and six months ended June 30, 2025 and June 30, 2024 :

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, 2025 and September 30, 2024 :

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

2025 2024 2025 2024

3 unchanged sentences

Currency translation adjustments ( 3.5 ) 10.2 14.6 ( 0.6 )

Other comprehensive income (loss), net 13.1 ( 4.0 ) 18.1 ( 10.8 )

Other comprehensive (loss) income, net ( 3.5 ) 10.2 14.6 ( 0.6 )

Balance at end of period ( 64.8 ) ( 56.7 ) ( 64.8 ) ( 56.7 )

3 unchanged sentences

Balance at end of period 0.4 ( 0.1 ) 0.4 ( 0.1 )

Unrealized loss on derivatives:

Unrealized (loss) gain on derivatives:

Balance at beginning of period $ ( 0.4 ) $ — $ — $ —

Unrealized loss during period ( 0.4 ) — ( 0.4 ) —

Other comprehensive loss, net ( 0.4 ) — ( 0.4 ) —

Unrealized gain during period 0.5 — 0.1 —

Other comprehensive income, net 0.5 — 0.1 —

Balance at end of period 0.1 — 0.1 —

1 unchanged sentence

Balance at beginning of period $ ( 61.3 ) $ ( 67.0 ) $ ( 79.0 ) $ ( 56.2 )

Total other comprehensive income (loss), net 12.7 ( 4.0 ) 17.7 ( 10.8 )

Total other comprehensive (loss) income, net ( 3.0 ) 10.2 14.7 ( 0.6 )

Balance at end of period $ ( 64.3 ) $ ( 56.8 ) $ ( 64.3 ) $ ( 56.8 )

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Since inception of the program, the Company repurchased approximately 2.0 million shares of Common stock at an average cost of $ 40.41 per share, or an aggregate cost of approximately $ 80.7 million.

During the six months ended June 30, 2025, the Company repurchased approximately 0.8 million shares of Common stock at an average cost of $ 38.34 per share, or an aggregate cost of approximately $ 30.4 million, all of which was paid during the period except for approximately $ 0.3 million settled in July 2025.

During the nine months ended September 30, 2025, the Company repurchased approximately 1.5 million shares of Common stock at an average cost of $ 41.58 per share, or an aggregate cost of approximately $ 60.7 million, all of which was paid during the period except for approximately $ 0.9 million settled in October 2025.

All share repurchases were funded through available cash on hand.

As of June 30, 2025, the Company had approximately $ 99.6 million in remaining share repurchase capacity.

As of September 30, 2025, the Company had approximately $ 69.3 million in remaining share repurchase capacity.

RELATIONSHIP WITH RELATED PARTIES

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Basic and diluted 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,

2025 2024 2025 2024

13 unchanged sentences

Other assets included the following:

September 30,

2025 December 31,

6 unchanged sentences

Other accrued expenses included the following:

September 30,

2025 December 31,

1 unchanged sentence

Marketing accruals $ 48.8 $ 46.9

Current portion of operating lease liabilities 15.4 12.0

Other taxes payables 20.2 14.9

Current portion of operating lease liabilities 16.8 12.0

Income taxes payable 11.2 6.8

3 unchanged sentences

Other liabilities included the following:

September 30,

2025 December 31,

1 unchanged sentence

Long-term portion of operating lease liabilities $ 22.5 $ 26.6

Deferred income taxes 1.0 1.4

Long-term income taxes 0.4 0.4

Deferred income taxes — 1.4

Other long-term liabilities 12.0 12.3

3 unchanged sentences

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, 2025 compared to the three and six months ended June 30, 2024 .

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, 2025 compared to the three and nine months ended September 30, 2024 .

Cautionary Note Regarding Forward-Looking Statements

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Forward-looking statements may be identified by the use of words such as “anticipates,” “expects,” “forecasts,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “could,” “should,” “may” or words of similar meaning.

Examples of forward-looking statements include, but are not limited to, statements we make regarding the outlook for our future business and financial performance, discussions of future operations, impact of planned acquisitions and dispositions, our strategy for growth, product development activities, regulatory approvals, market position, expenditures and the effects of the Full Separation, Separation and IPO (each as defined in Note 1, Description of the Business , to our Condensed Consolidated Financial Statements included herein).

Examples of forward-looking statements include, but are not limited to, statements we make regarding the outlook for our future business and financial performance, the development of future operations, the impact of planned acquisitions and dispositions, our strategy for growth, product development activities, regulatory approvals, market position, expenditures and the effects of the Full Separation, Separation and IPO (each as defined in Note 1, Description of the Business , to our Condensed Consolidated Financial Statements included herein).

These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which we refer to as “future factors,” which are difficult to predict.

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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.

During the first half of 2025, the United States announced changes to U.S.

During 2025, the United States announced changes to U.S.

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

3 unchanged sentences

exports, have led to significant volatility and uncertainty in global demand in both aftermarket and first-fit.

In response to these developments, we mitigated the cost impact on our business by employing any exemptions for which we were eligible, such as compliance under the United States-Mexico-Canada Agreement (“USMCA”), adjustment to our supply chain, and select price adjustments.

In response to these developments, we mitigated the cost impact on our business by employing any exemptions for which we were eligible, such as compliance under the United States-Mexico-Canada Agreement (“USMCA”), adjusting our supply chain, and implementing select price adjustments.

We will continue to evaluate opportunities to offset these costs and mitigate the impact on our business, consolidated results of operations and financial condition.

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Market demand

Aftermarket demand remained soft in the first six months of 2025.

We continue to be in a period of slow growth in global aftermarkets, and this trend is expected to continue through the second half of 2025.

First-fit experienced reduced demand in the first six months of 2025 reflecting depressed market conditions.

First-fit demand is expected to remain at reduced levels through the second half of 2025 based on overall market cyclicality.

Aftermarket demand remained soft in the first nine months of 2025.

We continue to be in a period of slow growth in global aftermarkets, and this trend is expected to continue for the remainder of 2025.

First-fit experienced reduced demand in the first nine months of 2025 reflecting depressed market conditions.

First-fit demand is expected to remain at reduced levels through 2025 based on overall market cyclicality.

Global supply chain

Overall supply chain conditions remained largely stable in the first six months of 2025 with minimal disruptions being experienced.

Logistics costs increased during the first half of 2025, primarily due to the impact

Our management team continues to monitor and evaluate all of the factors affecting our supply chain condition and the related impacts on our business and operations, and we continue to minimize any supply chain impacts to our business and to our customers.

Overall supply chain conditions remained largely stable in the first nine months of 2025 with minimal disruptions being experienced.

Logistics costs increased during the first nine months of 2025, primarily due to the transition to a standalone distribution network as part of the Separation and the impact of tariffs.

management team continues to monitor and evaluate all of the factors affecting our supply chain condition and the related impacts on our business and operations, and we 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 experienced variability in direct material costs through the first half of 2025.

Various key commodities have been exposed to inflationary pressures, primarily due to the impact of tariffs.

We have experienced general variability in direct material costs through the first nine months of 2025.

While the costs of our principal materials fluctuate, generally we believe there will continue to be an adequate supply of the materials we use and that they will broadly remain available.

During the first six months of 2025, our Selling, general and administrative expenses decreased due to lower one-time separation expenses.

Additionally, the appreciation of the U.S.

dollar against certain foreign currencies had an unfavorable impact on our condensed consolidated results of operations in the first six months of 2025 due to translation impacts.

During the first nine months of 2025, our Selling, general and administrative expenses decreased due to lower one-time separation expenses.

Additionally, the depreciation of the U.S.

dollar against certain foreign currencies had an unfavorable impact on our condensed consolidated results of operations in the first nine 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 June 30, 2025 , we incurred approximately $2.5 million of one-time expenses including $1.9 million within Cost of sales and $0.6 million within Selling, general and administrative expenses.

During the six months ended June 30, 2025, we incurred approximately $11.8 million of one-time expenses including $8.7 million within Cost of sales and $3.1 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.

In addition, we expect to incur capital expenditures in connection with the Separation of approximately $10 million to $15 million in 2025.

We have incurred additional costs associated with becoming a standalone public company.

During the three months ended September 30, 2025 , we incurred approximately $3.7 million of one-time expenses including $2.5 million within Cost of sales and $1.2 million within Selling, general and administrative expenses.

During the nine months ended September 30, 2025, we incurred approximately $15.5 million of one-time expenses including $11.2 million within Cost of sales and $4.3 million within Selling, general and administrative expenses.

In addition, we have incurred capital expenditures in connection with the Separation of approximately $9.5 million in 2025.

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.

The one-time costs incurred during the six months ended June 30, 2025, were primarily associated with establishing our own standalone warehouse in Belgium as we worked to ensure we were supporting customer needs and our technology transformation and modernization project.

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.

Additionally, the actual timing of when we incur these incremental expenses may be different, perhaps significantly, from our current estimates for a number of reasons, including, among others, unforeseen events that may cause delays or interruptions in our plans or our service providers’ ability to provide their services.

The one-time costs incurred during the three months ended September 30, 2025, were primarily associated with our technology transformation and modernization project.

The transition services agreement under which Cummins had continued to provide certain services related primarily to administrative services ended in September 2025.

With the conclusion of this agreement, we do not expect to incur any additional one-time expenses or capital expenditures in 2025 or in future periods in connection with becoming a standalone public company.

Results of Operations

Three Months Ended June 30, 2025 Compared to the Three Months Ended June 30, 2024

For the Three Months Ended June 30, Favorable

Three Months Ended September 30, 2025 Compared to the Three Months Ended September 30, 2024

For the Three Months Ended September 30, Favorable

(Unfavorable)

12 unchanged sentences

Interest expense 8.5 10.4 1.9 18.3 %

Other income, net

Other (expense) income, net

(1.7) 0.9 (2.6) (288.9) %

5 unchanged sentences

Diluted earnings per share $ 0.66 $ 0.52 $ 0.14 26.9 %

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 2.2% 2.4% 0.2

Net sales were $453.5 million for the three months ended June 30, 2025 , an increase of $20.9 million compared to $432.6 million for the three months ended June 30, 2024 .

The increase in Net sales was mainly due to favorable volumes of $15.0 million and pricing of $10.2 million, offset by unfavorable impacts of currency of $4.3 million.

Gross margin was $131.0 million for the three months ended June 30, 2025 , a decrease of $0.9 million compared to $131.9 million for the three months ended June 30, 2024 .

The decrease in Gross margin was mainly due to unfavorable logistics costs of $10.7 million, a $2.1 million increase in one-time separation costs, unfavorable manufacturing and other costs of $2.0 million and $1.5 million in unfavorable currency impacts, partially offset by favorable pricing of $10.2 million as described above, and favorable volumes of $5.2 million.

Gross margin as a percentage of Net sales was 28.9% for the three months ended June 30, 2025, a decrease of 1.6 percentage points compared to 30.5% for the three months ended June 30, 2024 .

The decrease in Gross margin as a percentage of Net sales was primarily driven by the items noted above.

Net sales were $447.7 million for the three months ended September 30, 2025 , an increase of $44.0 million compared to $403.7 million for the three months ended September 30, 2024 .

The increase in Net sales was mainly due to favorable volumes of $25.8 million, pricing of $14.9 million and favorable impacts of currency of $3.3 million.

The favorable impact from pricing is primarily driven by normal pricing initiatives and select increases as a result of tariffs.

Gross margin was $129.4 million for the three months ended September 30, 2025 , an increase of $18.1 million compared to $111.3 million for the three months ended September 30, 2024 .

The increase in Gross margin was mainly due to favorable pricing of $14.9 million as described above, favorable volumes of $9.0 million, favorable manufacturing and other costs of $6.2 million and a $2.5 million decrease in one-time separation costs, partially offset by unfavorable logistics costs of $14.5 million.

Gross margin as a percentage of Net sales was 28.9% for the three months ended September 30, 2025, an increase of 1.3 percentage points compared to 27.6% for the three months ended September 30, 2024 .

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

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $46.1 million for the three months ended June 30, 2025 , a decrease of $3.0 million compared to $49.1 million for the three months ended June 30, 2024 .

Selling, general and administrative expenses were $45.9 million for the three months ended September 30, 2025 , a decrease of $0.5 million compared to $46.4 million for the three months ended September 30, 2024 .

The decrease was primarily driven by lower one-time separation costs of $2.7 million, partially offset by higher consulting expenses.

Selling, general and administrative expenses as a percentage of Net sales were 10.2% for the three months ended June 30, 2025 , a decrease of 1.1 percentage points compared to 11.3% for the three months ended June 30, 2024 .

Selling, general and administrative expenses as a percentage of Net sales were 10.3% for the three months ended September 30, 2025 , a decrease of 1.2 percentage points compared to 11.5% for the three months ended September 30, 2024 .

The decrease 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 $10.7 million for the three months ended June 30, 2025 , an increase of $0.3 million compared to $10.4 million for the three months ended June 30, 2024 .

The increase was primarily due to timing of engineering projects.

Research, development and engineering expenses as a percentage of Net sales were 2.4% for the three months ended June 30, 2025 consistent with 2.4% for the three months ended June 30, 2024 .

Interest Expense

Interest expense was $8.5 million for the three months ended June 30, 2025 , a decrease of $2.0 million compared to $10.5 million for the three months ended June 30, 2024 .

Interest expense was $8.5 million for the three months ended September 30, 2025 , a decrease of $1.9 million compared to $10.4 million for the three months ended September 30, 2024 .

The decrease was primarily driven by a reduction to the interest rate on our borrowings and lower outstanding borrowings on our Credit Agreement as principal payments were made.

Other (Expense) Income, Net

Other (expense) income, net was $(1.7) million for the three months ended September 30, 2025, a decrease of $2.6 million compared to $0.9 million for the three months ended September 30, 2024.

The decrease in Other (expense) income, net was due to an increase in the net loss on foreign exchange rate hedging.

Income Tax Expense

Our effective tax rate for the three months ended June 30, 2025 was 21.9% , an increase of 0.1 percentage points compared to 21.8% for the three months ended June 30, 2024 .

The increase 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 September 30, 2025 was 23.6% , an increase of 5.2 percentage points compared to 18.4% for the three months ended September 30, 2024 .

The increase in the effective tax rate was driven by an unfavorable change in the mix of earnings among tax jurisdictions and reductions to U.S.

tax incentives and credits due to the adoption of the OBBBA, partially offset by 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.

Six Months Ended June 30, 2025 Compared to the Six Months Ended June 30, 2024

For the Six Months Ended June 30, Favorable

Nine Months Ended September 30, 2025 Compared to the Nine Months Ended September 30, 2024

For the Nine Months Ended September 30, Favorable

(Unfavorable)

19 unchanged sentences

Diluted earnings per share $ 1.91 $ 1.74 $ 0.17 9.8 %

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 2.3% 2.4% 0.1

Net sales were $870.0 million for the six months ended June 30, 2025 , an increase of $10.8 million compared to $859.2 million for the six months ended June 30, 2024 .

The increase in Net sales was mainly due to $15.0 million of favorable pricing impacts and higher volumes of $11.5 million, partially offset by the unfavorable impacts of currency of $15.6 million.

Gross margin was $241.5 million for the six months ended June 30, 2025 , a decrease of $2.2 million compared to $243.7 million for the six months ended June 30, 2024 .

The decrease in Gross margin was mainly due to unfavorable logistics costs of $12.9 million, $6.3 million in unfavorable currency impacts and a $5.6 million increase in one-time separation costs, partially offset by favorable pricing of $15.0 million as described above, favorable volumes of $4.0 million, a $2.3 million decrease in warranty costs and a $1.3 million decrease in manufacturing and other costs.

Gross margin as a percentage of Net sales was 27.8% for the six months ended June 30, 2025 , a decrease of 0.6 percentage points compared to 28.4% for the six months ended June 30, 2024 .

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

Net sales were $1,317.7 million for the nine months ended September 30, 2025 , an increase of $54.8 million compared to $1,262.9 million for the nine months ended September 30, 2024 .

The increase in Net sales was mainly due to higher volumes of $37.3 million and favorable pricing impacts of $29.9 million, partially offset by the unfavorable impacts of currency of $12.4 million.

The favorable impact from pricing is primarily driven by normal pricing initiatives and select increases as a result of tariffs.

Gross margin was $370.9 million for the nine months ended September 30, 2025 , an increase of $15.9 million compared to $355.0 million for the nine months ended September 30, 2024 .

The increase in Gross margin was mainly due to favorable pricing of $29.9 million as described above, favorable volumes of $13.0 million and a $9.8 million decrease in manufacturing and other costs, partially offset by unfavorable logistics costs of $27.4 million, $6.2 million in unfavorable currency impacts and a $3.1 million increase in one-time separation costs.

Gross margin as a percentage of Net sales was 28.1% for the nine months ended September 30, 2025 , consistent with a gross margin of 28.1% for the nine months ended September 30, 2024 .

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $92.0 million for the six months ended June 30, 2025 , a decrease of $0.4 million compared to $92.4 million for the six months ended June 30, 2024 .

Selling, general and administrative expenses were $137.9 million for the nine months ended September 30, 2025 , a decrease of $0.9 million compared to $138.8 million for the nine months ended September 30, 2024 .

The decrease was primarily driven by lower one-time separation costs of $6.4 million, partially offset by increased people-related and consulting expenses.

Selling, general and administrative expenses as a percentage of Net sales were 10.6% for the six months ended June 30, 2025 , a decrease of 0.2 percentage points compared to 10.8% for the six months ended June 30, 2024 .

Selling, general and administrative expenses as a percentage of Net sales were 10.5% for the nine months ended September 30, 2025 , a decrease of 0.5 percentage points compared to 11.0% for the nine months ended September 30, 2024 .

The decrease 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 $19.8 million for the six months ended June 30, 2025 , a decrease of $0.7 million compared to $20.5 million for the six months ended June 30, 2024 .

The decrease was primarily due to timing of engineering projects.

Research, development and engineering expenses as a percentage of Net sales were 2.3% for the six months ended June 30, 2025 , a decrease of 0.1 percentage points compared to 2.4% for the six months ended June 30, 2024 .

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 $16.7 million for the six months ended June 30, 2025 , a decrease of $1.9 million compared to $18.6 million for the six months ended June 30, 2024 .

Equity, royalty and interest income from investees was $25.1 million for the nine months ended September 30, 2025 , a decrease of $1.6 million compared to $26.7 million for the nine months ended September 30, 2024 .

The decrease was primarily due to lower earnings of $1.6 million from our joint ventures in India and China.

Other Operating (Income) Expense, Net

Other operating (income) expense, net was $(0.2) million for the six months ended June 30, 2025 , a decrease of $1.2 million compared to $1.0 million for the six months ended June 30, 2024 .

Other operating (income) expense, net was $(0.2) million for the nine months ended September 30, 2025 , a decrease of $1.3 million compared to $1.1 million for the nine months ended September 30, 2024 .

The change was primarily due to prior year asset write-offs in 2024 that did not recur.

Interest Expense

Interest expense was $16.9 million for the six months ended June 30, 2025 , a decrease of $4.1 million compared to $21.0 million for the six months ended June 30, 2024 .

Interest expense was $25.4 million for the nine months ended September 30, 2025 , a decrease of $6.0 million compared to $31.4 million for the nine months ended September 30, 2024 .

The decrease in Interest expense was primarily driven by a reduction to the interest rate on our borrowings and lower outstanding borrowings on our Credit Agreement as principal payments were made.

Other Income, Net

Other income, net was $2.1 million for the nine months ended September 30, 2025 , a decrease of $1.6 million compared to $3.7 million for the nine months ended September 30, 2024.

The decrease in Other income, net was due to an increase in the net loss on foreign exchange rate hedging.

Income Tax Expense

Our effective tax rate for the six months ended June 30, 2025 was 21.6% , a decrease of 0.3 percent percentage points compared to 21.9% for the six months ended June 30, 2024 .

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 nine months ended September 30, 2025 was 22.3% , an increase of 1.4 percentage points compared to 20.9% for the nine months ended September 30, 2024 .

The increase in the effective tax rate was driven by an unfavorable change in the mix of earnings among tax jurisdictions and reductions to U.S.

tax incentives and credits due to the adoption of the OBBBA, partially offset by discrete tax items.

Our effective tax rate differs from the U.S.

2 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, 2025, we have outstanding borrowings of $585.0 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, 2025.

As of September 30, 2025, we have outstanding borrowings of $577.5 million on the term loan and no amount was drawn on the revolving credit facility.

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

6 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)

3 unchanged sentences

Net cash used in financing activities

(88.1) (18.0)

Operating Cash Flow

Net cash provided by operating activities was $73.1 million for the six months ended June 30, 2025 , an increase of $58.4 million compared to $14.7 million for the six months ended June 30, 2024 .

The increase was driven primarily by lower working capital requirements of $50.4 million .

During the six months ended June 30, 2025 , lower working capital requirements resulted in a cash outflow of $41.3 million compared to a cash outflow of $91.7 million for the six months ended June 30, 2024 , mainly due to higher trade payables, lower inventory and lower prepaids, partially offset by higher trade receivables.

Dividends received from our unconsolidated equity investees were $5.7 million and $9.6 million for the six months ended June 30, 2025 and June 30, 2024 , respectively.

Net cash provided by operating activities was $155.2 million for the nine months ended September 30, 2025 , an increase of $69.8 million compared to $85.4 million for the nine months ended September 30, 2024 .

The increase was driven primarily by lower working capital requirements of $49.7 million and higher net income of $13.9 million .

During the nine months ended September 30, 2025 , lower working capital requirements resulted in a cash outflow of $32.2 million compared to a cash outflow of $81.9 million for the nine months ended September 30, 2024 , mainly due to higher trade payables and other accrued expenses and lower prepaids, partially offset by higher trade receivables.

Dividends received from our unconsolidated equity investees were $17.8 million and $22.6 million for the nine months ended September 30, 2025 and September 30, 2024 , respectively.

Investing Cash Flow

Net cash used in investing activities for the six months ended June 30, 2025 and June 30, 2024 was primarily used for capital expenditures.

Our capital expenditures were $24.4 million (of which approximately $6.6 million related to one-time separation capital expenditures) and $22.2 million (of which approximately $7.3 million related to one-time separation capital expenditures) for the six months ended June 30, 2025 and June 30, 2024 , respectively, corresponding to approximately 2.8% and 2.6% of Net sales for the six months ended June 30, 2025 and June 30, 2024, respectively .

Net cash used in investing activities for the nine months ended September 30, 2025 and September 30, 2024 was primarily used for capital expenditures.

Our capital expenditures were $37.6 million (of which approximately $9.5 million related to one-time separation capital expenditures) and $38.6 million (of which approximately $12.4 million related to one-time separation capital expenditures) for the nine months ended September 30, 2025 and September 30, 2024 , respectively, corresponding to approximately 2.9% and 3.1% of Net sales for the nine months ended September 30, 2025 and September 30, 2024, respectively .

Financing Cash Flow

Net cash used in financing activities for the six months ended June 30, 2025 was $45.9 million compared to $0.0 million for the six months ended June 30, 2024 .

Net cash used in financing activities for the six months ended June 30, 2025 consisted primarily of repurchases of common stock, dividends paid and payments made on our term loan.

We paid dividends of $8.3 million in the first six months of 2025 and none in the first six months of 2024.

Net cash used in financing activities for the nine months ended September 30, 2025 was $88.1 million compared to $18.0 million for the nine months ended September 30, 2024 .

Net cash used in financing activities for the nine months ended September 30, 2025 and September 30, 2024 consisted primarily of repurchases of common stock, payments made on our term loan and dividends paid.

We paid dividends of $12.7 million in the first nine months of 2025 and $4.2 million in the first nine 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 second quarter of 2025 dividend of $0.05 per share, declared on May 21, 2025 for shareholders of record as of June 3, 2025, was paid on June 18, 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.

The third quarter 2025 dividend of $0.055 per share, declared on August 13, 2025 for shareholders of record as of August 26, 2025, was paid on September 10, 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.

We anticipate that the 2025 distributions will be characterized as dividends under the U.S.

4 unchanged sentences

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 $585.0 million at June 30, 2025 and $592.5 million at December 31, 2024 .

At June 30, 2025 , the weighted-average term of our outstanding long-term debt was 2.4 years.

Our total debt was $577.5 million at September 30, 2025 and $592.5 million at December 31, 2024 .

At September 30, 2025 , the weighted-average term of our outstanding long-term debt was 1.9 years.

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

19 unchanged sentences

We believe Adjusted earnings per share provides improved comparability of underlying operating results.

time capital expenditures and other separation related costs associated with becoming a standalone public company.

• “Free cash flow” is defined as cash flows provided by (used for) operating activities less capital expenditures and “Adjusted free cash flow” is defined as Free cash flow after adding back certain one-time capital expenditures and other separation related costs associated with becoming a standalone public company.

We believe Free cash flow and Adjusted free cash flow are useful metrics used by management and investors to analyze our ability to service and repay debt and return value to shareholders.

12 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,

2025 2024 2025 2024

14 unchanged sentences

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,

2025 2024 2025 2024

6 unchanged sentences

(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 June 30, 2025 and 2024 were $0.5 million and $0.8 million, respectively, and for the six months ended June 30, 2025 and 2024 were $2.5 million and $2.1 million, respectively.

The tax impact of one-time separation costs for the three months ended September 30, 2025 and 2024 were $0.9 million and $1.6 million, respectively, and for the nine months ended September 30, 2025 and 2024 were $3.4 million and $3.8 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,

2025 2024 2025 2024

5 unchanged sentences

Other one-time separation related (a)

— 18.3 — 21.6

Adjusted free cash flow (non-GAAP) $ 71.8 $ 64.7 $ 127.1 $ 86.1

7 unchanged sentences

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