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Item 7. Management’s Discussion and Analysis

2026-02-13 compared with 2025-02-21 · 86 added, 115 removed, 265 unchanged (43% of the section changed)

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This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described under the heading “Risk Factors.” Actual results may differ materially from those contained in any forward-looking statements.

Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “Atmus” is intended to mean the business and operations of Atmus Filtration Technologies Inc.

Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to

“Atmus” is intended to mean the business and operations of Atmus Filtration Technologies Inc.

and its consolidated subsidiaries.

The following is the discussion and analysis of changes in the financial condition and results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023 and the year ended December 31, 2023 compared to the year ended December 31, 2022.

The following is the discussion and analysis of changes in the financial condition and results of operations for the year ended December 31, 2025 compared to the year ended December 31, 2024.

A discussion of the changes in the financial condition and results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023 can be found in Part II, “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the SEC on February 21, 2025.

Cautionary Note Regarding Forward-Looking Statements

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• Significant competition in the markets Atmus serves;

• Evolving customer needs and developing technologies;

• Reliance on Atmus’ executive leadership and other key personnel;

• Ability to attract and retain qualified personnel;

• Strategic transactions, such as acquisitions, divestitures, and joint ventures;

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• Variability in material and commodity costs;

• Raw material, transportation and labor price increases and supply shortages;

• Interruptions in the supply of critical materials and components;

• Complexity of supply chain and manufacturing;

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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;

• 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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• Unanticipated changes in Atmus' effective tax rate, the adoption of new tax legislation or exposure to additional income tax liabilities, as well as audits by tax authorities resulting in additional tax payments for prior periods;

• Changes in tax law relating to multinational corporations;

• Significant compliance costs and reputational and legal risks imposed by Atmus' global operations and the laws and regulations to which these are subject;

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• Potential system or data security breaches or other disruptions;

• Dependence on information technology infrastructure and assets that are increasing in complexity;

• Foreign currency exchange rate;

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• 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;

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

• Potential indemnification liabilities to Cummins pursuant to the separation agreement;

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

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

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

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We estimate that approximately 14% of our net sales in 2025 were generated through first-fit sales to OEMs, where our products are installed as components for new vehicles and equipment.

We estimate that approximately 86% of our net sales in 2024 were generated in the aftermarket, where our products are installed as replacement or repair parts, leading to a strong recurring revenue base.

We estimate that approximately 86% of our net sales in 2025 were generated in the aftermarket, where our

products are installed as replacement or repair parts, leading to a strong recurring revenue base.

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.

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The divestiture of Atmus shares by Cummins was completed on March 18, 2024 and resulted in the full separation of Atmus and divestitures of Cummins’ entire ownership and voting interest in Atmus (“Full Separation”).

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 for which Atmus paid Cummins mutually agreed upon fees.

These services were provided through and ended in September 2025.

Basis of Presentation

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Market demand

Aftermarket demand remained depressed in 2024 reflecting soft market conditions and first-fit demand softened across many of our key markets during the second half of 2024.

It is uncertain when a recovery can be expected.

Aftermarket demand remained soft throughout 2025.

We continue to be in a period of slow growth in global aftermarkets, and this trend is expected to continue into 2026.

First-fit experienced reduced demand in 2025 reflecting depressed market conditions.

First-fit demand is expected to remain at reduced levels in 2026 based on overall market cyclicality.

Global supply chain

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.

Overall supply chain conditions remained largely stable during 2025 with minimal disruptions being experienced.

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

Our management team continues to monitor and evaluate all of these factors and the related impacts of 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 second half of 2024.

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

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

We have experienced general variability in direct material costs during 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 they will remain available.

Labor and people related costs have remained stable with increases primarily driven by annual merit and variable compensation programs.

Additionally, the appreciation of the U.S.

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Standalone costs

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

During the year ended December 31, 2024, we incurred approximately $25.2 million related to one-time separation costs including $14.5 million within Selling, general and administrative expenses and $10.7 million within Cost of sales.

We expect to incur one-time expenses of approximately $5 million to $10 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 $5 million to $10 million in 2025.

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

During the year ended December 31, 2025, we incurred approximately $15.5 million related to one-time separation costs 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.

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 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 year ended December 31, 2025, were primarily associated with establishing our own distribution network and 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 future periods in connection with becoming a standalone public company.

Results of Operations

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(Unfavorable)

2025 2024 2023

Amount % Amount %

(in millions)

NET SALES $ 1,764.3 $ 1,669.6 $ 1,628.1 $ 94.7 5.7 % $ 41.5 2.5 %

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Net sales were $1,764.3 million for the year ended December 31, 2025, an increase of $94.7 million compared to $1,669.6 million for the year ended December 31, 2024.

The increase in Net sales was mainly due to $26.3 million of favorable pricing impacts and higher volumes of $22.3 million, partially offset by the unfavorable impacts of currency of $7.1 million.

The increase in Net sales was mainly due to higher volumes of $51.9 million and favorable pricing impacts of $50.0 million, partially offset by unfavorable impacts of currency of $7.3 million.

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

Gross margin was $498.3 million f or the year ended December 31, 2025, an increase of $36.2 million compared to $462.1 million for the year ended December 31, 2024.

The increase in Gross margin was mainly due to approximately $26.3 million of favorable pricing impacts as described above, higher volumes of approximately $7.8 million, favorable variable compensation of $7.2 million and favorable materials costs of $7.0 million, partially offset by higher manufacturing and other costs of $9.0 million, higher logistics costs of $5.8 million, unfavorable currency impacts of $2.7 million and higher one-time restructuring costs of $1.4 million.

Gross margin as a percentage of Net sales was 27.7% , an increase of 1.1 percentage points

compared to 26.6% .

The increase in Gross margin was mainly due to favorable pricing of $50.0 million as described above, favorable volumes of $21.0 million, a $7.7 million decrease in manufacturing and other costs and a $0.9 million reduction in one-time restructuring and separation costs, partially offset by unfavorable logistics and duties costs of $36.2 million, $5.8 million in unfavorable currency impacts and a $1.4 million increase in warranty costs.

Gross margin as

a percentage of Net sales was 28.2% , an increase of 0.5 percentage points compared to 27.7% .

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 $187.6 million for the year ended December 31, 2024, an increase of $12.9 million compared to $174.7 million for the year ended December 31, 2023.

The increase was primarily driven by increased people-related and consulting expenses, including one-time restructuring costs, partially offset by lower one-time separation costs.

Selling, general and administrative expenses as a percentage of Net sales were 11.2% for the year ended December 31, 2024 , an increase of 0.5 percentage points compared to 10.7% for the year ended December 31, 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 $184.3 million for the year ended December 31, 2025, a decrease of $3.3 million compared to $187.6 million for the year ended December 31, 2024.

The decrease was primarily driven by lower one-time separation and restructuring costs of $11.6 million, partially offset by increased people-related and consulting expenses and an increase in amortization of internal-use software.

Selling, general and administrative expenses as a percentage of Net sales were 10.4% for the year ended December 31, 2025 , a decrease of 0.8 percentage points compared to 11.2% for the year ended December 31, 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 $40.6 million for the year ended December 31, 2024, a decrease of $1.9 million compared to $42.5 million for the year ended December 31, 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 year ended December 31, 2024, a decrease of 0.2 percentage points compared to 2.6% for the year ended December 31, 2023.

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

Research, development and engineering expense was generally consistent for the year ended December 31, 2025 compared the year ended December 31, 2024.

Equity, royalty and interest income from investees

Equity, royalty and interest income from investees was $34.3 million for the year ended December 31, 2024, an increase of $0.7 million compared to $33.6 million for the year ended December 31, 2023.

The increase was primarily due to higher earnings of $0.5 million from our joint ventures in India and China.

Equity, royalty and interest income from investees was generally consistent for the year ended December 31, 2025 compared to the year ended December 31, 2024.

Other operating expense, net

Other operating expense, net was $8.1 million for the year ended December 31, 2025, an increase of $6.1 million compared to $2.0 million for the year ended December 31, 2024.

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

Interest Expense

Interest expense was $40.6 million for the year ended December 31, 2024, an increase of $14.8 million compared to $25.8 million for the year ended December 31, 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 $9.2 million for the year ended December 31, 2024, an increase of $5.4 million compared to $3.8 million for the year ended December 31, 2023.

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

Income Tax Expense

In connection with the Separation, 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.

Our effective tax rate for the year ended December 31, 2024 was 21.0% , a decrease of 3.3 percentage points compared to 24.3% for the year ended December 31, 2023.

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

related to US and foreign tax return filings.

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.

Net sales were $1,628.1 million (which included related party sales of $390.8 million) for the year ended December 31, 2023, an increase of $66.0 million compared to $1,562.1 million (which included related party sales of $344.9 million) for the year ended December 31, 2022.

Of the total net sales increase of $66.0 million, $20.1 million was an increase in external sales and $45.9 million was an increase in related party sales.

Additionally, sales increased by approximately $102.0 million due to increased pricing, partially offset by lower volumes of $34.2 million and the negative impacts of currency of $1.8 million.

Gross margin was $432.7 million for the year ended December 31, 2023, an increase of $73.5 million compared to $359.2 million for the year ended December 31, 2022.

The increase in Gross margin was mainly due to favorable pricing as described above (approximately $102.0 million) and approximately $41.0 million of favorable freight and commodities costs, partially offset by $32.1 million of unfavorable manufacturing and other costs, $11.9 million due to lower volumes, $11.1 million of increased variable compensation costs, $9.2 million of one-time separation costs, and $5.2 million of unfavorable currency impacts.

Gross margin as a percentage of Net sales was 26.6% for the year ended December 31, 2023, an increase of 3.6% compared to 23.0% for the year ended December 31, 2022.

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

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $174.7 million for the year ended December 31, 2023, an increase of $35.0 million compared to $139.7 million for 2022.

The increase was primarily driven by $13.5 million of increased variable compensation costs, $9.8 million of one-time separation costs, $6.3 million of higher executive and incentive based compensation and $5.4 million of higher merit and other costs.

Selling, general and administrative expenses as a percentage of Net sales were 10.7% for the year ended December 31, 2023, an increase of 1.8% compared to 8.9% for the year ended December 31, 2022.

Research, Development and Engineering Expenses

Research, development and engineering expenses were $42.5 million for the year ended December 31, 2023, an increase of $3.9 million compared to $38.6 million for the year ended December 31, 2022.

The increase was primarily due to increased variable compensation costs.

Research, development and engineering expenses as a percentage of Net sales were 2.6% for the year ended December 31, 2023, an increase of 0.1% compared to 2.5% for the year ended December 31, 2022.

The increase 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 were $33.6 million for the year ended December 31, 2023, an increase of $5.6 million compared to $28.0 million for the year ended December 31, 2022.

The increase was primarily due to higher earnings of $4.9 million from our joint ventures in China and India.

Other Operating Expense, Net

Other operating expense, net was $0.7 million for the year ended December 31, 2023, a decrease of $4.3 million compared to $5.0 million for the year ended December 31, 2022.

The decrease was primarily due to prior year asset write-offs related to a discontinued program and the establishment of reserves against accounts receivable from Russian customers in 2022 that did not recur.

The increase was primarily due to long-lived asset impairment charges on idled machinery, equipment and fixtures.

Interest expense

Interest expense was $25.8 million for the year ended December 31, 2023, an increase of $25.1 million compared to $0.7 million for the year ended December 31, 2022.

The increase was primarily due to the interest on our borrowings under the Credit Agreement in 2023.

Interest expense was $33.4 million for the year ended December 31, 2025, a decrease of $7.2 million compared to $40.6 million for the year ended December 31, 2024.

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

Other income, net

Other income, net was $0.6 million for the year ended December 31, 2025, a decrease of $8.6 million compared to $9.2 million for the year ended December 31, 2024.

The decrease in Other income, net was primarily due to the net loss on foreign exchange rate hedging, partially offset by higher interest income as a result of cash balances held in interest-bearing accounts which we did not have prior to IPO.

The decrease in Other income, net was due to an increase in the net loss on foreign exchange rate hedging which offset interest income that remained stable between the comparable periods.

Income tax expense

Our effective tax rate for the year ended December 31, 2023 was 24.3%, an increase of 4.7% compared to 19.6% for the year ended December 31, 2022.

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

Our effective tax rate for the year ended December 31, 2025 was 22.1%, an increase of 1.1 percentage points compared to 21.0% for the year ended December 31, 2024.

The increase in the effective tax rate was driven by unfavorable changes in the mix of earnings and lower U.S.

credits and incentives following cash tax planning around recent U.S.

tax law changes, partially offset by a valuation allowance release on foreign deferred tax assets.

Our effective tax rate differs from the U.S.

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As a result, we had capacity under our revolving credit facility of $400 million as of December 31, 2025 .

Subsequent to current year end, on January 7, 2026, the Company entered into an Amended and Restated Credit Agreement which provided for a term loan facility of $1.0 billion and $500 million revolving credit facility, both of which mature on January 7, 2031.

The term loan facility was drawn on fully for the amount of $1.0 billion with proceeds used to refinance the outstanding term loan facility and to finance in part the acquisition of Koch Filter Corporation.

Refer to Note 21, Subsequent Events , to the Consolidated Financial Statements for more information.

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.

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Operating Cash Flow

Net cash provided by operating activities was $105.4 million for the year ended December 31, 2024, a decrease of $83.6 million compared to Net cash provided by operating activities of $189.0 million for the year ended December 31, 2023.

The decrease was driven primarily by higher working capital requirements of $117.1 million, partially offset by higher net income, higher equity income from investees and a favorable change in other liabilities.

During the year ended December 31, 2024, higher working capital requirements resulted in a cash outflow of $103.3 million compared to a cash inflow of $11.3 million for the year ended December 31, 2023, mainly due to lower trade accounts payable, lower other accrued expenses, higher inventories, higher prepaids and higher trade accounts receivable.

Net cash provided by operating activities was $202.7 million for the year ended December 31, 2025, an increase of $97.3 million compared to Net cash provided by operating activities of $105.4 million for the year ended December 31, 2024.

The increase was driven primarily by lower working capital requirements of $26.1 million and a favorable change in other liabilities of $6.0 million, partially offset by an unfavorable change in income from equity method investees of $8.2 million.

During the year ended December 31, 2023, lower working capital requirements resulting in a cash inflow of $11.3 million compared to a cash outflow of $14.8 million for the year ended December 31, 2022, mainly due to higher other accrued expenses, higher trade accounts

payable, lower trade and related party receivables and lower inventories, partially offset by lower related party payables.

Dividends received from our unconsolidated equity investees were $25.5 million and $19.8 million for the years ended December 31, 2024 and December 31, 2023, respectively.

The increase was driven primarily by a favorable change in working capital requirements of $40.1 million, a favorable change in deferred taxes of $26.4 million and higher net income of $21.8 million.

During the year ended December 31, 2025, higher working capital requirements resulted in a cash outflow of $63.2 million compared to a cash outflow of $103.3 million for the year ended December 31, 2024, mainly due to higher trade accounts payable and lower prepaids, partially offset by higher trade and other receivables including VAT receivables.

Dividends received from our unconsolidated equity investees were $21.0 million, $25.5 million and $19.8 million for the years ended December 31, 2025, December 31, 2024 and December 31, 2023, respectively.

Dividends are included in Net cash provided by operating activities.

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Net cash used in investing activities for each fiscal year presented was primarily used for capital expenditures.

Our capital expenditures were $48.6 million (of which approximately $15.0 million related to one-time separation costs), $45.8 million (of which approximately $9.2 million related to one-time separation costs) and $37.5 million for the years ended December 31, 2024, December 31, 2023,and December 31, 2022, respectively, corresponding to approximately 2.9%, 2.8% and 2.4% of Net sales in 2024, 2023 and 2022, respectively.

Our capital expenditures were $53.9 million (of which approximately $9.5 million related to one-time separation costs) and $48.6 million (of which approximately $15.0 million related to one-time separation costs) for the years ended December 31, 2025 and December 31, 2024, respectively, corresponding to approximately 3.1% and 2.9% of Net sales in 2025 and 2024, respectively.

Financing Cash Flow

Net cash used in financing activities for the year ended December 31, 2025 consisted primarily of repurchases of common stock of $60.7 , payments made on our term loan of $22.5 million and dividends paid of $17.3 million .

Net cash used in financing activities for the year ended December 31, 2024 consisted primarily of repurchases of common stock of $20.0 million, dividends paid of $8.3 million and payments made on our term loan of $7.5 million.

Net cash provided by financing activities for the year ended December 31, 2023 consisted primarily of long-term debt proceeds from our borrowings of $650 million under our Credit Agreement, partially offset by net transfers of $579.5 million to Cummins as part of the Separation and $50.0 million in payments made on our revolving credit facility.

Net cash used in financing activities for the year ended December 31, 2022 consisted entirely of transfers to Cummins.

We paid dividends of $8.3 million in 2024 and none in 2023 and 2022.

The current quarterly dividend rate is $0.05 per share of common stock.

We paid dividends of $17.3 million in 2025, $8.3 million in 2024 and none in 2023.

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 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 fourth quarter dividend of $0.055 per share, declared on November 12, 2025 for shareholders of record as of November 25, 2025, was paid on December 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.

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For more information regarding our lease obligations, see Note 9, Leases , to the Consolidated Financial Statements , which provides a summary of our future minimum lease payments.

Our total debt outstanding was $592.5 million at December 31, 2024 and was $600.0 million at December 31, 2023.

We had no debt outstanding at December 31, 2022.

Our total debt outstanding was $570.0 million at December 31, 2025, was $592.5 million at December 31, 2024, and was $600.0 million at December 31, 2023 .

At December 31, 2025, the weighted-average term of our outstanding long-term debt was 1.9 years.

Refer to Note 12, Debt and Borrowing Arrangements , to the Consolidated Financial Statements for more information on our debt and debt covenants.

Refer to Note 12, Debt and Borrowing Arrangements , and Note 21, Subsequent Events , to the Consolidated Financial Statements for more information on our debt and debt covenants.

Non-GAAP Measures

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Additionally, we believe these metrics are widely used by investors, securities analysts, ratings agencies and others in our industry in evaluating performance.

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

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

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

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

GAAP financial measure) after adding back certain one-time expenses, reflected in Cost of sales and Selling, general and administrative expenses, associated with becoming a standalone public company and one-time restructuring costs less the related tax impact of the same one-time expenses.

GAAP financial measure) after adding back certain one-time expenses, reflected in Cost of sales and Selling, general and administrative expenses, associated with becoming a standalone public company, one-time restructuring costs and long-lived asset impairment charges less the related tax impact of the same one-time expenses and asset impairment charges.

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

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

For the Years Ended

For the Years Ended December 31,

(in millions)

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EBITDA (non-GAAP) $ 329.6 $ 300.2 $ 273.7

One-time restructuring costs

Impairment charges - Long-lived assets (a)

$ 8.4 $ — $ —

One-time separation costs (a)

One-time restructuring costs

One-time separation costs (b)

15.5 25.2 28.6

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Adjusted EBITDA margin (non-GAAP) 20.0 % 19.7 % 18.6 %

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

(a) During 2025, Atmus recognized fixed asset impairment charges on idled machinery, equipment and fixtures.

We do not expect the idling of the assets to have a material adverse effect on our financial position, results of operations, cash flows, liquidity or capital resources.

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

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

For the Years Ended

For the Years Ended December 31,

Diluted earnings per share $ 2.50 $ 2.22 $ 2.05

One-time restructuring costs (a)

Impairment charges - Long-lived assets (a)

$ 0.10 $ — $ —

One-time separation costs (a)

One-time restructuring costs (b)

One-time separation costs (b)

0.19 0.30 0.34

Tax impact of one-time restructuring costs (a)

Tax impact of impairment charges (a)

$ 0.02 $ — $ —

Tax impact of one-time separation costs (a)

Tax impact of one-time restructuring costs (b)

Tax impact of one-time separation costs (b)

0.04 0.06 0.08

Adjusted earnings per share (non-GAAP) $ 2.73 $ 2.50 $ 2.31

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

The tax impact of one-time restructuring costs for the year ended December 31, 2024 were $0.9 million and the tax impact of one-time separation costs for the years ended December 31, 2024 , 2023 and 2022 were $5.3 million, $6.9 million and $1.8 million, respectively.

(a) During 2025, Atmus recognized fixed asset impairment charges on idled machinery, equipment and fixtures.

The tax impact of the impairment charges for the year ended December 31, 2025, was $1.9 million .

(b) Primarily comprised of one-time expenses related to Information Technology, warehousing, manufacturing, restructuring and Human Resources separation costs and the related tax impact of those expenses.

The tax impact of one-time restructuring costs for the year ended December 31, 2024 was $0.9 million and the tax impact of one-time separation costs for the years ended December 31, 2025, 2024 and 2023 were $3.4 million, $5.3 million and $6.9 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 Years Ended

For the Years Ended December 31,

(in millions)

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The assets included $9.7 million for the value of net operating loss and credit carryforwards.

A valuation allow ance of $8.5 million was recorded to reduce the tax assets to the net value management believed was more likely than not to be realized.

A valuation allowance of $6.7 million was recorded to reduce the tax assets to the net value management believed was more likely than not to be realized.

In t he event our operating performance deteriorates, future assessments could conclude that a larger valuation allowance will be needed to further reduce the deferred tax assets.

5 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-K

Item 7. Management’s Discussion and Analysis