QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||
(Address of Principal Executive Offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Large accelerated filer | o | Accelerated filer | o | ||||||||
x | Smaller reporting company | ||||||||||
Emerging growth company |
Page No. | ||||||||
Part I - | FINANCIAL INFORMATION | |||||||
Part II - | OTHER INFORMATION | |||||||
For the Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
NET SALES(a) | $ | $ | |||||||||
Cost of sales | |||||||||||
GROSS MARGIN | |||||||||||
OPERATING EXPENSES AND INCOME | |||||||||||
Selling, general and administrative expenses | |||||||||||
Research, development and engineering expenses | |||||||||||
Equity, royalty and interest income from investees | |||||||||||
Other operating expense, net | |||||||||||
OPERATING INCOME | |||||||||||
Interest expense | |||||||||||
Other income (expense), net | ( | ||||||||||
INCOME BEFORE INCOME TAXES | |||||||||||
Income tax expense | |||||||||||
NET INCOME | $ | $ | |||||||||
PER SHARE DATA: | |||||||||||
Weighted-average shares for basic EPS | |||||||||||
Weighted-average shares for diluted EPS | |||||||||||
Basic earnings per share | $ | $ | |||||||||
Diluted earnings per share | $ | $ |
For the Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
NET INCOME | $ | $ | |||||||||
Other comprehensive (loss) income, net of tax | |||||||||||
Foreign currency translation adjustments | ( | ||||||||||
Total other comprehensive (loss) income, net of tax | ( | ||||||||||
COMPREHENSIVE INCOME | $ | $ |
March 31, 2024 | December 31, 2023 | ||||||||||
ASSETS | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Accounts and notes receivable, net | |||||||||||
Inventories | |||||||||||
Prepaid expenses and other current assets | |||||||||||
Total current assets | |||||||||||
Property, plant and equipment, net | |||||||||||
Investments and advances related to equity method investees | |||||||||||
Goodwill | |||||||||||
Other assets | |||||||||||
TOTAL ASSETS | $ | $ | |||||||||
LIABILITIES | |||||||||||
Accounts payable | $ | $ | |||||||||
Accrued compensation, benefits and retirement costs | |||||||||||
Current portion of accrued product warranty | |||||||||||
Current maturities of long-term debt | |||||||||||
Other accrued expenses | |||||||||||
Total current liabilities | |||||||||||
Long-term debt | |||||||||||
Accrued product warranty | |||||||||||
Other liabilities | |||||||||||
TOTAL LIABILITIES | |||||||||||
Commitments and contingencies (Note 10) | |||||||||||
EQUITY | |||||||||||
Common stock, $ | |||||||||||
Additional paid-in capital | |||||||||||
Retained earnings | |||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
TOTAL EQUITY | |||||||||||
TOTAL LIABILITIES AND EQUITY | $ | $ |
For the Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to operating cash flows: | |||||||||||
Depreciation and amortization | |||||||||||
Deferred income taxes | |||||||||||
Equity in income of investees, net of dividends | ( | ||||||||||
Foreign currency remeasurement and transaction exposure | ( | ||||||||||
Changes in current assets and liabilities: | |||||||||||
Trade and other receivables | ( | ( | |||||||||
Inventories | ( | ( | |||||||||
Prepaid expenses and other current assets | ( | ( | |||||||||
Accounts payable | |||||||||||
Other accrued expenses | ( | ( | |||||||||
Changes in other liabilities | |||||||||||
Other, net | ( | ( | |||||||||
Net cash (used in) provided by operating activities | ( | ||||||||||
CASH USED IN INVESTING ACTIVITIES | |||||||||||
Capital expenditures | ( | ( | |||||||||
Net cash used in investing activities | ( | ( | |||||||||
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | |||||||||||
Net transfers to Parent | ( | ||||||||||
Net cash provided by (used in) financing activities | ( | ||||||||||
Net decrease in cash and cash equivalents | ( | ||||||||||
Cash and cash equivalents at beginning of period | |||||||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | $ | |||||||||
SUPPLEMENTAL CASH FLOW INFORMATION: | |||||||||||
Non-cash investing and financing activities: | |||||||||||
Non-cash Capital expenditures | $ | $ |
Common Stock | Net Parent Investment | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total | ||||||||||||||||||||||||||||||
Three Months Ended March 31, 2024 | |||||||||||||||||||||||||||||||||||
Balances at January 01, 2024 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||||||||||||||
Other comprehensive loss, net of tax | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Share-based awards | — | — | — | — | |||||||||||||||||||||||||||||||
Balances at March 31, 2024 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
Three Months Ended March 31, 2023 | |||||||||||||||||||||||||||||||||||
Balances at January 01, 2023 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||||||||||||||
Other comprehensive income, net of tax | — | — | — | — | |||||||||||||||||||||||||||||||
Net transfers to Parent | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||
Balances at March 31, 2023 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
For the Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
(in millions) | |||||||||||
United States | $ | $ | |||||||||
Other international | |||||||||||
Total net sales | $ | $ |
For the Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
(in millions) | |||||||||||
Fuel | $ | $ | |||||||||
Lube | |||||||||||
Air | |||||||||||
Other | |||||||||||
Total net sales | $ | $ |
For the Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
(in millions) | |||||||||||
Fleetguard Filters Pvt. Ltd. | $ | $ | |||||||||
Shanghai Fleetguard Filter Co. Ltd | |||||||||||
Filtrum Fibretechnologies Pvt. Ltd | |||||||||||
Atmus share of net income | |||||||||||
Royalty and interest income | |||||||||||
Equity, royalty and interest income from investees | $ | $ |
March 31, 2024 | December 31, 2023 | ||||||||||
(in millions) | |||||||||||
Finished products | $ | $ | |||||||||
Work-in-process and raw materials | |||||||||||
Inventories at FIFO cost | |||||||||||
Excess of FIFO over LIFO | ( | ( | |||||||||
Total inventories | $ | $ |
For the Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
(in millions) | |||||||||||
Balance, beginning of year | $ | $ | |||||||||
Provision for base warranties issued | |||||||||||
Payments made during period | ( | ( | |||||||||
Changes in estimates for pre-existing product warranties | ( | ||||||||||
Balance, end of period | $ | $ |
March 31, 2024 | December 31, 2023 | ||||||||||
(in millions) | |||||||||||
Current portion | $ | $ | |||||||||
Long-term portion | |||||||||||
Total | $ | $ |
As of March 31, 2024 | As of December 31, 2023 | ||||||||||||||||||||||
Facility Amount | Borrowed Amount | Facility Amount | Borrowed Amount | ||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Credit facilities: | |||||||||||||||||||||||
Term loan September 30, 2027(1) | $ | $ | |||||||||||||||||||||
Revolving credit facility September 30, 2027(1) |
2024 | 2025 | 2026 | 2027 | 2028 | Thereafter | Total | ||||||||||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | $ |
For the Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
(in millions) | |||||||||||
Currency translation adjustments: | |||||||||||
Balance at beginning of period | $ | ( | $ | ( | |||||||
Currency translation adjustments | ( | ||||||||||
Other comprehensive (loss) income, net | ( | ||||||||||
Balance at end of period | ( | ( | |||||||||
Pensions and other benefit plans: | |||||||||||
Balance at beginning of period | $ | ( | $ | ||||||||
Change in pensions and other benefit plans | |||||||||||
Tax (expense)/benefit | |||||||||||
Other comprehensive income (loss), net | |||||||||||
Balance at end of period | ( | ||||||||||
Accumulated other comprehensive loss: | |||||||||||
Balance at beginning of period | $ | ( | $ | ( | |||||||
Total other comprehensive (loss) income, net | ( | ||||||||||
Balance at end of period | $ | ( | $ | ( |
For the Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
(in millions, except per share data) | |||||||||||
Net income | $ | $ | |||||||||
Weighted-average shares for basic EPS | |||||||||||
Plus incremental shares from assumed conversions of long-term incentive plan shares | |||||||||||
Weighted-average shares for diluted EPS | |||||||||||
Basic earnings per share | $ | $ | |||||||||
Diluted earnings per share | $ | $ |
March 31, 2024 | December 31, 2023 | ||||||||||
(in millions) | |||||||||||
Operating lease assets | $ | $ | |||||||||
Deferred income taxes | |||||||||||
Long-term receivables | |||||||||||
Other | |||||||||||
$ | $ |
March 31, 2024 | December 31, 2023 | ||||||||||
(in millions) | |||||||||||
Marketing accruals | $ | $ | |||||||||
Income taxes payable | |||||||||||
Other taxes payables | |||||||||||
Current portion of operating lease liabilities | |||||||||||
Current portion of finance lease liabilities | |||||||||||
Other | |||||||||||
Other accrued expenses | $ | $ |
March 31, 2024 | December 31, 2023 | ||||||||||
(in millions) | |||||||||||
Long-term portion of operating lease liabilities | $ | $ | |||||||||
Deferred income taxes | |||||||||||
Long-term income taxes | |||||||||||
Other long-term liabilities | |||||||||||
Other liabilities | $ | $ |
For the Three Months Ended March 31, | Favorable (Unfavorable) | ||||||||||||||||||||||
2024 | 2023 | Amount | % | ||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
NET SALES | $ | 426.6 | $ | 418.6 | $ | 8.0 | 1.9 | % | |||||||||||||||
Cost of sales | 314.8 | 308.8 | (6.0) | (1.9) | % | ||||||||||||||||||
GROSS MARGIN | 111.8 | 109.8 | 2.0 | 1.8 | % | ||||||||||||||||||
OPERATING EXPENSES AND INCOME | |||||||||||||||||||||||
Selling, general and administrative expenses | 43.3 | 39.1 | (4.2) | (10.7) | % | ||||||||||||||||||
Research, development and engineering expenses | 10.1 | 9.8 | (0.3) | (3.1) | % | ||||||||||||||||||
Equity, royalty and interest income from investees | 10.4 | 8.4 | 2.0 | 23.8 | % | ||||||||||||||||||
Other operating expense, net | 0.2 | 0.1 | (0.1) | (100.0) | % | ||||||||||||||||||
OPERATING INCOME | 68.6 | 69.2 | (0.6) | (0.9) | % | ||||||||||||||||||
Interest expense | 10.5 | — | (10.5) | — | % | ||||||||||||||||||
Other income (expense), net | 0.2 | (0.1) | 0.3 | (300.0) | % | ||||||||||||||||||
INCOME BEFORE INCOME TAXES | 58.3 | 69.1 | (10.8) | (15.6) | % | ||||||||||||||||||
Income tax expense | 12.8 | 16.4 | 3.6 | 22.0 | % | ||||||||||||||||||
NET INCOME | $ | 45.5 | $ | 52.7 | $ | (7.2) | (13.7) | % | |||||||||||||||
PER SHARE DATA: | |||||||||||||||||||||||
Basic earnings per share | $ | 0.55 | $ | 0.63 | $ | (0.09) | (13.7) | % | |||||||||||||||
Diluted earnings per share | $ | 0.54 | $ | 0.63 | $ | (0.09) | (14.0) | % |
For the Three Months Ended March 31, | Favorable (Unfavorable) | ||||||||||||||||
Percent of Net sales | 2024 | 2023 | Percentage Points | ||||||||||||||
Gross margin | 26.2% | 26.2% | — | ||||||||||||||
Selling, general and administrative expenses | 10.2% | 9.3% | (0.9) | ||||||||||||||
Research, development and engineering expenses | 2.4% | 2.3% | (0.1) |
For the Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
(in millions) | |||||||||||
Net cash (used in) provided by operating activities | $ | (8.2) | $ | 42.8 | |||||||
Net cash used in investing activities | (10.6) | (6.4) | |||||||||
Net cash provided by (used in) financing activities | — | (36.4) |
For the Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
(in millions) | |||||||||||
NET INCOME | $ | 45.5 | $ | 52.7 | |||||||
Plus: | |||||||||||
Interest expense | 10.5 | — | |||||||||
Income tax expense | 12.8 | 16.4 | |||||||||
Depreciation and amortization | 5.4 | 5.4 | |||||||||
EBITDA (non-GAAP) | $ | 74.2 | $ | 74.5 | |||||||
Plus: | |||||||||||
One-time separation costs(a) | $ | 6.0 | $ | 4.2 | |||||||
Adjusted EBITDA (non-GAAP) | $ | 80.2 | $ | 78.7 | |||||||
Net sales | $ | 426.6 | $ | 418.6 | |||||||
Net income margin | 10.7 | % | 12.6 | % | |||||||
EBITDA margin (non-GAAP) | 17.4 | % | 17.8 | % | |||||||
Adjusted EBITDA margin (non-GAAP) | 18.8 | % | 18.8 | % |
For the Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
(per share) | |||||||||||
Diluted earnings per share | $ | 0.54 | $ | 0.63 | |||||||
Plus: | |||||||||||
One-time separation costs(a) | $ | 0.07 | $ | 0.05 | |||||||
Less: | |||||||||||
Tax impact of one-time separation costs(a) | $ | 0.01 | $ | 0.01 | |||||||
Adjusted earnings per share | $ | 0.60 | $ | 0.67 |
For the Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
(in millions) | |||||||||||
Cash (used in) provided by operating activities | $ | (8.2) | $ | 42.8 | |||||||
Less: | |||||||||||
Capital expenditures | $ | 10.6 | $ | 6.4 | |||||||
Free cash flow | $ | (18.8) | $ | 36.4 | |||||||
Plus: | |||||||||||
One-time separation capital expenditures | $ | 2.8 | $ | 0.8 | |||||||
Other one-time separation related(a) | 3.3 | — | |||||||||
Adjusted free cash flow | $ | (12.7) | $ | 37.2 |
Exhibit No. | Description | |||||||
31.1 | ||||||||
31.2 | ||||||||
32.1 | ||||||||
101.INS* | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||
101.SCH* | Inline XBRL Taxonomy Extension Schema Document. | |||||||
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |||||||
101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document. | |||||||
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||
104 | Cover Page Interactive Data File (embedded with the Inline XBRL Document). | |||||||
* | Filed with this Quarterly Report on Form 10-Q are the following documents formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Income for the three months ended March 31, 2024 and 2023, (ii) the Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2024 and 2023, (iii) the Condensed Consolidated Balance Sheets at March 31, 2024 and December 31, 2023, (iv) the Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023, (v) the Condensed Consolidated Statements of Changes in Equity for the three months ended March 31, 2024and 2023, and (vi) Notes to Condensed Consolidated Financial Statements. | |||||||
By: | /s/ STEPHANIE J. DISHER | By: | /s/ JACK M. KIENZLER | |||||||||||||||||
Stephanie J. Disher | Jack M. Kienzler | |||||||||||||||||||
Chief Executive Officer | Chief Financial Officer and Chief Accounting Officer | |||||||||||||||||||
(Principal Executive Officer) | (Principal Financial Officer) | |||||||||||||||||||
May 3, 2024 | May 3, 2024 |
/s/ STEPHANIE J. DISHER | |||||
Stephanie J. Disher | |||||
Chief Executive Officer | |||||
(Principal Executive Officer) |
/s/ JACK M. KIENZLER | |||||
Jack M. Kienzler | |||||
Chief Financial Officer and Chief Accounting Officer | |||||
(Principal Financial Officer) |
/s/ STEPHANIE J. DISHER | |||||
Stephanie J. Disher | |||||
Chief Executive Officer | |||||
May 3, 2024 |
/s/ JACK M. KIENZLER | |||||
Jack M. Kienzler | |||||
Chief Financial Officer and Chief Accounting Officer | |||||
May 3, 2024 |
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CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|||
NET SALES | [1] | $ 426.6 | $ 418.6 | |
Related Party | ||||
NET SALES | $ 82.3 | $ 89.1 | ||
|
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Statement of Comprehensive Income [Abstract] | ||
NET INCOME | $ 45.5 | $ 52.7 |
Other comprehensive (loss) income, net of tax | ||
Foreign currency translation adjustments | (6.8) | 0.9 |
Total other comprehensive (loss) income, net | (6.8) | 0.9 |
COMPREHENSIVE INCOME | $ 38.7 | $ 53.6 |
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
ASSETS | ||
Cash and cash equivalents | $ 149.2 | $ 168.0 |
Accounts and notes receivable, net | 262.2 | 246.8 |
Inventories | 256.9 | 250.0 |
Prepaid expenses and other current assets | 31.1 | 28.2 |
Total current assets | 699.4 | 693.0 |
Property, plant and equipment, net | 181.2 | 174.6 |
Investments and advances related to equity method investees | 83.4 | 84.8 |
Goodwill | 84.7 | 84.7 |
Other assets | 55.5 | 51.5 |
TOTAL ASSETS | 1,104.2 | 1,088.6 |
LIABILITIES | ||
Accounts payable | 236.5 | 236.6 |
Accrued compensation, benefits and retirement costs | 17.8 | 41.8 |
Current portion of accrued product warranty | 6.1 | 5.4 |
Current maturities of long-term debt | 11.2 | 7.5 |
Other accrued expenses | 77.8 | 83.7 |
Total current liabilities | 349.4 | 375.0 |
Long-term debt | 588.8 | 592.5 |
Accrued product warranty | 9.7 | 8.6 |
Other liabilities | 34.5 | 31.8 |
TOTAL LIABILITIES | 982.4 | 1,007.9 |
Commitments and contingencies (Note 10) | ||
EQUITY | ||
Common stock, $0.0001 par value ($2,000,000,000 shares authorized and $83,355,930 shares issued and outstanding as of March 31, 2024) | 0.0 | 0.0 |
Additional paid-in capital | 52.1 | 49.7 |
Retained earnings | 132.7 | 87.2 |
Accumulated other comprehensive loss | (63.0) | (56.2) |
TOTAL EQUITY | 121.8 | 80.7 |
TOTAL LIABILITIES AND EQUITY | $ 1,104.2 | $ 1,088.6 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | ||
Net income | $ 45.5 | $ 52.7 |
Adjustments to reconcile net income to operating cash flows: | ||
Depreciation and amortization | 5.4 | 5.4 |
Deferred income taxes | 0.1 | 3.5 |
Equity in income of investees, net of dividends | 0.8 | (6.8) |
Foreign currency remeasurement and transaction exposure | 1.1 | (1.6) |
Changes in current assets and liabilities: | ||
Trade and other receivables | (18.2) | (4.6) |
Inventories | (9.6) | (9.7) |
Prepaid expenses and other current assets | (3.2) | (1.1) |
Accounts payable | 0.3 | 3.9 |
Other accrued expenses | (28.4) | (1.5) |
Changes in other liabilities | 3.3 | 4.9 |
Other, net | (5.3) | (2.3) |
Net cash (used in) provided by operating activities | (8.2) | 42.8 |
CASH USED IN INVESTING ACTIVITIES | ||
Capital expenditures | (10.6) | (6.4) |
Net cash used in investing activities | (10.6) | (6.4) |
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | ||
Net transfers to Parent | 0.0 | (36.4) |
Net cash provided by (used in) financing activities | 0.0 | (36.4) |
Net decrease in cash and cash equivalents | (18.8) | 0.0 |
Cash and cash equivalents at beginning of period | 168.0 | 0.0 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 149.2 | 0.0 |
Non-cash investing and financing activities: | ||
Non-cash Capital expenditures | $ 2.6 | $ 2.8 |
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) $ in Millions |
Total |
Common Stock |
Net Parent Investment |
Additional Paid-in Capital |
Retained Earnings |
Accumulated Other Comprehensive Loss |
---|---|---|---|---|---|---|
Beginning Balance at Dec. 31, 2022 | $ 455.6 | $ 0.0 | $ 511.4 | $ 0.0 | $ 0.0 | $ (55.8) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 52.7 | 52.7 | ||||
Other comprehensive loss, net of tax | 0.9 | 0.9 | ||||
Net transfers to Parent | (36.4) | (36.4) | ||||
Ending Balance at Mar. 31, 2023 | 472.8 | 0.0 | 527.7 | 0.0 | 0.0 | (54.9) |
Beginning Balance at Dec. 31, 2023 | 80.7 | 0.0 | 0.0 | 49.7 | 87.2 | (56.2) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 45.5 | 45.5 | ||||
Other comprehensive loss, net of tax | (6.8) | (6.8) | ||||
Share-based awards | 2.4 | 2.4 | ||||
Ending Balance at Mar. 31, 2024 | $ 121.8 | $ 0.0 | $ 0.0 | $ 52.1 | $ 132.7 | $ (63.0) |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) |
Mar. 31, 2024
$ / shares
shares
|
---|---|
Statement of Financial Position [Abstract] | |
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 |
Common stock, shares authorized (in shares) | 2,000,000,000 |
Common stock, shares issued (in shares) | 83,355,930 |
Common stock, shares outstanding (in shares) | 83,355,930 |
DESCRIPTION OF THE BUSINESS |
3 Months Ended |
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Mar. 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF THE BUSINESS | DESCRIPTION OF THE BUSINESS Atmus Filtration Technologies Inc. (“Atmus” or the “Company”) is one of the global leaders of filtration products for on-highway commercial vehicles and off-highway agriculture, construction, mining and power generation vehicles and equipment. Atmus designs and manufactures advanced filtration products, principally under the Fleetguard brand, that provide superior asset protection and enable lower emissions. Atmus estimates that approximately 19% of its net sales in 2023 were generated through first-fit sales to OEMs, where its products are installed as components for new vehicles and equipment. Atmus estimate that approximately 81% of its net sales in 2023 were generated in the aftermarket, where its products are installed as replacement or repair parts, leading to a strong recurring revenue base. Building on its more than 65-year history, Atmus continues to grow and differentiate itself through its global footprint, comprehensive offering of premium products, technology leadership and multi-channel path to market. In April 2022, Cummins Inc. (“Cummins” or the “Parent”) announced its intention to separate its filtration business (the “Filtration Business”) into a standalone publicly traded company (the “Separation”). In preparation for separation from Cummins, Atmus, as its predecessor in interest, was incorporated as a wholly-owned subsidiary of Cummins in Delaware on April 1, 2022 in connection with the planned Separation. Prior to the completion of Atmus’ initial public offering (the “IPO”), Cummins completed, in all material respects, the transfer of the assets and liabilities of the Filtration Business to Atmus and its subsidiaries as detailed in the separation agreement Atmus entered into with Cummins. On September 30, 2022, and as amended on February 15, 2023, Atmus entered into a $1.0 billion credit agreement (“Credit Agreement”) with Cummins and a syndicate of banks, providing for a $600 million term loan facility (the “term loan”) and a $400 million revolving credit facility (the “revolving credit facility”), in anticipation of the Separation. Borrowings under the Credit Agreement did not become available until the IPO occurred. The facilities covered by the Credit Agreement will mature on September 30, 2027. Atmus’ Registration Statement on Form S-1, as amended, filed with the Securities and Exchange Commission (“Commission”) on May 16, 2023, was declared effective on May 25, 2023, and Atmus’ common shares began trading on the New York Stock Exchange under the symbol “ATMU” on May 26, 2023. On May 30, 2023, the IPO was completed through the sale on behalf of certain commercial paper holders of Cummins of 16,243,070 shares of common stock, including the underwriters’ full exercise of their 30-day option to purchase 2,118,661 shares to cover over-allotments. None of the proceeds of the IPO were for the benefit of Atmus. As of the closing of the IPO, Cummins owned approximately 80.5% of the outstanding shares of Atmus common stock. Upon completion of the IPO, Atmus borrowed $650 million, consisting of proceeds of the term loan and amounts drawn under the revolving credit facility, and paid such amounts to Cummins in partial consideration for the Separation. On February 14, 2024, Cummins announced an exchange offer whereby Cummins shareholders could exchange all or a portion of Cummins common stock for shares of Atmus common stock owned by Cummins. The divestiture of Atmus shares by Cummins was completed on March 18, 2024 and resulted in the full separation of Atmus and divestiture of Cummins’ entire ownership and voting interest in Atmus (“Full-Separation”).
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BASIS OF PRESENTATION |
3 Months Ended |
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Mar. 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION As Atmus became a publicly traded company upon the IPO, its financial statements are now presented on a consolidated basis. In preparation for the IPO, the Company’s historical combined financial statements were prepared on a standalone basis, which reflected a combination of entities under common control that had been “carved out” of and derived from the historical consolidated financial statements and accounting records of Cummins. The unaudited financial statements for all periods presented, including the historical results of the Company prior to May 26, 2023, are now referred to as “Condensed Consolidated Financial Statements”, and have been prepared pursuant to the rules and regulations of the Commission for interim financial information. Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) have been omitted. It is management’s opinion that these financial statements include all normal and recurring adjustments necessary for a fair statement of Atmus’ results of operations, financial position and cash flows. Results of operations for any interim period are not necessarily indicative of future or annual results. These interim statements should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023. Periods Prior to the IPO Prior to the IPO, Atmus, previously the Filtration Business of Cummins, functioned as part of the larger group of businesses controlled by Cummins and accordingly, utilized centralized functions of Cummins, such as facilities and information technology, to support its operations. A portion of the shared service costs were historically allocated to the Filtration Business. Cummins also performed certain corporate functions for the Filtration Business. The corporate expenses related to the Filtration Business were allocated from Cummins. These allocated costs primarily related to certain governance and corporate functions, including finance, human resources, investor relations, legal, tax, treasury and certain other costs. Where it was possible to specifically attribute such expenses to activities of the Filtration Business, these amounts were charged or credited directly to the Filtration Business without allocation or apportionment. Allocation of other such expenses was based on a reasonable reflection of the utilization of the service provided or benefit received by the Filtration Business for the periods presented prior to the Separation, on a consistent basis, such as a relative percentage of headcount and third-party sales. The aggregate costs allocated for these functions to the Filtration Business are included within the unaudited Condensed Consolidated Statements of Net Income for the periods presented prior to the Separation. Management believes these cost allocations were a reasonable reflection of the utilization of services provided to, or the benefit derived by, the Filtration Business during the period prior to the IPO, though the allocations may not be indicative of the actual costs that would have been incurred had the Filtration Business operated as a standalone public company. Actual costs that may have been incurred if the Filtration Business had been a standalone company would depend on a number of factors, including the chosen organizational structure, whether functions were outsourced or performed by the Filtration Business employees, and strategic decisions made in areas such as manufacturing, selling and marketing, research and development, information technology and infrastructure. Historically, Atmus’ cash was transferred to Cummins on a daily basis. This arrangement was not reflective of the manner in which Atmus would have been able to finance its operations had it been a standalone business separate from Cummins during each of the periods presented. Cummins’ debt and related interest expense were not allocated to Atmus for any of the periods presented since Atmus was not the legal obligor of the debt and Cummins’ borrowings were not directly attributable to Atmus. As the separate legal entities that made up the Filtration Business were not historically held by a single legal entity, Cummins’ net investment in this business (“Net Parent Investment”) was presented in lieu of a controlling interest’s equity in the Condensed Consolidated Financial Statements. For the Filtration Business, transactions with Cummins affiliates were included in the Condensed Consolidated Statements of Net Income and related balances were reflected as related party receivables and related party payables. Other balances between the Filtration Business and Cummins were considered to be effectively settled in the Condensed Consolidated Financial Statements at the time the transactions were recorded. As of the IPO Date In connection with the Separation, we entered into various agreements with Cummins, including a separation agreement. In the separation agreement, there were certain assets and liabilities identified in the schedules, including leases and unrecognized tax liabilities, which were retained by Cummins and were reflected as Net Parent Investment in the Company’s Condensed Consolidated Financial Statements, and those that were transferred to the Company, including additional pension assets, other compensation obligations and certain other assets and liabilities, which were transferred to the Company through Net Parent Investment in the Company’s Condensed Consolidated Financial Statements. These various agreements comprehensively provide a framework for our relationship with Cummins and govern various interim and ongoing relationships between us and Cummins post IPO. As part of the Separation, Net Parent Investment was reclassified as Additional Paid-in Capital. Periods Post IPO Following the IPO, certain services continue 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. As a standalone entity, the Company will file tax returns on its own behalf, and tax balances and effective income tax rates may differ from the amounts reported in the historical periods. 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 March 31, 2024. Periods Post Full Separation Following Full Separation, Cummins will continue to provide certain services to Atmus under the transition services agreement. The transition services agreement relates primarily to administrative services, which are generally to be provided through May 2025. Atmus will continue to pay 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. Atmus files tax returns in all jurisdictions on its own behalf post Full Separation.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
3 Months Ended |
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Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Significant Accounting Estimates and Judgments Preparation of financial statements requires management to make estimates and assumptions that affect reported amounts presented and disclosed in our interim Condensed Consolidated Financial Statements. Significant estimates and assumptions in these interim Condensed Consolidated Financial Statements require the exercise of judgment. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be different from these estimates. Recent Accounting Pronouncements Net Yet Adopted Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (ASU) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Additionally, it requires a public entity to disclose the title and position of the Chief Operating Decision Maker (“CODM”). The ASU does not change how a public entity identifies its operating segments, aggregates them, or applies the quantitative thresholds to determine its reportable segments. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. A public entity should apply the amendments in this ASU retrospectively to all prior periods presented in the financial statements. We expect this ASU to only impact our disclosures with no impacts to our results of operations, cash flows and financial condition. Income Taxes (Topic 740): Improvements to Income Tax Disclosures In December 2023, the FASB issued ASU No. 2023-09: Income Taxes (Topic 740): 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 guidance does not affect recognition or measurement in our consolidated financial statements. We expect this ASU to only impact our disclosures with no impacts to our results of operations, cash flows and financial condition.
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REVENUE FROM CONTRACTS WITH CUSTOMERS |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUE FROM CONTRACTS WITH CUSTOMERS | REVENUE FROM CONTRACTS WITH CUSTOMERS Disaggregation of Revenue Revenue by Geographic Area The table below presents Atmus’ combined sales by geographic area. Net sales attributed to geographic areas were based on the location of the customer.
Revenue by Product Category The table below presents Atmus’ combined sales by product category:
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EQUITY, ROYALTY AND INTEREST INCOME FROM INVESTEES |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EQUITY, ROYALTY AND INTEREST INCOME FROM INVESTEES | EQUITY, ROYALTY AND INTEREST INCOME FROM INVESTEES Equity, royalty and interest income from investees, net of applicable taxes, was as follows:
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INCOME TAXES |
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Mar. 31, 2024 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES 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 months ended March 31, 2024, was 22.0%. Atmus’ effective tax rate for the three months ended March 31, 2023, was 23.7%. The decrease in the effective tax rate was driven by a change in the mix of earnings among tax jurisdictions and discrete tax items. The Company’s effective tax rate differs from the U.S. statutory rate primarily due to differences in rates applicable to foreign subsidiaries, withholding taxes and state income taxes. The Organization for Economic Co-operation and Development (“OECD”) introduced Base Erosion and Profit Shifting (“BEPS”) Pillar 2 rules that impose a global minimum tax rate of 15%. Numerous countries have enacted legislation that is effective on January 1, 2024. We have evaluated the impact of this legislation based on Atmus’ current global landscape and do not believe it will have a material impact. We will continue to update our analysis and monitor the ongoing legislation throughout the year.
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INVENTORIES |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORIES | INVENTORIES Inventories are stated at the lower of cost or net realizable value. Inventories included the following:
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PRODUCT WARRANTY LIABILITY |
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Product Warranties Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PRODUCT WARRANTY LIABILITY | PRODUCT WARRANTY LIABILITY A tabular reconciliation of the product warranty liability, including accrued product campaigns, was as follows:
Warranty liabilities included in Atmus’ Condensed Consolidated Balance Sheets were as follows:
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DEBT AND BORROWING ARRANGEMENTS |
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DEBT AND BORROWING ARRANGEMENTS | DEBT AND BORROWING ARRANGEMENTS Atmus entered into the Credit Agreement with Cummins and a syndicate of banks, providing for a "term loan” and a revolving credit facility, in anticipation of the Separation. Borrowings under the Credit Agreement did not become available under the Credit Agreement until the IPO occurred. The facilities covered by the Credit Agreement will mature on September 30, 2027. Upon completion of the IPO, we borrowed $650 million under the Credit Agreement, consisting of proceeds of the term loan and amounts drawn under the revolving credit facility, and paid such amounts to Cummins in partial consideration for the Separation. Borrowings under the Credit Agreement bear interest at varying rates, depending on the type of loan and, in some cases, the rates of designated benchmarks and the applicable election made. Generally, U.S. dollar-denominated loans bear interest at an adjusted term Secured Overnight Financing Rate (“SOFR”) (which includes a 0.1 percent credit spread adjustment to SOFR) for the applicable interest period plus a rate ranging from 1.125 percent to 1.75 percent depending on Atmus’ net leverage ratio. As of March 31, 2024, $600 million has been drawn on the term loan and no amount was drawn on the revolving credit facility. These amounts are included within Long-term debt and Current maturities of long-term debt on the Balance Sheet. As of March 31, 2024, Atmus’ fair value of Long-term debt was approximately $588 million, which was derived from Level 2 input measures. Our credit lines available as of March 31, 2024 and December 31, 2023 include:
(1)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 March 31, 2024, Atmus was in compliance with all financial covenants under the Credit Agreement. The Credit Agreement also contains customary representations, events of default and covenants, including restrictions on the level of borrowing. Over the next five years, aggregate principal maturities of our long-term debt are (in millions):
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COMMITMENTS AND CONTINGENCIES |
3 Months Ended |
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Mar. 31, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Legal Proceedings 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. Atmus carries various forms of commercial, property and casualty, product liability and other forms of insurance; however, such insurance may not be applicable or adequate to cover the costs associated with a judgment against Atmus with respect to these lawsuits, claims and proceedings. 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. Indemnifications Periodically, Atmus enters various contractual arrangements where it agrees to indemnify a third-party against certain types of losses. Atmus regularly evaluates the probability of having to incur costs associated with these indemnities and accrue for expected losses that are probable. Because the indemnifications are not related to specified known liabilities, and due to their uncertain nature, Atmus is unable to estimate the maximum amount of the potential loss associated with these indemnifications.
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ACCUMULATED OTHER COMPREHENSIVE LOSS |
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ACCUMULATED OTHER COMPREHENSIVE LOSS | ACCUMULATED OTHER COMPREHENSIVE LOSS Following are the changes in Accumulated other comprehensive (loss) income by component for the three months ended March 31, 2024 and March 31, 2023:
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RELATIONSHIP WITH PARENT AND RELATED PARTIES |
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Mar. 31, 2024 | |
Related Party Transactions [Abstract] | |
RELATIONSHIP WITH PARENT AND RELATED PARTIES | RELATIONSHIP WITH PARENT AND RELATED PARTIES As described in Note 1, Description of the Business, prior to the IPO, Atmus had been managed and operated in the normal course of business with other subsidiaries of Cummins. Accordingly, certain shared costs prior to the IPO have been allocated to Atmus and reflected as expenses in the Condensed Consolidated Financial Statements. Management of Cummins and Atmus consider the allocation methodologies used to be reasonable and appropriate reflections of historical expenses of Cummins attributable to Atmus for purposes of the Condensed Consolidated Financial Statements; however, the expenses reflected in the Condensed Consolidated Financial Statements may not be indicative of the actual expenses that would have been incurred during the periods presented if Atmus historically operated as a separate, stand-alone entity. In addition, the expenses reflected in the Condensed Consolidated Financial Statements may not be indicative of expenses that will be incurred in the future by Atmus. The Company entered into the separation agreement and transition services agreement with Cummins, among other transaction agreements, all of which will govern the parties relationship following the IPO and full separation. This includes services provided by Cummins to the Company for a fixed term on a service-by-service basis. We will pay Cummins mutually agreed-upon fees for the services provided under the transition services agreement. Corporate Costs/Allocations The Condensed Consolidated Financial Statements include corporate costs incurred by Cummins for services that were provided to or on behalf of Atmus for the period prior to IPO. Such costs represent shared services and infrastructure provided by Cummins, including administrative, finance, human resources, information technology, legal, and other corporate and infrastructure services. The corporate costs reflected in the Condensed Consolidated Financial Statements consist of direct charges to the business and indirect allocations to Atmus. The costs that were directly charged to Atmus, such as the shared services for finance provided by Cummins Business Services, were primarily determined based on actual usage. Indirect allocations are related to shared services and infrastructure provided by Cummins that would benefit Atmus but were not directly charged to Atmus in a manner discussed above. These corporate costs were allocated to Atmus using methods management believes are consistent and reasonable. The primary allocation factor was third-party revenue; however, other relevant metrics were also utilized based on the nature of the underlying activities. For example, headcount was used as the allocation driver to allocate the human resource departmental costs. The expenses allocated and directly charged reflect all expenses that Cummins incurred on behalf of the Company. The expenses reflected in the Condensed Consolidated Financial Statements prior to the IPO may not be indicative of the actual expenses that would have been incurred during the period presented if Atmus historically operated as a separate, stand-alone entity. All corporate charges and allocations have been deemed paid by Atmus to Cummins in the period in which the cost was recognized in the Condensed Consolidated Statements of Income. Total corporate costs allocated to Atmus were zero for the three months ended March 31, 2024 compared with $8.2 million for the three months ended March 31, 2023. Allocated corporate costs are included in Net sales, Cost of sales, Selling, general and administrative expenses, Research, development and engineering expenses and Other income, net. Post-IPO, Atmus has and will continue to incur its own corporate costs associated with being a standalone publicly traded company. Related Party Balances Following the full separation and as of March 31, 2024, Cummins is no longer considered a related party. Atmus had trade receivables of $37.9 million for products sold to, and accounts payable of $54.8 million for products and services purchased in the ordinary course from Cummins as of December 31, 2023. Atmus’ sales to Cummins from January 1, 2024 through the date of full separation, March 18, 2024, were $65.4 million compared to $76.7 million for the three months ended March 31, 2023.
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EARNINGS PER SHARE |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE | EARNINGS PER SHARE Basic and diluted earnings per share (“EPS”) were calculated as follows:
Basic and diluted earnings per share for the three months ended March 31, 2024 was calculated using the shares of common stock that were issued and outstanding as of the completion of the IPO. For the periods prior to the IPO, it is assumed that there were no dilutive equity instruments as there were no equity awards of Atmus outstanding prior to the IPO. Post-IPO, there were no anti-dilutive shares.
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SUPPLEMENTAL BALANCE SHEET DATA |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance Sheet Related Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUPPLEMENTAL BALANCE SHEET DATA | SUPPLEMENTAL BALANCE SHEET DATA Other assets included the following:
Other accrued expenses included the following:
Other liabilities included the following:
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Pay vs Performance Disclosure - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Pay vs Performance Disclosure | ||
NET INCOME | $ 45.5 | $ 52.7 |
Insider Trading Arrangements |
3 Months Ended |
---|---|
Mar. 31, 2024 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
3 Months Ended |
---|---|
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Significant Accounting Estimates and Judgments | Significant Accounting Estimates and Judgments Preparation of financial statements requires management to make estimates and assumptions that affect reported amounts presented and disclosed in our interim Condensed Consolidated Financial Statements. Significant estimates and assumptions in these interim Condensed Consolidated Financial Statements require the exercise of judgment. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be different from these estimates.
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Recent Accounting Pronouncements Net Yet Adopted | Recent Accounting Pronouncements Net Yet Adopted Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (ASU) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Additionally, it requires a public entity to disclose the title and position of the Chief Operating Decision Maker (“CODM”). The ASU does not change how a public entity identifies its operating segments, aggregates them, or applies the quantitative thresholds to determine its reportable segments. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. A public entity should apply the amendments in this ASU retrospectively to all prior periods presented in the financial statements. We expect this ASU to only impact our disclosures with no impacts to our results of operations, cash flows and financial condition. Income Taxes (Topic 740): Improvements to Income Tax Disclosures In December 2023, the FASB issued ASU No. 2023-09: Income Taxes (Topic 740): 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 guidance does not affect recognition or measurement in our consolidated financial statements. We expect this ASU to only impact our disclosures with no impacts to our results of operations, cash flows and financial condition.
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REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Revenue by Geographic Area | The table below presents Atmus’ combined sales by geographic area. Net sales attributed to geographic areas were based on the location of the customer.
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Schedule of Revenue by Product Category | The table below presents Atmus’ combined sales by product category:
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EQUITY, ROYALTY AND INTEREST INCOME FROM INVESTEES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Royalty and Interest Income From Investees | Equity, royalty and interest income from investees, net of applicable taxes, was as follows:
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INVENTORIES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventories | Inventories are stated at the lower of cost or net realizable value. Inventories included the following:
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PRODUCT WARRANTY LIABILITY (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Product Warranties Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Activity in Product Warranty Account | A tabular reconciliation of the product warranty liability, including accrued product campaigns, was as follows:
Warranty liabilities included in Atmus’ Condensed Consolidated Balance Sheets were as follows:
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DEBT AND BORROWING ARRANGEMENTS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Credit Lines Available | Our credit lines available as of March 31, 2024 and December 31, 2023 include:
(1)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 March 31, 2024, Atmus was in compliance with all financial covenants under the Credit Agreement. The Credit Agreement also contains customary representations, events of default and covenants, including restrictions on the level of borrowing.
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Schedule of Aggregate Principal Maturities of Long-Term Debt | Over the next five years, aggregate principal maturities of our long-term debt are (in millions):
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ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes In Accumulated Other Comprehensive Loss By Component | Following are the changes in Accumulated other comprehensive (loss) income by component for the three months ended March 31, 2024 and March 31, 2023:
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EARNINGS PER SHARE (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Basic and Diluted Earnings per Share | Basic and diluted earnings per share (“EPS”) were calculated as follows:
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SUPPLEMENTAL BALANCE SHEET DATA (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance Sheet Related Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Assets | Other assets included the following:
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Schedule of Other Accrued Expenses | Other accrued expenses included the following:
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Schedule of Other Liabilities | Other liabilities included the following:
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DESCRIPTION OF THE BUSINESS (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
May 30, 2023 |
May 26, 2023 |
Mar. 31, 2024 |
Dec. 31, 2023 |
Sep. 30, 2022 |
|
First-Fit Sales | Revenue Benchmark | Product Concentration Risk | |||||
Description of Business [Line Items] | |||||
Net sales estimate | 19.00% | ||||
Aftermarket Sales | Revenue Benchmark | Product Concentration Risk | |||||
Description of Business [Line Items] | |||||
Net sales estimate | 81.00% | ||||
Atmus Filtration Technologies Inc. And Subsidiaries | Cummins Filtration, Inc. | |||||
Description of Business [Line Items] | |||||
Ownership percentage | 80.50% | ||||
IPO | Cummins Filtration, Inc. | |||||
Description of Business [Line Items] | |||||
Number of shares issued in transaction (in shares) | 16,243,070 | ||||
Over-Allotment Option | Cummins Filtration, Inc. | |||||
Description of Business [Line Items] | |||||
Number of shares issued in transaction (in shares) | 2,118,661 | ||||
Revolving Credit Facility | Atmus Credit Agreement | Line of Credit | |||||
Description of Business [Line Items] | |||||
Facility Amount | $ 1,000.0 | ||||
Borrowed Amount | $ 650.0 | ||||
Revolving Credit Facility | Atmus Term Loan Facility | Line of Credit | |||||
Description of Business [Line Items] | |||||
Facility Amount | $ 600.0 | $ 600.0 | 600.0 | ||
Borrowed Amount | 600.0 | ||||
Revolving Credit Facility | Atmus Revolving Credit Facility | Line of Credit | |||||
Description of Business [Line Items] | |||||
Facility Amount | 400.0 | $ 400.0 | $ 400.0 | ||
Borrowed Amount | $ 0.0 |
REVENUE FROM CONTRACTS WITH CUSTOMERS (Details) - USD ($) $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|||
Disaggregation of Revenue [Line Items] | ||||
Net sales | [1] | $ 426.6 | $ 418.6 | |
Fuel | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 187.2 | 188.2 | ||
Lube | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 81.2 | 73.4 | ||
Air | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 71.8 | 72.1 | ||
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 86.4 | 84.9 | ||
United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 201.0 | 196.2 | ||
Other international | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 225.6 | $ 222.4 | ||
|
EQUITY, ROYALTY AND INTEREST INCOME FROM INVESTEES (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Schedule of Equity Method Investments [Line Items] | ||
Atmus share of net income | $ 8.8 | $ 6.8 |
Royalty and interest income | 1.6 | 1.6 |
Equity, royalty and interest income from investees | 10.4 | 8.4 |
Fleetguard Filters Pvt. Ltd. | ||
Schedule of Equity Method Investments [Line Items] | ||
Atmus share of net income | 7.6 | 5.8 |
Shanghai Fleetguard Filter Co. Ltd | ||
Schedule of Equity Method Investments [Line Items] | ||
Atmus share of net income | 1.1 | 0.9 |
Filtrum Fibretechnologies Pvt. Ltd | ||
Schedule of Equity Method Investments [Line Items] | ||
Atmus share of net income | $ 0.1 | $ 0.1 |
INCOME TAXES (Details) |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Income Tax Disclosure [Abstract] | ||
Effective tax rate | 22.00% | 23.70% |
INVENTORIES (Details) - USD ($) $ in Millions |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Finished products | $ 197.3 | $ 179.2 |
Work-in-process and raw materials | 96.4 | 101.1 |
Inventories at FIFO cost | 293.7 | 280.3 |
Excess of FIFO over LIFO | (36.8) | (30.3) |
Total inventories | $ 256.9 | $ 250.0 |
PRODUCT WARRANTY LIABILITY - Product Warranty Account (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Balance, beginning of year | $ 14.0 | $ 15.5 |
Provision for base warranties issued | 2.2 | 3.0 |
Payments made during period | (0.7) | (1.3) |
Changes in estimates for pre-existing product warranties | 0.3 | (0.8) |
Balance, end of period | $ 15.8 | $ 16.4 |
PRODUCT WARRANTY LIABILITY - Warranty Liability (Details) - USD ($) $ in Millions |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Product Warranties Disclosures [Abstract] | ||
Current portion | $ 6.1 | $ 5.4 |
Long-term portion | 9.7 | 8.6 |
Total | $ 15.8 | $ 14.0 |
DEBT AND BORROWING ARRANGEMENTS - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
May 30, 2023 |
May 26, 2023 |
Mar. 31, 2024 |
|
Line of Credit Facility [Line Items] | |||
Long-term debt fair value | $ 588 | ||
Revolving Credit Facility | Atmus Credit Agreement | Line of Credit | |||
Line of Credit Facility [Line Items] | |||
Long-term debt proceeds | $ 650 | ||
Borrowed Amount | $ 650 | ||
Revolving Credit Facility | Atmus Credit Agreement | Line of Credit | Secured Overnight Financing Rate | Variable Rate Component One | |||
Line of Credit Facility [Line Items] | |||
Interest rate | 0.10% | ||
Revolving Credit Facility | Atmus Credit Agreement | Line of Credit | Secured Overnight Financing Rate | Minimum | Variable Rate Component Two | |||
Line of Credit Facility [Line Items] | |||
Interest rate | 1.125% | ||
Revolving Credit Facility | Atmus Credit Agreement | Line of Credit | Secured Overnight Financing Rate | Maximum | Variable Rate Component Two | |||
Line of Credit Facility [Line Items] | |||
Interest rate | 1.75% | ||
Revolving Credit Facility | Atmus Term Loan Facility | Line of Credit | |||
Line of Credit Facility [Line Items] | |||
Borrowed Amount | $ 600 | ||
Revolving Credit Facility | Atmus Revolving Credit Facility | Line of Credit | |||
Line of Credit Facility [Line Items] | |||
Borrowed Amount | $ 0 |
DEBT AND BORROWING ARRANGEMENTS - Schedule of Credit Lines Available (Details) - USD ($) $ in Millions |
Mar. 31, 2024 |
Dec. 31, 2023 |
Sep. 30, 2022 |
---|---|---|---|
Line of Credit Facility [Line Items] | |||
Borrowed Amount | $ 600.0 | ||
Revolving Credit Facility | Atmus Credit Agreement | Line of Credit | |||
Line of Credit Facility [Line Items] | |||
Facility Amount | $ 1,000.0 | ||
Revolving Credit Facility | Atmus Term Loan Facility | Line of Credit | |||
Line of Credit Facility [Line Items] | |||
Facility Amount | 600.0 | $ 600.0 | 600.0 |
Borrowed Amount | 600.0 | 600.0 | |
Revolving Credit Facility | Atmus Revolving Credit Facility | Line of Credit | |||
Line of Credit Facility [Line Items] | |||
Facility Amount | 400.0 | 400.0 | $ 400.0 |
Borrowed Amount | $ 0.0 | $ 0.0 |
DEBT AND BORROWING ARRANGEMENTS - Schedule of Long Term Debt (Details) $ in Millions |
Mar. 31, 2024
USD ($)
|
---|---|
Debt Disclosure [Abstract] | |
2024 | $ 7.5 |
2025 | 22.5 |
2026 | 30.0 |
2027 | 540.0 |
2028 | 0.0 |
Thereafter | 0.0 |
Total | $ 600.0 |
ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning Balance | $ 80.7 | $ 455.6 |
Total other comprehensive (loss) income, net | (6.8) | 0.9 |
Ending Balance | 121.8 | 472.8 |
Accumulated Other Comprehensive Loss | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning Balance | (56.2) | (55.8) |
Total other comprehensive (loss) income, net | (6.8) | 0.9 |
Ending Balance | (63.0) | (54.9) |
Currency translation adjustments: | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning Balance | (56.1) | (56.7) |
Total other comprehensive (loss) income, net | (6.8) | 0.9 |
Ending Balance | (62.9) | (55.8) |
Pensions and other benefit plans: | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning Balance | (0.1) | 0.9 |
Change in pensions and other benefit plans | 0.0 | 0.0 |
Tax (expense)/benefit | 0.0 | 0.0 |
Total other comprehensive (loss) income, net | 0.0 | 0.0 |
Ending Balance | $ (0.1) | $ 0.9 |
RELATIONSHIP WITH PARENT AND RELATED PARTIES (Details) - USD ($) $ in Millions |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Mar. 31, 2024 |
Mar. 18, 2024 |
Mar. 31, 2023 |
Dec. 31, 2023 |
|||
Related Party Transaction [Line Items] | ||||||
Allocated corporate costs | $ 0.0 | $ 8.2 | ||||
Net sales | [1] | $ 426.6 | 418.6 | |||
Related Party | ||||||
Related Party Transaction [Line Items] | ||||||
Related party receivables | $ 37.9 | |||||
Accounts payable | $ 54.8 | |||||
Net sales | $ 65.4 | $ 76.7 | ||||
|
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Earnings Per Share [Abstract] | ||
Net income | $ 45.5 | $ 52.7 |
Weighted-average shares for basic EPS (in shares) | 83,300,000 | 83,300,000 |
Plus incremental shares from assumed conversions of long-term incentive plan shares (in shares) | 300,000 | 0 |
Weighted-average shares for diluted EPS (in shares) | 83,600,000 | 83,300,000 |
Basic earnings per share (in dollars per share) | $ 0.55 | $ 0.63 |
Diluted earnings per share (in dollars per share) | $ 0.54 | $ 0.63 |
Anti-dilutive shares (in shares) | 0 | 0 |
SUPPLEMENTAL BALANCE SHEET DATA - Schedule of Other Assets (Details) - USD ($) $ in Millions |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Balance Sheet Related Disclosures [Abstract] | ||
Operating lease assets | $ 28.0 | $ 24.8 |
Deferred income taxes | 14.1 | 14.2 |
Long-term receivables | 3.0 | 3.1 |
Other | 10.4 | 9.4 |
Other assets | $ 55.5 | $ 51.5 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Other assets | Other assets |
SUPPLEMENTAL BALANCE SHEET DATA - Schedule of Other Accrued Expenses (Details) - USD ($) $ in Millions |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Balance Sheet Related Disclosures [Abstract] | ||
Marketing accruals | $ 36.4 | $ 42.6 |
Income taxes payable | 14.0 | 10.3 |
Other taxes payables | 8.9 | 12.7 |
Current portion of operating lease liabilities | 7.3 | 7.1 |
Current portion of finance lease liabilities | 0.4 | 0.3 |
Other | 10.8 | 10.7 |
Other accrued expenses | $ 77.8 | $ 83.7 |
SUPPLEMENTAL BALANCE SHEET DATA - Schedule of Other Liabilities (Details) - USD ($) $ in Millions |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Balance Sheet Related Disclosures [Abstract] | ||
Long-term portion of operating lease liabilities | $ 21.4 | $ 18.5 |
Deferred income taxes | 1.4 | 1.4 |
Long-term income taxes | 0.2 | 0.2 |
Other long-term liabilities | 11.5 | 11.7 |
Other liabilities | $ 34.5 | $ 31.8 |
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