[Management View]
Atmus Filtration Technologies reported $454 million in sales for Q2 2025, a 4.8% increase YoY. Adjusted EBITDA was $95 million, with a 21% margin. Adjusted EPS was $0.75, up from $0.71 in Q2 2024. The company repurchased $20 million in stock during the quarter, totaling $50 million since July 2024. The operational separation from Cummins is on track for completion in Q3 2025.

[Outlook]
Revenue guidance for 2025 has been raised to $1.685 billion-$1.735 billion, implying 1%-4% growth. Adjusted EBITDA margin is expected to be 19.25%-20%, with adjusted EPS guidance reiterated at $2.40-$2.60. Freight activity is projected to be within a -0.5% to +1.5% range, with share gains and pricing contributing to revenue growth. The US heavy and medium-duty markets are expected to decline by 15%-25%.

[Financial Performance]
Sales increased by 4.8% YoY to $454 million, driven by higher volumes and pricing, partially offset by foreign exchange effects. Adjusted EBITDA was $95 million, compared to $93 million in the prior period. Adjusted EPS rose to $0.75 from $0.71. Adjusted free cash flow was $36 million.

[Q&A Highlights]
Question 1: Stephanie, Jack. As I listened to your updated outlook, some of the commentary, it sounds like your pricing expectations came down a little bit. I am curious if you could just walk through how that is going to play out through the balance of the year, just your realization, and I am assuming that is related to adjustments around tariffs, but I am curious if maybe you can clarify if that played into your base price expectations too.
Answer: Good morning, Rob, and thanks for the question. Most of the movement on price has been related to tariffs. In our last guide, we had guided tariff in pricing of about 1.5%, and this guide incorporates 0.8%. The movement is primarily related to the change in tariff on China. Our outlook and guide incorporate a 0.8% pricing on tariffs. Our overall expectation on tariffs is to be price-cost neutral for the year and through the quarters.

Question 2: Just as a follow-up as well, we certainly hear your consistent message, Stephanie, around capital allocation, particularly on the inorganic side and working the pipeline there. You know, we have seen, you know, it seems maybe there is a little more vibrancy in the industrial M&A space, some of that leans towards larger deals. But I am just curious if intra-quarter, if you saw anything in that environment that gives you any more encouragement as you go through the back half of the year.
Answer: We are very committed to the strategy of continuing to expand into industrial filtration markets through M&A. We are reviewing a robust pipeline of targets and feel good about the team and the targets we are reviewing. We are looking at opportunities broadly, targeting revenue of $50 million to $100 million, but not limiting ourselves to that range. We are taking a disciplined approach with a clear view of the strategic rationale and financial criteria for deals.

Question 3: My question is on the EBITDA margin guide. If we look at the full-year guide, and but we know what you did in the first half, it seems like what is implied for the back half is somewhere below 19% EBITDA margin in the back half versus above 20% in the first half. So just wanted to get some thoughts on how we should think about the sequential drivers behind that expected step down.
Answer: Typically, we see some seasonality where the first half of our revenue base is about 5% higher than the second half. We expect the markets, particularly the first fit market, to be more down in the second half. We also expect some leveling out of share gains and incremental pricing in the second half. FX has improved, and we expect it to be a tailwind in the second half. We do expect to operate with more pronounced decrementals in the second half due to volume decline.

Question 4: Just any specifics, like, lessons that you have learned as you are kind of understanding the market, anything that has kind of stuck out to you as from what you have learned through that initial rollout?
Answer: Nothing revolutionary. We are working on setting up our organizational capability to support the industrial filtration market. We have a strength in working with distributors and channel management, and we are leveraging that strength across additional end markets. Speed to market is important, and we are reinforcing good business practices.

[Sentiment Analysis]
The tone of the management was confident and focused on strategic growth through M&A and operational efficiency. Analysts' questions were centered around pricing, capital allocation, and market conditions, reflecting a cautious but optimistic outlook.

[Quarterly Comparison]
| Metric | Q2 2025 | Q2 2024 |
|----------------------------|---------|---------|
| Sales | $454M | $433M |
| Adjusted EBITDA | $95M | $93M |
| Adjusted EBITDA Margin | 21% | 21.4% |
| Adjusted EPS | $0.75 | $0.71 |
| Adjusted Free Cash Flow | $36M | $34M |

[Risks and Concerns]
- Tariff and regulatory uncertainties, particularly related to China and the US.
- Decline in the US heavy and medium-duty markets.
- Foreign exchange headwinds due to a strong US dollar.
- Potential delays in customer decision-making due to market conditions.

[Final Takeaway]
Atmus Filtration Technologies delivered strong Q2 2025 results with record sales and solid financial performance. The company is on track to complete its separation from Cummins and is focused on strategic M&A to drive growth in industrial filtration markets. Despite challenges in the US heavy and medium-duty markets and tariff uncertainties, Atmus remains committed to maintaining price-cost neutrality and executing its growth strategy. The management's confidence and strategic focus provide a positive outlook for the remainder of 2025.