ATMU earnings call transcript, November 6, 2026

$61 million from the same period last year. This strong free cash flow generation enables us to take a balanced and disciplined approach to capital allocation. Our first priority is to invest in growth, both organically and inorganically. Next, we focus on strong liquidity to protect against volatility and uncertainty. Maintaining investment-grade debt levels through the cycle. Lastly, we provide returns to shareholders through our dividend program and further utilise share repurchases. Relatively relative to M&A activities. We have been actively executing this strategy. During the third quarter, we returned $25 million of cash to shareholders through share buybacks and dividends. We have paid down $100 million of debt since our last earnings call and have achieved our stated objective of reducing leverage following a significant acquisition. Additionally, our board of directors recently approved a new $300 million share repurchase program which replaces our previous authorisation. Given the strength of our balance sheet and strong cash generation capability of the business, moving forward, we expect to increase share repurchases. We continue to seek M&A opportunities and will balance share repurchases against these opportunities as appropriate. Now let me highlight our third quarter financial results. Sales were $510 million compared to $448 million during the same period last year. An increase of 14%.

by the acquisition of Cook Filter and organic sales performance of 3% in power solutions excluding foreign exchange. Sales were reduced by $9 million related to IEPA tariff refunds that we expect to return to customers. Excluding these refunds and foreign exchange benefits, organic sales grew 5%. Adjusted IEPA tariff was $104 million or 20.4% compared to $92 million or 20.4% last year. Adjusted earnings per share was $0.77 in the third quarter of 2026 and adjusted free cash flow was $1.88 million. Now let's turn to our four pillar growth strategy. Our first pillar is to grow share in first bid. With a strong upturn in the US first bid market and long-standing partnership with market leaders, we are growing our installed customer base. This provides us with both near and long-term growth opportunities. As the market expands, we continue to grow our long-term partnerships, along with pursuing new opportunities with leading global and regional OEMs across a broad range of applications. Our second pillar, is focused on accelerating profitable growth in the aftermarket. We are prioritizing investments in faster growth regions and markets to broaden the availability of our industry leading fleet guards and cook filter brands. Our customers recognize the value and advanced filtration capabilities the fleet guard brand delivers. A recent independent survey framed fleet guard as the number one

preferred brand across all filter types including fuel, air and loo in the United States and Canada. We are proud of this recognition and the faith our customers have in us to protect what is important. Our third pillar is focused on transforming our supply chain. We have built a resilient and flexible supply chain that allows us to navigate challenges in an ever-changing operating environment. We control our distribution network and have consistently achieved top quartile performance. in delivery. This capability enables global availability of our products when and where our customers need us. Furthermore, we continue to prioritise investments for capacity and automation to expand our capabilities and position the business for growth. Our fourth pillar is to expand into industrial filtration markets. We have completed the integration of Cook Filter and are now focused on investing for growth. We recently opened a new HEPA filter clean room with test capabilities at the Louisville manufacturing site. This investment allows us to unlock growth in the high efficiency product category. With applications in fast growing markets such as health care. Additionally, we are investing to expand Cookfilter's capabilities and expect to open a new facility in Florida next year. To accelerate growth. In addition to organic growth, we continue to review a robust pipeline of inorganic opportunities. With a focus on industrial air to build a plan.

By leveraging cook filter and creating value through targeted bolt-on acquisition. While our primary focus is industrial air, we remain opportunistic in evaluating industrial water and liquid filtration assets. With the goal of identifying. An anchor investment that can serve as the foundation as we build out our industrial platform over time. Now let's turn to our outlook for 2026. Starting with the power solution. In the aftermarket, we continue to see strength in freight rates. Indicating improved economics for freight carriers. However, the overall level of freight. activity has yet to reach an inflection point. And we expect the market to remain relatively flat year over year. In contrast, the US first fit heavy and medium.

We saw the benefits of the recovery begin in the second quarter. This momentum has continued through the third quarter. And we expect these markets to remain... ...strong. We now expect some pressure on diesel pickup truck demands, which will impact volumes for the remainder of the year. This is more than offset by the strength in the heavy and medium duty markets. Our investment for growth is expected to deliver market share gains in both aftermarket and third fit, as we expand distribution capabilities, maintain world-class on-shelf availability, and win with... new and existing customers. For power solutions overall, we expect volume growth in a range of 2% to 3%. Additionally, net pricing is... expected to add approximately 1% growth, with 1.5% of base pricing action, to be partially offset by 0.5% of lower tariff pricing and refunds. Foreign exchange is expected to... ...to be a tailwind of approximately 2%. In total, we are raising our expectation for Power Solutions revenue to be in a range of 1.85 to 1.87 billion... ...which represents growth of approximately 5.5% at the midpoint. In our industrial solutions segment, we expect favourable market conditions and strong performance to continue. ...and are raising total revenue to be in a range of $160 to $165 million. Taken together, we are raising total company revenue expectations to be in a range of... ...$2.01 to $2.035 billion, an increase of 15% from 2025 at the midpoint. We are maintaining our full...

...year adjusted EBITDA margin guidance, which is expected to be in the range of 19.75 to 20.25%. Lastly, we are raising adjusted EPS expectations to be in a range of $2.90... ...to $3.05. I want to thank Amazonians around the world for focusing on delivering for our customers and protecting what is important. Our disciplined execution... ...and strong cash flow generation enables us to continue investing for growth through the execution of our four-pillar growth strategies. Now, I will turn the call over to Jeff.

Pricing of 1% and favorable foreign exchange of 1%. This was partially offset by 2% of pricing due to IEPA tariff refunds that we received and expected. To refund to customers in the fourth quarter. Returning refunded tariffs to customers is consistent with our stated objective to be price-cost neutral on tariffs. We do not expect to receive any additional material refunds. Industrial solution sales were $42 million. Resulting from the acquisition of Coke filter. Gross margin for the third quarter was $154 million, or 30.3%, compared to $129 million, or 28.9%, in the third quarter of 2020. The increase was due to incremental margin from the acquisition of Coke filter. Higher volume, and favorable manufacturing costs, partially offset by higher material costs. Selling, administrative, and research expenses for the third quarter were $64 million. Compared to $56 million in the prior year. The increase was primarily due to incremental costs associated with the acquisition of Coke filter, higher incentive compensation, and other people-related costs. Venture income was $7 million in the third quarter, compared to $8 million in the prior year. Strong performance in China offset weaker profitability in India, which has been impacted by rising input costs, driven by the Middle East conflict. Other expenses were The increase in other expense was primarily due to a non-recurring $3 million settlement with the supplier, partially offset by higher interest income and lower

or foreign exchange losses. Excluded from adjusted results are one-time costs related to the integration of Koch filter, which for the full year is expected to be approximately $3 million. We also exclude intangible access. Amortization resulting from the Koch filter acquisition, which is expected to be approximately $12 million. Total enterprise adjusted EBITDA in the third quarter was $104 million, or 20.4%. Compared to $92 million, or 20.4%. Segment adjusted EBITDA for power solutions was $96 million, or 20.5%, compared to $92 million, or 20.4%. Industrial solutions segment adjusted EBITDA with $8 million, or 19.6%. Adjusted earnings per share was $0.77, compared to $0.69 last year. Adjusted free cash flow was $88 million this quarter, compared to $72 million in the prior year. Now let's turn to capital deployment. The combination of continued strong cash flow and adjusted EBITDA performance has resulted in an estimated net debt. to adjusted EBITDA ratio of 1.7 times for the trailing 12 months end September 30th. During the quarter, we returned $25 million to shareholders consisting of $20 million in share repurchases and $5 million of dividends. Furthermore, we have retained $50 million of gross debt in the third quarter, and another $50 million in early October. As Steph highlighted, we have achieved our stated objective of reducing leverage and enhancing flexibility for growth following a significant acquisition. This provides us-

with flexibility to invest in both organic and inorganic growth. In closing, I want to thank our global team for their relentless focus on our customers, and I am confident the team will successfully deliver a strong finish to 2026.

Your first question comes from the line of Tammy Zakaria with JPMorgan India. Your line is now open.

This concludes today's call.