Atmus Filtration Technologies Inc. (ATMU) | The Buildout — AI Infrastructure

The Verdict

Atmus makes filtration products — fuel, lube, air and hydraulic filters, crankcase ventilation, coolants and other chemicals — sold mainly under the Fleetguard brand to makers and operators of commercial trucks, agricultural, construction, mining and power-generation equipment. That core business runs on truck build schedules and aftermarket replacement demand, not on AI. Its connection to the AI buildout is narrow: the industrial-air business it acquired in January 2026 makes filters for commercial and industrial HVAC systems, and management names data centers as one of that business's high-growth end markets. That places Atmus at the building-filtration layer around a data center, not in the compute, power or cooling systems themselves. The source material states plainly that its AI exposure is indirect, small and unquantified.

Earnings Beat

Q2 2026 sales were a record $528M, up 16.4% year over year from $454M, driven by the January 2026 Koch Filter acquisition and by Power Solutions. Gross margin was $154M, or 29.2% of sales, versus $131M and 28.9% a year earlier. Adjusted EBITDA was $109M, or 20.7% of sales, and adjusted free cash flow rose 86% to $67M from $36M.

Management tone: Between the two calls in the source, management stayed cautious on the macro while sounding more confident on execution. On the Q1 call they described freight as muted and expected the market to stay relatively flat; on Q2 they said they were "starting to see signs of health" in freight, citing higher spot rates, but kept the flat aftermarket outlook unchanged. First-fit language sharpened: Q1 cited pre-buy ahead of 2027 rules, while Q2 said the company is already seeing the cyclical recovery and has good visibility through the end of the year. The full-year price guide was raised to 1.5% from about 1%, with second-half realization disclosed at just over 0.5%. They also acknowledged the Middle East conflict as persisting longer than expected, after saying in Q1 that the risk was not in guidance. On the analyst Q&A, the source reads management as mostly direct, with the clearest non-answer occurring in Q1 on diesel-price exposure.

Management Guidance

Management guides FY2026 total revenue of $1.975B-$2.03B, raised from $1.945B-$2.015B; adjusted EBITDA margin of 19.75%-20.25%, narrowed from 19.5%-20.5%; and adjusted EPS of $2.85-$3.00, with the floor raised from $2.75. By segment, Power Solutions is guided to $1.82B-$1.865B, raised from $1.79B-$1.85B, and Industrial Solutions is reaffirmed at $155M-$165M. The Power Solutions build assumes volume of flat to 2%, price of approximately 1.5% and FX of approximately 2%. Full-year pricing is guided to 1.5%, with second-half realization moderating to just over 0.5%. Integration costs are guided to $3M-$6M and intangible amortization to $11M-$13M. The company guides the U.S. heavy- and medium-duty market up 5% to up 15% versus 2025.

Trajectory

Revenue has stepped up through 2026: $447M in Q4 FY2025, $478M in Q1 FY2026 and a record $528M in Q2. Most of the increase is the January 2026 Koch Filter acquisition, which created the Industrial Solutions segment, plus price and FX in Power Solutions; Power Solutions volume turned positive at 2% in Q2 after falling slightly in Q1. Margins are close to flat. The code-computed signals show gross margin compressing while operating and EBITDA margins are stable, and FY2025 adjusted EBITDA margin was 20.0%. The full-year guide itself implies a second half slightly below the first on both revenue and margin at the midpoint. Cash conversion is running below net income: trailing-twelve-month free cash flow was 75% of net income.

The Model

The model projects FY+1 revenue of $2,025.0M with EBITDA of $406M, a 20.05% margin, and FY+2 revenue of $2,115.5M with EBITDA of $429M, a 20.3% margin. The near-term figure is anchored on the contribution of the January 2026 Koch Filter acquisition and on the first-fit truck recovery management says is second-half loaded. FY+2 assumes continued revenue growth on top of that, with EBITDA margin widening about 25 basis points from FY+1.

Projections are the median of 4 independent model runs. The model’s revenue sits 0.7% above analyst consensus.

Management guides FY2026 total revenue of $1.975B-$2.03B, raised from $1.945B-$2.015B; adjusted EBITDA margin of 19.75%-20.25%, narrowed from 19.5%-20.5%; and adjusted EPS of $2.85-$3.00, with the floor raised from $2.75. By segment, Power Solutions is guided to $1.82B-$1.865B, raised from $1.79B-$1.85B, and Industrial Solutions is reaffirmed at $155M-$165M. The Power Solutions build assumes volume of flat to 2%, price of approximately 1.5% and FX of approximately 2%. Full-year pricing is guided to 1.5%, with second-half realization moderating to just over 0.5%. Integration costs are guided to $3M-$6M and intangible amortization to $11M-$13M. The company guides the U.S. heavy- and medium-duty market up 5% to up 15% versus 2025.

What Could Go Right — and Wrong

Looking Ahead

Over the next year the test is whether the second-half setup delivers. Management says the first-fit recovery is loaded into the second half and that it has good visibility through the end of the year; the Koch Filter integration is due to finish in Q3 2026; and Middle East sales are expected to recover in the second half. The source records no announced capacity addition, new plant, data-center project or long-range guidance. Beyond that, management points to a robust pipeline of industrial filtration M&A — industrial-air bolt-ons and, potentially, an industrial water and liquid filtration anchor investment — with no deal or timing named.

Financials

Annual Summary

Key Ratios (Trailing)

The Company

Atmus Filtration Technologies makes filtration products for engines and equipment: fuel filters, lube filters, air filters, crankcase ventilation, hydraulic filters, and coolants and other chemicals. The FY2025 10-K describes the company as "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," with products sold principally under the Fleetguard brand that "enable lower emissions and provide superior asset protection." FY2025 net sales were $1,764.3 million, split roughly 58% on-highway and 42% off-highway. The headquarters is Nashville, Tennessee.

The company runs a footprint of 14 sites listed in the 10-K — manufacturing and technology locations across the U.S., Mexico, Brazil, China, South Korea, India, France, Australia and South Africa — most of them leased. The largest single site is San Luis Potosí, Mexico, at 472,000 square feet and leased; the 10-Q calls it "our largest global manufacturing facility" and says it supplies U.S. and global markets. Distribution runs through what management calls an Atmus controlled distribution network, which it says has lifted delivery and on-shelf availability metrics to all-time highs. In January 2026 the company closed the Koch Filter acquisition for approximately $456.4 million in cash net of working-capital adjustments, creating a second segment, Industrial Solutions, alongside the legacy Power Solutions business.

Business Segments

Competitive Landscape

Atmus competes in a filtration market the FY2025 10-K describes with a named participant set: "Key global participants in this market include MANN+HUMMEL, Donaldson, Parker and MAHLE." The source's inferred read is that filtration is consolidating — Donaldson completed Facet Filtration, described in the source as its largest-ever acquisition, and Parker Hannifin's pending Filtration Group deal would "more than triple" the size of its filtration business and add 500 basis points of aftermarket. Atmus's own Koch Filter purchase is part of the same trend, and it is smaller than those pro-forma combinations; its offset is timing, since the Koch integration is nearly complete while the others are pending or ongoing. The source also records an aftermarket divergence — Donaldson's Mobile aftermarket grew 9% with double-digit growth in the independent channel while Atmus's aftermarket was flat — and leaves open whether that is share pressure or mix.

Supply Chain

Atmus buys filter media and components and ships finished filters to truck and equipment OEMs and aftermarket distributors, plus industrial and commercial HVAC channels through Koch Filter. No neighbor transcript in the source names Atmus directly.