Atmos Filtration Technologies Delivers Solid Q3 Performance, Emphasizes Growth Strategy
Atmos Filtration Technologies, a leading provider of filtration technologies, has reported solid third-quarter performance despite challenging market conditions. In the company's recent earnings call, Chief Executive Officer Steph Disher highlighted the team's dedication and hard work in delivering technology-leading products for customers.
The company's Q3 sales were $404 million, up approximately 2% from the same period last year. Adjusted EBITDA was $79 million or 19.6%, compared to $73 million or 18.3% in the prior period. Adjusted earnings per share was $0.61, and adjusted free cash flow was $65 million.
Steph Disher emphasized that the company's capital allocation priorities focus on growth in both its core business and expansion into industrial filtration. The company continues to allocate its capital to fuel this growth, with a balanced approach including share repurchases and quarterly dividends. In the third quarter, Atmos Filtration Technologies repurchased $10 million of shares as part of its $150 million program announced last quarter.
Despite softness in the aftermarket and weakening first-fit markets, the company's outperformance allowed it to more than offset market weakness. Demand in the U.S. heavy-duty first-fit market softened, while U.S. medium-duty demand remains resilient. The India market softened, and China did not show any signs of rebounding.
Looking ahead, the company expects its overall global aftermarket revenue to be up approximately 2% to 4% compared to last year, driven by continued outperformance and destocking benefits. However, the global markets for the aftermarket are expected to be down approximately 2% to 3%, reflecting soft freight activity and weakness in off-highway, construction, mining, and agriculture markets.
Atmos Filtration Technologies' focus on growth strategy and expansion into industrial filtration is expected to contribute 2% to aftermarket revenue growth. The company's updated outlook for 2024 reflects its confidence in its opportunities to grow revenue despite challenging market conditions.
The transition service agreements with Cummins are nearing completion, with the company estimating that it has completed 80% of the transition and expecting to be 90% complete by the end of this year. This significant milestone will enable the company to focus its energy on growth and executing its strategy.
