Ladies and gentlemen, thank you for standing by. My name is Krista and I will be your conference operator today. At this time, I would like to welcome you to the UTMIS Filtration Technologies First Quarter 2026 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question at that time, simply press star, then the number one on your telephone keypad. And if you'd like to withdraw that question, again, press star one. Thank you. I would now like to turn the conference over to Todd Cirillo, Executive Director of Investor Relations. Todd, please go ahead.

Thank you, Krista. Good morning, everyone, and welcome to the Atmos Filtration Technologies first quarter 2026 earnings call. On the call today, we have Steph Disher, Chief Executive Officer, and Jack Kinsler, Chief Financial Officer. Certain information presented today will be forward-looking and involve risks and uncertainties that could materially affect expected results. Please refer to the slides on our website for the disclosure of the risks that could affect our results and for a reconciliation of any non-GAAP measures referred to on this call. For additional information, please see our SEC filings and the investor relations pages available on our website at Atmos.com. Now, I'll turn the call over to Steph.

Thank you, Todd, and good morning, everyone. Today, I will provide an update on our first quarter results and share details of our progress executing our four-pillar growth strategy. I will also provide updates to our outlook for 2026. Jack will then speak to our financial results and segment performance. I want to begin by recognising Amazonians for their ability to navigate continued challenging market conditions all while delivering strong financial results to start the year. Our global team remains focused on solving our customer's filtration challenges and delivering on our four pillar growth strategy. During the first quarter, we completed the acquisition of Cook Filter, which represents our first step toward advancing our strategy to expand into industrial filtration. This establishes our industrial air filtration platform and expands our portfolio into commercial, industrial HVAC and high growth end markets, including data centres and healthcare. We have made significant progress integrating Cookfilter into the Atmos organisation. We have exited over 50% of the transition services agreement and expect all remaining integration activities to be completed early in the third quarter. The combination of Cookfilter's deep industry experience with our filtration expertise and footprint along with a strong cultural alignment will provide benefits for all stakeholders. With the acquisition, we will report on two business segments in 2026. Power Solutions, which serves global on-highway and off-highway equipment markets, and Industrial Solutions, where the Cook filter acquisition will be reported. Now, let me provide an update on our capital allocation strategy. During the first quarter, we returned $12 million of cash to shareholders consisting of $7 million of share buybacks and $5 million of dividends. We have $62 million remaining on our share repurchase authorisation and expect share repurchases to be $20 to $40 million in 2026. Behind our strong performance is our people and I want to take a moment to provide some insight into how the culture at Atmos is driving momentum in the overall business. As I have shared previously, we have developed and embedded the Atmos way as a way of working which incorporates our purpose, our values, our behaviours and our strategy. As part of the Atmos way, we are committed to being learning oriented. Embracing a learning mindset will enable our growth strategy and support the scaling of our operations. During the first quarter of 2026, we continued to invest in building future generations of leadership for ATLANs. At an executive level, we launched our second cohort of our executive development program. This program is focused on building executive leadership capability over two years. Additionally, we launched our leadership foundations program focused on developing frontline leaders with foundational leadership skills. grounded in our adverse values we have 200 managers and supervisors currently in the program and anticipate all frontline leaders to complete this by the end of 2027 I am inspired as our leaders around the world participate in these programs and develop both personal and professional skills to lead our organization now let's turn to our four pillar growth strategy our first pillar is to grow share in first bits. We continue to win with the winners by growing our long-term partnerships with leading global and regional OEMs across a broad range of applications. Recently we announced the opening of a new state-of-the-art laboratory facility at our Compare France location, reinforcing our commitment to advancing filtration technology and reducing testing lead times for our customers. This modernised testing facility strengthens our global laboratory network which allows us to work collaboratively with our customers. Our second pillar is focused on accelerating profitable growth in the aftermarket. We are partnered with leading global and regional OEMs who continue to grow their aftermarket business and expand market share. These OEMs to trust our industry-leading products to solve their filtration challenges and protect what is important. Additionally, we are expanding our product coverage in independent channels with new distributors. This allows us to provide our industry-leading SweetGuard and Cook Filter brand of products to our customers in their desired service channels. Our third pillar is focused on transforming our supply chain. We have established a strong distribution network, which has enabled us to enhance the customer experience we have raised our delivery and on-shelf availability metrics to all-time highs ensuring our customers have the right products when and where they need them our fourth pillar is to expand into industrial filtration markets the execution of our first acquisition with cook filter enables us to unlock operational commercial and growth synergy through the alignment of cook filters leading industrial air filtration brands and our advanced technology capabilities in filtration media. As we continue to review a robust pipeline of opportunities, we will focus on industrial air to build a platform of scale by leveraging cook filter and creating value through targeted bolt-on acquisitions. While our primary focus is industrial air, we will 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 broader industrial platform over time. As demonstrated by the Cook Filter acquisition, we remain focused on executing a disciplined approach to develop opportunities which deliver long-term shareholder value. Now let's discuss our first quarter financial results. Sales were $478 million compared to $417 million during the same period last year, an increase of 14.6%, largely driven by the acquisition of Cookfilter. Adjusted EBITDA was $95 million or 19.8% compared to $82 million or 19.6% last year. Adjusted earnings per share was 69 cents in the first quarter of 2026 and adjusted pre-cash flow was 33 million. Now I will discuss our market outlook for 2026. The conflict in the Middle East introduces uncertainties to the outlook for the year. This includes uncertainties regarding impact on input costs, our ability to sell products in the Middle East and broader macro economic impacts. At this stage we have not incorporated adverse impacts into our guidance associated with the Middle East conflict but it is an ongoing risk factor that we will continue to monitor. Now let's turn to our outlook for the power solutions segment. In the aftermarket overall freight activity remains muted and we expect the market to continue at current levels and be relatively flat year over year. In our first bit market customers have indicated strengthening activity as the year progresses related to cyclical market recovery and pre-buy activity ahead of 2027 US regulatory changes. Our outlook for heavy and medium duty markets in the US is now expected to be in a range of up 5% to up 15% compared to 2025. In our industrial solution segment, we continue to expect favourable market conditions and we anticipate the market to contribute 1 to 4% of growth. We expect share gains to deliver an additional 1 to 2% of share growth and overall pricing is expected to provide approximately 1% of revenue growth. As we noted last quarter, some tariff pricing implemented in 2025 will not carry into 2026 due to changes in status of global trade agreements, implementation of offset and the actions we have taken to mitigate tariff impact. Based on tariffs in effect as of April 30, we expect the impact of tariff pricing to be flat relative to 2025 on a full year basis. We will continue to be nimble and adjust pricing as necessary should the tariff environment change and we expect to remain price cost neutral. The US dollar is expected to weaken year over year and provide an approximate 1% revenue tailwind. In summary, our expectations for Power Solutions total revenue will be in a range of $1.79 billion to $1.85 billion, an increase of approximately 3% at the midpoint from the prior year. In Industrial Solutions, we expect revenue to be in the range of $155 million to $165 million, which includes revenue from the Cook Filter closing date of January 7. Taken together, we expect total company revenue to be in a range of $1.945 to $2.015 billion, an increase of 10% to 14% compared to 2025. We are maintaining our full year adjusted EBITDA guidance of 19.5% to 20.5%. As noted, the conflict in the Middle East is expected to put pressure on commodity prices throughout our supply chain, most notably in petroleum-based components such as plastics. Should this occur, we would expect to recover these inflationary costs. However, there may be a timing lag for recovery. Lastly, adjusted EPS is expected to be in a range of $2.75 to $3. dollars. Before I turn the call over to Jack I want to thank our team members around the world for delivering a strong quarter and for your continued focus on our customers. Now I will turn the call over to Jack.

Thank you Seth and good morning everyone. Our team delivered strong financial performance in the first quarter of 2026 even though we continued to experience its uncertain global market conditions. Sales in the first quarter were $478 million compared to $417 million during the same period last year, an increase of 14.6%. Power Solutions delivered sales of $439 million compared to $417 million in the prior year, an increase of 5.4%. The increase was primarily due to favorable foreign exchange of 4% and higher pricing of 2%. volume was down slightly year-over-year industrial solution sales were 38 million resulting from the acquisition of cook filter gross margin for the first quarter was 137 million compared to 111 million in the first quarter of 2025 the increase was primarily due to increment incremental margin from the acquisition of cook filter increases in pricing the cessation of one-time separation costs and the favorable impacts of currency, partially offset by higher logistics and duties costs, higher manufacturing costs, along with lower volume. Selling administrative and research expenses for the first quarter were $59 million, compared to $55 million in the prior year. The increase was primarily due to people-related expenses and information technology consulting. Joint venture income was $8 million in the first quarter, compared to $9 million in the prior year quarter. The decrease was primarily due to a $3 million expense in our India joint venture related to a benefit obligation remeasurement driven by recent labor law changes. Other income was an expense of $7 million compared to income of $1 million in the first quarter of 2025. The increased expense was primarily due to the Cook Filter acquisition consisting of $6 million in transaction costs. Excluded from adjusted results are one-time costs related to the integration of cook filter which for the full year 2026 is expected to be in the range of three to eight million along with approximately six million additionally we will exclude intangible asset amortization resulting from the cook filter acquisition which is expected to be in a range of 10 to 15 million adjusted evita in the first quarter was 95 million or 19.8 compared to 82 million or 19.6 percent in the prior period. Adjusted EBITDA for power solutions was 86 million or 19.6 percent compared to 82 million or 19.6 percent last year. Industrial solutions adjusted EBITDA with 8 million or 21.9 adjusted earnings per share with 69 cents compared to 63 cents last year. Adjusted free cash flow was 33 million this quarter compared to 20 million in the prior year. Now, let's turn to our balance sheet and the operational flexibility it provides to execute on our growth. We ended the quarter with $210 million of cash on hand. Combined with the full availability of our $500 million revolving credit facility, we have $710 million in available liquidity. Our strong liquidity provides us with operational flexibility to effectively manage our business and to execute growth operations and continued strong performance, along with inorganic growth from the acquisition of Cook Filter has resulted in an estimated net debt to adjusted EBITDA ratio of two times for the last 12 months ended March 30. I want to echo staff and thank Amazonians around the world for all of their hard work and dedication to deliver a strong start to 2026.

Our disciplined execution of our four-pillar growth strategy, underpinned with a strong balance sheet, will allow us to continue to drive growth and create long-term value for all of our stakeholders now we will take your questions thank you if you would like to ask a question please press star one on your telephone keypad to raise your hand and join the queue and if you'd like to withdraw that question again press star one we do ask that you limit yourself to one question and one follow-up for any additional questions please re-cue you. And your first question comes from Quinn Fredrickson with Baird. Please go ahead.

Yes, thank you. Just wanted to start off with a question about pricing. It seemed to come in a bit stronger than you were expecting in 1Q, but it sounds like you haven't changed your expectation for the full year at 1%. First, just can you confirm that's accurate? And if so, can you impact why that would be the case, given it sounds like input costs are moving up?

Do you want to take a little bit?

Thanks, Quinn, for the question. So overall, I would say our pricing expectations for the full year remain 1%. As we highlighted as we initiated our guide on our last call, part of what you're seeing there is the evolution of tariff dynamics. And so, as we talk about that pricing figure of 1%, it is holistic, including both base pricing actions that we took in January, for example, as well as tariff pricing. And so, as we move through the year, that tariff pricing will reflect the evolution of the tariff dynamics. And as you compare year on year, you have different puts and takes as tariffs went up and down relative to specifics. And so, as we had highlighted, we do expect the first quarter from a year-over-year comparison to be our strongest pricing quarter, and then as tariffs change and as the full-year impacts from year-over-year. In terms of the input costs, you know, and whether or not we will be taking price actions for that, you know, as we stand here right now, we're keeping a vigilant eye on those costs. As we noted, we will certainly look to recover those costs. either through different things we can do in our supply chain or through pricing. As you know, base pricing is generally done at the beginning and the middle of the year. We would not expect similar dynamics to counter those input cost headwinds, and so that's that inherent timing line that may exist should input costs become a dynamic this year.

Thank you. That was helpful. And then second question would just be on share gains. Any estimate on what that contributed in the quarter and then any update to the 150 basis points that you're guiding to for the year?

Great. Thanks, Quinn. Let me get started on that one. Let me just step back and look at the quarter and the performance overall. Overall, we're really pleased with the performance in the quarter. It was strong growth. We saw 14.6% growth in the quarter. And if I just talk specifically, I'll dive a bit more deeply into Power Solutions. We were very happy with Industrial Solutions, about 6% growth in the quarter, so a very good start to the acquisition of Cook Filter and a shout-out to that team who performed very well. If I look at Power Solutions, 5.4% growth year-on-year, quarter-on-quarter. That was made up of, as Jack discussed, 4% in FX and 2% in price, with volume overall slightly down and there's a mix in there of market conditions and share and some other one-time impacts that we experienced in the quarter also. So we saw the market was down year on year, overall we'd say that was about a percent down, first bit was eight percent down in our numbers and aftermarket slightly down and then if you start to unpack some of the specific one-time impacts we saw of. The Middle East, we had impacts on our ability to deliver to our customers in the Middle East in the month of March. That impacted us by about 4 million in sales, about 1%. That was because we couldn't deliver to our customers for a period of time because of restrictions in the supply chain. We have mitigated those impacts and are now able to overcome that obviously the middle east conflict is an ongoing challenge and we continue to monitor it and seek to mitigate those impacts but in the in the quarter it was a one point one percent impact that we are not expecting to continue we also see saw some stocking dynamics across the world some within Latin America and Southeast Asia that we expect are sort of timing so overall share was about in the middle of that 1.3% level right on top of the guide and where we're seeing it gives us confidence to continue to maintain our guide through the year in addition we're seeing positive inflection in the first fit market we've already seen that coming through in our build rates and orders from customers that gives us confidence in the second half guide underpinned by a recovery in first state markets.

Appreciate all those details. Thank you.

Your next question comes from the line of Joe O'Day with Wells Fargo. Please go ahead.

Hi, good morning. Can you unpack Middle East uncertainty a little bit more just from both kind of a revenue and cost consideration perspective? And based what you see on current market prices, how you think about the potential cost headwinds there, and then also you talked about a little bit of supply chain disruption in the quarter, but stepping back, what you see is a potential demand response to ongoing conflict and a revenue impact that you consider.

Yeah, good morning, Joe, and thanks for the question. The Middle East is an ongoing uncertainty for all of us I guess we've been just over 60 days in the conflict now and I'm certainly in no position to predict how long that continues the way I'm thinking about the impact of the Middle East on our business really is in three key areas the first of those is cost pressures and input cost pressures it would be increases in cost related to inflationary pressures or supply shortages and we see the biggest impact for us there in plastics or petroleum-based products right now we are not seeing a lot that you know is already impacting or is based into our forecast we're really monitoring this as a risk at this point but an expected you know we'll expect to see some pressure on costs as the year plays out Jack spoke to that we'll obviously look to mitigate those but there may be some lag here in the second half on pricing depending on how the conflict continues. The second dimension that may have an impact on our business is our sales in the Middle East. For context our sales in the Middle East were 38 million in 2025 so about 2% of our overall revenue. We did see a 4 million impact in the first quarter. We are not expecting that to continue through the remainder of the year but obviously we're watching to see how the conflict continues to evolve. And then the third piece which you rightly pointed out is the broader business confidence impact on global demand and it's very difficult to predict that obviously our aftermarket is heavily weighted towards economic activity, freight activity around the world and particularly in North America. At this stage, we do not see the conflict having an impact on that, but we continue to monitor business confidence and the projection that we're getting from our customers as to the outlook. But at this stage, we think that the view of a flat outlook on aftermarket markets year over year still helps.

Those are helpful details. And then my other question is on the Coke filter and with respect to your pillar of accelerating profitable growth in the aftermarket and just any color on how different the distribution network is there and some of the work that's underway or opportunities that you've identified in the near term to go after some of that aftermarket opportunity.

great question um as i alluded to i'm really pleased with the start of the acquisition of the cook filter business they had a strong quarter six percent revenue growth um in in the quarter and really we're progressing very well with the integration so the integration uh we expect to sort of wrap up here in the early in the third quarter um and so very pleased with our that's beginning and the team are very focused on share gains in their market and orienting the focus of their growth towards higher growth and market. There are some similarities between the distribution channel and obviously that overall broad coverage of our products across a very broad distribution network, that strategy holds across both our power solutions business and our industrial solutions business and some of our industrial broad-based distributors that we've signed up in recent time do have coverage of both across both our segments so we'll look to leverage the synergies across those distribution channels right now I would say we see plenty of opportunity with the filtration with the Cook filter business continuing to target its growth strategy and orienting towards higher-end growth markets and, you know, doing the integration well.

Got it. Thank you.

Your next question comes from the line of Tammy Zakaria with JPMorgan. Please go ahead.

Hi. Good morning. Thank you so much. I wanted to revisit the volume comment you made. So, for Power Solutions, volume was slightly down against a down number last year. Do you expect volumes to turn positive later in the year in any quarter, maybe driven by aftermarket or first fit due to pre-buy. So how are you thinking about volume and power solutions through the rest of the year?

Good morning, Tammy, and thanks for the question. So, yes, we do expect volume to continue to grow quarter over quarter through this year. Obviously, second quarter is a stronger quarter for us, and then we see the first fit dynamics in the third and fourth quarter starting to come in. So we talked about the heavy-duty and medium-duty market adjustment to being 5% to 15% up year over year. We expect that to be all second-half loaded. We're starting to see that progress through the second quarter. We've also already seen increases in build rates, and so we'll start to see that trend up through the second quarter and through the second half. And then from a share perspective, we see the 1% to 2% share as being about the right balance for us throughout this year. We still see a path to how we'll deliver that. And we see aftermarket. Aftermarket was challenged here in the first quarter. We continue to see it operating as pretty flat year over year is the assumption underpinning our guide. But overall, that leads you to sort of a volume growth environment through 2Q and second half.

Understood. That's a very helpful color. And question on cook filters. I think I just heard you say 6% revenue growth. Is that all organic? And if it grew 6%, you're saying the market would grow 1 to 4. So was share gain over 300 basis points in the quarter? Do you expect sort of 6% type-age growth year over year for the rest of the quarters in the year?

Yeah, so we've given you a pretty wide range on industrial, and I appreciate that. It is a smaller number, so as we find our way here, you'll give us some grace. So our full-year guide is a growth of 1% to 8% with a midpoint of 4%. If I look at the first quarter performance, it's right where I would expect it to be, about 1% price. 2% share and about 3% market growth is what we're seeing. We expect that market growth to be around that level. So I'd still position it for now around the midpoint of that 4%, but the range we're suggesting is one to eight for industrial.

Understood, thank you.

Thanks, Tammy. Your next question comes from the line of Bobby Brooks with Northland Capital Markets. please go ahead.

Hey, good morning, team, and thank you for taking my question. Now that you've had Coke under the hood for a little longer than three months, I'd be curious to hear what are the most compelling cross-sell or growth opportunities you see that are directly arising from your ownership, and then secondly, opportunities on the cost or manufacturing side?

Great thanks Bobby. So let me just give some an outline of how I'm seeing the opportunity of Cookfilter and then I'll ask Jack to talk through the integration activity and the supply chain cost. So look firstly as I said really happy with the first quarter performance and you know when you do due diligence of an acquisition obviously we were very thorough in our due diligence but you you then get to to work out exactly you know exactly what is under you described it um and here's what I would say is the opportunity this was really an adjacent market step for us and about expanding into new markets and we really want to support fully the cook filter business to do what they do well and they have a very clear plan to continue to expand their share in this two percent range with their customers. They've got a strong favorable market condition and we expect continued growth at a higher rate than our Palo Solutions business into the future. In terms of where strategically I want to direct the opportunities of the team, it really is around products, customer and channels to higher growth and markets and that includes data centers and healthcare, but it's also a very strong and robust set of opportunities we have across the broader industrial and commercial HVAC. So that's how I would describe the growth strategy. Very pleased with how it started. And I'll ask Jack to comment on how we see the opportunities from a cost and synergy perspective.

Thanks, Steph, and thanks, Bobby, for the question. So first of all, I would just echo Steph's comment. you know we continue to be very excited about the acquisition of cook filter i'm really pleased to see a strong cultural fit between the two organizations which really makes collaboration all that more possible first quarter performance also demonstrates the margin accretion and overall potential i'll start first on integration you know we've made significant progress on the integration activities fortunately we gained a lot of experience through our separation for cummins And that is to really sort of integrate this business and our parents. It's been really great to see this year, as you know.

Absolutely. Really appreciate the color. And then maybe for Jack, just curious to talk about, are you guys any outlook on tariff recoveries or just how to be thinking of that playing out this year, if so?

Yeah, thanks, Bobby, for the question. You know, I would say first, just to reiterate, our overall approach to tariffs remain unchanged. We will continue to pursue all of our available avenues to mitigate tariff exposure, importantly minimize the impact on our customers, and our overall objective remains unchanged to be price-cost neutral. There has been, of course, some evolution from a tariff perspective, so let me just give some color to that. As you all know, effective in early April, the Section 232 steel and aluminum tariffs went into effect. I would just say that there's an immaterial number of our products that qualify under that category really because the most of our products are already qualified around heavy duty and medium duty products so not really an incremental change there for us and because they qualify under the the prior heavy duty and medium duty section 232 the usnca exemption that we've been availing ourselves of is still valid and something we can take advantage of you know overall from a refund standpoint as you all know a refund mechanism has been established using the cape system as of mid to late april of this year like other companies we expect refund requests will be fulfilled once the mechanism is fully operational these refunds you know to our understanding will be provided in phases and we're following the normal steps with respect to filing our claim, their classification, and the status of the entries. I would just say that the timing of those refunds and, you know, the corresponding treatment in the market in terms of how those ultimately flow through is still highly uncertain, but we'll certainly keep you updated as we gain more clarity.

Appreciate the caller.

Your next question comes from the line of Andrew Obin with Bank of America. Please go ahead. Andrew, I'm sorry, we are having a hard time hearing you.

Sorry about that. This is David Ridley-Lane on for Andrew Oban. Question on the potential impact for you from higher diesel prices as you're thinking about your commodity freight.

If you snapped the line today and assumed that diesel prices remained constant, what kind of drag or year of your headwind would you be facing yes yeah so overall i would say um david again from an input cost perspective we're you know we're monitoring it um that's you know one of many i would say uh dynamics that flow through not only directly to i guess us but in terms of freight costs etc but also uh to end users in our space right who are navigating uh you know higher input costs and a challenging freight dynamic overall right now in terms of you know the impact of those costs again as Seth said we're more in the monitor phase and would expect to to react to those in terms of pricing or other supply chain maneuvering to offset so our guide as stated you know really in more of a watch and see mode on those just now and we'll continue to update that got it and The other question I had just real quickly was on the aftermarket performance this quarter.

I know you quantified the Middle East headwinds, so that was a point overall. You also mentioned some de-stocking in LATAM and Southeast Asia. I just want to better understand, was this a surprisingly light quarter for aftermarket? and any thoughts you have on reasons why or what you've seen maybe in April? Was there a little bit of recovery? Thank you.

Yeah, thanks, David. Look, I think the first quarter is always a little challenging for us. There are some dynamics between fourth quarter and first quarter, and we see this in North America a little bit. If you look at our published results of our customers, you see this reflected as well, But where there is some stocking up at the end of fourth quarter, and then you see some timing impacts of that into the first quarter. So I think there is some impact there in the first quarter. We do see improved volume performance throughout the year. Second quarter is in aftermarket. Second quarter is the strongest quarter for us. And then obviously we see the tailwinds on the first side in the second half. So, I believe that gives you some additional insight.

Thank you very much.

Appreciate it.

And we have no further questions in our queue at this time. I'd now like to turn the conference back over to Todd Chirillo for closing comments.

Thank you, Krista. That concludes our teleconference for the day. Thank you for participating and for your continued interest. Have a great day.

Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation, and you may now disconnect.