Cover
Cover | 12 Months Ended |
Dec. 31, 2023 | |
Cover [Abstract] | |
Document Type | S-4 |
Entity Registrant Name | Atmus Filtration Technologies Inc. |
Entity Filer Category | Non-accelerated Filer |
Entity Emerging Growth Company | false |
Entity Small Business | false |
Entity Central Index Key | 0001921963 |
Amendment Flag | false |
CONSOLIDATED STATEMENTS OF NET
CONSOLIDATED STATEMENTS OF NET INCOME - USD ($) shares in Millions, $ in Millions | 12 Months Ended | |||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | ||
Income Statement [Abstract] | ||||
NET SALES | $ 1,628.1 | $ 1,562.1 | $ 1,438.8 | |
Cost of sales | [1] | 1,195.4 | 1,202.9 | 1,089.5 |
GROSS MARGIN | 432.7 | 359.2 | 349.3 | |
OPERATING EXPENSES AND INCOME | ||||
Selling, general and administrative expenses | 174.7 | 139.7 | 126.2 | |
Research, development and engineering expenses | 42.5 | 38.6 | 42 | |
Equity, royalty and interest income from investees | 33.6 | 28 | 32.4 | |
Other operating expense, net | 0.7 | 5 | ||
OPERATING INCOME | 248.4 | 203.9 | 213.5 | |
Interest expense | 25.8 | 0.7 | 0.8 | |
Other income, net | 3.8 | 8.8 | 3.9 | |
INCOME BEFORE INCOME TAXES | 226.4 | 212 | 216.6 | |
Income tax expense | 55.1 | 41.6 | 46.5 | |
NET INCOME | $ 171.3 | $ 170.4 | $ 170.1 | |
PER SHARE DATA: | ||||
Weighted-average shares for basic EPS (in shares) | 83.3 | 83.3 | 83.3 | |
Weighted-average shares for diluted EPS (in shares) | 83.4 | 83.3 | 83.3 | |
Basic earnings per share (in dollars per share) | $ 2.06 | $ 2.05 | $ 2.04 | |
Diluted earnings per share (in dollars per share) | $ 2.05 | $ 2.05 | $ 2.04 | |
[1] Includes sales to related parties of $390.8 million, $344.9 million and $328.6 million for the years ended December 31, 2023, 2022 and 2021, respectively. |
CONSOLIDATED STATEMENTS OF NE_2
CONSOLIDATED STATEMENTS OF NET INCOME (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
NET SALES | $ 1,628.1 | $ 1,562.1 | $ 1,438.8 |
Related Party | |||
NET SALES | $ 390.8 | $ 344.9 | $ 328.6 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Statement of Comprehensive Income [Abstract] | |||
NET INCOME | $ 171.3 | $ 170.4 | $ 170.1 |
Other comprehensive loss, net of tax | |||
Change in pension and other postretirement defined benefit plans | (1) | 2.4 | 0.7 |
Foreign currency translation adjustments | 0.6 | (16.6) | (12) |
Total other comprehensive loss, net of tax | (0.4) | (14.2) | (11.3) |
COMPREHENSIVE INCOME | $ 170.9 | $ 156.2 | $ 158.8 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 |
ASSETS | ||
Cash and cash equivalents | $ 168 | $ 0 |
Accounts and notes receivable, net | ||
Trade and other receivables | 184.5 | 174.2 |
Related party receivables | 62.3 | 61.8 |
Inventories | 250 | 245 |
Prepaid expenses and other current assets | 28.2 | 19.3 |
Total current assets | 693 | 500.3 |
Property, plant and equipment, net | 174.6 | 148.4 |
Investments and advances related to equity method investees | 84.8 | 77 |
Goodwill | 84.7 | 84.7 |
Other assets | 51.5 | 57 |
TOTAL ASSETS | 1,088.6 | 867.4 |
LIABILITIES | ||
Accounts payable | 174.2 | 145.9 |
Related party payables | 62.4 | 82 |
Accrued compensation, benefits and retirement costs | 41.8 | 18.2 |
Current portion of accrued product warranty | 5.4 | 5.9 |
Current maturities of long-term debt | 7.5 | 0 |
Other accrued expenses | 83.7 | 79 |
Total current liabilities | 375 | 331 |
Long-term debt | 592.5 | 0 |
Accrued product warranty | 8.6 | 9.6 |
Other liabilities | 31.8 | 71.2 |
TOTAL LIABILITIES | 1,007.9 | 411.8 |
Commitments and contingencies (Note 14) | ||
EQUITY | ||
Common stock, $0.0001 par value (2,000,000,000 shares authorized and 83,297,796 shares issued and outstanding as of December 31, 2023) | 0 | 0 |
Net parent investment | 0 | 511.4 |
Additional paid-in capital | 49.7 | 0 |
Retained earnings | 87.2 | 0 |
Accumulated other comprehensive loss | (56.2) | (55.8) |
TOTAL EQUITY | 80.7 | 455.6 |
TOTAL LIABILITIES AND EQUITY | $ 1,088.6 | $ 867.4 |
Common stock, shares issued (in shares) | 83,297,796 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) | Dec. 31, 2023 $ / shares shares |
Statement of Financial Position [Abstract] | |
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 |
Common stock, shares authorized (in shares) | 2,000,000,000 |
Common stock, shares issued (in shares) | 83,297,796 |
Common stock, shares outstanding (in shares) | 83,297,796 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | |||
NET INCOME | $ 171.3 | $ 170.4 | $ 170.1 |
Adjustments to reconcile net income to operating cash flows: | |||
Depreciation and amortization | 21.5 | 21.6 | 21.6 |
Deferred income taxes | (10) | (12.7) | (2.7) |
Equity in income of investees, net of dividends | (7.8) | 0.4 | (2.8) |
Foreign currency remeasurement and transaction exposure | (4.5) | (1.9) | (5.8) |
Changes in current assets and liabilities: | |||
Trade and other receivables | (9.4) | (15.6) | 0.2 |
Related party receivables | (0.7) | (2.7) | (8) |
Inventories | (4.3) | (9.7) | (43.5) |
Prepaid expenses and other current assets | (8.9) | (6.1) | 10.2 |
Accounts payable | 24.1 | 12.6 | 20.5 |
Related party payables | (19.7) | 5.9 | 28.3 |
Other accrued expenses | 30.2 | 0.8 | 19.4 |
Changes in other liabilities | 0.3 | (5.7) | 3.4 |
Other, net | 6.9 | 8.4 | (1) |
Net cash provided by operating activities | 189 | 165.7 | 209.9 |
CASH USED IN INVESTING ACTIVITIES | |||
Capital expenditures | (45.8) | (37.5) | (33.4) |
Net cash used in investing activities | (45.8) | (37.5) | (33.4) |
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | |||
Long-term debt proceeds | 650 | ||
Payments on long-term debt | (50) | ||
Net transfers to Parent | (579.5) | (128.2) | (176.5) |
Other, net | 4.3 | ||
Net cash provided by (used in) financing activities | 24.8 | (128.2) | (176.5) |
Net increase in cash and cash equivalents | 168 | ||
Cash and cash equivalents at beginning of period | 168 | ||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 168 | ||
Non-cash investing and financing activities: | |||
Non-cash settlements with Parent | 29.4 | ||
Non-cash Capital expenditures | $ (1.5) | $ (4.1) | $ (1.5) |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) $ in Millions | Common Stock | Net Parent Investment | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total |
Balance at beginning of period at Dec. 31, 2020 | $ 0 | $ 475.6 | $ 0 | $ 0 | $ (30.3) | $ 445.3 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 170.1 | 170.1 | ||||
Other comprehensive loss, net of tax | (11.3) | (11.3) | ||||
Net transfer (to) from Parent | (176.5) | (176.5) | ||||
Balance at end of period at Dec. 31, 2021 | 0 | 469.2 | 0 | 0 | (41.6) | 427.6 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 170.4 | 170.4 | ||||
Other comprehensive loss, net of tax | (14.2) | (14.2) | ||||
Net transfer (to) from Parent | (128.2) | (128.2) | ||||
Balance at end of period at Dec. 31, 2022 | 0 | 511.4 | 0 | 0 | (55.8) | 455.6 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 84.1 | 87.2 | 171.3 | |||
Other comprehensive loss, net of tax | (0.4) | (0.4) | ||||
Share-based awards | 4.3 | 4.3 | ||||
Net transfer (to) from Parent | (595.5) | 45.4 | (550.1) | |||
Balance at end of period at Dec. 31, 2023 | $ 0 | $ 0 | $ 49.7 | $ 87.2 | $ (56.2) | $ 80.7 |
DESCRIPTION OF THE BUSINESS
DESCRIPTION OF THE BUSINESS | 12 Months Ended |
Dec. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF THE BUSINESS | NOTE 1. DESCRIPTION OF THE BUSINESS Atmus Filtration Technologies Inc. (“Atmus” or the “Company”) develops, designs, manufactures and sells filters, coolant and chemical products. Atmus offers products for first fit and aftermarket applications, including air filters, fuel filters, fuel water separators, lube filters, hydraulic filters, coolants, fuel additives and other filtration systems to original equipment manufacturers, dealers/distributors and end-users. Atmus supports a wide customer base in a diverse range of markets, including on-highway and off-highway segments such as oil and gas, agriculture, mining, construction, power generation, marine and industrial markets. The Company produces and sells globally recognized Fleetguard branded products in over 140 countries, including countries in North America, Europe, South America, Asia, Australia and Africa. Fleetguard branded products are available through distribution centers worldwide. Separation In April 2022, Cummins Inc. (“Cummins” or the “Parent”) announced its intention to separate its filtration business (the “Filtration Business”) into a standalone publicly traded company (the “Separation”). In preparation for separation from Cummins, Atmus, as its predecessor in interest, was incorporated as a wholly-owned subsidiary of Cummins in Delaware on April 1, 2022 in connection with the planned Separation. Prior to the completion of Atmus’ initial public offering (the “IPO”), Cummins completed, in all material respects, the transfer of the assets and liabilities of the Filtration Business to Atmus and its subsidiaries as detailed in the separation agreement Atmus entered into with Cummins. Atmus’ Registration Statement on Form S-1, as amended, filed with the Securities and Exchange Commission (“Commission”) on May 16, 2023, was declared effective on May 25, 2023, and Atmus’ common shares began trading on the New York Stock Exchange under the symbol “ATMU” on May 26, 2023. On May 30, 2023, the IPO was completed through the sale on behalf of certain commercial paper holders of Cummins of 16,243,070 shares of common stock, including the underwriters’ full exercise of their 30-day option to purchase 2,118,661 shares to cover over-allotments. None of the proceeds of the IPO were for the benefit of Atmus. As of the closing of the IPO, Cummins owned, and continues to own, approximately 80.5% of the outstanding shares of Atmus common stock. Atmus Debt Agreement On September 30, 2022, and as amended on February 15, 2023, Atmus entered into a $1.0 billion credit agreement (“Credit Agreement”) with Cummins and a syndicate of banks, providing for a $600 million term loan facility (the “term loan”) and a $400 million revolving credit facility (the “revolving credit facility”), in anticipation of the Separation. Borrowings under the Credit Agreement did not become available until the IPO occurred. The facilities covered by the Credit Agreement will mature on September 30, 2027. Upon completion of the IPO, Atmus borrowed $650 million, consisting of proceeds of the term loan and amounts drawn under the revolving credit facility, and paid such amounts to Cummins in partial consideration for the Separation. |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 12 Months Ended |
Dec. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | NOTE 2. BASIS OF PRESENTATION As Atmus became a publicly traded company upon the IPO, its financial statements are now presented on a consolidated basis. In preparation for the IPO, the Company’s historical consolidated financial statements were prepared on a standalone basis, which reflected a combination of entities under common control that had been “carved out” of and derived from the historical consolidated financial statements and accounting records of Cummins. The financial statements for all periods presented, including the historical results of the Company prior to May 26, 2023, are now referred to as “Consolidated Financial Statements”, and have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP). All intercompany balances and transactions are eliminated in consolidation. Periods Prior to the IPO Prior to the IPO, Atmus, previously the Filtration Business of Cummins, functioned as part of the larger group of businesses controlled by Cummins and accordingly, utilized centralized functions of Cummins, such as facilities and information technology, to support its operations. A portion of the shared service costs were historically allocated to the Filtration Business. Cummins also performed certain corporate functions for the Filtration Business and the related corporate expenses were allocated from Cummins. These allocated costs primarily related to certain governance and corporate functions, including finance, human resources, investor relations, legal, tax, treasury and certain other costs. Where it was possible to specifically attribute such expenses to activities of the Filtration Business, these amounts were charged or credited directly to the Filtration Business without allocation or apportionment. Allocation of other such expenses was based on a reasonable reflection of the utilization of the service provided or benefit received by the Filtration Business for the periods presented prior to the Separation, on a consistent basis, such as a relative percentage of headcount and third-party sales. The aggregate costs allocated for these functions to the Filtration Business are included within the Consolidated Statements of Net Income for the periods presented prior to the Separation. Management believes these cost allocations were a reasonable reflection of the utilization of services provided to, or the benefit derived by, the Filtration Business during the period prior to the IPO, though the allocations may not be indicative of the actual costs that would have been incurred had the Filtration Business operated as a standalone public company. Actual costs that may have been incurred if the Filtration Business had been a standalone company would depend on a number of factors, including the chosen organizational structure, whether functions were outsourced or performed by the Filtration Business employees, and strategic decisions made in areas such as manufacturing, selling and marketing, research and development, information technology and infrastructure. Historically, Atmus’ cash was transferred to Cummins on a daily basis. This arrangement was not reflective of the manner in which Atmus would have been able to finance its operations had it been a standalone business separate from Cummins during each of the periods presented. Cummins’ debt and related interest expense were not allocated to Atmus for any of the periods presented since Atmus was not the legal obligor of the debt and Cummins’ borrowings were not directly attributable to Atmus. As the separate legal entities that made up the Filtration Business were not historically held by a single legal entity, Cummins’ net investment in this business (“Net Parent Investment”) was presented in lieu of a controlling interest’s equity in the Consolidated Financial Statements. For the Filtration Business, transactions with Cummins affiliates were included in the Consolidated Statements of Net Income and related balances were reflected as related party receivables and related party payables. Other balances between the Filtration Business and Cummins were considered to be effectively settled in the Consolidated Financial Statements at the time the transactions were recorded. As of the IPO Date In connection with the Separation, Atmus entered into various agreements with Cummins, including a separation agreement. In the separation agreement, there were certain assets and liabilities identified in the schedules, including leases and unrecognized tax liabilities, which were retained by Cummins and were reflected as Net Parent Investment in the Company’s Consolidated Financial Statements, and those that were transferred to the Company, including additional pension assets, other compensation obligations and certain other assets and liabilities, which were transferred to the Company through Net Parent Investment in the Company’s Consolidated Financial Statements. These various agreements comprehensively provide a framework for Atmus’ relationship with Cummins and govern various interim and ongoing relationships between Atmus and Cummins post IPO. As part of the Separation, Net Parent Investment was reclassified as Additional Paid-in Capital. Periods Post IPO Following the IPO, certain services continue to be provided by Cummins under a transition services agreement. The Company incurred certain costs in its establishment as a standalone public company and expects to incur ongoing additional costs associated with operating as an independent, publicly traded company. As a standalone entity, the Company will file tax returns on its own behalf, and tax balances and effective income tax rates may differ from the amounts reported in the historical periods. Atmus currently files a consolidated Federal income tax return and returns in certain other jurisdictions with Cummins. Following a full separation from Cummins, Atmus will file tax returns in those jurisdictions on its own behalf. Post IPO, Retained earnings began to accumulate and the balance reflected on the Consolidated Balance Sheets reflects earnings for the period May 26, 2023 through December 31, 2023 . |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Investments in Equity Investees Atmus uses the equity method to account for its investments in joint ventures, affiliated companies and alliances in which Atmus has the ability to exercise significant influence, generally represented by equity ownership or partnership equity of at least 20 percent but not more than 50 percent. Generally, under the equity method, original investments in these entities are recorded at cost and subsequently adjusted by Atmus’ share of equity in income or losses after the date of acquisition. Equity in income or losses of each investee is recorded according to Atmus’ level of ownership; if losses accumulate, Atmus records its share of losses until its investment has been fully depleted. If Atmus’ investment has been fully depleted, Atmus recognizes additional losses only when it is the primary funding source. Atmus eliminates (to the extent of its ownership percentage) in its Consolidated Financial Statements the profit in inventory held by its equity method investees that has not yet been sold to a third-party. Dividends received from equity method investees reduce the amount of its investment when received and do not impact its earnings. Atmus’ investments are classified as “Investments and advances related to equity method investees” in its Consolidated Balance Sheets. Atmus’ share of the results from joint ventures, affiliated companies and alliances is reported in its Consolidated Statements of Net Income as “Equity, royalty and interest income from investees” and is reported net of all applicable income taxes. Atmus’ foreign equity investees are presented net of applicable foreign income taxes in its Consolidated Statements of Net Income. See Note 5, Investments in Equity Investees Use of Estimates in the Preparation of the Consolidated Financial Statements Preparation of financial statements requires management to make estimates and assumptions that affect reported amounts presented and disclosed in Atmus’ Consolidated Financial Statements. Significant estimates and assumptions in these Consolidated Financial Statements require the exercise of judgement and are used for, but not limited to, estimates of future cash flows and other assumptions associated with goodwill and long-lived asset impairment tests, useful lives for depreciation and amortization, warranty programs, restructuring costs, income taxes, deferred tax valuation allowances, contingencies and allowances for doubtful accounts. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be different from these estimates. Revenue From Contracts with Customers Revenue Recognition Sales of Products Atmus sells to customers either through long-term arrangements or standalone purchase orders. Atmus’ long-term arrangements generally do not include committed volumes until underlying purchase orders are issued. Typically, Atmus recognizes revenue on the products it sells at a point in time, in accordance with shipping terms or other contractual arrangements. All related shipping and handling costs are accrued at the time the related performance obligation has been satisfied. Atmus’ sales arrangements may include the collection of sales and other similar taxes that are then remitted to the related taxing authority. Atmus has elected to present the amounts collected for these taxes net of the related tax expense rather than presenting them as additional revenue. Atmus grants credit limits and terms to customers based upon traditional practices and competitive conditions. Typical terms vary by market, but payments are generally due in 60 days or less from invoicing for most of Atmus’ product sales. Sales Incentives Atmus provides various sales incentives to both Atmus’ distribution network and OEM customers. These programs are designed to promote the sale of Atmus’ products or encourage the usage of Atmus’ products by OEM customers. When there is uncertainty surrounding these sales incentives, Atmus may reduce the amount of revenue Atmus recognizes under a contract through an incentive accrual. When the uncertainty has been resolved the accrual will be adjusted accordingly. Sales incentives primarily fall into three categories: ● Aftermarket rebates; ● Volume and growth rebates; and ● Marketing Development Fund (“MDF”). For aftermarket rebates, Atmus provides incentives to promote sales to certain dealers and end- markets. These rebates are typically paid on a quarterly, or more frequent, basis. At the time of the sale, Atmus considers the expected amount of these rebates when determining the overall transaction price. Estimates are adjusted at the end of each month or quarter based sales and historical experience. For volume and growth rebates, Atmus provides certain customers with rebate opportunities for attaining specified volumes during a particular quarter or year. Atmus considers the expected amount of these rebates at the time of the original sale as it determines the sales revenue. Atmus updates its assessment of the amount of rebates that will be earned on a monthly or quarterly basis based on its best estimate of the volume levels the customer will reach during the measurement period. For MDF’s, these are funds to support Atmus’ customers primarily for business development, marketing and advertising programs, promotional items jointly developed, dealer incentives and partnering programs. Depending on the agreement, the funds are accrued for and paid on a quarterly basis, annual basis, or as agreed with those customers receiving these funds. Sales Returns The initial determination of the sales revenue may also be impacted by product returns. Rights of return do not exist for the majority of Atmus’ sales other than for quality issues. Atmus does offer certain return rights in its aftermarket business, where some aftermarket customers are permitted to return a small amount of filters each year. An estimate of future returns is accounted for at the time of sale as a reduction in the overall sales revenue based on historical return rates. Foreign Currency Transactions and Translation Atmus translates assets and liabilities of foreign entities to U.S. dollars, where the local currency is the functional currency, at month-end exchange rates. Atmus translates income and expenses to U.S. dollars using weighted-average exchange rates. Atmus records adjustments resulting from translation in a separate component of accumulated other comprehensive loss and include the adjustments in net income only upon sale, loss of controlling financial interest or liquidation of the underlying foreign investment. Foreign currency transaction gains and losses are included in net income. For foreign entities where the U.S. dollar is the functional currency, including those operating in highly inflationary economies when applicable, Atmus remeasures non-monetary balances and the related income statement amounts using historical exchange rates. Atmus includes the resulting gains and losses in net income, including the effect of derivatives in its Consolidated Statements of Net Income, which combined with transaction gains (losses) amounted to $(3.3) million, $0.3 million and $0.4 million for the years ended December 31, 2023, 2022 and 2021, respectively. Income Tax Accounting Atmus determines its income tax expense using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax effects of temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Future tax benefits of net operating loss and credit carryforwards are also recognized as deferred tax assets. Atmus evaluates the recoverability of its deferred tax assets each quarter by assessing the likelihood of future profitability and available tax planning strategies that could be implemented to realize Atmus’ net deferred tax assets. A valuation allowance is recorded to reduce the tax assets to the net value management believes is more likely than not to be realized. In the event Atmus’ operating performance deteriorates, future assessments could conclude that a larger valuation allowance will be needed to further reduce the deferred tax assets. In addition, Atmus operates within multiple taxing jurisdictions and are subject to tax audits in these jurisdictions. These audits can involve complex issues, which may require an extended period of time to resolve. Atmus accrues for the estimated additional tax and interest that may result from tax authorities disputing uncertain tax positions. Atmus believes it made adequate provisions for income taxes for all years that are subject to audit based upon the latest information available. Atmus’ income tax provision was prepared following the separate return method, which applies Accounting Standards Codification (“ASC”) 740 to the standalone financial statements of each member of the combined group as if the group member were a separate and standalone enterprise. Due to this treatment, tax transactions included in the Consolidated Financial Statements of the Parent may not be included in the separated Consolidated Financial Statements of the Company. Similarly, there may be certain tax attributes within the Consolidated Financial Statements of the Company that would not be found in the Consolidated Financial Statements and tax returns of the Parent. Examples of such items include net operating losses, tax credits carry forwards and valuation allowances, which may exist in the standalone financial statements but not in the Parent’s Consolidated Financial Statements. Furthermore, the Consolidated Financial Statements do not reflect any amounts due to or due from the Parent for income tax related matters as these matters are settled at the end of each year. A more complete description of Atmus’ income taxes and the future benefits of its net operating loss and credit carryforwards is disclosed in Note 6, Income Taxes Russian Operations On March 17, 2022, Cummins’ Board of Directors decided to indefinitely suspend its operations in Russia due to the ongoing conflict in Ukraine. As a result of the suspension of operations, Atmus evaluated the recoverability of assets in Russia and assessed other liabilities that may have been incurred. Atmus has experienced, and expect to continue to experience, an inability to collect customer receivables. Atmus also determined that it has some inventory items that were designated specifically for Russia that will not be able to be used elsewhere. As a result of this suspension, approximately $1.7 million of accounts receivable were reserved for and $0.6 million of inventory was written off in 2022. As of December 31, 2023, the accounts receivable reserves for Atmus’ Russia operations were $1.5 million and no inventory was written off during the year. The associated expense is recorded within Other operating expense, net and Cost of sales, respectively, in the Consolidated Statements of Net Income. Cash and Cash Equivalents Cash and cash equivalents consist of bank checking accounts and money market accounts. Atmus considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. Cash and cash equivalents are carried at cost, which approximates fair value. Accounts Receivable and Allowance for Doubtful Accounts Trade accounts receivable represent amounts billed to customers and not yet collected or amounts that have been earned but may not be billed until the passage of time and are recorded when the right to consideration becomes unconditional. Trade accounts receivable are recorded at the invoiced amount, which approximates net realizable value and generally do not bear interest. The allowance for doubtful accounts is Atmus’ best estimate of the amount of expected credit losses in its existing accounts receivable. Atmus determines the allowance based on its historical collection experience and by performing an analysis of its accounts receivable in light of the current economic environment. This estimate of expected losses reflects those losses expected to occur over the contractual life of the receivable. Atmus reviews its allowance for doubtful accounts at least quarterly, and more frequently as needed. In addition, when necessary, Atmus provides an allowance for the full amount of specific accounts deemed to be uncollectible. Account balances are charged off against the allowance in the period in which it determines that it is probable the receivable will not be recovered. The allowance for doubtful accounts balances were Inventories Atmus’ inventories are stated at the lower of cost or net realizable value. As of December 31, 2023 and 2022, approximately 32.1% and 34.4%, respectively, of its inventories were valued using the last- in, first-out (LIFO) cost method. The cost of other inventories is generally valued using the first-in, first-out (FIFO) cost method. Atmus’ inventories include estimates for adjustments related to annual physical inventory results and for inventory cost changes under the LIFO cost method. Due to significant movements of partially-manufactured components and parts between manufacturing plants, Atmus does not internally measure, nor do its accounting systems provide, a meaningful segregation between raw materials and work-in-process. See Note 7, Inventories Property, Plant and Equipment Atmus records property, plant and equipment at cost, inclusive of finance lease assets, with the adoption of ASC 842. Atmus depreciates the cost of the majority of its property, plant and equipment using the straight-line method with depreciable lives ranging from 20 to 40 years for buildings and 3 to 15 years for machinery, equipment and fixtures. Finance lease asset amortization is recorded in depreciation expense. Atmus expenses normal maintenance and repair costs as incurred. Depreciation expense totaled $21.5 million, $20.7 million and $21.0 million for the years ended December 31, 2023, 2022 and 2021, respectively. See Note 8, Property, Plant and Equipment Leases Impairment of Long-Lived Assets Atmus reviews its long-lived assets for possible impairment whenever events or circumstances indicate that the carrying value of an asset or asset group may not be recoverable. Atmus assesses the recoverability of the carrying value of the long-lived assets at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. An impairment of a long-lived asset or asset group exists when the expected future pre-tax cash flows (undiscounted and without interest charges) estimated to be generated by the asset or asset group is less than its carrying value. If these cash flows are less than the carrying value of such asset or asset group, an impairment loss is measured based on the difference between the estimated fair value and carrying value of the asset or asset group. Assumptions and estimates used to estimate cash flows in the evaluation of impairment and the fair values used to determine the impairment are subject to a degree of judgment and complexity. Any changes to the assumptions and estimates resulting from changes in actual results or market conditions from those anticipated may affect the carrying value of long-lived assets and could result in a future impairment charge. Leases Atmus determines if an arrangement contains a lease in whole or in part at the inception of the contract. Right-of-use (“ROU”) assets represent its right to use an underlying asset for the lease term while lease liabilities represent its obligation to make lease payments arising from the lease. All leases greater than 12 months result in the recognition of a ROU asset and a liability at the lease commencement date based on the present value of the lease payments over the lease term. As most of Atmus’ leases do not provide the information required to determine the implicit rate, Atmus uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. This rate is determined considering factors such as the lease term, Atmus’ credit standing and the economic environment of the location of the lease. Atmus uses the implicit rate when readily determinable. Atmus’ lease terms include all non-cancelable periods and may include options to extend (or to not terminate) the lease when it is reasonably certain that Atmus will exercise that option. Leases that have a term of 12 months or less at the commencement date are expensed on a straight-line basis over the lease term and do not result in the recognition of an asset or a liability. Lease expense for operating leases is recognized on a straight-line basis over the lease term. Lease expense for finance leases is generally front-loaded as the finance lease ROU asset is depreciated on a straight- line basis, but interest expense on the liability is recognized utilizing the interest method that results in more expense during the early years of the lease. Atmus has lease agreements with lease and non-lease components, primarily related to real estate, vehicle and information technology (“IT”) assets. For vehicle and real estate leases, Atmus accounts for the lease and non-lease components as a single lease component. For IT leases, Atmus allocates the payment between the lease and non-lease components based on the relative value of each component. See Note 9, Leases Goodwill Atmus has the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value as a basis for determining whether it is necessary to perform an annual quantitative goodwill impairment test. Atmus has elected this option for Atmus’ reporting unit. In addition, the carrying value of goodwill must be tested for impairment on an interim basis in certain circumstances where impairment may be indicated. When Atmus is required or opt to perform the quantitative impairment test, the fair value of its reporting unit is estimated with either the market approach or the income approach using a discounted cash flow model. Atmus’ income approach method uses a discounted cash flow model in which cash flows anticipated over several periods, plus a terminal value at the end of that time horizon, are discounted to their present value using an appropriate rate of return. The discounted cash flow model requires Atmus to make projections of revenue, gross margin, operating expenses, working capital investment and fixed asset additions for Atmus’ reporting unit over a multi-year period. Additionally, management must estimate a weighted-average cost of capital, which reflects a market rate, for Atmus’ reporting unit for use as a discount rate. The discounted cash flows are compared to the carrying value of the reporting unit and, if less than the carrying value, the difference is recorded as a goodwill impairment loss. In addition, Atmus also performs a sensitivity analysis to determine how much its forecasts can fluctuate before the fair value of a reporting unit would be lower than its carrying amount. Atmus performs the required procedures as of the end of its fiscal third quarter. Changes in Atmus’ projections or estimates, a deterioration of its operating results and the related cash flow effect or a significant increase in the discount rate could decrease the estimated fair value of its reporting unit and result in a future impairment of goodwill. See Note 10, Goodwill Warranty Atmus estimates and records a liability for standard warranty programs at the time its products are sold. Atmus’ estimates are based on historical experience and reflect management’s best estimates of expected costs at the time products are sold and subsequent adjustment to those expected costs when actual costs differ. As a result of the uncertainty surrounding the nature and frequency of product campaigns, the liability for such campaigns is recorded when Atmus commits to a recall action or when a recall becomes probable and estimable, which generally occurs when it is announced. Atmus reviews and assesses the liability for these programs on a quarterly basis. See Note 11, Product Warranty Liability Research and Development Atmus’ research and development programs are focused on product improvements, product extensions, innovations and cost reductions for its customers. Research and development expenditures include salaries, contractor fees, building costs, utilities, testing, technical IT, administrative expenses and allocation of corporate costs and are expensed, net of contract reimbursements, when incurred. Research and development expenses were $42.3 million, $38.5 million and $41.6 million for the years ended December 31, 2023, 2022 and 2021, respectively. Related Party Transactions In accordance with the provisions of various joint venture agreements, Atmus may purchase products and components from its joint ventures, sell products and components to its joint ventures and its joint ventures may sell products and components to unrelated parties. Joint venture transfer prices may differ from normal selling prices. Certain joint venture agreements transfer product at cost, some transfer product on a cost-plus basis, and others transfer product at market value. Atmus also may purchase products and components from other Cummins’ owned entities and sell products to other Cummins’ owned entities. These purchases and sales take place on terms resulting in margins within a reasonable range of market rates. See Note 16, Relationship with Parent and Related Parties Segment Information Atmus operates its business as one operating segment and also one reportable segment based on the manner in which Atmus reviews and evaluates operating performance. The operating results are regularly reviewed by Atmus’ chief operating decision maker on a consolidated basis. The chief operating decision maker is Atmus’ Chief Executive Officer. Stock-Based Compensation Atmus maintains a share-based compensation plan, which authorizes the granting of various equity-based incentives, including restricted stock units (“RSU”s) and performance share units (“PSU”s). Stock compensation expense is generally amortized on a straight line basis over the service period during which awards are expected to vest, generally three years. RSUs are typically granted to selected management employees on an annual basis and vest over three years. Dividend equivalents are paid during the vesting period. The fair value of Atmus’ RSUs and other stock-based awards is measured at the market price of its Common Stock on the grant date. PSUs vest based on varying performance, market and service conditions. The fair value of Atmus’ PSUs is measured at the market price of Atmus’ Common Stock on the grant date. The final award may equal 0 – 200 percent of the target grant, based on Atmus’ actual performance during the vesting period. Forfeitures are estimated on the grant date for all of Atmus’ stock-based compensation awards. Pensions and other Postretirement Benefits Atmus and its Parent provide a range of benefits, including pensions, postretirement and post-employment benefits to eligible current and former employees, of which certain of Atmus’ employees participate. For purposes of Atmus’ Consolidated Financial Statements, participation in Cummins plans is being treated as a multiemployer plan. Accordingly, the benefit obligations, plan assets and accumulated other comprehensive income (loss) amounts are not shown in the Consolidated Balance Sheets for these plans. Atmus plans that have been transferred as part of the transaction, however, are treated as single-employer plans. See Note 13, Pensions and Other Postretirement Benefits Net Parent Investment Net Parent Investment represents Atmus’ Parent’s historical investment in Atmus, its accumulated net earnings after taxes and the net effect of transactions with and allocations from its Parent prior to the IPO. Net Parent Investment in the Consolidated Balance Sheets represents Cummins’ net investment in Atmus and is presented in lieu of shareholders’ equity. The Consolidated Statements of Changes in Net Parent Investment include net cash transfers between Cummins and Atmus pursuant to the centralized cash management and other treasury-related functions performed by Cummins. The Net Parent Investment account includes the settlement and net effect of transactions with and corporate allocations from Cummins including administrative expenses such as corporate finance, accounting and field shared services, information services, human resources, marketing, corporate office and other services. In the separation agreement, there were certain assets and liabilities which were retained by Cummins and were reflected as Net Parent Investment in the Company’s Consolidated Financial Statements, and those that were transferred to the Company through Net Parent Investment in the Company’s Consolidated Financial Statements. The net effect of other assets and liabilities and related income and expenses recorded at the corporate level and pushed down to Atmus are also included in Net Parent Investment. All transactions reflected in Net Parent Investment in the accompanying Consolidated Balance Sheets have been considered cash receipts and payments for purposes of the Consolidated Statements of Cash Flows and are reflected in financing activities in the accompanying Consolidated Statements of Cash Flows with the exception of certain non-cash items related to an unrecognized tax liability for FIN48 reserves and leased assets and related depreciation, which were retained by Cummins upon completion of Atmus’ IPO. These items have been included as supplemental information to the Consolidated Statements of Cash Flows. Recent Accounting Pronouncements Net Yet Adopted Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (ASU) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Additionally, it requires a public entity to disclose the title and position of the Chief Operating Decision Maker (“CODM”). The ASU does not change how a public entity identifies its operating segments, aggregates them, or applies the quantitative thresholds to determine its reportable segments. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. A public entity should apply the amendments in this ASU retrospectively to all prior periods presented in the financial statements. Atmus expect this ASU to only impact Atmus’ disclosures with no impacts to Atmus’ results of operations, cash flows and financial condition. Income Taxes (Topic 740): Improvements to Income Tax Disclosures In December 2023, the FASB issued ASU No. 2023-09: Income Taxes (Topic 740): Improvements to Income Tax Disclosures that requires entities to disclose additional information about federal, state, and foreign income taxes primarily related to the income tax rate reconciliation and income taxes paid. The new standard also eliminates certain existing disclosure requirements related to uncertain tax positions and unrecognized deferred tax liabilities. The guidance is effective for Atmus’ fiscal year ending December 31, 2025, with early adoption permitted. The guidance does not affect recognition or measurement in Atmus’ consolidated financial statements. Atmus expects this ASU to only impact its disclosures with no impacts to Atmus’ results of operations, cash flows and financial condition. |
REVENUE FROM CONTRACTS WITH CUS
REVENUE FROM CONTRACTS WITH CUSTOMERS | 12 Months Ended |
Dec. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE FROM CONTRACTS WITH CUSTOMERS | NOTE 4: REVENUE FROM CONTRACTS WITH CUSTOMERS Disaggregation of Revenue Revenue by Geographic Area The table below presents Atmus’ consolidated sales by geographic area. Net sales attributed to geographic areas were based on the location of the customer. Years ended December 31, In millions 2023 2022 2021 United States $ 746.5 $ 720.5 $ 619.6 Other international 881.6 841.6 819.2 Total net sales $ 1,628.1 $ 1,562.1 $ 1,438.8 Revenue by Product Category The table below presents Atmus’ consolidated sales by product category. Years ended December 31, In millions 2023 2022 2021 Fuel $ 705.2 $ 674.7 $ 612.6 Lube 305.4 306.9 278.7 Air 282.4 267.8 242.9 Other 335.1 312.7 304.6 Total net sales $ 1,628.1 $ 1,562.1 $ 1,438.8 Revenue by Major Customer Related party sales to Cummins represented 17.4% of net sales in 2023 ($282.5 million), 19.3% of net sales in 2022 ($302.2 million) and 18.5% of net sales in 2021 ($266.8 million). For the years ended December 31, 2023, 2022 and 2021, two external customers, PACCAR and the Traton Group, each represented greater than 10% of Atmus’ annual net sales. These customers represented 15.6% and 11.8% of net sales in 2023, 16.2% and 12.0% of net sales in 2022 and 15.1% and 11.7% of net sales in 2021. No other customers exceeded 10% of net sales in the three years presented. |
INVESTMENTS IN EQUITY INVESTEES
INVESTMENTS IN EQUITY INVESTEES | 12 Months Ended |
Dec. 31, 2023 | |
Equity Method Investments and Joint Ventures [Abstract] | |
INVESTMENTS IN EQUITY INVESTEES | NOTE 5: INVESTMENTS IN EQUITY INVESTEES Investments and advances related to equity method investees and Atmus’ ownership percentages were as follows: Ownership December 31, In millions Percentage 2023 2022 Shanghai Fleetguard Filter Co. Ltd. 50.0 % $ 24.9 $ 23.9 Fleetguard Filters Pvt. Ltd. 49.5 % $ 58.0 $ 51.4 Filtrum Fibretechnologies Pvt. Ltd. 49.7 % $ 1.9 $ 1.7 Investments and advances related to equity method investees $ 84.8 $ 77.0 Dividends received from Atmus’ unconsolidated equity investees were $19.8 million, $23.1 million and $24.0 million in 2023, 2022 and 2021, respectively. Equity, royalty and interest income from investees, net of applicable taxes, was as follows: Years ended December 31, In millions 2023 2022 2021 Shanghai Fleetguard Filter Co. Ltd. $ 5.9 $ 5.3 $ 10.2 Fleetguard Filters Pvt. Ltd. $ 21.5 $ 17.1 $ 16.4 Filtrum Fibretechnologies Pvt. Ltd. $ 0.2 $ 0.3 $ 0.2 Atmus share of net income $ 27.6 $ 22.7 $ 26.8 Royalty and interest income $ 6.0 $ 5.3 $ 5.6 Equity, royalty and interest income from investees $ 33.6 $ 28.0 $ 32.4 Atmus’ joint ventures are primarily intended to allow Atmus to increase its market penetration in geographic regions, reduce capital spending, streamline Atmus’ supply chain management and develop technologies. The results and investments in Atmus’ joint ventures in which Atmus has 50 percent or less ownership are included in “Equity, royalty and interest income from investees” and “Investments and advances related to equity method investees” in its Consolidated Statements of Net Income and Consolidated Balance Sheets, respectively. ● Shanghai Fleetguard Filter Co. Ltd. — Shanghai Fleetguard Filter Co. Ltd. is a limited liability company (Sinoforeign joint venture) incorporated in Shanghai of the People’s Republic of China on April 27, 1994 by Dongfeng Motor Parts and Components Group Co., Ltd. and Cummins (China) Investment Co. with 50% partnership. Shanghai Fleetguard Filter Co. Ltd.’s approved scope of business operations includes the manufacture and sales of various filters and filter spare parts for diesel engines, trucks, buses, mining, excavators and other construction equipment to customers in China and exports to Atmus. Shanghai Fleetguard Filter Co. Ltd. has three manufacturing sites, Shanghai, Wuhan and Shiyan, with Shanghai being the primary location. ● Fleetguard Filters Pvt. Ltd. — Fleetguard Filters Pvt. Ltd. is a limited company incorporated in 1987 by Perfect Sealing Systems Private Limited (India) and Cummins Filtration Inc. (USA) which set a benchmark by providing premium filtration solutions for both on and off-highway applications from Air, Lube, Fuel, Hydraulic and Water Filtration to Coolants & Chemicals. They focus on supplies to first fit and aftermarket customers in India and exports to Atmus. The Head Office of Fleetguard Filters Pvt. Ltd. is located at Baner, in Pune, Maharashtra, India and has seven manufacturing plants in different states of India — Dharwad in Karnataka, Hosur in Tamil Nadu, Jamshedpur in Jharkhand, Nandur, Wadki and Loni Khalbhor in Maharashtra, and Sitarganj in Uttarakhand. Equity Investee Financial Summary Summary financial information for Atmus’ equity investees was as follows: Years ended December 31, In millions 2023 2022 2021 Net sales 435.2 392.5 429.7 Gross margin 170.0 136.3 98.8 Net income 56.2 38.4 53.9 Atmus share of net income 27.6 22.7 26.8 Royalty and interest income 6.0 5.3 5.6 Total equity, royalty and interest income from investees 33.6 28.0 32.4 Current assets 182.5 157.9 186.0 Non-current assets 87.4 82.0 84.1 Current liabilities (89.1) (75.9) (88.0) Non-current liabilities (4.7) (7.3) (5.3) Net assets 176.1 156.7 176.8 Atmus share of net assets 85.7 78.9 88.1 |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2023 | |
INCOME TAXES | |
INCOME TAXES | NOTE 6: INCOME TAXES The following table summarizes income before income taxes: Years ended December 31, In millions 2023 2022 2021 U.S. income (1) $ 136.3 $ 69.1 $ 71.9 Foreign income (1) 90.1 142.9 144.7 Income before income taxes $ 226.4 $ 212.0 $ 216.6 (1) The change in the mix of earnings between U.S. and foreign operations from 2022 to 2023 primarily relates to a legal entity restructuring implemented in anticipation of the IPO and the Separation. Income tax expense (benefit) consisted of the following: Years ended December 31, In millions 2023 2022 2021 Current U.S. federal and state $ 38.4 $ 28.6 $ 15.5 Foreign 26.7 25.7 33.7 Total current income tax expense 65.1 54.3 49.2 Deferred U.S. federal and state (10.4) (11.4) 1.6 Foreign 0.4 (1.3) (4.3) Total deferred income tax expense (benefit) (10.0) (12.7) (2.7) Income tax expense $ 55.1 $ 41.6 $ 46.5 Total income taxes paid were approximately $41.3 million, $20.3 million and $17.6 million in 2023, 2022 and 2021, respectively. A reconciliation of the statutory U.S. federal income tax rate to the effective tax rate was as follows: Years ended December 31, 2023 2022 2021 Statutory U.S. federal income tax rate 21.0 % 21.0 % 21.0 % State income tax, net of federal effect 1.4 % 0.9 % 1.0 % Differences in rates and taxability of foreign subsidiaries and joint ventures 3.9 % (2.6) % (1.2) % Research tax credits (1.3) % (0.6) % (1.1) % Foreign derived intangible income (1.7) % (1.3) % (1.2) % Valuation allowance — % (0.4) % 0.7 % Uncertain tax positions 0.1 % 2.5 % 1.6 % Other, net 0.9 % 0.1 % 0.7 % Effective tax rate 24.3 % 19.6 % 21.5 % Atmus’ effective tax rate for 2023 was 24.3 percent compared to 19.6 percent for 2022 and 21.5 percent for 2021. The increase in Atmus’ effective tax rate was primarily due to changes in the mix of Atmus’ income before income taxes between the U.S. and foreign countries. At December 31, 2023, $129.9 million of non-U.S. earnings are considered indefinitely reinvested in operations outside the U.S. for which deferred taxes have not been provided. Determination of the related deferred tax liability, if any, is not practicable because of the complexities associated with the hypothetical calculation. Carryforward tax benefits and the tax effect of temporary differences between financial and tax reporting that give rise to net deferred tax assets (liabilities) were as follows: December 31, In millions 2023 2022 Deferred tax assets Foreign carryforward benefits $ 5.6 $ 18.6 Accrued expenses 14.3 15.5 Warranty expenses 2.5 3.5 Lease liabilities 2.7 4.1 Research and development capitalization 15.6 — Other 5.1 12.3 Gross deferred tax assets 45.8 54.0 Valuation allowance (3.7) (16.4) Total deferred tax assets 42.1 37.6 Deferred tax liabilities Property, plant and equipment 7.8 8.0 Unremitted income of foreign subsidiaries and joint ventures 13.9 12.4 Employee benefit plans 0.7 1.2 Lease assets 3.2 4.0 Other 3.7 5.0 Total deferred tax liabilities 29.3 30.6 Net deferred tax assets $ 12.8 $ 7.0 Atmus’ foreign carryforward benefits as of December 31, 2023 may be carried forward indefinitely, subject to certain utilization limitations. A valuation allowance is recorded to reduce the gross deferred tax assets to an amount Atmus believes is more likely than not to be realized. The valuation allowance is primarily attributable to the uncertainty regarding the realization of foreign net operating loss carryforward benefits. A reconciliation of the valuation allowance for the years ended December 31, 2023, 2022 and 2021 was as follows: Years ended December 31, In millions 2023 2022 2021 Balance at beginning of year $ 16.4 $ 17.6 $ 16.0 Additions charged to tax expense 0.1 0.4 2.1 Valuation allowance reversal — (1.6) (0.5) Other (1) (12.8) — — Balance at end of year $ 3.7 $ 16.4 $ 17.6 (1) Pursuant to the Separation Agreement, includes certain assets and liabilities, including deferred tax assets, and corresponding valuation allowances which were retained by Cummins. In addition, includes impact of currency changes and the expiration of net operating losses for which a full valuation allowance was recorded. Atmus’ Consolidated Balance Sheets contain the following tax related items: December 31, In millions 2023 2022 Prepaid expenses and other current assets Refundable income taxes $ 2.0 $ 0.8 Other assets Deferred income tax assets $ 14.2 $ 14.3 Other accrued expenses Income tax payable $ 10.3 $ 6.0 Other liabilities One-time transition tax $ — $ 0.7 Deferred income tax liabilities $ 1.4 $ 7.3 A reconciliation of unrecognized tax benefits for the years ended December 31, 2023, 2022 and 2021 was as follows: December 31, In millions 2023 2022 2021 Balance at beginning of year $ 22.2 $ 19.0 $ 16.6 Additions to current year tax positions 0.2 3.2 2.4 Additions to prior years’ tax positions — — — Reductions to prior years’ tax positions (1) (22.2) — — Balance at end of year $ 0.2 $ 22.2 $ 19.0 (1) Pursuant to the Separation Agreement, includes certain assets and liabilities, including contingency reserves which were retained by Cummins The total amount of unrecognized tax benefits in 2023, 2022 and 2021, if recognized, would favorably impact the effective tax rate in future periods. Atmus has accrued interest expense related to the unrecognized tax benefits of zero, $7.0 million and $5.0 million as of December 31, 2023, 2022 and 2021, respectively. Atmus recognizes potential accrued interest and penalties related to unrecognized tax benefits in income tax expense. Audit outcomes and the timing of audit settlements are subject to significant uncertainty. Although Atmus believes that adequate provision has been made for such issues, there is the possibility that the ultimate resolution of such issues could have an adverse effect on its earnings. Conversely, if these issues are resolved favorably in the future, the related provision would be reduced, thus having a positive impact on earnings. As a result of Atmus’ global operations, Atmus files income tax returns in various jurisdictions including U.S. federal, state and foreign jurisdictions. Atmus is routinely subject to examination by taxing authorities throughout the world, including Australia, Belgium, Brazil, Canada, China, France, India, Mexico, the U.K. and the U.S. With few exceptions, Atmus’ U.S. federal, major state and foreign jurisdictions are no longer subject to income tax assessments for years before 2019. |
INVENTORIES
INVENTORIES | 12 Months Ended |
Dec. 31, 2023 | |
INVENTORIES | |
INVENTORIES | NOTE 7: INVENTORIES Inventories are stated at the lower of cost or net realizable value. Inventories included the following: December 31, In millions 2023 2022 Finished products $ 179.2 $ 195.9 Work-in-process and raw materials 101.1 92.4 Inventories at FIFO cost 280.3 288.3 Excess of FIFO over LIFO (30.3) (43.3) Total inventories $ 250.0 $ 245.0 |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2023 | |
PROPERTY, PLANT AND EQUIPMENT | |
PROPERTY, PLANT AND EQUIPMENT | NOTE 8: PROPERTY, PLANT AND EQUIPMENT Details of Atmus’ property, plant and equipment balance were as follows: December 31, In millions 2023 2022 Land and buildings $ 69.9 $ 68.7 Machinery, equipment and fixtures 320.8 304.1 Construction in process 57.3 35.4 Property, plant and equipment, gross 448.0 408.2 Less: Accumulated depreciation (273.4) (259.8) Property, plant and equipment, net $ 174.6 $ 148.4 |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2023 | |
Leases [Abstract] | |
LEASES | NOTE 9: LEASES Atmus’ lease portfolio consists primarily of real estate and equipment leases. Atmus’ real estate leases primarily consist of land, office, distribution, warehousing and manufacturing facilities. These leases typically range in term from 2 Atmus’ operating lease cost was $10.5 million, $10.7 million, and $10.6 million for the years ended December 31, 2023, 2022 and 2021, respectively. Atmus’ finance lease cost, short-term lease cost and variable lease cost were immaterial for the years ended December 31, 2023, 2022 and 2021. Supplemental balance sheet information related to leases: December 31, In millions 2023 2022 Balance Sheet Location Assets Operating $ 24.8 $ 32.4 Other assets Finance (1) $ 0.7 $ 0.6 Property, plant and equipment, net Total lease assets $ 25.5 $ 33.0 Liabilities Current Operating $ 7.1 $ 9.0 Other accrued expenses Finance $ 0.3 $ 0.4 Other accrued expenses Long-term Operating $ 18.5 $ 23.2 Other liabilities Finance $ 0.5 $ 0.7 Other liabilities Total lease liabilities $ 26.4 $ 33.3 (1) Finance lease assets were recorded net of accumulated amortization of $0.9 million and $1.3 million at December 31, 2023 and 2022. Supplemental cash flow and other information related to leases: Years ended December 31, In millions 2023 2022 2021 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 8.8 $ 9.4 $ 9.4 Right-of-use assets obtained in exchange for lease obligations Operating leases $ 11.8 $ 7.4 $ 14.7 Finance leases $ 0.2 $ 0.8 $ 1.0 Additional information related to leases: December 31, 2023 2022 Weighted-average remaining lease term (in years) Operating leases 4.2 3.8 Finance leases 3.2 3.6 Weighted-average discount rate Operating leases 4.9 % 3.4 % Finance leases 2.2 % 1.5 % Following is a summary of the future minimum lease payments due to finance and operating leases with terms of more than one year at lease commencement at December 31, 2023, together with the net present value of the minimum payments: Finance Operating In millions Leases Leases 2024 $ 0.4 $ 8.1 2025 0.2 6.8 2026 0.1 6.0 2027 0.1 3.6 2028 0.1 2.0 After 2028 — 2.1 Total minimum lease payments 0.9 28.6 Interest (0.1) (3.0) Present value of net minimum lease payments $ 0.8 $ 25.6 |
GOODWILL
GOODWILL | 12 Months Ended |
Dec. 31, 2023 | |
GOODWILL | |
GOODWILL | NOTE 10: GOODWILL Goodwill is not amortized but it is subject to impairment testing at the reporting unit on an annual basis, or more often if events or circumstances indicate there may be impairment. Atmus performs a goodwill impairment evaluation for its reporting unit annually. There was no impairment of goodwill during the periods covered by these Consolidated Financial Statements. |
PRODUCT WARRANTY LIABILITY
PRODUCT WARRANTY LIABILITY | 12 Months Ended |
Dec. 31, 2023 | |
PRODUCT WARRANTY LIABILITY | |
PRODUCT WARRANTY LIABILITY | NOTE 11: PRODUCT WARRANTY LIABILITY A tabular reconciliation of the product warranty liability, including accrued product campaigns, was as follows: December 31, In millions 2023 2022 2021 Balance, beginning of year $ 15.5 $ 23.9 $ 23.2 Provision for base warranties issued 8.6 1.6 5.9 Payments made during period (6.0) (7.0) (7.6) Changes in estimates for pre-existing product warranties (4.0) (2.6) 2.2 Foreign currency translation and other (0.1) (0.4) 0.2 Balance, end of year $ 14.0 $ 15.5 $ 23.9 Warranty liabilities on Atmus’ Consolidated Balance Sheets were as follows: December 31, In millions 2023 2022 Current portion $ 5.4 $ 5.9 Long-term portion 8.6 9.6 Total $ 14.0 $ 15.5 Fuel Heater Campaign Accrual Quality issues were identified with a particular application of a fuel heater which primarily impacted one customer, resulting in a recall campaign. A total of $24.2 million was accrued for this campaign during 2020 and 2019. The remaining accrual balance at December 31, 2023 was $3.0 million. |
DEBT AND BORROWING ARRANGEMENTS
DEBT AND BORROWING ARRANGEMENTS | 12 Months Ended |
Dec. 31, 2023 | |
DEBT AND BORROWING ARRANGEMENTS | |
DEBT AND BORROWING ARRANGEMENTS | NOTE 12. DEBT AND BORROWING ARRANGEMENTS Atmus entered into the Credit Agreement with Cummins and a syndicate of banks, providing for a term loan and a revolving credit facility, in anticipation of the Separation. Borrowings under the Credit Agreement did not become available under the Credit Agreement until the IPO occurred. The facilities covered by the Credit Agreement will mature on September 30, 2027. Upon completion of the IPO, Atmus borrowed $650 million under the Credit Agreement, consisting of proceeds of the term loan and amounts drawn under the revolving credit facility, and paid such amounts to Cummins in partial consideration for the Separation. Borrowings under the Credit Agreement bear interest at varying rates, depending on the type of loan and, in some cases, the rates of designated benchmarks and the applicable election made. Generally, U.S. dollar-denominated loans bear interest at an adjusted term Secured Overnight Financing Rate (“SOFR”) (which includes a 0.10 percent credit spread adjustment to SOFR) for the applicable interest period plus a rate ranging from 1.125 percent to 1.75 percent depending on Atmus’ net leverage ratio. As of December 31, 2023, $600 million has been drawn on the term loan and no amount was drawn on the revolving credit facility. These amounts are included within Long-term debt and Current maturities of long-term debt on the Balance Sheet. As of December 31, 2023, Atmus’ fair value of Long-term debt was approximately $594 million, which was derived from Level 2 input measures. Atmus’ credit lines available as of December 31, 2023 and December 31, 2022 include: As of December 31, 2023 As of December 31, 2022 Facility Amount Borrowed Amount Facility Amount Borrowed Amount (in millions) Credit facilities: Term loan September 30, 2027 (1) 600.0 600.0 — — Revolving credit facility September 30, 2027 (1) 400.0 — — — (1) Atmus maintains a term loan facility and a revolving credit facility as part of the Credit Agreement. The Credit Agreement includes financial covenants that Atmus maintain certain net leverage, secured net leverage and interest coverage ratios. At December 31, 2023, Atmus complied with all financial covenants. The Credit Agreement also contains customary representations, events of default and covenants, including restrictions on the level of borrowing. Over the next five years, aggregate principal maturities of Atmus’ long-term debt are (in millions): 2024 2025 2026 2027 2028 Thereafter Total $ 7.5 $ 22.5 $ 30.0 $ 540.0 $ — $ — $ 600.0 |
PENSIONS AND OTHER POSTRETIREME
PENSIONS AND OTHER POSTRETIREMENT BENEFITS | 12 Months Ended |
Dec. 31, 2023 | |
PENSIONS AND OTHER POSTRETIREMENT BENEFITS | |
PENSIONS AND OTHER POSTRETIREMENT BENEFITS | NOTE 13: PENSIONS AND OTHER POSTRETIREMENT BENEFITS Pension Plans Multiemployer Plans with Cummins Cummins offers various retirement benefits (“Cummins Plans”) to its eligible employees which includes eligible employees of Atmus, both in the U.S. and foreign countries. Since Cummins provides these benefits to eligible employees and retirees of Atmus, the costs to participating employees of Atmus in these plans are reflected in the Consolidated Financial Statements, while the related assets and liabilities are retained by Cummins. The total Cummins defined benefit pension plan service costs allocated to Atmus were $5.7 million, $5.8 million and $6.8 million in 2023, 2022 and 2021, respectively. These costs are reflected in the Consolidated Financial Statements as a component of Cost of sales, Research, development and engineering expenses and Selling, general and administrative expenses. The non-service benefit allocated to Atmus was $3.4 million, $3.4 million and $2.7 million in 2023, 2022 and 2021, respectively. The non-service benefit is reflected as a component of Other income, net. The following is a listing of significant defined benefit pension plans sponsored by Cummins in which eligible Atmus employees and retirees participate: Country Name of Defined Benefit Plan(s) Mexico Pension Plan, Seniority Premium, Termination Indemnity(a) United Kingdom Cummins UK Pension Plan United States The Cummins Pension Plan Cummins Inc. Excess Benefit Retirement Plan Cummins Inc. Postretirement Health Care and Life Insurance Plans Atmus Plans Atmus has defined benefit pension plans, which provide retirement benefits to eligible participants and are collectively referred to as the “Atmus Plans.” The plans’ benefits are primarily based on employee earnings and credited service. Plans in two countries, Belgium and Mexico, were newly established in 2022. Prior to the establishment of the plans in Belgium and Mexico, Filtration employees’ participated in the Cummins’ plans. The total Atmus Plans’ defined benefit pension plan expenses were $0.9 million in 2023, $2.0 million in 2022 and $0.8 million in 2021. Service costs allocated to Atmus were $0.6 million in 2023, $1.5 million in 2022 and $0.6 million in 2021. These costs are reflected in the Consolidated Financial Statements as a component of Cost of sales, Research, development and engineering expenses and Selling, general and administrative expenses. The non-service costs allocated to Atmus were immaterial for each of the years ended December 31, 2023, 2022 and 2021. These non-service costs are reflected as a component of Other income, net. The total Atmus Plans’ defined benefit pension plan liabilities were $9.6 million and $7.3 million as of December 31, 2023 and 2022, respectively. These liabilities are reflected in the Consolidated Financial Statements as a component of Other liabilities. The following is a listing of significant Atmus Plans: Country Name of Defined Benefit Plan(s) Belgium Reglement Plannen Leven en Overligden France Indemnité de Départ en Retraite Germany ersorgungsordnung von October 1979 Japan Employee Retirement Allowance Plan Mexico Pension Plan, Seniority Premium, Termination Indemnity (a) (a) New plans have been established in Mexico, but for a period of time, certain Atmus employees will continue to participate in the Cummins’ plans until they are transferred into the new Atmus plans. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2023 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 14: COMMITMENTS AND CONTINGENCIES Legal Proceedings The Company is subject to lawsuits and claims arising out of the ordinary course of its business. The Company does not have any currently pending claims or litigation that the Company believes, individually or in the aggregate, will have a material adverse effect on its financial position, results of operations, cash flows, liquidity or capital resources. Atmus carries various forms of commercial, property and casualty, product liability and other forms of insurance. Where Atmus has not obtained its own insurance policies, it will continue to be covered under Cummins’ insurance policies while Atmus continues to be majority owned by Cummins; however, such insurance may not be applicable or adequate to cover the costs associated with a judgment against Atmus with respect to these lawsuits, claims and proceedings. While the Company believes it has established adequate accruals for Atmus’ expected future liability with respect to pending lawsuits, claims and proceedings, where the nature and extent of any such liability can be reasonably estimated based upon presently available information, there can be no assurance that the final resolution of any existing or future lawsuits, claims or proceedings will not have a material adverse effect on Atmus’ business, financial condition, results of operations or cash flows. Indemnifications Periodically, Atmus enters various contractual arrangements where it agrees to indemnify a third-party against certain types of losses. Atmus regularly evaluates the probability of having to incur costs associated with these indemnities and accrue for expected losses that are probable. Because the indemnifications are not related to specified known liabilities, and due to their uncertain nature, Atmus is unable to estimate the maximum amount of the potential loss associated with these indemnifications. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE LOSS | 12 Months Ended |
Dec. 31, 2023 | |
Equity [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | NOTE 15: ACCUMULATED OTHER COMPREHENSIVE LOSS Following are the changes in accumulated other comprehensive income (loss) by component: For the Years Ended December 31, 2023 2022 2021 (in millions) Currency translation adjustments: Balance at beginning of period $ (56.7) $ (40.1) $ (28.1) Currency translation adjustments $ 0.6 $ (16.6) $ (12.0) Other comprehensive income (loss), net $ 0.6 $ (16.6) $ (12.0) Balance at end of period $ (56.1) $ (56.7) $ (40.1) Pensions and other benefit plans: Balance at beginning of period $ 0.9 $ (1.5) $ (2.2) Change in pensions and other benefit plans $ (1.5) $ 3.1 $ 1.0 Tax benefit (expense) $ 0.5 $ (0.7) $ (0.3) Other comprehensive (loss) income, net $ (1.0) $ 2.4 $ 0.7 Balance at end of period $ (0.1) $ 0.9 $ (1.5) Accumulated other comprehensive loss: Balance at beginning of period $ (55.8) $ (41.6) $ (30.3) Total other comprehensive loss, net $ (0.4) $ (14.2) $ (11.3) Balance at end of period $ (56.2) $ (55.8) $ (41.6) |
RELATIONSHIP WITH PARENT AND RE
RELATIONSHIP WITH PARENT AND RELATED PARTIES | 12 Months Ended |
Dec. 31, 2023 | |
Related Party Transactions [Abstract] | |
RELATIONSHIP WITH PARENT AND RELATED PARTIES | NOTE 16: RELATIONSHIP WITH PARENT AND RELATED PARTIES As described in Note 1, Description of the Business The Company entered into the separation agreement and transition services agreement with Cummins, among other transaction agreements, all of which will govern the parties relationship following the IPO. This includes services provided by Cummins to the Company for a fixed term on a service-by-service basis. Atmus will pay Cummins mutually agreed-upon fees for the services provided under the transition services agreement. Corporate Costs/Allocations The Consolidated Financial Statements include corporate costs incurred by Cummins for services that were provided to or on behalf of Atmus for the period prior to IPO. Such costs represent shared services and infrastructure provided by Cummins, including administrative, finance, human resources, information technology, legal, and other corporate and infrastructure services. The corporate costs reflected in the Consolidated Financial Statements consist of direct charges to the business and indirect allocations to Atmus. The costs that were directly charged to Atmus, such as the shared services for finance provided by Cummins Business Services, were primarily determined based on actual usage. Indirect allocations are related to shared services and infrastructure provided by Cummins that would benefit Atmus but have not been directly charged to Atmus in a manner discussed above. These corporate costs were allocated to Atmus using methods management believes are consistent and reasonable. The primary allocation factor is third-party revenue; however, other relevant metrics are also utilized based on the nature of the underlying activities. For example, headcount is used as the allocation driver to allocate the human resource departmental costs. The expenses allocated and directly charged reflect all expenses that Cummins incurred on behalf of the Company. The expenses reflected in the Consolidated Financial Statements may not be indicative of the actual expenses that would have been incurred during the period presented if Atmus historically operated as a separate, stand-alone entity. All corporate charges and allocations have been deemed paid by Atmus to Cummins in the period in which the cost was recognized in the Consolidated Statements of Income. Prior to the separation Cummins used a centralized approach to cash management and financing of its operations, including Atmus’ operations. Accordingly, Atmus transferred all of its cash to Cummins to be utilized in the central cash management program and as a result do not have cash allocated to Atmus in the consolidated financial statements in 2022 and 2021. Total corporate costs allocated to Atmus were $13.7 million, $45.0 million and $54.3 million for the years ended December 31, 2023, 2022 and 2021, respectively. Allocated corporate costs are included in Net sales, Cost of sales, Selling, general and administrative expenses, Research, development and engineering expenses and Other income, net. Post IPO, Atmus has and will continue to incur its own corporate costs associated with being a standalone publicly traded company. Related Party Balances Atmus had trade receivables of $37.9 million and $52.0 million for products sold to, and accounts payable of $54.8 million and $57.6 million for products and services purchased in the ordinary course from Cummins as of December 31, 2023 and December 31, 2022, respectively. Atmus’ sales to Cummins were $282.5 million, $302.2 million and $266.8 million for the years ended December 31, 2023, 2022 and 2021, respectively. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2023 | |
Stock-Based Compensation | |
Stock-Based Compensation | NOTE 17: STOCK-BASED COMPENSATION Under the Atmus 2022 Omnibus Incentive Plan, Atmus is authorized to issue a maximum of $7.5 million shares of common stock to Atmus employees and non-employee directors. Restricted Stock Units and Performance Share Units Atmus recorded compensation expense related to RSUs and PSUs of $5.5 million during the year ended December 31, 2023 and zero during the years ended December 31, 2022 and 2021, respectively. The unamortized compensation expense related to Atmus RSUs and PSUs was $16.1 million and is expected to be recognized over a weighted-average period of 2.4 years. Atmus’ RSU and PSU activity is reflected below: Weighted-Average Weighted-Average Number of Fair Value Per Aggregate Fair Shares Grant Date Share Value Balance at January 1, 2023 — $ — Granted 763,480 Various 28.34 $ 21.6 million Vested — — Forfeited — — Balance at December 31, 2023 763,480 28.34 |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2023 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | NOTE 18: EARNINGS PER SHARE Basic net earnings per share (“EPS”) is computed by dividing net earnings by the weighted average number of outstanding common shares. Diluted net EPS is computed by dividing net earnings by the weighted average number of outstanding common shares and common share equivalents relating to stock options and other stock incentive plans. Basic and diluted EPS were calculated as follows: For the Years Ended December 31, 2023 2022 2021 (in millions, except per share data) Net income $ 171.3 $ 170.4 $ 170.1 Weighted-average shares for basic EPS 83.3 83.3 83.3 Plus incremental shares from assumed conversions of long-term incentive plan shares 0.1 — — Weighted-average shares for diluted EPS 83.4 83.3 83.3 Basic earnings per share 2.06 2.05 2.04 Diluted earnings per share $ 2.05 $ 2.05 $ 2.04 Basic and diluted EPS for the years ended December 31, 2022 and 2021 were calculated using the shares of common stock that were issued and outstanding as of the completion of the IPO. For the periods prior to the IPO, it is assumed that there were no dilutive equity instruments as there were no equity awards of Atmus outstanding prior to the IPO. Post IPO, there were no anti-dilutive shares. |
SUPPLEMENTAL BALANCE SHEET DATA
SUPPLEMENTAL BALANCE SHEET DATA | 12 Months Ended |
Dec. 31, 2023 | |
SUPPLEMENTAL BALANCE SHEET DATA | |
SUPPLEMENTAL BALANCE SHEET DATA | NOTE 19. SUPPLEMENTAL BALANCE SHEET DATA Other assets included the following: December 31, December 31, 2023 2022 (in millions) Operating lease assets (1) $ 24.8 $ 32.4 Deferred income taxes 14.2 14.3 Long-term receivables 3.1 3.1 Other 9.4 7.2 Other assets $ 51.5 $ 57.0 Other accrued expenses included the following: December 31, December 31, 2023 2022 (in millions) Marketing accruals $ 42.6 $ 47.3 Other taxes payables 12.7 7.5 Income taxes payable 10.3 6.0 Current portion of operating lease liabilities (1) 7.1 9.0 Current portion of finance lease liabilities 0.3 0.4 Other 10.7 8.8 Other accrued expenses $ 83.7 $ 79.0 Other liabilities included the following: December 31, December 31, 2023 2022 (in millions) Long-term portion of operating lease liabilities (1) $ 18.5 $ 23.2 Deferred income taxes 1.4 7.3 Long-term income taxes (1) 0.2 29.8 Other long-term liabilities 11.7 10.9 Other liabilities $ 31.8 $ 71.2 (1) Balances at December 31, 2022 included an unrecognized tax liability for FIN48 reserves and leased assets and related depreciation, which have been retained by Cummins upon completion of Atmus’ IPO and are no longer included on Atmus’ Consolidated Balance Sheets at December 31, 2023. See Note 1, Description of the Business Basis of Presentation |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Investments in Equity Investees | Investments in Equity Investees Atmus uses the equity method to account for its investments in joint ventures, affiliated companies and alliances in which Atmus has the ability to exercise significant influence, generally represented by equity ownership or partnership equity of at least 20 percent but not more than 50 percent. Generally, under the equity method, original investments in these entities are recorded at cost and subsequently adjusted by Atmus’ share of equity in income or losses after the date of acquisition. Equity in income or losses of each investee is recorded according to Atmus’ level of ownership; if losses accumulate, Atmus records its share of losses until its investment has been fully depleted. If Atmus’ investment has been fully depleted, Atmus recognizes additional losses only when it is the primary funding source. Atmus eliminates (to the extent of its ownership percentage) in its Consolidated Financial Statements the profit in inventory held by its equity method investees that has not yet been sold to a third-party. Dividends received from equity method investees reduce the amount of its investment when received and do not impact its earnings. Atmus’ investments are classified as “Investments and advances related to equity method investees” in its Consolidated Balance Sheets. Atmus’ share of the results from joint ventures, affiliated companies and alliances is reported in its Consolidated Statements of Net Income as “Equity, royalty and interest income from investees” and is reported net of all applicable income taxes. Atmus’ foreign equity investees are presented net of applicable foreign income taxes in its Consolidated Statements of Net Income. See Note 5, Investments in Equity Investees |
Use of Estimates in the Preparation of the Consolidated Financial Statements | Use of Estimates in the Preparation of the Consolidated Financial Statements Preparation of financial statements requires management to make estimates and assumptions that affect reported amounts presented and disclosed in Atmus’ Consolidated Financial Statements. Significant estimates and assumptions in these Consolidated Financial Statements require the exercise of judgement and are used for, but not limited to, estimates of future cash flows and other assumptions associated with goodwill and long-lived asset impairment tests, useful lives for depreciation and amortization, warranty programs, restructuring costs, income taxes, deferred tax valuation allowances, contingencies and allowances for doubtful accounts. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be different from these estimates. |
Revenue From Contracts with Customers | Revenue From Contracts with Customers Revenue Recognition Sales of Products Atmus sells to customers either through long-term arrangements or standalone purchase orders. Atmus’ long-term arrangements generally do not include committed volumes until underlying purchase orders are issued. Typically, Atmus recognizes revenue on the products it sells at a point in time, in accordance with shipping terms or other contractual arrangements. All related shipping and handling costs are accrued at the time the related performance obligation has been satisfied. Atmus’ sales arrangements may include the collection of sales and other similar taxes that are then remitted to the related taxing authority. Atmus has elected to present the amounts collected for these taxes net of the related tax expense rather than presenting them as additional revenue. Atmus grants credit limits and terms to customers based upon traditional practices and competitive conditions. Typical terms vary by market, but payments are generally due in 60 days or less from invoicing for most of Atmus’ product sales. Sales Incentives Atmus provides various sales incentives to both Atmus’ distribution network and OEM customers. These programs are designed to promote the sale of Atmus’ products or encourage the usage of Atmus’ products by OEM customers. When there is uncertainty surrounding these sales incentives, Atmus may reduce the amount of revenue Atmus recognizes under a contract through an incentive accrual. When the uncertainty has been resolved the accrual will be adjusted accordingly. Sales incentives primarily fall into three categories: ● Aftermarket rebates; ● Volume and growth rebates; and ● Marketing Development Fund (“MDF”). For aftermarket rebates, Atmus provides incentives to promote sales to certain dealers and end- markets. These rebates are typically paid on a quarterly, or more frequent, basis. At the time of the sale, Atmus considers the expected amount of these rebates when determining the overall transaction price. Estimates are adjusted at the end of each month or quarter based sales and historical experience. For volume and growth rebates, Atmus provides certain customers with rebate opportunities for attaining specified volumes during a particular quarter or year. Atmus considers the expected amount of these rebates at the time of the original sale as it determines the sales revenue. Atmus updates its assessment of the amount of rebates that will be earned on a monthly or quarterly basis based on its best estimate of the volume levels the customer will reach during the measurement period. For MDF’s, these are funds to support Atmus’ customers primarily for business development, marketing and advertising programs, promotional items jointly developed, dealer incentives and partnering programs. Depending on the agreement, the funds are accrued for and paid on a quarterly basis, annual basis, or as agreed with those customers receiving these funds. Sales Returns The initial determination of the sales revenue may also be impacted by product returns. Rights of return do not exist for the majority of Atmus’ sales other than for quality issues. Atmus does offer certain return rights in its aftermarket business, where some aftermarket customers are permitted to return a small amount of filters each year. An estimate of future returns is accounted for at the time of sale as a reduction in the overall sales revenue based on historical return rates. |
Foreign Currency Transactions and Translation | Foreign Currency Transactions and Translation Atmus translates assets and liabilities of foreign entities to U.S. dollars, where the local currency is the functional currency, at month-end exchange rates. Atmus translates income and expenses to U.S. dollars using weighted-average exchange rates. Atmus records adjustments resulting from translation in a separate component of accumulated other comprehensive loss and include the adjustments in net income only upon sale, loss of controlling financial interest or liquidation of the underlying foreign investment. Foreign currency transaction gains and losses are included in net income. For foreign entities where the U.S. dollar is the functional currency, including those operating in highly inflationary economies when applicable, Atmus remeasures non-monetary balances and the related income statement amounts using historical exchange rates. Atmus includes the resulting gains and losses in net income, including the effect of derivatives in its Consolidated Statements of Net Income, which combined with transaction gains (losses) amounted to $(3.3) million, $0.3 million and $0.4 million for the years ended December 31, 2023, 2022 and 2021, respectively. |
Income Tax Accounting | Income Tax Accounting Atmus determines its income tax expense using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax effects of temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Future tax benefits of net operating loss and credit carryforwards are also recognized as deferred tax assets. Atmus evaluates the recoverability of its deferred tax assets each quarter by assessing the likelihood of future profitability and available tax planning strategies that could be implemented to realize Atmus’ net deferred tax assets. A valuation allowance is recorded to reduce the tax assets to the net value management believes is more likely than not to be realized. In the event Atmus’ operating performance deteriorates, future assessments could conclude that a larger valuation allowance will be needed to further reduce the deferred tax assets. In addition, Atmus operates within multiple taxing jurisdictions and are subject to tax audits in these jurisdictions. These audits can involve complex issues, which may require an extended period of time to resolve. Atmus accrues for the estimated additional tax and interest that may result from tax authorities disputing uncertain tax positions. Atmus believes it made adequate provisions for income taxes for all years that are subject to audit based upon the latest information available. Atmus’ income tax provision was prepared following the separate return method, which applies Accounting Standards Codification (“ASC”) 740 to the standalone financial statements of each member of the combined group as if the group member were a separate and standalone enterprise. Due to this treatment, tax transactions included in the Consolidated Financial Statements of the Parent may not be included in the separated Consolidated Financial Statements of the Company. Similarly, there may be certain tax attributes within the Consolidated Financial Statements of the Company that would not be found in the Consolidated Financial Statements and tax returns of the Parent. Examples of such items include net operating losses, tax credits carry forwards and valuation allowances, which may exist in the standalone financial statements but not in the Parent’s Consolidated Financial Statements. Furthermore, the Consolidated Financial Statements do not reflect any amounts due to or due from the Parent for income tax related matters as these matters are settled at the end of each year. A more complete description of Atmus’ income taxes and the future benefits of its net operating loss and credit carryforwards is disclosed in Note 6, Income Taxes |
Russian Operations | Russian Operations On March 17, 2022, Cummins’ Board of Directors decided to indefinitely suspend its operations in Russia due to the ongoing conflict in Ukraine. As a result of the suspension of operations, Atmus evaluated the recoverability of assets in Russia and assessed other liabilities that may have been incurred. Atmus has experienced, and expect to continue to experience, an inability to collect customer receivables. Atmus also determined that it has some inventory items that were designated specifically for Russia that will not be able to be used elsewhere. As a result of this suspension, approximately $1.7 million of accounts receivable were reserved for and $0.6 million of inventory was written off in 2022. As of December 31, 2023, the accounts receivable reserves for Atmus’ Russia operations were $1.5 million and no inventory was written off during the year. The associated expense is recorded within Other operating expense, net and Cost of sales, respectively, in the Consolidated Statements of Net Income. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of bank checking accounts and money market accounts. Atmus considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. Cash and cash equivalents are carried at cost, which approximates fair value. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Trade accounts receivable represent amounts billed to customers and not yet collected or amounts that have been earned but may not be billed until the passage of time and are recorded when the right to consideration becomes unconditional. Trade accounts receivable are recorded at the invoiced amount, which approximates net realizable value and generally do not bear interest. The allowance for doubtful accounts is Atmus’ best estimate of the amount of expected credit losses in its existing accounts receivable. Atmus determines the allowance based on its historical collection experience and by performing an analysis of its accounts receivable in light of the current economic environment. This estimate of expected losses reflects those losses expected to occur over the contractual life of the receivable. Atmus reviews its allowance for doubtful accounts at least quarterly, and more frequently as needed. In addition, when necessary, Atmus provides an allowance for the full amount of specific accounts deemed to be uncollectible. Account balances are charged off against the allowance in the period in which it determines that it is probable the receivable will not be recovered. The allowance for doubtful accounts balances were |
Inventories | Inventories Atmus’ inventories are stated at the lower of cost or net realizable value. As of December 31, 2023 and 2022, approximately 32.1% and 34.4%, respectively, of its inventories were valued using the last- in, first-out (LIFO) cost method. The cost of other inventories is generally valued using the first-in, first-out (FIFO) cost method. Atmus’ inventories include estimates for adjustments related to annual physical inventory results and for inventory cost changes under the LIFO cost method. Due to significant movements of partially-manufactured components and parts between manufacturing plants, Atmus does not internally measure, nor do its accounting systems provide, a meaningful segregation between raw materials and work-in-process. See Note 7, Inventories |
Property, Plant and Equipment | Property, Plant and Equipment Atmus records property, plant and equipment at cost, inclusive of finance lease assets, with the adoption of ASC 842. Atmus depreciates the cost of the majority of its property, plant and equipment using the straight-line method with depreciable lives ranging from 20 to 40 years for buildings and 3 to 15 years for machinery, equipment and fixtures. Finance lease asset amortization is recorded in depreciation expense. Atmus expenses normal maintenance and repair costs as incurred. Depreciation expense totaled $21.5 million, $20.7 million and $21.0 million for the years ended December 31, 2023, 2022 and 2021, respectively. See Note 8, Property, Plant and Equipment Leases |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets Atmus reviews its long-lived assets for possible impairment whenever events or circumstances indicate that the carrying value of an asset or asset group may not be recoverable. Atmus assesses the recoverability of the carrying value of the long-lived assets at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. An impairment of a long-lived asset or asset group exists when the expected future pre-tax cash flows (undiscounted and without interest charges) estimated to be generated by the asset or asset group is less than its carrying value. If these cash flows are less than the carrying value of such asset or asset group, an impairment loss is measured based on the difference between the estimated fair value and carrying value of the asset or asset group. Assumptions and estimates used to estimate cash flows in the evaluation of impairment and the fair values used to determine the impairment are subject to a degree of judgment and complexity. Any changes to the assumptions and estimates resulting from changes in actual results or market conditions from those anticipated may affect the carrying value of long-lived assets and could result in a future impairment charge. |
Leases | Leases Atmus determines if an arrangement contains a lease in whole or in part at the inception of the contract. Right-of-use (“ROU”) assets represent its right to use an underlying asset for the lease term while lease liabilities represent its obligation to make lease payments arising from the lease. All leases greater than 12 months result in the recognition of a ROU asset and a liability at the lease commencement date based on the present value of the lease payments over the lease term. As most of Atmus’ leases do not provide the information required to determine the implicit rate, Atmus uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. This rate is determined considering factors such as the lease term, Atmus’ credit standing and the economic environment of the location of the lease. Atmus uses the implicit rate when readily determinable. Atmus’ lease terms include all non-cancelable periods and may include options to extend (or to not terminate) the lease when it is reasonably certain that Atmus will exercise that option. Leases that have a term of 12 months or less at the commencement date are expensed on a straight-line basis over the lease term and do not result in the recognition of an asset or a liability. Lease expense for operating leases is recognized on a straight-line basis over the lease term. Lease expense for finance leases is generally front-loaded as the finance lease ROU asset is depreciated on a straight- line basis, but interest expense on the liability is recognized utilizing the interest method that results in more expense during the early years of the lease. Atmus has lease agreements with lease and non-lease components, primarily related to real estate, vehicle and information technology (“IT”) assets. For vehicle and real estate leases, Atmus accounts for the lease and non-lease components as a single lease component. For IT leases, Atmus allocates the payment between the lease and non-lease components based on the relative value of each component. See Note 9, Leases |
Goodwill | Goodwill Atmus has the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value as a basis for determining whether it is necessary to perform an annual quantitative goodwill impairment test. Atmus has elected this option for Atmus’ reporting unit. In addition, the carrying value of goodwill must be tested for impairment on an interim basis in certain circumstances where impairment may be indicated. When Atmus is required or opt to perform the quantitative impairment test, the fair value of its reporting unit is estimated with either the market approach or the income approach using a discounted cash flow model. Atmus’ income approach method uses a discounted cash flow model in which cash flows anticipated over several periods, plus a terminal value at the end of that time horizon, are discounted to their present value using an appropriate rate of return. The discounted cash flow model requires Atmus to make projections of revenue, gross margin, operating expenses, working capital investment and fixed asset additions for Atmus’ reporting unit over a multi-year period. Additionally, management must estimate a weighted-average cost of capital, which reflects a market rate, for Atmus’ reporting unit for use as a discount rate. The discounted cash flows are compared to the carrying value of the reporting unit and, if less than the carrying value, the difference is recorded as a goodwill impairment loss. In addition, Atmus also performs a sensitivity analysis to determine how much its forecasts can fluctuate before the fair value of a reporting unit would be lower than its carrying amount. Atmus performs the required procedures as of the end of its fiscal third quarter. Changes in Atmus’ projections or estimates, a deterioration of its operating results and the related cash flow effect or a significant increase in the discount rate could decrease the estimated fair value of its reporting unit and result in a future impairment of goodwill. See Note 10, Goodwill |
Warranty | Warranty Atmus estimates and records a liability for standard warranty programs at the time its products are sold. Atmus’ estimates are based on historical experience and reflect management’s best estimates of expected costs at the time products are sold and subsequent adjustment to those expected costs when actual costs differ. As a result of the uncertainty surrounding the nature and frequency of product campaigns, the liability for such campaigns is recorded when Atmus commits to a recall action or when a recall becomes probable and estimable, which generally occurs when it is announced. Atmus reviews and assesses the liability for these programs on a quarterly basis. See Note 11, Product Warranty Liability |
Research and Development | Research and Development Atmus’ research and development programs are focused on product improvements, product extensions, innovations and cost reductions for its customers. Research and development expenditures include salaries, contractor fees, building costs, utilities, testing, technical IT, administrative expenses and allocation of corporate costs and are expensed, net of contract reimbursements, when incurred. Research and development expenses were $42.3 million, $38.5 million and $41.6 million for the years ended December 31, 2023, 2022 and 2021, respectively. |
Related Party Transactions | Related Party Transactions In accordance with the provisions of various joint venture agreements, Atmus may purchase products and components from its joint ventures, sell products and components to its joint ventures and its joint ventures may sell products and components to unrelated parties. Joint venture transfer prices may differ from normal selling prices. Certain joint venture agreements transfer product at cost, some transfer product on a cost-plus basis, and others transfer product at market value. Atmus also may purchase products and components from other Cummins’ owned entities and sell products to other Cummins’ owned entities. These purchases and sales take place on terms resulting in margins within a reasonable range of market rates. See Note 16, Relationship with Parent and Related Parties |
Segment Information | Segment Information Atmus operates its business as one operating segment and also one reportable segment based on the manner in which Atmus reviews and evaluates operating performance. The operating results are regularly reviewed by Atmus’ chief operating decision maker on a consolidated basis. The chief operating decision maker is Atmus’ Chief Executive Officer. |
Stock-Based Compensation | Stock-Based Compensation Atmus maintains a share-based compensation plan, which authorizes the granting of various equity-based incentives, including restricted stock units (“RSU”s) and performance share units (“PSU”s). Stock compensation expense is generally amortized on a straight line basis over the service period during which awards are expected to vest, generally three years. RSUs are typically granted to selected management employees on an annual basis and vest over three years. Dividend equivalents are paid during the vesting period. The fair value of Atmus’ RSUs and other stock-based awards is measured at the market price of its Common Stock on the grant date. PSUs vest based on varying performance, market and service conditions. The fair value of Atmus’ PSUs is measured at the market price of Atmus’ Common Stock on the grant date. The final award may equal 0 – 200 percent of the target grant, based on Atmus’ actual performance during the vesting period. Forfeitures are estimated on the grant date for all of Atmus’ stock-based compensation awards. |
Pension and other Postretirement Benefits | Pensions and other Postretirement Benefits Atmus and its Parent provide a range of benefits, including pensions, postretirement and post-employment benefits to eligible current and former employees, of which certain of Atmus’ employees participate. For purposes of Atmus’ Consolidated Financial Statements, participation in Cummins plans is being treated as a multiemployer plan. Accordingly, the benefit obligations, plan assets and accumulated other comprehensive income (loss) amounts are not shown in the Consolidated Balance Sheets for these plans. Atmus plans that have been transferred as part of the transaction, however, are treated as single-employer plans. See Note 13, Pensions and Other Postretirement Benefits |
Net Parent Investment | Net Parent Investment Net Parent Investment represents Atmus’ Parent’s historical investment in Atmus, its accumulated net earnings after taxes and the net effect of transactions with and allocations from its Parent prior to the IPO. Net Parent Investment in the Consolidated Balance Sheets represents Cummins’ net investment in Atmus and is presented in lieu of shareholders’ equity. The Consolidated Statements of Changes in Net Parent Investment include net cash transfers between Cummins and Atmus pursuant to the centralized cash management and other treasury-related functions performed by Cummins. The Net Parent Investment account includes the settlement and net effect of transactions with and corporate allocations from Cummins including administrative expenses such as corporate finance, accounting and field shared services, information services, human resources, marketing, corporate office and other services. In the separation agreement, there were certain assets and liabilities which were retained by Cummins and were reflected as Net Parent Investment in the Company’s Consolidated Financial Statements, and those that were transferred to the Company through Net Parent Investment in the Company’s Consolidated Financial Statements. The net effect of other assets and liabilities and related income and expenses recorded at the corporate level and pushed down to Atmus are also included in Net Parent Investment. All transactions reflected in Net Parent Investment in the accompanying Consolidated Balance Sheets have been considered cash receipts and payments for purposes of the Consolidated Statements of Cash Flows and are reflected in financing activities in the accompanying Consolidated Statements of Cash Flows with the exception of certain non-cash items related to an unrecognized tax liability for FIN48 reserves and leased assets and related depreciation, which were retained by Cummins upon completion of Atmus’ IPO. These items have been included as supplemental information to the Consolidated Statements of Cash Flows. |
Recent Accounting Pronouncements Net Yet Adopted | Recent Accounting Pronouncements Net Yet Adopted Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (ASU) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Additionally, it requires a public entity to disclose the title and position of the Chief Operating Decision Maker (“CODM”). The ASU does not change how a public entity identifies its operating segments, aggregates them, or applies the quantitative thresholds to determine its reportable segments. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. A public entity should apply the amendments in this ASU retrospectively to all prior periods presented in the financial statements. Atmus expect this ASU to only impact Atmus’ disclosures with no impacts to Atmus’ results of operations, cash flows and financial condition. Income Taxes (Topic 740): Improvements to Income Tax Disclosures In December 2023, the FASB issued ASU No. 2023-09: Income Taxes (Topic 740): Improvements to Income Tax Disclosures that requires entities to disclose additional information about federal, state, and foreign income taxes primarily related to the income tax rate reconciliation and income taxes paid. The new standard also eliminates certain existing disclosure requirements related to uncertain tax positions and unrecognized deferred tax liabilities. The guidance is effective for Atmus’ fiscal year ending December 31, 2025, with early adoption permitted. The guidance does not affect recognition or measurement in Atmus’ consolidated financial statements. Atmus expects this ASU to only impact its disclosures with no impacts to Atmus’ results of operations, cash flows and financial condition. |
REVENUE FROM CONTRACTS WITH C_2
REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Revenue by Geographic Area | The table below presents Atmus’ consolidated sales by geographic area. Net sales attributed to geographic areas were based on the location of the customer. Years ended December 31, In millions 2023 2022 2021 United States $ 746.5 $ 720.5 $ 619.6 Other international 881.6 841.6 819.2 Total net sales $ 1,628.1 $ 1,562.1 $ 1,438.8 |
Schedule of Revenue by Product Category | The table below presents Atmus’ consolidated sales by product category. Years ended December 31, In millions 2023 2022 2021 Fuel $ 705.2 $ 674.7 $ 612.6 Lube 305.4 306.9 278.7 Air 282.4 267.8 242.9 Other 335.1 312.7 304.6 Total net sales $ 1,628.1 $ 1,562.1 $ 1,438.8 |
INVESTMENTS IN EQUITY INVESTE_2
INVESTMENTS IN EQUITY INVESTEES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Summary of Equity Investees | Ownership December 31, In millions Percentage 2023 2022 Shanghai Fleetguard Filter Co. Ltd. 50.0 % $ 24.9 $ 23.9 Fleetguard Filters Pvt. Ltd. 49.5 % $ 58.0 $ 51.4 Filtrum Fibretechnologies Pvt. Ltd. 49.7 % $ 1.9 $ 1.7 Investments and advances related to equity method investees $ 84.8 $ 77.0 Years ended December 31, In millions 2023 2022 2021 Shanghai Fleetguard Filter Co. Ltd. $ 5.9 $ 5.3 $ 10.2 Fleetguard Filters Pvt. Ltd. $ 21.5 $ 17.1 $ 16.4 Filtrum Fibretechnologies Pvt. Ltd. $ 0.2 $ 0.3 $ 0.2 Atmus share of net income $ 27.6 $ 22.7 $ 26.8 Royalty and interest income $ 6.0 $ 5.3 $ 5.6 Equity, royalty and interest income from investees $ 33.6 $ 28.0 $ 32.4 Years ended December 31, In millions 2023 2022 2021 Net sales 435.2 392.5 429.7 Gross margin 170.0 136.3 98.8 Net income 56.2 38.4 53.9 Atmus share of net income 27.6 22.7 26.8 Royalty and interest income 6.0 5.3 5.6 Total equity, royalty and interest income from investees 33.6 28.0 32.4 Current assets 182.5 157.9 186.0 Non-current assets 87.4 82.0 84.1 Current liabilities (89.1) (75.9) (88.0) Non-current liabilities (4.7) (7.3) (5.3) Net assets 176.1 156.7 176.8 Atmus share of net assets 85.7 78.9 88.1 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
INCOME TAXES | |
Summary of Income Before Income Taxes | Years ended December 31, In millions 2023 2022 2021 U.S. income (1) $ 136.3 $ 69.1 $ 71.9 Foreign income (1) 90.1 142.9 144.7 Income before income taxes $ 226.4 $ 212.0 $ 216.6 (1) The change in the mix of earnings between U.S. and foreign operations from 2022 to 2023 primarily relates to a legal entity restructuring implemented in anticipation of the IPO and the Separation. |
Schedule of Income Tax Expense (Benefit) | Years ended December 31, In millions 2023 2022 2021 Current U.S. federal and state $ 38.4 $ 28.6 $ 15.5 Foreign 26.7 25.7 33.7 Total current income tax expense 65.1 54.3 49.2 Deferred U.S. federal and state (10.4) (11.4) 1.6 Foreign 0.4 (1.3) (4.3) Total deferred income tax expense (benefit) (10.0) (12.7) (2.7) Income tax expense $ 55.1 $ 41.6 $ 46.5 |
Summary of Income Tax Rate to The Effective Tax Rate | Years ended December 31, 2023 2022 2021 Statutory U.S. federal income tax rate 21.0 % 21.0 % 21.0 % State income tax, net of federal effect 1.4 % 0.9 % 1.0 % Differences in rates and taxability of foreign subsidiaries and joint ventures 3.9 % (2.6) % (1.2) % Research tax credits (1.3) % (0.6) % (1.1) % Foreign derived intangible income (1.7) % (1.3) % (1.2) % Valuation allowance — % (0.4) % 0.7 % Uncertain tax positions 0.1 % 2.5 % 1.6 % Other, net 0.9 % 0.1 % 0.7 % Effective tax rate 24.3 % 19.6 % 21.5 % |
Schedule of Deferred Tax Assets and Liabilities | December 31, In millions 2023 2022 Deferred tax assets Foreign carryforward benefits $ 5.6 $ 18.6 Accrued expenses 14.3 15.5 Warranty expenses 2.5 3.5 Lease liabilities 2.7 4.1 Research and development capitalization 15.6 — Other 5.1 12.3 Gross deferred tax assets 45.8 54.0 Valuation allowance (3.7) (16.4) Total deferred tax assets 42.1 37.6 Deferred tax liabilities Property, plant and equipment 7.8 8.0 Unremitted income of foreign subsidiaries and joint ventures 13.9 12.4 Employee benefit plans 0.7 1.2 Lease assets 3.2 4.0 Other 3.7 5.0 Total deferred tax liabilities 29.3 30.6 Net deferred tax assets $ 12.8 $ 7.0 |
Summary of Valuation Allowance | Years ended December 31, In millions 2023 2022 2021 Balance at beginning of year $ 16.4 $ 17.6 $ 16.0 Additions charged to tax expense 0.1 0.4 2.1 Valuation allowance reversal — (1.6) (0.5) Other (1) (12.8) — — Balance at end of year $ 3.7 $ 16.4 $ 17.6 (1) Pursuant to the Separation Agreement, includes certain assets and liabilities, including deferred tax assets, and corresponding valuation allowances which were retained by Cummins. In addition, includes impact of currency changes and the expiration of net operating losses for which a full valuation allowance was recorded. |
Schedule of Income Tax Amounts Recognized in Balance Sheet | December 31, In millions 2023 2022 Prepaid expenses and other current assets Refundable income taxes $ 2.0 $ 0.8 Other assets Deferred income tax assets $ 14.2 $ 14.3 Other accrued expenses Income tax payable $ 10.3 $ 6.0 Other liabilities One-time transition tax $ — $ 0.7 Deferred income tax liabilities $ 1.4 $ 7.3 |
Schedule of Unrecognized Tax Benefits | December 31, In millions 2023 2022 2021 Balance at beginning of year $ 22.2 $ 19.0 $ 16.6 Additions to current year tax positions 0.2 3.2 2.4 Additions to prior years’ tax positions — — — Reductions to prior years’ tax positions (1) (22.2) — — Balance at end of year $ 0.2 $ 22.2 $ 19.0 (1) Pursuant to the Separation Agreement, includes certain assets and liabilities, including contingency reserves which were retained by Cummins |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
INVENTORIES | |
Schedule of Inventories | December 31, In millions 2023 2022 Finished products $ 179.2 $ 195.9 Work-in-process and raw materials 101.1 92.4 Inventories at FIFO cost 280.3 288.3 Excess of FIFO over LIFO (30.3) (43.3) Total inventories $ 250.0 $ 245.0 |
PROPERTY, PLANT AND EQUIPMENT (
PROPERTY, PLANT AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
PROPERTY, PLANT AND EQUIPMENT | |
Summary of Property, Plant and Equipment | December 31, In millions 2023 2022 Land and buildings $ 69.9 $ 68.7 Machinery, equipment and fixtures 320.8 304.1 Construction in process 57.3 35.4 Property, plant and equipment, gross 448.0 408.2 Less: Accumulated depreciation (273.4) (259.8) Property, plant and equipment, net $ 174.6 $ 148.4 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Leases [Abstract] | |
Summary of Supplemental Balance Sheet and Additional Information | December 31, In millions 2023 2022 Balance Sheet Location Assets Operating $ 24.8 $ 32.4 Other assets Finance (1) $ 0.7 $ 0.6 Property, plant and equipment, net Total lease assets $ 25.5 $ 33.0 Liabilities Current Operating $ 7.1 $ 9.0 Other accrued expenses Finance $ 0.3 $ 0.4 Other accrued expenses Long-term Operating $ 18.5 $ 23.2 Other liabilities Finance $ 0.5 $ 0.7 Other liabilities Total lease liabilities $ 26.4 $ 33.3 (1) Finance lease assets were recorded net of accumulated amortization of $0.9 million and $1.3 million at December 31, 2023 and 2022. |
Schedule of Supplemental Cash Flow and Other Information | Years ended December 31, In millions 2023 2022 2021 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 8.8 $ 9.4 $ 9.4 Right-of-use assets obtained in exchange for lease obligations Operating leases $ 11.8 $ 7.4 $ 14.7 Finance leases $ 0.2 $ 0.8 $ 1.0 |
Schedule of Supplemental Cash Flow and Other Information Related to Leases | December 31, 2023 2022 Weighted-average remaining lease term (in years) Operating leases 4.2 3.8 Finance leases 3.2 3.6 Weighted-average discount rate Operating leases 4.9 % 3.4 % Finance leases 2.2 % 1.5 % |
Summary of Future Minimum Lease Payments Due to Operating Leases | Finance Operating In millions Leases Leases 2024 $ 0.4 $ 8.1 2025 0.2 6.8 2026 0.1 6.0 2027 0.1 3.6 2028 0.1 2.0 After 2028 — 2.1 Total minimum lease payments 0.9 28.6 Interest (0.1) (3.0) Present value of net minimum lease payments $ 0.8 $ 25.6 |
Summary of Future Minimum Lease Payments Due to Finance Leases | Finance Operating In millions Leases Leases 2024 $ 0.4 $ 8.1 2025 0.2 6.8 2026 0.1 6.0 2027 0.1 3.6 2028 0.1 2.0 After 2028 — 2.1 Total minimum lease payments 0.9 28.6 Interest (0.1) (3.0) Present value of net minimum lease payments $ 0.8 $ 25.6 |
PRODUCT WARRANTY LIABILITY (Tab
PRODUCT WARRANTY LIABILITY (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
PRODUCT WARRANTY LIABILITY | |
Summary of Activity in Product Warranty Account | A tabular reconciliation of the product warranty liability, including accrued product campaigns, was as follows: December 31, In millions 2023 2022 2021 Balance, beginning of year $ 15.5 $ 23.9 $ 23.2 Provision for base warranties issued 8.6 1.6 5.9 Payments made during period (6.0) (7.0) (7.6) Changes in estimates for pre-existing product warranties (4.0) (2.6) 2.2 Foreign currency translation and other (0.1) (0.4) 0.2 Balance, end of year $ 14.0 $ 15.5 $ 23.9 Warranty liabilities on Atmus’ Consolidated Balance Sheets were as follows: December 31, In millions 2023 2022 Current portion $ 5.4 $ 5.9 Long-term portion 8.6 9.6 Total $ 14.0 $ 15.5 |
DEBT AND BORROWING ARRANGEMEN_2
DEBT AND BORROWING ARRANGEMENTS (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
DEBT AND BORROWING ARRANGEMENTS | |
Schedule of Credit Lines Available | Atmus’ credit lines available as of December 31, 2023 and December 31, 2022 include: As of December 31, 2023 As of December 31, 2022 Facility Amount Borrowed Amount Facility Amount Borrowed Amount (in millions) Credit facilities: Term loan September 30, 2027 (1) 600.0 600.0 — — Revolving credit facility September 30, 2027 (1) 400.0 — — — (1) Atmus maintains a term loan facility and a revolving credit facility as part of the Credit Agreement. The Credit Agreement includes financial covenants that Atmus maintain certain net leverage, secured net leverage and interest coverage ratios. At December 31, 2023, Atmus complied with all financial covenants. The Credit Agreement also contains customary representations, events of default and covenants, including restrictions on the level of borrowing. |
Schedule of Aggregate Principal Maturities of Long-Term Debt | Over the next five years, aggregate principal maturities of Atmus’ long-term debt are (in millions): 2024 2025 2026 2027 2028 Thereafter Total $ 7.5 $ 22.5 $ 30.0 $ 540.0 $ — $ — $ 600.0 |
PENSIONS AND OTHER POSTRETIRE_2
PENSIONS AND OTHER POSTRETIREMENT BENEFITS (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
PENSIONS AND OTHER POSTRETIREMENT BENEFITS | |
Summary of Defined Benefit Plans and Significant Atmus Plans | The following is a listing of significant defined benefit pension plans sponsored by Cummins in which eligible Atmus employees and retirees participate: Country Name of Defined Benefit Plan(s) Mexico Pension Plan, Seniority Premium, Termination Indemnity(a) United Kingdom Cummins UK Pension Plan United States The Cummins Pension Plan Cummins Inc. Excess Benefit Retirement Plan Cummins Inc. Postretirement Health Care and Life Insurance Plans The following is a listing of significant Atmus Plans: Country Name of Defined Benefit Plan(s) Belgium Reglement Plannen Leven en Overligden France Indemnité de Départ en Retraite Germany ersorgungsordnung von October 1979 Japan Employee Retirement Allowance Plan Mexico Pension Plan, Seniority Premium, Termination Indemnity (a) (a) New plans have been established in Mexico, but for a period of time, certain Atmus employees will continue to participate in the Cummins’ plans until they are transferred into the new Atmus plans. |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Equity [Abstract] | |
Schedule of Changes In Accumulated Other Comprehensive Loss By Component | Following are the changes in accumulated other comprehensive income (loss) by component: For the Years Ended December 31, 2023 2022 2021 (in millions) Currency translation adjustments: Balance at beginning of period $ (56.7) $ (40.1) $ (28.1) Currency translation adjustments $ 0.6 $ (16.6) $ (12.0) Other comprehensive income (loss), net $ 0.6 $ (16.6) $ (12.0) Balance at end of period $ (56.1) $ (56.7) $ (40.1) Pensions and other benefit plans: Balance at beginning of period $ 0.9 $ (1.5) $ (2.2) Change in pensions and other benefit plans $ (1.5) $ 3.1 $ 1.0 Tax benefit (expense) $ 0.5 $ (0.7) $ (0.3) Other comprehensive (loss) income, net $ (1.0) $ 2.4 $ 0.7 Balance at end of period $ (0.1) $ 0.9 $ (1.5) Accumulated other comprehensive loss: Balance at beginning of period $ (55.8) $ (41.6) $ (30.3) Total other comprehensive loss, net $ (0.4) $ (14.2) $ (11.3) Balance at end of period $ (56.2) $ (55.8) $ (41.6) |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Stock-Based Compensation | |
Schedule of RSU and PSU Activity | Weighted-Average Weighted-Average Number of Fair Value Per Aggregate Fair Shares Grant Date Share Value Balance at January 1, 2023 — $ — Granted 763,480 Various 28.34 $ 21.6 million Vested — — Forfeited — — Balance at December 31, 2023 763,480 28.34 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
EARNINGS PER SHARE | |
Schedule of Basic and Diluted Earnings per Share | Basic and diluted EPS were calculated as follows: For the Years Ended December 31, 2023 2022 2021 (in millions, except per share data) Net income $ 171.3 $ 170.4 $ 170.1 Weighted-average shares for basic EPS 83.3 83.3 83.3 Plus incremental shares from assumed conversions of long-term incentive plan shares 0.1 — — Weighted-average shares for diluted EPS 83.4 83.3 83.3 Basic earnings per share 2.06 2.05 2.04 Diluted earnings per share $ 2.05 $ 2.05 $ 2.04 |
SUPPLEMENTAL BALANCE SHEET DA_2
SUPPLEMENTAL BALANCE SHEET DATA (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
SUPPLEMENTAL BALANCE SHEET DATA | |
Schedule of Other Assets | Other assets included the following: December 31, December 31, 2023 2022 (in millions) Operating lease assets (1) $ 24.8 $ 32.4 Deferred income taxes 14.2 14.3 Long-term receivables 3.1 3.1 Other 9.4 7.2 Other assets $ 51.5 $ 57.0 (1) Balances at December 31, 2022 included an unrecognized tax liability for FIN48 reserves and leased assets and related depreciation, which have been retained by Cummins upon completion of Atmus’ IPO and are no longer included on Atmus’ Consolidated Balance Sheets at December 31, 2023. See Note 1, Description of the Business Basis of Presentation |
Schedule of Other Accrued Expenses | Other accrued expenses included the following: December 31, December 31, 2023 2022 (in millions) Marketing accruals $ 42.6 $ 47.3 Other taxes payables 12.7 7.5 Income taxes payable 10.3 6.0 Current portion of operating lease liabilities (1) 7.1 9.0 Current portion of finance lease liabilities 0.3 0.4 Other 10.7 8.8 Other accrued expenses $ 83.7 $ 79.0 (1) Balances at December 31, 2022 included an unrecognized tax liability for FIN48 reserves and leased assets and related depreciation, which have been retained by Cummins upon completion of Atmus’ IPO and are no longer included on Atmus’ Consolidated Balance Sheets at December 31, 2023. See Note 1, Description of the Business Basis of Presentation |
Schedule of Other Liabilities | Other liabilities included the following: December 31, December 31, 2023 2022 (in millions) Long-term portion of operating lease liabilities (1) $ 18.5 $ 23.2 Deferred income taxes 1.4 7.3 Long-term income taxes (1) 0.2 29.8 Other long-term liabilities 11.7 10.9 Other liabilities $ 31.8 $ 71.2 (1) Balances at December 31, 2022 included an unrecognized tax liability for FIN48 reserves and leased assets and related depreciation, which have been retained by Cummins upon completion of Atmus’ IPO and are no longer included on Atmus’ Consolidated Balance Sheets at December 31, 2023. See Note 1, Description of the Business Basis of Presentation |
DESCRIPTION OF THE BUSINESS (De
DESCRIPTION OF THE BUSINESS (Details) $ in Millions | 12 Months Ended | ||
May 26, 2023 USD ($) shares | Dec. 31, 2023 USD ($) country | Sep. 30, 2022 USD ($) | |
Description of Business [Line Items] | |||
Number of countries | country | 140 | ||
Atmus Filtration Technologies Inc. And Subsidiaries | Cummins Filtration, Inc. | |||
Description of Business [Line Items] | |||
Ownership Percentage | 80.50% | ||
IPO | Cummins Filtration, Inc. | |||
Description of Business [Line Items] | |||
Number of shares issued in transaction (in shares) | shares | 16,243,070 | ||
Over-Allotment Option | Cummins Filtration, Inc. | |||
Description of Business [Line Items] | |||
Number of shares issued in transaction (in shares) | shares | 2,118,661 | ||
Revolving Credit Facility | Atmus Credit Agreement | Line of Credit | |||
Description of Business [Line Items] | |||
Line of credit facility, maximum borrowing capacity | $ 1,000 | ||
Proceeds from debt borrowings | $ 650 | ||
Revolving Credit Facility | Atmus Term Loan Facility | Line of Credit | |||
Description of Business [Line Items] | |||
Line of credit facility, maximum borrowing capacity | $ 600 | 600 | |
Proceeds from debt borrowings | 600 | ||
Revolving Credit Facility | Atmus Revolving Credit Facility | Line of Credit | |||
Description of Business [Line Items] | |||
Line of credit facility, maximum borrowing capacity | 400 | $ 400 | |
Proceeds from debt borrowings | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 USD ($) segment | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Threshold period past due for customers | 60 days | ||
Foreign currency transaction | $ (3.3) | $ 0.3 | $ 0.4 |
Allowance for credit loss | $ 2.9 | $ 2.4 | |
Percentage of LIFO inventory | 32.10% | 34.40% | |
Depreciation | $ 21.5 | $ 20.7 | 21 |
Research and development expense | $ 42.3 | 38.5 | $ 41.6 |
Number of operating segments | segment | 1 | ||
Number of reportable segments | segment | 1 | ||
Stock-Based compensation vesting period | 3 years | ||
Restricted Stock Units (RSUs) | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Stock-Based compensation vesting period | 3 years | ||
Minimum | Building | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Useful life of property, plant, and equipment | 20 years | ||
Minimum | Machinery and Equipment | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Useful life of property, plant, and equipment | 3 years | ||
Maximum | Building | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Useful life of property, plant, and equipment | 40 years | ||
Maximum | Machinery and Equipment | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Useful life of property, plant, and equipment | 15 years | ||
Russian Operations | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Reserve established for accounts receivable | $ 1.5 | 1.7 | |
Inventory written off | $ 0 | $ 0.6 |
REVENUE FROM CONTRACTS WITH C_3
REVENUE FROM CONTRACTS WITH CUSTOMERS (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Disaggregation of Revenue [Line Items] | |||
Net sales | $ 1,628.1 | $ 1,562.1 | $ 1,438.8 |
Fuel | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | 705.2 | 674.7 | 612.6 |
Lube | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | 305.4 | 306.9 | 278.7 |
Air | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | 282.4 | 267.8 | 242.9 |
Other | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | 335.1 | 312.7 | 304.6 |
United States | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | 746.5 | 720.5 | 619.6 |
Other international | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | $ 881.6 | $ 841.6 | $ 819.2 |
REVENUE FROM CONTRACTS WITH C_4
REVENUE FROM CONTRACTS WITH CUSTOMERS - Narrative (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 USD ($) customer | Dec. 31, 2022 USD ($) customer | Dec. 31, 2021 USD ($) customer | |
Disaggregation of Revenue [Line Items] | |||
Number of customer representing 10% or more | customer | 2 | 2 | 2 |
Revenue from Contract with Customer Benchmark | Customer Concentration Risk | Related Party | |||
Disaggregation of Revenue [Line Items] | |||
Percentage of net sales | 17.40% | 19.30% | 18.50% |
Revenues | $ | $ 282.5 | $ 302.2 | $ 266.8 |
PACCAR | Revenue from Contract with Customer Benchmark | Customer Concentration Risk | |||
Disaggregation of Revenue [Line Items] | |||
Percentage of net sales | 15.60% | 16.20% | 15.10% |
Traton Group | Revenue from Contract with Customer Benchmark | Customer Concentration Risk | |||
Disaggregation of Revenue [Line Items] | |||
Percentage of net sales | 11.80% | 12% | 11.70% |
INVESTMENTS IN EQUITY INVESTE_3
INVESTMENTS IN EQUITY INVESTEES - Investments and Advances Related to Equity Method Investees (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 |
Schedule of Equity Method Investments [Line Items] | ||
Investments and advances related to equity method investees | $ 84.8 | $ 77 |
Shanghai Fleetguard Filter Co. Ltd. | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership Percentage | 50% | |
Investments and advances related to equity method investees | $ 24.9 | 23.9 |
Fleetguard Filters Pvt. Ltd. | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership Percentage | 49.50% | |
Investments and advances related to equity method investees | $ 58 | 51.4 |
Filtrum Fibretechnologies Pvt. Ltd. | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership Percentage | 49.70% | |
Investments and advances related to equity method investees | $ 1.9 | $ 1.7 |
INVESTMENTS IN EQUITY INVESTE_4
INVESTMENTS IN EQUITY INVESTEES - Narrative (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 USD ($) site | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Schedule of Equity Method Investments [Line Items] | |||
Dividends received | $ | $ 19.8 | $ 23.1 | $ 24 |
Shanghai Fleetguard Filter Co. Ltd. | |||
Schedule of Equity Method Investments [Line Items] | |||
Ownership Percentage | 50% | ||
Number of manufacturing sites | 3 | ||
Fleetguard Filters Pvt. Ltd. | |||
Schedule of Equity Method Investments [Line Items] | |||
Ownership Percentage | 49.50% | ||
Number of manufacturing sites | 7 |
INVESTMENTS IN EQUITY INVESTE_5
INVESTMENTS IN EQUITY INVESTEES - Equity, Royalty and Interest Income From Investees (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule of Equity Method Investments [Line Items] | |||
Atmus share of net income | $ 27.6 | $ 22.7 | $ 26.8 |
Royalty and interest income | 6 | 5.3 | 5.6 |
Equity, royalty and interest income from investees | 33.6 | 28 | 32.4 |
Shanghai Fleetguard Filter Co. Ltd. | |||
Schedule of Equity Method Investments [Line Items] | |||
Atmus share of net income | 5.9 | 5.3 | 10.2 |
Fleetguard Filters Pvt. Ltd. | |||
Schedule of Equity Method Investments [Line Items] | |||
Atmus share of net income | 21.5 | 17.1 | 16.4 |
Filtrum Fibretechnologies Pvt. Ltd. | |||
Schedule of Equity Method Investments [Line Items] | |||
Atmus share of net income | $ 0.2 | $ 0.3 | $ 0.2 |
INVESTMENTS IN EQUITY INVESTE_6
INVESTMENTS IN EQUITY INVESTEES - Equity Investees (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule of Equity Method Investments [Line Items] | |||
Gross margin | $ 432.7 | $ 359.2 | $ 349.3 |
Net income | 171.3 | 170.4 | 170.1 |
Total equity, royalty and interest income from investees | 33.6 | 28 | 32.4 |
Current assets | 693 | 500.3 | |
Current liabilities | (375) | (331) | |
Atmus share of net assets | 85.7 | 78.9 | 88.1 |
Equity Method Investment, Nonconsolidated Investee or Group of Investees | |||
Schedule of Equity Method Investments [Line Items] | |||
Net sales | 435.2 | 392.5 | 429.7 |
Gross margin | 170 | 136.3 | 98.8 |
Net income | 56.2 | 38.4 | 53.9 |
Atmus share of net income | 27.6 | 22.7 | 26.8 |
Royalty and interest income | 6 | 5.3 | 5.6 |
Current assets | 182.5 | 157.9 | 186 |
Non-current assets | 87.4 | 82 | 84.1 |
Current liabilities | (89.1) | (75.9) | (88) |
Non-current liabilities | (4.7) | (7.3) | (5.3) |
Net assets | $ 176.1 | $ 156.7 | $ 176.8 |
INCOME TAXES - Income Before In
INCOME TAXES - Income Before Income Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
INCOME TAXES | |||
U.S. income | $ 136.3 | $ 69.1 | $ 71.9 |
Foreign income | 90.1 | 142.9 | 144.7 |
Income before income taxes | $ 226.4 | $ 212 | $ 216.6 |
INCOME TAXES - Income Tax Expen
INCOME TAXES - Income Tax Expense (Benefit) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Current | |||
U.S. federal and state | $ 38.4 | $ 28.6 | $ 15.5 |
Foreign | 26.7 | 25.7 | 33.7 |
Total current income tax expense | 65.1 | 54.3 | 49.2 |
Deferred | |||
U.S. federal and state | (10.4) | (11.4) | 1.6 |
Foreign | 0.4 | (1.3) | (4.3) |
Total deferred income tax expense (benefit) | (10) | (12.7) | (2.7) |
Income tax expense | $ 55.1 | $ 41.6 | $ 46.5 |
INCOME TAXES - Effective Tax Ra
INCOME TAXES - Effective Tax Rate (Details) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
INCOME TAXES | |||
Statutory U.S. federal income tax rate | 21% | 21% | 21% |
State income tax, net of federal effect | 1.40% | 0.90% | 1% |
Differences in rates and taxability of foreign subsidiaries and joint ventures | 3.90% | (2.60%) | (1.20%) |
Research tax credits | (1.30%) | (0.60%) | (1.10%) |
Foreign derived intangible income | (1.70%) | (1.30%) | (1.20%) |
Valuation allowance | (0.40%) | 0.70% | |
Uncertain tax positions | 0.10% | 2.50% | 1.60% |
Other, net | 0.90% | 0.10% | 0.70% |
Effective tax rate | 24.30% | 19.60% | 21.50% |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
INCOME TAXES | |||
Income Taxes Paid | $ 41.3 | $ 20.3 | $ 17.6 |
Effective tax rate | 24.30% | 19.60% | 21.50% |
Indefinitely reinvested non-U.S. earnings | $ 129.9 | ||
Accrued interest expense | $ 0 | $ 7 | $ 5 |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of the valuation allowance (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
INCOME TAXES | |||
Additions charged to tax expense | $ 0.1 | $ 0.4 | $ 2.1 |
Valuation allowance reversal | $ (1.6) | $ (0.5) | |
Other | $ (12.8) |
INCOME TAXES - Net Deferred Tax
INCOME TAXES - Net Deferred Tax Assets (Liabilities) (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Deferred tax assets | ||||
Foreign carryforward benefits | $ 5.6 | $ 18.6 | ||
Accrued expenses | 14.3 | 15.5 | ||
Warranty expenses | 2.5 | 3.5 | ||
Lease liabilities | 2.7 | 4.1 | ||
Research and development capitalization | 15.6 | |||
Other | 5.1 | 12.3 | ||
Gross deferred tax assets | 45.8 | 54 | ||
Valuation allowance | (3.7) | (16.4) | $ (17.6) | $ (16) |
Total deferred tax assets | 42.1 | 37.6 | ||
Deferred tax liabilities | ||||
Property, plant and equipment | 7.8 | 8 | ||
Unremitted income of foreign subsidiaries and joint ventures | 13.9 | 12.4 | ||
Employee benefit plans | 0.7 | 1.2 | ||
Lease assets | 3.2 | 4 | ||
Other | 3.7 | 5 | ||
Total deferred tax liabilities | 29.3 | 30.6 | ||
Net deferred tax assets | $ 12.8 | $ 7 |
INCOME TAXES - Balance Sheet Ta
INCOME TAXES - Balance Sheet Tax Items (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 |
Prepaid expenses and other current assets | ||
Refundable income taxes | $ 2 | $ 0.8 |
Other assets | ||
Deferred income tax assets | 14.2 | 14.3 |
Other accrued expenses | ||
Income tax payable | 10.3 | 6 |
Other liabilities | ||
One-time transition tax | 0.7 | |
Deferred income tax liabilities | $ 1.4 | $ 7.3 |
INCOME TAXES - Unrecognized Tax
INCOME TAXES - Unrecognized Tax Benefits (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Balance at beginning of year | $ 22.2 | $ 19 | $ 16.6 |
Additions to current year tax positions | 0.2 | 3.2 | 2.4 |
Reductions to prior years' tax positions | (22.2) | ||
Balance at end of year | $ 0.2 | $ 22.2 | $ 19 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 |
INVENTORIES | ||
Finished products | $ 179.2 | $ 195.9 |
Work-in-process and raw materials | 101.1 | 92.4 |
Inventories at FIFO cost | 280.3 | 288.3 |
Excess of FIFO over LIFO | (30.3) | (43.3) |
Total inventories | $ 250 | $ 245 |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 448 | $ 408.2 |
Less: Accumulated depreciation | (273.4) | (259.8) |
Property, plant and equipment, net | 174.6 | 148.4 |
Land and buildings | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 69.9 | 68.7 |
Machinery, equipment and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 320.8 | 304.1 |
Construction in process | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 57.3 | $ 35.4 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Lessee, Lease, Description [Line Items] | |||
Operating lease cost | $ 10.5 | $ 10.7 | $ 10.6 |
Real Estate | |||
Lessee, Lease, Description [Line Items] | |||
Renewal term | 10 years | ||
Minimum | Real Estate | |||
Lessee, Lease, Description [Line Items] | |||
Term of contract | 2 years | ||
Minimum | Equipment | |||
Lessee, Lease, Description [Line Items] | |||
Term of contract | 2 years | ||
Maximum | Real Estate | |||
Lessee, Lease, Description [Line Items] | |||
Term of contract | 50 years | ||
Maximum | Equipment | |||
Lessee, Lease, Description [Line Items] | |||
Term of contract | 3 years |
LEASES - Supplemental Balance S
LEASES - Supplemental Balance Sheet Information (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 |
ASSETS | ||
Operating lease assets | $ 24.8 | $ 32.4 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Other Assets, Noncurrent | Other Assets, Noncurrent |
Finance | $ 0.7 | $ 0.6 |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Other assets | Other assets |
Total lease assets | $ 25.5 | $ 33 |
Current | ||
Current portion of operating lease liabilities | $ 7.1 | $ 9 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Other accrued expenses | Other accrued expenses |
Finance | $ 0.3 | $ 0.4 |
Finance Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Other accrued expenses | Other accrued expenses |
Long-term | ||
Long-term portion of operating lease liabilities | $ 18.5 | $ 23.2 |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Other liabilities | Other liabilities |
Finance | $ 0.5 | $ 0.7 |
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Other liabilities | Other liabilities |
Total lease liabilities | $ 26.4 | $ 33.3 |
Accumulated amortization | $ 0.9 | $ 1.3 |
LEASES - Supplemental Cash Flow
LEASES - Supplemental Cash Flows (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Cash paid for amounts included in the measurement of lease liabilities | |||
Operating cash flows from operating leases | $ 8.8 | $ 9.4 | $ 9.4 |
Right-of-use assets obtained in exchange for lease obligations | |||
Operating leases | 11.8 | 7.4 | 14.7 |
Finance leases | $ 0.2 | $ 0.8 | $ 1 |
LEASES - Additional Lease Infor
LEASES - Additional Lease Information (Details) | Dec. 31, 2023 | Dec. 31, 2022 |
Weighted-average remaining lease term (in years) | ||
Operating leases | 4 years 2 months 12 days | 3 years 9 months 18 days |
Finance leases | 3 years 2 months 12 days | 3 years 7 months 6 days |
Weighted-average discount rate | ||
Operating leases | 4.90% | 3.40% |
Finance leases | 2.20% | 1.50% |
GOODWILL (Details)
GOODWILL (Details) | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
GOODWILL | |
Goodwill impairment | $ 0 |
PRODUCT WARRANTY LIABILITY - Pr
PRODUCT WARRANTY LIABILITY - Product Warranty Account (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | |||
Balance, beginning of year | $ 15.5 | $ 23.9 | $ 23.2 |
Provision for base warranties issued | 8.6 | 1.6 | 5.9 |
Payments made during period | (6) | (7) | (7.6) |
Changes in estimates for pre-existing product warranties | (4) | (2.6) | 2.2 |
Foreign currency translation and other | (0.1) | (0.4) | 0.2 |
Balance, end of year | $ 14 | $ 15.5 | $ 23.9 |
PRODUCT WARRANTY LIABILITY - Wa
PRODUCT WARRANTY LIABILITY - Warranty Liability (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 |
PRODUCT WARRANTY LIABILITY | ||
Current portion | $ 5.4 | $ 5.9 |
Long-term portion | 8.6 | 9.6 |
Total | $ 14 | $ 15.5 |
PRODUCT WARRANTY LIABILITY - Na
PRODUCT WARRANTY LIABILITY - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Product Warranty Liability [Line Items] | |||||
Provision for base warranties issued | $ 8.6 | $ 1.6 | $ 5.9 | ||
Warranty accrual | 14 | $ 15.5 | $ 23.9 | $ 23.2 | |
Fuel Heater Campaign | |||||
Product Warranty Liability [Line Items] | |||||
Provision for base warranties issued | $ 24.2 | $ 24.2 | |||
Warranty accrual | $ 3 |
DEBT AND BORROWING ARRANGEMEN_3
DEBT AND BORROWING ARRANGEMENTS - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | |
May 26, 2023 | Dec. 31, 2023 | |
Line of Credit Facility [Line Items] | ||
Long-term debt proceeds | $ 650 | |
Long-term debt | $ 594 | |
Revolving Credit Facility | Atmus Credit Agreement | Line of Credit | ||
Line of Credit Facility [Line Items] | ||
Long-term debt proceeds | $ 650 | |
Proceeds from debt borrowings | $ 650 | |
Revolving Credit Facility | Atmus Credit Agreement | Line of Credit | Secured Overnight Financing Rate | Variable Rate Component One | ||
Line of Credit Facility [Line Items] | ||
Interest rate | 0.10% | |
Revolving Credit Facility | Atmus Credit Agreement | Line of Credit | Secured Overnight Financing Rate | Minimum | Variable Rate Component Two | ||
Line of Credit Facility [Line Items] | ||
Interest rate | 1.125% | |
Revolving Credit Facility | Atmus Credit Agreement | Line of Credit | Secured Overnight Financing Rate | Maximum | Variable Rate Component Two | ||
Line of Credit Facility [Line Items] | ||
Interest rate | 1.75% | |
Revolving Credit Facility | Atmus Term Loan Facility | Line of Credit | ||
Line of Credit Facility [Line Items] | ||
Proceeds from debt borrowings | $ 600 | |
Revolving Credit Facility | Atmus Revolving Credit Facility | Line of Credit | ||
Line of Credit Facility [Line Items] | ||
Proceeds from debt borrowings | $ 0 |
DEBT AND BORROWING ARRANGEMEN_4
DEBT AND BORROWING ARRANGEMENTS - Schedule of Credit Lines Available (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Sep. 30, 2022 |
Line of Credit Facility [Line Items] | ||
Borrowed Amount | $ 600 | |
Revolving Credit Facility | Atmus Credit Agreement | Line of Credit | ||
Line of Credit Facility [Line Items] | ||
Facility Amount | $ 1,000 | |
Revolving Credit Facility | Atmus Term Loan Facility | Line of Credit | ||
Line of Credit Facility [Line Items] | ||
Facility Amount | 600 | 600 |
Borrowed Amount | 600 | |
Revolving Credit Facility | Atmus Revolving Credit Facility | Line of Credit | ||
Line of Credit Facility [Line Items] | ||
Facility Amount | $ 400 | $ 400 |
DEBT AND BORROWING ARRANGEMEN_5
DEBT AND BORROWING ARRANGEMENTS - Schedule of Long Term Debt (Details) $ in Millions | Dec. 31, 2023 USD ($) |
DEBT AND BORROWING ARRANGEMENTS | |
2024 | $ 7.5 |
2025 | 22.5 |
2026 | 30 |
2027 | 540 |
Total | $ 600 |
PENSIONS AND OTHER POSTRETIRE_3
PENSIONS AND OTHER POSTRETIREMENT BENEFITS (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) country | Dec. 31, 2021 USD ($) | |
PENSIONS AND OTHER POSTRETIREMENT BENEFITS | |||
Defined benefit pension plan service costs | $ 5.7 | $ 5.8 | $ 6.8 |
Non-service benefit | 3.4 | $ 3.4 | 2.7 |
Number of countries with newly established plans | country | 2 | ||
Defined benefit pension plan expenses | 0.9 | $ 2 | 0.8 |
Service costs | 0.6 | 1.5 | $ 0.6 |
Defined benefit pension plan liability | $ 9.6 | $ 7.3 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance at beginning of period | $ 455.6 | $ 427.6 | $ 445.3 |
Total other comprehensive loss, net of tax | (0.4) | (14.2) | (11.3) |
Balance at end of period | 80.7 | 455.6 | 427.6 |
Accumulated Other Comprehensive Loss | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance at beginning of period | (55.8) | (41.6) | (30.3) |
Total other comprehensive loss, net of tax | (0.4) | (14.2) | (11.3) |
Balance at end of period | (56.2) | (55.8) | (41.6) |
Currency translation adjustments: | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance at beginning of period | (56.7) | (40.1) | (28.1) |
Total other comprehensive loss, net of tax | 0.6 | (16.6) | (12) |
Balance at end of period | (56.1) | (56.7) | (40.1) |
Pensions and other benefit plans: | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance at beginning of period | 0.9 | (1.5) | (2.2) |
Change in pensions and other benefit plans | (1.5) | 3.1 | 1 |
Tax benefit (expense) | 0.5 | (0.7) | (0.3) |
Total other comprehensive loss, net of tax | (1) | 2.4 | 0.7 |
Balance at end of period | $ (0.1) | $ 0.9 | $ (1.5) |
RELATIONSHIP WITH PARENT AND _2
RELATIONSHIP WITH PARENT AND RELATED PARTIES (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Related Party Transaction [Line Items] | |||
Allocated corporate costs | $ 13.7 | $ 45 | $ 54.3 |
Related party receivables | 62.3 | 61.8 | |
Net sales | 1,628.1 | 1,562.1 | 1,438.8 |
Related Party | |||
Related Party Transaction [Line Items] | |||
Related party receivables | 37.9 | 52 | |
Accounts payable | 54.8 | 57.6 | |
Net sales | $ 282.5 | $ 302.2 | $ 266.8 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Compensation expense | $ 5.5 | $ 0 | $ 0 |
Unamortized compensation expense | $ 16.1 | ||
Unamortized compensation expense, period of recognition | 2 years 4 months 24 days | ||
Common Stock | Omnibus Incentive Plan | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Maximum issuance of common stock (in shares) | 7.5 |
Stock-Based Compensation - RSU
Stock-Based Compensation - RSU and PSU Activity (Details) $ / shares in Units, shares in Thousands, $ in Millions | 12 Months Ended |
Dec. 31, 2023 USD ($) $ / shares shares | |
Number of Shares | |
Granted (in shares) | shares | 763,480 |
Outstanding at December 31, 2023 (in shares) | shares | 763,480 |
Weighted-Average Fair Value Per Share | |
Granted, Weighted average fair value per share (in dollars per share) | $ / shares | $ 28.34 |
Outstanding, Weighted average fair value per share at December 31, 2023 (in dollars per share) | $ / shares | $ 28.34 |
Weighted-Average Aggregate Fair Value | |
Granted | $ | $ 21.6 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
EARNINGS PER SHARE | |||
Net income | $ 171.3 | $ 170.4 | $ 170.1 |
Weighted-average shares for basic EPS (in shares) | 83,300,000 | 83,300,000 | 83,300,000 |
Plus incremental shares from assumed conversions of long-term incentive plan shares (in shares) | 100,000 | ||
Weighted-average shares for diluted EPS (in shares) | 83,400,000 | 83,300,000 | 83,300,000 |
Basic earnings per share (in dollars per share) | $ 2.06 | $ 2.05 | $ 2.04 |
Diluted earnings per share (in dollars per share) | $ 2.05 | $ 2.05 | $ 2.04 |
Anti-dilutive shares (in shares) | 0 | 0 |
SUPPLEMENTAL BALANCE SHEET DA_3
SUPPLEMENTAL BALANCE SHEET DATA - Schedule of Other Assets (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 |
SUPPLEMENTAL BALANCE SHEET DATA | ||
Operating lease assets | $ 24.8 | $ 32.4 |
Deferred income taxes | 14.2 | 14.3 |
Long-term receivables | 3.1 | 3.1 |
Other | $ 9.4 | $ 7.2 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Other assets | Other assets |
Other assets | $ 51.5 | $ 57 |
SUPPLEMENTAL BALANCE SHEET DA_4
SUPPLEMENTAL BALANCE SHEET DATA - Schedule of Other Accrued Expenses (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 |
SUPPLEMENTAL BALANCE SHEET DATA. | ||
Marketing accruals | $ 42.6 | $ 47.3 |
Other taxes payables | 12.7 | 7.5 |
Income tax payable | 10.3 | 6 |
Current portion of operating lease liabilities | 7.1 | 9 |
Current portion of finance lease liabilities | 0.3 | 0.4 |
Other | 10.7 | 8.8 |
Other accrued expenses | $ 83.7 | $ 79 |
SUPPLEMENTAL BALANCE SHEET DA_5
SUPPLEMENTAL BALANCE SHEET DATA - Schedule of Other Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 |
SUPPLEMENTAL BALANCE SHEET DATA. | ||
Long-term portion of operating lease liabilities | $ 18.5 | $ 23.2 |
Deferred income taxes | 1.4 | 7.3 |
Long-term income taxes | 0.2 | 29.8 |
Other long-term liabilities | 11.7 | 10.9 |
Other liabilities | $ 31.8 | $ 71.2 |