ATMU Industrial Filtration · Filtration · Aftermarket · Cummins spinout · Thesis updated July 12, 2026

A steadier filter business needs a rebound

Atmus is mainly a replacement-filter business, with aftermarket sales making up about 86% of 2025 net sales.
The new Industrial Solutions segment added $38 million of Q1 2026 sales and a 21.9% adjusted EBITDA margin.
The much larger Power Solutions segment still showed slightly lower organic volume in Q1 2026.
Management kept full-year 2026 guidance for 10% to 14% revenue growth and 19.5% to 20.5% adjusted EBITDA margins.
Customer concentration is high, with Cummins, PACCAR, and Traton making up 18.8%, 16.3%, and 11.5% of 2025 net sales.

01 Running thesis

A race between new growth and old softness

Atmus has a simple core idea. Engines and heavy machines need filters, and those filters must be replaced over time. That gives the company a large recurring base. In 2025, aftermarket sales were about 86% of net sales, while first-fit sales to original equipment makers were about 14%.

The bull case got more real in Q1 2026. Koch Filter, now reported as Industrial Solutions, added $38 million of sales in its first full quarter inside Atmus. Its 21.9% adjusted EBITDA margin was strong. That matters because industrial air filtration can move Atmus beyond its legacy engine and equipment cycle.

The bear case did not go away. Power Solutions, the legacy business, is still almost all of revenue. It posted $439 million of Q1 2026 sales, but organic volume was slightly down. Price and currency helped the top line, which means demand itself is still soft.

This is why the stock story is balanced. Management reaffirmed full-year 2026 guidance, but investors sold the stock after the Q1 report. The market seems worried that the core cycle could stay weak longer than management expects. Atmus needs proof that Power Solutions volumes are bottoming while Industrial Solutions keeps its high margin.

May 2026→Q1 2026 showed both sides of the thesis. Koch Filter added $38 million of sales at a 21.9% adjusted EBITDA margin, but Power Solutions organic volume was slightly down.

May 2026▼The Q1 2026 filing pushed out the demand recovery story. Management said aftermarket slow growth should last for the remainder of 2026 and first-fit recovery is expected in the latter half of 2026.

Feb 2026→The 2025 10-K confirmed the end of separation-related costs, which cleans up the earnings base. It also showed higher customer concentration and a longer soft-demand period into 2026.

Nov 2025▲Atmus completed its transition services agreement with Cummins in September 2025. That reduced the risk of further one-time separation costs.

Aug 2025▼The Q2 2025 filing extended the soft demand outlook through the second half of 2025. Tariffs also became a real margin headwind through higher logistics costs.

May 2025▼Demand continued to soften in early 2025, and new U.S. tariffs began to affect the business. Expected 2025 separation costs also moved higher.

Feb 2025→The 2024 10-K showed the aftermarket had grown to about 86% of sales, strengthening the recurring revenue story. It also showed softer first-fit and aftermarket demand with no clear recovery date.

Nov 2024→The first standalone thesis framed Atmus as a recurring aftermarket filtration business. The main tension was stable replacement demand versus soft end markets and the risks of operating apart from Cummins.

02 Business model

Replacement filters pay the bills

Atmus sells filters under the Fleetguard brand for on-highway commercial vehicles and off-highway equipment used in agriculture, construction, mining, and power generation. Filters protect engines and equipment by keeping dirt and other harmful material out of the system.

The best part of the model is repeat demand. After a truck, tractor, generator, or mining machine is in service, filters wear out and must be replaced. That is the aftermarket business, and it made up about 86% of 2025 net sales.

The weaker part is the first-fit business. These are filters sold to original equipment manufacturers for new machines. This piece was about 14% of 2025 net sales and is more tied to new truck and equipment production.

The model also depends on a few very large customers. In 2025, Cummins accounted for 18.8% of net sales, PACCAR for 16.3%, and Traton Group for 11.5%. That concentration can help volume and access, but it also gives those customers power.

03 Product portfolio

Filters for engines, machines, and buildings

Cash cow

Fleetguard replacement filters

These are replacement parts for vehicles and equipment already in use. This aftermarket base is the main reason Atmus has recurring revenue.

Steady

First-fit engine filtration

Atmus sells filters to original equipment manufacturers that install them in new vehicles and machines. This business can weaken when truck and equipment production slows.

Steady

Off-highway filtration

The company serves agriculture, construction, mining, and power generation equipment. These markets can be cyclical, but the installed base supports future replacement demand.

Option

Commercial and industrial HVAC air filters

Koch Filter gives Atmus a broader air filtration portfolio. It adds exposure to commercial and industrial buildings.

Growth engine

Data center and power generation air filtration

Industrial Solutions targets higher-growth settings such as data centers and power generation environments. The first quarter margin was strong, but the organic growth rate is still an open question.

04 Business segments

Two segments, one still dominates

Power Solutions92%declining

Industrial Solutions8%growing fast

Segment mix uses Q1 2026 net sales: $439 million from Power Solutions and $38 million from Industrial Solutions. Customer concentration remains important because Cummins, PACCAR, and Traton together made up a large share of 2025 net sales.

05 Risk factors

What could break the story

Power Solutions demand stays weak

High impact · Medium odds

Power Solutions is still the main business. In Q1 2026, its revenue rose, but organic volume was slightly down because price and currency did most of the work. If volumes do not recover in the latter half of 2026, guidance could become harder to hit.

We watchPower Solutions organic volume in Q2 and Q3 2026.

Aftermarket slows for longer

High impact · Medium odds

The aftermarket is the recurring core of Atmus. Management said slow growth in global aftermarkets is expected to continue for the remainder of 2026. If replacement demand stays soft, the company loses one of its main defenses against the equipment cycle.

We watchManagement comments on aftermarket demand and order patterns through the rest of 2026.

Koch Filter fails to scale

Medium impact · Medium odds

Industrial Solutions had a strong first full quarter, with $38 million of sales and a 21.9% adjusted EBITDA margin. But it is still much smaller than Power Solutions. If integration slips or organic growth is weak, it will not offset a larger downturn in the legacy business.

We watchIndustrial Solutions sales growth, adjusted EBITDA margin, and any comments on organic growth excluding acquisition effects.

Large customers squeeze Atmus

High impact · Medium odds

Atmus depends on a small group of major customers. Cummins, PACCAR, and Traton accounted for 18.8%, 16.3%, and 11.5% of 2025 net sales. A lost program, lower production plan, or tougher pricing from any one of them could matter.

We watchSales concentration disclosures and any change in Cummins, PACCAR, or Traton demand.

Tariffs and trade costs hit margins

Medium impact · Medium odds

Tariffs have already shown up as a cost issue, including higher logistics costs in 2025. The legal and refund process for some tariffs remains uncertain. That means the final margin impact and any possible recovery of costs are still hard to know.

We watchGross margin, logistics costs, tariff disclosures, and any update on refund timing.

06 Quick answers

In one breath

What does Atmus Filtration Technologies do?

Atmus makes filtration products, mainly under the Fleetguard brand. Its filters are used in commercial vehicles, heavy equipment, power generation systems, and now industrial air filtration markets.

Why does the aftermarket matter so much for Atmus?

Aftermarket filters are replacement parts for equipment already in use. That creates repeat demand, which is steadier than selling parts only for new trucks or machines.

What changed after the Koch Filter acquisition?

Koch Filter created the new Industrial Solutions segment. In Q1 2026, it added $38 million of sales and posted a 21.9% adjusted EBITDA margin, giving Atmus a new growth path outside its core engine filtration business.

What is the main risk for ATMU stock?

The main risk is that the large Power Solutions segment stays weak longer than expected. Industrial Solutions is promising, but it is not yet big enough to carry the whole company if the legacy business gets much worse.