Good morning. My name is David, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Atmus Filtration Technologies second quarter 2023 earnings call. Today's conference is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there'll be a question-and-answer session. If you'd like to ask a question during this time, simply press the star key followed by the number one on your telephone keypad. If you'd like to withdraw your question, press star one once again. Thank you, Todd Chirillo, Executive Director, Investor Relations. You may begin your conference. Thank you, David. Good morning, everyone, and welcome to the Atmus Filtration Technologies second quarter 2023 earnings call. On the call today, we have Stephanie Disher, Chief Executive Officer, and Jack Kienzler, Chief Financial Officer. Certain information presented today will be forward-looking and involve risks and uncertainties that could materially affect expected results. Please refer to our slides on our website for the disclosure of the risks that could affect our results and for a reconciliation of any non-GAAP measures referred to on our call. For additional information, please see our SEC filings and the Investor Relation pages available on our website at atmus.com. Now, I'll turn the call over to Steph. Thank you, Todd, and good morning. I'm excited to be here for our company's first earnings call and to provide you with an update of our second quarter 2023 results. At the end of May, we completed our initial public offering, a significant milestone for our company and the culmination of multiple years of work. The launch of Atmus provides us with a unique opportunity to grow, both in our core markets and through expansion into industrial filtration markets. Our successful IPO would not have been possible without the tireless dedication of our global employees. Every person on our team, from our quality inspector at our dedicated media production facility in Korea to our safety leader in Cookeville, Tennessee, is key to our success. Our people provide premium Fleetguard products and deep industry knowledge to support the success of our customers. We have made significant progress in our first quarter as a public company and are on track with plans to separate fully from Cummins. I do want to bring to your attention that we filed an 8-K on Tuesday, restating our first quarter 2023 financial statements and revising annual prior periods for 2020-2022. Jack will provide more detailed information later in our call. Of course, we want to address any questions you have. We are committed to ensuring a strong internal control environment and to communicating transparently. I would like to now turn to a summary of our strong second quarter results. I'll start with a high-level overview of our markets and the drivers of our results, and then turn to our financial performance. Demand remained strong in our first fit markets through the second quarter, and we expect this to continue through the second half, with our customers reporting strong orders through the end of the year. In the aftermarket, we experienced some destocking by customers through the second quarter, and we expect a softer second half connected with slower economic activity. China market continues to be challenging to predict, and whilst we see some recovery from 2022 demand levels, it is a slow recovery, and we expect a continued muted recovery through the end of 2023. Sales in the second quarter 2023 were $414 million, an increase of approximately 5% from the second quarter of 2022. Increased pricing more than offset lower volume and FX headwinds. Adjusted EBITDA margin rose 220 basis points from the prior year to 19.3%. The benefits of pricing actions, coupled with the moderation of commodity and freight costs, drove the improvement in profitability. We are adjusting EBITDA for one-time separation costs, which were $9 million in the second quarter of 2023, compared to $1 million a year ago. Adjusted earnings per share was $0.63, and adjusted free cash flow was $35 million, an increase of $11 million over the same period last year. We have adjusted free cash flow for $2 million of one-time capital expenditures related to separation. Overall, it was a strong quarter, and we are continuing to build momentum. We have strong leadership in place, and we are working together to create Atmus. I would like to make some brief comments on our strategic progress in the quarter. You may recall our strategy is focused on four pillars: Grow share in first fit in our core markets, accelerate profit, profitable growth in the aftermarket, transform our supply chain, and expand into industrial filtration markets. I would like to highlight three areas of strategic momentum during the second quarter. Firstly, we are a technology leader. Our proven leadership enables us to win first fit business by solving our customers' complex problems. During the second quarter, we launched our Wuhan China Technical Center. This was the first of three transitions as we progressed our technical strategy and established full separation from Cummins. During the opening of our Wuhan facility, we introduced our next generation of media technology, NanoNet Plus, for China, which further extends the performance capabilities of our existing NanoNet technology. The next generation, NanoNet+, along with our new technical center, enables us to continue to develop differentiated products in fuel filtration. This further underpins our global market leading position in fuel filtration. Secondly, we are focused on transforming our supply chain. One element of this transformation is improving the availability of products for our cost- customers, which will drive share in the aftermarket and profitable growth. During the second quarter, we progressed the implementation of our global distribution strategy through the establishment of new Atmus warehouses in São Paulo, Brazil, and San Luis Potosí in Mexico. Our teams have done an outstanding job establishing these new facilities, embedding capabilities, and ensuring improved delivery for our customers. The progress in the quarter to deliver enhanced availability for our customers while maintaining disciplined inventory management was remarkable. Finally, I wanted to focus on our growth potential through expansion into industrial filtration markets. As Atmus, we intend to pursue this growth opportunity through a disciplined, programmatic approach to acquisitions. We have established a strategy and corporate development team. We have developed a robust pipeline of targets and are continuing to assess acquisition opportunities aligned with our strategy. My leadership team and I are focused on growing beyond our core and will continue to update you on our progress. It has been a big quarter, a successful IPO and launch of Atmus, progress on multiple fronts against our strategic priorities, and strong financial performance. I want to thank all of the Atmus team for their significant contributions. Now, I will turn the call over to Jack. Thank you, Steph. Good morning, everybody. Before reviewing our quarterly results and full year 2023 outlook, I want to provide you with some additional details regarding the recent 8-K filing, which Steph referred to. We restated our March 31st, 2023 financial statements and revised our annual financial statements for 2020, 2021, and 2022. As we closed the books in the second quarter of 2023, we identified errors within our intercompany and related party accounting practices. These errors principally included overstatements of related party receivables and related party payables, and an understatement of net parent investment. When combined with other prior period errors originally considered to be immaterial, both individually and in the aggregate, the amount of the overstatement of cash provided by operating activities totaled approximately $25 million for the period. These overstatements in cash provided by operating activities were offset by an overstatement of cash used in investing activities of $3 million and cash used in financing activities of $22 million. It is important to note that these errors had no impact on revenue, net income, or EBITDA for the first quarter of 2023, nor did they have an impact on the amount of the company's cash balance upon closing of the initial public offering, which was $115 million. Let's discuss our second quarter 2023 results compared to the same period last year. As Steph mentioned at the beginning of the call, we delivered strong financial performance. Sales were $414 million, compared to $393 million from the same period last year, an increase of approximately 5%. The increased sales were driven by $32 million of pricing, which more than offset $7 million of, of decreased volume and $4 million of foreign exchange headwind. Gross margin for the quarter was $114 million, an increase of $19 million compared to the second quarter of 2022. In addition to favorable pricing, we saw commodities and freight improve by $12 million. This was partially offset by higher variable compensation costs, the impact of lower volumes, and foreign exchange headwinds. SG&A expenses were $46 million, an increase of $14 million over the same period in the prior year. The growth in cost was driven by higher variable compensation. In addition, we experienced some cost inefficiencies as we incurred corporate costs from our parent company while standing up our own dedicated resources. We expect this inefficiency to continue until we are a fully standalone company. The increase in variable compensation is a result of the efforts of all of our employees, as they delivered strong results through the first half of the year relative to our expectations. Equity, royalty, and interest income was $8 million, an increase of $3 million from 2022, primarily due to higher earnings from our joint ventures in China and India. This resulted in adjusted EBITDA of $80 million, or 19.3% compared to $67 million, or 17.1% in the prior period. Adjusted EBITDA for the quarter excludes $9 million of one-time standalone costs. These one-time costs primarily relate to the establishment of functions previously commingled with our parent company, such as information technologies, distribution centers, and other human resources matters. Overall, we delivered strong profitability, driven by higher pricing and a moderating cost environment. Our effective tax rate for the second quarter was 24.5%, an increase of 500 basis points from the second quarter of 2022. The increase was primarily due to a change in the mix of earnings among tax jurisdictions. Adjusted earnings per share was $0.63. For the same period last year, adjusted EPS was $0.60. Adjusted free cash flow was $35 million this quarter, compared to $24 million in the prior year. I would like to discuss our approach to capital allocation, which is focused on delivering long-term shareholder value. We maintain strong liquidity to protect against volatility and uncertainty. We ended the second quarter with $140 million of cash. Combined with $350 million of availability under our revolving credit facility, our total liquidity was $490 million, or approximately 30% of the last 12 months' sales. We paid down $20 million of our outstanding revolving credit facility following the quarter end. This reflects our strong performance and confidence in our ability to generate cash. We plan to allocate capital for the sustainable growth opportunities, which Steph addressed earlier. These include growth in our traditional business and inorganic expansion into industrial filtration markets. Finally, we will continue to assess returning cash to shareholders. Next, I will turn to our guidance for the full year of 2023. We expect sales to be in a range of $1.58 billion-$1.63 billion. We expect adjusted EBITDA margin in the range of 17.25%-18.25%. This excludes an expected $30 million-$35 million of one-time separation costs for the full year of 2023. Moving to adjusted earnings per share, our outlook for 2023 is in the range of $2.05-$2.25. As we look towards the second half of the year, we expect to incur interest expense of approximately $25 million-$30 million as we service debt incurred at the IPO. Our effective cash tax rate will be in the range of 23%-25% for the full year of 2023. This range is consistent with our year-to-date average tax rate. Overall, our team did a fantastic job delivering strong results during the second quarter, and we look forward to a strong full year of 2023. Now, I will turn it back over to the operator, and we will take your questions. Thank you. At this time, I'd like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We'll take our first question from Tami Zakaria with JP Morgan. Your line is now open. Hi, good morning, Steph and Jack. Hope you're doing well. My first question is, seems like volume growth was flattish in the first half. Can you help us understand what's the volume decline outlook is embedded in for the back half as you think about the full year guide? Meaning, can you quantify what kind of volume you're expecting for the back half, and whether 3Q should be worse than 4Q? I think compares step down in the fourth quarter. Any color on volume execution would be very helpful. Okay. Good morning, Tami, and, and thank you for your question. You know, I think as we provided in my overview comments, and I'll let Jack to talk to, you know, the specifics of how it plays out into the 3rd and 4th quarters in our guidance. Overall, I would say we're seeing a softening in the 2nd half relative to the, the 1st. We've, we've seen strong performance in the 1st, 1st quarter particularly. We saw that soften somewhat in the 2nd quarter, particularly in the U.S. market. As we see some destocking through the channel, we expect our customers are doing that at different rates. Some had, had progressed that through the 2nd quarter. We would expect more of that in the 3rd quarter and, and through the 4th. We do see softened economic activity, impacting largely the fourth quarter, I would say. That's strongly connected to economic activity, which is a primary driver of our aftermarket, obviously. I'll let Jack add any other specifics. Sure. Thanks, Tami. Generally speaking, and it, it, it can vary year by year, but over, over the long period of time, we generally see the second half from a seasonality perspective, being, being softer than the first. You know, somewhere in the range of 5% or less. Our outlook implies a little bit more of a softening than that in the second half of this year, driven by the factors that Steph just described. Usually, we've seen the third quarter be, you know, that decline be more pronounced in the third quarter with a little bit of recovery in the fourth quarter. It's hard to, to say, you know, precisely in this period. Got it. Thank you so much. If I can ask a follow-up question. Since you want to enter into industrial filtration market, can you tell us whether your current product portfolio has any products in there that can be fitted or leveraged to enter some, some industrial end markets relatively quickly? We are certainly assessing our opportunities to grow into industrial filtration markets. We see this as a significant growth opportunity. These markets are, you know, growing at 2x the rate of our existing core markets, and we see the market size opportunity being, you know, 3x the size of our current market opportunity. We, we are primarily focused on accessing that growth opportunity through inorganic expansion, and we discussed that in our remarks. We do see some possibilities of entering through organic, and we are exploring those. It really would be leveraging off our media capability. It would need some product development still, though, Tami, to have finished goods that would, would service those markets. That's, that's how I would characterize it with you, but we are certainly exploring the full realm of possibilities there as to how we could fast-track organic development into those markets as well. Great. Thank you so much. Thank you, Tami. Thank you. Next, we'll go to Jerry Revich with Goldman Sachs. Your line is now open. Yes. Hi, good morning, everyone. Morning, Jerry. Morning, Jerry. really impressed by the margin performance. You know, you're now running at 19% year to date. I'm wondering if you could just update us on how you're thinking about long-term margin targets. You know, obviously, you're reducing production sequentially in the guide, but it feels like the margin step down is significant. I'm wondering, is that just a function of, you know, first couple of quarters out, out of the gate, wanting to make sure expectations are manageable versus, you know, so something that's meaningfully different back half versus first half? Thank you. Thanks for the question, Jerry. You know, obviously, our guidance puts full-year adjusted EBITDA in this $17.25-$18.25. You're right, the first two quarters of the year have been very strong in terms of margin performance. There's a number of factors that I think have fed into that. We're, we're very pleased with it, however, it's certainly not at the, you know, a level I would say is sustainable at, at this point. We're getting the benefits in, in the first half, both the first and second quarter of, you know, significant pricing actions, which were catch-up actions, and at the same time, we have seen some moderation of costs in those quarters. Plus, we've had a strong volume environment with back orders and so forth, that we have caught up on largely at this point. So it was kind of a lovely mix of, of strong margin, for, for that first and second quarter. As we've spoken about previously, we certainly see margin expansion opportunities in our business, and we've started to realize some of that related to the short-term actions of pricing and cost factors moderating. We are focused on expanding our margins into the future. At the volume moderation in the second half, certainly puts downwards pressure, as, as you discussed, and we've got a number of inefficiencies still factored into our EBITDA margins overall, as we become a standalone company. Th- that's clear. Steph, can, can I ask to expand o- on the M&A opportunity set? Can you characterize for us the size of the M&A pipeline that you folks are pursuing, and just talk about your process in, in building that pipeline, just to give us a sense for what the opportunity set could look like of, of from a transaction standpoint, over the next, you know, 6 to 18 months? Yeah. Yeah, and I don't have a specific target to talk to you about. I hope in some of these future calls, I will be able to be very, very specific about the opportunity that we're gonna proceed forward with. The rigor and the process we're putting in place, I'm very pleased with our progress. As I referenced, we have established a strategy team, a corporate development team. They've built a pipeline of targets. We've filtered that pipeline of targets down to those that meet our strategic criteria and our financial criteria. We're evaluating regularly, every month, it's multiple targets. As you, as you know, we have to, we have to fish for many before we actually are going to be able to find the right opportunity for us to take that first step. We've described our acquisition strategy as a disciplined programmatic acquisition strategy, Jerry. I see these as smaller acquisitions that we will, you know, look to build out the synergy opportunity over time. I'd love to be able to give you more color than that. Hopefully, that gives you a sense of the discipline and the robust establishment of team and capability we're building to really be able to set us up for a programmatic acquisition approach to industrial filtration markets. Yeah, appreciate it, Steph. Thank you, and congratulations on the strong start here. Thanks. Thank you, Jerry. Okay, next we'll go to Joe O'Dea with Wells Fargo. Your line is now open. Hi, good morning. Thanks for taking my questions. I, I wanted to, to circle back on, on aftermarket, and, and if you could kind of parse it by, you know, what you're seeing on the destock side, and, and then, you know, what you're anticipating on the slower economic activity side. And so just any color on what you've seen from a cadence perspective on the destock, you know, whether kind of the right thinking is that you saw it in 2Q, maybe it's a little bit steeper headwind in 3Q, and then that eases in 4Q. And then regarding the, the softer economic activity, the degree to which what you're actually hearing and seeing from customers, as opposed to sort of what, what you're anticipating, just based on what you see on the macro? Yeah, maybe I'll take a, a go, and Steph, obviously, can, can weigh in here, too. Joe, I think, I think it, it's a little difficult to... In the aftermarket, as you, as you're aware, to, to parse out the, the specific driver. I think all of our broader customers have approached this year from an inventory management standpoint a little bit differently, and you're seeing destocking occur at different times with, with, you know, different customers. We did see some of that in Q2, as Steph alluded to, and expect some more of that here, over the back half as everyone, you know, right sizes their, their inventory relative to their expectations. In terms of the overall economic activity, you know, I, I would say we are seeing, you know, some, some slowdowns there. You know, you can look at a number of different inputs, whether it's rate indices or, you know, truck tonnage to, to point to a slowdown in that activity. You know, perhaps it isn't as pronounced as, as we all thought, a quarter ago, and so we're keeping a close eye on, on how that unfolds. You know, we'll continue to monitor what happens in the aftermarket. Got it. Then, question on, on R&D. I think that was up, up 20% sequentially and year-over-year. You know, not sure how much of that is, is tied to, you know, standalone or how much is tied to, you know, maybe some initiatives underway, but if you could, you could touch on anything that, that contributed to that by sort of specific programs or, or any organic efforts toward industrial. Yeah, absolutely. Generally speaking, we think about R&D as a% of sales and, you know, right in that 2.5, call it in the 2%-3% of sales range, and that's, you know, kind of where we've been pretty consistently. We do have some lumpiness, if you will, in terms of prototype recoveries in particular. You know, as we work with our customers to develop new products, the timing of reimbursements for that can be can cause some differences quarter-on-quarter. Overall, we, you know, we continue to invest, from an R&D perspective and are excited about what the team can do, not only in our core markets, as they bring new solutions forward for our customers, but also, through the evaluation of these industrial markets and, you know, what, what capabilities can we leverage into those new markets? Got it. Thank you. Thanks, Joe. Okay, next we'll go to Rob Mason with Baird. Your line's open. Yes, good morning, all. I. Good morning, Rob. It's good to see the benefits of the, you know, your pricing initiatives flow through. That's pretty visible. I was curious what your outlook for the full year includes with respect to price as we go forward, and just also around your pricing initiatives, the stickiness of that price that you've put through, as you think about the balance of the year, and if some of these costs do continue to come down, like freight, input costs, et cetera. Yeah. No, thanks, Rob. Good to talk to you. Let me just give an overview on where I see we are in the sort of price, cost story. Largely through now, the second quarter, we've caught up on price cost, I would say. As you, as you've reflected in terms of our, our margin performance, we obviously had the lag through previous periods of performance. I'd say largely we're caught up now, and we are seeing, seeing inflationary pressures and commodity prices moderate. I do expect pricing in our outlook and what's contained in our guidance to return much more to historical trends is, is where I would guide you to. Of course, if we do see costs escalate further, we will adjust for that. You will see the lag that we, we have experienced in the past, but we would adjust for those. I'm, I'm not expecting any issues with stickiness. We really have been able to successfully pass our price into the market as you've seen and demonstrated, and so I wouldn't, I wouldn't flag any issues there at this point. Thanks for that, Steph. It just as a follow-up, it looks like your kind of one-time separation cost, the outlook for the year suggests those could increase sequentially as we go through the second half of the year. Could you just update us on where you think you are in terms of your ability to move off from some of the TSAs? You also mentioned some inclusion of inefficiencies in the outlook as well. Just, is there any way to frame up, you know, what those inefficiencies amount to quantitatively right now? Yeah, let me give an overview of how we're tracking, overall. It's a, it's a significant, you know, separation from Cummins, and I'll give some more color to that to, and give you a sense of it. I'll ask Jack to add anything that he thinks I'm missing. Just overall, we-- there are certain elements, certain functions, that we are heavily entangled with Cummins, right. We've called those out a few times, but I would describe those predominantly as warehousing and transportation, HR, and IT. We are tracking very well in terms of our separation plans and the individual projects. I would just broadly describe those as, as being on track. I spoke to a couple of those features in, in my highlights. We've established, two of our warehouses and distribution centers. We are very much on track with where we expected to be at the end of the second quarter. The... I, I think the challenge in terms of just where those inefficiencies might lie that, you know, we're just guarding against, is just unanticipated elements of IT, perhaps, that we need to keep on longer, for example. That's what I would characterize it as. A good example, I feel like we've adequately integrated this, but, you know, as we stand up our own cybersecurity capability, we do need to keep coverage of Cummins cybersecurity for the whole period, wherever we're using any of Cummins' applications, right? We can't really turn that piece off right until we get to the end of our two-year journey, if you like, at the end of, at the end of 2024. We're on track right now. We, we've been managing it very well, and we'll wind down the TSAs as we turn off the activities and the services. Yeah, and just to add a little bit here, Rob. So I think, you know, as you think about the cadence of the one-time costs, as you alluded to, you know, we are expecting them to remain at this level, if not a touch elevated, as we move through the back half of the year. As a reminder, we had about $4 million of these one-time costs in our first quarter of 2023, and then $9 million here in the second quarter. Our guidance is $30 million-$35 million for the full year. And so we, you know, we do expect to continue to incur these costs as we separate, you know, facilities from Cummins, systems from Cummins, so on and so forth. And just for color, you know, roughly a third of those, that $30 million-$35 million should be incurred in our cost of sales, with the balance down in SG&A, primarily. That's helpful. Thank you. Thank you, Rob. Okay. Next, we'll go to Andrew Obin with Bank of America. Your line's open. Hi, yes, good morning. Good morning, Andrew. Hey, Andrew. Yeah, just to follow up on, the destock commentary. You know, I, I, I think there are a lot of dynamics here. I think one of your competitors, it really had to do with, you know, specifically what one of their customers was doing. Are you seeing destock at the distributor level, or are you seeing destock at your OEM customer level? Where is the destock that you're talking about? Andrew, I'll focus, you know, largely on the North America market with my comments. It is, it is the majority of our aftermarket, just to give you. To give you a sense. Can you still hear me, Andrew? Yes. Yeah, good. I'll just focus on North America. Look, what I would say, it is varying by OE, actually. That's the color I would give you. Some of our customers or OE, it was really all the way through the, the dealer and distributor channel, and it's moderated back to normal levels of inventory through the chain, and we think we're most of the way through the destocking. In others, we're kind of, you know, still in the distributor or dealer level. In others, again, it's up at the OE level. It is varying actually. We're seeing some, you know, who are moving through that faster than others. We expect it to play out, almost that, that variation is helping us as this, as this moderates through, is how I would describe it. We're expecting that, that destocking, to play out over the remainder of quarter three and, and four. Gotcha. Just a follow-up question on inflation. I, I think industry is starting to talk about disinflation or maybe some talking about deflation. I think you guys are talking about better price from your supply chain. I, I, I think historically, the industry would give back pricing in a deflationary environment. Have you adjusted the contract-- Just remind us if you have adjusted your contract structure going forward, to sort of, to mitigate that? You know, should we look at sort of legacy patterns where, you know, inputs go down first, and then you guys have to give back some price? Can you just talk about, structurally, what do contracts look like? Thank you. Yeah. I'll, I'll talk at a high level just to the differences between, you know, our first-fit business and aftermarket as it relates to pricing. It's roughly 80/20, so 80% aftermarket, 20% first-fit. Our first-fit contracts are very much based on a contractual arrangement. Many of those have rise and fall clauses integrated into them, you know, you've seen that flow through in our previous period results. In terms of the aftermarket, we pass, you know, price increases to the aftermarket roughly on a twice-a-year basis, but it varies by region. At the moment, we're not seeing deflationary pressures, I would say. Certainly, we're seeing a lower inflationary environment. We have only, you know, really caught up, I would say, in, in those markets to the, the previous rising and escalating cost environment. I certainly I'm not, you know, looking at a deflationary piece in our forward pricing outlook. But generally, in aftermarket, the point is that pricing should be a lot more stable than in the OE channel. Exactly. Thanks so much. Congratulations on a great quarter. Thank you. Thanks, Andrew. Okay. There are no further questions at this time. Todd Chirillo, I'll turn the call back over to you for any additional or closing remarks. Great. Thank you. That concludes our teleconference for the day. Thank you for participating and your continued interest. As always, the investor relations team will be available for questions after the call. This concludes today's conference call. You may now disconnect.