Atmus Filtration Technologies (ATMU) risk factors, FY2024 10-K

Risks Related to Our Business Operations

1. 01The loss of a top OEM relationship, or changes in the preferences of our aftermarket end-users, could adversely impact the recurring nature of our aftermarket sales
2. 02a standard first-fit component creates a steady demand for that product in the aftermarket, as end-users often return to the OEM for aftermarket service for multiple years and may continue to prefer our products as replacement or repair parts
3. 03We derive significant earnings from investees that we do not directly control
4. 04We face significant competition in the markets we serve and maintaining a competitive advantage requires consistent investment with uncertain returns
5. 05Evolving customer needs and developing technologies may threaten our existing business and growth
6. 06We rely on our executive leadership team and other key personnel as a critical part of our human capital resources
7. 07We face risks from strategic transactions, such as acquisitions, divestitures, joint ventures and other similar arrangements that we may pursue or undertake
8. 08Our long term performance targets assume certain ongoing productivity improvements; if we do not successfully manage productivity improvements, we may not realize the expected benefits
9. 09We may be adversely impacted by work stoppages and other labor matters
10. 10Our products are exposed to variability in material and commodity costs
11. 11We are vulnerable to raw material, transportation and labor price increases and supply shortages, which have adversely impacted and could continue to adversely impact our operations
12. 12Complexity of supply chain and manufacturing could perpetuate the inability to meet demand and result in the loss of customers
13. 13complexity of our manufacturing operations, we may be unable to timely respond to fluctuations in demand, which could adversely impact our business, financial condition, results of operations or cash flows
14. 14A number of our customers operate in similar cyclical industries and economic conditions in these industries could impact our sales
15. 15Our business is exposed to potential claims related to warranties and claims for support outside of standard warranty obligations
16. 16Our products are subject to recall for performance or safety-related issues
17. 17Inability or failure to adequately protect or enforce our intellectual property could reduce or eliminate any competitive advantage and reduce our sales and profitability and the cost of protecting or enforcing our intellectual property may be significant
18. 18There could be an occurrence of one or more unexpected events, including a terrorist attack, war or civil unrest, a weather event, an earthquake, a pandemic, cyber-attack or other catastrophe in countries in which we operate or in which our suppliers are located
19. 19As a result of the Separation, we may experience difficulty operating as a standalone company

Risks Related to Legal and Regulatory Issues

1. 20Sales of counterfeit versions of our products, as well as unauthorized sales of our products, may adversely affect our business, financial condition, results of operations or cash flows
2. 21Our products are subject to statutory and regulatory requirements that can significantly increase our costs and could have a material adverse impact on our business, financial condition, results of operations or cash flows
3. 22We operate our business on a global basis and changes in international, national and regional trade laws, regulations, and policies affecting and/or restricting international trade could adversely impact the demand for our products and our competitive position
4. 23Unanticipated changes in our effective tax rate, the adoption of new tax legislation or exposure to additional income tax liabilities could adversely affect our profitability and cash flow. In addition, audits by tax authorities could result in additional tax payments for prior periods
5. 24Changes in tax law relating to multinational corporations could adversely affect our tax position
6. 25Our global operations are subject to laws and regulations that impose significant compliance costs and create reputational and legal risk
7. 26We may be adversely impacted by the effects of climate change and may incur increased costs and experience other impacts due to climate change
8. 27Our operations are subject to increasingly stringent environmental laws and regulations, and we are also subject to laws requiring cleanup of contaminated property

Risks Related to Cybersecurity and Information Technology Infrastructure

1. 28Our information technology environment and our products are exposed to potential security or data breaches or other disruptions, which may adversely impact our operations
2. 29technology risks. The impact of a significant information technology event on either our information technology environment or our products could negatively affect the performance of our products, our reputation, and competitive position
3. 30A number of our operations depend on information technology infrastructure and assets that are increasing in complexity, which are undergoing changes as a result of the Separation

Risks Related to Finance and Financial Market Conditions

1. 31We are subject to foreign currency exchange rate and other related risks
2. 32We have recorded goodwill as a result of prior acquisitions, and an economic downturn could cause these balances to become impaired, requiring write-downs that would reduce our operating income

Risks Related to Macroeconomic and Geopolitical Conditions

1. 33Increased tariffs or the imposition of other barriers to international trade could impact demand for our products and our competitive position
2. 34Political, economic and social uncertainty in geographies where we have significant operations or large offerings of our products could significantly change the dynamics of our competition, customer and end-user base and product offerings and impact our growth opportunities globally
3. 35Risks arising from uncertainty in worldwide and regional market and economic conditions may harm our business and make it difficult to project long-term performance
4. 36monetary policies, and general economic conditions such as inflation, deflation, interest rates and credit availability

Risks Related to our Relationship with Cummins

1. 37We, or Cummins, may fail to perform under various transaction agreements that were executed as part of the IPO or we may fail to have necessary systems and services in place when certain of the transaction agreements expire
2. 38Potential indemnification liabilities to Cummins pursuant to the separation agreement could materially and adversely affect our businesses, financial condition, results of operations and cash flows
3. 39liabilities, or that Cummins’ ability to satisfy its indemnification obligation will not be impaired in the future
4. 40We may have received better terms from unaffiliated third parties than the terms we received in our agreements with Cummins

Risks Related to our Capital Structure

1. 41Changes in the capital and credit markets may negatively affect our ability to access financing to support strategic initiatives
2. 42Substantially all of our assets, subject to certain exceptions, are pledged as security for our term loan and revolving credit facility, and if we default on our obligations, we may suffer adverse consequences, including foreclosure on our assets

Risks Related to Ownership of our Common Stock

1. 43The price of our common stock may fluctuate substantially, and you could lose all or part of your investment in our common stock as a result
2. 44Our stock repurchase program could affect the price of our common stock and may be suspended or terminated at any time, which may result in a decrease in the trading price of our common stock
3. 45We cannot guarantee the payment of dividends on our common stock, or the timing, or amount of any such dividends
4. 46Applicable laws and regulations, provisions of our amended and restated certificate of incorporation and bylaws and certain contractual rights granted to Cummins may discourage takeover attempts and business combinations that shareholders might consider in their best interests
5. 47These limitations may adversely affect the prevailing market price and market for our Common Stock if they are viewed as limiting the liquidity of our stock or discouraging takeover attempts in the future
6. 48Our historical consolidated financial statements are not necessarily representative of the results we would have achieved as a standalone company and may not be a reliable indicator of our future results