“Our culture of managing costs prudently while supporting our profitable growth was evident in our 2011 financial results. Sales grew 11%, but selling and administrative expenses increased only 4%. As a result, our selling and administrative expenses as a percentage of sales declined 1.3 percentage points. We believe our current cost structure positions us well to capitalize on our anticipated growth initiatives moving into 2012.”
Fourth Quarter Results:
Engine/Mobile Filtration Segment
Net sales at our Engine/Mobile Filtration segment increased 17% compared with the fourth quarter of 2010. This increase was primarily related to higher volume of heavy-duty engine filter sales in the U.S. and abroad. Overall, the higher net sales were the result of 13% growth domestically and 26% growth outside the U.S. Domestic growth was driven by higher aftermarket sales including market share gains. Foreign growth was aided by 31% higher sales in China compared with last year’s fourth quarter. This foreign sales growth was also supported by higher export sales from the U.S. and an increase in our heavy-duty engine filter sales in Europe.Operating profit at our Engine/Mobile Filtration segment increased 28% from the fourth quarter of 2010. This increase was primarily the result of higher heavy-duty engine filter sales. Our operating margin improved 2.0 percentage points from last year’s fourth quarter to 23.1%. This higher operating margin was primarily the result of our ability to leverage our manufacturing overhead and selling and administrative costs. Industrial/Environmental Filtration Segment Net sales at our Industrial/Environmental Filtration segment increased 11% from the fourth quarter of 2010. Net sales in the U.S. rose 22% while net sales outside the U.S. declined 12%. Our growth in domestic sales was the result of higher natural gas vessel sales, increased sales of new air filtration products and incremental sales from our acquisition of TransWeb, which was completed at the end of December 2010. The reduction in sales outside the U.S. was heavily influenced by a reduction in Asian sales primarily due to several large natural gas vessel projects completed in the fourth quarter of 2010 that did not repeat in the fourth quarter this year.