“We are excited about the long-term outlook in our core filtration markets, and we continue to promote strategic initiatives to drive long-term profitable growth. During the first quarter, in support of our heavy-duty engine filtration market, we announced our plan to invest $40.0 million to build a new warehouse and distribution center at our facility in Kearney, Nebraska. We also brought on-line additional capacity at our manufacturing facility in Yankton, South Dakota, that includes automated production capabilities, which we believe will enhance our ability to continue to improve our operating efficiencies. These investments will provide additional capacity and infrastructure to support our expected domestic and export market growth in heavy-duty engine filtration over the next decade. We expect this growth to be generated in part from the continued penetration of new distribution channels in the U.S. and overseas including global OE aftermarket programs, and we expect to continue to introduce new heavy-duty filtration products into new market sectors. In addition, we broke ground in the first quarter on our new oil and gas filtration research center in Mineral Wells, Texas. This facility will support our continued leadership in developing innovative technologies to address the most rigorous filtration needs in oil and gas extraction, transmission and processing. We believe these significant investments demonstrate our strong commitment to protect and develop our competitive position in our core filtration markets.”
First Quarter Results:
Engine/Mobile Filtration Segment
Net sales at our Engine/Mobile Filtration segment declined 2% compared with the first quarter of 2012 including relatively proportionate decreases domestically and outside the U.S. Lower domestic sales were driven by a 4% decline in the heavy-duty engine filtration aftermarket, but this is compared against a first quarter 2012 when aftermarket sales increased 16% from the previous year’s first quarter. Lower foreign sales were driven by reductions in Europe and China, both of which continue to be influenced by economic uncertainty, offset in part by increased sales in each Mexico and South Africa.