Midwesco 2007 Annual Report
September 19, 2008
The Filtration Products business segment posted 2007 sales of $97,120,000, an increase of 12.5 percent from the prior year, reflecting stronger sales for all product lines and geographic areas, primarily the result of a growing electric power generation customer base. Gross profit was $13,776,000 or 14.2 percent of sales in 2007 from 18.8 percent of sales in 2006 as a result of items discussed above. Income from operations in 2007 was $2,220,000, a 57.9 percent decrease from 2006. Gene Ogilvie, President of the Filtration Products Business, is focused on margin improvement and maintaining increased sales and backlog.
The Filtration Products group continues to expand its line of Pleat-Plus® pleated filter bags and other pleated element products. The growth of these products and their increased use by dust collector and gas turbine operators were major strategic objectives of our Cicero, Illinois and Nakskov, Denmark operations.In order to increase the capacity and efficiency of the domestic pleated products line the activities at the Cicero plant will be relocated to a modern facility in Bolingbrook, Illinois in the summer of 2008.
The Nakskov, Denmark facility primarily supplies cartridge filter elements for dust collectors and gas turbines in Europe. Sales from this facility continued to grow nicely during 2007 but margins declined to unsatisfactory levels. In an effort to better manage its business operations a new manufacturing software package was put in operation during the fourth quarter of 2007. This system along with other operational changes should help us to restore margins to historic levels.
Faced with continued increases in materials pricing in the United States and selling price pressure from competitors we believe an important way for us to improve our profitability in this segment is to seek supply and fabrication sources on a global basis. To support this mission, we created a cross-functional filtration team to qualify more competitive suppliers throughout the world. We have begun to buy from some new vendors but have experienced quality and consistency problems. The realization of the potential savings from this effort should become apparent in higher margins as this program matures.