Sales for the three-month period ended March 31 were $481.6 million, approximately 16 percent lower than first quarter 2008 sales of $571.4 million.

"The market trends we experienced in the fourth quarter carried over into the first quarter of this year," Chairman and Chief Executive Officer Paul W. Jones said. "The latest data indicate the housing contraction will be deeper and longer than last year, affecting a number of important electric motor market segments as well as our residential water heater market. In addition, the weakness in commercial construction that we saw materializing in the fourth quarter has continued into this year."

"Faced with inventory destocking during the prolonged recession and no sign of the normal seasonal inventory build in our selling channels, we are adjusting the company's earnings outlook for the year to $1.80 to $2.10 per share," Jones said.

"Despite the weak market conditions, the company's balance sheet remains strong, and our cash conservation programs are bearing results. In the first quarter, our cash flow from operations was $6.0 million, a $20.9 million swing from the $14.9 million cash used in last year's first quarter. We were able to accomplish this despite the fact that earnings were $13.2 million lower than a year ago."

"Our operating units have aggressively reduced costs in response to the global recession and have programs to decrease inventories worldwide, postpone or reduce capital expenditures, and reduce overall expenses," Jones continued. "I am confident the company will manage its way through these economic challenges, by maintaining substantial profitability and continuing to expand our new product development."

Water Products

Water Products' first quarter sales of $339.0 million were approximately four percent lower than first quarter 2008 sales of $352.1 million. Lower sales of residential and commercial water heaters in North America, combined with lower sales in China, more than offset price increases related to higher steel costs.

Operating profit decreased 19 percent to $29.1 million due to the lower volumes. Operating margin decreased to 8.6 percent compared with 10.2 percent in last year's first quarter.

Electrical Products

Electrical Products' first quarter sales decreased approximately 35 percent to $143.6 million, as the weak residential and commercial construction markets and customer inventory reduction actions adversely impacted electric motor sales.

In the first quarter of 2009, Electrical Products lost $3.1 million compared with first quarter 2008 earnings of $11.1 million, as the company faced significant volume declines in its end markets. The impact of the volume declines more than offset the $5 million in cost savings achieved from product repositioning activities during the quarter.

Outlook

"OEM motor customers are forecasting anywhere from 20 to 30 percent year over year volume declines in 2009, and we are aligning our cost structure with this lower level of market demand," Jones commented. "Since the beginning of the year, we have significantly reduced our hourly and salaried workforce around the world. And we have and will continue to implement significant cost reduction programs."

"As a result of weak demand and the prolonged and severe housing slump, we are reducing our annual guidance to between $1.80 and $2.10 per share," Jones said.