OVERVIEW

Sales for the first quarter of 2009 were down from the same quarter last year. The major factor causing the earnings decline during the quarter was the recession induced sales volume decline. Gross profit decreased in dollars by about 16 percent, but as a percentage of sales the decrease was only 40 basis points during the first quarter of 2009 versus the first quarter of 2008.

RESULTS OF OPERATIONS

Net Sales
                    Q1 2009       Q1 2008       2009 v 2008
                                  Net Sales
Water Systems     $   114.4     $   136.7     $      (22.3)
Fueling Systems   $    35.4     $    39.3     $       (3.9)
Other             $       -     $       -     $           -
Consolidated      $   149.8     $   176.0     $      (26.2)

Net sales for the first quarter of 2009 were $149.8 million, a decrease of $26.2 million or 15 percent compared to 2008 first quarter sales of $176.0 million. A major factor causing the Company's earnings decline during the first quarter of 2009 was the sales volume reduction that was experienced as a result of the continuing recession. The ongoing slump in housing combined with the customer's desire to reduce inventories contributed to soft end market demand and fewer shipments for the Company's products in the first quarter. Additionally, first quarter 2009 sales were lower by $13.3 million versus the first quarter 2008 due to foreign currency translations as a result of a stronger U.S. dollar. First quarter sales attributed to acquisitions were $6.0 million.

Net Sales-Water Systems
Water Systems sales worldwide were $114.4 million, down $22.3 million or 16 percent for the first quarter of 2009 compared to the same period for 2008. Water Systems revenues represent about 75 percent of the Company's total sales. During the first quarter 2009, Water Systems revenues declined by 11 percent organically before the impact of foreign currency translations. Virtually the entire organic sales decline occurred as a result of weakness in the U.S. and Canada markets which represents about half of total Water Systems sales. Based on trade association data, management estimates that first quarter industry wide groundwater pump sales were down about 33 percent versus the prior year. While the Company's sales did not decline as much, sales nevertheless were impacted by the extraordinary drop in the overall market. Management believes the industry sales decline was caused by the ongoing slump in housing, with housing starts off by about 50 percent versus the first quarter 2008. In addition, downstream distributor and contractor customers reduced inventories during the quarter which negatively impacted shipments.

International water sales represent about half of the Water Systems revenues and were up about 3 percent in local currencies but were negatively impacted by $12.8 million due to foreign currency translations. During the quarter, organic sales growth in Asia/Pacific, Latin America and Southern Africa offset a decline in Europe and the Middle East. Additionally, the Company completed the acquisition of 75 percent of Vertical S.p.A in Italy during the quarter as the Company continues to focus on building product capability while expanding international reach. Vertical's performance met Company expectations in the first quarter.

Net Sales-Fueling Systems
Fueling Systems sales worldwide were $35.4 million, down $3.9 million or 10 percent for the first quarter of 2009 compared to the same period for 2008. Fueling Systems represent about 25 percent of the Company's total revenues. Fueling Systems sales in the U.S. grew by about 2 percent, with sales growth in California offsetting an 8 percent decline in the balance of the country. Fueling Systems sales in international markets declined during the quarter because in the first quarter of 2008 there were heavy shipments of vapor control systems to the Beijing area as part of China's program to reduce air pollution prior to the Summer Olympics. The Company is encouraged that in March overall Fueling Systems sales were up 19 percent versus March 2008 as station owners in California continued their capital spending projects to comply with that state's vapor control mandate, and station owners outside of California also moved ahead with upgrade, replacement and expansion projects.

Management estimates that at the end of the first quarter 2009, approximately two thirds of the California filling stations requiring vapor recovery retrofit were completed and that the Company's market-share of these retrofits was approximately 90 percent. Of the roughly 4,100 stations remaining to complete the retrofit, the Company expects to win an approximately 60 to 70 percent share and that approximately 80 percent of the remaining station conversions will take place in the second and third quarters of 2009.

Cost of Sales
Cost of sales as a percent of net sales for the first quarter of 2009 and 2008 was 71.2 percent and 70.8 percent, respectively. Correspondingly, the gross profit margin decreased to 28.8 percent from 29.2 percent, a decline of only 40 basis points. Gross profit margins remained nearly unchanged in the quarter in spite of the significant sales volume reduction. The Company's gross profit was $43.2 million, down by $8.3 million from the $51.5 million in 2008. Of the $8.3 million decrease, about $15 million was the result of reduced sales. Offsetting the decline in gross profit due to lower sales were the following: $2.5 million as a result of better factory utilization, about $2 million attributable to acquisitions, and sales price increases in excess of product cost increases.

Restructuring Expenses
Restructuring expenses for the first quarter of 2009 were approximately $0.9 million and reduced diluted earnings per share by approximately $0.02 per share. Restructuring expenses incurred in the first quarter related primarily to the announced manufacturing optimization plan which included charges for severance and equipment relocations. Other restructuring expenses incurred in the first quarter of 2009 were related to integration expenses of a fourth quarter 2008 acquisition and other rationalization costs associated with global headcount reductions that were initiated in the first quarter of 2009 The first quarter 2009 restructuring charges were primarily cash items. The Company expects to take between $5 and $6 million in additional restructuring charges in 2009 related to the Siloam Springs relocation and other severance costs related to reductions in our global work force. Approximately 2/3 of these remaining restructuring costs will be noncash.

Selling, General and Administrative ("SG&A") Selling, general, and administrative (SG&A) expenses decreased by $1.9 million in the first quarter of 2009 compared to first quarter last year. The acquisitions, primarily of Vertical (Italy), added approximately $0.7 million to SG&A for the first quarter of 2009. SG&A expenses before the impact of acquisitions were lower by $2.6 million which partially offset the impact of lower sales volumes.