CLEVELAND, -- Hawk Corporation (AMEX:HWK)announced today that net sales from continuing operations for the first quarter ended March 31, 2008 increased by 21.4% to a record $65.8 million from $54.2 million in the comparable prior year period. The Company's first quarter 2008 net sales benefited from strong economic conditions in most of its end markets, pricing actions to offset cost increases, favorable foreign currency exchange rates and new product introductions. The effect of foreign currency exchange rates accounted for 6.6% of the total net sales increase of 21.4% during the first quarter of 2008. The Company experienced strong sales growth from all of its facilities in the first quarter of 2008, especially in Italy and China. On a local currency basis, net sales increased 22.5% in Italy and 60.6% in China during the first quarter of 2008 compared to the first quarter of 2007.
Income from continuing operations for the first quarter ended March 31, 2008 was $6.5 million, an increase of $3.0 million, or 85.7%, from $3.5 million in the prior year. Income from continuing operations benefited from the impact of sales volume increases, pricing, foreign currency exchange rates and a continued implementation of the Company's lean manufacturing processes. This increase during the first quarter of 2008 compared to 2007 was partially offset by increases in wages, employee benefits and variable incentive compensation expense, as well as, increases in raw material costs during the quarter.
Ronald E. Weinberg, Hawk's Chairman and CEO, said, "We are very pleased with our first quarter 2008 results. We achieved record sales and earnings from continuing operations during the quarter as a result of a strong global economy in our industrial and performance automotive markets, served by our Wellman friction business. As a result of our decision to focus our management resources on the friction products business, we recently announced a plan to sell our performance racing segment. This will allow us to focus all of our resources on maintaining our world leadership position in the development and manufacture of friction products." Mr. Weinberg continued, "We continue to pursue acquisitions and organic growth in the friction products segment. Our capital expenditure program for the full year 2008 should allow us to broaden our base of current business while adding new products and customers. Our geographic expansion continues to show favorable results as our foreign operations continue to register healthy quarter over quarter sales increases. The results that we have achieved in the first quarter of 2008 give us confidence about the growth potential we see for the balance of the year."
For the quarter ended March 31, 2008, the Company reported income from continuing operations, after income taxes, of $3.8 million, or $0.40 per diluted share, an improvement of $1.9 million or 100.0%, compared to $1.9 million, or $0.20 per diluted share, in the comparable prior year period.
For the three months ended March 31, 2008, the Company reported net income of $3.2 million, or $0.33 per diluted share, a decrease of $9.6 million, compared to $12.8 million in the first quarter of 2007. The net income of $3.2 million included an impairment loss of $0.8 million ($0.5 million net of tax), or $0.05 per diluted share, related to the performance racing discontinued operation. The first quarter of 2007 included a gain on the sale of the Company's precision components segment of $15.0 million ($11.8 million, net of tax), or $1.25 per diluted share.
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