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PRESS RELEASE

2950 North Loop West, Suite 700
Houston, TX 77092
Phone: (713) 685-8082 Fax: (713) 683-7841

NATCO Group Announces 1st Quarter Results
Issues 2Q07 Guidance
Reaffirms 2007 Guidance

NATCO Group Inc. (NYSE: NTG) today announced revenue for the first quarter 2007 of $127.4 million, an increase of 8% over first quarter 2006 revenue of $117.8 million. Net income available to common stockholders for the first quarter 2007 was $8.4 million, or $0.45 per diluted share, compared to net income available to common stockholders for the first quarter 2006 of $7.5 million, or $0.41 per diluted share.

Segment profit increased to $15.6 million for the first quarter 2007, up from $14.4 million for the first quarter of 2006. Bookings for the first quarter 2007 were $133.9 million, compared with $154.3 million for the first quarter of 2006.

John U. Clarke, NATCO’s Chairman and CEO said, “We produced another quarter of solid results. Pricing and margin improvements achieved over the past two years continue to pay off. The increase in revenue and segment profit over the prior year’s first quarter was driven by improved gross margins reflecting a strong market, offset in part by higher operating expenses associated with the addition of key personnel and enhancements in business systems to support our future growth.”

“In our Oil & Water Technology segment, sales of standard equipment sales in North America remained strong. This product line experienced higher activity levels in the first quarter 2007 and continued to see the benefits from pricing and efficiency improvements. The Gas Technologies segment increased its earnings contribution from new

built-to-order systems and benefited from ^{higher throughput at its West Texas CO}2 ^{processing facility.}

Additionally, we have entered into a joint development agreement with the national oil company of Malaysia aimed

^{at further developing our membrane technology for bulk CO}2 ^{separation and deploying our new 30” membrane.}

This arrangement strengthens our competitive position in the very important South East ^{Asia CO}2 ^{market. As} expected, the Automation and Controls segment was hurt by a soft market in the Gulf of Mexico, but helped by stronger international field services work.”

For the first quarter 2007, the Oil & Water Technologies segment increased revenue over the first quarter 2006 by 5% to $89.2 million. Segment profit increased 25% to $7.0 million. The improved results included margin benefits from higher pricing and improved efficiency in the Company’s traditional and standard product lines. In the first quarter of 2007, bookings for the segment were $86.8 million compared with $112.8 million for the first quarter of 2006 as a result of industry-wide delays in built-to-order project awards.

Revenue from the Gas Technologies segment was $16.1 million in the first quarter 2007, compared to $12.7 million in the first quarter 2006. Segment profit for the first quarter 2007 was $6.4 million compared with $6.0 million in the

^{prior year period primarily as a result of higher contribution from CO}2 ^{membrane built-to-order projects and higher throughput at the Company’s West Texas CO}2 ^{processing facility.} Bookings in the first quarter 2007 totaled $21.0

million, compared with $20.5 million in the first quarter 2006. Bookings include an award of the largest sale to date ^{of a H}2^{S removal project using the Shell PaquesTM} process under license to NATCO for deployment in Mexico. Revenue from the Automation & Controls segment in the first quarter 2007 increased 11% over the prior year’s comparable period to $23.1 million, while segment profit decreased to $2.2 million in the first quarter 2007 from $2.7 million in the first quarter 2006. The reduction in segment profit was primarily due to the previously reported reduction in field service activity in the Gulf of Mexico offset, in part, by a higher contribution from international field service work.

Weighted average shares of 19.5 million for the first quarter 2007 increased from 19.0 million in the first quarter of 2006 reflecting the impact of shares issued under the Company’s incentive compensation program.

Mr. Clarke concluded, “We continue to pursue historically high project bid activity and recently have seen improvements in our Gulf of Mexico field service utilization. North American activities remain strong based on drilling levels in the US and our exposure to the Canadian heavy oil market. We expect to see additional international Automation & Controls field service opportunities, while large South East Asia projects continue to progress.”

The Company is reaffirming its 2007 guidance with respect to segment profit, estimated at $76 to $82 million based upon revenue of approximately $560 to $580 million and earnings per diluted common share, excluding special items, of $2.30 to $2.50. For the second quarter 2007, the Company expects revenue of $145 to $155 million and segment profit of $19 to $21 million.

The Company will hold its quarterly earnings conference call on Thursday, May 3rd at 9:00 a.m. Central time. Interested parties are directed to the investor relations page on the Company’s website at www.natcogroup.com for information on accessing the conference call or webcast.

NATCO Group Inc. is a leading provider of wellhead process equipment, systems and services used in the production of oil and gas. NATCO has designed, manufactured and marketed production equipment and services for over 80 years. NATCO production equipment is used onshore and offshore in most major oil and gas producing regions of the world.

Statements made in this press release that are forward-looking in nature are intended to be "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934 and may involve risks and uncertainties. Forward looking statements in this press release include, but are not limited to, revenue, earnings and segment profit guidance and discussions regarding areas for growth in 2007, markets and demand for our products. These statements may differ materially from actual future events or results. Further, bookings and backlog are not necessarily indicative of future results. Readers are referred to documents filed by NATCO Group Inc. with the Securities and Exchange Commission, including its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which identify significant risk factors that could cause actual results to differ from those contained in the forward-looking statements.

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NATCO GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data and par value data)	March 31,	December 31,
	2007	2006 (1)
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$ 49,658	$	35,238
Trade accounts receivable, less allowance for doubtful accounts of $1,283
and $1,183 as of March 31, 2007 and December 31, 2006, respectively	118,862		116,165
Inventories	47,542		42,451
Deferred income tax assets, net	5,969		5,353
Prepaid expenses and other current assets	4,885		5,075
Total current assets	$ 226,916	$	204,282
Property, plant and equipment, net	35,096		34,603
Goodwill, net	80,965		80,893
Deferred income tax assets, net	834		1,203
Other assets, net	1,279		1,392
Total assets	$ 345,090	$	322,373
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK
AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable and other	$ 45,663	$	40,545
Accrued expenses	48,470		49,281
Customer advanced billings and payments	41,196		35,387
Income taxes payable	4,337		1,236
Total current liabilities	$ 139,666	$	126,449
Long-term deferred tax liabilities	680		611
Postretirement and other long-term liabilities	7,370		7,809
Total liabilities	$ 147,716	$	134,869
Commitments and contingencies
Minority interest	398		337
Series B redeemable convertible preferred stock (aggregate redemption value of
$15,000), $.01 par value. 15,000 shares authorized, issued and outstanding
(net of issuance costs)	14,222		14,222
Stockholders' equity:
Preferred stock $.01 par value. Authorized 5,000,000 shares (of which
500,000 are designated as Series A and 15,000 are designated as Series B);
no shares issued and outstanding (except Series B shares above)	-		-
Series A preferred stock, $.01 par value. Authorized 500,000 shares; no
shares issued and outstanding	-		-
Common stock, $.01 par value. Authorized 50,000,000 shares;
issued and outstanding 17,389,155 and 17,357,557 shares as of March 31,
2007 and December 31, 2006, respectively	174		174
Additional paid-in capital	114,552		113,340
Retained earnings	65,084		56,681
Treasury stock, no shares as of March 31, 2007 and December 31, 2006,
respectively	-		-
Accumulated other comprehensive income	2,944		2,750
Total stockholders' equity	$ 182,754	$	172,945
Total liabilities, redeemable convertible preferred stock and
stockholders' equity	$ 345,090	$	322,373

(1) Results for 2006 have been adjusted to reflect the adoption of the Financial Accounting Standards Board's Staff Position ("FSP") No. AUG AIR-1, Accounting for Planned Major Maintenance Activities. See discussion of Change in Accounting Principle below.

NATCO GROUP INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
	Three Months Ended March 31,
		2007		2006 (1)
Revenue:
Products	$	102,035	$	97,006
Services		25,394		20,761
Total Revenue	$	127,429	$	117,767
Cost of goods sold and services:
Products	$	77,819	$	75,935
Services		13,516		10,466
Total cost of goods sold and services	$	91,335	$	86,401
Gross profit	$	36,094	$	31,366
Selling, general and administrative expense		20,378		16,994
Depreciation and amortization expense		1,390		1,445
Net interest expense (income)		(197)		640
Minority interest		61		-
Losses of unconsolidated investment		85		-
Other, net		555		(347)
Income before income taxes	$	13,822	$	12,634
Income tax provision		5,045		4,802
Net income	$	8,777	$	7,832
Preferred stock dividends		375		375
Net income available to common stockholders	$	8,402	$	7,457
Earnings per share:
-Basic	$	0.49	$	0.45
-Diluted	$	0.45	$	0.41
Weighted average number of shares of common stock
-Basic		17,199		16,663
-Diluted		19,495		19,046

(1)

Results for 2006 have been adjusted to reflect the adoption of FSP No. AUG AIR-1, Accounting for Planned Major Maintenance Activities. See discussion of Change in Accounting Principle below.

NATCO GROUP INC. AND SUBSIDIARIES
UNAUDITED SEGMENT INFORMATION
(in thousands, except percentages)
			Three Months Ended
		March 31,				December 31,
		2007		2006 (1)		2006 (1)
Revenue:
Oil & Water Technologies	$	89,243	$	85,070	$	99,541
Gas Technologies		16,137		12,702		17,744
Automation & Controls		23,070		20,872		24,052
Eliminations		(1,021)		(877)		(948)
Total revenue	$	127,429	$	117,767	$	140,389
Gross profit:
Oil & Water Technologies	$	23,006	$	19,220	$	20,515
Gas Technologies		8,368		7,554		8,160
Automation & Controls		4,720		4,592		5,492
Total gross profit	$	36,094	$	31,366	$	34,167
Gross profit % of revenue:
Oil & Water Technologies		25.8%		22.6%		20.6%
Gas Technologies		51.9%		59.5%		46.0%
Automation & Controls		20.5%		22.0%		22.8%
Total gross profit % of revenue		28.3%		26.6%		24.3%
Operating expense:
Oil & Water Technologies	$	16,001	$	13,589	$	14,012
Gas Technologies		1,985		1,525		1,793
Automation & Controls		2,538		1,880		1,972
Total operating expenses	$	20,524	$	16,994	$	17,777
Segment profit: (2)
Oil & Water Technologies	$	7,005	$	5,631	$	6,503
Gas Technologies		6,383		6,029		6,367
Automation & Controls		2,182		2,712		3,520
Total segment profit	$	15,570	$	14,372	$	16,390
Segment profit % of Revenue
Oil & Water Technologies		7.8%		6.6%		6.5%
Gas Technologies		39.6%		47.5%		35.9%
Automation & Controls		9.5%		13.0%		14.6%
Total segment profit % of Revenue		12.2%		12.2%		11.7%

(1)	Results for 2006 have been adjusted to reflect the adoption of FSP No. AUG AIR-1, Accounting for Planned Major Maintenance Activities. See discussion of Change in Accounting Principle below.
(2)
	Total segment profit, defined as income before tax, depreciation and amortization, net interest expense and other, net, is a non- GAAP financial measure that can be reconciled to the unaudited Consolidated Income Statement as shown below. The Company believes that segment profit is one of the primary drivers and provides a more meaningful presentation for measuring the performance of the Company.

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			Three Months Ended
		March 31,				December 31,
	2007			2006 (1)		2006 (1)
Total segment profit	$	15,570	$	14,372	$	16,390
Net interest expense (income)		(197)		640		(104)
Depreciation and amortization		1,390		1,445		1,331
Other, net		555		(347)		492
Income before income taxes	$	13,822		12,634	$	14,671
Income tax provision		5,045		4,802		3,887
Net income	$	8,777	$	7,832	$	10,784
Preferred stock dividends		375		375		375
Net income available to common stockholders	$	8,402	$	7,457	$	10,409
			Three Months Ended
		March 31,				December 31,
Bookings:	2007			2006		2006
			(in thousands)
Oil & Water Technologies	$	86,815	$	112,816	$	90,818
Gas Technologies		20,956		20,536		16,885
Automation & Controls		26,079		20,994		19,540
Total bookings	$ 133,850		$	154,346	$	127,243
		As of March 31,			As of December 31,
Backlog:	2007			2006		2006
			(in thousands)
Oil & Water Technologies	$ 142,001		$	177,555	$	144,236
Gas Technologies		61,080		18,260		56,260
Automation & Controls		10,625		11,788		6,789
Total backlog	$ 213,706		$	207,603	$	207,285

Change in Accounting Principle

As of January 1, 2007, the Company changed its method of accounting for planned major maintenance activities from the accrue-in-advance method to the direct expense method, as required by FSP No. AUG AIR-1, “Accounting for Planned Major Maintenance Activities.”

Previously, the Company made provisions for the cost of upcoming periodic replacements or maintenance of membranes in advance of performing the related replacements or maintenance to our gas processing facilities, based on an average of historical data of actual membrane replacements and/or maintenance. The costs expected to be paid in the future were included as a current liability. Under the direct expense method, costs actually incurred are expensed in the same period.

The adoption of this change in accounting on January 1, 2007 resulted in an increase to stockholders’ equity of $296,000 net of tax expense of $168,000, which was recorded as of December 31, 2006. Prior period results presented have been adjusted to reflect the adoption of this new accounting method. Net income in the 1^st quarter of 2006 increased by $27,000 due to this change in accounting principle.

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