Burnham Holdings, Inc. Announces Third Quarter and Nine Months Results

LANCASTER, Pa., Oct. 11, 2012 /PRNewswire/ -- Burnham Holdings, Inc., (Pink Sheets: BURCA), the parent company of fourteen subsidiaries that are leading domestic manufacturers of boilers, and related HVAC products and accessories (including furnaces, radiators, and air conditioning systems) for residential, commercial and industrial applications, today reported its financial results for the period ended September 30, 2012.

Third quarter and year-to-date ("YTD") sales were $49.8 million and $127.8 million, respectively; as compared to 2011 third quarter and YTD sales of $51.1 million and $127.4 million, respectively.  The residential portion of the business (on a yearly basis about 70% of the sales revenue) recorded increased sales for the quarter and YTD versus the prior year.  The commercial portion of the business provides heating applications for large commercial, institutional and industrial facilities such as hospitals, factories, hotels, and schools.  Year over year growth was experienced in commercial through the first half of this year. During the most recent quarter, however, the commercial businesses have slowed in line with general economic conditions. The Burnham Holdings strategy of industry diversification through independent subsidiaries with different products and markets has served us well as individual product demand changes with energy costs and the varying economic cycle.  However, existing boilers will continue to be replaced over time due to age or operating costs, and the powerful lineup of high-efficiency residential and commercial products sold through our subsidiary companies, position them well in the market.  These products are top-quality, high-value equipment for virtually any application.

We are reporting income for the third quarter and YTD of $1.9 million or $0.42 per share, and $1.1 million or $0.25, respectively.  These results compare favorably to 2011 quarter and YTD income of $1.8 million or $0.41 per share, and $794 thousand or $0.18 per share, respectively.  The 2012 YTD gross profit percentage of sales was 21.5%, better than last year's nine months of 21.3% (the percentages for the third quarters were identical at 23.3%).  The improvement in our gross profit margin reflects our efforts to continually and systematically adjust our product pricing to recover inflationary costs, while being cognizant of our competitive position in the market.  Further improving our operating income was that selling, administrative, and general expenses were lower than the prior year for the quarter and YTD, in both dollars and as a percentage of sales. Our interest expense for the quarter and YTD was also slightly lower than the prior year for both periods.  All of these results have been achieved despite the soft industry and economic environment.

The Company's balance sheet has appropriate levels of working capital consistent with the current business activity.  A review of our Statement of Cash Flows attached, and specifically our cash usage related to operating activities (2012 usage of $10.5 million compared to $18.7 million last year), reflects our spending directives and the overall strength of the balance sheet. This improvement in our cash flow has enabled us to reduce our debt position by $9 million to $31.1 million, the lowest debt level for a third quarter in ten years. 

As a reminder, the Board of Directors will evaluate the Company's financial performance at its regular scheduled November 29th meeting for consideration of December dividends. 

Consolidated Statements of Operations               




    (In thousands, except            

Three months ended


Nine months ended


    per share data)               

September 30,


September 25,


September 30,


September 25,


(Data is unaudited (see Notes))        

2012


2011


2012


2011


Net sales      

$      49,828


$        51,050


$     127,811


$    127,374


Cost of goods sold      

38,226


39,168


100,365


100,187




Gross profit              

11,602


11,882


27,446


27,187

Selling, administrative and general expense   

8,293


8,689


24,685


24,945


Operating income      

3,309


3,193


2,761


2,242












Other income (expense)










   Mark-to-market gain (4)        

55


47


118


157



   Interest income             

8


5


30


7



   Interest expense     

(407)


(419)


(1,140)


(1,165)




   Other income (expense)           

(344)


(367)


(992)


(1,001)











Income before taxes        

2,965


2,826


1,769


1,241


Income tax expense         

1,067


1,017


637


447












Net income                   

$        1,898


$         1,809


$         1,132


$          794












Per Share Data:










  Basic & Diluted income    

$          0.42


$           0.41


$           0.25


$         0.18



  Dividends paid       

$          0.18


$           0.17


$           0.54


$         0.51


Notes:

1)

The accompanying unaudited financial statements contain adjustments that are necessary for a fair presentation of the interim results, and these adjustments are applied consistently for the periods presented.  The results for any interim period are not necessarily indicative of results for the full year.  These consolidated financial statements should be read in conjunction with the Annual Report for the period ended December 31, 2011.  Statements other than historical facts included or referenced in this Report are forward-looking statements subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected.  We undertake no duty to update or revise these forward-looking statements. 

2)

Basic earnings per share are based upon weighted average shares outstanding for the period. Diluted earnings per share assume the conversion of outstanding rights into common stock. 

3)

Common stock outstanding as of September 30, 2012 includes 2,961,350 of Class A shares and 1,522,959 of Class B shares.

4)

Mark-to-market adjustments are a result of changes (non-cash) in the fair value of interest rate agreements.  These agreements are used to exchange the interest rate stream on variable rate debt for payments indexed to a fixed interest rate.  These non-operational, non-cash charges reverse themselves over the term of the agreements.

5)

Accounting rules require that the funded status of pension and other postretirement benefits be recognized as a non-cash asset or liability, as the case may be, on the balance sheet of the Company.  For December 31, 2011 and 2010, projected benefit obligations exceeded plan assets.  The resulting non-cash presentation on the balance sheet is reflected in "Deferred income taxes",  "Other postretirement liabilities", and "Accumulated other comprehensive income (loss)", a non-cash sub-section of "Stockholders' Equity" (see Note 10 of the 2011 Annual Report for more details).

6)

In the first nine months of 2012 and 2011, the Company made voluntary pre-tax contributions of $3.4 million and $2.5 million, respectively, to its defined pension plan.  These payments increased the trust assets available for benefit payments (reducing "Other postretirement liabilities") and did not impact the Statement of Operations.

 

Consolidated Balance Sheets               

September 30, 


September 25,

(In thousands and data is unaudited (see Notes))    

2012


2011

                  ASSETS                      


Current Assets 



Cash, cash equivalents, and marketable securities       

$         5,124


$         4,973


Trade and other accounts receivable, net          

23,134


27,065

       Inventories                                         

52,673


55,310


Prepayments and other current assets           

3,631


3,604



Total current assets                

84,562


90,952

Property, plant and equipment, net               

48,307


50,032

Deferred income taxes (5)                      

3,307


---

Other assets, net                                 

22,335


22,064



Total Assets                   

$     158,511


$     163,048

                  LIABILITIES AND STOCKHOLDERS' EQUITY 


Current Liabilities





Accounts and taxes payable & accrued expenses     

$       27,350


$       28,326


Current portion of long-term liabilities         

351


288



Total current liabilities          

27,701


28,614

Long-term debt                                    

31,138


39,934

Other postretirement liabilities (5)(6)            

36,392


21,094

Deferred income taxes (5)                       

---


1,447

Stockholders' equity 



Preferred stock                       

530


530


Class A common stock                   

3,419


3,341


Class B convertible common stock          

1,523


1,585


Additional paid-in capital                 

14,747


14,519


Retained earnings                       

95,007


92,783


Accumulated other comprehensive income (loss) (5)      

(33,988)


(22,841)


Treasury stock, at cost                           

(17,958)


(17,958)



Total stockholders' equity                

63,280


71,959



Total Liabilities and Stockholders' Equity        

$      158,511


$     163,048


 Consolidated Statements of Cash Flows    

     September 30,


September 25,

(In thousands and data is unaudited)            

2012


2011


Net income                               

$          1,132


$            794


Depreciation and amortization                

3,450


3,151


Other net adjustments              

(1,117)


(1,121)


Pension and postretirement liabilities expense       

1,026


740


Contributions to pension trust (6)           

(3,350)


(2,500)


Changes in operating assets and liabilities     

(11,643)


(19,778)

Net cash used in operating activities                     

(10,502)


(18,714)

Net cash used in the purchase of assets               

(1,604)


(3,143)

Proceeds from borrowings                                    

15,000


25,000

Principal payments on debt and lease obligations           

(86)


(30)

Proceeds from exercise of stock options                     

255


181

Dividends paid                                              

(2,428)


(2,286)

Cash, cash equivalents, and marketable securities:



Increase for period      

635


1,008


Beginning of year          

4,489


3,965


End of period            

$         5,124


$         4,973

 

SOURCE Burnham Holdings, Inc.



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