Burnham Holdings, Inc. Announces First Half Results and Declares Dividend

LANCASTER, Pa., July 14, 2011 /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 June 26, 2011, and announced a common stock dividend.

Second quarter and year-to-date sales were $40.0 million and $76.3 million, respectively.  Prior year second quarter and year-to-date sales were $35.6 million and $71.1 million, respectively.  Both portions of our business, residential and commercial recorded sales increases for the quarter and built upon the upward sales trend Burnham Holdings experienced in the first quarter.  This is encouraging in light of the challenging economic and political conditions, which continue to destabilize any consistent sign of recovery. With a firm foundation based on our core principles and philosophy, Burnham is financially and operationally strong.  Existing boilers will continue to be replaced over time due to age or operating costs, and our powerful lineup of high-efficiency residential and commercial products positions us well in the market.  We produce top-quality, high-value equipment for virtually any application.  As we approach the upcoming heating season, we are scheduling our manufacturing facilities for the normal pattern of higher demand in the second half.  

The losses for the second quarter and year-to-date were $(31) thousand or $(0.01) per share, and $(1,015) thousand or $(0.23) per share, respectively.  This is basically equal to 2010, when quarter and year-to-date losses were $(122) thousand or $(0.03) per share, and $(942) thousand or $(0.21) per share, respectively.  Cost of goods sold ("COGS") as a percentage of sales for 2011, for both the quarter and year-to-date, have increased by approximately 1% compared to the same periods of the prior year (2011 at 78.8% and 79.9%, respectively, versus 2010 at 77.7% and 79.3%, respectively). The COGS has been negatively impacted by an increase in global commodity prices. Through the six months, we have incurred material price variances of approximately 1.6% of sales, more than double the year-to-date difference in the COGS percentage.  We have been able to offset a portion of these increases through the continual and systematic improvement of our production processes and from strict control of manufacturing overhead expenses.  Selling, administrative, and general expenses were lower as a percentage of sales for the quarter and first half compared to the prior year (2011 at 20.4% and 21.3%, respectively, versus 2010 at 21.7% and 21.8%, respectively).  In addition to the favorable impact from the above-mentioned cost drivers, we are also taking appropriate product pricing actions to maintain the operating margins.

The Company's balance sheet remains strong with working capital at a level consistent with the business activity.  Total debt was $34.4 million at June 26, 2011, only $1.0 million higher than the $33.4 million at the same point in 2010. This change is mainly the result of higher inventory levels and increased capital spending (in the prior year we recognized proceeds from the sale of assets discussed in Note 7).  While the Statement of Cash Flows presents negative net cash used in operations for the six months, the higher inventory levels at the end of the half explain the majority of this usage. The inventory levels are based on historical monthly patterns and optimized manufacturing schedules combined with market estimates, which are routinely evaluated and adjusted as appropriate.  

At its meeting on July 14, 2011, Burnham Holdings, Inc.'s Board of Directors declared a quarterly common stock dividend of $0.17 per share payable August 29, 2011, with a record date of August 22, 2011.    

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, 2010.  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 at June 26, 2011 includes 2,882,724 of Class A shares and 1,584,785 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, 2010 and 2009, 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 2010 Annual Report for more details).

6) In the first half of 2011 and 2010, the Company made voluntary pre-tax contributions of $1.9 million and $2.1 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.

7) On February 22, 2010, the Company sold the assets of Wendland Manufacturing Corp. in Texas.  The sale was recorded in the 2009 financial statements, while the transfer of cash occurred on the date of sale.

SOURCE Burnham Holdings, Inc.