Burnham Holdings, Inc. Announces Year 2009 Financial Results
LANCASTER, Pa., Feb. 25 /PRNewswire-FirstCall/ -- Burnham Holdings, Inc., (Pink Sheets: BURCA), a leading domestic manufacturer of boilers, and related HVAC products and accessories for residential, commercial and industrial applications, today reported its financial results for the year ended December 31, 2009.
We are pleased to report a year of solid financial performance and accomplishments, despite the prevailing difficult economic conditions. Although our revenue for 2009 was down 18.6%, due to the recession and its impact on our industry, earnings per share were $1.20, only slightly lower than last year's $1.30. Our balance sheet is very strong with the lowest debt level in over 12 years. We paid common stock dividends for the 69th consecutive year at the rate of $0.68 per share, the same rate as 2008 and 2007. Details of results mentioned in this release are discussed fully in the Company's audited Annual Report, which will be available about March 19, 2010.
Net sales for 2009 were $183.7 million, down $42.1 million from last year's $225.8 million. The residential portion of the business continued to experience a cyclical downturn from the robust levels of 2004 and 2005. This decline is the result of the economic cycle that not only has impacted Burnham Holdings but also the overall industry. This downturn is a result of a number of factors, including the sharp decline in the real estate market and its impact on home construction, consumer confidence and spending behaviors, the deep recession in the general economy, and reduced credit availability. The 2009 market for our residential products was down 19.3% in units from 2008 and 29.3% from the average of the past five years. The commercial portion of our business services heating applications for large commercial, institutional and industrial facilities such as hospitals, factories, hotels, and schools. We experienced modest growth in commercial products sales from 2004 through 2007, which mitigated the downturn in the residential portion of the business. However, in mid-2008, we began to feel the impact of constraints on spending in the commercial sector, which continued into 2009 and resulted in lower sales for this portion of our business. The Company's strategies of product diversification, independent markets served, and continuous new product introductions, have resulted in a less dramatic decline in our sales trend for the last five years compared to the overall boiler industry. Although current business conditions remain difficult, we are optimistic about longer-term prospects for the Company. Existing boilers will continue to be replaced over time due to age or operating costs. Our powerful lineup of high-efficiency residential and commercial products sold through the subsidiary companies; position them well in the market. These products are top-quality, high-value equipment for virtually any application.
Net income for 2009 was $5.3 million, or $1.20 per basic share, very similar to the $5.8 million, or $1.30 per basic share, reported for 2008. The stability of the bottom line was accomplished in spite of the decline in industry units and a highly competitive pricing environment. With net sales declining and the need to remain competitive in the market, increased emphasis was placed on cost control and resource optimization, both facility and manpower, in order to maintain operating margins. Through strict spending policies and flexibility with our manufacturing capabilities, we were highly successful in the effort of balancing the building of inventory and covering the costs of fixed overhead, while having the stock necessary to meet demand during the peak seasonal periods. As a result, manufacturing overhead expenses and production variances declined in 2009 from the prior year by nearly $10 million. This lowering of expenses further built upon the reductions we accomplished in 2008, positions us to have operating margins equal to the highest level within the last five years. We have steadily continued our process of reducing selling, administrative and general expenses ("SG&A"). The 2009 SG&A expenses, which declined by nearly $5 million from 2008, are at their lowest dollar level for at least the last 12 years. This has been accomplished through a careful review of processes, personnel, and program justifications, to ensure that the Company is benefiting from these services while continuing to meet the needs of its customers.
The balance sheet is sound with appropriate levels of working capital and a conservative ratio of debt to equity. Cash flow from operations was at the highest level since the mid-1990s, providing the ability to fund operating expenses while also providing the funds to develop new products, make necessary investments in capital assets, make principal repayments, and pay dividends to our stockholders.
At its meeting on February 25, 2010, the Burnham Holdings, Inc. Board of Directors declared a regular quarterly common stock dividend of $0.17 per share payable March 15, 2010 with a record date of March 8, 2010. The annual dividend rate for preferred stock is $3.00 per share.
The Company's directors have scheduled the 2010 Annual Meeting for Monday, April 26th. The meeting will be held at the Lancaster Host Resort and Conference Center in Lancaster beginning at 11:30 a.m.
Consolidated Statements of Income
(In thousands, except per share data)
Years Ended December 31,
(Data is unaudited (see Notes)) 2009 2008
------------------------------- ---- ----
Net sales $183,678 $225,805
Cost of goods sold 140,738 175,961
Gross profit 42,940 49,844
Selling, administrative and general expenses 33,555 38,436
Operating income 9,385 11,408
Other income (expense)
Mark-to-market (5) 369 (427)
Interest and investment income (loss) 212 (126)
Interest expense (1,620) (1,787)
Other income (expense) (1,039) (2,340)
Income before taxes 8,346 9,068
Income tax expense 3,007 3,264
Net income $5,339 $5,804
Basic & Diluted income per share $1.20 $1.30
Other Financial Highlights:
Preferred dividends per share $3.00 $3.00
Common stock dividends per share $0.68 $0.68
Book value per common share $16.44 $16.05
Book value per share (excluding
AOCI, see Note 7) $20.80 $20.28
Notes:
1) The accompanying unaudited financial statements contain all adjustments
that are necessary for a fair presentation of results for such periods
and are consistent with policies and procedures employed in the audited
year-end financial statements. These consolidated financial statements
should be read in conjunction with the Annual Report for the period
December 31, 2009, which will be available about March 19, 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.
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 December 31, 2009 includes 2,824,492 of
Class A shares and 1,627,397 of Class B shares.
4) In 2009 and 2008, the Company made pre-tax contributions of $4.2
million and $2.8 million, respectively, to its defined benefit pension
plan. These payments increased the plan assets available for benefit
payments and did not impact the Statement of Income.
5) 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.
6) 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 2009, the
non-cash impact was a decrease in Other Postretirement Liability of
$2.3 million (projected benefit obligations exceeded plan assets, but
by less than in the previous year) and an increase of $970 thousand to
Accumulated Other Comprehensive Income (Loss)("AOCI"), a non-cash
sub-section of Stockholders' Equity. In 2008, the non-cash impact to
the balance sheet was a decline in Other Assets of $10.7 million (the
reversal of the balance established in 2007), an increase to the Other
Postretirement Liability of $20.4 million (projected benefit
obligations exceeded plan assets), and an after tax charge of $21.1
million to AOCI (see Note 9 of the 2009 Annual Report for more
details).
7) Book value per common share is presented excluding AOCI, a non-cash
subsection of Stockholders' Equity, which has been dramatically
impacted in both years by the pension and postretirement benefit
adjustments described in Note 6.
Consolidated Balance Sheets
(In thousands and data is unaudited December 31,
(see Notes)) 2009 2008
----------------------------------- ---- ----
ASSETS
Current Assets
Cash and cash equivalents $3,827 $3,608
Trade and other accounts receivable, net 23,767 30,165
Inventories 38,897 45,695
Prepayments and other current assets 3,073 3,019
Total current assets 69,564 82,487
Property, plant and equipment, net 45,720 48,202
Deferred income taxes 777 2,776
Other assets, net 22,373 21,815
Total Assets $138,434 $155,280
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts and taxes payable &
accrued expenses $23,058 $30,160
Current portion of long-term liabilities 343 398
Total current liabilities 23,401 30,558
Long-term liabilities 20,128 29,304
Other postretirement liabilities (6) 21,396 23,649
Stockholders' equity
Preferred stock 530 530
Class A common stock 3,283 3,258
Class B convertible common stock 1,627 1,652
Additional paid-in capital 14,308 14,308
Retained earnings 91,113 88,820
Accumulated other comprehensive
income (loss) (5)(6) (19,394) (18,847)
Treasury stock, at cost (17,958) (17,952)
Total stockholders' equity 73,509 71,769
Total Liabilities and Stockholders'
Equity $138,434 $155,280
Consolidated Statements of Cash Flows Years Ended December 31,
(In thousands and data is unaudited) 2009 2008
------------------------------------ ---- ----
Net income $5,339 $5,804
Depreciation and amortization 4,673 5,041
Other net adjustments 142 290
Pension and postretirement
liabilities expense 155 989
Pension contribution (4) (4,200) (2,800)
Changes in operating assets and
liabilities 8,251 (3,643)
Net cash provided by operating activities 14,360 5,681
Net cash used in the purchase of assets (2,064) (3,565)
Proceeds from borrowings - 1,193
Principal payments on debt and lease
obligations (9,025) (151)
Principal payments on debt and lease
obligations (6) -
Dividends paid (3,046) (3,046)
Cash, cash equivalents and marketable
securities
Increase for year 219 112
Beginning of year 3,608 3,496
End of year $3,827 $3,608
SOURCE Burnham Holdings, Inc.
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