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.