BURNHAM HOLDINGS, INC. REPORTS FIRST QUARTER RESULTS

Rhea-AI Summary

Burnham Holdings, Inc. (OTC-Pink: BURCA) reported a net loss of $0.8 million for Q1 2022, compared to a loss of $0.6 million in Q1 2021. However, net sales rose 19.2% to $52.4 million due to strong demand for heating equipment. Gross profit was stable at 15.9% of sales, with higher expenses from interest and inflation affecting profitability. Total debt increased by $11.2 million to $30.9 million, primarily due to material cost inflation. First-quarter results typically represent only 20% of the annual total, warranting caution in interpreting financial outcomes.

Positive

• Net sales increased by 19.2% to $52.4 million.
• Sales of residential products rose by 17.6%.
• Commercial product sales increased by 25.1% as projects resumed.

Negative

• Net loss of $0.8 million, worsening from a loss of $0.6 million.
• Total debt increased by $11.2 million to $30.9 million due to inflation.
• Gross profit margin remains low at 15.9%, pressured by inflation.

LANCASTER, Pa., April 25, 2022 /PRNewswire/ -- Burnham Holdings, Inc. (OTC-Pink: BURCA), the parent company of multiple 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 quarter ended April 3, 2022.

Burnham Holdings, Inc.'s financial performance in the first quarter of 2022 included the following:

• Net sales were $52.4 million, up $8.4 million, or 19.2%, versus 2021, as demand for residential and commercial heating equipment continues to remain strong.
• Gross profit as a percentage of sales was 15.9% for both the first quarter of 2022 and 2021, primarily as the result of pricing actions to offset material price inflation.
• 2022 Q1 net loss was ($0.8) million compared to ($0.6) in Q1 2021. 2022 was affected by higher interest expense as a result of both rising interest rates and higher debt levels due to inflationary pressures affecting working capital, material price inflation and production efficiency challenges driven by intermittent supply chain issues.
• Total debt of $30.9 million was $11.2 million higher versus the prior year primarily as a result of material cost inflation in inventories.

Sales of residential products increased by 17.6% compared to last year, as strong demand continued throughout our primary trading areas.  Sales of commercial products increased by 25.1% as numerous COVID-19-delayed projects restarted in several key markets (schools, healthcare, industrial).  Although not quite yet back to pre-pandemic levels, incoming orders for commercial products have increased significantly over the past 60-90 days and are approximately 62% higher versus the first quarter of 2021. 

As noted in our full year 2021 results, profitability continues to be pressured by significant difficulties in hiring and retaining qualified employees and multiple supply chain issues negatively impacting production.  Price inflation on purchased materials remains a headwind, particularly metals, freight costs and resin-based materials such as plastics, paint and glue.  Each of our subsidiaries raised their selling prices in Q1 to recover costs and maintain profitability and are prepared to take additional actions as appropriate for the remainder of the year. 

The Company's balance sheet continues to be strong, with adequate levels of working capital to support current and future business opportunities.  Long-term debt of $30.9 million was $11.2 million higher than last year, with the increase mostly attributable to a $7.1 million increase in inventories.  Approximately half of the inventory increase was due to material cost inflation, with the remainder due to higher inventory levels necessary to support the increased sales volume.

Due to the seasonal nature of the sales made by our subsidiary companies, the first quarter provides the lowest quarterly sales of our fiscal year (normally 20% or less of full year sales).  Combined with continued uncertainty in the macro-economic environment, we therefore advise caution when using the financial results from the first quarter as an indicator of full year results. 

The Burnham Holdings, Inc. 2022 Annual Meeting of Stockholders is being held today in Lancaster, PA beginning at 11:30 a.m.  A press release regarding today's stockholder voting and the Board of Directors determination regarding declaration of a quarterly dividend will be released later this afternoon.

 

 

Burnham Holdings, Inc.
Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
				Three Months Ended
				April 3,		March 28,
				2022		2021
Net sales				$       52,438		$       44,003
Cost of goods sold				44,078		37,008
		Gross profit		8,360		6,995
Selling, general and administrative expenses				9,038		7,647
		Operating loss		(678)		(652)
Other expense:
	Non-service related pension credit			106		131
	Investment loss net of interest income			(133)		(49)
	Interest expense			(275)		(185)
		Other expense		(302)		(103)
Loss before income taxes				(980)		(755)
Income tax benefit				(225)		(174)
	Net loss			$           (755)		$           (581)
	Loss per share (Note 1)
		Basic		$          (0.16)		$          (0.13)
		Diluted		$          (0.16)		$          (0.13)
	Cash dividends per share			$           0.22		$           0.22
The accompanying notes are integral to the consolidated financial statements.

 

 

Burnham Holdings, Inc.
Consolidated Balance Sheets
(In thousands)
				(Unaudited)				(Unaudited)
				April 3,		December 31,		March 28,
ASSETS				2022		2021		2021
Current Assets
	Cash and cash equivalents			$         5,711		$         5,654		$         5,771
	Trade accounts receivable, less allowances			19,342		24,920		18,156
	Inventories			56,951		51,066		49,872
	Prepaid expenses and other current assets			5,204		4,717		2,074
		Total Current Assets		87,208		86,357		75,873
Property, plant and equipment, net				57,739		57,496		56,327
Operating lease assets				2,203		2,065		2,466
Other assets, net (Note 4)				22,466		21,551		12,240
		Total Assets		$     169,616		$     167,469		$     146,906
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
	Accounts payable & accrued expenses			$       27,145		$       33,429		$       22,148
	Current portion of long-term liabilities			152		152		147
	Current portion of operating lease liabilities			827		765		721
		Total Current Liabilities		28,124		34,346		23,016
Long-term debt				30,940		21,843		19,762
Operating lease liabilities				1,376		1,300		1,745
Other postretirement liabilities (Notes 4 and 5)				6,052		6,062		5,474
Deferred income taxes (Note 4)				8,934		8,753		6,723
Stockholders' Equity
	Preferred Stock			530		530		530
	Class A Common Stock			3,615		3,615		3,565
	Class B Convertible Common Stock			1,329		1,329		1,379
	Additional paid-in capital			16,354		16,317		16,115
	Retained earnings			111,816		113,582		115,048
	Accumulated other comprehensive loss (Note 4)			(21,509)		(22,260)		(28,487)
	Treasury stock, at cost			(17,945)		(17,948)		(17,964)
		Total Stockholders' Equity		94,190		95,165		90,186
		Total Liabilities and Stockholders' Equity		$     169,616		$     167,469		$     146,906
The accompanying notes are integral to the consolidated financial statements.

 

 

Burnham Holdings, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
			Three Months Ended
			April 3,		March 28,
			2022		2021
	Net loss		$       (755)		$       (581)
	Depreciation and amortization		1,182		1,116
	Pension and postretirement liabilities expense		43		43
	Contributions to pension trust (Note 5)		-		(188)
	Other net adjustments		(937)		(990)
	Changes in operating assets and liabilities		(6,184)		5,626
Net cash (used) / provided by operating activities			(6,651)		5,026
	Purchase of property, plant and equipment		(1,431)		(5,202)
	Proceeds from borrowings		9,110		1,192
	Proceeds from stock option exercise and treasury activity, net		40		-
	Dividends paid		(1,011)		(1,004)
Net increase in cash, cash equivalents and restricted cash			$          57		$           12
Cash, cash equivalents and restricted cash, beginning of period			$     5,654		$      5,759
Net increase in cash, cash equivalents and restricted cash			57		12
Cash, cash equivalents and restricted cash, end of period			$     5,711		$      5,771
The accompanying notes are integral to the consolidated financial statements.

 

 

Burnham Holdings, Inc.
Consolidated Statements of Stockholders' Equity
(In thousands)
(Unaudited)
						Class B						Accumulated
				Class A		Convertible		Additional				Other		Treasury
			Preferred	Common		Common		Paid-in		Retained		Comprehensive		Stock,		Stockholders'
			Stock	Stock		Stock		Capital		Earnings		Loss		at Cost		Equity
Balance at December 31, 2021			$       530	$     3,615		$     1,329		$   16,317		$ 113,582		$          (22,260)		$ (17,948)		$        95,165
Exercise of stock options			-	-		-		37		-		-		3		40
Cash dividends declared:
	Common stock - ($0.22 per share)									(1,011)						(1,011)
Net loss for the period			-	-		-		-		(755)		-		-		(755)
Other comprehensive income,
net of tax ($211)			-	-		-		-		-		751		-		751
Balance at April 3, 2022			$       530	$     3,615		$     1,329		$   16,354		$ 111,816		$          (21,509)		$ (17,945)		$        94,190
						Class B						Accumulated
				Class A		Convertible		Additional				Other		Treasury
			Preferred	Common		Common		Paid-in		Retained		Comprehensive		Stock,		Stockholders'
			Stock	Stock		Stock		Capital		Earnings		Loss		at Cost		Equity
Balance at December 31, 2020			$       530	$     3,560		$     1,384		$   16,115		$ 116,633		$          (29,043)		$ (17,964)		$        91,215
Conversion of common stock			-	5		(5)		-		-		-		-		-
Cash dividends declared:
	Common stock - ($0.22 per share)									(1,004)						(1,004)
Net loss for the period			-	-		-		-		(581)		-		-		(581)
Other comprehensive income,
net of tax ($166)			-	-		-		-		-		556		-		556
Balance at March 28, 2021			$       530	$     3,565		$     1,379		$   16,115		$ 115,048		$          (28,487)		$ (17,964)		$        90,186
The accompanying notes are integral to the consolidated financial statements.

 

 

Notes To Financial Statements:
(1)	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.
(2)	Common stock outstanding at April 3, 2022 includes 3,262,626 of Class A shares and 1,327,496 of Class B shares.
(3)	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.
(4)	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.  As of December 31, 2021, plan assets exceeded projected
	benefit obligations (asset) while as of December 31, 2020, projected benefit obligations exceeded plan assets (liability).
	The resulting non-cash presentation on the balance sheet is reflected in "Other assets, net" or "Other postretirement
	liabilities", "Deferred income taxes", and "Accumulated other comprehensive loss", a non-cash subsection of
	"Stockholders' Equity" (See Note 10 of the 2021 Annual Report for more details).
(5)	For the first quarter of 2021, the Company made voluntary pre-tax contributions of $0.19 million to its defined benefit
	pension plan.  This payment increased the trust assets available for benefit payments (reducing "Other postretirement
	liabilities") and did not impact the Statement of Income.  No contribution was needed in the first quarter of 2022 due
	to the funded status of the plan.
(6)	Unaudited results, forward looking statements, and certain significant estimates and risks.  This note has been
	expanded to include items discussed in detail within the 2021 Annual Report.
	Unaudited Results and Forward Looking Statements. 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 ended December 31, 2021.  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.
	Certain Significant Estimates and Risks.  Certain estimates are determined using historical information along with
	assumptions about future events.  Changes in assumptions for items such as warranties, pensions, medical cost trends,
	employment demographics and legal actions, as well as changes in actual experience, could cause these estimates to
	change.  Specific risks, such as those included below, are discussed in the Company's Quarterly and Annual Reports
	in order to provide regular knowledge of relevant matters.  Estimates and related reserves are more fully explained in the
	2021 Annual Report.
	Retirement Plans:  The Company maintains a non-contributory defined benefit pension plan, covering both union and
	non-union employees, that has been closed to new hires for a number of years.  Benefit accrual ceased in 2009, or earlier
	depending on the employee group, with the exception of a limited, closed group of union production employees.  While not
	100% frozen, these actions were taken to protect benefits for retirees and eligible employees, and have materially reduced
	the growth of the pension liability.  Lancaster Metal Manufacturing, a Company subsidiary, also contributes to a separate
	union-sponsored multiemployer defined benefit pension plan that covers its collective bargaining employees.  Variables
	such as future market conditions, investment returns, and employee experience could affect results.
	Medical Health Coverage: The Company and its subsidiaries are self-insured for most of the medical health insurance provided for its employees, limiting maximum exposure per occurrence by purchasing third-party stop-loss coverage.
	Retiree Health Benefits:  The Company pays a fixed annual amount that assists a specific group of retirees in purchasing medical and/or prescription drug coverage from providers. Additionally, certain employees electing early retirement receive a fixed dollar amount based on years of employee service to assist them in covering medical costs.  These obligations are accounted for within the financial statements.
	Insurance: The Company and its subsidiaries maintain insurance to cover product liability, general liability, workers' compensation, and property damage. Well-known and reputable insurance carriers provide current coverage. All policies and corresponding deductible levels are reviewed on an annual basis. Third-party administrators, approved by the Company and the insurance carriers, handle claims and attempt to resolve them to the benefit of both the Company and its insurance carriers. The Company reviews claims periodically in conjunction with administrators and adjusts recorded reserves as required.
	Warranty Litigation, Class Action:  In 2010, two of the Company's subsidiaries were served with a class action lawsuit related generally to boiler products manufactured and sold by a predecessor to one of the Company's subsidiaries more than 10 years ago. This matter has now been discontinued as a class action and the litigation has been resolved.
	General Litigation, including Asbestos: In the normal course of business, certain subsidiaries of the Company have been named, and may in the future be named, as defendants in various legal actions including claims related to property damage and/or personal injury allegedly arising from products of the Company's subsidiaries or their predecessors. A number of these claims allege personal injury arising from exposure to asbestos-containing material allegedly contained in certain boilers manufactured many years ago, or through the installation or removal of heating systems. The Company's subsidiaries, directly and/or through insurance providers, are vigorously defending all open asbestos cases, many of which involve multiple claimants and many defendants, which may not be resolved for several years. Asbestos litigation is a national issue with thousands of companies defending claims.  While the large majority of claims have historically been resolved prior to the completion of trial, from time to time some claims may be expected to proceed to a potentially substantial verdict against subsidiaries of the Company.  Any such verdict would be subject to a potential reduction or reversal of verdict on appeal, any set-off rights, and/or a reduction of liability following allocation of liability among various defendants.  For example, on July 23, 2013 and December 12, 2014, New York City State Court juries found numerous defendant companies, including a subsidiary of the Company, responsible for asbestos-related damages in cases involving multiple plaintiffs. The subsidiary, whose share of the verdicts amounted to $42 million and $6 million, respectively, before offsets, filed post-trial motions and appeals seeking to reduce and/or overturn the verdicts, and granting of new trials.  On February 9, 2015, the trial court significantly reduced the 2013 verdicts, reducing the subsidiary's liability from $42 million to less than $7 million.  Additionally, on May 15, 2015, the trial court reduced the subsidiary's liability in the 2014 verdict to less than $2 million.  On October 30, 2015, the subsidiary settled these verdicts for significantly less than the trial courts' reduced verdicts, with all such settled amounts being covered by applicable insurance.  The Company believes, based upon its understanding of its available insurance policies and discussions with legal counsel, that all pending legal actions and claims, including asbestos, should ultimately be resolved (whether through settlements or verdicts) within existing insurance limits and reserves, or for amounts not material to the Company's financial position or results of operations. However, the resolution of litigation generally entails significant uncertainties, and no assurance can be given as to the ultimate outcome of litigation or its impact on the Company and its subsidiaries. Furthermore, the Company cannot predict the extent to which new claims will be filed in the future, although the Company currently believes that the great preponderance of future asbestos claims will be covered by existing insurance. There can be no assurance that insurers will be financially able to satisfy all pending and future claims in accordance with the applicable insurance policies, or that any disputes regarding policy provisions will be resolved in favor of the Company.
	Litigation Expense, Settlements, and Defense: The 2022 first quarter charges for all uninsured litigation of every kind, were $115,000.  Expenses for legal counsel, consultants, etc., in defending these various actions and claims for the quarter were approximately $5,000.  Prior year's settlements and expenses, including amounts for self-insured asbestos cases, are disclosed in the 2021 Annual Report.
	Permitting Activities (excluding environmental): The Company's subsidiaries are engaged in various matters with respect to obtaining, amending or renewing permits required under various laws and associated regulations in order to operate each of its manufacturing facilities. Based on the information presently available, management believes it has all necessary permits and expects that all permit applications currently pending will be routinely handled and approved.
	Environmental Matters: The operations of the Company's subsidiaries are subject to a variety of Federal, State, and local environmental laws. Among other things, these laws require the Company's subsidiaries to obtain and comply with the terms of a number of Federal, State and local environmental regulations and permits, including permits governing air emissions, wastewater discharges, and waste disposal. The Company's subsidiaries periodically need to apply for new permits or to renew or amend existing permits in connection with ongoing or modified operations. In addition, the Company generally tracks and tries to anticipate any changes in environmental laws that might relate to its ongoing operations. The Company believes its subsidiaries are in material compliance with all environmental laws and permits.
	As with all manufacturing operations in the United States, the Company's subsidiaries can potentially be responsible for response actions at disposal areas containing waste materials from their operations. In the past five years, the Company has not received any notice that it or its subsidiaries might be responsible for remedial clean-up actions under government supervision. However, one issue covered by insurance policies remains open as of this date and is fully disclosed in the 2021 Annual Report. While it is not possible to be certain whether or how any new or old matters will proceed, the Company does not presently have reason to anticipate incurring material costs in connection with any matters.

 

 

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SOURCE Burnham Holdings, Inc.

FAQ

What were Burnham Holdings' net sales for Q1 2022?

Burnham Holdings reported net sales of $52.4 million for Q1 2022.

How did Burnham Holdings' net loss in Q1 2022 compare to Q1 2021?

The net loss in Q1 2022 was $0.8 million, compared to a loss of $0.6 million in Q1 2021.

What is the current debt level of Burnham Holdings?

Burnham Holdings' total debt is $30.9 million, an increase of $11.2 million from the previous year.

How much did residential product sales increase for Burnham Holdings in Q1 2022?

Sales of residential products increased by 17.6% in Q1 2022.

What impact did inflation have on Burnham Holdings' financial results in Q1 2022?

Inflation contributed to increased material costs and a rise in debt, affecting profitability.