LANCASTER, Pa., Oct. 9 /PRNewswire-FirstCall/ -- Burnham Holdings, Inc., (Pink Sheets: BURCA), a leading manufacturer of boilers, furnaces, radiators, air conditioning systems, and related accessories for residential, commercial and industrial applications, today reported its financial results for the period ended September 28, 2008.
Third quarter and year-to-date sales were $62.9 million and $149.8 million, respectively. Prior year third quarter and year-to-date sales were $59.8 million and $154.2 million, respectively. Sales for the third quarter have increased as compared to a year ago. The residential portion of our business led that increase as it enters the heating season. The increase was achieved despite the ongoing economic conditions that continue to dominate the national news, namely declining housing and real estate markets, uncertainty in the financial markets, and tightening of credit. Our commercial businesses reported sales for the quarter similar to last year, which was a strong quarter. Although current conditions remain challenging, we are optimistic about longer-term prospects for the business. Existing boilers will continue to be replaced over time due to age or operating costs. Our many new high-efficiency product introductions, for both portions of our business, are considered some of the best on the market and have been well received by contractors, specifiers, and building owners. These are adding to our already powerful lineup of products across all our residential and commercial brands that position us well in the respective markets.
The income for the third quarter was $2.5 million or $0.56 per share, compared to prior year's $1.7 million or $0.37 per share. Year-to-date income was $277 thousand or $0.06 per share, compared to prior year's $1.2 million or $0.26 per share. As we have discussed in our prior reports, the Burnham group of companies, like most users of steel products in the United States, has experienced substantial cost increases for raw steel and steel related products this year, which has negatively impacted our gross margin. We have announced product price increases within all of our businesses to mitigate these cost impacts, while at the same time being cognizant of our need to remain cost competitive in this difficult market. Selling, administrative, and general expense was lower in dollars, and as a percentage of sales, compared to the prior year (both for the quarter and year-to-date) and is indicative of actions taken by Burnham to lower its cost structure. Other income (expense) is favorably lower for the quarter and year-to-date compared to last year because of our lower debt levels and borrowing rates, in addition to favorable mark-to-market adjustments on our interest rate agreements.
The Company's balance sheet remains strong with high liquidity and working capital at a level consistent with the business activity. Inventory levels are lower than last year at this time despite the sharp increase in raw material costs, increases resulting from our new product introductions, and increases within our commercial businesses that have experienced growth. We are able to maintain adequate inventory levels, with a resulting stronger cash flow, because of the increased production flexibility provided by the facility expansions and equipment improvements made over the last several years. Total debt at September 28, 2008 is $43.4 million, or $6.0 million lower than at this point last year, and as a percentage of total capital (debt and equity) is 32.9% versus 38.1% last year. Burnham's long-term financing arrangements are a combination of Industrial Revenue Bonds ("IRB's"), State-assisted equipment loans, and a Revolving line of credit (committed through mid-2010). The IRB's and line of credit are with multiple financial institutions and as of September 28, 2008, Burnham is in compliance with all covenants.
At its meeting on October 9, 2008, Burnham Holdings, Inc.'s Board of Directors declared a quarterly common stock dividend of $0.17 per share payable December 1, 2008, with a record date of November 7, 2008; and a semi-annual preferred stock dividend of $1.50 per share payable December 29, 2008 with a record date of December 8, 2008.
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. Careful consideration should be given to cautionary statements made in our 2007 Annual Report. We undertake no duty to update or revise these forward-looking statements.
Consolidated Statements of Operations (In thousands, except Three months ended Nine months ended per share data) September September September September (Data is unaudited 28, 30, 28, 30, (see Notes)) 2008 2007 2008 2007 Net sales $62,904 $59,764 $149,802 $154,248 Cost of goods sold 48,381 45,579 119,743 119,891 Gross profit 14,523 14,185 30,059 34,357 Selling, administrative and general expense 10,143 10,414 28,403 30,303 Operating income 4,380 3,771 1,656 4,054 Other income (expense) Mark-to-market gain (loss)(4) -- (419) 21 (465) Interest income 18 32 62 79 Interest expense (489) (790) (1,306) (1,860) Other income (expense) (471) (1,177) (1,223) (2,246) Income before taxes 3,909 2,594 433 1,808 Income tax expense 1,407 918 156 640 Net income $2,502 $1,676 $277 $1,168 Per Share Data: Basic & Diluted income $0.56 $0.37 $0.06 $ 0.26 Dividends paid $0.17 $0.17 $0.51 $ 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, 2007.
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 28, 2008 includes 2,796,823 of Class A shares and 1,655,066 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 a portion of the variable rate debt for payments indexed to a fixed interest rate. These non-operational, non-cash charges are recorded on a quarterly basis but reverse themselves over the term of the agreements.
5) In 2006, accounting rule changes required recognition of the funded status of pensions and postretirement benefits as a net liability or asset on the Company's balance sheet. On an annual basis, changes in the funded position of these obligations are recorded as an adjustment to the liability or asset with an offsetting change (net of deferred taxes) in Other Comprehensive Income (Loss), a sub-section of Stockholders' Equity. The primary 2007 year-end, non-cash change for Burnham was a net increase in Other Assets of $9.7 million and a net increase to Stockholders' Equity of $7.3 million (after tax) (see Note 9 of the 2007 Annual Report).
Consolidated Balance Sheets (In thousands) September September (Data is unaudited (see Notes)) 28, 30, 2008 2007 ASSETS Current Assets Cash and cash equivalents $3,370 $1,527 Marketable securities --- 1,265 Trade and other accounts receivable, net 38,678 38,018 Inventories 53,988 55,022 Prepayments and other current assets 3,543 4,477 Total current assets 99,579 100,309 Property, plant and equipment, net 47,778 49,640 Other assets, net(5) 32,447 21,141 Total Assets $179,804 $171,090 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts and taxes payable & accrued expenses $34,816 $31,415 Current portion of long-term liabilities 404 357 Total current liabilities 35,220 31,772 Long-term debt 43,231 49,262 Other postretirement liabilities 3,457 3,327 Deferred income taxes (5) 9,323 6,554 Stockholders' equity Preferred stock 530 530 Class A common stock 3,255 3,225 Class B convertible common stock 1,655 1,685 Additional paid-in capital 14,308 14,308 Retained earnings 84,059 82,691 Accumulated other comprehensive income (loss)(5) 2,718 (4,312) Treasury stock, at cost (17,952) (17,952) Total stockholders' equity 88,573 80,175 Total Liabilities and Stockholders' Equity $179,804 $171,090
