Burnham Holdings, Inc. Reports Second Quarter Results, Board Actions and Executive Officer Appointment

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Jul 27, 2023, 20:18 ET

LANCASTER, Pa., July 27, 2023 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 six months ended July 2, 2023, announced a quarterly common stock dividend and an update to its executive leadership team.

Burnham Holdings, Inc.'s financial performance for the first half of 2023 included the following:

Net sales were $52.2 million for the second quarter of 2023, essentially flat with the second quarter of 2022. Year to date net sales were $111.7 million, an increase of 6.4% over the first six months of 2022.
Gross profit margin was 22.2% and 14.5% for the second quarters of 2023 and 2022, respectively, primarily due to continued realization of pricing actions to offset inflation. Year to date gross profit margins were 22.9% for 2023 versus 15.2% for 2022.
Selling, general and administrative expenses (SG&A) were up as a percentage of sales to 19.1% in the second quarter of 2023 versus 16.5% in the second quarter of 2022. Prior year spend was lower than historical norms as we slowly returned to pre-Covid staffing, travel, and administrative spending levels. For the first six months of 2023 and 2022, SG&A as a percentage of sales was 17.9% and 16.9%, respectively.
Net income for the second quarter 2023 was $1.0 million versus a net loss of ($1.1) million for the second quarter of 2022. First half net income was $4.0 million for 2023 versus a first half net loss of ($1.8) million in 2022.
Earnings per share were $0.20 for the second quarter of 2023 versus a loss per share of ($0.23) for the second quarter of 2022. For the first half of 2023 and 2022, earnings per share and loss per share was $0.85 and ($0.40), respectively.

For the first half of 2023, sales of residential products were higher by 3.7% versus the same period in 2022, while sales of commercial products increased by 14.7% in 2023 versus 2022. Residential and commercial backlogs decreased $9.8 million and $0.8 million compared to the prior year. Backlogs entering 2023 were higher than expected due to part availability and production staffing challenges hampering our ability to complete and ship units in the back half of 2022. 2023 order velocity remains strong, and we believe current backlog levels are in line with seasonal operating cycles.

We are pleased with the recent financial performance of the Company. Several new product introductions during the first half supported stronger sales levels across multiple business units. Additionally, the multiple pricing actions undertaken throughout 2022 across all subsidiaries in response to continuing inflationary pressures had a positive impact resulting in improved price realization during the first half of 2023. Component part and commodity inflation continued through the first half of 2023, and we continue to monitor the need for additional pricing actions to maintain margins as well as remaining diligent and ready to respond to continued instability and uncertainty in the greater macro-economic environment.

Although long-term debt was $18.9 million higher than last year due to a combination of increased working capital levels and inflationary pressures impacting inventory valuations, it is in line with our expectations given the higher sales levels. Accordingly, interest expense for both the second quarter and year to date 2023 was higher versus the same periods in 2022. We will continue to evaluate our working capital needs, including inventory levels, to ensure we can appropriately meet production volumes.

At its meeting on July 27, 2023, the Burnham Holdings, Inc. Board of Directors declared a quarterly common stock dividend of $0.22 per share payable August 23, 2023 with a record date of August 15, 2023. Additionally, the Board of Directors amended the bylaws to lower the minimum number of directors from nine to eight and increase the maximum age, at the time of election, at which a director may be elected to the board from 70 to 72.

We are pleased to announce that Samantha L. Fugagli has been appointed General Counsel and Secretary of the Company effective July 27, 2023. Ms. Fugagli joined the Company on June 26, 2023 after serving previously in roles at McNees Wallace & Nurick and Deloitte Tax LLP. She received her B.S. in Accounting from Gannon University and J.D. from the University of Pittsburgh, School of Law.

Burnham Holdings, Inc
Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)

			Three Months Ended		Six Months Ended
			July 2,	July 3,	July 2,	July 3,
			2023	2022	2023	2022
Net sales			$ 52,167	$ 52,500	$ 111,701	$ 104,938
Cost of goods sold			40,568	44,906	86,124	88,984
		Gross profit	11,599	7,594	25,577	15,954
Selling, general and administrative expenses			9,940	8,680	19,982	17,718
		Operating income (loss)	1,659	(1,086)	5,595	(1,764)
Other expense:
	Non-service related pension credit		138	107	275	213
	Interest and investment gain (loss)		207	(85)	489	(218)
	Interest expense		(687)	(330)	(1,186)	(605)
		Other expense	(342)	(308)	(422)	(610)
Income (loss) before income taxes			1,317	(1,394)	5,173	(2,374)
Income tax expense (benefit)			303	(321)	1,190	(546)
	Net income (loss)		$ 1,014	$ (1,073)	$ 3,983	$ (1,828)

	Earnings (loss) per share
		Basic	$ 0.20	$ (0.23)	$ 0.85	$ (0.40)
		Diluted	$ 0.20	$ (0.23)	$ 0.85	$ (0.40)
	Cash dividends per share		$ 0.22	$ 0.22	$ 0.44	$ 0.44

Burnham Holdings, Inc
Consolidated Balance Sheets
(In thousands)

			(Unaudited)		(Unaudited)
			July 2,	December 31,	July 3,
ASSETS			2023	2022	2022
Current Assets
	Cash and cash equivalents		$ 6,733	$ 6,994	$ 5,857
	Trade accounts receivable, net		24,496	29,243	19,933
	Inventories, net		75,453	59,635	63,427
	Prepaid expenses and other current assets		4,555	3,747	4,857
		Total Current Assets	111,237	99,619	94,074
Property, plant and equipment, net			62,244	59,980	57,828
Lease assets			2,853	1,793	1,997
Other long-term assets			15,747	14,866	22,901
		Total Assets	$ 192,081	$ 176,258	$ 176,800

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
	Accounts payable & accrued expenses		$ 25,176	$ 36,047	$ 29,349
	Current portion of long-term liabilities		152	152	152
	Current portion of operating lease liabilities		810	854	824
		Total Current Liabilities	26,138	37,053	30,325
Long-term debt			56,642	33,721	37,775
Lease liabilities			2,043	939	1,173
Other postretirement liabilities			6,148	5,636	6,068
Deferred income taxes			7,827	7,822	8,972
Shareholders' Equity
	Preferred Stock		530	530	530
	Class A Common Stock		3,626	3,626	3,623
	Class B Convertible Common Stock		1,318	1,318	1,321
	Additional paid-in capital		16,824	16,565	16,564
	Retained earnings		116,420	114,526	109,668
	Accumulated other comprehensive loss		(27,529)	(27,549)	(21,291)
	Treasury stock, at cost		(17,906)	(17,929)	(17,928)
		Total Shareholders' Equity	93,283	91,087	92,487
		Total Liabilities and Shareholders' Equity	$ 192,081	$ 176,258	$ 176,800

Burnham Holdings, Inc
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

		Six Months Ended
		July 2,	July 3,
		2023	2022
	Net income (loss)	$ 3,983	$ (1,828)
	Depreciation and amortization	2,511	2,388
	Pension and postretirement liabilities expense	(208)	86
	Other net adjustments	(496)	(549)
	Changes in operating assets and liabilities	(20,349)	(11,224)
Net cash used by operating activities		(14,559)	(11,127)
	Purchase of property, plant and equipment	(4,842)	(2,797)
	Net proceeds from borrowings	20,947	15,946
	Share-based and treasury activity, net	282	267
	Dividends paid	(2,089)	(2,086)
Net (decrease) increase in cash and cash equivalents		$ (261)	$ 203

Cash and cash equivalents, beginning of period		$ 6,994	$ 5,654
Net (decrease) increase in cash and cash equivalents		(261)	203
Cash and cash equivalents, end of period		$ 6,733	$ 5,857

Burnham Holdings, Inc
Consolidated Statements of Shareholders' Equity
(In thousands)
(Unaudited)

				Class B			Accumulated
			Class A	Convertible	Additional		Other	Treasury
		Preferred	Common	Common	Paid-in	Retained	Comprehensive	Stock,	Shareholders'
		Stock	Stock	Stock	Capital	Earnings	Loss	at Cost	Equity
Balance at December 31, 2022		$ 530	$ 3,626	$ 1,318	$ 16,565	$ 114,526	$ (27,549)	$ (17,929)	$ 91,087

Cash dividends declared:
	Common stock - ($0.22 per share)	-	-	-	-	(1,012)	-	-	(1,012)
Net income for the period		-	-	-	-	2,969	-	-	2,969
Other comprehensive loss,
net of tax ($88)		-	-	-	-	-	(296)	-	(296)

Balance at April 2, 2023		$ 530	$ 3,626	$ 1,318	$ 16,565	$ 116,483	$ (27,845)	$ (17,929)	$ 92,748

Share-based compensation		-	-	-	259	-	-	23	282
Cash dividends declared:
	Preferred stock - 6%	-	-	-	-	(9)	-	-	(9)
	Common stock - ($0.22 per share)	-	-	-	-	(1,068)	-	-	(1,068)
Net income for the period		-	-	-	-	1,014	-	-	1,014
Other comprehensive income,
net of tax ($94)		-	-	-	-	-	316	-	316

Balance at July 2, 2023		$ 530	$ 3,626	$ 1,318	$ 16,824	$ 116,420	$ (27,529)	$ (17,906)	$ 93,283


				Class B			Accumulated
			Class A	Convertible	Additional		Other	Treasury
		Preferred	Common	Common	Paid-in	Retained	Comprehensive	Stock,	Shareholders'
		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

Share-based compensation		-	-	-	37	-	-	3	40
Conversion of common stock		-	-	-	-	-	-	-	-
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 ($166)		-	-	-	-	-	751	-	751

Balance at April 3, 2022		$ 530	$ 3,615	$ 1,329	$ 16,354	$ 111,816	$ (21,509)	$ (17,945)	$ 94,190

Share-based compensation		-	-	-	210	-	-	17	227
Conversion of common stock		-	8	(8)	-	-	-	-	-
Cash dividends declared:
	Preferred stock - 6%	-	-	-	-	(9)	-	-	(9)
	Common stock - ($0.22 per share)	-	-	-	-	(1,066)	-	-	(1,066)
Net loss for the period		-	-	-	-	(1,073)	-	-	(1,073)
Other comprehensive income,
net of tax ($166)		-	-	-	-	-	218	-	218

Balance at April 3, 2022		$ 530	$ 3,623	$ 1,321	$ 16,564	$ 109,668	$ (21,291)	$ (17,928)	$ 92,487