Burnham Holdings, Inc. Announces Third Quarter And Nine Months Results

LANCASTER, Pa., Oct. 18, 2017

Highlights of our third quarter and year-to-date (YTD) operations include the following:

• Net sales in the third quarter and YTD in 2017 were $43.6 million and $113.4 million, respectively, compared to $42.1 million and $109.9 million in the same periods last year. This represented a year-over-year increase of 3.6% in the third quarter and 3.2% on a YTD basis.
• Long term debt (including current maturities) was $31.5 million, a reduction of $1.9 million compared to 2016. Interest expense on a YTD basis was flat compared to last year.
• Cash flow used in operations was lower by $5.7 million through the first nine months of 2017, mainly due to planned inventory reductions, lower accounts receivable levels, and lower pension contributions.
• Pre-tax profit in the third quarter was $848 thousand compared to $719 thousand in the third quarter of 2016, an improvement of 18%.

Residential product sales continued to show improvement in the third quarter, as sales were up 10.0% compared to the third quarter of 2016.  On a YTD basis, residential product sales were higher by 6.1% compared to 2016, mainly due to growth in sales of cast iron boilers and residential furnace products.  Commercial product sales were down 3.1% on a YTD basis, however, sales of our new high efficiency condensing commercial products were up over 10% compared to last year.  Shipment backlogs entering the fourth quarter with respect to both residential and commercial products were significantly higher than at the same time in 2016.

Cost of goods sold ("COGS") as a percentage of sales for the third quarter and YTD in 2017 was 81.2% and 81.3%, respectively, compared to 81.1% and 79.5% for the same periods in 2016.  The increase in COGS was mainly the result of the mix of products sold, higher prices for certain purchased raw materials, and negative cost impacts due to lower operating levels in certain manufacturing operations.  The reduced operating levels were scheduled in order to reduce manufactured inventory levels to be in line with expected customer demand.  Although the deliberate inventory reduction has caused a negative impact on pre-tax profits, we were successful in reducing inventory levels by $5.3 million on a year-over-year basis.  Also, product pricing actions taken in the first half of the year were realized in the third quarter, resulting in a favorable impact on profit results.  Selling, general and administrative expenses were lower as a percentage of sales both in the third quarter (16.2% vs. 16.6%) and on a YTD basis (19.0% vs. 19.8%).  On a YTD basis, 2017 results reflect a net loss of ($701) thousand compared to a 2016 net profit of $23 thousand.    

The Company's balance sheet has adequate levels of working capital based on our expected level of business activity as we move into the fourth quarter of the year.  Long-term debt (including current maturities) was lower by $1.9 million compared to last year ($31.5 million vs. $33.4 million), and represents a manageable level when measured as a percentage of total capital.