Feb 18, 2021 SOURCE: PR NewsWire
Burnham Holdings, Inc. Announces Year 2020 Financial Results
LANCASTER, Pa., Feb. 18, 2021 /PRNewswire/ -- Burnham Holdings, Inc., (OTC-Pink: BURCA), the parent company of multiple subsidiaries that are leading domestic manufacturers and sellers of boilers, and related HVAC products and accessories (including furnaces, radiators, and air conditioning systems), for residential, commercial and industrial applications, today reported financial results for the year ended December 31, 2020.
The following are some key highlights of our 2020 financial results:
-- Net sales were $ 187.5 million, a decrease of $ 24.8 million, or 11.7%,
compared to 2019 as overall demand for residential and commercial
heating equipment was adversely affected in the first half of the year
by warmer than normal winter weather and impacts from the COVID-19
pandemic.
-- Gross profit was $ 38.5 million, down $ 7.0 million, or 15.5%, versus
2019, as the result of lower sales
-- Net Income was $6.55mm, or $1.43 per share; versus $8.74mm, or $1.91 per
share in 2019
Further details of the results mentioned in this press release will be discussed in the Company's 2020 Annual Report and audited financial statements, which will be available on or around March 22, 2021.
The COVID-19 pandemic had a significant impact on our businesses in 2020. As an essential business, Burnham Holdings and its subsidiaries continued all operations with implementation of proper personal protection protocols throughout all facilities. The majority of office staff transitioned to a work-from-home posture, which continued throughout the year. Overall, operations successfully adapted to the new operating environment, delivering strong second half business results and minimizing operational disruptions. It was a significant team effort by the entire organization to keep our employees safe and healthy while continuing to meet the needs of our customers and the end users who rely on our products for their comfort and well-being.
Full year 2020 sales of residential heating products decreased by 10.5% compared to 2019 levels, due mainly to weather and COVID-19 related business closures in the first half of the year. However, residential product sales did show improvement in the second half of 2020 with a 1.5% increase compared to 2019 second half sales. Sales of commercial boiler products decreased by 14.8% in 2020, as new project activity was depressed due to COVID-19 related closures of schools, hotels and other users of large commercial boilers. Sales of new high-efficiency commercial boiler products in 2020 were higher compared to 2019 levels.
Gross profit (profit after deducting cost of goods sold (COGS) from net sales) in 2020 was $ 38.5 million, or 20.5% of net sales. This compares to gross profit of $ 45.5 million in 2019, or 21.4% of net sales. Gross profit as a percentage of sales in 2020 was impacted negatively by the decrease in sales volume, Selling, general, and administrative expenses (SG&A) were lower at $ 30.5 million in 2020 compared to $ 34.4 million in 2019, a decrease of $ 3.9 million, or 11.3%. SG&A as a percent of sales was 16.3% versus 16.2% in 2019.
Reported net income in 2020 was $6.55 million, a return on net sales of 3.5%, and basic earnings per share of $1.43. This compared to reported 2019 net income of $8.74 million, a return on net sales of 4.1%, and basic earnings per share of $ 1.91.
Effective as of the Annual Meeting, April 26, 2021, George W. Hodges, Chairman of the Board, will retire from the Board after serving 15 years in a variety of Board positions; including the last year as Board Chairman. We are very appreciative of the countless contributions Mr. Hodges has made to the success of the Company. John W. Lyman was elected the new Chairman of the Board, effective April 26, 2021. Mr. Lyman has served as a Director of the Company since 2002, serving on several Board committees, including the Nominating and Governance Committee which he currently Chairs, as well as the Audit and Risk Committee.
At its meeting on February 18, 2021, Burnham Holdings, Inc.'s Board of Directors declared a quarterly common stock dividend of $0.22 per share, payable on March 12, 2021 with a record date of March 5, 2021; and has scheduled the 2021 Annual Meeting of Shareholders for Monday, April 26th with a shareholder record date of March 1, 2021. With continued public health concerns as the result of COVID-19, the meeting will be a virtual meeting and shareholders will not be able to attend in person. Further details regarding the meeting will be provided in March, 2021 on our website, burnhamholdings.com.
Consolidated Statements of Income
(In thousands, except per share data)
Years Ended December
(Data is unaudited (see Notes)) 2020 2019
---
Net sales $187,461 $212,257
Cost of goods sold 148,985 166,737
---
Gross profit 38,476 45,520
Selling, general and administrative expenses 30,477 34,355
Goodwill impairment loss (Note 3)
---
Operating income 7,999 11,165
Other income (expense):
Non-service related pension credit 684 720
Interest and investment income 719 822
Interest expense (930) (1,141)
Other income (expense) 473 401
Income before income taxes 8,472 11,566
Income tax (benefit) expense 1,925 2,828
---
NET (LOSS) INCOME $6,547 $8,738
BASIC (LOSS) EARNINGS PER SHARE (Note 1) $1.43 $1.91
DILUTED (LOSS) EARNINGS PER SHARE (Note 1) $1.43 $1.91
COMMON STOCK DIVIDENDS PAID $0.88 $0.88
BOOK VALUE PER COMMON SHARE $19.89 $18.99
Consolidated Balance Sheets
(in thousands and data is unaudited (see Notes))
December
ASSETS 2020 2019
CURRENT ASSETS
Cash, cash equivalents and restricted cash $5,759 $5,749
Trade accounts receivable, less allowances 28,654 24,589
Inventories 49,203 47,234
Prepaid expenses and other current assets 2,154 1,661
TOTAL CURRENT ASSETS 85,770 79,233
PROPERTY, PLANT AND EQUIPMENT, net 52,494 52,461
OPERATING LEASE RIGHT OF USE ASSETS (Note 7) 4,022 4,431
OTHER ASSETS, net 12,089 11,064
---
TOTAL ASSETS $154,375 $147,189
LIABILITIES AND STOCKHOLDERS' EQUITY 2020 2019
CURRENT LIABILITIES
Accounts and taxes payable & accrued expenses $27,382 $26,095
Current portion of long-term liabilities 147 152
Current portion of operating lease liabilities
(Note 7) 1,020 979
Current portion of long-term debt -
TOTAL CURRENT LIABILITIES 28,549 27,226
LONG-TERM DEBT 19,292 15,068
LONG-TERM OPERATING LEASE LIABILITIES (Note 7) 3,002 3,452
OTHER POSTRETIREMENT LIABILITIES (Notes 5 and 6) 5,742 8,488
DEFERRED INCOME TAXES (Note 5) 6,575 6,019
STOCKHOLDERS' EQUITY
Preferred Stock 530 530
Class A Common Stock 3,560 3,536
Class B Convertible Common Stock 1,384 1,408
Additional paid-in capital 16,115 16,034
Retained earnings 116,633 114,139
Accumulated other comprehensive income (loss)
(Note 5) (29,043) (30,738)
Treasury stock, at cost (17,964) (17,973)
TOTAL STOCKHOLDERS' EQUITY 91,215 86,936
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $154,375 $147,189
Consolidated Statements of Cash Flows Years Ended December 31,
(in thousands and data is unaudited (see Notes)) 2020 2019
---
$6,547 $8,738
Net (loss) income
4,336 4,127
Depreciation and amortization
91 104
Pension and postretirement liabilities expense
(960)
Contributions to pension trust (Note 6)
1,407 1,844
Other net adjustments
Changes in operating assets and liabilities (6,681) (2,788)
---
NET CASH PROVIDED BY OPERATING ACTIVITIES 4,740 12,025
(4,607) (7,078)
Net cash used in the purchase of assets
3,840 320
Proceeds from borrowings
90 131
Proceeds from stock option exercise and Treasury activity, net
(4,000)
Principal payments on debt and lease obligations
Dividends paid (4,053) (4,048)
---
INCREASE (DECREASE)IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 10 (2,650)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR 5,749 8,399
---
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF YEAR $5,759 $5,749
---
Consolidated Statements of Stockholders' Equity
(in thousands and data is unaudited (see Notes))
---
Year ended December 31, 2020
---
Class B
Accumulated
Class A
Convertible
Additional
Other
Treasury
Preferred
Common
Common
Paid-in
Retained
Comprehensive
Stock,
Stockholders'
Stock
Stock
Stock
Capital
Earnings
Income (Loss)
at Cost
Equity
Balance at January 1, 2020 $530 $3,536 $1,408 $16,034 $114,139 $(30,738) $(17,973) $86,936
Exercise of stock options - 81 9 90
Conversion of common stock - 24 (24)
Cash dividends declared:
Preferred stock - 6% (18) (18)
Common stock - ($0.88 per share) (4,035) (4,035)
Net income for the period - 6,547 6,547
Other comprehensive income (loss),
net of $ (507) of tax - 1,695 1,695
Balance at December 31, 2020 $530 $3,560 $1,384 $16,115 $116,633 $(29,043) $(17,964) $91,215
--- ---
Year ended December 31, 2019
---
Class B
Accumulated
Class A
Convertible
Additional
Other
Treasury
Preferred
Common
Common
Paid-in
Retained
Comprehensive
Stock,
Stockholders'
Stock
Stock
Stock
Capital
Earnings
Income (Loss)
at Cost
Equity
Balance at January 1, 2019 $530 $3,518 $1,426 $15,911 $109,610 $(33,481) $(17,982) $79,532
Other reclassification adjustment - (161) 161
Exercise of stock options - 123 9 132
Conversion of common stock - 18 (18)
Cash dividends declared:
Preferred stock - 6% (18) (18)
Common stock - ($0.88 per share) (4,030) (4,030)
Net income for the period - 8,738 8,738
Other comprehensive income (loss),
net of $(763) of tax - 2,582 2,582
Balance at December 31, 2019 $530 $3,536 $1,408 $16,034 $114,139 $(30,738) $(17,973) $86,936
--- ---
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
December 31,
2020 includes
3,186,962 of
Class A shares
and 1,384,218
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.
For December
31, 2020 and
2019, 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
2020 Annual
Report for more
details).
(5) For the years
2020 and 2019,
the Company
made voluntary
pre-tax
contributions
of $0.96
million and $0,
respectively,
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.
(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 2020 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,
2020.
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
2020 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.
New Accounting
Standard:
During February
2016, the
Financial
Accounting
Standards Board
(FASB) issued
Accounting
Standards
Update (ASU)
No. 2016-02,
Leases (ASC
842). ASC 842
requires
lessees to
recognize the
assets and
liabilities
that arise from
all leases that
exceed twelve
months in
duration on the
balance sheet,
regardless if
they are
operating or
financing type
leases. A
lessee shall
recognize on
the balance
sheet a
liability to
make future
lease payments
(the lease
liability) and
a right-of-
use asset
representing
the value of
the right to
use the asset
for the
remaining term
of the lease
agreement. ASC
842 is
effective for
annual periods
beginning after
December 15,
2018, including
interim
periods. The
Company adopted
ASC 842
effective
January 1, 2019
using the
optional
transition
method
described in
ASU No. 2018-
11, 'Leases -
Targeted
Improvements',
which was
issued in July,
2018. Under
the optional
transition
method, the
Company
recognized any
cumulative
impact of
initially
applying ASC
842 as an
adjustment to
the opening
balance of
retained
earnings as of
January 1,
2019.
The Company
balance sheet
at December 31,
2020 and
December 31,
2019 includes
total right-
of-use asset
values of
$4,022 and
$4,431,
respectively;
current
liabilities of
$(1,019) and
$(979),
respectively;
and long-term
liabilities of
$(3,003) and
$(3,452),
respectively,
related to
future lease
payments.
Leases at all
of the
Company's
subsidiaries
have been
classified as
operating
leases.
Therefore, all
lease payments
made with
respect to
outstanding
leases are
reported as
lease expense.
For the years
ended December
31, 2020 and
December 31,
2019, total
lease expenses
of $1,544 and
$1,394,
respectively,
were included
in the
calculation of
operating
income. Lease
accounting
details are
explained in
greater detail
in the 2020
Annual Report.
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.
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 2020
charges for all
uninsured
litigation of
every kind,
were $383
thousand.
Expenses for
legal counsel,
consultants,
etc., in
defending these
various actions
and claims for
the year were
approximately
$65 thousand.
Prior year's
settlements and
expenses,
including
amounts for
self-insured
asbestos cases,
are disclosed
in the 2020
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 2020 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.
