Burnham Holdings, Inc. (Pink Sheets: 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 third quarter and nine months ended September 26, 2021.
Key items related to our third quarter and year-to-date (YTD) operating performance include the following:
Third quarter net sales were higher than last year by $4.6 million (9.5%), with YTD sales higher by $22.8 million (19.3%) versus 2020. Nine month sales of $140.8 million were comparable to the pre-COVID 19 sales levels during the same period in 2019 (our highest nine month sales level in the previous ten years).
Sales of residential products increased by 9.1% in the third quarter and 29.0% YTD. Sales of commercial products increased by 10.6% in the third quarter, but were 2.2% lower YTD.
YTD gross profit as a percentage of sales was lower at 12.6% versus 18.5% in 2020 resulting from significantly higher raw material and transportation costs, manufacturing inefficiencies within our manufacturing operations, supply chain disruptions, staffing challenges, and higher employee medical costs.
Multiple pricing actions have been taken in response to these increased costs. The benefit of these pricing actions began to be more fully realized late in the third quarter and will continue throughout the balance of the year.
Net loss for the third quarter was $(1.34) million versus a net profit of $1.47 million in 2020. Through nine months of 2021, total net loss was $(4.41) million versus a profit of $32 thousand last year.
Net sales in the third quarter and YTD were $53.3 million and $140.8 million, respectively, compared to $48.7 million and $118.0 million in 2020 as our businesses rebounded to pre-COVID 19 pandemic sales levels. Residential sales through nine months show a significant increase from last year (up 29.0%) and were also higher than pre-pandemic levels ($105.2 million in the first nine months of 2021 versus $97.8 million in the same period of 2019). Commercial product sales in the third quarter of 2021 were higher by over 10% versus 2020 as projects that were delayed last year began to resume. YTD commercial product sales, however, were off 2.2% as a result of weak first half shipments driven by COVID related delays. The commercial business has rebounded, with strong order bookings for our commercial products through the third quarter, increasing the current commercial product order backlog by $6.6 million compared to the same time last year.
Cost of goods sold (“COGS”) as a percentage of sales for the second quarter and YTD in 2021 was 88.1% and 87.4%, respectively, compared to 80.9% and 81.5% in 2020. Several factors have contributed to the increase in the COGS percentage through nine months. All of our subsidiaries have experienced significant cost increases on a wide range of material costs, and have taken multiple price increases to offset the raw material and component parts inflation. Additionally, our supply chain has faced numerous disruptions as parts shortages, shipping delays and shipping costs are all creating sub-optimal conditions for ongoing operations. While our supply chain team has worked tirelessly to minimize the impact of these challenges, parts shortages, shipping and receiving delays have all contributed to reduced productivity and efficiency within the manufacturing operations. The human resources teams continue to focus their efforts on hiring, training and retaining employees. The national shortage of qualified workers has led to reduced staffing levels at all operations further hampering operational productivity and efficiencies.
Net loss in the third quarter of 2021 was $(1.34) million compared to a net profit of $1.47 million in 2020. In the first nine months of 2021, results were a net loss of $(4.41) million compared to a net profit of $32 thousand in 2020, a decline of $(4.43) million. YTD net loss per share was $(0.96) in 2021 compared to a net income of $0.01 in 2020.
The Company has appropriate borrowing capacity to adequately support the expected level of business activity in the fourth quarter. Long-term debt was higher at the end of the third quarter compared to last year ($36.3 million vs. $33.3 million). The increased debt was due to the purchase in the first quarter of a previously leased manufacturing facility by one of our subsidiaries.