LANCASTER, PA — It’s been a challenging first quarter for Burnham Holdings Inc. (OTC-Pink: BURCA), the parent entity commanding an armada of subsidiaries that manufacture boilers, furnaces, and related HVAC products for residential, commercial, and industrial use. Despite the hurdles, financial figures for the quarter ending March 31, 2024 reveal an unyielding resilience and strategic foresight.
While net sales dipped by 5.9% to $56.0 million, in comparison to the same quarter in 2023, it was not for lack of market dominance. BHI’s subsidiaries continue to maintain a strong foothold in the boiler and oil furnace markets. A significant contraction in HVAC industry unit volumes is the primary culprit behind the shrinkage.
However, the sting of lower sales was softened by an impressive gross profit margin of 24.9% for the first quarter of 2024, a notable increase from 23.5% in the previous year. This boost can be credited to an effective combination of productivity enhancements and stringent cost control measures employed across all subsidiaries. Additionally, strategic pricing actions were also set into motion to counteract inflationary pressures.
Expenses related to Selling, General, and Administrative (SG&A) activities remained consistent with the first quarter of 2023, despite a contraction in net sales. The net income for the first quarter of 2024 stood at a respectable $3.0 million, mirroring the same figure from the first quarter of 2023. The EBITDA (Earnings Before Interest, Tax, Depreciation, and Amortization) was $5.6 million, marginally higher in terms of percentage (9.9%) compared to the same period of 2023 (9.4%).
While the sales of residential products dropped by 11.4% as compared to the first quarter of 2023, commercial product sales experienced a 4.0% uptick. The Service and Rentals segment pulled in $1.6 million in net sales for the first quarter of 2024.
Despite the fluctuating sales volumes, the company was able to maintain consistent gross margin and operating margin dollars. This was achieved by diligent cost structure management, and productivity improvements in manufacturing sites, driven by effective capital investment programs.
Significant strides have been made in the area of debt reduction. The first quarter of 2024 saw a marked reduction in average debt levels by approximately $15.6 million, compared to the same period in 2023. The impact on the bottom line was a significant 40.7% cut in interest expenses in the first quarter of 2024. The company continues to evaluate its working capital needs to ensure sufficient resources are available to meet production volumes and fund future growth initiatives.
In a proactive move to enhance fiscal flexibility and capacity, BHI entered into a $10.0 million equipment financing agreement with its banking consortium on January 30, 2024. The company had previously announced new lending facilities in place that could provide up to $92.0 million in capacity.
While the first quarter of 2024 has presented some challenges for Burnham Holdings, Inc., the company has demonstrated resilience and strategic initiative. Through careful cost management, strategic pricing, and debt reduction, BHI continues to navigate a volatile market with resilience and foresight.
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