Company Overview

See Note 7 for an overview of the Company.

Liquidity and Capital Resources

As noted above, various factors affect the sales of the Company's products. Historically, the Company has experienced operating losses during the first quarter except when construction activity is strong along the Southern Front Range of Colorado and the weather is mild. Operating results typically improve in the second and third quarters reflecting more favorable weather conditions in Colorado and the seasonal sales of the Evaporative Cooling segment. Fourth quarter results can vary based on weather conditions in Colorado as well as in the principal markets for the Company's heating equipment. Notwithstanding weather conditions, however, the Company expects that construction activity along the Southern Front Range will remain weak for the balance of 2012.

The Company typically experiences operating cash flow deficits during the first half of the year reflecting operating results, the use of sales dating programs (extended payment terms) related to the Evaporative Cooling segment and payments of the prior year's accrued incentive bonuses and Company profit-sharing contributions, if any. As a result, the Company's borrowings against its revolving credit facility tend to peak during the second quarter and then decline over the remainder of the year. This trend has continued in the first quarter of 2012.

As expected, the Company's cash flow from operations during the first quarter was negative due to the seasonality of sales, production schedules, the sales dating programs related to the Evaporative Cooler segment and the overall current economic and financial market's effect on construction. Operations for the first three months of 2012 used $185,000 of cash compared to $1,714,000 of cash used during the first three months of 2011. The decreased use of cash was primarily the result of changes in working capital items, most notably an increase in accounts payable and accruals during the first quarter of 2012 compared to a decrease in accounts payable and accruals during the first quarter of 2011. The purchase of the residence of an executive related to his relocation also used cash during the first quarter of 2011.

The Company was in compliance with the all loan covenants as of the fiscal quarter ended March 31, 2012. Because the maturity date of the revolving credit line portion of the Credit Agreement is May 1, 2013, the outstanding revolving credit balances at March 31, 2012 and December 31, 2011 were classified as long-term obligations.

With regard to investing activities, capital expenditures continue to be curtailed wherever possible with a relatively modest $257,000 spent during the first quarter of 2012 compared to $326,000 spent during the first quarter of 2011. The Company also made a loan of $336,000 to an officer of one of the Company's subsidiaries in conjunction with his relocation during the first quarter of 2011.

Financing activities during the first quarter of 2012 provided $315,000 of cash compared to $2,375,000 provided during the comparable 2011 quarter. Scheduled debt repayments were made during the first quarter of both 2012 and 2011. During the first quarter of 2012, the Company provided a letter of credit to replace the $4,340,000 of cash deposited with the insurance company for self-insured claims. The returned cash was used to repay $3,900,000 of the outstanding revolving bank loan. During the first quarter of 2011, the Company borrowed $2,750,000 against the revolving bank loan. The highest amount of Company borrowings outstanding under the revolving credit agreement during the first quarter of 2012 was $8,150,000 and the average amount outstanding during the first quarter was $5,262,000.

Results of Operations - Comparison of Quarter Ended March 31, 2012 to Quarter Ended April 2, 2011

(In the ensuing discussions of the results of operations the term gross profit means the amount determined by deducting cost of sales before depreciation, depletion and amortization from sales. The gross profit ratio is gross profit divided by sales.)

Consolidated sales and the operating loss in the first quarter of 2012 were substantially the same as in the first quarter of 2011. Sales for the first quarter of 2012 were $372,000 or 1.5% less than the prior year's quarter. Sales improved in the Heating and Cooling segment but declined at the other three business units. The consolidated gross profit ratio improved from 17.3% in the first quarter of 2011 to 19.8% in the current year quarter. This was the net result of a substantial improvement in the Heating and Cooling segment but some deterioration in the gross profit ratio in the CACS and Door segments. The higher gross profit in the Heating and Cooling segment reflects improved margins in both furnaces and fan coils. Consolidated selling and administrative

expenses were $470,000 higher in the 2012 quarter compared to the prior year's quarter. Selling and administrative expenses in the Heating and Cooling segment were $454,000 higher due to higher legal expenses, a reversal of a loss contingency in the first quarter of 2011 and the hiring of additional engineering staff. The operating loss for the first quarter of 2012 was narrowed to $1,534,000 compared to an operating loss of $1,621,000 in the first quarter of 2011 primarily due to the improved margins in the Heating and Cooling segment.

Net interest expense (exclusive of amortization of deferred financing fees) was $134,000 in the first quarter of 2012 compared to $193,000 in the first three months of 2011. The average interest rate in the first quarter of 2012, including the effect of an interest rate swap and finance charges on letters of credit, was 5.6% compared to 7.1% in the first quarter of 2011. Average outstanding indebtedness was approximately $659,000 lower during the first quarter of 2012 compared to the first quarter of 2011. The reduction in outstanding indebtedness was principally due to the replacement of the cash collateral deposit previously placed with the Company's casualty insurance provider with a letter of credit issued on March 1, 2012.

A discussion of operations by segment follows.

Construction Products



The table below presents a summary of operating information for the two
reportable segments within the Construction Products industry group for the
quarters ended March 31, 2012 and April 2, 2011 (dollar amounts in thousands):



                                                   Concrete,
                                                Aggregates and
                                                 Construction
                                                   Supplies         Doors
Quarter ended March 31, 2012
Revenues from external customers                $         6,743    $ 2,930
Gross profit                                                 55        624
Gross profit as a percent of sales                           .8 %     21.3 %
Segment operating (loss) income                          (1,765 )       59
Operating (loss) income as a percent of sales             (26.2 )%     2.0 %
Segment assets as of March 31, 2012             $        29,994    $ 5,888
Return on assets                                           (5.9 )%     1.0 %




                                                   Concrete,
                                                Aggregates and
                                                 Construction
                                                   Supplies         Doors
Quarter ended April 2, 2011
Revenues from external customers                $         7,354    $ 3,113
Gross profit                                                222        782
Gross profit as a percent of sales                          3.0 %     25.1 %
Segment operating (loss) income                          (1,675 )      200
Operating (loss) income as a percent of sales             (22.8 )%     6.4 %
Segment assets as of April 2, 2011              $        33,953    $ 5,834
Return on assets                                           (4.9 )%     3.4 %

Concrete, Aggregates and Construction Supplies Segment

Sales in the CACS segment for the first quarter of 2012 decreased by $611,000 or 8.3% compared to the prior year's quarter. Construction activity in Colorado Springs and Pueblo was slow and demand for construction materials remained very depressed. Concrete volume, excluding flow fill material provided for a particular project, fell by approximately 24% compared to the prior year. Ready mix concrete prices in the first quarter of 2012 were substantially the same as the prior year. Prices paid for cement and fuel were higher in 2012. Sales of construction aggregates were higher in 2012 with tons sold or consumed internally 20% higher compared to the first quarter of 2011. Higher gross profit from aggregates operations helped to offset a drop in ready mix gross profits. Selling and administrative expenses for this segment were slightly lower in the first quarter of 2012.

Door Segment

Sales during the first quarter of 2012 in the Door segment decreased $183,000 or 5.8% from the comparable 2011 quarter as a result of the continuing weak construction market. The gross profit ratio in 2012 was 3.8 points lower in 2012 due principally to more aggressive pricing particularly on larger projects. The sales backlog at the end of the first quarter of 2012 was approximately 20% higher compared to the backlog on April 2, 2011.

HVAC Products



The table below presents a summary of operating information for the two
reportable segments within the HVAC products industry group for the quarters
ended March 31, 2012 and April 2, 2011 (dollar amounts in thousands):



                                          Heating and     Evaporative
                                            Cooling         Cooling
Quarter ended March 31, 2012
Revenues from external customers         $       8,866   $       5,768
Gross profit                                     2,793           1,321
Gross profit as a percent of sales                31.5 %          22.9 %
Segment operating income                           499             369
Operating income as a percent of sales             5.6 %           6.4 %
Segment assets as of March 31, 2012      $      16,124   $      14,658
Return on assets                                   3.1 %           2.5 %

Quarter ended April 2, 2011
Revenues from external customers         $       8,395   $       5,817
Gross profit                                     1,923           1,335
Gross profit as a percent of sales                22.9 %          22.9 %
Segment operating income                            77             481
Operating income as a percent of sales              .9 %           8.3 %
Segment assets as of April 2, 2011       $      16,551   $      15,607
Return on assets                                    .5 %           3.1 %

Heating and Cooling Segment

Sales in the Heating and Cooling segment increased $471,000 (5.6%) in the first quarter of 2012 from the comparable 2011 quarter. Fan coil sales were stronger in 2012 compared to very weak fan coil demand in the first quarter of 2011. Furnace sales were 6.6% lower in the first quarter of 2012 due to warmer than usual weather while furnace sales in the first quarter of 2011 benefitted from cold weather. The gross profit ratio for this segment increased from 22.9 % to 31.5% due to the stronger fan coil market, a focus on smaller, more profitable fan coil projects and an increased level of furnace production. Selling and administrative expenses were $454,000 higher in 2012 due to higher legal expenses, a reversal of a loss contingency in 2011 and the addition of engineering and other staff.

Evaporative Cooling Segment

Sales and the gross profit in the Evaporative Cooling segment in the first quarter of 2012 was substantially the same as the prior year quarter. Selling and administrative costs increased by $113,000.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States which require the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of March 31, 2012 and December 31, 2011 and affect the reported amounts of revenues and expenses for the periods reported. Actual results could differ from those estimates.

Information with respect to the Company's critical accounting policies which the Company believes could have the most significant effect on the Company's reported results and require subjective or complex judgments by management is contained in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

OUTLOOK

The construction markets in Southern Colorado have recently exhibited some improvement. Bidding activity has increased compared to a year ago. Ready mix producers, including the Company, have announced price increases to the building trades. However, competitors' prices on most bid jobs have not yet reflected a higher pricing level. Producers of cement, a principal component of the cost of ready mix concrete, have instituted price increases.

The Door segment's sales also rely to a significant degree on new construction. As noted above the sales backlog of the Door segment has increased compared to the end of the first quarter of 2011. However pricing remains very competitive.

Sales of the Evaporative Cooling segment for the remainder of the current cooling season will largely be weather dependent. April 2012 sales will be about 15% less than in April of 2011.

The fan coil markets are exhibiting some modest improvement. Here also, bidding activity seems to be on the upswing. The focus on smaller jobs should help to improve profit margins compared to 2011. In-season furnace sales later this year will be largely weather dependent.

RECENTLY ISSUED ACCOUNTING STANDARDS

See Note 4 for a discussion of recently issued accounting standards.

MATERIAL CHANGES TO CONTRACTUAL OBLIGATIONS

There were no material changes to contractual obligations that occurred during the quarter ended March 31, 2012.

FORWARD-LOOKING STATEMENTS

The foregoing discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended. Such forward-looking statements are based on the beliefs of the Company's management as well as on assumptions made by and information available to the Company at the time such statements were made. When used in this Report, words such as "anticipates," "believes," "contemplates," "estimates," "expects," "plans," "projects," and similar expressions are intended to identify forward-looking statements. Actual results could differ materially from those projected in the forward-looking statements

as a result of factors including but not limited to: weather, interest rates, availability of raw materials and their related costs, national and local economic conditions, competitive forces and changes in governmental regulations and policies. Some of these factors are discussed in more detail in the Company's 2011 Annual Report on Form 10-K. Changes in accounting pronouncements could also alter projected results. Forward-looking statements speak only as of the date they were made, and the Company undertakes no obligation to publicly update them.