AAON Reports Record First Quarter Sales but Lower Net Income

TULSA, Okla., May 04, 2017 (GLOBE NEWSWIRE) -- AAON, Inc. AAON today announced its operating results for the first quarter ended March 31, 2017. 

Net sales in the first quarter gained 0.8% to $86.1 million from $85.4 million in the corresponding period in 2016. Net income declined 11.5% to $10.2 million, or $0.19 per diluted share, as compared with $11.6 million, or $0.22 per diluted share for the same period a year ago, based upon 53.2 million and 53.6 million diluted shares outstanding at March 31, 2017 and 2016, respectively.

Mr. Asbjornson said, "The Company had a slow start to the year because of weak order input in the fourth quarter. Toward the final half of the first quarter, the order input rate improved and we ended the quarter with a near record backlog of $68.9 million, up 40.9% from December 31, 2016 and up 14.3% from the same period a year ago. The firm rate of order input has continued into the current quarter."

Increases in manufacturing costs restricted gross profits which declined 2.9% to $25.0 million (29.0% of sales) versus $25.7 million (30.1% of sales). Selling, general and administrative expenses, impacted by unusually higher warranty expenses, non-recurring advertising and promotional costs as well as increased stock compensation expenses, all combined to cause these costs to increase $1.6 million or 18.1% to $10.5 million (12.2% of sales) from $8.9 million (10.4% of sales) during the same period a year ago.

Norman H. Asbjornson, CEO, said, "We implemented selective price increases on March 1st which should begin to impact our sales in the latter half of the year. We are closely monitoring our SG&A expenses and we expect to witness reduction of these expenses throughout the year."

Mr. Asbjornson further added, "Although we continue to restrain our sales effort to ensure initial customer satisfaction, our new Water-Source Heat Pump line production is exhibiting excellent progress."

Mr. Asbjornson concluded, "Our financial condition at March 31, 2017 is strong with a current ratio of 3.6:1 (including cash and short-term investments totaling $41.9 million) and we continue to remain debt free. The combination of increasing sales and moderating SG&A expenses should enable us to once again post record sales and earnings for the current year."

The Company will host a conference call today at 4:15 P.M. Eastern Time to discuss the first quarter results. To participate, call 1-888-241-0551 (code 14715826); or, for rebroadcast, call 1-855-859-2056 (code 14715826).

AAON, Inc. is engaged in the engineering, manufacturing, marketing and sale of air conditioning and heating equipment consisting of standard, semi-custom and custom rooftop units, chillers, packaged outdoor mechanical rooms, air handling units, makeup air units, energy recovery units, condensing units, geothermal/water-source heat pumps and coils. Since the founding of AAON in 1988, AAON has maintained a commitment to design, develop, manufacture and deliver heating and cooling products to perform beyond all expectations and demonstrate the value of AAON to our customers.

Certain statements in this news release may be "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended. Statements regarding future prospects and developments are based upon current expectations and involve certain risks and uncertainties that could cause actual results and developments to differ materially from the forward-looking statements.

Use of Non-GAAP Financial Measures

To supplement the Company's consolidated financial statements presented in accordance with generally accepted accounting principles ("GAAP"), an additional non-GAAP financial measure is provided and reconciled in the following table. The Company believes that this non-GAAP financial measure, when considered together with the GAAP financial measures, provides information that is useful to investors in understanding period-over-period operating results. The Company believes that this non-GAAP financial measure enhances the ability of investors to analyze the Company's business trends and operating performance.

EBITDAX

EBITDAX (as defined below) is presented herein and reconciled from the GAAP measure of net income because of its wide acceptance by the investment community as a financial indicator of a company's ability to internally fund operations.

The Company defines EBITDAX as net income, plus (1) depreciation, (2) amortization of bond premiums, (3) share-based compensation, (4) interest (income) expense and (5) income tax expense. EBITDAX is not a measure of net income or cash flows as determined by GAAP.

The Company's EBITDAX measure provides additional information which may be used to better understand the Company's operations. EBITDAX is one of several metrics that the Company uses as a supplemental financial measurement in the evaluation of its business and should not be considered as an alternative to, or more meaningful than, net income, as an indicator of operating performance. Certain items excluded from EBITDAX are significant components in understanding and assessing a company's financial performance. EBITDAX, as used by the Company, may not be comparable to similarly titled measures reported by other companies. The Company believes that EBITDAX is a widely followed measure of operating performance and is one of many metrics used by the Company's management team and by other users of the Company's consolidated financial statements.

The following table provides a reconciliation of net income (GAAP) to EBITDAX (non-GAAP) for the periods indicated:

For Further Information:
Jerry R. Levine 
Phone: (914) 244-0292 
Fax: (914) 244-0295
Email: jrladvisor@yahoo.com