Market Overview

AAON Reports Sales and Earnings for the Fourth Quarter and Year 2019

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TULSA, Okla., Feb. 27, 2020 (GLOBE NEWSWIRE) -- AAON, INC. (NASDAQ-AAON), today announced its results for the fourth quarter and full year 2019.

Financial Highlights: Three Months Ended December 31,   %       Years Ended December 31,   %
  2019   2018   Change       2019   2018   Change
  (in thousands, except share and per share data)       (in thousands, except share and per share data)
Net sales $ 122,574     $ 112,340     9.1 %       $ 469,333     $ 433,947     8.2 %
Gross profit 36,381     27,846     30.7 %       119,425     103,533     15.3 %
Gross profit % 29.7 %   24.8 %           25.4 %   23.9 %    
Selling, general and administrative expenses $ 13,114     $ 10,723     22.3 %       $ 52,077     $ 48,194     8.1 %
Net income 17,273     12,964     33.2 %       53,711     42,329     26.9 %
Earnings per diluted share: $ 0.33     $ 0.25     32.0 %       $ 1.02     $ 0.80     27.5 %
Diluted average shares 52,701,202     52,420,529     0.5 %       52,635,415     52,667,939     (0.1) %
  As of December 31,   %                
  2019   2018   Change                
  (in thousands)                    
Backlog $ 142,747     $ 151,767     (5.9) %                
Cash & cash equivalents 26,797     1,994     1,244 %                

Gary Fields, President, said, "Our increase in net sales is attributable to our continuing investment in new manufacturing equipment that has allowed us to capitalize on our existing workforce as well as reorganize production resources at our Tulsa facilities. We are witnessing operational and financial improvements as a direct result. Combined with our 2018 sales price increases, the result has been record sales for the year of 2019, an increase of 8.2%, as compared to $433.9 million in 2018."

Mr. Fields, continued, "We are seeing improvements in our manufacturing capacity due to additional Salvagnini sheet metal fabrication machines coming online during mid-September 2019, evidenced by our results of a record gross profit in the fourth quarter of 2019. In addition to improvements in gross profit, we continue to reduce other costs as evidenced by the decrease in warranty claims paid for the year down 13.4% from 2018. With our high backlog containing the 2018 price increases combined with our continual improvements in operational capacity and efficiency, we expect to witness improvements in both our sales and earnings in 2020."

Norman H. Asbjornson, CEO, added, "With a 2020 capital expenditure budget of $73.2 million, the Company continues to make strategic investments to maintain future sustainable growth. These investments in both operations and innovation are being made while maintaining a strong financial condition evidenced by our current ratio of 3.3:1 at December 31, 2019. Furthermore, we have unrestricted cash and cash equivalents of $26.8 million as of December 31, 2019, to ensure that our future investment in the Company remains fiscally sound."

The Company will host a conference call today at 4:15 P.M. (Eastern Time) to discuss the fourth quarter and year 2019 results. To participate, call 1-888-241-0551 (code 2880248); or, for rebroadcast available through March 4, 2020, call 1-855-859-2056 (code 2880248).

Error Correction

The Company noted errors in previously issued financial statements relating to share-based compensation expense for stock options and restricted stock awards held by retirement eligible employees and directors. The Company determined that it would be appropriate to correct the errors in our previously issued consolidated financial statements by correcting such financial statements with the Company's 2019 annual report. More details, including the impact to each of the annual and interim financial statements is described in detail in the Company's 2019 annual report. The effect of the error correction for the year ending December 31, 2018 was a $0.2 million decrease in net income and $0.01 decrease in our diluted earnings per common share. The effect of the error correction for the quarter ending December 31, 2018 was a $0.4 million increase in net income and $0.01 increase in our diluted earnings per common share. 

About AAON
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, coils and controls. 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. For more information, please visit www.AAON.com.

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

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



AAON, Inc. and Subsidiaries
Unaudited Consolidated Statements of Income
  Three Months Ended 
 December 31,
  Years Ended
December 31,
  2019   2018   2019   2018
  (in thousands, except share and per share data)
Net sales $ 122,574       $ 112,340       $ 469,333       $ 433,947    
Cost of sales 86,193       84,494       349,908       330,414    
Gross profit 36,381       27,846       119,425       103,533    
Selling, general and administrative expenses 13,114       10,723       52,077       48,194    
Loss (gain) on disposal of assets 41       (3 )     337       (12 )  
Income from operations 23,226       17,126       67,011       55,351    
Interest income, net 17       25       66       196    
Other (expense) income, net (30 )     (58 )     (46 )     (47 )  
Income before taxes 23,213       17,093       67,031       55,500    
Income tax provision 5,940       4,129       13,320       13,171    
Net income $ 17,273       $ 12,964       $ 53,711       $ 42,329    
Earnings per share:              
Basic $ 0.33       $ 0.25       $ 1.03       $ 0.81    
Diluted $ 0.33       $ 0.25       $ 1.02       $ 0.80    
Cash dividends declared per common share: $ 0.16       $ 0.16       $ 0.32       $ 0.32    
Weighted average shares outstanding:              
Basic 52,094,125       52,086,247       52,079,865       52,284,616    
Diluted 52,701,202       52,420,529       52,635,415       52,667,939    



AAON, Inc. and Subsidiaries
Unaudited Consolidated Balance Sheets
  December 31,
  2019   2018
Assets (in thousands, except share and per share data)
Current assets:      
Cash and cash equivalents $ 26,797     $ 1,994  
Restricted cash 17,576      
Accounts receivable, net 67,399     54,078  
Income tax receivable 772     5,901  
Note receivable 29     27  
Inventories, net 73,601     77,612  
Prepaid expenses and other 1,375     1,046  
Total current assets 187,549     140,658  
Property, plant and equipment:      
Land 3,274     3,114  
Buildings 101,113     97,393  
Machinery and equipment 236,087     212,779  
Furniture and fixtures 16,862     16,597  
Total property, plant and equipment 357,336     329,883  
Less: Accumulated depreciation 179,242     166,880  
Property, plant and equipment, net 178,094     163,003  
Intangible assets, net 272     506  
Goodwill 3,229     3,229  
Right of use assets 1,683      
Note receivable 597     598  
Total assets $ 371,424     $ 307,994  
       
Liabilities and Stockholders' Equity      
Current liabilities:      
Revolving credit facility $     $  
Accounts payable 11,759     10,616  
Accrued liabilities 44,269     36,875  
Total current liabilities 56,028     47,491  
Deferred tax liabilities 15,297     9,259  
Other long-term liabilities 3,639     1,801  
New market tax credit obligation 6,320      
Commitments and contingencies      
Stockholders' equity:      
Preferred stock, $.001 par value, 5,000,000 shares authorized, no shares issued      
Common stock, $.004 par value, 100,000,000 shares authorized, 52,078,515 and 51,991,242
issued and outstanding at December 31, 2019 and 2018, respectively
208     208  
Additional paid-in capital 3,631      
Retained earnings 286,301     249,235  
Total stockholders' equity 290,140     249,443  
Total liabilities and stockholders' equity $ 371,424     $ 307,994  



AAON, Inc. and Subsidiaries
Unaudited Consolidated Statements of Cash Flows
  Years Ended December 31,
  2019   2018
Operating Activities (in thousands)
Net income $ 53,711       $ 42,329    
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization 22,766       17,655    
Amortization of bond premiums       13    
Amortization of debt issuance costs 7          
Provision for losses on accounts receivable, net of adjustments 91       174    
Provision for excess and obsolete inventories 1,454       152    
Share-based compensation 11,799       7,862    
Loss (gain) on disposition of assets 337       (12 )  
Foreign currency transaction (gain) loss (27 )     55    
Interest income on note receivable (25 )     (27 )  
Deferred income taxes 6,038       2,641    
Changes in assets and liabilities:      
Accounts receivable (13,412 )     (2,832 )  
Income tax receivable 5,129       (4,448 )  
Inventories 2,557       (5,598 )  
Prepaid expenses and other (329 )     (528 )  
Accounts payable 280       (1,176 )  
Deferred revenue 425       412    
Accrued liabilities and donations 7,124       (1,816 )  
Net cash provided by operating activities 97,925       54,856    
Investing Activities      
Capital expenditures (37,166 )     (37,268 )  
Cash paid in business combination       (6,377 )  
Proceeds from sale of property, plant and equipment 69       13    
Investment in certificates of deposits (6,000 )     (7,200 )  
Maturities of certificates of deposits 6,000       10,080    
Purchases of investments held to maturity       (9,001 )  
Maturities of investments       14,570    
Proceeds from called investments       495    
Principal payments from note receivable 51       53    
Net cash used in investing activities (37,046 )     (34,635 )  
Financing Activities      
Proceeds from financing obligation, net of issuance costs 6,614          
Payments related to financing costs (301 )        
Stock options exercised 12,625       4,987    
Repurchase of stock (19,586 )     (26,846 )  
Employee taxes paid by withholding shares (1,207 )     (1,097 )  
Cash dividends paid to stockholders (16,645 )     (16,728 )  
Net cash used in financing activities (18,500 )     (39,684 )  
Net increase (decrease) in cash, cash equivalents and restricted cash 42,379       (19,463 )  
Cash, cash equivalents and restricted cash, beginning of period 1,994       21,457    
Cash, cash equivalents and restricted cash, end of period $ 44,373       $ 1,994    

 

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