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AAON Reports Earnings & Backlog for the Second Quarter of 2020

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TULSA, Okla., Aug. 06, 2020 (GLOBE NEWSWIRE) -- TULSA, OK, August 6, 2020 - AAON, INC. (NASDAQ-AAON), today announced its results for the second quarter of 2020.

Financial Highlights:

Three Months Ended
June 30,

%

Six Months Ended
June 30,

%

2020

2019

Change

2020

2019

Change

(in thousands, except share and per share data)

(in thousands, except share and per share data)

Net sales

$

125,596

$

119,437

5.2

%

$

263,079

$

233,259

12.8

%

Gross profit

38,131

30,204

26.2

%

81,078

55,634

45.7

%

Gross profit %

30.4

%

25.3

%

30.8

%

23.9

%

Selling, general and admin. expenses

$

15,939

$

12,912

23.4

%

$

31,153

$

26,589

17.2

%

SG&A %

12.7

%

10.8

%

11.8

%

11.4

%

Net income

17,804

13,391

33.0

%

39,657

22,148

79.1

%

Net income %

14.2

%

11.2

%

15.1

%

9.5

%

Earnings per diluted share

$

0.34

$

0.25

36.0

%

$

0.75

$

0.42

78.6

%

Diluted average shares

52,750,401

52,747,199

%

52,885,491

52,589,845

0.6

%

June 30,

December 31,

%

2020

2019

Change

(in thousands)

Backlog

$

103,508

$

142,747

(27.5)

%

Cash & cash equivalents & restricted cash

70,845

44,373

59.7

%

Total current liabilities

76,620

56,028

36.8

%

Gary Fields, CEO, said "It has been a challenging quarter for us. As an essential business, we were able to maintain continuous operations during the quarter but our workforce was impacted by employee absences, most significantly in the latter part of June. These unexpected employee absences resulted in reduced shipments and longer lead times. Our dedicated team members worked hard to overcome the challenges as demonstrated by our positive results reflected above. Our improved efficiency, fiscal responsibility and declining raw material costs helped us improve our gross profit and bottom line."

Mr. Fields continued, "Thankfully, most of our workforce affected by COVID-19 has recovered and returned to work, resulting in significant improvement in our employee absenteeism levels in the first part of July. We continuously work to keep our workforce safe and healthy. We have implemented several safety procedures concerning COVID-19 including mandatory use of masks, daily temperature scanning and health screens of all employees and visitors at our facilities."

Mr. Fields added "Our financial condition remains strong as evidenced by our current ratio of 2.9:1 at June 30, 2020. We had unrestricted cash and cash equivalents of $61.3 million as of June 30, 2020, which, along with improved free cash flow, enabled us to declare an $0.19 per share semi-annual cash dividend, paid on July 1, 2020, an 18.8% increase from the $0.16 semi-annual dividend paid last year. Our capital expenditures during the first half of the year were $33.5 million, as compared to $16.8 million for the same period a year ago, and we anticipate our full-year 2020 capital expenditures will total approximately $73.2 million."

Mr. Fields concluded, "Our incoming order rate has recently softened slightly due to less than optimal lead times and turmoil in the market resulting from COVID-19. We are back on schedule and anticipate orders will increase as our lead times improve during our peak selling season. Uncertainty in the education industry could negatively impact our employee attendance levels as well as our bookings. The outlook for the remainder of the year is hard to predict during these uncertain times. Despite this uncertainty, we remain cautiously optimistic that the year will end with modest revenue growth over 2019."

The Company will host a conference call today at 4:15 P.M. (Eastern Time) to discuss the second quarter 2020 results. To participate, call 1-833-634-8218 (code 9699424); or, for rebroadcast available through August 20, 2020, call 1-855-859-2056 (code 9699424).

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

Consolidated Statements of Income

(Unaudited)

Three Months Ended
June 30,

Six Months Ended
June 30,

2020

2019

2020

2019

(in thousands, except share and per share data)

Net sales

$

125,596

$

119,437

$

263,079

$

233,259

Cost of sales

87,465

89,233

182,001

177,625

Gross profit

38,131

30,204

81,078

55,634

Selling, general and administrative expenses

15,939

12,912

31,153

26,589

Loss (gain) on disposal of assets

6

(62

)

290

Income from operations

22,192

17,286

49,987

28,755

Interest income, net

19

31

80

40

Other income (expense), net

32

17

5

(9

)

Income before taxes

22,243

17,334

50,072

28,786

Income tax provision

4,439

3,943

10,415

6,638

Net income

$

17,804

$

13,391

$

39,657

$

22,148

Earnings per share:

Basic

$

0.34

$

0.26

$

0.76

$

0.43

Diluted

$

0.34

$

0.25

$

0.75

$

0.42

Cash dividends declared per common share:

$

0.19

$

0.16

$

0.19

$

0.16

Weighted average shares outstanding:

Basic

52,099,694

52,120,272

52,160,348

52,087,626

Diluted

52,750,401

52,747,199

52,885,491

52,589,845



AAON, Inc. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

June 30, 2020

December 31, 2019

Assets

(in thousands, except share and per share data)

Current assets:

Cash and cash equivalents

$

61,284

$

26,797

Restricted cash

9,561

17,576

Accounts receivable, net

56,394

67,399

Income tax receivable

5,154

772

Note receivable

28

29

Inventories, net

85,411

73,601

Prepaid expenses and other

1,943

1,375

Total current assets

219,775

187,549

Property, plant and equipment:

Land

3,804

3,274

Buildings

112,735

101,113

Machinery and equipment

260,548

236,087

Furniture and fixtures

17,926

16,862

Total property, plant and equipment

395,013

357,336

Less: Accumulated depreciation

190,585

179,242

Property, plant and equipment, net

204,428

178,094

Intangible assets, net

155

272

Goodwill

3,229

3,229

Right of use assets

1,665

1,683

Note receivable

555

597

Total assets

$

429,807

$

371,424

Liabilities and Stockholders' Equity

Current liabilities:

Revolving credit facility

$

$

Accounts payable

19,698

11,759

Dividends payable

9,930

Accrued liabilities

46,992

44,269

Total current liabilities

76,620

56,028

Deferred tax liabilities

20,358

15,297

Other long-term liabilities

3,794

3,639

New market tax credit obligation

6,340

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, 52,234,119 and 52,078,515 issued and outstanding at June 30, 2020 and December 31, 2019, respectively

209

208

Additional paid-in capital

6,451

3,631

Retained earnings

316,035

286,301

Total stockholders' equity

322,695

290,140

Total liabilities and stockholders' equity

$

429,807

$

371,424




AAON, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

Six Months Ended
June 30,

2020

2019

Operating Activities

(in thousands)

Net income

$

39,657

$

22,148

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

12,340

11,760

Amortization of debt issuance cost

20

Provision for losses on accounts receivable, net of adjustments

76

128

Provision for excess and obsolete inventories

(193

)

1,153

Share-based compensation

5,694

7,786

(Gain) loss on disposition of assets

(62

)

290

Foreign currency transaction loss (gain)

30

(13

)

Interest income on note receivable

(12

)

(26

)

Deferred income taxes

5,061

3,318

Changes in assets and liabilities:

Accounts receivable

10,929

(14,983

)

Income taxes

(4,382

)

2,925

Inventories

(11,617

)

(585

)

Prepaid expenses and other

(568

)

(650

)

Accounts payable

2,893

(2,592

)

Deferred revenue

473

172

Accrued liabilities

2,423

5,041

Net cash provided by operating activities

62,762

35,872

Investing Activities

Capital expenditures

(33,510

)

(16,784

)

Proceeds from sale of property, plant and equipment

61

59

Investment in certificates of deposits

(6,000

)

Maturities of certificates of deposits

2,000

Principal payments from note receivable

25

28

Net cash used in investing activities

(33,424

)

(20,697

)

Financing Activities

Stock options exercised

14,173

7,685

Repurchase of stock

(15,937

)

(10,191

)

Employee taxes paid by withholding shares

(1,102

)

(980

)

Net cash used in financing activities

(2,866

)

(3,486

)

Net increase in cash, cash equivalents and restricted cash

26,472

11,689

Cash, cash equivalents and restricted cash, beginning of period

44,373

1,994

Cash, cash equivalents and restricted cash, end of period

$

70,845

$

13,683