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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