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TULSA, Okla., Aug. 01, 2019 (GLOBE NEWSWIRE) -- AAON, Inc. (NASDAQ-AAON) today announced its operating results for the second quarter and six months ended June 30, 2019.
In the quarter ended June 30, 2019, net sales were $119.4 million, up 9.0% from $109.6 million in 2018. Net income was $13.0 million, an increase of 10.9% from $11.7 million in the same period a year ago. Net sales for the six months ended June 30, 2019 were $233.3 million, increasing 11.8% from $209 million in 2018. Net income for the six months ended June 30, 2019 was $23.9 million, up 49.6% from $16.0 million in 2018.
Our backlog at June 30, 2019, increased 18.3% to $179.6 million, from $151.8 million at December 31, 2018, and increased 15.0% from $156.6 million at June 30, 2018.
Earnings per diluted share for the second quarter of 2019 were $0.25, an increase of 13.6% from $0.22 for the same period in 2018, based upon 52.7 million and 52.7 million shares outstanding at June 30, 2019 and 2018, respectively. Earnings per diluted share for the six months ended June 30, 2019 were $0.45, an increase of 50.0% from $0.30 in 2018, based upon 52.6 million and 52.8 million shares outstanding at June 30, 2019 and 2018, respectively.
Gross profit, benefiting from moderating raw material costs and improved productivity, increased 30.2% to $56.0 million (24.0% of sales) for the six months ended June 30, 2019, versus $43.0 million (20.6% of sales) for the same period a year ago.
Norman H. Asbjornson, CEO, said, "In the fourth quarter of 2018 we became aware of the need for additional sheet metal fabrication equipment and ordered four additional systems at that time. However, due to the substantial increase in business, we pushed our existing equipment as hard as possible which caused additional downtime on the equipment, thus limiting the amount of additional growth we were able to attain. As the year has progressed we experienced strengthening demand and thus recently ordered another four machines, totaling eight machines on order."
Selling, general and administrative expenses increased 3.0% to $13.5 million (11.3% of sales) from $13.1 million (11.9% of sales) as compared to the second quarter of 2018. For the six months ended June 30, 2019, selling, general and administrative expenses increased 5.1% to $24.5 million (10.5% of sales) compared to $23.3 million (11.2% of sales) for the same period a year ago.
Mr. Asbjornson continued, "Our financial condition at June 30, 2019 remained strong with a current ratio of 2.9:1, including cash and investments totaling $17.7 million, and we continue to operate debt free."
Gary Fields, President, stated, "Our recently purchased Salvagnini sheet metal fabrication machines started to arrive in early July and will continue to arrive throughout 2019, with the final machine scheduled to arrive January of 2020. Each Salvagnini system will be in full production within 45 days of arrival. Furthermore, we have taken significant steps to improve our sheet metal fabrication equipment maintenance and production capabilities through the hiring of a former long-term Salvagnini employee to implement and oversee strengthened maintenance and replacement initiatives."
Mr. Fields concluded, "We believe the steps taken to address our manufacturing capacity issues will allow us to see improvements in our overall operations as the year progresses."
The Company will host a conference call today at 4:15 P.M. Eastern Time to discuss the second quarter results. To participate, call 1-888-241-0551 (code 3096466); or, for rebroadcast, call 1-855-859-2056 (code 3096466).
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.
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 that could cause actual results and developments to differ materially from the forward-looking statements.
Jerry R. Levine
Phone: (561) 482-4046 or (914) 244-0292
Fax: (914) 244-0295
|AAON, Inc. and Subsidiaries|
|Consolidated Statements of Income|
Three Months Ended
Six Months Ended
|(in thousands, except share and per share data)|
|Cost of sales||89,262||82,003||177,291||165,695|
|Selling, general and administrative expenses||13,481||13,086||24,482||23,305|
|Loss (gain) on disposal of assets||6||(4||)||290||(11||)|
|Income from operations||16,688||14,503||31,196||19,681|
|Interest income, net||31||67||40||135|
|Other expense, net||17||12||(9||)||6|
|Income before taxes||16,736||14,582||31,227||19,822|
|Income tax provision||3,775||2,891||7,364||3,871|
|Earnings per share:|
|Cash dividends declared per common share:||$||0.16||$||0.16||$||0.16||$||0.16|
|Weighted average shares outstanding:|
|AAON, Inc. and Subsidiaries|
|Consolidated Balance Sheets|
|June 30, 2019||December 31, 2018|
|Assets||(in thousands, except share and per share data)|
|Cash and cash equivalents||$||13,683||$||1,994|
|Certificates of deposit||4,000||—|
|Accounts receivable, net||68,933||54,078|
|Income tax receivable||3,246||6,104|
|Prepaid expenses and other||1,696||1,046|
|Total current assets||168,630||140,861|
|Property, plant and equipment:|
|Machinery and equipment||219,438||212,779|
|Furniture and fixtures||17,107||16,597|
|Total property, plant and equipment||338,863||329,883|
|Less: Accumulated depreciation||171,232||166,880|
|Property, plant and equipment, net||167,631||163,003|
|Intangible assets, net||389||506|
|Right of use assets||1,764||—|
|Liabilities and Stockholders' Equity|
|Revolving credit facility||$||—||$||—|
|Total current liabilities||58,953||48,071|
|Deferred tax liabilities||14,938||10,826|
|Other long-term liabilities||3,791||1,801|
|Commitments and contingencies|
|Preferred stock, $.001 par value, 5,000,000 shares authorized, no shares issued||—||—|
|Common stock, $.004 par value, 100,000,000 shares authorized, 52,118,180 and 51,991,242 issued and outstanding at June 30, 2019 and December 31, 2018, respectively||209||208|
|Additional paid-in capital||1,586||—|
|Total stockholders' equity||264,569||247,499|
|Total liabilities and stockholders' equity||$||342,251||$||308,197|
|AAON, Inc. and Subsidiaries|
|Consolidated Statements of Cash Flows|
Six Months Ended
|Operating Activities||(in thousands)|
|Adjustments to reconcile net income to net cash provided by operating activities:|
|Depreciation and amortization||11,760||8,438|
|Amortization of bond premiums||—||8|
|Provision for losses on accounts receivable, net of adjustments||128||89|
|Provision for excess and obsolete inventories||1,153||299|
|Loss (gain) on disposition of assets||290||(11||)|
|Foreign currency transaction gain||(13||)||15|
|Interest income on note receivable||(26||)||14|
|Deferred income taxes||4,112||438|
|Changes in assets and liabilities:|
|Prepaid expenses and other||(650||)||(935||)|
|Net cash provided by operating activities||35,872||36,246|
|Cash paid in business combination||—||(6,377||)|
|Proceeds from sale of property, plant and equipment||59||11|
|Investment in certificates of deposits||(6,000||)||(7,200||)|
|Maturities of certificates of deposits||2,000||4,560|
|Purchases of investments held to maturity||—||(9,001||)|
|Maturities of investments||—||11,620|
|Proceeds from called investments||—||495|
|Principal payments from note receivable||28||16|
|Net cash used in investing activities||(20,697||)||(31,801||)|
|Stock options exercised||7,685||2,299|
|Repurchase of stock||(10,191||)||(11,539||)|
|Employee taxes paid by withholding shares
|Net cash used in financing activities||(3,486||)||(10,048||)|
|Net increase (decrease) in cash and cash equivalents||11,689||(5,603||)|
|Cash and cash equivalents, beginning of period||1,994||21,457|
|Cash and cash equivalents, end of period||$||13,683||$||15,854|
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 (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 and amortization, (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:
Three Months Ended
Six Months Ended
|Net Income, a GAAP measure||$||12,961||$||11,691||$||23,863||$||15,951|
|Depreciation and amortization||5,846||4,309||11,760||8,438|
|Amortization of bond premiums||—||3||—||8|
|Income tax expense||3,775||2,891||7,364||3,871|
|EBITDAX, a non-GAAP measure||$||25,594||$||20,799||$||48,020||$||31,824|