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CST: 22/08/2019 16:58:52   

AAON Reports Second Quarter Sales and Earnings

21 Days ago

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).

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.

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.

Contact Information
Jerry R. Levine
Phone: (561) 482-4046 or (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,
  2019   2018   2019   2018
  (in thousands, except share and per share data)
Net sales $ 119,437     $ 109,588     $ 233,259     $ 208,670  
Cost of sales 89,262     82,003     177,291     165,695  
Gross profit 30,175     27,585     55,968     42,975  
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  
Net income $ 12,961     $ 11,691     $ 23,863     $ 15,951  
Earnings per share:              
Basic $ 0.25     $ 0.22     $ 0.46     $ 0.30  
Diluted $ 0.25     $ 0.22     $ 0.45     $ 0.30  
Cash dividends declared per common share: $ 0.16     $ 0.16     $ 0.16     $ 0.16  
Weighted average shares outstanding:              
Basic 52,120,272     52,383,842     52,087,626     52,348,912  
Diluted 52,747,199     52,717,787     52,589,845     52,754,045  



AAON, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
  June 30, 2019   December 31, 2018
Assets (in thousands, except share and per share data)
Current assets:      
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  
Note receivable 28     27  
Inventories, net 77,044     77,612  
Prepaid expenses and other 1,696     1,046  
Total current assets 168,630     140,861  
Property, plant and equipment:      
Land 3,125     3,114  
Buildings 99,193     97,393  
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  
Goodwill 3,229     3,229  
Right of use assets 1,764      
Note receivable 608     598  
Total assets $ 342,251     $ 308,197  
       
Liabilities and Stockholders' Equity      
Current liabilities:      
Revolving credit facility $     $  
Accounts payable 7,885     10,616  
Dividends payable 8,355      
Accrued liabilities 42,713     37,455  
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      
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, 52,118,180 and 51,991,242 issued and outstanding at June 30, 2019 and December 31, 2018, respectively 209     208  
Additional paid-in capital 1,586      
Retained earnings 262,774     247,291  
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
(Unaudited)
  Six Months Ended
 June 30,
  2019   2018
Operating Activities (in thousands)
Net income $ 23,863     $ 15,951  
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  
Share-based compensation 5,073     3,699  
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:      
Accounts receivable (14,983 )   (2,087 )
Income taxes 2,858     (3,328 )
Inventories (585 )   1,400  
Prepaid expenses and other (650 )   (935 )
Accounts payable (2,592 )   12,974  
Deferred revenue 172     (931 )
Accrued liabilities 5,312     213  
Net cash provided by operating activities 35,872     36,246  
Investing Activities      
Capital expenditures (16,784 )   (25,925 )
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 )
Financing Activities      
Stock options exercised 7,685     2,299  
Repurchase of stock (10,191 )   (11,539 )
Employee taxes paid by withholding shares

 
(980 )   (808 )
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

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
 June 30,
  Six Months Ended
 June 30,
   
  2019   2018   2019   2018
  (in thousands)
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  
Share-based compensation 3,043     1,975     5,073     3,699  
Interest income (31 )   (70 )   (40 )   (143 )
Income tax expense 3,775     2,891     7,364     3,871  
EBITDAX, a non-GAAP measure $ 25,594     $ 20,799     $ 48,020     $ 31,824  

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