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CST: 21/11/2019 20:49:02   

AAON Reports Third Quarter Sales and Earnings

21 Days ago

TULSA, Okla., Oct. 31, 2019 (GLOBE NEWSWIRE) -- AAON, Inc. (NASDAQ-AAON) today announced its operating results for the third quarter and nine months ended September 30, 2019. 

In the quarter ended September 30, 2019, net sales were $113.5 million, up 0.5% from $112.9 million in 2018. Net income was $13.8 million, a decrease of 1.8% from $14.1 million in the same period a year ago.  Net sales for the nine months ended September 30, 2019 were $346.8 million, increasing 7.8% from $321.6 million in 2018. Net income for the nine months ended September 30, 2019 was $37.7 million, up 25.5% from $30.0 million in 2018.  Our net income benefited from additional tax credits the Company was able to take advantage of and also from positive return to provision adjustments on our tax return that together totaled $1.6 million for the quarter ended September 30, 2019.

Our backlog at September 30, 2019, increased 8.9% to $165.3 million, from $151.8 million at December 31, 2018, and increased 30.4% from $126.8 million at September 30, 2018.

Earnings per diluted share for the third quarter of 2019 were $0.26, a decrease of 3.7% from $0.27 for the same period in 2018, based upon 52.7 million and 52.6 million shares outstanding at September 30, 2019 and 2018, respectively.  Earnings per diluted share for the nine months ended September 30, 2019 were $0.72, an increase of 26.3% from $0.57 in 2018, based upon 52.6 million and 52.7 million shares outstanding at September 30, 2019 and 2018, respectively.

Gross profit, benefiting from moderating raw material costs and improved productivity, increased 10.1% to $83.4 million (24.0% of sales) for the nine months ended September 30, 2019, versus $75.7 million (23.5% of sales) for the same period a year ago.

Gary D. Fields, President, said, “Our net sales have been constrained primarily by sheet metal production.  We are beginning to see improvements in our manufacturing capacity due to additional Salvagnini sheet metal fabrication machines coming online during mid-September.  In addition, we have significantly increased the number of our Salvagnini maintenance technicians on staff, and our heightened emphasis on best-practice equipment maintenance policies has also contributed to manufacturing capacity improvements.  We have recently reorganized certain key production management positions at our Tulsa facilities and are witnessing operational improvements as a direct result.”

Selling, general and administrative expenses decreased 1.5% to $13.0 million (11.4% of sales) from $13.2 million (11.7% of sales) as compared to the third quarter of 2018.  For the nine months ended September 30, 2019, selling, general and administrative expenses increased 2.7% to $37.5 million (10.8% of sales) compared to $36.5 million (11.3% of sales) for the same period a year ago.

Mr. Fields continued, "Our financial condition at September 30, 2019 remained strong with a current ratio of 3.2:1, including cash and investments totaling $28.4 million."

Norman H. Asbjornson, CEO, stated, “On October 29th we had the grand opening for our research and development laboratory.  Approximately 25 years ago, we reviewed the need for additional labs with two objectives.  First, was to provide for our laboratory needs in the future.  Second, was the opportunity to design a lab with capabilities far beyond industry standards and unlikely to be copied.  Among the things unique to our lab is  the ability to test a capacity of 300 tons when the industry standard is 100 tons or less.  Another item is combining performance testing with acoustical testing simultaneously which is not available in any other lab.  We believe this and other attributes give AAON an advantage far into the future.  I am greatly honored to report we named our lab the Norman Asbjornson Innovation Center.  It will enable AAON to continue to lead the industry in the development of quiet, energy efficient and sustainable HVAC equipment well into the future.”

The Company will host a conference call today at 4:15 P.M. Eastern Time to discuss the third quarter results. To participate, call 1-888-241-0551 (code 8175235); or, for rebroadcast, call 1-855-859-2056 (code 8175235).

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 
 September 30,
  Nine Months Ended 
 September 30,
  2019   2018   2019   2018
  (in thousands, except share and per share data)
Net sales $ 113,500   $ 112,937   $ 346,759   $ 321,607
Cost of sales 86,115   80,174   263,406   245,869
Gross profit 27,385   32,763   83,353   75,738
Selling, general and administrative expenses 12,994   13,190   37,476   36,495
Loss (gain) on disposal of assets 6   2   296   (9)
Income from operations 14,385   19,571   45,581   39,252
Interest income, net 9   36   49   171
Other (expense) income, net (7)   5   (16)   11
Income before taxes 14,387   19,612   45,614   39,434
Income tax provision 560   5,527   7,924   9,398
Net income $ 13,827   $ 14,085   $ 37,690   $ 30,036
Earnings per share:              
Basic $ 0.27   $ 0.27   $ 0.72   $ 0.57
Diluted $ 0.26   $ 0.27   $ 0.72   $ 0.57
Cash dividends declared per common share: $   $   $ 0.16   $ 0.16
Weighted average shares outstanding:              
Basic 52,111,444   52,238,796   52,086,209   52,315,719
Diluted 52,722,127   52,627,541   52,624,583   52,715,390


AAON, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
  September 30, 2019   December 31, 2018
Assets (in thousands, except share and per share data)
Current assets:      
Cash and cash equivalents $ 28,373   $ 1,994
Accounts receivable, net 56,083   54,078
Income tax receivable 3,870   6,104
Note receivable 28   27
Inventories, net 80,623   77,612
Prepaid expenses and other 1,559   1,046
Total current assets 170,536   140,861
Property, plant and equipment:      
Land 3,274   3,114
Buildings 99,705   97,393
Machinery and equipment 230,806   212,779
Furniture and fixtures 17,310   16,597
Total property, plant and equipment 351,095   329,883
Less: Accumulated depreciation 175,357   166,880
Property, plant and equipment, net 175,738   163,003
Intangible assets, net 331   506
Goodwill 3,229   3,229
Right of use assets 1,724  
Note receivable 594   598
Total assets $ 352,152   $ 308,197
       
Liabilities and Stockholders' Equity      
Current liabilities:      
Revolving credit facility $   $
Accounts payable 11,118   10,616
Accrued liabilities 42,764   37,455
Total current liabilities 53,882   48,071
Deferred tax liabilities 15,034   10,826
Other long-term liabilities 3,669   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, 52,119,295 and 51,991,242 issued and outstanding at September 30, 2019 and December 31, 2018, respectively 209   208
Additional paid-in capital 2,680  
Retained earnings 276,678   247,291
Total stockholders' equity 279,567   247,499
Total liabilities and stockholders' equity $ 352,152   $ 308,197


AAON, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
  Nine Months Ended 
 September 30,
  2019   2018
Operating Activities (in thousands)
Net income $ 37,690   $ 30,036
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization 17,627   12,865
Amortization of bond premiums   11
Provision for losses on accounts receivable, net of adjustments 91   67
Provision for excess and obsolete inventories 1,003   55
Share-based compensation 7,858   5,614
Loss (gain) on disposition of assets 296   (9)
Foreign currency transaction gain (17)   (20)
Interest income on note receivable (19)   27
Deferred income taxes 4,208   864
Changes in assets and liabilities:      
Accounts receivable (2,096)   146
Income taxes 2,234   (649)
Inventories (4,014)   (7,071)
Prepaid expenses and other (513)   (792)
Accounts payable 782   4,328
Deferred revenue 263   (1,644)
Accrued liabilities 5,190   364
Net cash provided by operating activities 70,583   44,192
Investing Activities      
Capital expenditures (30,831)   (34,328)
Cash paid in business combination   (6,377)
Proceeds from sale of property, plant and equipment 68   11
Investment in certificates of deposits (6,000)   (7,200)
Maturities of certificates of deposits 6,000   7,920
Purchases of investments held to maturity   (9,001)
Maturities of investments   13,320
Proceeds from called investments   495
Principal payments from note receivable 39   32
Net cash used in investing activities (30,724)   (35,128)
Financing Activities      
Stock options exercised 11,283   3,504
Repurchase of stock (15,437)   (17,500)
Employee taxes paid by withholding shares (1,023)   (860)
Cash dividends paid to stockholders (8,303)   (8,400)
Net cash used in financing activities (13,480)   (23,256)
Net increase (decrease)  in cash and cash equivalents 26,379   (14,192)
Cash and cash equivalents, beginning of period 1,994   21,457
Cash and cash equivalents, end of period $ 28,373   $ 7,265


 

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