AAON, Inc. (NASDAQ:AAON) today announced its operating results for
the third quarter and nine months ended September 30, 2017.
In the quarter ended September 30, 2017,
net sales were $113.7 million, up 8.7% from $104.6 million in 2016.
Net income was $14.7 million, a decline of 6.2% from $15.7 million
in the same period a year ago. Net sales for the nine months ended
September 30, 2017 were $301.1 million, increasing 3.0% from $292.3
million in 2016. Net income for the nine months ended September 30,
2017 was $38.7 million, down 7.7% from $42.0 million in 2016.
Earnings per diluted share in the third quarter of 2017 were $0.28,
down 3.4% from $0.29 for the same period in 2016, based upon 53.0
million and 53.4 million shares outstanding at September 30,
2017 and 2016, respectively. Earnings per diluted share for the
nine months ended September 30, 2017 were $0.73, a decrease of 6.4%
from $0.78 in 2016, based upon 53.1 million and 53.5 million shares
outstanding at September 30, 2017 and 2016, respectively.
Our backlog at September 30, 2017 increased
19% to $73.8 million, from $62.2 million for the same period a year
ago.
Selling, general and administrative expenses
increased $2.6 million or 25.3% to $13.0 million (11.5% of sales)
from $10.4 million (9.9% of sales) as compared to the third quarter
of 2016. This increase is primarily due to warranty expense
and modifications the Company has made during the year to its
warranty policy. These modifications more clearly define what
qualifies as a warranty claim and place a deadline for when claims
may be submitted. The Company continues to expect these changes
will benefit the Company in the long term with better customer
relationships.
We are still awaiting certifications from AHRI
on our new water-source heat pump (WSHP) products. However,
we are seeing significant increases in WSHP orders, the bulk of
which will be delivered by the end of 2017. With the approval
of certifications, we anticipate WSHP orders will increase
substantially in 2018.
Capital expenditures for the nine months ended
September 30, 2017 were $26.4 million and for the total year 2017
we estimate we will reach $47-$50 million to complete work on our
first automated WSHP line, start work on one of the two additional
WSHP lines and the construction of our state of the art
laboratory. For 2018, we currently estimate total capital
expenditures in the range of $35-$37 million to finish work on our
second WSHP line, start work on our third WSHP line and increase
our sheet metal capacity with additional Salvagnini machines.
Norman H. Asbjornson, CEO, said, "We're happy to
witness revenue growth and improvement in our production. We
continue to make investments in our research and development and
capital expenditures so that revenues accelerate in 2018 and
beyond. We are now less than a year from opening the Norman
Asbjornson Innovation Center, our state of the art acoustical and
performance measuring laboratory. The ability to do testing
in this facility for ourselves and customers will allow us to
introduce new products at a more rapid rate while generating
additional revenue."
Mr. Asbjornson concluded, “Our financial
condition at September 30, 2017 remains strong with a current
ratio of 2.7:1 (including cash and short-term investments totaling
$39.9 million) and we continue to operate debt free."
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 4098978); or, for
rebroadcast, call 1-855-859-2056 (code 4098978).
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 and coils. 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.
Certain statements in this news release may be
“forward-looking statements” within the meaning of Section 27A of
the Securities Act of 1933, as amended. 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.
| AAON, Inc. and Subsidiaries |
| Consolidated Statements of
Income |
| (Unaudited) |
| |
| |
Three Months Ended September
30, |
|
Nine Months Ended September
30, |
| |
2017 |
|
2016 |
|
2017 |
|
2016 |
| |
(in thousands, except share and per share data) |
| Net sales |
$ |
113,668 |
|
|
$ |
104,568 |
|
|
$ |
301,072 |
|
|
$ |
292,309 |
|
| Cost of sales |
78,010 |
|
|
71,476 |
|
|
208,750 |
|
|
200,739 |
|
| Gross profit |
35,658 |
|
|
33,092 |
|
|
92,322 |
|
|
91,570 |
|
| Selling, general and
administrative expenses |
13,034 |
|
|
10,400 |
|
|
35,535 |
|
|
29,874 |
|
| Loss (gain) on disposal
of assets |
(1 |
) |
|
— |
|
|
46 |
|
|
(20 |
) |
| Income from
operations |
22,625 |
|
|
22,692 |
|
|
56,741 |
|
|
61,716 |
|
| Interest income,
net |
84 |
|
|
82 |
|
|
215 |
|
|
223 |
|
| Other income, net |
41 |
|
|
(12 |
) |
|
86 |
|
|
115 |
|
| Income before
taxes |
22,750 |
|
|
22,762 |
|
|
57,042 |
|
|
62,054 |
|
| Income tax
provision |
8,033 |
|
|
7,080 |
|
|
18,314 |
|
|
20,098 |
|
| Net income |
$ |
14,717 |
|
|
$ |
15,682 |
|
|
$ |
38,728 |
|
|
$ |
41,956 |
|
| Earnings per
share: |
|
|
|
|
|
|
|
|
Basic |
$ |
0.28 |
|
|
$ |
0.30 |
|
|
$ |
0.74 |
|
|
$ |
0.79 |
|
|
Diluted |
$ |
0.28 |
|
|
$ |
0.29 |
|
|
$ |
0.73 |
|
|
$ |
0.78 |
|
| Cash dividends declared
per common share: |
$ |
— |
|
|
$ |
— |
|
|
$ |
0.13 |
|
|
$ |
0.11 |
|
| Weighted average shares
outstanding: |
|
|
|
|
|
|
|
|
Basic |
52,566,619 |
|
|
52,891,879 |
|
|
52,586,429 |
|
|
52,942,571 |
|
|
Diluted |
53,014,269 |
|
|
53,394,331 |
|
|
53,103,408 |
|
|
53,467,023 |
|
| AAON, Inc. and Subsidiaries |
| Consolidated Balance Sheets |
| (Unaudited) |
| |
September 30, 2017 |
|
December 31, 2016 |
|
Assets |
(in thousands, except share and per share data) |
| Current assets: |
|
|
|
| Cash and
cash equivalents |
$ |
23,515 |
|
|
$ |
24,153 |
|
|
Certificates of deposit |
5,040 |
|
|
5,512 |
|
|
Investments held to maturity at amortized cost |
11,342 |
|
|
14,083 |
|
| Accounts
receivable, net |
57,342 |
|
|
43,001 |
|
| Income
tax receivable |
— |
|
|
6,239 |
|
| Note
receivable |
28 |
|
|
25 |
|
|
Inventories, net |
66,117 |
|
|
47,352 |
|
| Prepaid
expenses and other |
757 |
|
|
616 |
|
| Total current
assets |
164,141 |
|
|
140,981 |
|
| Property, plant and
equipment: |
|
|
|
| Land |
2,233 |
|
|
2,233 |
|
|
Buildings |
88,740 |
|
|
78,806 |
|
| Machinery
and equipment |
179,712 |
|
|
158,216 |
|
| Furniture
and fixtures |
14,136 |
|
|
12,783 |
|
| Total
property, plant and equipment |
284,821 |
|
|
252,038 |
|
|
Less: Accumulated depreciation |
146,513 |
|
|
137,146 |
|
| Property, plant and
equipment, net |
138,308 |
|
|
114,892 |
|
| Note receivable |
689 |
|
|
657 |
|
| Total assets |
$ |
303,138 |
|
|
$ |
256,530 |
|
| |
|
|
|
| Liabilities and
Stockholders' Equity |
|
|
|
| Current
liabilities: |
|
|
|
| Revolving
credit facility |
$ |
— |
|
|
$ |
— |
|
| Accounts
payable |
18,933 |
|
|
7,102 |
|
| Dividends
payable |
— |
|
|
— |
|
| Accrued
liabilities |
41,682 |
|
|
31,940 |
|
| Total current
liabilities |
60,615 |
|
|
39,042 |
|
| Deferred revenue |
1,547 |
|
|
1,498 |
|
| Deferred tax
liabilities |
10,678 |
|
|
9,531 |
|
| Donations |
— |
|
|
561 |
|
| 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, 52,513,061
and 52,651,448 issued and outstanding at September 30, 2017 and
December 31, 2016, respectively |
210 |
|
|
211 |
|
|
Additional paid-in capital |
— |
|
|
— |
|
| Retained
earnings |
230,088 |
|
|
205,687 |
|
| Total stockholders'
equity |
230,298 |
|
|
205,898 |
|
| Total liabilities and
stockholders' equity |
$ |
303,138 |
|
|
$ |
256,530 |
|
| AAON, Inc. and Subsidiaries |
| Consolidated Statements of Cash
Flows |
| (Unaudited) |
| |
Nine Months Ended September
30, |
| |
2017 |
|
2016 |
| Operating
Activities |
(in thousands) |
| Net
income |
$ |
38,728 |
|
|
$ |
41,956 |
|
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
Depreciation |
11,025 |
|
|
9,547 |
|
|
Amortization of bond premiums |
39 |
|
|
216 |
|
| Provision
for losses on accounts receivable, net of adjustments |
180 |
|
|
30 |
|
| Provision
for excess and obsolete inventories |
54 |
|
|
420 |
|
|
Share-based compensation |
4,960 |
|
|
3,172 |
|
| Loss
(gain) on disposition of assets |
46 |
|
|
(20 |
) |
| Foreign
currency transaction gain |
(65 |
) |
|
(38 |
) |
| Interest
income on note receivable |
(18 |
) |
|
(21 |
) |
| Deferred
income taxes |
1,147 |
|
|
(1,519 |
) |
| Changes
in assets and liabilities: |
|
|
|
| Accounts
receivable |
(14,521 |
) |
|
(3,340 |
) |
| Income
taxes |
6,239 |
|
|
2,230 |
|
|
Inventories |
(18,819 |
) |
|
(5,322 |
) |
| Prepaid
expenses and other |
(141 |
) |
|
(287 |
) |
| Accounts
payable |
3,781 |
|
|
949 |
|
| Deferred
revenue |
416 |
|
|
334 |
|
| Accrued
liabilities and donations |
8,814 |
|
|
(1,300 |
) |
| Net cash
provided by operating activities |
41,865 |
|
|
47,007 |
|
| Investing
Activities |
|
|
|
| Capital
expenditures |
(26,436 |
) |
|
(23,627 |
) |
| Proceeds
from sale of property, plant and equipment |
8 |
|
|
28 |
|
|
Investment in certificates of deposits |
(5,280 |
) |
|
(4,112 |
) |
|
Maturities of certificates of deposits |
5,752 |
|
|
9,840 |
|
| Purchases
of investments held to maturity |
(13,241 |
) |
|
(10,384 |
) |
|
Maturities of investments |
15,443 |
|
|
5,622 |
|
| Proceeds
from called investments |
500 |
|
|
1,511 |
|
| Principal
payments from note receivable |
48 |
|
|
39 |
|
| Net cash
used in investing activities |
(23,206 |
) |
|
(21,083 |
) |
| Financing
Activities |
|
|
|
|
Borrowings under revolving credit facility |
— |
|
|
761 |
|
| Payments
under revolving credit facility |
— |
|
|
(761 |
) |
| Stock
options exercised |
1,715 |
|
|
1,681 |
|
|
Repurchase of stock |
(12,991 |
) |
|
(14,572 |
) |
| Employee
taxes paid by withholding shares |
(1,193 |
) |
|
(559 |
) |
| Cash
dividends paid to stockholders |
(6,828 |
) |
|
(5,820 |
) |
| Net cash
used in financing activities |
(19,297 |
) |
|
(19,270 |
) |
| Net (decrease)
increase in cash and cash equivalents |
(638 |
) |
|
6,654 |
|
| Cash and cash
equivalents, beginning of period |
24,153 |
|
|
7,908 |
|
| Cash and cash
equivalents, end of period |
$ |
23,515 |
|
|
$ |
14,562 |
|
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, (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 September
30, |
|
Nine Months Ended September
30, |
| |
|
| |
2017 |
|
2016 |
|
2017 |
|
2016 |
| |
(in thousands) |
| Net Income, a GAAP
measure |
$ |
14,717 |
|
|
$ |
15,682 |
|
|
$ |
38,728 |
|
|
$ |
41,956 |
|
| Depreciation |
3,744 |
|
|
3,201 |
|
|
11,025 |
|
|
9,547 |
|
| Amortization of bond
premiums |
10 |
|
|
65 |
|
|
39 |
|
|
216 |
|
| Share-based
compensation |
1,431 |
|
|
1,129 |
|
|
4,960 |
|
|
3,172 |
|
| Interest income |
(93 |
) |
|
(147 |
) |
|
(254 |
) |
|
(439 |
) |
| Income tax expense |
8,033 |
|
|
7,080 |
|
|
18,314 |
|
|
20,098 |
|
| EBITDAX, a non-GAAP
measure |
$ |
27,842 |
|
|
$ |
27,010 |
|
|
$ |
72,812 |
|
|
$ |
74,550 |
|
For Further Information:Jerry R. LevinePhone: (914) 244-0292Fax:
(914) 244-0295Email: jrladvisor@yahoo.com
AAON (NASDAQ:AAON)
Historical Stock Chart
From Mar 2024 to Apr 2024
AAON (NASDAQ:AAON)
Historical Stock Chart
From Apr 2023 to Apr 2024
