UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934


Date of Report (Date of earliest event reported): November 2, 2015

AAON, INC.
(Exact name of Registrant as Specified in Charter) 
Nevada
0-18953
87-0448736
(State or Other Jurisdiction
(Commission File Number: )
(IRS Employer Identification No.)
of Incorporation)
 
 
 
 
 
2425 South Yukon, Tulsa, Oklahoma 
 
74107
(Address of Principal Executive Offices)
 
(Zip Code)
 
(Registrant's telephone number, including area code): (918) 583-2266

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ]    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ]    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ]    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ]    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))





Item 2.02    Results of Operations and Financial Conditions.

On November 2, 2015, AAON, Inc. (the "Company") announced its financial and operating results and backlog for the third quarter ended September 30, 2015. A copy of the Company's press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference. The Company plans to host a teleconference at 4:15 P.M (Eastern Time) on November 2, 2015 to discuss these results. To access the call, please dial 1-888-241-0551 (code 62745780). A replay of the call will be available through November 9, 2015 at 1-855-859-2056 (code 62745780).

In accordance with General Instruction B.2 of Form 8-K, the information in this Item shall not be deemed "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing.

Item 7.01    Regulation FD Disclosure.

On November 2, 2015, the Company issued the press release described above in Item 2.02 of this Current Report on Form 8-K. A copy of the press release is attached hereto as Exhibit 99.1.

All statements in the teleconference, other than historical financial information, may be deemed to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

In accordance with General Instruction B.2 of Form 8-K, the information in this Item shall not be deemed "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing.

Item 9.01    Financial Statements and Exhibits.

(d)    Exhibits
Exhibit Number
 
Description
 
 
 
 
 
99.1
 
Press release dated November 2, 2015 announcing financial and operating results and backlog.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
AAON, INC.
 
 
 
 
Date:
November 2, 2015
By:
/s/ Luke A. Bomer
 
 
 
Luke A. Bomer, Secretary







Exhibit 99.1                        
NEWS
BULLETIN
 
AAON, Inc.
 
2425 South Yukon Ave. Ÿ Tulsa, OK 74107-2728
 
Ÿ Ph: (918) 583-2266 Ÿ   Fax: (918) 583-6094 Ÿ
 
Ÿhttp://www.aaon.comŸ
 
 
 
For Further Information:
FOR IMMEDIATE RELEASE
November 2, 2015
 
Jerry R. Levine Ÿ Phone: (914) 244-0292 Ÿ Fax: (914) 244-0295
 
Email: jrladvisor@yahoo.com

AAON REPORTS THIRD QUARTER RESULTS

TULSA, OK, November 2, 2015 - AAON, Inc. (NASDAQ-AAON) today announced its operating results for the third quarter and nine months ended September 30, 2015.

In the quarter, net sales were $94.4 million, down 8.3% from $102.9 million in 2014. Net income was $13.3 million, up 6.5% from $12.4 million in the same period a year ago. Net sales for the nine-month period ended September 30, 2015 were $261.4 million, down 3.8% from $271.6 million in 2014. Net income for the nine-month period ended September 30, 2015 was $32.8 million, down 2.5% from $33.6 million in 2014.

Earnings per diluted share in the third quarter of 2015 were $0.24, up 9.1% from $0.22 for the same period the previous year, based upon 54.6 million and 55.5 million shares outstanding at September 30, 2015 and 2014, respectively. Earnings per diluted share for the nine-month period ended September 30, 2015 were $0.60, down 1.6% from $0.61 in 2014, based upon 54.6 million and 55.4 million shares outstanding at September 30, 2015 and 2014, respectively.

Norman H. Asbjornson, President and CEO, stated, “Despite the continuing unstable economic environment which negatively impacted our sales, we were able to maintain our gross profit margins, aided by improved productivity and level raw material costs. Our gross profit for the quarter was 32.0% of sales compared to 32.4% of sales a year ago, and for the nine month period ended September 30, 2015, stood at 30.3% versus 30.6% for the corresponding period in 2014.”

Mr. Asbjornson further added, “Our SG&A expense as a percentage of sales declined from 13.4% to 10.7% for the quarter, and for the nine month period decreased from 11.8% to 10.6%. Total SG&A expense benefited from lower salaries and benefits along with the absence of non-recurring charitable contributions made in 2014.”

Mr. Asbjornson continued, “Our financial condition at September 30, 2015 remained quite strong with a current ratio of 3.4:1 (including cash and short-term investments totaling $48.9 million), plus long term marketable investments of $13.2 million. We also remain debt free. Our backlog at September 30, 2015 increased 10.2% to $60.4 million, from $54.8 million for the same period a year ago.”

Mr. Asbjornson concluded, “We have made important changes and additions to our product line which will be introduced in 2016. Furthermore, we have added new sales personnel who should contribute to next year’s sales and earnings. While we expect results to remain relatively flat for the remainder of 2015, we look forward to resuming our growth in 2016 and beyond.”

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 62745780); or, for rebroadcast, call 1-855-859-2056 (code 62745780).

AAON, Inc. is a manufacturer of air conditioning and heating equipment consisting of rooftop units, chillers, packaged outdoor mechanical rooms, air handling units, makeup air units, energy recovery units, condensing units, self-contained units and coils. Its products serve the new construction and replacement markets. The Company has successfully gained market share through its “semi-custom” product lines, which offer the customer value, quality, function, serviceability and efficiency.

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.

1


AAON, Inc. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2015
 
2014
 
2015
 
2014
 
(in thousands, except share and per share data)
Net sales
$
94,360

 
$
102,917

 
$
261,403

 
$
271,594

Cost of sales
64,175

 
69,567

 
182,303

 
188,522

Gross profit
30,185

 
33,350

 
79,100

 
83,072

Selling, general and administrative expenses
10,062

 
13,830

 
27,579

 
32,043

Gain on disposal of assets
(34
)
 
—

 
(59
)
 
(24
)
Income from operations
20,157

 
19,520

 
51,580

 
51,053

Interest income
14

 
55

 
87

 
195

Other expense, net
(58
)
 
(43
)
 
(106
)
 
(30
)
Income before taxes
20,113

 
19,532

 
51,561

 
51,218

Income tax provision
6,862

 
7,092

 
18,781

 
17,593

Net income
$
13,251

 
$
12,440

 
$
32,780

 
$
33,625

Earnings per share:
 

 
 

 
 
 
 
Basic
$
0.24

 
$
0.23

 
$
0.61

 
$
0.61

Diluted
$
0.24

 
$
0.22

 
$
0.60

 
$
0.61

Cash dividends declared per common share:
$
—

 
$
—

 
$
0.11

 
$
0.09

Weighted average shares outstanding:
 

 
 

 
 
 
 
Basic
54,209,942

 
54,905,288

 
54,160,649

 
54,851,911

Diluted
54,579,590

 
55,484,043

 
54,623,163

 
55,423,294





2


AAON, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
 
September 30, 2015
 
December 31, 2014
Assets
(in thousands, except share and per share data)
Current assets:
 
 
 
Cash and cash equivalents
$
29,863

 
$
21,952

Certificates of deposit
10,800

 
6,098

Investments held to maturity at amortized cost
8,266

 
11,972

Accounts receivable, net
45,825

 
44,092

Income tax receivable
2,172

 
2,569

Note receivable
24

 
30

Inventories, net
41,052

 
37,618

Prepaid expenses and other
763

 
609

Deferred tax assets
6,155

 
6,143

Total current assets
144,920

 
131,083

Property, plant and equipment:
 

 
 

Land
2,233

 
2,233

Buildings
67,580

 
64,938

Machinery and equipment
136,952

 
127,968

Furniture and fixtures
10,746

 
10,388

Total property, plant and equipment
217,511

 
205,527

Less:  Accumulated depreciation
121,215

 
113,605

Property, plant and equipment, net
96,296

 
91,922

Certificates of deposit
2,120

 
5,280

Investments held to maturity at amortized cost
11,072

 
4,015

Note receivable
690

 
817

Total assets
$
255,098

 
$
233,117

 
 
 
 
Liabilities and Stockholders' Equity
 

 
 

Current liabilities:
 

 
 

Revolving credit facility
$
—

 
$
—

Accounts payable
7,759

 
11,370

Accrued liabilities
34,482

 
31,343

Total current liabilities
42,241

 
42,713

Deferred revenue
689

 
1,006

Deferred tax liabilities
12,689

 
13,677

Donations
1,108

 
1,662

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, 54,139,246 and 54,041,829
217

 
216

issued and outstanding at September 30, 2015 and December 31, 2014, respectively
 

 
 

Additional paid-in capital
—

 
—

Retained earnings
198,154

 
173,843

Total stockholders' equity
198,371

 
174,059

Total liabilities and stockholders' equity
$
255,098

 
$
233,117



3


AAON, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
 
Nine Months Ended 
 September 30,
 
2015
 
2014
Operating Activities
(in thousands)
Net income
$
32,780

 
$
33,625

Adjustments to reconcile net income to net cash provided by operating activities:
 

 
 

Depreciation
8,587

 
8,660

Amortization of bond premiums
168

 
561

Provision for losses on accounts receivable, net of adjustments
(48
)
 
(59
)
Provision for excess and obsolete inventories, net
(111
)
 
223

Share-based compensation
2,076

 
1,578

Excess tax benefits from stock options exercised and restricted stock awards vested
(2,217
)
 
(908
)
Gain on disposition of assets
(59
)
 
(24
)
Foreign currency transaction loss
114

 
36

Interest income on note receivable
(23
)
 
(30
)
Deferred income taxes
(1,000
)
 
(4,361
)
Changes in assets and liabilities:
 

 
 

Accounts receivable
(1,685
)
 
(15,663
)
Income tax receivable
2,614

 
1,981

Inventories
(3,323
)
 
(5,323
)
Prepaid expenses and other
(154
)
 
(486
)
Accounts payable
(3,801
)
 
5,982

Deferred revenue
138

 
591

Accrued liabilities and donations
2,130

 
12,761

Net cash provided by operating activities
36,186

 
39,144

Investing Activities
 

 
 

Capital expenditures
(12,775
)
 
(13,567
)
Proceeds from sale of property, plant and equipment
63

 
30

Investment in certificates of deposits
(6,200
)
 
(9,940
)
Maturities of certificates of deposits
4,658

 
6,745

Purchases of investments held to maturity
(14,183
)
 
(6,880
)
Maturities of investments
9,907

 
8,891

Proceeds from called investments
757

 
2,525

Principal payments from note receivable
42

 
52

Net cash used in investing activities
(17,731
)
 
(12,144
)
Financing Activities
 

 
 

Stock options exercised
2,640

 
908

Excess tax benefits from stock options exercised and restricted stock awards vested
2,217

 
908

Repurchase of stock
(9,436
)
 
(17,309
)
Cash dividends paid to stockholders
(5,965
)

(4,773
)
Net cash used in financing activities
(10,544
)
 
(20,266
)
Net increase in cash and cash equivalents
7,911

 
6,734

Cash and cash equivalents, beginning of period
21,952

 
12,085

Cash and cash equivalents, end of period
$
29,863

 
$
18,819



4


Use of Non-GAAP Financial Measures
To supplement the Company’s consolidated financial statements presented in accordance with generally accepted accounting principles (“GAAP”), additional non-GAAP financial measures are provided and reconciled in the following tables. The Company believes that these non-GAAP financial measures, when considered together with the GAAP financial measures, provide information that is useful to investors in understanding period-over-period operating results. The Company believes that these non-GAAP financial measures enhance 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,
 
 
 
2015
 
2014
 
2015
 
2014
 
(in thousands)
Net Income, a GAAP measure
$
13,251

 
$
12,440

 
$
32,780

 
$
33,625

Depreciation
2,988

 
2,941

 
8,587

 
8,660

Amortization of bond premiums
62

 
172

 
168

 
561

Share-based compensation
795

 
594

 
2,076

 
1,578

Interest (income)
(76
)
 
(227
)
 
(255
)
 
(756
)
Income tax expense
6,862

 
7,092

 
18,781

 
17,593

EBITDAX, a non-GAAP measure
$
23,882

 
$
23,012

 
$
62,137

 
$
61,261


Adjusted Net Income and Adjusted Earnings per Share
The Company defines Adjusted Net Income and the related per share amount as (1) net income, plus (2) non-recurring donations, less (3) the impact on profit sharing expense from the non-recurring donations and (4) the impact on income tax expense from the non-recurring donations. These measures provide additional information which may be used to better understand the Company’s operations.
The following tables provide a reconciliation of net income and earnings per share-diluted (GAAP) to adjusted net income and adjusted earnings per share-diluted (non-GAAP) for the periods indicated:

 
Three Months Ended 
 September 30,
 
Nine Months Ended September 30,
 
 
 
2015
 
2014
 
2015
 
2014
 
(in thousands except per share data)
Net Income, a GAAP measure
$
13,251

 
$
12,440

 
$
32,780

 
$
33,625

Non-recurring donations
390

 
2,845

 
195

 
3,845

Profit-sharing
(39
)
 
(284
)
 
(20
)
 
(384
)
Income tax expense
(120
)
 
(929
)
 
(64
)
 
(1,187
)
Adjusted Net Income, a non-GAAP measure
$
13,482

 
$
14,072

 
$
32,891

 
$
35,899

 
 
 
 
 
 
 
 
Earnings per share-diluted, a GAAP measure
$
0.24

 
$
0.22

 
$
0.60

 
$
0.61

Non-recurring donations
0.01

 
0.05

 
—

 
0.07

Profit-sharing
—

 
(0.01
)
 
—

 
(0.01
)
Income tax expense
—

 
(0.02
)
 
—

 
(0.02
)
Adjusted earnings per share-diluted, a non-GAAP measure
$
0.25

 
$
0.24

 
$
0.60

 
$
0.65



5
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