AAON Reports Third Quarter Sales and Earnings
October 31 2019 - 07:00AM
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 AAONAAON, 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 InformationJerry R.
LevinePhone: (561) 482-4046 or (914) 244-0292Fax:
(914) 244-0295Email: 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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