AAON, INC. (NASDAQ-AAON), today announced its results for the first quarter of 2020.
Financial Highlights: Three Months Ended March 31,   %
  2020   2019   Change
  (in thousands, except share and per share data)
Net sales $ 137,483     $ 113,822     20.8 %
Gross profit 42,947     25,430     68.9 %
Gross profit % 31.2 %   22.3 %    
Selling, general and administrative expenses $ 15,214     $ 13,677     11.2 %
Net income 21,853     8,757     149.5 %
Net income % 15.9 %   7.7 %    
Earnings per diluted share $ 0.41     $ 0.17     141.2 %
Diluted average shares 52,871,419     52,369,660     1.0 %
           
  March 31,   December 31,   %
  2020   2019   Change
  (in thousands)    
Backlog $ 119,642     $ 142,747     (16.2 )%
Cash & cash equivalents & Restricted cash 52,145     44,373     17.5 %
                 

Gary Fields, President, said "We have been extremely fortunate during these trying times.  As discussed in the fourth quarter, we were able to increase our manufacturing capacity with the addition of several Salvagnini sheet metal fabrication machines which put us in a beneficial position heading into the first quarter.  As a result, we have been able to reduce lead times and our Tulsa plant has nearly 100% on time deliveries as of the end of the quarter.  All these factors gave us the ability to swiftly respond to the needs of the public as an essential business. Our team worked around-the-clock to produce and deliver multiple orders for temporary hospitals in the New York area."

Mr. Fields continued, "The increased sales volume has helped absorb our fixed overhead costs and improve our gross profit.  Our selling, general and administrative expenses have increased due to the profit sharing and other incentives we pay our employees as a result of our record earnings. To date, we have seen minimal business disruption from COVID-19.  While the future may hold some amount of uncertainty, we continue to work hard to keep our work environment safe so we can meet the needs of our customers and protect the health and well-being of our employees."

The decreased backlog as of March 31, 2020 compared to year-end 2019 resulted from both accelerated shipments during the first quarter and a planned reduction in the backlog to facilitate more acceptable lead-times on deliveries.  While business continues to remain firm, evidenced by our 92% of expected order intake in the first quarter of 2020, we are closely monitoring and adapting to COVID-19 related variables.

Norman H. Asbjornson, CEO, added "Our financial condition remains strong as evidenced by our current ratio of 3.1:1 at March 31, 2020.   Furthermore, we have unrestricted cash and cash equivalents of $35.7 million as of March 31, 2020, to ensure that our future investment in the Company remains fiscally sound."

The Company will host a conference call today at 4:15 P.M. (Eastern Time) to discuss the first quarter 2020 results. To participate, call 1-888-241-0551 (code 5395749); or, for rebroadcast available through May 13, 2020, call 1-855-859-2056 (code 5395749).

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.

Forward-Looking StatementsCertain 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, including risks related to the impact of the error correction, that could cause actual results and developments to differ materially from the forward-looking statements.

Contact InformationJerry R. LevinePhone: (914) 244-0292Fax: (914) 244-0295Email: jrladvisor@yahoo.com

AAON, Inc. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
  Three Months Ended   March 31,
  2020   2019
  (in thousands, except share and per share data)
Net sales $ 137,483     $ 113,822  
Cost of sales 94,536     88,392  
Gross profit 42,947     25,430  
Selling, general and administrative expenses 15,214     13,677  
(Gain) loss on disposal of assets (62 )   284  
Income from operations 27,795     11,469  
Interest income, net 61     9  
Other (expense) income, net (27 )   (26 )
Income before taxes 27,829     11,452  
Income tax provision 5,976     2,695  
Net income $ 21,853     $ 8,757  
Earnings per share:      
Basic $ 0.42     $ 0.17  
Diluted $ 0.41     $ 0.17  
Weighted average shares outstanding:      
Basic 52,071,839     51,992,150  
Diluted 52,871,419     52,369,660  
           
AAON, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
  March 31, 2020   December 31, 2019
Assets (in thousands, except share and per share data)
Current assets:      
Cash and cash equivalents $ 35,677     $ 26,797  
Restricted cash 16,468     17,576  
Accounts receivable, net 69,894     67,399  
Income tax receivable —     772  
Note receivable 27     29  
Inventories, net 72,855     73,601  
Prepaid expenses and other 2,045     1,375  
Total current assets 196,966     187,549  
Property, plant and equipment:      
Land 3,298     3,274  
Buildings 104,707     101,113  
Machinery and equipment 252,544     236,087  
Furniture and fixtures 17,116     16,862  
Total property, plant and equipment 377,665     357,336  
Less: Accumulated depreciation 184,636     179,242  
Property, plant and equipment, net 193,029     178,094  
Intangible assets, net 213     272  
Goodwill 3,229     3,229  
Right of use assets 1,641     1,683  
Note receivable 542     597  
Total assets $ 395,620     $ 371,424  
       
Liabilities and Stockholders' Equity      
Current liabilities:      
Revolving credit facility $ —     $ —  
Accounts payable 13,501     11,759  
Accrued liabilities 50,684     44,269  
Total current liabilities 64,185     56,028  
Deferred tax liabilities 15,130     15,297  
Other long-term liabilities 3,652     3,639  
New market tax credit obligation 6,330     6,320  
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, 52,044,110 and 52,078,515 issued and outstanding at March 31, 2020 and December 31, 2019, respectively 208     208  
Additional paid-in capital —     3,631  
Retained earnings 306,115     286,301  
Total stockholders' equity 306,323     290,140  
Total liabilities and stockholders' equity $ 395,620     $ 371,424  
               
AAON, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
  Three Months Ended   March 31,
  2020   2019
Operating Activities (in thousands)
Net income $ 21,853     $ 8,757  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization 6,002     5,914  
Amortization of debt issuance cost 10     —  
Provision for losses on accounts receivable, net of adjustments 294     115  
Provision for excess and obsolete inventories (274 )   357  
Share-based compensation 2,351     5,407  
(Gain) loss on disposition of assets (62 )   284  
Foreign currency transaction loss (gain) 51     (16 )
Interest income on note receivable (6 )   (6 )
Deferred income taxes (167 )   909  
Changes in assets and liabilities:      
Accounts receivable (2,789 )   (4,725 )
Income taxes 772     1,432  
Inventories 1,020     2,678  
Prepaid expenses and other (670 )   (561 )
Accounts payable 2,742     (5,730 )
Deferred revenue 229     25  
Accrued liabilities 6,241     73  
Net cash provided by operating activities 37,597     14,913  
Investing Activities      
Capital expenditures (21,877 )   (8,772 )
Proceeds from sale of property, plant and equipment 61     52  
Principal payments from note receivable 12     17  
Net cash used in investing activities (21,804 )   (8,703 )
Financing Activities      
Stock options exercised 4,497     4,010  
Repurchase of stock (11,565 )   (4,483 )
Employee taxes paid by withholding shares (953 )   (588 )
Net cash used in financing activities (8,021 )   (1,061 )
Net increase in cash, cash equivalents and restricted cash 7,772     5,149  
Cash, cash equivalents and restricted cash, beginning of period 44,373     1,994  
Cash, cash equivalents and restricted cash, end of period $ 52,145     $ 7,143  
               
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