TULSA, OK, August 6, 2020 - AAON, INC. (NASDAQ-AAON), today announced its results for the second quarter of 2020.
Financial Highlights: Three Months Ended   June 30,   %       Six Months Ended   June 30,   %
  2020   2019   Change       2020   2019   Change
  (in thousands, except share and per share data)       (in thousands, except share and per share data)
Net sales $ 125,596     $ 119,437     5.2 %       $ 263,079     $ 233,259     12.8 %
Gross profit 38,131     30,204     26.2 %       81,078     55,634     45.7 %
Gross profit % 30.4 %   25.3 %           30.8 %   23.9 %    
Selling, general and admin. expenses $ 15,939     $ 12,912     23.4 %       $ 31,153     $ 26,589     17.2 %
SG&A % 12.7 %   10.8 %           11.8 %   11.4 %    
Net income 17,804     13,391     33.0 %       39,657      22,148     79.1 %
Net income % 14.2 %   11.2 %           15.1 %   9.5 %    
Earnings per diluted share $ 0.34     $ 0.25     36.0 %       $ 0.75     $ 0.42     78.6 %
Diluted average shares 52,750,401     52,747,199     —    %       52,885,491     52,589,845     0.6 %
                           
  June 30,   December 31, %                
  2020   2019   Change                
  (in thousands)                    
Backlog $ 103,508     $ 142,747     (27.5) %                
Cash & cash equivalents & restricted cash 70,845     44,373     59.7 %                
Total current liabilities 76,620     56,028     36.8 %                

Gary Fields, CEO, said "It has been a challenging quarter for us.  As an essential business, we were able to maintain continuous operations during the quarter but our workforce was impacted by employee absences, most significantly in the latter part of June.  These unexpected employee absences resulted in reduced shipments and longer lead times.  Our dedicated team members worked hard to overcome the challenges as demonstrated by our positive results reflected above.  Our improved efficiency, fiscal responsibility and declining raw material costs helped us improve our gross profit and bottom line."

Mr. Fields continued, "Thankfully, most of our workforce affected by COVID-19 has recovered and returned to work, resulting in significant improvement in our employee absenteeism levels in the first part of July.  We continuously work to keep our workforce safe and healthy.  We have implemented several safety procedures concerning COVID-19 including mandatory use of masks, daily temperature scanning and health screens of all employees and visitors at our facilities."

Mr. Fields added "Our financial condition remains strong as evidenced by our current ratio of 2.9:1 at June 30, 2020.   We had unrestricted cash and cash equivalents of $61.3 million as of June 30, 2020, which, along with improved free cash flow, enabled us to declare an $0.19 per share semi-annual cash dividend, paid on July 1, 2020, an 18.8% increase from the $0.16 semi-annual dividend paid last year.  Our capital expenditures during the first half of the year were $33.5 million, as compared to $16.8 million for the same period a year ago, and we anticipate our full-year 2020 capital expenditures will total approximately $73.2 million."

Mr. Fields concluded, "Our incoming order rate has recently softened slightly due to less than optimal lead times and turmoil in the market resulting from COVID-19.  We are back on schedule and anticipate orders will increase as our lead times improve during our peak selling season.  Uncertainty in the education industry could negatively impact our employee attendance levels as well as our bookings.  The outlook for the remainder of the year is hard to predict during these uncertain times.  Despite this uncertainty, we remain cautiously optimistic that the year will end with modest revenue growth over 2019."

The Company will host a conference call today at 4:15 P.M. (Eastern Time) to discuss the second quarter 2020 results. To participate, call 1-833-634-8218 (code 9699424); or, for rebroadcast available through August 20, 2020, call 1-855-859-2056 (code 9699424).

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   June 30,   Six Months Ended   June 30,
  2020   2019   2020   2019
  (in thousands, except share and per share data)
Net sales $ 125,596     $ 119,437     $ 263,079       $ 233,259    
Cost of sales 87,465     89,233     182,001       177,625    
Gross profit 38,131     30,204     81,078       55,634    
Selling, general and administrative expenses 15,939     12,912     31,153       26,589    
Loss (gain) on disposal of assets —      6     (62 )     290    
Income from operations 22,192     17,286     49,987       28,755    
Interest income, net 19     31     80       40    
Other income (expense), net 32     17     5       (9 )  
Income before taxes 22,243     17,334     50,072       28,786    
Income tax provision 4,439     3,943     10,415       6,638    
Net income $ 17,804     $ 13,391     $ 39,657       $ 22,148    
Earnings per share:              
Basic $ 0.34     $ 0.26     $ 0.76       $ 0.43    
Diluted $ 0.34     $ 0.25     $ 0.75       $ 0.42    
Cash dividends declared per common share: $ 0.19     $ 0.16     $ 0.19       $ 0.16    
Weighted average shares outstanding:              
Basic 52,099,694     52,120,272     52,160,348       52,087,626    
Diluted 52,750,401     52,747,199     52,885,491       52,589,845    
AAON, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
  June 30, 2020   December 31, 2019
Assets (in thousands, except share and per share data)
Current assets:      
Cash and cash equivalents $ 61,284      $ 26,797   
Restricted cash 9,561      17,576   
Accounts receivable, net 56,394      67,399   
Income tax receivable 5,154      772   
Note receivable 28      29   
Inventories, net 85,411      73,601   
Prepaid expenses and other 1,943      1,375   
Total current assets 219,775      187,549   
Property, plant and equipment:      
Land 3,804      3,274   
Buildings 112,735      101,113   
Machinery and equipment 260,548      236,087   
Furniture and fixtures 17,926      16,862   
Total property, plant and equipment 395,013      357,336   
Less: Accumulated depreciation 190,585      179,242   
Property, plant and equipment, net 204,428      178,094   
Intangible assets, net 155      272   
Goodwill 3,229      3,229   
Right of use assets 1,665      1,683   
Note receivable 555      597   
Total assets $ 429,807      $ 371,424   
       
Liabilities and Stockholders' Equity      
Current liabilities:      
Revolving credit facility $ —      $ —   
Accounts payable 19,698      11,759   
Dividends payable 9,930      —   
Accrued liabilities 46,992      44,269   
Total current liabilities 76,620      56,028   
Deferred tax liabilities 20,358      15,297   
Other long-term liabilities 3,794      3,639   
New market tax credit obligation 6,340      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, 52,234,119 and 52,078,515 issued and outstanding at June 30, 2020 and December 31, 2019, respectively 209      208   
Additional paid-in capital 6,451      3,631   
Retained earnings 316,035      286,301   
Total stockholders' equity 322,695      290,140   
Total liabilities and stockholders' equity $ 429,807      $ 371,424   
AAON, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
  Six Months Ended   June 30,
  2020   2019
Operating Activities (in thousands)
Net income $ 39,657       $ 22,148    
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization 12,340       11,760    
Amortization of debt issuance cost 20       —     
Provision for losses on accounts receivable, net of adjustments 76       128    
Provision for excess and obsolete inventories (193 )     1,153    
Share-based compensation 5,694       7,786    
(Gain) loss on disposition of assets (62 )     290    
Foreign currency transaction loss (gain) 30       (13 )  
Interest income on note receivable (12 )     (26 )  
Deferred income taxes 5,061       3,318    
Changes in assets and liabilities:      
Accounts receivable 10,929       (14,983 )  
Income taxes (4,382 )     2,925    
Inventories (11,617 )     (585 )  
Prepaid expenses and other (568 )     (650 )  
Accounts payable 2,893       (2,592 )  
Deferred revenue 473       172    
Accrued liabilities 2,423       5,041    
Net cash provided by operating activities 62,762       35,872    
Investing Activities      
Capital expenditures (33,510 )     (16,784 )  
Proceeds from sale of property, plant and equipment 61       59    
Investment in certificates of deposits —        (6,000 )  
Maturities of certificates of deposits —        2,000    
Principal payments from note receivable 25       28    
Net cash used in investing activities (33,424 )     (20,697 )  
Financing Activities      
Stock options exercised 14,173       7,685    
Repurchase of stock (15,937 )     (10,191 )  
Employee taxes paid by withholding shares (1,102 )     (980 )  
Net cash used in financing activities (2,866 )     (3,486 )  
Net increase in cash, cash equivalents and restricted cash 26,472       11,689    
Cash, cash equivalents and restricted cash, beginning of period 44,373       1,994    
Cash, cash equivalents and restricted cash, end of period $ 70,845       $ 13,683    

 

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