AAON Reports Record Sales and Earnings For 2020
February 25 2021 - 7:00AM
AAON, INC. (NASDAQ-AAON), today announced its results for the
fourth quarter of 2020.
Financial
Highlights: |
Three Months Ended December
31, |
|
% |
|
Years Ending December
31, |
|
% |
|
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
|
(in thousands, except share and per share data) |
|
(in thousands, except share and per share data) |
Net sales |
$ |
116,700 |
|
|
$ |
122,574 |
|
|
(4.8 |
)% |
|
$ |
514,551 |
|
|
$ |
469,333 |
|
|
9.6 |
% |
Gross profit |
33,923 |
|
|
36,381 |
|
|
(6.8 |
)% |
|
155,849 |
|
|
119,425 |
|
|
30.5 |
% |
Gross profit % |
29.1 |
% |
|
29.7 |
% |
|
|
|
30.3 |
% |
|
25.4 |
% |
|
|
Selling, general and admin.
expenses |
$ |
14,622 |
|
|
$ |
13,114 |
|
|
11.5 |
% |
|
$ |
60,491 |
|
|
$ |
52,077 |
|
|
16.2 |
% |
SG&A % |
12.5 |
% |
|
10.7 |
% |
|
|
|
11.8 |
% |
|
11.1 |
% |
|
|
Net income* |
18,892 |
|
|
17,273 |
|
|
9.4 |
% |
|
79,009 |
|
|
53,711 |
|
|
47.1 |
% |
Net income % |
16.2 |
% |
|
14.1 |
% |
|
|
|
15.4 |
% |
|
11.4 |
% |
|
|
Effective Tax Rate |
26.6 |
% |
|
25.6 |
% |
|
|
|
22.5 |
% |
|
19.9 |
% |
|
|
Earnings per diluted
share* |
$ |
0.35 |
|
|
$ |
0.33 |
|
|
6.1 |
% |
|
$ |
1.49 |
|
|
$ |
1.02 |
|
|
46.1 |
% |
Diluted average shares |
53,469,759 |
|
|
52,701,202 |
|
|
1.5 |
% |
|
53,061,169 |
|
|
52,635,415 |
|
|
0.8 |
% |
*Includes $4.1 million or $0.08 per share related to a gain from
insurance proceeds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
December 31, |
% |
|
|
|
|
|
|
|
2020 |
|
2019 |
|
Change |
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|
|
|
Backlog |
$ |
74,417 |
|
|
$ |
142,747 |
|
|
(47.9 |
)% |
|
|
|
|
|
|
Cash & cash equivalents
& restricted cash |
82,288 |
|
|
44,373 |
|
|
85.4 |
% |
|
|
|
|
|
|
Total current liabilities |
59,033 |
|
|
56,028 |
|
|
5.4 |
% |
|
|
|
|
|
|
Net sales for the fourth quarter 2020 decreased
to $116.7 million from $122.6 million in 2019 primarily as a result
of this year's six additional days of planned plant holiday closure
at the end of December 2020. The Company reported diluted EPS of
$0.35, up 6.1% from $0.33 in the prior year period. The Company had
a gain of $4.1 million, net of profit sharing and taxes, associated
with insurance proceeds related to a damaged roof incurred by
adverse weather earlier in the year, which impacted our diluted EPS
by $0.08.
The Company finished the quarter with a backlog
of $74.4 million. The decline in backlog was related to initiatives
made to improve productivity and lead times to meet customer
delivery expectations. New bookings in the quarter
increased 6% compared to the same period one year
ago. As of February 1, 2021, our backlog was approximately
$103.8 million, compared to $129.2 million at February 1,
2020.
For the twelve months ending December 31, 2020,
sales were a record $514.6 million, an increase of 9.6% compared
with $469.3 million in 2019. Diluted earnings per share increased
46.1% to $1.49.
Gary Fields, President and CEO, said, "We are
pleased to report all-time record sales and earnings in 2020
compared to any other year in our Company's history. I am
especially proud we achieved these results in a year that presented
many challenges to the Company and our end-markets. Achieving
organic sales growth of nearly 10% while simultaneously improving
our gross margins by 490 basis points to 30.3% is truly an
achievement. At the same time, we continued to invest in growth as
our capex spend for the year was up 82.4%, amounting to 13.2% of
sales."
Mr. Fields continued, "Our fourth quarter
results demonstrate demand slowed as we finished the year. The
outlook for 2021 continues to present uncertainty, especially for
the first half of the year. Architectural billings and
nonresidential construction starts in 2020 suggest new construction
demand will be soft, particularly in end-markets significantly
impacted by the COVID-19 pandemic such as the hospitality and
office building markets."
Mr. Fields added, "However, new bookings in the
fourth quarter still grew year-over-year 6% and demand so far in
2021 has been surprisingly solid. Furthermore, we are starting to
see positive signs in our replacement business and certain
end-markets like data centers, warehouses and healthcare. We are
also well positioned to take advantage of our customers' increased
focus on indoor air quality to address COVID challenges, which we
expect will drive incremental demand. Finally, ongoing progress in
our transition from entrepreneurial leadership to a collaborative
team-based management approach, a strengthening sales channel,
improved productivity and lead times, new capacity at our Longview,
Texas facility and a strong product development pipeline keeps us
optimistic on the outlook of our business. While we believe demand
will be soft to start the year, we think activity should be
moderate in the first half and then accelerate in the second
half."
The Company finished 2020 in a strong financial
position as evidenced by a current ratio of 3.7:1 at
December 31, 2020. We had no debt and unrestricted cash and
cash equivalents of $79.0 million as of December 31, 2020. Our
capital expenditures during the twelve months ended
December 31, 2020 were $67.8 million, as compared to $37.2
million for the same period a year ago, and we anticipate our
full-year 2021 capital expenditures will total approximately $70.7
million.
The Company will host a conference call today at
4:15 P.M. (Eastern Time) to discuss the fourth quarter 2020
results. To participate, call 1-833-674-0554 (code 3448509); or,
for rebroadcast available through March 5, 2021, call
1-855-859-2056 (code 3448509).
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 InformationJoseph
MondilloDirector of Investor RelationsPhone: (617)
877-6346Email: joseph.mondillo@aaon.com
AAON, Inc. and Subsidiaries |
Consolidated Statements of Income |
(Unaudited) |
|
|
Three Months Ended December
31, |
|
Years Ending December
31, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
(in thousands, except share and per share data) |
Net sales |
$ |
116,700 |
|
|
$ |
122,574 |
|
|
$ |
514,551 |
|
|
$ |
469,333 |
|
Cost of sales |
82,777 |
|
|
86,193 |
|
|
358,702 |
|
|
349,908 |
|
Gross profit |
33,923 |
|
|
36,381 |
|
|
155,849 |
|
|
119,425 |
|
Selling, general and
administrative expenses |
14,622 |
|
|
13,114 |
|
|
60,491 |
|
|
52,077 |
|
(Gain) loss on disposal of
assets and insurance recoveries |
(6,417 |
) |
|
41 |
|
|
(6,478 |
) |
|
337 |
|
Income from operations |
25,718 |
|
|
23,226 |
|
|
101,836 |
|
|
67,011 |
|
Interest income, net |
(2 |
) |
|
17 |
|
|
88 |
|
|
66 |
|
Other income (expense),
net |
31 |
|
|
(30 |
) |
|
51 |
|
|
(46 |
) |
Income before taxes |
25,747 |
|
|
23,213 |
|
|
101,975 |
|
|
67,031 |
|
Income tax provision |
6,855 |
|
|
5,940 |
|
|
22,966 |
|
|
13,320 |
|
Net income |
$ |
18,892 |
|
|
$ |
17,273 |
|
|
$ |
79,009 |
|
|
$ |
53,711 |
|
Earnings per share: |
|
|
|
|
|
|
|
Basic |
$ |
0.36 |
|
|
$ |
0.33 |
|
|
$ |
1.51 |
|
|
$ |
1.03 |
|
Diluted |
$ |
0.35 |
|
|
$ |
0.33 |
|
|
$ |
1.49 |
|
|
$ |
1.02 |
|
Cash dividends declared per
common share: |
$ |
0.19 |
|
|
$ |
0.16 |
|
|
$ |
0.38 |
|
|
$ |
0.32 |
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
Basic |
52,240,829 |
|
|
52,094,125 |
|
|
52,168,679 |
|
|
52,079,865 |
|
Diluted |
53,469,759 |
|
|
52,701,202 |
|
|
53,061,169 |
|
|
52,635,415 |
|
AAON, Inc. and Subsidiaries |
Consolidated Balance Sheets |
(Unaudited) |
|
December 31, 2020 |
|
December 31, 2019 |
Assets |
(in thousands, except share and per share data) |
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
79,025 |
|
|
$ |
26,797 |
|
Restricted cash |
3,263 |
|
|
17,576 |
|
Accounts receivable, net of allowance for credit losses of $506 and
$353, respectively |
47,387 |
|
|
67,399 |
|
Income tax receivable |
4,587 |
|
|
772 |
|
Note receivable |
31 |
|
|
29 |
|
Inventories, net |
82,219 |
|
|
73,601 |
|
Prepaid expenses and other |
3,739 |
|
|
1,375 |
|
Total current assets |
220,251 |
|
|
187,549 |
|
Property, plant and
equipment: |
|
|
|
Land |
4,072 |
|
|
3,274 |
|
Buildings |
122,171 |
|
|
101,113 |
|
Machinery and equipment |
281,266 |
|
|
236,087 |
|
Furniture and fixtures |
18,956 |
|
|
16,862 |
|
Total property, plant and equipment |
426,465 |
|
|
357,336 |
|
Less: Accumulated depreciation |
203,125 |
|
|
179,242 |
|
Property, plant and equipment,
net |
223,340 |
|
|
178,094 |
|
Intangible assets, net |
38 |
|
|
272 |
|
Goodwill |
3,229 |
|
|
3,229 |
|
Right of use assets |
1,571 |
|
|
1,683 |
|
Note receivable |
579 |
|
|
597 |
|
Total assets |
$ |
449,008 |
|
|
$ |
371,424 |
|
|
|
|
|
Liabilities and
Stockholders' Equity |
|
|
|
Current liabilities: |
|
|
|
Revolving credit facility |
$ |
— |
|
|
$ |
— |
|
Accounts payable |
12,447 |
|
|
11,759 |
|
Accrued liabilities |
46,586 |
|
|
44,269 |
|
Total current liabilities |
59,033 |
|
|
56,028 |
|
Deferred tax liabilities |
28,324 |
|
|
15,297 |
|
Other long-term
liabilities |
4,423 |
|
|
3,639 |
|
New market tax credit
obligation |
6,363 |
|
|
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,
52,224,767 and 52,078,515 issued and outstanding at
December 31, 2020 and December 31, 2019,
respectively |
209 |
|
|
208 |
|
Additional paid-in capital |
5,161 |
|
|
3,631 |
|
Retained earnings |
345,495 |
|
|
286,301 |
|
Total stockholders'
equity |
350,865 |
|
|
290,140 |
|
Total liabilities and
stockholders' equity |
$ |
449,008 |
|
|
$ |
371,424 |
|
AAON, Inc. and Subsidiaries |
Consolidated Statements of Cash Flows |
(Unaudited) |
|
Years Ending December
31, |
|
2020 |
|
2019 |
Operating
Activities |
(in thousands) |
Net income |
$ |
79,009 |
|
|
$ |
53,711 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Depreciation and amortization |
25,634 |
|
|
22,766 |
|
Amortization of debt issuance cost |
43 |
|
|
7 |
|
Provision for credit losses on accounts receivable, net of
adjustments |
153 |
|
|
91 |
|
Provision for excess and obsolete inventories |
1,108 |
|
|
1,454 |
|
Share-based compensation |
11,342 |
|
|
11,799 |
|
(Gain) loss on disposition of assets |
(6,478 |
) |
|
337 |
|
Foreign currency transaction (gain) loss |
(12 |
) |
|
(27 |
) |
Interest income on note receivable |
(24 |
) |
|
(25 |
) |
Deferred income taxes |
13,027 |
|
|
6,038 |
|
Changes in assets and liabilities: |
|
|
|
Accounts receivable |
19,859 |
|
|
(13,412 |
) |
Income taxes |
(3,815 |
) |
|
5,129 |
|
Inventories |
(9,726 |
) |
|
2,557 |
|
Prepaid expenses and other |
(2,364 |
) |
|
(329 |
) |
Accounts payable |
(2,155 |
) |
|
280 |
|
Deferred revenue |
1,010 |
|
|
425 |
|
Accrued liabilities |
2,203 |
|
|
7,124 |
|
Net cash provided by operating activities |
128,814 |
|
|
97,925 |
|
Investing
Activities |
|
|
|
Capital expenditures |
(67,802 |
) |
|
(37,166 |
) |
Proceeds from sale of property, plant and equipment |
60 |
|
|
69 |
|
Insurance proceeds |
6,417 |
|
|
— |
|
Investment in certificates of deposits |
— |
|
|
(6,000 |
) |
Maturities of certificates of deposits |
— |
|
|
6,000 |
|
Principal payments from note receivable |
52 |
|
|
51 |
|
Net cash used in investing activities |
(61,273 |
) |
|
(37,046 |
) |
Financing
Activities |
|
|
|
Proceeds from financing obligation, net of issuance costs |
— |
|
|
6,614 |
|
Payment related to financing costs |
— |
|
|
(301 |
) |
Stock options exercised |
21,418 |
|
|
12,625 |
|
Repurchase of stock |
(30,060 |
) |
|
(19,586 |
) |
Employee taxes paid by withholding shares |
(1,169 |
) |
|
(1,207 |
) |
Dividends paid to stockholders |
(19,815 |
) |
|
(16,645 |
) |
Net cash used in financing activities |
(29,626 |
) |
|
(18,500 |
) |
Net increase in cash,
cash equivalents and restricted cash |
37,915 |
|
|
42,379 |
|
Cash, cash equivalents
and restricted cash, beginning of period |
44,373 |
|
|
1,994 |
|
Cash, cash equivalents
and restricted cash, end of period |
$ |
82,288 |
|
|
$ |
44,373 |
|
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