AAON, Inc. (NASDAQ-AAON) today announced its operating results for
the first quarter and three months ended March 31, 2019.
In the quarter ended March 31, 2019, net
sales were $113.8 million, up 14.9% from $99.1 million in 2018. Net
income was $10.9 million, an increase of 155.9% from $4.3 million
in the same period a year ago. Earnings per diluted share for
the three months ended March 31, 2019 were $0.21, an increase of
162.5% from $0.08 in 2018, based upon 52.4 million and 52.9 million
shares outstanding at March 31, 2019 and 2018,
respectively.
Our backlog at March 31, 2019, increased
9.7% to $166.6 million, from $151.8 million at December 31, 2018,
and increased 125% from $74.1 million at March 31, 2018.
Gross profit increased 67.6% to $25.8 million
(22.7% of sales) versus $15.4 million (15.5% of sales).
Norman H. Asbjornson, CEO, said, "While we witnessed increases in
both labor and raw material costs, the price increases implemented
during the second half of 2018, as well as increased productivity
and higher sales helped partially offset these costs and had a
positive impact on our gross margins in the first quarter. We
expect our gross margins will continue to recover as our production
increases and we work through the lower-priced portion of our
backlog."
For the three months ended March 31, 2019,
selling, general and administrative expenses increased 7.7% to
$11.0 million (9.7% of sales) compared to $10.2 million (10.3% of
sales) for the same period a year ago, positively impacted by
moderating warranty costs, which we believe have stabilized.
Mr. Asbjornson continued, "Strong sales
supported by an increasing backlog coupled with improving margins,
secure financial condition (current ratio of 3.3:1, including cash
totaling $7.1 million) and debt free balance sheet provide a solid
foundation for future growth."
Gary Fields, President, stated, "We continue to
gradually strengthen our manufacturing personnel and are beginning
to witness increases in our production capacity as a result of our
improved employee training and on-boarding initiatives. We are also
improving our sheet metal manufacturing operations and we
anticipate these enhancements will enable us to optimize our sheet
metal manufacturing capacity before the end of the year."
Mr. Fields concluded, "As we continue to work
through our lower-priced backlog and also improve productivity, we
believe the Company is well positioned to capitalize on what we
anticipate to be a sustainable growth opportunity as we enter our
peak season."
The Company will host a conference call today at
4:15 P.M. Eastern Time to discuss the first quarter results. To
participate, call 1-888-241-0551 (code 5189007); or, for
rebroadcast, call 1-855-859-2056 (code 5189007).
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 March
31, |
|
2019 |
|
2018 |
|
|
|
(in thousands, except share and per share data) |
Net sales |
$ |
113,822 |
|
|
$ |
99,082 |
|
Cost of sales |
88,029 |
|
|
83,692 |
|
Gross profit |
25,793 |
|
|
15,390 |
|
Selling, general and
administrative expenses |
11,001 |
|
|
10,219 |
|
Loss (gain) on disposal
of assets |
284 |
|
|
(7 |
) |
Income from
operations |
14,508 |
|
|
5,178 |
|
Interest income,
net |
9 |
|
|
68 |
|
Other expense, net |
(26 |
) |
|
(6 |
) |
Income before
taxes |
14,491 |
|
|
5,240 |
|
Income tax
provision |
3,589 |
|
|
980 |
|
Net income |
$ |
10,902 |
|
|
$ |
4,260 |
|
Earnings per
share: |
|
|
|
Basic |
$ |
0.21 |
|
|
$ |
0.08 |
|
Diluted |
$ |
0.21 |
|
|
$ |
0.08 |
|
Weighted average shares
outstanding: |
|
|
|
Basic |
51,992,150 |
|
|
52,433,902 |
|
Diluted |
52,369,660 |
|
|
52,910,223 |
|
AAON, Inc. and Subsidiaries |
|
Consolidated Balance Sheets |
|
(Unaudited) |
|
|
|
March 31,
2019 |
|
|
December
31, 2018 |
|
|
|
|
|
Assets |
|
(in thousands, except share and per share data) |
|
Current assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
7,143 |
|
|
$ |
1,994 |
|
Accounts receivable, net |
58,688 |
|
|
54,078 |
|
Income tax receivable |
4,756 |
|
|
6,104 |
|
Note receivable |
27 |
|
|
27 |
|
Inventories, net |
74,577 |
|
|
77,612 |
|
Prepaid expenses and other |
1,607 |
|
|
1,046 |
|
Total
current assets |
146,798 |
|
|
140,861 |
|
Property,
plant and equipment: |
|
|
|
Land |
3,114 |
|
|
3,114 |
|
Buildings |
98,394 |
|
|
97,393 |
|
Machinery and equipment |
215,928 |
|
|
212,779 |
|
Furniture and fixtures |
17,079 |
|
|
16,597 |
|
Total property, plant and equipment |
334,515 |
|
|
329,883 |
|
Less: Accumulated depreciation |
167,863 |
|
|
166,880 |
|
Property,
plant and equipment, net |
166,652 |
|
|
163,003 |
|
Intangible
assets, net |
447 |
|
|
506 |
|
Goodwill |
3,229 |
|
|
3,229 |
|
Right of
use assets |
1,796 |
|
|
— |
|
Note
receivable |
603 |
|
|
598 |
|
Total
assets |
$ |
319,525 |
|
|
$ |
308,197 |
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
Current
liabilities: |
|
|
|
Revolving credit facility |
$ |
— |
|
|
$ |
— |
|
Accounts payable |
5,947 |
|
|
10,616 |
|
Accrued liabilities |
38,053 |
|
|
37,455 |
|
Total
current liabilities |
44,000 |
|
|
48,071 |
|
Deferred
tax liabilities |
12,713 |
|
|
10,826 |
|
Other
long-term liabilities |
3,442 |
|
|
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,
52,099,274 and 51,991,242 issued and outstanding at March 31, 2019
and December 31, 2018, respectively |
208 |
|
|
208 |
|
Additional paid-in capital |
969 |
|
|
— |
|
Retained earnings |
258,193 |
|
|
247,291 |
|
Total
stockholders' equity |
259,370 |
|
|
247,499 |
|
Total
liabilities and stockholders' equity |
$ |
319,525 |
|
|
$ |
308,197 |
|
AAON, Inc. and Subsidiaries |
Consolidated Statements of Cash
Flows |
(Unaudited) |
|
Three Months EndedMarch 31 |
|
2019 |
|
2018 |
|
|
Operating
Activities |
(in thousands) |
Net income |
$ |
10,902 |
|
|
$ |
4,260 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Depreciation and amortization |
5,914 |
|
|
4,129 |
|
Amortization of bond premiums |
— |
|
|
5 |
|
Provision for losses on accounts receivable, net of
adjustments |
115 |
|
|
(11 |
) |
Provision for excess and obsolete inventories |
357 |
|
|
101 |
|
Share-based compensation |
2,030 |
|
|
1,724 |
|
Loss (gain) on disposition of assets |
284 |
|
|
(7 |
) |
Foreign currency transaction gain |
(16 |
) |
|
3 |
|
Interest income on note receivable |
(6 |
) |
|
9 |
|
Deferred income taxes |
1,887 |
|
|
420 |
|
Changes in assets and liabilities: |
|
|
|
Accounts receivable |
(4,725 |
) |
|
(2,897 |
) |
Income taxes |
1,348 |
|
|
(5,673 |
) |
Inventories |
2,678 |
|
|
3,447 |
|
Prepaid expenses and other |
(561 |
) |
|
(712 |
) |
Accounts payable |
(5,730 |
) |
|
9,833 |
|
Deferred revenue |
25 |
|
|
37 |
|
Accrued liabilities and donations |
411 |
|
|
(3,924 |
) |
Net cash provided by operating activities |
14,913 |
|
|
10,744 |
|
Investing Activities |
|
|
|
Capital expenditures |
(8,772 |
) |
|
(8,451 |
) |
Cash paid in business combination |
— |
|
|
(6,000 |
) |
Proceeds from sale of property, plant and equipment |
52 |
|
|
6 |
|
Investment in certificates of deposits |
— |
|
|
(4,320 |
) |
Maturities of certificates of deposits |
— |
|
|
1,200 |
|
Purchases of investments held to maturity |
— |
|
|
(7,495 |
) |
Maturities of investments |
— |
|
|
4,230 |
|
Proceeds from called investments |
— |
|
|
395 |
|
Principal payments from note receivable |
17 |
|
|
14 |
|
Net cash used in investing activities |
(8,703 |
) |
|
(20,421 |
) |
Financing Activities |
|
|
|
Stock options exercised |
4,010 |
|
|
1,340 |
|
Repurchase of stock |
(4,483 |
) |
|
(4,379 |
) |
Employee taxes paid by withholding shares |
(588 |
) |
|
(568 |
) |
Net cash used in financing activities |
(1,061 |
) |
|
(3,607 |
) |
Net
increase (decrease) in cash and cash
equivalents |
5,149 |
|
|
(13,284 |
) |
Cash and cash equivalents, beginning of
period |
1,994 |
|
|
21,457 |
|
Cash and cash
equivalents, end of period |
$ |
7,143 |
|
|
$ |
8,173 |
|
Use of Non-GAAP Financial Measures
To supplement the Company’s consolidated
financial statements presented in accordance with generally
accepted accounting principles (“GAAP”), an additional non-GAAP
financial measure is provided and reconciled in the following
table. The Company believes that this non-GAAP financial measure,
when considered together with the GAAP financial measures, provides
information that is useful to investors in understanding
period-over-period operating results. The Company believes that
this non-GAAP financial measure enhances 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 and amortization, (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 EndedMarch
31, |
|
|
2019 |
|
|
2018 |
|
|
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income, a GAAP
measure |
$ |
10,902 |
|
|
$ |
4,260 |
|
Depreciation and
amortization |
5,914 |
|
|
4,129 |
|
Amortization of bond
premiums |
— |
|
|
5 |
|
Share-based
compensation |
2,030 |
|
|
1,724 |
|
Interest income |
(9 |
) |
|
(73 |
) |
Income tax expense |
3,589 |
|
|
980 |
|
EBITDAX, a non-GAAP
measure |
$ |
22,426 |
|
|
$ |
11,025 |
|
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