AAON Reports Sales and Earnings for the Fourth Quarter and Year 2019
February 27 2020 - 7:00AM
AAON, INC. (NASDAQ-AAON), today announced its results for the
fourth quarter and full year 2019.
Financial Highlights: |
Three Months Ended December 31, |
|
% |
|
|
|
Years Ended December 31, |
|
% |
|
2019 |
|
2018 |
|
Change |
|
|
|
2019 |
|
2018 |
|
Change |
|
(in thousands, except share and per share data) |
|
|
|
(in thousands, except share and per share data) |
Net sales |
$ |
122,574 |
|
|
$ |
112,340 |
|
|
9.1 |
% |
|
|
|
$ |
469,333 |
|
|
$ |
433,947 |
|
|
8.2 |
% |
Gross profit |
36,381 |
|
|
27,846 |
|
|
30.7 |
% |
|
|
|
119,425 |
|
|
103,533 |
|
|
15.3 |
% |
Gross profit % |
29.7 |
% |
|
24.8 |
% |
|
|
|
|
|
25.4 |
% |
|
23.9 |
% |
|
|
Selling, general and
administrative expenses |
$ |
13,114 |
|
|
$ |
10,723 |
|
|
22.3 |
% |
|
|
|
$ |
52,077 |
|
|
$ |
48,194 |
|
|
8.1 |
% |
Net income |
17,273 |
|
|
12,964 |
|
|
33.2 |
% |
|
|
|
53,711 |
|
|
42,329 |
|
|
26.9 |
% |
Earnings per diluted
share: |
$ |
0.33 |
|
|
$ |
0.25 |
|
|
32.0 |
% |
|
|
|
$ |
1.02 |
|
|
$ |
0.80 |
|
|
27.5 |
% |
Diluted average shares |
52,701,202 |
|
|
52,420,529 |
|
|
0.5 |
% |
|
|
|
52,635,415 |
|
|
52,667,939 |
|
|
(0.1) |
% |
|
As of December 31, |
|
% |
|
|
|
|
|
|
|
|
|
2019 |
|
2018 |
|
Change |
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|
|
|
|
|
Backlog |
$ |
142,747 |
|
|
$ |
151,767 |
|
|
(5.9) |
% |
|
|
|
|
|
|
|
|
Cash & cash
equivalents |
26,797 |
|
|
1,994 |
|
|
1,244 |
% |
|
|
|
|
|
|
|
|
Gary Fields, President, said, “Our increase in
net sales is attributable to our continuing investment in new
manufacturing equipment that has allowed us to capitalize on our
existing workforce as well as reorganize production resources at
our Tulsa facilities. We are witnessing operational and financial
improvements as a direct result. Combined with our 2018 sales price
increases, the result has been record sales for the year of
2019, an increase of 8.2%, as compared to $433.9 million
in 2018.”
Mr. Fields, continued, “We are seeing
improvements in our manufacturing capacity due to additional
Salvagnini sheet metal fabrication machines coming online during
mid-September 2019, evidenced by our results of a record
gross profit in the fourth quarter of 2019. In
addition to improvements in gross profit, we continue to reduce
other costs as evidenced by the decrease in warranty claims paid
for the year down 13.4% from 2018. With our high backlog containing
the 2018 price increases combined with our continual improvements
in operational capacity and efficiency, we expect to witness
improvements in both our sales and earnings in 2020.”
Norman H. Asbjornson, CEO, added, “With a
2020 capital expenditure budget of $73.2 million,
the Company continues to make strategic investments to maintain
future sustainable growth. These investments in both operations and
innovation are being made while maintaining a strong financial
condition evidenced by our current ratio of 3.3:1 at
December 31, 2019. Furthermore, we have unrestricted
cash and cash equivalents of $26.8 million
as of December 31, 2019, 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 fourth quarter and year
2019 results. To participate, call 1-888-241-0551 (code 2880248);
or, for rebroadcast available through March 4, 2020, call
1-855-859-2056 (code 2880248).
Error Correction
The Company noted errors in previously issued
financial statements relating to share-based compensation expense
for stock options and restricted stock awards held by retirement
eligible employees and directors. The Company determined that it
would be appropriate to correct the errors in our previously issued
consolidated financial statements by correcting such financial
statements with the Company’s 2019 annual report. More details,
including the impact to each of the annual and interim financial
statements is described in detail in the Company’s 2019 annual
report. The effect of the error correction for the year ending
December 31, 2018 was a $0.2 million decrease in net income and
$0.01 decrease in our diluted earnings per common share. The effect
of the error correction for the quarter ending December 31, 2018
was a $0.4 million increase in net income and $0.01 increase in our
diluted earnings per common share.
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 |
Unaudited Consolidated Statements of Income |
|
Three Months Ended December
31, |
|
Years Ended December 31, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
(in thousands, except share and per share data) |
Net sales |
$ |
122,574 |
|
|
|
$ |
112,340 |
|
|
|
$ |
469,333 |
|
|
|
$ |
433,947 |
|
|
Cost of sales |
86,193 |
|
|
|
84,494 |
|
|
|
349,908 |
|
|
|
330,414 |
|
|
Gross profit |
36,381 |
|
|
|
27,846 |
|
|
|
119,425 |
|
|
|
103,533 |
|
|
Selling, general and
administrative expenses |
13,114 |
|
|
|
10,723 |
|
|
|
52,077 |
|
|
|
48,194 |
|
|
Loss (gain) on disposal of
assets |
41 |
|
|
|
(3 |
) |
|
|
337 |
|
|
|
(12 |
) |
|
Income from operations |
23,226 |
|
|
|
17,126 |
|
|
|
67,011 |
|
|
|
55,351 |
|
|
Interest income, net |
17 |
|
|
|
25 |
|
|
|
66 |
|
|
|
196 |
|
|
Other (expense) income,
net |
(30 |
) |
|
|
(58 |
) |
|
|
(46 |
) |
|
|
(47 |
) |
|
Income before taxes |
23,213 |
|
|
|
17,093 |
|
|
|
67,031 |
|
|
|
55,500 |
|
|
Income tax provision |
5,940 |
|
|
|
4,129 |
|
|
|
13,320 |
|
|
|
13,171 |
|
|
Net income |
$ |
17,273 |
|
|
|
$ |
12,964 |
|
|
|
$ |
53,711 |
|
|
|
$ |
42,329 |
|
|
Earnings per share: |
|
|
|
|
|
|
|
Basic |
$ |
0.33 |
|
|
|
$ |
0.25 |
|
|
|
$ |
1.03 |
|
|
|
$ |
0.81 |
|
|
Diluted |
$ |
0.33 |
|
|
|
$ |
0.25 |
|
|
|
$ |
1.02 |
|
|
|
$ |
0.80 |
|
|
Cash dividends declared per
common share: |
$ |
0.16 |
|
|
|
$ |
0.16 |
|
|
|
$ |
0.32 |
|
|
|
$ |
0.32 |
|
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
Basic |
52,094,125 |
|
|
|
52,086,247 |
|
|
|
52,079,865 |
|
|
|
52,284,616 |
|
|
Diluted |
52,701,202 |
|
|
|
52,420,529 |
|
|
|
52,635,415 |
|
|
|
52,667,939 |
|
|
AAON, Inc. and Subsidiaries |
Unaudited Consolidated Balance Sheets |
|
December 31, |
|
2019 |
|
2018 |
Assets |
(in thousands, except share and per share data) |
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
26,797 |
|
|
$ |
1,994 |
|
Restricted cash |
17,576 |
|
|
— |
|
Accounts receivable, net |
67,399 |
|
|
54,078 |
|
Income tax receivable |
772 |
|
|
5,901 |
|
Note receivable |
29 |
|
|
27 |
|
Inventories, net |
73,601 |
|
|
77,612 |
|
Prepaid expenses and other |
1,375 |
|
|
1,046 |
|
Total current assets |
187,549 |
|
|
140,658 |
|
Property, plant and
equipment: |
|
|
|
Land |
3,274 |
|
|
3,114 |
|
Buildings |
101,113 |
|
|
97,393 |
|
Machinery and equipment |
236,087 |
|
|
212,779 |
|
Furniture and fixtures |
16,862 |
|
|
16,597 |
|
Total property, plant and equipment |
357,336 |
|
|
329,883 |
|
Less: Accumulated depreciation |
179,242 |
|
|
166,880 |
|
Property, plant and equipment, net |
178,094 |
|
|
163,003 |
|
Intangible assets, net |
272 |
|
|
506 |
|
Goodwill |
3,229 |
|
|
3,229 |
|
Right of use assets |
1,683 |
|
|
— |
|
Note receivable |
597 |
|
|
598 |
|
Total assets |
$ |
371,424 |
|
|
$ |
307,994 |
|
|
|
|
|
Liabilities and
Stockholders' Equity |
|
|
|
Current liabilities: |
|
|
|
Revolving credit facility |
$ |
— |
|
|
$ |
— |
|
Accounts payable |
11,759 |
|
|
10,616 |
|
Accrued liabilities |
44,269 |
|
|
36,875 |
|
Total current liabilities |
56,028 |
|
|
47,491 |
|
Deferred tax liabilities |
15,297 |
|
|
9,259 |
|
Other long-term
liabilities |
3,639 |
|
|
1,801 |
|
New market tax credit
obligation |
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,
52,078,515 and 51,991,242issued and outstanding at December 31,
2019 and 2018, respectively |
208 |
|
|
208 |
|
Additional paid-in capital |
3,631 |
|
|
— |
|
Retained earnings |
286,301 |
|
|
249,235 |
|
Total stockholders'
equity |
290,140 |
|
|
249,443 |
|
Total liabilities and
stockholders' equity |
$ |
371,424 |
|
|
$ |
307,994 |
|
AAON, Inc. and Subsidiaries |
Unaudited Consolidated Statements of Cash
Flows |
|
Years Ended December 31, |
|
2019 |
|
2018 |
Operating
Activities |
(in thousands) |
Net income |
$ |
53,711 |
|
|
|
$ |
42,329 |
|
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Depreciation and amortization |
22,766 |
|
|
|
17,655 |
|
|
Amortization of bond premiums |
— |
|
|
|
13 |
|
|
Amortization of debt issuance costs |
7 |
|
|
|
— |
|
|
Provision for losses on accounts receivable, net of
adjustments |
91 |
|
|
|
174 |
|
|
Provision for excess and obsolete inventories |
1,454 |
|
|
|
152 |
|
|
Share-based compensation |
11,799 |
|
|
|
7,862 |
|
|
Loss (gain) on disposition of assets |
337 |
|
|
|
(12 |
) |
|
Foreign currency transaction (gain) loss |
(27 |
) |
|
|
55 |
|
|
Interest income on note receivable |
(25 |
) |
|
|
(27 |
) |
|
Deferred income taxes |
6,038 |
|
|
|
2,641 |
|
|
Changes in assets and liabilities: |
|
|
|
Accounts receivable |
(13,412 |
) |
|
|
(2,832 |
) |
|
Income tax receivable |
5,129 |
|
|
|
(4,448 |
) |
|
Inventories |
2,557 |
|
|
|
(5,598 |
) |
|
Prepaid expenses and other |
(329 |
) |
|
|
(528 |
) |
|
Accounts payable |
280 |
|
|
|
(1,176 |
) |
|
Deferred revenue |
425 |
|
|
|
412 |
|
|
Accrued liabilities and donations |
7,124 |
|
|
|
(1,816 |
) |
|
Net cash provided by operating activities |
97,925 |
|
|
|
54,856 |
|
|
Investing
Activities |
|
|
|
Capital expenditures |
(37,166 |
) |
|
|
(37,268 |
) |
|
Cash paid in business combination |
— |
|
|
|
(6,377 |
) |
|
Proceeds from sale of property, plant and equipment |
69 |
|
|
|
13 |
|
|
Investment in certificates of deposits |
(6,000 |
) |
|
|
(7,200 |
) |
|
Maturities of certificates of deposits |
6,000 |
|
|
|
10,080 |
|
|
Purchases of investments held to maturity |
— |
|
|
|
(9,001 |
) |
|
Maturities of investments |
— |
|
|
|
14,570 |
|
|
Proceeds from called investments |
— |
|
|
|
495 |
|
|
Principal payments from note receivable |
51 |
|
|
|
53 |
|
|
Net cash used in investing activities |
(37,046 |
) |
|
|
(34,635 |
) |
|
Financing
Activities |
|
|
|
Proceeds from financing obligation, net of issuance costs |
6,614 |
|
|
|
— |
|
|
Payments related to financing costs |
(301 |
) |
|
|
— |
|
|
Stock options exercised |
12,625 |
|
|
|
4,987 |
|
|
Repurchase of stock |
(19,586 |
) |
|
|
(26,846 |
) |
|
Employee taxes paid by withholding shares |
(1,207 |
) |
|
|
(1,097 |
) |
|
Cash dividends paid to stockholders |
(16,645 |
) |
|
|
(16,728 |
) |
|
Net cash used in financing activities |
(18,500 |
) |
|
|
(39,684 |
) |
|
Net increase
(decrease) in cash, cash equivalents and restricted
cash |
42,379 |
|
|
|
(19,463 |
) |
|
Cash, cash equivalents
and restricted cash, beginning of period |
1,994 |
|
|
|
21,457 |
|
|
Cash, cash equivalents
and restricted cash, end of period |
$ |
44,373 |
|
|
|
$ |
1,994 |
|
|
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