AAON Reports Earnings & Backlog for the Second Quarter of 2020
August 06 2020 - 7:00AM
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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