AAON Reports Earnings & Backlog for the Third Quarter of 2020
November 05 2020 - 7:00AM
AAON, INC. (NASDAQ-AAON), today announced its results for the third
quarter of 2020.
Financial Highlights: |
Three Months Ended September
30, |
|
% |
|
|
|
Nine Months Ended September
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 |
$ |
134,772 |
|
|
$ |
113,500 |
|
|
18.7 |
|
% |
|
|
|
$ |
397,851 |
|
|
$ |
346,759 |
|
|
14.7 |
% |
Gross profit |
40,848 |
|
|
27,410 |
|
|
49.0 |
|
% |
|
|
|
121,926 |
|
|
83,044 |
|
|
46.8 |
% |
Gross profit % |
30.3 |
% |
|
24.1 |
% |
|
|
|
|
|
30.6 |
% |
|
23.9 |
% |
|
|
Selling, general and admin.
expenses |
$ |
14,716 |
|
|
$ |
12,374 |
|
|
18.9 |
|
% |
|
|
|
$ |
45,869 |
|
|
$ |
38,963 |
|
|
17.7 |
% |
SG&A % |
10.9 |
% |
|
10.9 |
% |
|
|
|
|
|
11.5 |
% |
|
11.2 |
% |
|
|
Net income |
20,460 |
|
|
14,290 |
|
|
43.2 |
|
% |
|
|
|
60,117 |
|
|
36,438 |
|
|
65.0 |
% |
Net income % |
15.2 |
% |
|
12.6 |
% |
|
|
|
|
|
15.1 |
% |
|
10.5 |
% |
|
|
Effective Tax Rate |
21.8 |
% |
|
4.9 |
% |
|
|
|
|
|
21.1 |
% |
|
16.8 |
% |
|
|
Earnings per diluted
share |
$ |
0.38 |
|
|
$ |
0.26 |
|
|
46.2 |
|
% |
|
|
|
$ |
1.14 |
|
|
$ |
0.69 |
|
|
65.2 |
% |
Diluted average shares |
53,151,295 |
|
|
52,722,127 |
|
|
0.8 |
|
% |
|
|
|
52,955,049 |
|
|
52,624,583 |
|
|
0.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
December 31, |
|
% |
|
|
|
|
|
|
|
|
|
2020 |
|
2019 |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|
|
|
|
|
Backlog |
$ |
84,885 |
|
|
$ |
142,747 |
|
|
(40.5 |
) |
% |
|
|
|
|
|
|
|
|
Cash & cash equivalents
& restricted cash |
78,601 |
|
|
44,373 |
|
|
77.1 |
|
% |
|
|
|
|
|
|
|
|
Total current liabilities |
61,506 |
|
|
56,028 |
|
|
9.8 |
|
% |
|
|
|
|
|
|
|
|
Gary Fields, CEO, said "We are pleased to report
that our net sales for the third quarter were an all-time
record for any quarter in our Company’s history. I
am especially proud we achieved these results despite a slow start
to the quarter due to a planned maintenance shutdown at our Tulsa
facilities during the beginning of July. In addition, the continued
challenges presented by the COVID-19 pandemic resulted in higher
medical expenses. Our third quarter results demonstrate the
ongoing progress in our transition from entrepreneurial leadership
to a collaborative team-based management approach and
validate our Company’s capability to produce great results
even through challenging times. It should also be
noted that the record sales along with favorable raw material costs
and improved productivity had a significant impact on our
gross profit, which increased to 30.3% from 24.1% for the
corresponding quarter a year ago."
Mr. Fields continued, "The outlook for 2021
continues to present a lot of uncertainty. The Architecture
Billings Index has been down for several months, indicating a
decline in construction, which may start to impact the new
nonresidential construction market in late 2020. Although
construction may decline, our equipment is uniquely positioned to
address COVID challenges by providing heightened filtration and
sanitation through the use of MERV 13 filters, UV lights and
bi-polar ionization installed in the factory. We are
beginning to see increases in raw materials costs, which we are
offsetting in part with our previously announced price increase,
which will be effective January 2021. With approximately 50%
of our total sales already represented by the replacement market,
we are confident of our ability to grow our market share in the
replacement market while we continue to pursue opportunities in the
new construction market. With our improved lead
times, we have been able to continue our planned reduction
of our backlog to a more manageable level and we believe this will
also allow our order intake to stay consistent but
do not see significant growth opportunities in the near term."
Mr. Fields added "Our financial condition
remains strong as evidenced by our current ratio of 3.7:1 at
September 30, 2020. We had unrestricted
cash and cash equivalents of $70.6 million as of September 30,
2020. Our capital expenditures during the nine months
ended September 30, 2020 were $49.0 million, as compared to $30.8
million for the same period a year ago, and we anticipate our
full-year 2020 capital expenditures will total approximately $73.2
million, with $41.3 million directed to our new facility in
Longview Texas."
Mr. Fields concluded, "Our expansion project at
our Longview, Texas facility is nearing completion and the new
building is expected to be operational by January 2021. This
project will not only add 220,000 square feet of additional
capacity to the Longview facility, but will also create additional
space and capacity at our Tulsa facility for future growth
potential."
The Company will host a conference call today at
4:15 P.M. (Eastern Time) to discuss the third quarter 2020 results.
To participate, call 1-833-634-8218 (code 1233199); or, for
rebroadcast available through November 12, 2020, call
1-855-859-2056 (code 1233199).
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 September
30, |
|
Nine Months Ended September
30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
|
(in thousands, except share and per share data) |
Net sales |
$ |
134,772 |
|
|
$ |
113,500 |
|
|
$ |
397,851 |
|
|
$ |
346,759 |
|
Cost of sales |
93,924 |
|
|
86,090 |
|
|
275,925 |
|
|
263,715 |
|
Gross profit |
40,848 |
|
|
27,410 |
|
|
121,926 |
|
|
83,044 |
|
Selling, general and
administrative expenses |
14,716 |
|
|
12,374 |
|
|
45,869 |
|
|
38,963 |
|
Loss (gain) on disposal of
assets |
1 |
|
|
6 |
|
|
(61 |
) |
|
296 |
|
Income from operations |
26,131 |
|
|
15,030 |
|
|
76,118 |
|
|
43,785 |
|
Interest income, net |
10 |
|
|
9 |
|
|
90 |
|
|
49 |
|
Other income (expense),
net |
15 |
|
|
(7 |
) |
|
20 |
|
|
(16 |
) |
Income before taxes |
26,156 |
|
|
15,032 |
|
|
76,228 |
|
|
43,818 |
|
Income tax provision |
5,696 |
|
|
742 |
|
|
16,111 |
|
|
7,380 |
|
Net income |
$ |
20,460 |
|
|
$ |
14,290 |
|
|
$ |
60,117 |
|
|
$ |
36,438 |
|
Earnings per share: |
|
|
|
|
|
|
|
Basic |
$ |
0.39 |
|
|
$ |
0.27 |
|
|
$ |
1.15 |
|
|
$ |
0.70 |
|
Diluted |
$ |
0.38 |
|
|
$ |
0.26 |
|
|
$ |
1.14 |
|
|
$ |
0.69 |
|
Cash dividends declared per
common share: |
$ |
— |
|
|
$ |
— |
|
|
$ |
0.19 |
|
|
$ |
0.16 |
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
Basic |
52,260,551 |
|
|
52,111,444 |
|
|
52,174,705 |
|
|
52,086,209 |
|
Diluted |
53,151,295 |
|
|
52,722,127 |
|
|
52,955,049 |
|
|
52,624,583 |
|
AAON, Inc. and Subsidiaries |
Consolidated Balance Sheets |
(Unaudited) |
|
September 30, 2020 |
|
December 31, 2019 |
|
|
|
|
Assets |
(in thousands, except share and per share data) |
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
70,603 |
|
|
$ |
26,797 |
|
Restricted cash |
7,998 |
|
|
17,576 |
|
Accounts receivable, net of allowance for credit losses of $546 and
$353, respectively |
62,195 |
|
|
67,399 |
|
Income tax receivable |
3,914 |
|
|
772 |
|
Note receivable |
29 |
|
|
29 |
|
Inventories, net |
78,819 |
|
|
73,601 |
|
Prepaid expenses and other |
1,973 |
|
|
1,375 |
|
Total current assets |
225,531 |
|
|
187,549 |
|
Property, plant and
equipment: |
|
|
|
Land |
3,804 |
|
|
3,274 |
|
Buildings |
115,600 |
|
|
101,113 |
|
Machinery and equipment |
267,763 |
|
|
236,087 |
|
Furniture and fixtures |
18,342 |
|
|
16,862 |
|
Total property, plant and equipment |
405,509 |
|
|
357,336 |
|
Less: Accumulated depreciation |
196,631 |
|
|
179,242 |
|
Property, plant and equipment,
net |
208,878 |
|
|
178,094 |
|
Intangible assets, net |
97 |
|
|
272 |
|
Goodwill |
3,229 |
|
|
3,229 |
|
Right of use assets |
1,618 |
|
|
1,683 |
|
Note receivable |
560 |
|
|
597 |
|
Total assets |
$ |
439,913 |
|
|
$ |
371,424 |
|
|
|
|
|
Liabilities and
Stockholders' Equity |
|
|
|
Current liabilities: |
|
|
|
Revolving credit facility |
$ |
— |
|
|
$ |
— |
|
Accounts payable |
16,038 |
|
|
11,759 |
|
Accrued liabilities |
45,468 |
|
|
44,269 |
|
Total current liabilities |
61,506 |
|
|
56,028 |
|
Deferred tax liabilities |
22,973 |
|
|
15,297 |
|
Other long-term
liabilities |
4,191 |
|
|
3,639 |
|
New market tax credit
obligation |
6,351 |
|
|
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,
52,264,801 and 52,078,515 issued and outstanding at
September 30, 2020 and December 31, 2019, respectively |
209 |
|
|
208 |
|
Additional paid-in capital |
8,175 |
|
|
3,631 |
|
Retained earnings |
336,508 |
|
|
286,301 |
|
Total stockholders'
equity |
344,892 |
|
|
290,140 |
|
Total liabilities and
stockholders' equity |
$ |
439,913 |
|
|
$ |
371,424 |
|
AAON, Inc. and Subsidiaries |
Consolidated Statements of Cash Flows |
(Unaudited) |
|
Nine Months Ended September
30, |
|
2020 |
|
2019 |
|
|
|
|
Operating
Activities |
(in thousands) |
Net income |
$ |
60,117 |
|
|
$ |
36,438 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Depreciation and amortization |
18,971 |
|
|
17,627 |
|
Amortization of debt issuance cost |
31 |
|
|
— |
|
Provision for losses on accounts receivable, net of
adjustments |
193 |
|
|
91 |
|
Provision for excess and obsolete inventories |
1,776 |
|
|
1,003 |
|
Share-based compensation |
8,546 |
|
|
9,854 |
|
(Gain) loss on disposition of assets |
(61 |
) |
|
296 |
|
Foreign currency transaction loss (gain) |
18 |
|
|
(17 |
) |
Interest income on note receivable |
(19 |
) |
|
(19 |
) |
Deferred income taxes |
7,676 |
|
|
3,614 |
|
Changes in assets and liabilities: |
|
|
|
Accounts receivable |
5,011 |
|
|
(2,096 |
) |
Income taxes |
(3,142 |
) |
|
2,283 |
|
Inventories |
(6,994 |
) |
|
(4,014 |
) |
Prepaid expenses and other |
(598 |
) |
|
(513 |
) |
Accounts payable |
3,654 |
|
|
782 |
|
Deferred revenue |
1,128 |
|
|
263 |
|
Accrued liabilities |
688 |
|
|
4,991 |
|
Net cash provided by operating activities |
96,995 |
|
|
70,583 |
|
Investing
Activities |
|
|
|
Capital expenditures |
(48,955 |
) |
|
(30,831 |
) |
Proceeds from sale of property, plant and equipment |
61 |
|
|
68 |
|
Investment in certificates of deposits |
— |
|
|
(6,000 |
) |
Maturities of certificates of deposits |
— |
|
|
6,000 |
|
Principal payments from note receivable |
38 |
|
|
39 |
|
Net cash used in investing activities |
(48,856 |
) |
|
(30,724 |
) |
Financing
Activities |
|
|
|
Stock options exercised |
18,519 |
|
|
11,283 |
|
Repurchase of stock |
(21,390 |
) |
|
(15,437 |
) |
Employee taxes paid by withholding shares |
(1,130 |
) |
|
(1,023 |
) |
Cash dividends paid to stockholders |
(9,910 |
) |
|
(8,303 |
) |
Net cash used in financing activities |
(13,911 |
) |
|
(13,480 |
) |
Net increase in cash,
cash equivalents and restricted cash |
34,228 |
|
|
26,379 |
|
Cash, cash equivalents
and restricted cash, beginning of period |
44,373 |
|
|
1,994 |
|
Cash, cash equivalents
and restricted cash, end of period |
$ |
78,601 |
|
|
$ |
28,373 |
|
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