AAON Reports Earnings & Backlog For The First Quarter Of 2021
May 06 2021 - 7:00AM
AAON, INC. (NASDAQ-AAON), today announced its results for the first
quarter of 2021.
Financial
Highlights: |
Three Months Ended March
31, |
|
% |
|
2021 |
|
2020 |
|
Change |
|
(in thousands, except share and per share data) |
Net sales |
$ |
115,788 |
|
|
$ |
137,483 |
|
|
(15.8 |
)% |
Gross profit |
33,157 |
|
|
42,947 |
|
|
(22.8 |
)% |
Gross profit % |
28.6 |
% |
|
31.2 |
% |
|
|
Selling, general and admin.
expenses |
$ |
14,696 |
|
|
$ |
15,214 |
|
|
(3.4 |
)% |
SG&A % |
12.7 |
% |
|
11.1 |
% |
|
|
Net income |
16,376 |
|
|
21,853 |
|
|
(25.1 |
)% |
Net income % |
14.1 |
% |
|
15.9 |
% |
|
|
Effective Tax Rate |
11.4 |
% |
|
21.5 |
% |
|
|
Earnings per diluted
share |
$ |
0.30 |
|
|
$ |
0.41 |
|
|
(26.8 |
)% |
Diluted average shares |
53,814,644 |
|
|
52,871,419 |
|
|
1.8 |
% |
|
|
|
|
|
|
|
March 31, |
|
December 31, |
% |
|
2021 |
|
2020 |
|
Change |
|
(in thousands) |
|
|
Backlog |
$ |
96,733 |
|
|
$ |
74,417 |
|
|
30.0 |
% |
Cash & cash equivalents
& restricted cash |
97,772 |
|
|
82,288 |
|
|
18.8 |
% |
Total current liabilities |
66,679 |
|
|
59,033 |
|
|
13.0 |
% |
Net sales for the first quarter of 2021
decreased 15.8% to $115.8 million from $137.5 million in the first
quarter of 2020. The year over year decline in net sales was
partially attributable to fewer production days due to an extended
holiday shutdown in early January and winter storm in February and
is a reflection of our markets temporarily moderating at the end of
2020. Moreover, the prior year quarter was an all time record for
the Company creating a tough relative comparison. The Company
reported diluted EPS of $0.30, down 26.8% from $0.41 in the prior
year period. The decline in EPS was largely due to the lower
recognized revenue, partially offset by a lower effective tax rate.
The lower tax rate compared to a year ago mainly related to a $1.8
million increase in excess tax benefits associated with stock
awards.
The Company finished the quarter with a backlog
of $96.7 million, down from $119.6 million one year ago but up from
$74.4 million at the end of 2020. The sequential improvement
reflects the improved demand that we experienced throughout the
first quarter. New bookings in the quarter increased 21% compared
to the same period one year ago. Demand has continued to strengthen
through April. As of May 1, 2021, backlog was approximately $104.5
million.
Gary Fields, President and CEO, noted, "As we've
mentioned in our prior releases, we were previously overwhelmed
with customer orders and did not have the capacity to handle all
these orders which lead to lengthy lead times in 2019. We spent
most of that year adding several Salvagnini sheet metal fabrication
machines and rearranging our production lines for more efficient
production. In Longview, we started construction of our 224,000
square feet building which also housed additional Salvagninis and
was completed in early 2021. As all this was happening, we had our
lead times come down which resulted in a record breaking year in
2020. Although the pandemic caused new construction to slow down,
our customers started to increase their replacement orders in early
2021 as demonstrated in the growth of our backlog."
Gary Fields, President and CEO, said,
“Considering our soft backlog entering the quarter combined with
the challenges we faced related to the new construction market as
well as the adverse weather at both of our facilities in February,
we are pleased with our performance in the first quarter of the
year. The year over year decline in revenue and earnings was
unsurprising considering the all-time record quarter we realized in
the first quarter of 2020. We believe the fact that our performance
in the first quarter of 2021 was very similar to the fourth quarter
of 2020 suggests our business has stabilized and has already begun
to pick up after some moderation we experienced at the end of last
year.”
Mr. Fields added, “We are confident demand is
improving. Our backlog at the beginning of May was up considerably
from both the end 2020 and the end of the first quarter.
Replacement demand is already improving as the economy recovers,
and while the new construction market is still facing some
challenges, we are beginning to see signs of stabilization.
Inflation remains a challenge, but we are confident we will be able
to maintain our margin through disciplined price management. In
conclusion, as we look to the rest of the year, we continue to
anticipate revenue and earnings will progressively improve
throughout 2021.”
As of March 31, 2021, the Company had no debt
and unrestricted cash and cash equivalents of $97.0 million, which
is up from $79.0 million at the end of 2020. Capital expenditures
during the first three months of 2021 were $16.4 million, as
compared to $21.9 million for the same period a year ago. Rebecca
Thompson, CFO, stated, “We continue to 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 first quarter 2021 results.
To participate, call 1-888-241-0551 (code 7788949); or, for
rebroadcast available through May 13, 2021, call 1-855-859-2056
(code 7788949).
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 March
31, |
|
|
2021 |
|
2020 |
|
(in thousands, except share and per share data) |
Net sales |
|
$ |
115,788 |
|
|
$ |
137,483 |
|
Cost of sales |
|
82,631 |
|
|
94,536 |
|
Gross profit |
|
33,157 |
|
|
42,947 |
|
Selling, general and
administrative expenses |
|
14,696 |
|
|
15,214 |
|
(Gain) loss on disposal of
assets |
|
— |
|
|
(62 |
) |
Income from operations |
|
18,461 |
|
|
27,795 |
|
Interest income, net |
|
3 |
|
|
61 |
|
Other income (expense),
net |
|
17 |
|
|
(27 |
) |
Income before taxes |
|
18,481 |
|
|
27,829 |
|
Income tax provision |
|
2,105 |
|
|
5,976 |
|
Net income |
|
$ |
16,376 |
|
|
$ |
21,853 |
|
Earnings per share: |
|
|
|
|
Basic |
|
$ |
0.31 |
|
|
$ |
0.42 |
|
Diluted |
|
$ |
0.30 |
|
|
$ |
0.41 |
|
Weighted average shares
outstanding: |
|
|
|
|
Basic |
|
52,293,464 |
|
|
52,071,839 |
|
Diluted |
|
53,814,644 |
|
|
52,871,419 |
|
AAON, Inc. and Subsidiaries |
Consolidated Balance Sheets |
(Unaudited) |
|
March 31, 2021 |
|
December 31, 2020 |
Assets |
(in thousands, except share and per share data) |
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
97,047 |
|
|
$ |
79,025 |
|
Restricted cash |
725 |
|
|
3,263 |
|
Accounts receivable, net of allowance for credit losses of $493 and
$506, respectively |
52,579 |
|
|
47,387 |
|
Income tax receivable |
7,353 |
|
|
4,587 |
|
Note receivable |
32 |
|
|
31 |
|
Inventories, net |
84,040 |
|
|
82,219 |
|
Prepaid expenses and other |
3,631 |
|
|
3,739 |
|
Total current assets |
245,407 |
|
|
220,251 |
|
Property, plant and
equipment: |
|
|
|
Land |
4,109 |
|
|
4,072 |
|
Buildings |
126,090 |
|
|
122,171 |
|
Machinery and equipment |
292,961 |
|
|
281,266 |
|
Furniture and fixtures |
19,971 |
|
|
18,956 |
|
Total property, plant and equipment |
443,131 |
|
|
426,465 |
|
Less: Accumulated depreciation |
210,483 |
|
|
203,125 |
|
Property, plant and equipment,
net |
232,648 |
|
|
223,340 |
|
Goodwill and intangible
assets, net |
3,229 |
|
|
3,267 |
|
Right of use assets |
1,522 |
|
|
1,571 |
|
Note receivable |
578 |
|
|
579 |
|
Total assets |
$ |
483,384 |
|
|
$ |
449,008 |
|
|
|
|
|
Liabilities and
Stockholders' Equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
17,615 |
|
|
$ |
12,447 |
|
Accrued liabilities |
49,064 |
|
|
46,586 |
|
Total current liabilities |
66,679 |
|
|
59,033 |
|
Deferred tax liabilities |
32,982 |
|
|
28,324 |
|
Other long-term
liabilities |
4,312 |
|
|
4,423 |
|
New market tax credit
obligation |
6,373 |
|
|
6,363 |
|
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,
52,423,579 and 52,224,767 issued and outstanding at March 31,
2021 and December 31, 2020, respectively |
210 |
|
|
209 |
|
Additional paid-in capital |
10,957 |
|
|
5,161 |
|
Retained earnings |
361,871 |
|
|
345,495 |
|
Total stockholders'
equity |
373,038 |
|
|
350,865 |
|
Total liabilities and
stockholders' equity |
$ |
483,384 |
|
|
$ |
449,008 |
|
AAON, Inc. and Subsidiaries |
Consolidated Statements of Cash Flows |
(Unaudited) |
|
Three Months Ended March
31, |
|
2021 |
|
2020 |
Operating
Activities |
(in thousands) |
Net income |
$ |
16,376 |
|
|
$ |
21,853 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Depreciation and amortization |
7,398 |
|
|
6,002 |
|
Amortization of debt issuance cost |
10 |
|
|
10 |
|
(Recovery of) provision for credit losses on accounts receivable,
net of adjustments |
(13 |
) |
|
294 |
|
Provision for excess and obsolete inventories |
(194 |
) |
|
(274 |
) |
Share-based compensation |
2,761 |
|
|
2,351 |
|
(Gain) loss on disposition of assets |
— |
|
|
(62 |
) |
Foreign currency transaction (gain) loss |
(8 |
) |
|
51 |
|
Interest income on note receivable |
(6 |
) |
|
(6 |
) |
Deferred income taxes |
4,658 |
|
|
(167 |
) |
Changes in assets and liabilities: |
|
|
|
Accounts receivable |
(5,179 |
) |
|
(2,789 |
) |
Income taxes |
(2,766 |
) |
|
772 |
|
Inventories |
(1,627 |
) |
|
1,020 |
|
Prepaid expenses and other |
108 |
|
|
(670 |
) |
Accounts payable |
4,904 |
|
|
2,742 |
|
Deferred revenue |
2,358 |
|
|
229 |
|
Accrued liabilities |
58 |
|
|
6,241 |
|
Net cash provided by operating activities |
28,838 |
|
|
37,597 |
|
Investing
Activities |
|
|
|
Capital expenditures |
(16,404 |
) |
|
(21,877 |
) |
Proceeds from sale of property, plant and equipment |
— |
|
|
61 |
|
Principal payments from note receivable |
14 |
|
|
12 |
|
Net cash used in investing activities |
(16,390 |
) |
|
(21,804 |
) |
Financing
Activities |
|
|
|
Stock options exercised |
9,438 |
|
|
4,497 |
|
Repurchase of stock |
(5,185 |
) |
|
(11,565 |
) |
Employee taxes paid by withholding shares |
(1,217 |
) |
|
(953 |
) |
Net cash provided by (used in) financing activities |
3,036 |
|
|
(8,021 |
) |
Net increase in cash,
cash equivalents and restricted cash |
15,484 |
|
|
7,772 |
|
Cash, cash equivalents
and restricted cash, beginning of period |
82,288 |
|
|
44,373 |
|
Cash, cash equivalents
and restricted cash, end of period |
$ |
97,772 |
|
|
$ |
52,145 |
|
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