AAON, INC. (NASDAQ-AAON), today announced its results for the
second quarter of 2021.
Financial
Highlights: |
Three Months Ended June
30, |
|
% |
|
|
|
Six Months Ended June
30, |
|
% |
|
2021 |
|
2020 |
|
Change |
|
|
|
2021 |
|
2020 |
|
Change |
|
(in thousands, except share and per share data) |
|
|
|
(in thousands, except share and per share data) |
Net sales |
$ |
143,876 |
|
|
$ |
125,596 |
|
|
14.6 |
% |
|
|
|
$ |
259,664 |
|
|
$ |
263,079 |
|
|
(1.3 |
)% |
Gross profit |
42,107 |
|
|
38,131 |
|
|
10.4 |
% |
|
|
|
75,264 |
|
|
81,078 |
|
|
(7.2 |
)% |
Gross profit % |
29.3 |
% |
|
30.4 |
% |
|
|
|
|
|
29.0 |
% |
|
30.8 |
% |
|
|
Selling, general and admin.
expenses |
$ |
16,895 |
|
|
$ |
15,939 |
|
|
6.0 |
% |
|
|
|
$ |
31,591 |
|
|
$ |
31,153 |
|
|
1.4 |
% |
SG&A % |
11.7 |
% |
|
12.7 |
% |
|
|
|
|
|
12.2 |
% |
|
11.8 |
% |
|
|
Net income |
20,615 |
|
|
17,804 |
|
|
15.8 |
% |
|
|
|
36,991 |
|
|
39,657 |
|
|
(6.7 |
)% |
Net income % |
14.3 |
% |
|
14.2 |
% |
|
|
|
|
|
14.2 |
% |
|
15.1 |
% |
|
|
Effective Tax Rate |
18.3 |
% |
|
20.0 |
% |
|
|
|
|
|
15.4 |
% |
|
20.8 |
% |
|
|
Earnings per diluted
share |
$ |
0.38 |
|
|
$ |
0.34 |
|
|
11.8 |
% |
|
|
|
$ |
0.69 |
|
|
$ |
0.75 |
|
|
(8.0 |
)% |
Diluted average shares |
53,603,932 |
|
|
52,750,401 |
|
|
1.6 |
% |
|
|
|
53,736,134 |
|
|
52,885,491 |
|
|
1.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA, a non-GAAP
measure |
$ |
32,777 |
|
|
$ |
28,562 |
|
|
14.8 |
% |
|
|
|
$ |
58,653 |
|
|
$ |
62,332 |
|
|
(5.9 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
June 30, |
% |
|
|
|
|
|
|
|
|
|
2021 |
|
2020 |
|
Change |
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|
|
|
|
|
Backlog |
$ |
138,131 |
|
|
$ |
103,508 |
|
|
33.4 |
% |
|
|
|
|
|
|
|
|
Cash & cash equivalents
& restricted cash |
112,119 |
|
|
70,845 |
|
|
58.3 |
% |
|
|
|
|
|
|
|
|
Net sales for the three months ended June 30,
2021 increased 14.6% to an all time record high of $143.9 million
from $125.6 million in the same period in 2020. The year over year
increase in net sales was driven by robust replacement demand
broadly across the nonresidential building market that increased
our volume 24.6%. The return to historical employee attendance
levels helped drive our production up year over year which led to
an increase in our overall revenues even as our product mix shifted
to lower priced units. The Company reported diluted EPS of $0.38,
up 11.8% from $0.34 in the prior year period. The increase in EPS
was driven by the higher revenue, improved productivity, lower
SG&A expenses as a percent of sales and a lower tax rate,
partially offset by inflationary cost pressures. The lower tax rate
compared to a year ago was associated with lower corporate income
tax rates in the state of Oklahoma that were signed into law during
the quarter. This resulted in a one-time benefit of $0.8 million,
and will also lower our effective rate starting in 2022.
The Company finished the quarter with a backlog
of $138.1 million, up from $103.5 million one year ago and up from
$96.7 million at the end of the first quarter of 2021. The
sequential improvement in backlog reflects the improved demand that
we experienced throughout the second quarter. New bookings in the
quarter increased approximately 70% compared to the same period one
year ago.
Gary Fields, President and CEO, stated, “Our
performance in the second quarter was better than we expected.
Organic sales growth of 14.6% was particularly noteworthy. Unlike
much of the commercial HVAC market that faced a very easy year over
year comparison due to the effects the pandemic had on the market
in the second quarter of 2020, we did not face such a comparison.
Our sales in the second quarter of 2020 were up year over year 5%
versus the commercial market being down approximately 20%-25%. We
were also pleased with our gross profit performance, especially
considering the inflationary challenges of tight labor markets and
increased raw material costs. We will continue to improve
productivity and increase prices to counteract these cost
pressures.”
Mr. Fields continued, “Looking to the second
half of the year, we are optimistic sales and earnings growth will
accelerate. The backlog at the end of the second quarter was up
33.4% from a year ago and 42.8% from the end of the first quarter,
which positions us well. Order trends are robust and we show no
sign of slowing. We are particularly optimistic considering the new
construction market has yet to recover from the pandemic-related
downturn. That said, we are seeing early signs of a strong recovery
in new construction project planning. In addition to robust demand,
we are optimistic our gross profit will continue to improve. Our
disciplined pricing strategy combined with expected productivity
improvements should drive higher gross and operating profits.
Lastly, we continue to manage the business for the long-term as we
maintain a positive outlook on the fundamentals of the company over
the next several years.”
As of June 30, 2021, the Company had no debt and
unrestricted cash and cash equivalents of $111.4 million, which is
up from $79.0 million at the end of 2020. Capital expenditures
during the first six months of 2021 were $33.2 million, as compared
to $33.5 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 on
August 6, 2021 at 9:00 A.M. (Eastern Time) to discuss the second
quarter 2021 results. To participate, call 1-888-241-0551 (code
6788945); or, for rebroadcast available through August 13, 2021,
call 1-855-859-2056 (code 6788945).
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 StatementsThis
press release includes “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995.
Words such as “expects”, “anticipates”, “intends”, “plans”,
“believes”, “seeks”, “estimates”, “should”, “will”, and variations
of such words and similar expressions are intended to identify such
forward-looking statements. These statements are not guarantees of
future performance and involve certain risks, uncertainties and
assumptions, which are difficult to predict. Therefore, actual
outcomes and results may differ materially from what is expressed
or forecasted in such forward-looking statements. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date on which they are made.
We undertake no obligations to update publicly any forward-looking
statements, whether as a result of new information, future events
or otherwise. Important factors that could cause results to differ
materially from those in the forward-looking statements include (1)
the timing and extent of changes in raw material and component
prices, (2) the effects of fluctuations in the
commercial/industrial new construction market, (3) the timing and
extent of changes in interest rates, as well as other competitive
factors during the year, and (4) general economic, market or
business conditions.
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 June
30, |
|
Six Months Ended June
30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
(in thousands, except share and per share data) |
Net sales |
$ |
143,876 |
|
|
$ |
125,596 |
|
|
$ |
259,664 |
|
|
$ |
263,079 |
|
Cost of sales |
101,769 |
|
|
87,465 |
|
|
184,400 |
|
|
182,001 |
|
Gross profit |
42,107 |
|
|
38,131 |
|
|
75,264 |
|
|
81,078 |
|
Selling, general and
administrative expenses |
16,895 |
|
|
15,939 |
|
|
31,591 |
|
|
31,153 |
|
(Gain) loss on disposal of
assets |
— |
|
|
— |
|
|
— |
|
|
(62 |
) |
Income from operations |
25,212 |
|
|
22,192 |
|
|
43,673 |
|
|
49,987 |
|
Interest (expense), income,
net |
(4 |
) |
|
19 |
|
|
(1 |
) |
|
80 |
|
Other income (expense),
net |
39 |
|
|
32 |
|
|
56 |
|
|
5 |
|
Income before taxes |
25,247 |
|
|
22,243 |
|
|
43,728 |
|
|
50,072 |
|
Income tax provision |
4,632 |
|
|
4,439 |
|
|
6,737 |
|
|
10,415 |
|
Net income |
$ |
20,615 |
|
|
$ |
17,804 |
|
|
$ |
36,991 |
|
|
$ |
39,657 |
|
Earnings per share: |
|
|
|
|
|
|
|
Basic |
$ |
0.39 |
|
|
$ |
0.34 |
|
|
$ |
0.71 |
|
|
$ |
0.76 |
|
Diluted |
$ |
0.38 |
|
|
$ |
0.34 |
|
|
$ |
0.69 |
|
|
$ |
0.75 |
|
Cash dividends declared per
common share: |
$ |
0.19 |
|
|
$ |
0.19 |
|
|
$ |
0.19 |
|
|
$ |
0.19 |
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
Basic |
52,432,822 |
|
|
52,099,694 |
|
|
52,389,989 |
|
|
52,160,348 |
|
Diluted |
53,603,932 |
|
|
52,750,401 |
|
|
53,736,134 |
|
|
52,885,491 |
|
AAON, Inc. and Subsidiaries |
Consolidated Balance Sheets |
(Unaudited) |
|
June 30, 2021 |
|
December 31, 2020 |
Assets |
(in thousands, except share and per share data) |
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
111,427 |
|
|
$ |
79,025 |
|
Restricted cash |
692 |
|
|
3,263 |
|
Accounts receivable, net of allowance for credit losses of $518 and
$506, respectively |
53,311 |
|
|
47,387 |
|
Income tax receivable |
3,339 |
|
|
4,587 |
|
Note receivable |
32 |
|
|
31 |
|
Inventories, net |
87,399 |
|
|
82,219 |
|
Prepaid expenses and other |
2,940 |
|
|
3,739 |
|
Total current assets |
259,140 |
|
|
220,251 |
|
Property, plant and
equipment: |
|
|
|
Land |
5,016 |
|
|
4,072 |
|
Buildings |
129,607 |
|
|
122,171 |
|
Machinery and equipment |
301,964 |
|
|
281,266 |
|
Furniture and fixtures |
20,726 |
|
|
18,956 |
|
Total property, plant and equipment |
457,313 |
|
|
426,465 |
|
Less: Accumulated depreciation |
217,549 |
|
|
203,125 |
|
Property, plant and equipment,
net |
239,764 |
|
|
223,340 |
|
Goodwill and intangible
assets, net |
3,229 |
|
|
3,267 |
|
Right of use assets |
1,472 |
|
|
1,571 |
|
Note receivable |
579 |
|
|
579 |
|
Total assets |
$ |
504,184 |
|
|
$ |
449,008 |
|
|
|
|
|
Liabilities and
Stockholders’ Equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
21,250 |
|
|
$ |
12,447 |
|
Dividends payable |
9,970 |
|
|
— |
|
Accrued liabilities |
47,291 |
|
|
46,586 |
|
Total current liabilities |
78,511 |
|
|
59,033 |
|
Deferred tax liabilities |
31,071 |
|
|
28,324 |
|
Other long-term
liabilities |
4,493 |
|
|
4,423 |
|
New market tax credit
obligation |
6,383 |
|
|
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,
52,416,014 and 52,224,767 issued and outstanding at June 30,
2021 and December 31, 2020, respectively |
210 |
|
|
209 |
|
Additional paid-in capital |
10,998 |
|
|
5,161 |
|
Retained earnings |
372,518 |
|
|
345,495 |
|
Total stockholders’
equity |
383,726 |
|
|
350,865 |
|
Total liabilities and
stockholders’ equity |
$ |
504,184 |
|
|
$ |
449,008 |
|
AAON, Inc. and Subsidiaries |
Consolidated Statements of Cash Flows |
(Unaudited) |
|
Six Months Ended June
30, |
|
2021 |
|
2020 |
Operating
Activities |
(in thousands) |
Net income |
$ |
36,991 |
|
|
$ |
39,657 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Depreciation and amortization |
14,924 |
|
|
12,340 |
|
Amortization of debt issuance cost |
20 |
|
|
20 |
|
Provision for credit losses on accounts receivable, net of
adjustments |
12 |
|
|
76 |
|
Provision (recoveries) for excess and obsolete inventories |
292 |
|
|
(193 |
) |
Share-based compensation |
5,793 |
|
|
5,694 |
|
(Gain) loss on disposition of assets |
— |
|
|
(62 |
) |
Foreign currency transaction (gain) loss |
(11 |
) |
|
30 |
|
Interest income on note receivable |
(19 |
) |
|
(12 |
) |
Deferred income taxes |
2,747 |
|
|
5,061 |
|
Changes in assets and liabilities: |
|
|
|
Accounts receivable |
(5,936 |
) |
|
10,929 |
|
Income taxes |
1,248 |
|
|
(4,382 |
) |
Inventories |
(5,472 |
) |
|
(11,617 |
) |
Prepaid expenses and other |
799 |
|
|
(568 |
) |
Accounts payable |
10,650 |
|
|
2,893 |
|
Deferred revenue |
574 |
|
|
473 |
|
Accrued liabilities |
300 |
|
|
2,423 |
|
Net cash provided by operating activities |
62,912 |
|
|
62,762 |
|
Investing
Activities |
|
|
|
Capital expenditures |
(33,157 |
) |
|
(33,510 |
) |
Proceeds from sale of property, plant and equipment |
2 |
|
|
61 |
|
Principal payments from note receivable |
29 |
|
|
25 |
|
Net cash used in investing activities |
(33,126 |
) |
|
(33,424 |
) |
Financing
Activities |
|
|
|
Stock options exercised |
11,848 |
|
|
14,173 |
|
Repurchase of stock |
(10,271 |
) |
|
(15,937 |
) |
Employee taxes paid by withholding shares |
(1,532 |
) |
|
(1,102 |
) |
Net cash provided by (used in) financing activities |
45 |
|
|
(2,866 |
) |
Net increase in cash,
cash equivalents and restricted cash |
29,831 |
|
|
26,472 |
|
Cash, cash equivalents
and restricted cash, beginning of period |
82,288 |
|
|
44,373 |
|
Cash, cash equivalents
and restricted cash, end of period |
$ |
112,119 |
|
|
$ |
70,845 |
|
Use of Non-GAAP Financial
MeasuresTo 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.
EBITDAEBITDA (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 EBITDA as net income, plus
(1) depreciation and amortization, (2) interest expense (income),
net and (3) income tax expense. EBITDA is not a measure of net
income or cash flows as determined by GAAP.
The Company’s EBITDA measure provides additional
information which may be used to better understand the Company’s
operations. EBITDA 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 EBITDA are significant
components in understanding and assessing a company's financial
performance. EBITDA, as used by the Company, may not be comparable
to similarly titled measures reported by other companies. The
Company believes that EBITDA 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 EBITDA (non-GAAP) for the periods
indicated:
|
Three Months Ended June
30, |
|
Six Months Ended June
30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
(in thousands) |
Net Income, a GAAP measure |
$ |
20,615 |
|
|
$ |
17,804 |
|
|
$ |
36,991 |
|
|
$ |
39,657 |
|
Depreciation and
amortization |
7,526 |
|
|
6,338 |
|
|
14,924 |
|
|
12,340 |
|
Interest expense (income),
net |
|
4 |
|
|
(19 |
) |
|
|
1 |
|
|
(80 |
) |
Income tax expense |
4,632 |
|
|
4,439 |
|
|
6,737 |
|
|
10,415 |
|
EBITDA, a non-GAAP
measure |
$ |
32,777 |
|
|
$ |
28,562 |
|
|
$ |
58,653 |
|
|
$ |
62,332 |
|
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