TULSA,
Okla., May 4, 2023 /PRNewswire/ -- AAON,
INC. (NASDAQ-AAON), a provider of premier, configurable HVAC
solutions that bring long-term value to customers and owners, today
announced its results for the first quarter of 2023.
Net sales for the first quarter of 2023 increased 45.5% to a
record $266.0 million from
$182.8 million in the first quarter
of 2022. Organic volume growth and product mix contributed
approximately 23.5% to year over year growth. Volume growth
reflects the increased production output resulting from the
Company's success in attracting and retaining employees along with
continuously adapting our production in order to manage parts
shortages. Additionally, we continue to realize more pricing each
month with pricing comprising 22.0% of growth.
Gross profit margin in the quarter increased to 29.0%, up 380
basis points from the comparable quarter in 2022. Price increases
implemented over the last year combined with moderating cost
inflation were the driving factors to the gross profit margin
expansion.
Earnings per diluted share in the first quarter of 2023
increased 103.0% to a record $0.67
from $0.33 in the first quarter of
2022. The increase in earnings was primarily due to robust
volume growth and improved gross profit margin. As a percent
of sales, SG&A expenses were 12.4%, down 20 basis points from
the first quarter of 2022. Lastly, our stellar stock performance in
the first quarter resulted in a large excess tax benefit of
$3.8 million.
Financial
Highlights:
|
Three Months
Ended
March 31,
|
|
%
|
|
2023
|
|
2022
|
|
Change
|
|
(in thousands,
except share and per share data)
|
GAAP
Measures
|
|
|
|
|
|
Net sales
|
$
265,953
|
|
$
182,771
|
|
45.5 %
|
Gross profit
|
77,154
|
|
46,064
|
|
67.5 %
|
Gross profit
margin
|
29.0 %
|
|
25.2 %
|
|
|
Operating
income
|
$
44,206
|
|
$
23,010
|
|
92.1 %
|
Operating
margin
|
16.6 %
|
|
12.6 %
|
|
|
Net income
|
36,814
|
|
18,059
|
|
103.9 %
|
Earnings per diluted
share
|
$
0.67
|
|
$
0.33
|
|
103.0 %
|
Diluted average
shares
|
55,240,638
|
|
53,950,995
|
|
2.4 %
|
|
|
|
|
|
|
Non-GAAP
Measures
|
|
|
|
|
|
EBITDA1
|
$
54,594
|
|
$
30,107
|
|
81.3 %
|
EBITDA
margin1
|
20.5 %
|
|
16.5 %
|
|
|
1These are
non-GAAP measures. See "Use of Non-GAAP Financial Measures" below
for reconciliation to GAAP measures.
|
Backlog
|
|
March 31,
2023
|
|
December 31,
2022
|
|
March 31,
2022
|
(in
thousands)
|
$
599,912
|
|
$
548,022
|
|
$
461,400
|
The Company finished the first quarter of 2023 with a record
backlog of $599.9 million, up 30.0%
from $461.4 million a year ago, and
up 9.5% from $548.0 million at the
end of the fourth quarter of 2022.
Gary Fields, President and CEO,
stated, "The first quarter of 2023 was another excellent quarter
for AAON. We posted a fifth straight quarter of record
sales. At the same time, our backlog continued to grow to
record levels. Our bookings are still very strong and
continue to grow, even when excluding the impact of price
increases. We achieved this while continuing to expand
production output and capacity. We made further investments
in plant and equipment and our total headcount was up 27.3% from a
year ago and up 10.4% from the end of 2022."
Mr. Fields continued, "Our gross profit margin of 29.0%, while
down compared to the fourth quarter of 2022, was in line with our
expectations. As we communicated on our previous conference
call, we incurred certain one-time expenses this quarter as a
result of improving some employee benefits. Clearly, these
investments we are making in people are paying off as demonstrated
in our ability to hire. As also stated on our previous call,
we continue to expect gross profit margin will improve throughout
the year, particularly in the second half when we anticipate more
pricing and better productivity from the capacity investments we
are making in the first half of the year."
Mr. Fields concluded, "As we sit here in the early part of the
year, we remain positive on the business. The profitability
of the record backlog has never been better, positioning us
extremely well through at least the third quarter. Bookings
also continue to trend positively, which will help carry us through
year-end. Furthermore, we recently closed on our second New
Markets Tax Credit transaction related to expansion of our
Longview, Texas facility, along
with acquiring additional properties in Tulsa. These
investments will create additional production capacity, warehouse
space and office space needed to continue our growth
trajectory."
As of March 31, 2023, the Company had cash and cash
equivalents of $2.5 million and total
debt of $83.7 million. Rebecca Thompson, CFO, commented, "Capital
expenditures in the quarter were up 106.2% to $28.9 million due to our continuous investment at
all locations. This along with our quarterly dividend paid on
March 31st resulted in net
borrowings of $12.7 million on our
line of credit. That said, our balance sheet remains
strong. At the end of the first quarter, our leverage ratio
was 0.47. As earnings improve throughout the year and working
capital becomes a source of cash, we anticipate cash flows from
operations will improve, allowing us to reduce our borrowings under
the line of credit while making necessary capital investments for
long-term growth."
Conference Call
The Company will host a conference
call and webcast today at 5:15 P.M.
ET to discuss the first quarter 2023 results and outlook.
The conference call will be accessible via a dial-in for those who
wish to participate in Q&A as well as a listen-only webcast.
The dial-in is 1-877-550-1858 for domestic callers or
1-848-488-9160 for international callers, both accessible with the
conference ID 1754341. To access the listen-only webcast, please
register at https://app.webinar.net/v2AqQOrNY0L. On the next
business day following the call, a replay of the call will be
available on the Company's website at
https://AAON.com/Investors.
About AAON
Founded in 1988, AAON is a world leader in
HVAC solutions for commercial and industrial indoor environments.
The Company's industry-leading approach to designing and
manufacturing highly configurable equipment to meet exact needs
creates a premier ownership experience with greater efficiency,
performance and long-term value. AAON is headquartered in
Tulsa, Oklahoma, where its
world-class innovation center and testing lab allows AAON engineers
to continuously push boundaries and advance the industry. For more
information, please visit www.AAON.com.
Forward-Looking Statements
This 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 Information
Joseph
Mondillo
Director of Investor Relations
Phone: (617) 877-6346
Email: joseph.mondillo@aaon.com
AAON, Inc. and
Subsidiaries
|
Consolidated
Statements of Income
|
(Unaudited)
|
|
Three Months
Ended
March 31,
|
|
2023
|
|
2022
|
|
(in thousands,
except share and per share data)
|
Net sales
|
$
265,953
|
|
$
182,771
|
Cost of
sales
|
188,799
|
|
136,707
|
Gross profit
|
77,154
|
|
46,064
|
Selling, general and
administrative expenses
|
32,942
|
|
23,056
|
Loss (gain) on disposal
of assets
|
6
|
|
(2)
|
Income from
operations
|
44,206
|
|
23,010
|
Interest expense,
net
|
(1,150)
|
|
(190)
|
Other income,
net
|
114
|
|
21
|
Income before
taxes
|
43,170
|
|
22,841
|
Income tax
provision
|
6,356
|
|
4,782
|
Net income
|
$
36,814
|
|
$
18,059
|
Earnings per
share:
|
|
|
|
Basic
|
$
0.69
|
|
$
0.34
|
Diluted
|
$
0.67
|
|
$
0.33
|
Cash dividends declared
per common share:
|
$
0.12
|
|
$
—
|
Weighted average shares
outstanding:
|
|
|
|
Basic
|
53,640,598
|
|
52,613,232
|
Diluted
|
55,240,638
|
|
53,950,995
|
AAON, Inc. and
Subsidiaries
|
Consolidated Balance
Sheets
|
(Unaudited)
|
|
March 31,
2023
|
|
December 31,
2022
|
Assets
|
(in thousands,
except share and per share
data)
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
2,515
|
|
$
5,451
|
Restricted
cash
|
465
|
|
498
|
Accounts receivable,
net of allowance for credit losses of $421 and $477,
respectively
|
160,954
|
|
127,158
|
Inventories,
net
|
199,579
|
|
198,939
|
Contract
assets
|
15,126
|
|
15,151
|
Prepaid expenses and
other
|
5,540
|
|
1,919
|
Total current
assets
|
384,179
|
|
349,116
|
Property, plant and
equipment:
|
|
|
|
Land
|
8,904
|
|
8,537
|
Buildings
|
177,119
|
|
169,156
|
Machinery and
equipment
|
360,628
|
|
342,045
|
Furniture and
fixtures
|
31,868
|
|
30,033
|
Total property, plant
and equipment
|
578,519
|
|
549,771
|
Less: Accumulated
depreciation
|
253,953
|
|
245,026
|
Property, plant and
equipment, net
|
324,566
|
|
304,745
|
Intangible assets,
net
|
63,704
|
|
64,606
|
Goodwill
|
81,892
|
|
81,892
|
Right of use
assets
|
7,166
|
|
7,123
|
Other long-term
assets
|
6,407
|
|
6,421
|
Total assets
|
$
867,914
|
|
$
813,903
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
29,561
|
|
$
45,513
|
Accrued
liabilities
|
86,173
|
|
78,630
|
Contract
liabilities
|
22,137
|
|
21,424
|
Total current
liabilities
|
137,871
|
|
145,567
|
Revolving credit
facility, long-term
|
83,664
|
|
71,004
|
Deferred tax
liabilities
|
19,582
|
|
18,661
|
Other long-term
liabilities
|
10,923
|
|
11,508
|
New market tax credit
obligation
|
6,460
|
|
6,449
|
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, 54,201,863
and 53,425,184 issued and outstanding at March 31, 2023 and
December 31,
2022, respectively
|
217
|
|
214
|
Additional paid-in
capital
|
117,077
|
|
98,735
|
Retained
earnings
|
492,120
|
|
461,765
|
Total stockholders'
equity
|
609,414
|
|
560,714
|
Total liabilities and
stockholders' equity
|
$
867,914
|
|
$
813,903
|
AAON, Inc. and
Subsidiaries
|
Consolidated
Statements of Cash Flows
|
(Unaudited)
|
|
Three Months
Ended
March 31,
|
|
2023
|
|
2022
|
Operating
Activities
|
(in
thousands)
|
Net income
|
$
36,814
|
|
$
18,059
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
10,274
|
|
7,076
|
Amortization of debt
issuance cost
|
11
|
|
11
|
Amortization of right
of use assets
|
29
|
|
67
|
(Recoveries of)
provision for credit losses on accounts receivable, net of
adjustments
|
(56)
|
|
288
|
Provision for excess
and obsolete inventories, net of write-offs
|
221
|
|
220
|
Share-based
compensation
|
3,519
|
|
3,112
|
Loss (gain) on
disposition of assets
|
6
|
|
(2)
|
Foreign currency
transaction gain
|
(2)
|
|
(9)
|
Interest income on
note receivable
|
(6)
|
|
(6)
|
Deferred income
taxes
|
921
|
|
973
|
Changes in assets and
liabilities:
|
|
|
|
Accounts
receivable
|
(33,740)
|
|
(43,244)
|
Income tax
receivable
|
5,262
|
|
3,631
|
Inventories
|
(861)
|
|
(16,041)
|
Contract
assets
|
25
|
|
(4,252)
|
Prepaid expenses and
other long-term assets
|
(3,613)
|
|
(3,588)
|
Accounts
payable
|
(16,318)
|
|
6,325
|
Contract
liabilities
|
713
|
|
17,998
|
Extended
warranties
|
777
|
|
68
|
Accrued liabilities
and other long-term liabilities
|
847
|
|
2,511
|
Net cash provided by
(used in) operating activities
|
4,823
|
|
(6,803)
|
Investing
Activities
|
|
|
|
Capital
expenditures
|
(28,935)
|
|
(14,031)
|
Cash paid in business
combination, net of cash acquired
|
—
|
|
(249)
|
Proceeds from sale of
property, plant and equipment
|
102
|
|
2
|
Principal payments
from note receivable
|
14
|
|
14
|
Net cash used in
investing activities
|
(28,819)
|
|
(14,264)
|
Financing
Activities
|
|
|
|
Borrowings under
revolving credit facility
|
105,172
|
|
25,000
|
Payments under
revolving credit facility
|
(92,512)
|
|
—
|
Principal payments on
financing lease
|
—
|
|
—
|
Stock options
exercised
|
15,856
|
|
2,890
|
Repurchase of
stock
|
—
|
|
(3,278)
|
Employee taxes paid by
withholding shares
|
(1,030)
|
|
(804)
|
Cash dividends paid to
stockholders
|
(6,459)
|
|
—
|
Net cash provided by
financing activities
|
21,027
|
|
23,808
|
Net (decrease)
increase in cash, cash equivalents and restricted
cash
|
(2,969)
|
|
2,741
|
Cash, cash
equivalents and restricted cash, beginning of period
|
5,949
|
|
3,487
|
Cash, cash
equivalents and restricted cash, end of period
|
$
2,980
|
|
$
6,228
|
Use of Non-GAAP Financial Measures
To supplement the Company's consolidated financial statements
presented in accordance with generally accepted accounting
principles ("GAAP"), additional non-GAAP financial measures are
provided and reconciled in the following tables. The Company
believes that these non-GAAP financial measures, when considered
together with the GAAP financial measures, provide 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 as they are
used by management to better understand operating performance.
Since EBITDA and EBITDA margin are non-GAAP measures and are
susceptible to varying calculations, EBITDA and EBITDA margin, as
presented, may not be directly comparable with other similarly
titled measures used by other companies.
EBITDA
EBITDA (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. EBITDA
margin is defined as EBITDA as a percentage of net sales.
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) and for the periods indicated:
|
Three Months
Ended
March 31,
|
|
2023
|
|
2022
|
|
(in
thousands)
|
Net income, a GAAP
measure
|
$
36,814
|
|
$
18,059
|
Depreciation and
amortization
|
10,274
|
|
7,076
|
Interest expense,
net
|
1,150
|
|
190
|
Income tax
expense
|
6,356
|
|
4,782
|
EBITDA, a non-GAAP
measure
|
$
54,594
|
|
$
30,107
|
EBITDA
margin
|
20.5 %
|
|
16.5 %
|
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SOURCE AAON