0000824142false00008241422023-08-032023-08-03

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934


Date of Report (Date of earliest event reported): November 06, 2023

AAON, INC.
(Exact name of Registrant as Specified in Charter) 
Nevada0-1895387-0448736
(State or Other Jurisdiction(Commission File Number: )(IRS Employer Identification No.)
of Incorporation)
2425 South Yukon Ave.,Tulsa,Oklahoma74107
(Address of Principal Executive Offices)(Zip Code)
 
(Registrant's telephone number, including area code): (918) 583-2266

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common StockAAONNASDAQ




Item 2.02    Results of Operations and Financial Conditions.

On November 6, 2023, AAON, Inc. (the "Company") announced its financial and operating results and backlog for the third quarter ended September 30, 2023. A copy of the Company's press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference. The Company plans to host a teleconference at 5:15 P.M (Eastern Time) on November 6, 2023 to discuss these results. The accessible dial-in is 1-877-550-1858 for domestic callers. To access the listen-only webcast, please register at https://app.webinar.net/or1gZEMZANL. 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.

In accordance with General Instruction B.2 of Form 8-K, the information in this Item shall not be deemed "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing.

Item 7.01    Regulation FD Disclosure.

On November 6, 2023, the Company issued the press release described above in Item 2.02 of this Current Report on Form 8-K. A copy of the press release is attached hereto as Exhibit 99.1.

All statements in the teleconference, other than historical financial information, may be deemed to be "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. Participants and 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.

In accordance with General Instruction B.2 of Form 8-K, the information in this Item shall not be deemed "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing.

Item 9.01    Financial Statements and Exhibits.

(d)    Exhibits
Exhibit NumberDescription
Press release dated November 6, 2023 announcing financial and operating results and backlog.
104Cover Page Interactive Data File (embedded within the Inline XBRL document).


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
AAON, INC.
Date: November 6, 2023By:/s/ Luke A. Bomer
Luke A. Bomer, Secretary



Exhibit 99.1                        
aaona05a.jpg


AAON REPORTS THIRD QUARTER OF 2023 RESULTS

TULSA, OK, November 6, 2023 - 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 third quarter of 2023.

Gary Fields, President and CEO, stated, “The third quarter was another strong quarter for AAON. For a second straight quarter, we achieved both record net sales and gross profits. All three segments performed well. Our AAON Oklahoma and BASX segments both realized robust double digit organic net sales growth along with record gross profits, and our AAON Coil Products segment recorded its highest profits over the last four quarters. Across all three segments, improved productivity was a key factor to both production output and gross profit margins. Our manufacturing teams did a great job of improving the efficiency of our operations while continuing to add production capacity. Gross profit margin of 37.2% reflects these productivity gains along with incremental pricing. All in, our operations have never performed better as reflected in the results.”

Net sales for the third quarter of 2023 increased 28.6% to $312.0 million from $242.6 million in the third quarter of 2022. This marked the seventh straight quarter of record sales in the Company's history. The Company had a healthy backlog entering the quarter, which combined with improved operational efficiencies, contributed to year over year organic volume growth of approximately 11.9%. Supply chain disruptions continue to abate, also aiding to the rising production rates.

Gross profit margin in the quarter increased to 37.2%, up from 27.0% in the comparable quarter in 2022 and up from 33.1% in the previous quarter. The drivers for the quarter-over-quarter margin expansion were incremental pricing, improved operational efficiencies and improved overhead absorption.

Net income for the quarter was $48.1 million, an increase of $20.6 million or 75.0% compared to the prior year quarter. Earnings per diluted share for the three months ended September 30, 2023, was $0.58, an increase of 70.6% from the third quarter of 2022. Excluding the net impact of a one-time settlement, non-GAAP adjusted net income and earnings per diluted share were $53.2 million and $0.64, respectively, an approximate 90% increase in both over the prior year period.




Financial Highlights:Three Months Ended 
 September 30,
%Nine Months Ended 
 September 30,
%
20232022Change20232022Change
(in thousands, except share and per share data)(in thousands, except share and per share data)
GAAP Measures
Net sales$311,970 $242,605 28.6 %$861,880 $634,190 35.9 %
Gross profit$116,109 $65,591 77.0 %$287,281 $159,031 80.6 %
Gross profit margin37.2 %27.0 %33.3 %25.1 %
Operating income$64,664 $36,700 76.2 %$163,610 $80,163 104.1 %
Operating margin20.7 %15.1 %19.0 %12.6 %
Net income$48,078 $27,473 75.0 %$130,574 $61,478 112.4 %
Earnings per diluted share1
$0.58 $0.34 70.6 %$1.57 $0.76 106.6 %
Diluted average shares1
83,393,05480,938,0743.0 %83,275,20880,882,7983.0 %
1 Reflects three-for-two stock split effective August 16, 2023.
1


Financial Highlights:Three Months Ended 
 September 30,
%Nine Months Ended 
 September 30,
%
20232022Change20232022Change
(in thousands, except share and per share data)(in thousands, except share and per share data)
Non-GAAP Measures
Non-GAAP adjusted net income2
$53,188 $27,473 93.6 %$136,082 $61,478 121.4 %
Non-GAAP earnings per diluted share2
$0.64 $0.34 88.2 %$1.63 $0.76 114.5 %
Adjusted EBITDA2
$83,710 $46,078 81.7 %$204,169 $106,082 92.5 %
Adjusted EBITDA margin2
26.8 %19.0 %23.7 %16.7 %
2 These are non-GAAP measures. See "Use of Non-GAAP Financial Measures" below for reconciliation to GAAP measures.

Backlog

September 30, 2023June 30, 2023September 30, 2022
(in thousands)
$490,591 $526,209 $514,735 

Gains in production efficiency continued throughout the quarter resulting in all time high production rates that have continued to improve lead times. Bookings increased quarter over quarter, but were intentionally outpaced by increases in production to draw down backlog to more appropriate levels. The Company finished the third quarter of 2023 with a backlog of $490.6 million, down 4.7% from $514.7 million a year ago, and down from $526.2 million at the end of the second quarter of 2023.

Mr. Fields concluded, “As we approach the end of this year, we are enthusiastic with the outlook. We are optimistic the fourth quarter and year end results will finish strong. Looking into next year, while there are pockets of our end-markets that are slowing, there are several that are very strong. Furthermore, we anticipate upcoming new refrigerant regulations will noticeably disrupt the industry in 2024, which we view as a positive. AAON thrives on challenges like this and we view it as another opportunity to take market share. Also, in relation to factors such as inflation, supply chain disruptions, workforce dynamics and internal leadership, we believe AAON is entering a more predictable manufacturing environment than we've seen in years, which will enable our productivity to further increase. Our organization has made major enhancements in the last few years, many of which have yet to be financially recognized. We are highly optimistic about the future and are excited to be able to create more value for all of our stakeholders.”

As of September 30, 2023, the Company had cash, cash equivalents and restricted cash of $22.5 million and a balance of $78.4 million on the revolving credit facility. Rebecca Thompson, CFO, commented, “Our cash flows are strengthening with our second straight quarter of cash flows from operating activities exceeding our capital expenditures. We also completed the repurchase of approximately 403,000 shares for $25.0 million during the quarter. As construction ramps at our Longview, Texas plant expansion, we anticipate spending down our restricted cash balance and using the funds to pay down our revolving line of credit. Our balance sheet remains strong with a current ratio of 3.0 and a leverage ratio of 0.33.”

Conference Call
The Company will host a conference call and webcast today at 5:15 P.M. EST to discuss the third quarter 2023 results and outlook. The conference call will be accessible via dial-in for those who wish to participate in Q&A as well as a listen-only webcast. The dial-in is accessible at 1-877-550-1858. To access the listen-only webcast, please register at https://app.webinar.net/or1gZEMZANL. 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.

2


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

3


AAON, Inc. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
 Three Months Ended 
 September 30,
Nine Months Ended 
 September 30,
 2023202220232022
(in thousands, except share and per share data)
Net sales$311,970 $242,605 $861,880 $634,190 
Cost of sales195,861 177,014 574,599 475,159 
Gross profit116,109 65,591 287,281 159,031 
Selling, general and administrative expenses51,470 28,891 123,684 78,880 
Loss (gain) on disposal of assets(25)— (13)(12)
Income from operations64,664 36,700 163,610 80,163 
Interest expense, net(1,266)(954)(3,959)(1,694)
Other income, net93 54 370 295 
Income before taxes63,491 35,800 160,021 78,764 
Income tax provision15,413 8,327 29,447 17,286 
Net income$48,078 $27,473 $130,574 $61,478 
Earnings per share:  
Basic1
$0.59 $0.34 $1.61 $0.77 
Diluted1
$0.58 $0.34 $1.57 $0.76 
Cash dividends declared per common share1:
$0.08 $— $0.24 $0.13 
Weighted average shares outstanding:  
Basic1
81,418,800 79,777,987 81,140,473 79,543,925 
Diluted1
83,393,054 80,938,074 83,275,208 80,882,798 
1 Reflects three-for-two stock split effective August 16, 2023.



4


AAON, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
 September 30, 2023December 31, 2022
Assets(in thousands, except share and per share data)
Current assets:  
Cash and cash equivalents$212 $5,451 
Restricted cash22,323 498 
Accounts receivable, net of allowance for credit losses of $385 and $477, respectively
160,108 127,158 
Inventories, net214,507 198,939 
Contract assets25,306 15,151 
Prepaid expenses and other2,836 1,919 
Total current assets425,292 349,116 
Property, plant and equipment:  
Land15,296 8,537 
Buildings193,684 169,156 
Machinery and equipment381,271 342,045 
Furniture and fixtures41,488 30,033 
Total property, plant and equipment631,739 549,771 
Less:  Accumulated depreciation274,909 245,026 
Property, plant and equipment, net356,830 304,745 
Intangible assets, net61,901 64,606 
Goodwill81,892 81,892 
Right of use assets12,252 7,123 
Other long-term assets6,376 6,421 
Total assets$944,543 $813,903 
Liabilities and Stockholders' Equity  
Current liabilities:  
Accounts payable$29,917 $45,513 
Accrued liabilities90,986 78,630 
Contract liabilities19,576 21,424 
Total current liabilities140,479 145,567 
Revolving credit facility, long-term78,420 71,004 
Deferred tax liabilities14,744 18,661 
Other long-term liabilities16,247 11,508 
New market tax credit obligation12,169 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, 81,231,513 and 80,137,776 issued and outstanding at September 30, 2023 and December 31, 2022, respectively1
325 322 
Additional paid-in capital109,874 98,735 
Retained earnings1
572,285 461,657 
Total stockholders' equity682,484 560,714 
Total liabilities and stockholders' equity$944,543 $813,903 
1 Reflects three-for-two stock split effective August 16, 2023.
5


AAON, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
 Nine Months Ended 
 September 30,
 20232022
Operating Activities(in thousands)
Net income
$130,574 $61,478 
Adjustments to reconcile net income to net cash provided by operating activities:
  
Depreciation and amortization33,439 25,624 
Amortization of debt issuance cost57 32 
Amortization of right of use assets166 191 
(Recoveries of) provision for credit losses on accounts receivable, net of adjustments
(92)300 
Provision for excess and obsolete inventories, net of write-offs
2,979 1,380 
Share-based compensation12,102 10,229 
Gain on disposition of assets
(13)(12)
Foreign currency transaction loss
— 42 
Interest income on note receivable
(15)(17)
Deferred income taxes(3,917)(563)
Changes in assets and liabilities:  
Accounts receivable(32,040)(63,593)
Income tax receivable(12,472)3,782 
Inventories(18,547)(47,998)
Contract assets(10,155)(3,843)
Prepaid expenses and other long-term assets(896)(70)
Accounts payable(15,631)18,616 
Contract liabilities(1,848)24,249 
Extended warranties2,049 730 
Accrued liabilities and other long-term liabilities21,405 12,857 
Net cash provided by operating activities
107,145 43,414 
Investing Activities  
Capital expenditures(82,900)(41,586)
Cash paid for building— (22,000)
Cash paid in business combination, net of cash acquired— (249)
Proceeds from sale of property, plant and equipment129 12 
Principal payments from note receivable39 41 
Net cash used in investing activities
(82,732)(63,782)
Financing Activities  
Proceeds from financing obligation, net of issuance costs6,061 — 
Payment related to financing costs(398)— 
Borrowings under revolving credit facility444,072 151,103 
Payments under revolving credit facility(436,656)(114,812)
Principal payments on financing lease— (115)
Stock options exercised25,251 10,990 
Repurchase of stock(25,009)(7,943)
Employee taxes paid by withholding shares(1,202)(978)
Cash dividends paid to stockholders(19,946)(10,096)
Net cash (used in) provided by financing activities
(7,827)28,149 
Net increase in cash, cash equivalents and restricted cash16,586 7,781 
Cash, cash equivalents and restricted cash, beginning of period5,949 3,487 
Cash, cash equivalents and restricted cash, end of period$22,535 $11,268 


6



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.

Non-GAAP Adjusted Net Income

The Company defines non-GAAP adjusted net income as net income adjusted for any one-time events, such as litigation settlements, net of profit sharing and tax effect, in the periods presented.

The following table provides a reconciliation of net income (GAAP) to non-GAAP adjusted net income for the periods indicated:

Three Months Ended 
 September 30,
Nine Months Ended 
 September 30,
2023202220232022
(in thousands)
Net income, a GAAP measure$48,078 $27,473 $130,574 $61,478 
Litigation settlement7,500 — 7,500 — 
Profit sharing effect(750)— (750)— 
Tax effect(1,640)— (1,242)— 
Non-GAAP adjusted net income$53,188 $27,473 $136,082 $61,478 
Non-GAAP adjusted earnings per diluted share1
$0.64 $0.34 $1.63 $0.76 
1 Reflects three-for-two stock split effective August 16, 2023.

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.

Adjusted EBITDA is calculated as EBITDA adjusted by items in non-GAAP adjusted net income, above, except for taxes, as taxes are already excluded from EBITDA.

7


The following table provides a reconciliation of net income (GAAP) to EBITDA (non-GAAP) and Adjusted EBITDA (non-GAAP) for the periods indicated:

Three Months Ended 
 September 30,
Nine Months Ended 
 September 30,
2023202220232022
(in thousands)
Net income, a GAAP measure$48,078 $27,473 $130,574 $61,478 
Depreciation and amortization12,203 9,324 33,439 25,624 
Interest expense, net1,266 954 3,959 1,694 
Income tax expense15,413 8,327 29,447 17,286 
EBITDA, a non-GAAP measure$76,960 $46,078 $197,419 $106,082 
Litigation settlement7,500 — 7,500 — 
Profit sharing effect1
(750)— (750)— 
Adjusted EBITDA, a non-GAAP measure$83,710 $46,078 $204,169 $106,082 
Adjusted EBITDA margin26.8 %19.0 %23.7 %16.7 %
1Profit sharing effect of litigation settlement in the respective period.


8
v3.23.3
Cover Page
Aug. 03, 2023
Cover [Abstract]  
Document Type 8-K
Document Period End Date Nov. 06, 2023
Entity Registrant Name AAON, INC.
Entity Incorporation, State or Country Code NV
Entity File Number 0-18953
Entity Tax Identification Number 87-0448736
Entity Address, Address Line One 2425 South Yukon Ave.,
Entity Address, City or Town Tulsa,
Entity Address, State or Province OK
Entity Address, Postal Zip Code 74107
City Area Code 918
Local Phone Number 583-2266
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock
Trading Symbol AAON
Security Exchange Name NASDAQ
Entity Emerging Growth Company false
Entity Central Index Key 0000824142
Amendment Flag false

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