0000824142false00008241422024-02-282024-02-28

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): February 28, 2024

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 February 28, 2024, AAON, Inc. (the "Company") announced its financial and operating results and backlog for the fourth quarter ended December 31, 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 February 28, 2024 to discuss these results. 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 accessible dial-in is accessible at 1-800-836-8184. To access the listen-only webcast, please register at https://app.webinar.net/b6rzgxE5JyM. 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 February 28, 2024, 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 February 28, 2024 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:
February 28, 2024
By:/s/ Luke A. Bomer
Luke A. Bomer, Secretary


Exhibit 99.1                        
aaona05.jpg
AAON REPORTS SALES, EARNINGS & BACKLOG
FOR THE FOURTH QUARTER OF 2023

TULSA, OK, February 28, 2024 - AAON, INC. (NASDAQ-AAON), a leading producer of premium HVAC solutions, today announced its results for the fourth quarter of 2023.

Gary Fields, CEO, stated, “I am extremely pleased with our overall results for 2023. We finished another year with record sales, EBITDA and earnings. The fourth quarter was also another strong quarter for AAON. In what typically is a seasonally soft period for the Company, we achieved comparable sales and earnings to what we reported in the third quarter, which was a record quarter for AAON. On a year-over-year perspective, improved productivity was a key factor to both production output and margin expansion. Our manufacturing teams did an excellent job of improving the efficiency of our operations, a trend we expect will continue in 2024. Gross profit margin of 36.4%, up from 30.8% in the year ago quarter, reflects these productivity gains, along with incremental pricing. In addition to profitability, I was also pleased with how the Company's bookings and backlog trended throughout the second half of 2023, including the fourth quarter. All in, 2023 was a spectacular year and we are optimistic on continued success in 2024.”

Net sales for the fourth quarter of 2023 increased 20.4% to a record $306.6 million from $254.6 million in the fourth quarter of 2022. 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 9.3%.

Gross profit for the quarter increased 42.3% to $111.7 million, or 36.4% of sales, compared to the same period a year ago. The drivers for the year--over--year margin expansion were incremental pricing, improved operational efficiencies and improved overhead absorption.

Earnings per diluted share in the fourth quarter of 2023 increased 19.1% to $0.56 from $0.47 in the fourth quarter of 2022.


Financial Highlights:Three Months Ended 
 December 31,
%Years Ended  
 December 31,
%
20232022Change20232022Change
(in thousands, except share and per share data)(in thousands, except share and per share data)
GAAP Measures
Net sales$306,638 $254,598 20.4 %$1,168,518 $888,788 31.5 %
Gross profit$111,739 $78,541 42.3 %$399,020 $237,572 68.0 %
Gross profit margin36.4 %30.8 %34.1 %26.7 %
Operating income$63,884 $46,598 37.1 %$227,494 $126,761 79.5 %
Operating margin20.8 %18.3 %19.5 %14.3 %
Net income$47,049 $38,898 21.0 %$177,623 $100,376 77.0 %
Earnings per diluted share$0.56 $0.47 19.1 %$2.13 $1.24 71.8 %
Diluted average shares83,446,05182,211,4181.5 %83,295,29081,145,6102.6 %
Non-GAAP Measures
EBITDA1
$77,046 $56,184 37.1 %$274,465 $162,266 69.1 %
EBITDA margin1
25.1 %22.1 %23.5 %18.3 %
Adjusted EBITDA1
$77,046 $56,184 37.1 %$281,215 $162,266 73.3 %
Adjusted EBITDA margin1
25.1 %22.1 %24.1 %18.3 %
1These are non-GAAP measures. See "Use of Non-GAAP Financial Measures" below for reconciliation to GAAP measures.
1


Backlog
December 31, 2023September 30, 2023December 31, 2022
Backlog$510,028 $490,591 548,022 
Year over year change(6.9)%(4.7)%110.6 %

Bookings in the fourth quarter increased sequentially for a second straight quarter and were up on a year-over-year basis. Bookings in the quarter also outpaced production, resulting in a quarter-over-quarter increase in backlog. Backlog at the end of the fourth quarter of 2023 was $510.0 million, up 4.0% from $490.6 million the end of the third quarter and down 6.9% from $548.0 million at December 31, 2022.

Mr. Fields concluded, “As we progress through the early months of 2024, we are cautiously optimistic with the outlook for the current year. While increasingly there are signs of slowing in the nonresidential construction sector, along with uncertainties surrounding the new refrigerant transition, we continue to anticipate sales and earnings growth for the year, albeit at slower growth rates than recent years. We are also confident we will continue to take market share due to our advanced position in both new refrigerant equipment and cold climate air-source heat pumps. We currently have a majority of our product portfolio offered with the new refrigerant in our electronic catalog as well as a full line of packaged rooftop equipment configurable with heat pumps designed to operate down to zero degrees Fahrenheit, both of which provide us an advantage against most of our competition. At the same time, we see more opportunity for enhancements in productivity across our operations in 2024. Recently announced changes to Company leadership will help leverage these opportunities, best positioning AAON for growth. Therefore, while there are external factors that could result in a slower market environment, we are optimistic we will continue to drive growth this year and create more value for all of our stakeholders.”

As of December 31, 2023, the Company had cash, cash equivalents and restricted cash of $9.0 million and $38.3 million outstanding on the revolving credit facility. Rebecca Thompson, CFO, commented, “Our cash flows from operating activities strengthened in both the fourth quarter and 2023, growing year-over-year 189.0% and 159.1%, respectively, and outpacing earnings growth in the respective periods. Cash flows from operating activities in both periods also exceeded capital expenditures, which were up significantly from prior periods. We continue to find attractive organic growth opportunities with compelling returns, which will result in another year of elevated capital expenditures in 2024. At the same time, we see further opportunities to enhance our earnings to cash flow conversion rates in 2024. Our balance sheet remains strong with a current ratio of 3.2 and a leverage ratio of 0.15.”


Conference Call and Webcast

The Company will host a conference call and webcast to discuss its financial results and outlook on February 28, 2024 at 5:15 P.M. ET. 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 accessible dial-in is accessible at 1-800-836-8184. To access the listen-only webcast, please register at https://app.webinar.net/b6rzgxE5JyM. 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 global leader in HVAC solutions for commercial and industrial indoor environments. The Company's industry-leading approach to designing and manufacturing highly configurable and custom-made 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
2


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 
 December 31,
Years Ended  
 December 31,
 2023202220232022
(in thousands, except share and per share data)
Net sales$306,638 $254,598 $1,168,518 $888,788 
Cost of sales194,899 176,057 769,498 651,216 
Gross profit111,739 78,541 399,020 237,572 
Selling, general and administrative expenses47,855 31,943 171,539 110,823 
Gain on disposal of assets— — (13)(12)
Income from operations63,884 46,598 227,494 126,761 
Interest expense, net(884)(933)(4,843)(2,627)
Other income, net133 104 503 399 
Income before taxes63,133 45,769 223,154 124,533 
Income tax provision16,084 6,871 45,531 24,157 
Net income$47,049 $38,898 $177,623 $100,376 
Earnings per share:  
Basic$0.58 $0.49 $2.19 $1.26 
Diluted$0.56 $0.47 $2.13 $1.24 
Cash dividends declared per common share:$0.08 $0.16 $0.32 $0.29 
Weighted average shares outstanding:  
Basic81,293,549 79,975,517 81,156,114 79,582,480 
Diluted83,446,051 82,211,418 83,295,290 81,145,610 



4


AAON, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
 December 31, 2023December 31, 2022
Assets(in thousands, except share and per share data)
Current assets:  
Cash and cash equivalents$287 $5,451 
Restricted cash8,736 498 
Accounts receivable, net 138,108 127,158 
Inventories, net213,532 198,939 
Contract assets45,194 15,151 
Prepaid expenses and other3,097 1,919 
Total current assets408,954 349,116 
Property, plant and equipment:  
Land15,438 8,537 
Buildings205,841 169,156 
Machinery and equipment391,366 342,045 
Furniture and fixtures40,787 30,033 
Total property, plant and equipment653,432 549,771 
Less:  Accumulated depreciation283,485 245,026 
Property, plant and equipment, net369,947 304,745 
Intangible assets, net68,053 64,606 
Goodwill81,892 81,892 
Right of use assets11,774 7,123 
Other long-term assets816 6,421 
Total assets$941,436 $813,903 
Liabilities and Stockholders' Equity  
Current liabilities:  
Accounts payable27,484 45,513 
Accrued liabilities85,508 78,630 
Contract liabilities13,757 21,424 
Total current liabilities126,749 145,567 
Revolving credit facility, long-term38,328 71,004 
Deferred tax liabilities12,134 18,661 
Other long-term liabilities16,807 11,508 
New market tax credit obligation12,194 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, 81,508,381 and 80,137,776 issued and outstanding at December 31, 2023 and December 31, 2022, respectively
326 322 
Additional paid-in capital122,063 98,735 
Retained earnings612,835 461,657 
Total stockholders' equity735,224 560,714 
Total liabilities and stockholders' equity$941,436 $813,903 
5


AAON, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
 Years Ended  
 December 31,
 20232022
Operating Activities(in thousands)
Net income$177,623 $100,376 
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortization46,468 35,106 
Amortization of debt issuance cost82 43 
Amortization of right of use assets324 324 
(Recoveries of) provision for accounts receivable, net of adjustments
(154)(72)
Provision for excess and obsolete inventories, net of write-offs
1,633 2,740 
Share-based compensation16,384 13,700 
Gain on disposition of assets
(13)(12)
Foreign currency transaction (gain) loss
(10)41 
Interest income on note receivable
(21)(22)
Deferred income taxes(6,527)(13,332)
Changes in assets and liabilities:  
Accounts receivable(9,978)(56,306)
Income taxes(11,302)18,195 
Inventories(16,226)(71,409)
Contract assets(30,043)(9,402)
Prepaid expenses and other long-term assets(1,048)(2,367)
Accounts payable(18,316)11,574 
Contract liabilities(7,667)13,882 
Extended warranties2,600 1,314 
Accrued liabilities and other long-term liabilities15,086 16,945 
Net cash provided by operating activities
158,895 61,318 
Investing Activities  
Capital expenditures(104,294)(54,024)
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 
Acquisition of intangible assets(5,197)— 
Principal payments from note receivable51 48 
Net cash used in investing activities
(109,311)(76,213)
Financing Activities  
Borrowings under revolving credit facility597,111 225,758 
Payments under revolving credit facility(629,787)(194,754)
Proceeds from financing obligation, net of issuance costs6,061 — 
Payments related to financing costs(398)— 
Principal payments on financing lease— (115)
Stock options exercised33,259 23,140 
Repurchase of stock(25,009)(12,737)
Employee taxes paid by withholding shares(1,302)(1,018)
Dividends paid to stockholders(26,445)(22,917)
Net cash (used in) provided by financing activities
(46,510)17,357 
Net increase in cash, cash equivalents and restricted cash3,074 2,462 
Cash, cash equivalents and restricted cash, beginning of period5,949 3,487 
Cash, cash equivalents and restricted cash, end of period$9,023 $5,949 

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 adjusted net income, adjusted net income per diluted share, EBITDA, adjusted EBITDA, and adjusted EBITDA margin are non-GAAP measures and are susceptible to varying calculations, adjusted net income, adjusted net income per diluted share, EBITDA, adjusted EBITDA, and adjusted 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 infrequent 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 
 December 31,
Years Ended
 December 31,
2023202220232022
(in thousands)
Net income, a GAAP measure$47,049 $38,898 $177,623 $100,376 
Litigation Settlement— — 7,500 — 
Profit sharing effect1
— — (750)— 
Tax effect— — (1,242)— 
Non-GAAP adjusted net income47,049 38,898 183,131 100,376 
Non-GAAP adjusted earnings per diluted share2
$0.56 $0.47 $2.20 $1.24 
1Profit sharing effect of litigation settlement in the respective period.
2Reflects three-for-two stock split effective August 16, 2023.

EBITDA and Adjusted 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 
 December 31,
Years Ended
 December 31,
2023202220232022
(in thousands)
Net income, a GAAP measure$47,049 $38,898 $177,623 $100,376 
Depreciation and amortization13,029 9,482 46,468 35,106 
Interest expense884 933 4,843 2,627 
Income tax expense16,084 6,871 45,531 24,157 
EBITDA, a non-GAAP measure77,046 56,184 274,465 162,266 
Litigation Settlement— — 7,500 — 
Profit sharing effect1
— — (750)— 
Adjusted EBITDA, a non-GAAP measure$77,046 $56,184 $281,215 $162,266 
Adjusted EBITDA margin25.1 %22.1 %24.1 %18.3 %
1Profit sharing effect of litigation settlement in the respective period.



8
v3.24.0.1
Cover Page
Feb. 28, 2024
Cover [Abstract]  
Document Type 8-K
Document Period End Date Feb. 28, 2024
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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