TULSA, OK--(Marketwire - Mar 14, 2012) - AAON, Inc. (
Earnings per diluted share for year 2011 were $0.56 compared to $0.87 in 2010, based upon 24.9 million and 25.3 million diluted shares outstanding, respectively, while earnings for the fourth quarter of 2011 were $0.04 per diluted share compared to $0.23 per diluted share in 2010, based upon 24.8 million and 24.9 million diluted shares outstanding, respectively. The year 2011 and fourth quarter earnings per share were reduced by $0.05 due to a loss on the trade in of old equipment (discussed below).
Norman H. Asbjornson, President and CEO, stated that, "Although 2011 was a very difficult year primarily due to the poor economy and a severely contracted market, our sales were at the second highest level in the Company's history as a result of greatly increasing our market share with highly successful new products. Market conditions also prevented us from fully passing on material and component parts price increases, which, along with other factors (discussed below), limited revenues as well."
Mr. Asbjornson next said, "I would characterize 2011 mainly as a year of bunching abnormal expenses and events, which greatly reduced both our gross margins and net income.
In the first quarter, we experienced record snowstorms in Tulsa during the week of February 1-8 which caused multiple roof collapses on our manufacturing facilities, closed down production for 8 1/2 days and adversely affected productivity for the balance of that quarter (and through September). The building damage was covered by insurance, subject to a $500,000 deductible paid by the Company. Profits were also impacted by higher commodity and purchased parts prices.
The decrease in earnings in the second quarter was primarily attributable to a continuation of higher costs of copper and component parts, lower productivity of workers and equipment caused by adverse temperature conditions resulting from the previously mentioned storm damage to the roofs of the Tulsa facilities and manufacturing problems related to production facilities rearrangement.
However, the Company achieved higher earnings in the third quarter compared to the previous year primarily by greatly reducing the negative impact of various manufacturing/facilities problems mentioned earlier, aided by a price increase.
While higher component prices continued to adversely affect both gross margins and profits in the fourth quarter, we also experienced the negative effect of manufacturing inefficiencies due to the introduction of new products and, quite significantly, a $1.8 million charge to earnings caused by our decision to replace approximately 50% of AAON's heavily-used sheet metal equipment to benefit from a Federal law allowing 100% depreciation (for tax purposes) of qualified capital expenditures put in service in calendar year 2011 and to gain greatly improved manufacturing efficiencies in 2012 and beyond. The charge to earnings was caused by a pre-tax loss of $1.8 million on the trade in of the old equipment. The new equipment is state of the art and combines the latest advancements in automation and laser technology, in furtherance of our strategic vision to improve manufacturing efficiencies. We estimate that the new equipment will reduce our costs by more than $1 million per year.
A number of additional one-time charges were incurred in the fourth quarter:
- Inefficient sheet metal production due to the changing out of approximately 50% of our capacity in a short period of time in order to have our new equipment operable by the end of the year.
- Numerous costs expensed during the change out of the equipment.
- Inefficiencies in production due to lack of sheet metal parts in a timely fashion.
- Costs associated with relocating three assembly lines and rearranging two other assembly lines."
Mr. Asbjornson concluded by saying, "As previously reported, we increased our investment in equipment and facilities in 2011 by 308% over the average of the preceding three years and continue to introduce new products, all of which have positioned AAON to benefit from future opportunities. Further, and of significance to our near-term outlook, we have received record amounts of new orders for the months of January and February 2012 and our backlog stood at a March 1 record of $55.3 million, compared to $37.9 million in 2011. Additionally, based on our experience, we believe it is likely that we will encounter fewer and less costly abnormal expenses in 2012, as compared to 2011. Accordingly, we anticipate higher sales and, at an even greater rate, improved earnings in the foreseeable future.
Finally, the 100% write-off of the new equipment purchased during 2011 created a $7.8 million income tax refund which, together with additional refunds totaling $2.2 million, will have a positive impact on the Company's liquidity as the refunds are converted to cash. Essentially, the $10 million of tax refunds will be sufficient to fund most of our 2012 capital budget."
AAON, Inc. is a manufacturer of air-conditioning and heating equipment consisting of rooftop units, chillers, air-handling units, condensing units, heat recovery units, commercial self-contained units and coils. Its products serve the new construction and replacement markets. The Company has successfully gained market share through its "semi-custom" product lines, which offer the customer value, quality, functionality, serviceability and efficiency.
The Company will host a conference call today at 4:15 P.M. EDT to discuss year 2011 and the fourth quarter results. To participate, call 1-877-737-1669 (Pass code VA73524).
Certain 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 that could cause actual results and developments to differ materially from the forward-looking statements.
| AAON, Inc., and Subsidiaries | ||||||||||||||||
| Consolidated Statements of Operations | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31, 2011 | December 31, 2010 | December 31, 2011 | December 31, 2010 | |||||||||||||
| (in thousands, except per share data) | ||||||||||||||||
| Net sales | $ | 63,402 | $ | 65,826 | $ | 266,220 | $ | 244,552 | ||||||||
| Cost of sales | 54,755 | 51,635 | 219,939 | 189,364 | ||||||||||||
| Gross profit | 8,647 | 14,191 | 46,281 | 55,188 | ||||||||||||
| Selling, general and administrative expenses | 5,611 | 5,849 | 22,310 | 22,546 | ||||||||||||
| Loss (gain) on disposal of assets | 1,816 | 32 | 1,802 | (73 | ) | |||||||||||
| Income from operations | 1,220 | 8,310 | 22,169 | 32,715 | ||||||||||||
| Interest expense | (104 | ) | (41 | ) | (277 | ) | (45 | ) | ||||||||
| Interest income | 11 | 96 | 98 | 258 | ||||||||||||
| Other income (expense), net | 213 | (49 | ) | (477 | ) | (235 | ) | |||||||||
| Income before income taxes | 1,340 | 8,316 | 21,513 | 32,693 | ||||||||||||
| Income tax provision | 469 | 2,534 | 7,527 | 10,799 | ||||||||||||
| Net income | $ | 871 | $ | 5,782 | $ | 13,986 | $ | 21,894 | ||||||||
| Earnings per share: | ||||||||||||||||
| Basic* | $ | 0.04 | $ | 0.23 | $ | 0.57 | $ | 0.87 | ||||||||
| Diluted* | $ | 0.04 | $ | 0.23 | $ | 0.56 | $ | 0.87 | ||||||||
| Cash dividends declared per common share* | $ | 0.12 | $ | 0.12 | $ | 0.24 | $ | 0.24 | ||||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic* | 24,635 | 24,785 | 24,690 | 25,198 | ||||||||||||
| Diluted* | 24,821 | 24,950 | 24,881 | 25,339 | ||||||||||||
* Reflects three-for-two stock split effective June 13, 2011.
| AAON, Inc., and Subsidiaries | |||||||
| Consolidated Balance Sheets | |||||||
| December 31, 2011 |
December 31, 2010 |
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| (in thousands, except share and per share data) | |||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 13 | $ | 2,393 | |||
| Certificates of deposit | - | 1,503 | |||||
| Investments held to maturity at amortized cost | - | 9,520 | |||||
| Accounts receivable, net | 34,137 | 39,901 | |||||
| Income tax receivable | 10,016 | - | |||||
| Note receivable, current | 27 | 26 | |||||
| Inventories, net | 34,948 | 33,602 | |||||
| Prepaid expenses and other | 723 | 656 | |||||
| Deferred tax assets | 4,523 | 4,147 | |||||
| Total current assets | 84,387 | 91,748 | |||||
| Property, plant and equipment: | |||||||
| Land | 1,340 | 1,328 | |||||
| Buildings | 56,057 | 45,482 | |||||
| Machinery and equipment | 114,256 | 100,559 | |||||
| Furniture and fixtures | 7,784 | 6,356 | |||||
| Total property, plant and equipment | 179,437 | 153,725 | |||||
| Less: Accumulated depreciation | 85,935 | 86,307 | |||||
| Property, plant and equipment, net | 93,502 | 67,418 | |||||
| Note receivable, long-term | 1,092 | 1,111 | |||||
| Total assets | $ | 178,981 | $ | 160,277 | |||
| Liabilities and Stockholders' Equity | |||||||
| Current liabilities: | |||||||
| Revolving credit facility | 4,575 | - | |||||
| Accounts payable | 14,118 | 13,017 | |||||
| Accrued liabilities | 19,994 | 23,229 | |||||
| Total current liabilities | 38,687 | 36,246 | |||||
| Deferred tax liabilities | 17,790 | 7,292 | |||||
| Commitments and contingencies | |||||||
| Stockholders' equity: | |||||||
| Preferred stock, $.001 par value, 11,250,000 shares authorized, no shares issued* | - | - | |||||
| Common stock, $.004 par value, 112,500,000 shares authorized, 24,618,324 and 24,758,480 issued and outstanding at December 31, 2011 and 2010, respectively* | 98 |
99 |
|||||
| Additional paid-in capital | - | - | |||||
| Retained earnings | 122,406 | 116,640 | |||||
| Total stockholders' equity | 122,504 | 116,739 | |||||
| Total liabilities and stockholders' equity | $ | 178,981 | $ | 160,277 | |||
* Reflects three-for-two stock split effective June 13, 2011.
| AAON, Inc., and Subsidiaries | |||||||||||
| Consolidated Statements of Cash Flows | |||||||||||
| Twelve Months Ended December 31, 2011 |
Twelve Months Ended December 31, 2010 |
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| (in thousands) | |||||||||||
| Operating Activities | |||||||||||
| Net income | $ | 13,986 | $ | 21,894 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation | 11,397 | 9,886 | |||||||||
| Amortization of bond premiums | 156 | 379 | |||||||||
| Provision for losses on accounts receivable, net of adjustments | (289 | ) | (117 | ) | |||||||
| Provision for excess and obsolete inventories | (50 | ) | - | ||||||||
| Share-based compensation | 680 | 791 | |||||||||
| Excess tax benefits from stock options exercised and restricted stock awards vested | (211 | ) | (356 | ) | |||||||
| Loss (gain) on disposition of assets | 1,802 | (73 | ) | ||||||||
| Unrealized gain on financial derivative asset | - | (14 | ) | ||||||||
| Effect of foreign currency (gain) loss | (8 | ) | - | ||||||||
| Deferred income taxes | 10,122 | (558 | ) | ||||||||
| Changes in assets and liabilities: | |||||||||||
| Accounts receivable | 6,053 | (6,403 | ) | ||||||||
| Income tax receivable | (10,016 | ) | - | ||||||||
| Inventories | (1,296 | ) | (4,814 | ) | |||||||
| Prepaid expenses and other | (67 | ) | 431 | ||||||||
| Financial derivative asset | - | 2,214 | |||||||||
| Accounts payable | (2,751 | ) | 6,522 | ||||||||
| Accrued liabilities | (3,024 | ) | 2,370 | ||||||||
| Net cash provided by operating activities | 26,484 | 32,152 | |||||||||
| Investing Activities | |||||||||||
| Proceeds from sale of property, plant, and equipment | 482 | 136 | |||||||||
| Investment in certificates of deposit | - | (2,745 | ) | ||||||||
| Maturities of certificates of deposit | 1,503 | 1,242 | |||||||||
| Investments held to maturity | - | (12,018 | ) | ||||||||
| Maturities of investments | 9,364 | 2,119 | |||||||||
| Proceeds from assets held for sale | - | 460 | |||||||||
| Proceeds from note receivable | 27 | - | |||||||||
| Capital expenditures | (35,914 | ) | (17,470 | ) | |||||||
| Net cash used in investing activities | (24,538 | ) | (28,276 | ) | |||||||
| Financing Activities | |||||||||||
| Borrowings under revolving credit facility | 82,078 | 20,839 | |||||||||
| Payments under revolving credit facility | (77,503 | ) | (20,839 | ) | |||||||
| Payments of long-term debt | - | (76 | ) | ||||||||
| Stock options exercised | 494 | 1,168 | |||||||||
| Excess tax benefits from stock options exercised and restricted stock awards vested | 211 | 356 | |||||||||
| Repurchase of stock | (3,671 | ) | (19,480 | ) | |||||||
| Cash dividends paid to stockholders | (5,935 | ) | (9,168 | ) | |||||||
| Net cash used in financing activities | (4,326 | ) | (27,200 | ) | |||||||
| Effect of exchange rate on cash | - | 78 | |||||||||
| Net increase (decrease) in cash and cash equivalents | (2,380 | ) | (23,246 | ) | |||||||
| Cash and cash equivalents, beginning of year | 2,393 | 25,639 | |||||||||
| Cash and cash equivalents, end of year | $ | 13 | $ | 2,393 | |||||||
Contact Information:
For Further Information:
Jerry R. Levine
Phone: (914) 244-0292
Fax: (914) 244-0295
Email: jrladvisor@yahoo.com