SOURCE: AAON

AAON

February 27, 2015 07:00 ET

AAON Reports Record Sales and Earnings for Fourth Quarter and Year 2014

TULSA, OK--(Marketwired - Feb 27, 2015) - AAON, INC. (NASDAQ: AAON), today announced its operating results for the fourth quarter and year 2014. Sales in the fourth quarter were a record $84.7 million, up 15.5% from $73.4 million in 2013. Net income was also a record $10.5 million, up 35.6% from $7.8 million in the same period a year ago. Sales for the year 2014 were, too, a record $356.3 million, up 11.0% compared to $321.1 million in 2013. Earnings for 2014 were also a record, $44.2 million, up 17.6% compared to $37.5 million in 2013.

Earnings for the fourth quarter of 2014 and 2013 were $0.19 and $0.14 per diluted share, based upon 54.8 million and 55.4 million diluted shares outstanding, respectively. Earnings per diluted share for the years 2014 and 2013 were $0.80 and $0.68, based upon 55.4 million and 55.6 million diluted shares outstanding, respectively. All per share earnings reflect the 3-for-2 stock split effective July 16, 2014.

Norman H. Asbjornson, President and CEO, stated, "The 2014 gains in sales and income from operations primarily reflect favorable reception of our products and efficiencies from our investment in equipment that caused gross profit as a percent of sales to increase from 28.0% to 30.4%; despite SG&A expense as a percent of sales having increased from 10.6% to 11.4%, the majority of which represents non-recurring charitable donations. Absent these donations, our diluted earnings per share would have been $0.04 higher."

Mr. Asbjornson continued, "The Company's backlog increased from $45.3 million at December 31, 2013 to $48.8 million at December 31, 2014. In addition, the Company's balance sheet at year end was strong. The current ratio was 3.1:1 (including cash and investments of $49.3 million). It should be noted that the Company purchased a total of 1.0 million shares of AAON stock under its resumed open market buyback program for approximately $20.0 million during the year, for an average cost of $19.67 per share. We continued to remain debt-free and our return on average stockholder equity was 26.1% in 2014."

Mr. Asbjornson next said, "While we had another record year, we are starting to see an inflation in raw material, component and labor costs, and perceive a stagnation in non-residential construction growth. Still, we expect to have another good year in 2015."

The Company will host a conference call today at 10:00 A.M. (Eastern Time) to discuss the fourth quarter and year 2014 results. To participate, call 1-888-241-0551 (code 88563885); or, for rebroadcast, call 1-855-859-2056 (code 88563885).

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, function, serviceability and efficiency.

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  
Unaudited Consolidated Statements of Income  
   
    Three Months Ended
 December 31,
    Years Ending
December 31,
 
    2014     2013     2014     2013  
    (in thousands, except share and per share data)  
Net sales   $ 84,728     $ 73,376     $ 356,322     $ 321,140  
Cost of sales     59,537       53,188       248,059       231,348  
Gross profit     25,191       20,188       108,263       89,792  
Selling, general and administrative expenses     8,519       8,246       40,562       33,989  
(Gain) loss on disposal of assets     (281 )     30       (305 )     (22 )
Income from operations     16,953       11,912       68,006       55,825  
Interest income, net     81       70       276       221  
Other (expense) income, net     (6 )     (4 )     (36 )     248  
Income before taxes     17,028       11,978       68,246       56,294  
Income tax provision     6,495       4,212       24,088       18,747  
Net income   $ 10,533     $ 7,766     $ 44,158     $ 37,547  
Earnings per share:                                
  Basic*   $ 0.19     $ 0.14     $ 0.81     $ 0.68  
  Diluted*   $ 0.19     $ 0.14     $ 0.80     $ 0.68  
Cash dividends declared per common share*:   $ 0.09     $ 0.07     $ 0.18     $ 0.13  
Weighted average shares outstanding:                                
  Basic*     54,291,317       55,181,840       54,809,319       55,119,150  
  Diluted*     54,815,954       55,416,734       55,369,016       55,587,381  
                                 
 *Reflects three-for-two stock split effective July 16, 2014
 
 
 
 
AAON, Inc. and Subsidiaries
Unaudited Consolidated Balance Sheets
 
    December 31,
    2014   2013
Assets   (in thousands, except share and per share data)
Current assets:            
  Cash and cash equivalents   $ 21,952   $ 12,085
  Certificates of deposit     6,098     8,110
  Investments held to maturity at amortized cost     11,972     16,040
  Accounts receivable, net     44,092     39,063
  Income tax receivable     2,569     1,073
  Note receivable     30     29
  Inventories, net     37,618     32,140
  Prepaid expenses and other     609     304
  Deferred tax assets     6,143     4,779
Total current assets     131,083     113,623
Property, plant and equipment:            
  Land     2,233     1,417
  Buildings     64,938     61,821
  Machinery and equipment     127,968     119,439
  Furniture and fixtures     10,388     9,748
    Total property, plant and equipment     205,527     192,425
    Less: Accumulated depreciation     113,605     105,142
  Property, plant and equipment, net     91,922     87,283
Certificates of deposit     5,280     2,638
Investments held to maturity at amortized cost     4,015     10,981
Note receivable     817     919
Total assets   $ 233,117   $ 215,444
             
Liabilities and Stockholders' Equity            
Current liabilities:            
  Revolving credit facility   $ --   $ --
  Accounts payable     11,370     7,779
  Accrued liabilities     31,343     28,550
Total current liabilities     42,713     36,329
Deferred revenue     1,006     585
Deferred tax liabilities     13,677     14,424
Donations     1,662     --
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, 54,041,829 and 55,067,031 issued and outstanding at December 31, 2014 and 2013, respectively*     216     221
Additional paid-in capital     --     --
Retained earnings     173,843     163,885
Total stockholders' equity     174,059     164,106
Total liabilities and stockholders' equity   $ 233,117   $ 215,444
             
 *Reflects three-for-two stock split effective July 16, 2014
 
 
   
   
AAON, Inc. and Subsidiaries  
Unaudited Consolidated Statements of Cash Flows  
   
    Years Ending December 31,  
    2014     2013     2012  
Operating Activities   (in thousands)  
Net income   $ 44,158     $ 37,547     $ 27,449  
Adjustments to reconcile net income to net cash provided by operating activities:                        
  Depreciation     11,553       12,312       13,407  
  Amortization of bond premiums     688       790       155  
  Provision for losses on accounts receivable, net of adjustments     (22 )     141       (83 )
  Provision for excess and obsolete inventories     135       243       63  
  Share-based compensation     2,178       1,763       1,294  
  Excess tax benefits from stock options exercised and restricted stock awards vested     (1,239 )     (843 )     (393 )
  (Gain) loss on disposition of assets     (305 )     (22 )     4  
  Foreign currency transaction loss (gain)     74       67       (27 )
  Interest income on note receivable     (36 )     (40 )     (42 )
  Deferred income taxes     (2,111 )     (1,594 )     (2,028 )
  Write-off of note receivable     --       75       --  
  Changes in assets and liabilities:                        
    Accounts receivable     (5,007 )     4,662       (9,646 )
    Income tax receivable     (257 )     464       9,715  
    Inventories     (5,613 )     231       2,271  
    Prepaid expenses and other     (305 )     436       (17 )
    Accounts payable     3,512       (5,197 )     2,461  
    Deferred revenue     782       615       --  
    Accrued liabilities     4,094       1,942       6,584  
Net cash provided by operating activities     52,279       53,592       51,167  
Investing Activities                        
  Capital expenditures     (16,127 )     (9,041 )     (14,147 )
  Proceeds from sale of property, plant and equipment     319       92       11  
  Investment in certificates of deposits     (9,940 )     (9,108 )     (6,540 )
  Maturities of certificates of deposits     9,310       3,600       1,300  
  Purchases of investments held to maturity     (6,880 )     (22,275 )     (11,654 )
  Maturities of investments     14,197       2,005       --  
  Proceeds from called investments     3,029       3,332       626  
  Principal payments from note receivable     63       69       69  
  Net cash used in investing activities     (6,029 )     (31,326 )     (30,335 )
Financing Activities                        
  Borrowings under revolving credit facility     --       8,325       34,847  
  Payments under revolving credit facility     --       (8,325 )     (39,422 )
  Stock options exercised     1,318       1,467       1,996  
  Excess tax benefits from stock options exercised and restricted stock awards vested     1,239       843       393  
  Repurchase of stock     (29,284 )     (8,222 )     (6,660 )
  Cash dividends paid to stockholders     (9,656 )     (7,428 )     (8,840 )
  Net cash used in financing activities     (36,383 )     (13,340 )     (17,686 )
Net increase in cash and cash equivalents     9,867       8,926       3,146  
Cash and cash equivalents, beginning of period     12,085       3,159       13  
Cash and cash equivalents, end of period   $ 21,952     $ 12,085     $ 3,159  
                         
                         

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 these non-GAAP financial measures enhance the ability of investors to analyze the Company's business trends and operating performance.

EBITDAX

EBITDAX (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 EBITDAX as net income, plus (1) depreciation, (2) amortization of bond premiums, (3) share-based compensation, (4) interest (income) expense and (5) income tax expense. EBITDAX is not a measure of net income or cash flows as determined by GAAP.

The Company's EBITDAX measure provides additional information which may be used to better understand the Company's operations. EBITDAX 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 EBITDAX are significant components in understanding and assessing a company's financial performance. EBITDAX, as used by the Company, may not be comparable to similarly titled measures reported by other companies. The Company believes that EBITDAX 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 EBITDAX (non-GAAP) for the periods indicated:

             
             
    Three Months Ended
December 31,
    Years Ending
December 31,
 
    2014     2013     2014     2013  
    (in thousands)  
Net Income, a GAAP measure   $ 10,533     $ 7,766     $ 44,158     $ 37,547  
Depreciation     2,893       2,963       11,553       12,312  
Amortization of bond premiums     127       245       688       790  
Share-based compensation     600       709       2,178       1,763  
Interest (income) expense     (81 )     (70 )     (276 )     (221 )
Income tax expense     6,495       4,212       24,088       18,747  
EBITDAX, a non-GAAP measure   $ 20,567     $ 15,825     $ 82,389     $ 70,938  
                                 
                                 

Adjusted Net Income and Adjusted Earnings per Share

The Company defines Adjusted Net Income and the related per share amount as (1) net income, plus (2) non-recurring donations, less (3) the impact on profit sharing expense from the non-recurring donations and (4) the impact on income tax expense from the non-recurring donations. These measures provide additional information which may be used to better understand the Company's operations.

The following tables provide a reconciliation of net income and earnings per share-diluted (GAAP) to adjusted net income and adjusted earnings per share-diluted (non-GAAP) for the periods indicated:

         
         
    Three Months Ended
December 31,
  Years Ending
December 31,
    2014     2013   2014     2013
    (in thousands except per share data)
Net Income, a GAAP measure   $ 10,533     $ 7,766   $ 44,158     $ 37,547
Non-recurring donations     18       --     3,862       --
Profit-sharing     (2 )     --     (386 )     --
Income tax expense     (6 )     --     (1,227 )     --
Adjusted Net Income, a non-GAAP measure   $ 10,543     $ 7,766   $ 46,407     $ 37,547
                             
Earnings per share-diluted, a GAAP measure   $ 0.19     $ 0.14   $ 0.80     $ 0.68
Non-recurring donations     --       --     0.07       --
Profit-sharing     --       --     (0.01 )     --
Income tax expense     --       --     (0.02 )     --
Adjusted earnings per share-diluted, a non-GAAP measure   $ 0.19     $ 0.14   $ 0.84     $ 0.68
                             
                             

Contact Information

  • For Further Information:
    Jerry R. Levine
    Phone: (914) 244-0292
    Fax: (914) 244-0295
    Email: jrladvisor@yahoo.com