SOURCE: AAON

AAON

February 25, 2016 07:00 ET

AAON Reports Record Sales and Earnings for Fourth Quarter and Year 2015

TULSA, OK--(Marketwired - February 25, 2016) - AAON, INC. (NASDAQ: AAON) today announced its operating results for the fourth quarter and year 2015. Sales in the fourth quarter were a record $97.2 million, up 14.8% from $84.7 million in 2014. Net income was also a record $12.9 million, up 22.9% from $10.5 million in the same period a year ago. Sales for the year 2015 reached a record level, $358.6 million, up 0.6% compared to $356.3 million in 2014. Earnings for 2015 were also a record, $45.7 million, up 3.6% compared to $44.2 million in 2014.

Earnings for the fourth quarter of 2015 and 2014 were $0.24 and $0.19 per diluted share, up 26.3%, based upon 54.0 million and 54.8 million diluted shares outstanding, respectively. Earnings per diluted share for the years 2015 and 2014 were $0.84 and $0.80, up 5.0%, based upon 54.5 million and 55.4 million diluted shares outstanding, respectively.

Norman H. Asbjornson, President and CEO, stated, "We had a slow start to 2015, but with the changes made during the year, including adding more Regional Sales Managers and eliminating under-performing Sales Representative firms, we witnessed a firm rebound and growth in the final quarter of the year."

Mr. Asbjornson further added, "Our gross profit percentage remains strong at 30.3% for the year 2015 compared to 30.4% in 2014. Our SG&A expense as a percent of sales decreased from 11.4% in 2014 to 10.4% in 2015. This decrease is due to the absence of non-recurring charitable donations made in 2014 and decreases in our warranty expense."

Mr. Asbjornson continued, "The Company's backlog increased from $48.8 million at December 31, 2014 to $57.1 million at December 31, 2015. In addition, the Company's balance sheet at year end was strong. The current ratio was 2.9:1 (including cash and investments of $37.4 million). It should be noted that the Company purchased slightly more than 1.0 million shares of AAON stock under its resumed open market buyback program for approximately $25.0 million during the fourth quarter. We continued to remain debt-free and our return on average stockholder equity was 25.9% in 2015 compared to 26.1% in 2014."

Mr. Asbjornson concluded, "While 2015 results were relatively similar with 2014, we expect the changes in our sales force in 2015 and the expansion of our product lines in 2016 will allow the Company to continue its growth mode and post record results in sales and earnings."

The Company will host a conference call today at 4:15 P.M. (Eastern Time) to discuss the fourth quarter and year 2015 results. To participate, call 1-888-241-0551 (code 49944392); or, for rebroadcast, call 1-855-859-2056 (code 49943292).

AAON, Inc. is a manufacturer of air conditioning and heating equipment consisting of rooftop units, chillers, packaged outdoor mechanical rooms, air handling units, makeup air units, energy recovery units, condensing units, geothermal heat pumps, 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,
    2015   2014   2015   2014
    (in thousands, except share and per share data)
Net sales   $ 97,229     $ 84,728     $ 358,632     $ 356,322  
Cost of sales     67,648       59,537       249,951       248,059  
Gross profit     29,581       25,191       108,681       108,263  
Selling, general and administrative expenses     9,859       8,519       37,438       40,562  
Gain on disposal of assets     -       (281 )     (59 )     (305 )
Income from operations     19,722       16,953       71,302       68,006  
Interest income, net     74       81       161       276  
Other expense, net     (18 )     (6 )     (124 )     (36 )
Income before taxes     19,778       17,028       71,339       68,246  
Income tax provision     6,830       6,495       25,611       24,088  
Net income   $ 12,948     $ 10,533     $ 45,728     $ 44,158  
Earnings per share:                        
  Basic   $ 0.24     $ 0.19     $ 0.85     $ 0.81  
  Diluted   $ 0.24     $ 0.19     $ 0.84     $ 0.80  
Cash dividends declared per common share:   $ 0.11     $ 0.09     $ 0.22     $ 0.18  
Weighted average shares outstanding:                        
  Basic     53,680,995       54,291,317       54,045,841       54,809,319  
  Diluted     54,036,021       54,815,954       54,481,484       55,369,016  
                                 
 
AAON, Inc. and Subsidiaries
Unaudited Consolidated Balance Sheets
 
    December 31,
    2015   2014
Assets   (in thousands, except share and per share data)
Current assets:            
  Cash and cash equivalents   $ 7,908   $ 21,952
  Certificates of deposit     10,080     6,098
  Investments held to maturity at amortized cost     12,444     11,972
  Accounts receivable, net     50,024     44,092
  Income tax receivable     4,702     2,569
  Note receivable     23     30
  Inventories, net     38,499     37,618
  Prepaid expenses and other     533     609
Total current assets     124,213     124,940
Property, plant and equipment:            
  Land     2,233     2,233
  Buildings     68,806     64,938
  Machinery and equipment     143,100     127,968
  Furniture and fixtures     11,270     10,388
    Total property, plant and equipment     225,409     205,527
    Less: Accumulated depreciation     124,348     113,605
  Property, plant and equipment, net     101,061     91,922
Certificates of deposit     1,880     5,280
Investments held to maturity at amortized cost     5,039     4,015
Note receivable     661     817
Total assets   $ 232,854   $ 226,974
             
Liabilities and Stockholders' Equity            
Current liabilities:            
  Revolving credit facility   $ -   $ -
  Accounts payable     6,178     11,370
  Accrued liabilities     37,235     31,343
Total current liabilities     43,413     42,713
Deferred revenue     698     1,006
Deferred tax liabilities     8,706     7,534
Donations     1,119     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, 53,012,363 and 54,041,829 issued and outstanding at December 31, 2015 and 2014, respectively     212     216
  Additional paid-in capital     -     -
  Retained earnings     178,706     173,843
Total stockholders' equity     178,918     174,059
Total liabilities and stockholders' equity   $ 232,854   $ 226,974
             
 
AAON, Inc. and Subsidiaries
Unaudited Consolidated Statements of Cash Flows
 
    Years Ending December 31,
    2015   2014   2013
Operating Activities   (in thousands)
  Net income   $ 45,728     $ 44,158     $ 37,547  
  Adjustments to reconcile net income to net cash provided by operating activities:                  
    Depreciation     11,741       11,553       12,312  
    Amortization of bond premiums     266       688       790  
    Provision for losses on accounts receivable, net of adjustments     (48 )     (22 )     141  
    Provision for excess and obsolete inventories     178       135       243  
    Share-based compensation     2,891       2,178       1,763  
    Excess tax benefits from stock options exercised and restricted stock awards vested     (2,445 )     (1,239 )     (843 )
    Gain on disposition of assets     (59 )     (305 )     (22 )
    Foreign currency transaction loss     139       74       67  
    Interest income on note receivable     (30 )     (36 )     (40 )
    Deferred income taxes     1,172       (2,111 )     (1,594 )
    Write-off of note receivable     -       -       75  
    Changes in assets and liabilities:                  
      Accounts receivable     (5,884 )     (5,007 )     4,662  
      Income tax receivable     312       (257 )     464  
      Inventories     (1,059 )     (5,613 )     231  
      Prepaid expenses and other     76       (305 )     436  
      Accounts payable     (5,109 )     3,512       (5,197 )
      Deferred revenue     189       782       615  
      Accrued liabilities     4,852       4,094       1,942  
  Net cash provided by operating activities     52,910       52,279       53,592  
Investing Activities                  
  Capital expenditures     (20,967 )     (16,127 )     (9,041 )
  Proceeds from sale of property, plant and equipment     63       319       92  
  Investment in certificates of deposits     (6,680 )     (9,940 )     (9,108 )
  Maturities of certificates of deposits     6,098       9,310       3,600  
  Purchases of investments held to maturity     (14,183 )     (6,880 )     (22,275 )
  Maturities of investments     11,408       14,197       2,005  
  Proceeds from called investments     1,013       3,029       3,332  
  Principal payments from note receivable     54       63       69  
  Net cash used in investing activities     (23,194 )     (6,029 )     (31,326 )
Financing Activities                  
  Borrowings under revolving credit facility     -       -       8,325  
  Payments under revolving credit facility     -       -       (8,325 )
  Stock options exercised     2,795       1,318       1,467  
  Excess tax benefits from stock options exercised and restricted stock awards vested     2,445       1,239       843  
  Repurchase of stock     (37,143 )     (29,284 )     (8,222 )
  Cash dividends paid to stockholders     (11,857 )     (9,656 )     (7,428 )
  Net cash used in financing activities     (43,760 )     (36,383 )     (13,340 )
Net (decrease) increase in cash and cash equivalents     (14,044 )     9,867       8,926  
Cash and cash equivalents, beginning of period     21,952       12,085       3,159  
Cash and cash equivalents, end of period   $ 7,908     $ 21,952     $ 12,085  
                         

Use of Non-GAAP Financial Measure

To supplement the Company's consolidated financial statements presented in accordance with generally accepted accounting principles ("GAAP"), an additional non-GAAP financial measure is provided and reconciled in the following table. The Company believes that this non-GAAP financial measure, 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.

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,
    2015   2014   2015   2014
    (in thousands)
Net Income, a GAAP measure   $ 12,948     $ 10,533     $ 45,728     $ 44,158  
Depreciation     3,154       2,893       11,741       11,553  
Amortization of bond premiums     98       127       266       688  
Share-based compensation     815       600       2,891       2,178  
Interest (income) expense     (172 )     (208 )     (427 )     (964 )
Income tax expense     6,830       6,495       25,611       24,088  
EBITDAX, a non-GAAP measure   $ 23,673     $ 20,440     $ 85,810     $ 81,701  
                                 

Contact Information

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