SOURCE: AAON

AAON

November 06, 2014 07:00 ET

AAON Reports Record Sales and Earnings

TULSA, OK--(Marketwired - Nov 6, 2014) - AAON, Inc. (NASDAQ: AAON) today announced its operating results for the third quarter and nine months ended September 30, 2014. 

Sales and earnings for the third quarter and nine months ended September 30, 2014, were all time records and sales in the third quarter exceeded $100.0 million for the first time in any quarter in the Company's history.

Net sales in the third quarter were $102.9 million, up 14.7% from $89.7 million in 2013. Net income was $12.4 million, up 18.2% from $10.5 million for the same period a year ago. Net sales and net income for the nine months ended September 30, 2014, were $271.6 million, up 9.6% from $247.8 million in 2013, with net income of $33.6 million, up 12.9% compared to $29.8 million in 2013.

Earnings per diluted share in the third quarter of 2014 were $0.22, up 15.8% from $0.19 for the same period the previous year, based upon 55.5 million shares outstanding at both September 30, 2014 and 2013. Earnings per diluted share were $0.61, up 13.0% from $0.54, for the nine months ended September 30, 2014 and 2013, based upon 55.4 million and 55.6 million diluted shares outstanding, respectively. All per share earnings and shares reflect the three-for-two stock split effective July 16, 2014. 

Norman H. Asbjornson, President and CEO, stated, "The third quarter increase in sales primarily reflects shifts in product mix with more expensive units being sold during the period. Gross profit as a percent of sales increased to 32.4% compared to 29.7% a year ago. SG&A expense as a percent of sales increased 2.6% (from 10.8% to 13.4%), primarily due to a commitment of $3.0 million to A Gathering Place for Tulsa."

Mr. Asbjornson added that, "While our commitment to the Gathering Place is expected to be paid over five years, U.S. GAAP rules require AAON to book it all in the third quarter when the commitment was made. Absent this very special, non-recurring item, our earnings for the past quarter would have been $0.03 per share higher. The Gathering Place will transform nearly 100 acres of Tulsa's waterfront along the Arkansas River into a $350.0 million park being financed by the George Kaiser Family Foundation ($200.0 million) and numerous local corporate and community philanthropists. AAON will have its name placed on focal points known as the Swing Hill Valley and Bridge at the park. We feel it is important for AAON to be a part of this transformational project in our headquarters' community. Over 1,300 of our total 1,700 employees live in the Tulsa area and we want them and their families to enjoy and personally identify with the park and its many offerings."

Mr. Asbjornson continued, "The Company's balance sheet at September 30, 2014, was very strong, showing a current ratio of 2.7:1 (including cash and short-term investments totaling $42.1 million), plus long-term marketable investments of $12.6 million, and we remained debt-free. In this regard, it should be noted that the Company purchased a total of 530 thousand shares of AAON stock under its resumed buyback program for approximately $9.8 million during the third quarter of this year, for an average of $18.55 per share. Additionally, our backlog increased from $49.9 million at September 30, 2013, to $54.8 million at September 30, 2014." 

Mr. Asbjornson then said, "While we are confident of having record sales and profits for 2014, we believe we will experience our normal seasonal softening in the fourth quarter but expect to compare favorably with 2013."

The Company will host a conference call today at 4:15 P.M. Eastern Time to discuss the third quarter results. To participate, call 1-888-241-0551 (code 25661198); or, for rebroadcast, call 1-855-859-2056 (code 25661198).

AAON, Inc. is a manufacturer of air conditioning and heating equipment consisting of rooftop units, chillers, outdoor mechanical rooms, air handling units, makeup air units, energy recovery units, condensing 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, as amended. 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 Income
(Unaudited)
             
  Three Months Ended
 September 30,
  Nine Months Ended
 September 30,
 
  2014     2013   2014     2013  
  (in thousands, except share and per share data)            
Net sales $ 102,917     $ 89,690   $ 271,594     $ 247,764  
Cost of sales   69,567       63,074     188,522       178,160  
Gross profit   33,350       26,616     83,072       69,604  
Selling, general and administrative expenses   13,830       9,687     32,043       25,743  
Gain on disposal of assets   -       -     (24 )     (52 )
Income from operations   19,520       16,929     51,053       43,913  
Interest income   55       60     195       151  
Other income (expense), net   (43 )     15     (30 )     252  
Income before taxes   19,532       17,004     51,218       44,316  
Income tax provision   7,092       6,482     17,593       14,535  
Net income $ 12,440     $ 10,522   $ 33,625     $ 29,781  
Earnings per share:                            
  Basic* $ 0.23     $ 0.19   $ 0.61     $ 0.54  
  Diluted* $ 0.22     $ 0.19   $ 0.61     $ 0.54  
Cash dividends declared per common share*: $ -     $ -   $ 0.09     $ 0.07  
Weighted average shares outstanding:                            
  Basic*   54,905,288       55,113,393     54,851,911       55,128,986  
  Diluted*   55,484,043       55,526,342     55,423,294       55,562,663  
                               

*Reflects three-for-two stock split effective July 16, 2014

 
AAON, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
 
  September 30, 2014   December 31, 2013
Assets (in thousands, except share and per share data)
Current assets:      
  Cash and cash equivalents $ 18,819   $ 12,085
  Certificates of deposit   7,223     8,110
  Investments held to maturity at amortized cost   16,079     16,040
  Accounts receivable, net   54,785     39,063
  Income tax receivable   -     1,073
  Note receivable   30     29
  Inventories, net   37,240     32,140
  Prepaid expenses and other   790     304
  Deferred tax assets   7,093     4,779
Total current assets   142,059     113,623
Property, plant and equipment:          
  Land   2,233     1,417
  Buildings   64,098     61,821
  Machinery and equipment   128,459     119,439
  Furniture and fixtures   10,230     9,748
    Total property, plant and equipment   205,020     192,425
    Less: Accumulated depreciation   112,995     105,142
  Property, plant and equipment, net   92,025     87,283
Certificates of deposit   6,720     2,638
Investments held to maturity at amortized cost   5,845     10,981
Note receivable   860     919
Total assets $ 247,509   $ 215,444
           
Liabilities and Stockholders' Equity          
Current liabilities:          
  Revolving credit facility $ -   $ -
  Accounts payable   13,602     7,779
  Accrued liabilities   39,922     28,550
Total current liabilities   53,524     36,329
Deferred revenue   920     585
Deferred tax liabilities   12,377     14,424
Donations   1,645     -
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, 54,460,266 and 55,067,031 issued and outstanding at September 30, 2014 and December 31, 2013, respectively*   218     221
Additional paid-in capital   -     -
Retained earnings*   178,825     163,885
Total stockholders' equity   179,043     164,106
Total liabilities and stockholders' equity $ 247,509   $ 215,444
           

*Reflects three-for-two stock split effective July 16, 2014

   
AAON, Inc. and Subsidiaries  
Consolidated Statements of Cash Flows  
(Unaudited)  
   
  Nine Months Ended
 September 30,
 
  2014     2013  
Operating Activities (in thousands)  
  Net income $ 33,625     $ 29,781  
  Adjustments to reconcile net income to net cash provided by operating activities:              
    Depreciation   8,660       9,349  
    Amortization of bond premiums   561       545  
    Provision for losses on accounts receivable, net of adjustments   (59 )     121  
    Provision for excess and obsolete inventories, net   223       468  
    Share-based compensation   1,578       1,054  
    Excess tax benefits from stock options exercised and restricted stock awards vested   (908 )     (502 )
    Gain on disposition of assets   (24 )     (52 )
    Foreign currency transaction loss   36       35  
    Interest income on note receivable   (30 )     (31 )
    Deferred income taxes   (4,361 )     (1,794 )
    Write-off of note receivable   -       75  
    Changes in assets and liabilities:              
      Accounts receivable   (15,663 )     (2,384 )
      Income tax receivable   1,981       1,753  
      Inventories   (5,323 )     (1,237 )
      Prepaid expenses and other   (486 )     121  
      Accounts payable   5,982       (227 )
      Deferred revenue   591       358  
      Accrued liabilities   12,761       1,410  
  Net cash provided by operating activities   39,144       38,843  
Investing Activities              
  Capital expenditures   (13,567 )     (6,407 )
  Proceeds from sale of property, plant and equipment   30       72  
  Investment in certificates of deposits   (9,940 )     (8,869 )
  Maturities of certificates of deposits   6,745       1,440  
  Purchases of investments held to maturity   (6,880 )     (22,275 )
  Maturities of investments   8,891       3,315  
  Proceeds from called investments   2,525       -  
  Principal payments from note receivable   52       52  
  Net cash used in investing activities   (12,144 )     (32,672 )
Financing Activities              
  Borrowings under revolving credit facility   -       8,325  
  Payments under revolving credit facility   -       (8,325 )
  Stock options exercised   908       986  
  Excess tax benefits from stock options exercised and restricted stock awards vested   908       502  
  Repurchase of stock   (17,309 )     (4,817 )
  Cash dividends paid to stockholders   (4,773 )     (3,712 )
  Net cash used in financing activities   (20,266 )     (7,041 )
Net increase (decrease) in cash and cash equivalents   6,734       (870 )
Cash and cash equivalents, beginning of period   12,085       3,159  
Cash and cash equivalents, end of period $ 18,819     $ 2,289  
               

Contact Information

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