SOURCE: AAON

AAON

August 04, 2016 07:00 ET

AAON Reports Record Second Quarter Sales and Earnings

TULSA, OK--(Marketwired - August 04, 2016) - AAON, Inc. (NASDAQ: AAON) today announced its operating results for the second quarter and six months ended June 30, 2016.

In the quarter, net sales were $102.3 million, up 13.3% from $90.3 million in 2015. Net income was $14.3 million, up 28.8% from $11.1 million in the same period a year ago. Net sales for the six months ended June 30, 2016 were $187.7 million, up 12.4% from $167.0 million in 2015. Net income for the six months ended June 30, 2016 was $25.1 million, up 28.8% from $19.5 million in 2015. Both sales and earnings in 2016 were all-time records for any second quarter in the history of AAON.

Earnings per diluted share in the second quarter of 2016 were $0.27, up 35.0% from $0.20 for the same period the previous year, based upon 53.4 million and 54.7 million shares outstanding at June 30, 2016 and 2015, respectively. Earnings per diluted share for the six months ended June 30, 2016 were $0.47, up 30.6% from $0.36 in 2015, based upon 53.4 million and 54.7 million shares outstanding at June 30, 2016 and 2015, respectively.

Norman H. Asbjornson, President and CEO, stated, "The addition of new regional sales managers in 2015 is starting to show results with our gains in sales for 2016, however, the market appears to have softened. The increased production volume has also created efficiencies to help us maintain and slightly grow our gross profit as a percentage of sales to 32.0% compared to 30.0% a year ago. We have also been able to control our SG&A expense, keeping SG&A expense as a percent of sales flat at approximately 10.3% for both the quarter and six months ended 2016 and 2015."

Mr. Asbjornson further added, "Our financial condition at June 30, 2016 remained quite strong with a current ratio of 2.7:1 (including cash and short-term investments totaling $44.3 million). We continue to remain debt free. Our backlog at June 30, 2016 increased 5% to $69.3 million, from $66.0 million for the same period a year ago."

Mr. Asbjornson continued, "We are looking forward to introducing our new Water Source Heat Pump line this quarter, but we don't expect significant results from this new line to impact profit until 2018. We continue to monitor steel prices and look for ways to maintain our gross profit with rising raw material costs, although we currently believe the impact to costs will be less than the equivalent of 2% of sales. The next six months will be a challenge, but we expect to have a successful year."

The Company will host a conference call today at 4:15 P.M. Eastern Time to discuss the second quarter results. To participate, call 1-888-241-0551 (code 50519850); or, for rebroadcast, call 1-855-859-2056 (code 50519850).

AAON, Inc. is engaged in the engineering, manufacturing, marketing and sale of air conditioning and heating equipment consisting of standard, semi-custom and custom rooftop units, chillers, packaged outdoor mechanical rooms, air handling units, makeup air units, energy recovery units, condensing units, geothermal/water-source heat pumps and coils. Since the founding of AAON in 1988, AAON has maintained a commitment to design, develop, manufacture and deliver heating and cooling products to perform beyond all expectations and demonstrate the value of AAON to our customers.

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
 June 30,
 Six Months Ended
 June 30,
   2016  2015  2016  2015
   (in thousands, except share and per share data)
Net sales  $102,319   $90,275   $187,741   $167,043  
Cost of sales   69,572    63,158    129,263    118,128  
Gross profit   32,747    27,117    58,478    48,915  
Selling, general and administrative expenses   10,561    9,200    19,474    17,517  
Gain on disposal of assets   (12 )  (30 )  (20 )  (25 )
Income from operations   22,198    17,947    39,024    31,423  
Interest income   67    29    141    73  
Other income (expense), net   10    27    127    (48 )
Income before taxes   22,275    18,003    39,292    31,448  
Income tax provision   7,934    6,873    14,145    11,919  
Net income  $14,341   $11,130   $25,147   $19,529  
Earnings per share:                     
 Basic  $0.27   $0.21   $0.47   $0.36  
 Diluted  $0.27   $0.20   $0.47   $0.36  
Cash dividends declared per common share:  $0.11   $0.11   $0.11   $0.11  
Weighted average shares outstanding:                     
 Basic   53,036,009    54,208,362    53,028,224    54,205,657  
 Diluted   53,401,238    54,669,763    53,395,361    54,714,604  
                  
AAON, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
 
   June 30, 2016  December 31, 2015
Assets  (in thousands, except share and per share data)
Current assets:      
 Cash and cash equivalents  $12,209  $7,908
 Certificates of deposit   9,832   10,080
 Investments held to maturity at amortized cost   22,303   12,444
 Accounts receivable, net   58,483   50,024
 Income tax receivable   669   4,702
 Note receivable   25   23
 Inventories, net   40,125   38,499
 Prepaid expenses and other   1,083   533
Total current assets   144,729   124,213
Property, plant and equipment:        
 Land   2,233   2,233
 Buildings   75,912   68,806
 Machinery and equipment   152,165   143,100
 Furniture and fixtures   12,058   11,270
  Total property, plant and equipment   242,368   225,409
  Less: Accumulated depreciation   130,505   124,348
Property, plant and equipment, net   111,863   101,061
Certificates of deposit   240   1,880
Investments held to maturity at amortized cost   -   5,039
Note receivable   695   661
Total assets  $257,527  $232,854
         
Liabilities and Stockholders' Equity        
Current liabilities:        
 Revolving credit facility  $-  $-
 Accounts payable   9,367   6,178
 Dividends payable   5,797   -
 Accrued liabilities   38,087   37,235
Total current liabilities   53,251   43,413
Deferred revenue   1,295   698
Deferred tax liabilities   6,855   8,706
Donations   1,142   1,119
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, 53,008,136 and 53,012,363 issued and outstanding at June 30, 2016 and December 31, 2015, respectively   212   212
 Additional paid-in capital   -   -
 Retained earnings   194,772   178,706
Total stockholders' equity   194,984   178,918
Total liabilities and stockholders' equity  $257,527  $232,854
 
AAON, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
   Six Months Ended
 June 30,
   2016  2015
Operating Activities  (in thousands)
 Net income  $25,147   $19,529  
 Adjustments to reconcile net income to net cash provided by operating activities:           
  Depreciation   6,346    5,599  
  Amortization of bond premiums   151    106  
  Provision for losses on accounts receivable, net of adjustments   (42 )  (102 )
  Provision for excess and obsolete inventories   308    59  
  Share-based compensation   2,043    1,281  
  Excess tax benefits from stock options exercised and restricted stock awards vested   (1,129 )  (2,452 )
  Gain on disposition of assets   (20 )  (25 )
  Foreign currency transaction (gain) loss   (48 )  53  
  Interest income on note receivable   (14 )  (16 )
  Deferred income taxes   (1,851 )  (563 )
  Changes in assets and liabilities:           
   Accounts receivable   (8,417 )  (1,286 )
   Income taxes   5,162    1,636  
   Inventories   (1,934 )  (9,623 )
   Prepaid expenses and other   (550 )  (446 )
   Accounts payable   1,848    (1,030 )
   Deferred revenue   220    136  
   Accrued liabilities and donations   1,252    (867 )
 Net cash provided by operating activities   28,472    11,989  
Investing Activities           
 Capital expenditures   (15,825 )  (9,304 )
 Proceeds from sale of property, plant and equipment   1    30  
 Investment in certificates of deposits   (4,112 )  -  
 Maturities of certificates of deposits   6,000    4,658  
 Purchases of investments held to maturity   (9,782 )  -  
 Maturities of investments   3,801    9,201  
 Proceeds from called investments   1,010    504  
 Principal payments from note receivable   26    28  
 Net cash (used in) provided by investing activities   (18,881 )  5,117  
Financing Activities           
 Borrowings under revolving credit facility   761    -  
 Payments under revolving credit facility   (761 )  -  
 Stock options exercised   1,255    2,534  
 Excess tax benefits from stock options exercised and restricted stock awards vested   1,129    2,452  
 Repurchase of stock   (7,674 )  (6,444 )
 Net cash used in financing activities   (5,290 )  (1,458 )
Net increase in cash and cash equivalents   4,301    15,648  
Cash and cash equivalents, beginning of period   7,908    21,952  
Cash and cash equivalents, end of period  $12,209   $37,600  
         

Use of Non-GAAP Financial Measures

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, provides 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 June 30,  Six Months Ended June 30,
   
   2016  2015  2016  2015
   (in thousands)
Net Income, a GAAP measure  $14,341   $11,130   $25,147   $19,529  
Depreciation   3,175    2,795    6,346    5,599  
Amortization of bond premiums   68    45    151    106  
Share-based compensation   1,095    843    2,043    1,281  
Interest income   (135 )  (74 )  (292 )  (179 )
Income tax expense   7,934    6,873    14,145    11,919  
EBITDAX, a non-GAAP measure  $26,478   $21,612   $47,540   $38,255  
                 

Contact Information

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