SOURCE: AAON

AAON

August 04, 2011 07:00 ET

AAON Reports Second Quarter Results

TULSA, OK--(Marketwire - Aug 4, 2011) - AAON, Inc. (NASDAQ: AAON), today announced its operating results for the second quarter and six-month period ended June 30, 2011.

In the quarter, net sales increased 7% to $69.1 million from $64.5 million, while net income decreased 34% to $3.8 million from $5.8 million in the second quarter of 2010. Earnings per diluted share were $0.15, down 35% from $0.23 for the same period a year ago, based upon 24.9 million and 25.5 million diluted shares outstanding for the three months ended June 30, 2011, compared to June 30, 2010, respectively. Net sales for the first six months of 2011 increased 13% to $129.0 million from $113.8 million in 2010, and net income decreased 31% to $7.5 million from $10.9 million. Earnings per diluted share were $0.30, down 30% from $0.43, based upon 24.9 million and 25.7 million diluted shares outstanding for the six months ended June 30, 2011, compared to June 30, 2010, respectively.

Norman H. Asbjornson, President and CEO, stated, "The increases in sales resulted primarily from a significant increase in sales to the replacement market (up to 70% of total sales vs. less than 60% in 2010), largely due to the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 signed into law on December 17, 2010, which allows 100% depreciation for qualified capitalized expenditures put in service in calendar year 2011."

Mr. Asbjornson said, "The decreases in earnings were attributable to a number of factors, including primarily: (1) excess manufacturing expense items purchased in advance to avoid price increases; (2) higher costs of raw material and component parts; (3) lower productivity of workers and equipment caused by adverse temperature conditions resulting from previously reported storm damage to the roof of the Tulsa facility; and (4) manufacturing problems related to production facilities rearrangement."

Mr. Asbjornson concluded by saying, "With most of these higher, abnormal costs and elective expenses behind us or abating, and taking into account our record backlog of $59.7 million at mid-year (up 35% from June 30, 2010), plus the fact that our recent price increases will fully impact sales in the third quarter and beyond, we anticipate continued increases in sales and improved profitability for the balance of 2011."

The Company will host a conference call today at 4:15 P.M. ET to discuss the second quarter results. To participate, call 1-877-737-1669.

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
Consolidated Statements of Income
(unaudited)
Three Months Ended Six Months Ended
June 30, 2011 June 30, 2010 June 30, 2011 June 30, 2010
(in thousands, except per share data)
Net sales $ 69,076 $ 64,531 $ 128,989 $ 113,840
Cost of sales 57,339 49,025 105,614 85,340
Gross profit 11,737 15,506 23,375 28,500
Selling, general and administrative expenses
5,697

6,598

11,240
11,426
Income from operations 6,040 8,908 12,135 17,074
Interest expense (104 ) - (114 ) -
Investment interest income 20 112 43 118
Note receivable interest income 11 - 22 -
Other income (expense), net (65 ) (62 ) (568 ) (122 )
Income before income taxes 5,902 8,958 11,518 17,070
Income tax provision 2,063 3,137 4,029 6,131
Net income $ 3,839 $ 5,821 $ 7,489 $ 10,939
Earnings per share:
Basic* $ 0.16 $ 0.23 $ 0.30 $ 0.43
Diluted* $ 0.15 $ 0.23 $ 0.30 $ 0.43
Cash dividends declared per common share:* $ 0.12 $ 0.12 $ 0.12 $ 0.12
Weighted average shares outstanding:
Basic* 24,715 25,411 24,730 25,594
Diluted* 24,923 25,546 24,931 25,725
*Reflects three-for-two stock split effective June 13, 2011.
AAON, Inc., and Subsidiaries
Consolidated Balance Sheets
(unaudited)
June 30, 2011 December 31, 2010
Assets (in thousands except share and per share data)

Current assets:
Cash and cash equivalents $ 2,091 $ 2,393
Certificates of deposit 240 1,503
Investments held to maturity at amortized cost 2,328 9,520
Accounts receivable, net 42,694 39,901
Note receivable 26 26
Inventories, net 45,311 33,602
Prepaid expenses and other 422 656
Deferred tax assets 4,610 4,147
Total current assets 97,722 91,748
Property, plant and equipment:
Land 1,340 1,328
Buildings 50,584 45,482
Machinery and equipment 119,491 100,559
Furniture and fixtures 7,101 6,356
Total property, plant and equipment 178,516 153,725
Less: Accumulated depreciation 91,034 86,307
Property, plant and equipment, net 87,482 67,418
Note receivable, long-term 1,156 1,111
Total assets $ 186,360 $ 160,277
Liabilities and Stockholders' Equity
Current liabilities:
Revolving credit facility $ 7,628 $ -
Accounts payable 24,621 13,017
Dividends payable 2,966 -
Accrued liabilities 23,047 23,229
Total current liabilities 58,262 36,246
Deferred tax liabilities 8,069 7,292
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.001 par value, 7,500,000 shares authorized, no shares issued - -
Common stock, $.004 par value, 75,000,000 shares authorized, 24,670,026 and 24,758,480 issued and outstanding at June 30, 2011 and December 31, 2010, respectively* 99
99
Retained earnings 119,930 116,640
Total stockholders' equity 120,029 116,739
Total liabilities and stockholders' equity $ 186,360 $ 160,277
* Reflects three-for-two stock split effective June 13, 2011.
AAON, Inc., and Subsidiaries
Consolidated Statements of Cash Flows
(unaudited)
Six Months
Ended
June 30, 2011
Six Months
Ended
June 30, 2010
(in thousands)
Operating Activities
Net income $ 7,489 $ 10,939
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 5,449 4,812
Amortization of bond premiums 137 -
Provision for losses on accounts receivable, net of adjustments (106 ) (164 )
Share-based compensation 346 421
Excess tax benefits from stock options exercised and restricted stock awards vested (77 ) (342 )
Gain on disposition of assets (8 ) -
Other, effect of foreign currency gain (59 ) -
Deferred income taxes 314 (1,284 )
Changes in assets and liabilities:
Accounts receivable (2,687 ) (2,914 )
Inventories (11,709 ) (5,454 )
Prepaid expenses and other 234 426
Financial derivative assets - 1,211
Accounts payable 10,957 7,821
Accrued liabilities (105 ) 6,936
Net cash provided by operating activities 10,175 22,408
Investing Activities
Proceeds from sale of property, plant and equipment 49 -
Investment in certificates of deposit - (2,744 )
Maturities of certificates of deposit 1,263 719
Investments held to maturity - (13,692 )
Maturities of investments 7,055 600
Capital expenditures (24,907 ) (6,472 )
Proceeds from note receivable 14 -
Net cash used in investing activities (16,526 ) (21,589 )
Financing Activities
Borrowings under revolving credit facility 36,231 -
Payments under revolving credit facility (28,603 ) -
Payments of long-term debt - (46 )
Stock options exercised 132 976
Excess tax benefits from stock options exercised and restricted stock awards vested 77 342
Repurchases of stock (1,779 ) (17,439 )
Cash dividends paid to stockholders* (9 ) (6,192 )
Net cash provided by (used) in financing activities 6,049 (22,359 )
Effect of exchange rate on cash - 2
Net decrease in cash and cash equivalents (302 ) (21,538 )
Cash and cash equivalents, beginning of year 2,393 25,639
Cash and cash equivalents, end of period $ 2,091 $ 4,101
*Cash payment in lieu of fractional shares resulting from three-for-two stock split effective June 13, 2011.
AAON, Inc., and Subsidiaries
Consolidated Statements of Cash Flows
(unaudited)
Six Months
Ended
June 30, 2011
Six Months
Ended
June 30, 2010
(in thousands)
Non Cash Investing Activities
Capital expenditures accrued in accounts payable $ 647 $ -

Contact Information

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