SOURCE: AAON

AAON

November 02, 2015 07:00 ET

AAON Reports Third Quarter Results

TULSA, OK--(Marketwired - November 02, 2015) - AAON, Inc. (NASDAQ: AAON) today announced its operating results for the third quarter and nine months ended September 30, 2015.

In the quarter, net sales were $94.4 million, down 8.3% from $102.9 million in 2014. Net income was $13.3 million, up 6.5% from $12.4 million in the same period a year ago. Net sales for the nine-month period ended September 30, 2015 were $261.4 million, down 3.8% from $271.6 million in 2014. Net income for the nine-month period ended September 30, 2015 was $32.8 million, down 2.5% from $33.6 million in 2014.

Earnings per diluted share in the third quarter of 2015 were $0.24, up 9.1% from $0.22 for the same period the previous year, based upon 54.6 million and 55.5 million shares outstanding at September 30, 2015 and 2014, respectively. Earnings per diluted share for the nine-month period ended September 30, 2015 were $0.60, down 1.6% from $0.61 in 2014, based upon 54.6 million and 55.4 million shares outstanding at September 30, 2015 and 2014, respectively.

Norman H. Asbjornson, President and CEO, stated, "Despite the continuing unstable economic environment which negatively impacted our sales, we were able to maintain our gross profit margins, aided by improved productivity and level raw material costs. Our gross profit for the quarter was 32.0% of sales compared to 32.4% of sales a year ago, and for the nine month period ended September 30, 2015, stood at 30.3% versus 30.6% for the corresponding period in 2014."

Mr. Asbjornson further added, "Our SG&A expense as a percentage of sales declined from 13.4% to 10.7% for the quarter, and for the nine month period decreased from 11.8% to 10.6%. Total SG&A expense benefited from lower salaries and benefits along with the absence of non-recurring charitable contributions made in 2014."

Mr. Asbjornson continued, "Our financial condition at September 30, 2015 remained quite strong with a current ratio of 3.4:1 (including cash and short-term investments totaling $48.9 million), plus long term marketable investments of $13.2 million. We also remain debt free. Our backlog at September 30, 2015 increased 10.2% to $60.4 million, from $54.8 million for the same period a year ago."

Mr. Asbjornson concluded, "We have made important changes and additions to our product line which will be introduced in 2016. Furthermore, we have added new sales personnel who should contribute to next year's sales and earnings. While we expect results to remain relatively flat for the remainder of 2015, we look forward to resuming our growth in 2016 and beyond."

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 62745780); or, for rebroadcast, call 1-855-859-2056 (code 62745780).

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, 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,
   2015  2014  2015  2014
   (in thousands, except share and per share data)
Net sales  $94,360   $102,917   $261,403   $271,594  
Cost of sales   64,175    69,567    182,303    188,522  
Gross profit   30,185    33,350    79,100    83,072  
Selling, general and administrative expenses   10,062    13,830    27,579    32,043  
Gain on disposal of assets   (34 )  -    (59 )  (24 )
Income from operations   20,157    19,520    51,580    51,053  
Interest income   14    55    87    195  
Other expense, net   (58 )  (43 )  (106 )  (30 )
Income before taxes   20,113    19,532    51,561    51,218  
Income tax provision   6,862    7,092    18,781    17,593  
Net income  $13,251   $12,440   $32,780   $33,625  
Earnings per share:                     
 Basic  $0.24   $0.23   $0.61   $0.61  
 Diluted  $0.24   $0.22   $0.60   $0.61  
Cash dividends declared per common share:  $-   $-   $0.11   $0.09  
Weighted average shares outstanding:                     
 Basic   54,209,942    54,905,288    54,160,649    54,851,911  
 Diluted   54,579,590    55,484,043    54,623,163    55,423,294  
                  
 
AAON, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
 
   September 30, 2015  December 31, 2014
Assets  (in thousands, except share and per share data)
Current assets:      
 Cash and cash equivalents  $29,863  $21,952
 Certificates of deposit   10,800   6,098
 Investments held to maturity at amortized cost   8,266   11,972
 Accounts receivable, net   45,825   44,092
 Income tax receivable   2,172   2,569
 Note receivable   24   30
 Inventories, net   41,052   37,618
 Prepaid expenses and other   763   609
 Deferred tax assets   6,155   6,143
Total current assets   144,920   131,083
Property, plant and equipment:        
 Land   2,233   2,233
 Buildings   67,580   64,938
 Machinery and equipment   136,952   127,968
 Furniture and fixtures   10,746   10,388
  Total property, plant and equipment   217,511   205,527
  Less: Accumulated depreciation   121,215   113,605
 Property, plant and equipment, net   96,296   91,922
Certificates of deposit   2,120   5,280
Investments held to maturity at amortized cost   11,072   4,015
Note receivable   690   817
Total assets  $255,098  $233,117
         
Liabilities and Stockholders' Equity        
Current liabilities:        
 Revolving credit facility  $-  $-
 Accounts payable   7,759   11,370
 Accrued liabilities   34,482   31,343
Total current liabilities   42,241   42,713
Deferred revenue   689   1,006
Deferred tax liabilities   12,689   13,677
Donations   1,108   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, 54,139,246 and 54,041,829   217   216
 issued and outstanding at September 30, 2015 and December 31, 2014, respectively        
Additional paid-in capital   -   -
Retained earnings   198,154   173,843
Total stockholders' equity   198,371   174,059
Total liabilities and stockholders' equity  $255,098  $233,117
       
 
AAON, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
 
   Nine Months Ended
 September 30,
   2015  2014
Operating Activities  (in thousands)
 Net income  $32,780   $33,625  
 Adjustments to reconcile net income to net cash provided by operating activities:           
  Depreciation   8,587    8,660  
  Amortization of bond premiums   168    561  
  Provision for losses on accounts receivable, net of adjustments   (48 )  (59 )
  Provision for excess and obsolete inventories, net   (111 )  223  
  Share-based compensation   2,076    1,578  
  Excess tax benefits from stock options exercised and restricted stock awards vested   (2,217 )  (908 )
  Gain on disposition of assets   (59 )  (24 )
  Foreign currency transaction loss   114    36  
  Interest income on note receivable   (23 )  (30 )
  Deferred income taxes   (1,000 )  (4,361 )
  Changes in assets and liabilities:           
   Accounts receivable   (1,685 )  (15,663 )
   Income tax receivable   2,614    1,981  
   Inventories   (3,323 )  (5,323 )
   Prepaid expenses and other   (154 )  (486 )
   Accounts payable   (3,801 )  5,982  
   Deferred revenue   138    591  
   Accrued liabilities and donations   2,130    12,761  
 Net cash provided by operating activities   36,186    39,144  
Investing Activities           
 Capital expenditures   (12,775 )  (13,567 )
 Proceeds from sale of property, plant and equipment   63    30  
 Investment in certificates of deposits   (6,200 )  (9,940 )
 Maturities of certificates of deposits   4,658    6,745  
 Purchases of investments held to maturity   (14,183 )  (6,880 )
 Maturities of investments   9,907    8,891  
 Proceeds from called investments   757    2,525  
 Principal payments from note receivable   42    52  
 Net cash used in investing activities   (17,731 )  (12,144 )
Financing Activities           
 Stock options exercised   2,640    908  
 Excess tax benefits from stock options exercised and restricted stock awards vested   2,217    908  
 Repurchase of stock   (9,436 )  (17,309 )
 Cash dividends paid to stockholders   (5,965 )  (4,773 )
 Net cash used in financing activities   (10,544 )  (20,266 )
Net increase in cash and cash equivalents   7,911    6,734  
Cash and cash equivalents, beginning of period   21,952    12,085  
Cash and cash equivalents, end of period  $29,863   $18,819  
         

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
September 30,
 Nine Months Ended
September 30,
   
   2015  2014  2015  2014
   (in thousands)
Net Income, a GAAP measure  $13,251   $12,440   $32,780   $33,625  
Depreciation   2,988    2,941    8,587    8,660  
Amortization of bond premiums   62    172    168    561  
Share-based compensation   795    594    2,076    1,578  
Interest (income)   (76 )  (227 )  (255 )  (756 )
Income tax expense   6,862    7,092    18,781    17,593  
EBITDAX, a non-GAAP measure  $23,882   $23,012   $62,137   $61,261  
                 

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
September 30,
 Nine Months Ended
September 30,
   
   2015  2014  2015  2014
   (in thousands except per share data)
Net Income, a GAAP measure  $13,251   $12,440   $32,780   $33,625  
Non-recurring donations   390    2,845    195    3,845  
Profit-sharing   (39 )  (284 )  (20 )  (384 )
Income tax expense   (120 )  (929 )  (64 )  (1,187 )
Adjusted Net Income, a non-GAAP measure  $13,482   $14,072   $32,891   $35,899  
                      
Earnings per share-diluted, a GAAP measure  $0.24   $0.22   $0.60   $0.61  
Non-recurring donations   0.01    0.05    -    0.07  
Profit-sharing   -    (0.01 )  -    (0.01 )
Income tax expense   -    (0.02 )  -    (0.02 )
Adjusted earnings per share-diluted, a non-GAAP measure  $0.25   $0.24   $0.60   $0.65  

Contact Information

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