AAON Reports Record Sales and Earnings For the First Quarter of 2020

TULSA, Okla., May 07, 2020 (GLOBE NEWSWIRE) -- AAON, INC. (NASDAQ-AAON), today announced its results for the first quarter of 2020.

Financial Highlights:Three Months Ended March 31, %
 2020 2019 Change
 (in thousands, except share and per share data)
Net sales$137,483  $113,822  20.8%
Gross profit42,947  25,430  68.9%
Gross profit %31.2% 22.3%  
Selling, general and administrative expenses$15,214  $13,677  11.2%
Net income21,853  8,757  149.5%
Net income %15.9% 7.7%  
Earnings per diluted share$0.41  $0.17  141.2%
Diluted average shares52,871,419  52,369,660  1.0%
      
 March 31, December 31, %
 2020 2019 Change
 (in thousands)  
Backlog$119,642  $142,747  (16.2)%
Cash & cash equivalents & Restricted cash52,145  44,373  17.5%
         

Gary Fields, President, said "We have been extremely fortunate during these trying times.  As discussed in the fourth quarter, we were able to increase our manufacturing capacity with the addition of several Salvagnini sheet metal fabrication machines which put us in a beneficial position heading into the first quarter.  As a result, we have been able to reduce lead times and our Tulsa plant has nearly 100% on time deliveries as of the end of the quarter.  All these factors gave us the ability to swiftly respond to the needs of the public as an essential business. Our team worked around-the-clock to produce and deliver multiple orders for temporary hospitals in the New York area."

Mr. Fields continued, "The increased sales volume has helped absorb our fixed overhead costs and improve our gross profit.  Our selling, general and administrative expenses have increased due to the profit sharing and other incentives we pay our employees as a result of our record earnings. To date, we have seen minimal business disruption from COVID-19.  While the future may hold some amount of uncertainty, we continue to work hard to keep our work environment safe so we can meet the needs of our customers and protect the health and well-being of our employees."

The decreased backlog as of March 31, 2020 compared to year-end 2019 resulted from both accelerated shipments during the first quarter and a planned reduction in the backlog to facilitate more acceptable lead-times on deliveries.  While business continues to remain firm, evidenced by our 92% of expected order intake in the first quarter of 2020, we are closely monitoring and adapting to COVID-19 related variables.

Norman H. Asbjornson, CEO, added "Our financial condition remains strong as evidenced by our current ratio of 3.1:1 at March 31, 2020.   Furthermore, we have unrestricted cash and cash equivalents of $35.7 million as of March 31, 2020, to ensure that our future investment in the Company remains fiscally sound."

The Company will host a conference call today at 4:15 P.M. (Eastern Time) to discuss the first quarter 2020 results. To participate, call 1-888-241-0551 (code 5395749); or, for rebroadcast available through May 13, 2020, call 1-855-859-2056 (code 5395749).

About AAON
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, coils and controls. 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. For more information, please visit www.AAON.com.

Forward-Looking Statements
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, including risks related to the impact of the error correction, that could cause actual results and developments to differ materially from the forward-looking statements.

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

AAON, Inc. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
 Three Months Ended 
 March 31,
 2020 2019
 (in thousands, except share and per share data)
Net sales$137,483  $113,822 
Cost of sales94,536  88,392 
Gross profit42,947  25,430 
Selling, general and administrative expenses15,214  13,677 
(Gain) loss on disposal of assets(62) 284 
Income from operations27,795  11,469 
Interest income, net61  9 
Other (expense) income, net(27) (26)
Income before taxes27,829  11,452 
Income tax provision5,976  2,695 
Net income$21,853  $8,757 
Earnings per share:   
Basic$0.42  $0.17 
Diluted$0.41  $0.17 
Weighted average shares outstanding:   
Basic52,071,839  51,992,150 
Diluted52,871,419  52,369,660 
      


AAON, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
 March 31, 2020 December 31, 2019
Assets(in thousands, except share and per share data)
Current assets:   
Cash and cash equivalents$35,677  $26,797 
Restricted cash16,468  17,576 
Accounts receivable, net69,894  67,399 
Income tax receivable  772 
Note receivable27  29 
Inventories, net72,855  73,601 
Prepaid expenses and other2,045  1,375 
Total current assets196,966  187,549 
Property, plant and equipment:   
Land3,298  3,274 
Buildings104,707  101,113 
Machinery and equipment252,544  236,087 
Furniture and fixtures17,116  16,862 
Total property, plant and equipment377,665  357,336 
Less: Accumulated depreciation184,636  179,242 
Property, plant and equipment, net193,029  178,094 
Intangible assets, net213  272 
Goodwill3,229  3,229 
Right of use assets1,641  1,683 
Note receivable542  597 
Total assets$395,620  $371,424 
    
Liabilities and Stockholders' Equity   
Current liabilities:   
Revolving credit facility$  $ 
Accounts payable13,501  11,759 
Accrued liabilities50,684  44,269 
Total current liabilities64,185  56,028 
Deferred tax liabilities15,130  15,297 
Other long-term liabilities3,652  3,639 
New market tax credit obligation6,330  6,320 
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, 52,044,110 and 52,078,515 issued and outstanding at March 31, 2020 and December 31, 2019, respectively208  208 
Additional paid-in capital  3,631 
Retained earnings306,115  286,301 
Total stockholders' equity306,323  290,140 
Total liabilities and stockholders' equity$395,620  $371,424 
        


AAON, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
 Three Months Ended 
 March 31,
 2020 2019
Operating Activities(in thousands)
Net income$21,853  $8,757 
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization6,002  5,914 
Amortization of debt issuance cost10   
Provision for losses on accounts receivable, net of adjustments294  115 
Provision for excess and obsolete inventories(274) 357 
Share-based compensation2,351  5,407 
(Gain) loss on disposition of assets(62) 284 
Foreign currency transaction loss (gain)51  (16)
Interest income on note receivable(6) (6)
Deferred income taxes(167) 909 
Changes in assets and liabilities:   
Accounts receivable(2,789) (4,725)
Income taxes772  1,432 
Inventories1,020  2,678 
Prepaid expenses and other(670) (561)
Accounts payable2,742  (5,730)
Deferred revenue229  25 
Accrued liabilities6,241  73 
Net cash provided by operating activities37,597  14,913 
Investing Activities   
Capital expenditures(21,877) (8,772)
Proceeds from sale of property, plant and equipment61  52 
Principal payments from note receivable12  17 
Net cash used in investing activities(21,804) (8,703)
Financing Activities   
Stock options exercised4,497  4,010 
Repurchase of stock(11,565) (4,483)
Employee taxes paid by withholding shares(953) (588)
Net cash used in financing activities(8,021) (1,061)
Net increase in cash, cash equivalents and restricted cash7,772  5,149 
Cash, cash equivalents and restricted cash, beginning of period44,373  1,994 
Cash, cash equivalents and restricted cash, end of period$52,145  $7,143 
        

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