AAON, INC. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - February 25, 2016

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8-K - 8-K - AAON, INC.aaon20151231pressrelease.htm


Exhibit 99.1                        
NEWS
BULLETIN
 
AAON, Inc.
 
2425 South Yukon Ave. Ÿ Tulsa, OK 74107-2728
 
Ÿ Ph: (918) 583-2266 Ÿ   Fax: (918) 583-6094 Ÿ
 
Ÿhttp://www.aaon.comŸ
 
 
 
 
 
FOR IMMEDIATE RELEASE
FEBRUARY 25, 2016
 
For Further Information:
 
Jerry R. Levine Ÿ Phone: (914) 244-0292 Ÿ Fax: (914) 244-0295
 
Email: jrladvisor@yahoo.com

AAON REPORTS RECORD SALES AND EARNINGS
FOR FOURTH QUARTER AND YEAR 2015

TULSA, OK, February 25, 2016 - AAON, INC. (NASDAQ-AAON), today announced its operating results for the fourth quarter and year 2015. Sales in the fourth quarter were a record $97.2 million, up 14.8% from $84.7 million in 2014. Net income was also a record $12.9 million, up 22.9% from $10.5 million in the same period a year ago. Sales for the year 2015 reached a record level, $358.6 million, up 0.6% compared to $356.3 million in 2014. Earnings for 2015 were also a record, $45.7 million, up 3.6% compared to $44.2 million in 2014.

Earnings for the fourth quarter of 2015 and 2014 were $0.24 and $0.19 per diluted share, up 26.3%, based upon 54.0 million and 54.8 million diluted shares outstanding, respectively. Earnings per diluted share for the years 2015 and 2014 were $0.84 and $0.80, up 5.0%, based upon 54.5 million and 55.4 million diluted shares outstanding, respectively.

Norman H. Asbjornson, President and CEO, stated, “We had a slow start to 2015, but with the changes made during the year, including adding more Regional Sales Managers and eliminating under-performing Sales Representative firms, we witnessed a firm rebound and growth in the final quarter of the year."

Mr. Asbjornson further added, "Our gross profit percentage remains strong at 30.3% for the year 2015 compared to 30.4% in 2014. Our SG&A expense as a percent of sales decreased from 11.4% in 2014 to 10.4% in 2015. This decrease is due to the absence of non-recurring charitable donations made in 2014 and decreases in our warranty expense."

Mr. Asbjornson continued, "The Company’s backlog increased from $48.8 million at December 31, 2014 to $57.1 million at December 31, 2015. In addition, the Company's balance sheet at year end was strong. The current ratio was 2.9:1 (including cash and investments of $37.4 million). It should be noted that the Company purchased slightly more than 1.0 million shares of AAON stock under its resumed open market buyback program for approximately $25.0 million during the fourth quarter. We continued to remain debt-free and our return on average stockholder equity was 25.9% in 2015 compared to 26.1% in 2014."

Mr. Asbjornson concluded, "While 2015 results were relatively similar with 2014, we expect the changes in our sales force in 2015 and the expansion of our product lines in 2016 will allow the Company to continue its growth mode and post record results in sales and earnings."

The Company will host a conference call today at 4:15 P.M. (Eastern Time) to discuss the fourth quarter and year 2015 results. To participate, call 1-888-241-0551 (code 49944392); or, for rebroadcast, call 1-855-859-2056 (code 49943292).

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, geothermal heat pumps, 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.


1


AAON, Inc. and Subsidiaries
Unaudited Consolidated Statements of Income
 
Three Months Ended 
 December 31,
 
Years Ending
December 31,
 
2015
 
2014
 
2015
 
2014
 
(in thousands, except share and per share data)
Net sales
$
97,229

 
$
84,728

 
$
358,632

 
$
356,322

Cost of sales
67,648

 
59,537

 
249,951

 
248,059

Gross profit
29,581

 
25,191

 
108,681

 
108,263

Selling, general and administrative expenses
9,859

 
8,519

 
37,438

 
40,562

Gain on disposal of assets
—

 
(281
)
 
(59
)
 
(305
)
Income from operations
19,722

 
16,953

 
71,302

 
68,006

Interest income, net
74

 
81

 
161

 
276

Other expense, net
(18
)
 
(6
)
 
(124
)
 
(36
)
Income before taxes
19,778

 
17,028

 
71,339

 
68,246

Income tax provision
6,830

 
6,495

 
25,611

 
24,088

Net income
$
12,948

 
$
10,533

 
$
45,728

 
$
44,158

Earnings per share:
 

 
 

 
 

 
 

Basic
$
0.24

 
$
0.19

 
$
0.85

 
$
0.81

Diluted
$
0.24

 
$
0.19

 
$
0.84

 
$
0.80

Cash dividends declared per common share:
$
0.11

 
$
0.09

 
$
0.22

 
$
0.18

Weighted average shares outstanding:
 
 
 
 
 

 
 

Basic
53,680,995

 
54,291,317

 
54,045,841

 
54,809,319

Diluted
54,036,021

 
54,815,954

 
54,481,484

 
55,369,016





2


AAON, Inc. and Subsidiaries
Unaudited Consolidated Balance Sheets
 
December 31,
 
2015
 
2014
Assets
(in thousands, except share and per share data)
Current assets:
 
 
 
Cash and cash equivalents
$
7,908

 
$
21,952

Certificates of deposit
10,080

 
6,098

Investments held to maturity at amortized cost
12,444

 
11,972

Accounts receivable, net
50,024

 
44,092

Income tax receivable
4,702

 
2,569

Note receivable
23

 
30

Inventories, net
38,499

 
37,618

Prepaid expenses and other
533

 
609

Total current assets
124,213

 
124,940

Property, plant and equipment:
 

 
 

Land
2,233

 
2,233

Buildings
68,806

 
64,938

Machinery and equipment
143,100

 
127,968

Furniture and fixtures
11,270

 
10,388

Total property, plant and equipment
225,409

 
205,527

Less:  Accumulated depreciation
124,348

 
113,605

Property, plant and equipment, net
101,061

 
91,922

Certificates of deposit
1,880

 
5,280

Investments held to maturity at amortized cost
5,039

 
4,015

Note receivable
661

 
817

Total assets
$
232,854

 
$
226,974

 
 
 
 
Liabilities and Stockholders' Equity
 

 
 

Current liabilities:
 

 
 

Revolving credit facility
$
—

 
$
—

Accounts payable
6,178

 
11,370

Accrued liabilities
37,235

 
31,343

Total current liabilities
43,413

 
42,713

Deferred revenue
698

 
1,006

Deferred tax liabilities
8,706

 
7,534

Donations
1,119

 
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, 53,012,363 and 54,041,829 issued and outstanding at December 31, 2015 and 2014, respectively
212

 
216

Additional paid-in capital
—

 
—

Retained earnings
178,706

 
173,843

Total stockholders' equity
178,918

 
174,059

Total liabilities and stockholders' equity
$
232,854

 
$
226,974




3


AAON, Inc. and Subsidiaries
Unaudited Consolidated Statements of Cash Flows
 
Years Ending December 31,
 
2015
 
2014
 
2013
Operating Activities
(in thousands)
Net income
$
45,728

 
$
44,158

 
$
37,547

Adjustments to reconcile net income to net cash provided by operating activities:
 

 
 

 
 

Depreciation
11,741

 
11,553

 
12,312

Amortization of bond premiums
266

 
688

 
790

Provision for losses on accounts receivable, net of adjustments
(48
)
 
(22
)
 
141

Provision for excess and obsolete inventories
178

 
135

 
243

Share-based compensation
2,891

 
2,178

 
1,763

Excess tax benefits from stock options exercised and restricted stock awards vested
(2,445
)
 
(1,239
)
 
(843
)
Gain on disposition of assets
(59
)
 
(305
)
 
(22
)
Foreign currency transaction loss
139

 
74

 
67

Interest income on note receivable
(30
)
 
(36
)
 
(40
)
Deferred income taxes
1,172

 
(2,111
)
 
(1,594
)
Write-off of note receivable
—

 
—

 
75

Changes in assets and liabilities:
 

 
 

 
 
Accounts receivable
(5,884
)
 
(5,007
)
 
4,662

Income tax receivable
312

 
(257
)
 
464

Inventories
(1,059
)
 
(5,613
)
 
231

Prepaid expenses and other
76

 
(305
)
 
436

Accounts payable
(5,109
)
 
3,512

 
(5,197
)
Deferred revenue
189

 
782

 
615

Accrued liabilities
4,852

 
4,094

 
1,942

Net cash provided by operating activities
52,910

 
52,279

 
53,592

Investing Activities
 

 
 

 
 
Capital expenditures
(20,967
)
 
(16,127
)
 
(9,041
)
Proceeds from sale of property, plant and equipment
63

 
319

 
92

Investment in certificates of deposits
(6,680
)
 
(9,940
)
 
(9,108
)
Maturities of certificates of deposits
6,098

 
9,310

 
3,600

Purchases of investments held to maturity
(14,183
)
 
(6,880
)
 
(22,275
)
Maturities of investments
11,408

 
14,197

 
2,005

Proceeds from called investments
1,013

 
3,029

 
3,332

Principal payments from note receivable
54

 
63

 
69

Net cash used in investing activities
(23,194
)
 
(6,029
)
 
(31,326
)
Financing Activities
 

 
 

 
 
Borrowings under revolving credit facility
—

 
—

 
8,325

Payments under revolving credit facility
—

 
—

 
(8,325
)
Stock options exercised
2,795

 
1,318

 
1,467

Excess tax benefits from stock options exercised and restricted stock awards vested
2,445

 
1,239

 
843

Repurchase of stock
(37,143
)
 
(29,284
)
 
(8,222
)
Cash dividends paid to stockholders
(11,857
)
 
(9,656
)
 
(7,428
)
Net cash used in financing activities
(43,760
)
 
(36,383
)
 
(13,340
)
Net (decrease) increase in cash and cash equivalents
(14,044
)
 
9,867

 
8,926

Cash and cash equivalents, beginning of period
21,952

 
12,085

 
3,159

Cash and cash equivalents, end of period
$
7,908

 
$
21,952

 
$
12,085



4


Use of Non-GAAP Financial Measure
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, provide 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 
 December 31,
 
Years Ending
December 31,
 
 
 
2015
 
2014
 
2015
 
2014
 
(in thousands)
Net Income, a GAAP measure
$
12,948

 
$
10,533

 
$
45,728

 
$
44,158

Depreciation
3,154

 
2,893

 
11,741

 
11,553

Amortization of bond premiums
98

 
127

 
266

 
688

Share-based compensation
815

 
600

 
2,891

 
2,178

Interest (income) expense
(172
)
 
(208
)
 
(427
)
 
(964
)
Income tax expense
6,830

 
6,495

 
25,611

 
24,088

EBITDAX, a non-GAAP measure
$
23,673

 
$
20,440

 
$
85,810

 
$
81,701






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