Attached files
| file | filename |
|---|---|
| 8-K - 8-K - AAON, INC. | aaon-20200227.htm |
Exhibit 99.1
AAON REPORTS SALES AND EARNINGS FOR THE FOURTH QUARTER AND YEAR 2019
TULSA, OK, February 27, 2020 - AAON, INC. (NASDAQ-AAON), today announced its results for the fourth quarter and full year 2019.
| Financial Highlights: | Three Months Ended December 31, | % | Years Ended December 31, | % | |||||||||||||||||||||||||||||||||||||
| 2019 | 2018 | Change | 2019 | 2018 | Change | ||||||||||||||||||||||||||||||||||||
| (in thousands, except share and per share data) | (in thousands, except share and per share data) | ||||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 122,574 | $ | 112,340 | 9.1 | % | $ | 469,333 | $ | 433,947 | 8.2 | % | |||||||||||||||||||||||||||||
| Gross profit | 36,381 | 27,846 | 30.7 | % | 119,425 | 103,533 | 15.3 | % | |||||||||||||||||||||||||||||||||
| Gross profit % | 29.7 | % | 24.8 | % | 25.4 | % | 23.9 | % | |||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | $ | 13,114 | $ | 10,723 | 22.3 | % | $ | 52,077 | $ | 48,194 | 8.1 | % | |||||||||||||||||||||||||||||
| Net income | 17,273 | 12,964 | 33.2 | % | 53,711 | 42,329 | 26.9 | % | |||||||||||||||||||||||||||||||||
| Earnings per diluted share: | $ | 0.33 | $ | 0.25 | 32.0 | % | $ | 1.02 | $ | 0.80 | 27.5 | % | |||||||||||||||||||||||||||||
| Diluted average shares | 52,701,202 | 52,420,529 | 0.5 | % | 52,635,415 | 52,667,939 | (0.1) | % | |||||||||||||||||||||||||||||||||
| As of December 31, | % | ||||||||||||||||||||||||||||||||||||||||
| 2019 | 2018 | Change | |||||||||||||||||||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||||||||||||||||||||
| Backlog | $ | 142,747 | $ | 151,767 | (5.9) | % | |||||||||||||||||||||||||||||||||||
| Cash & cash equivalents | 26,797 | 1,994 | 1,244 | % | |||||||||||||||||||||||||||||||||||||
Gary Fields, President, said "Our increase in net sales is attributable to our continuing investment in new manufacturing equipment that has allowed us to capitalize on our existing workforce as well as reorganize production resources at our Tulsa facilities. We are witnessing operational and financial improvements as a direct result. Combined with our 2018 sales price increases, the result has been record sales for the year of 2019, an increase of 8.2%, as compared to $433.9 million in 2018."
Mr. Fields, continued "We are seeing improvements in our manufacturing capacity due to additional Salvagnini sheet metal fabrication machines coming online during mid-September 2019, evidenced by our results of a record gross profit in the fourth quarter of 2019. In addition to improvements in gross profit, we continue to reduce other costs as evidenced by the decrease in warranty claims paid for the year down 13.4% from 2018. With our high backlog containing the 2018 price increases combined with our continual improvements in operational capacity and efficiency, we expect to witness improvements in both our sales and earnings in 2020."
Norman H. Asbjornson, CEO, added "With a 2020 capital expenditure budget of $73.2 million, the Company continues to make a strategic investments to maintain future sustainable growth. These investments in both operations and innovation are being made while maintaining a strong financial condition evidenced by our current ratio of 3.3:1 at December 31, 2019. Furthermore, we have unrestricted cash and cash equivalents of $26.8 million as of December 31, 2019, 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 fourth quarter and year 2019 results. To participate, call 1-888-241-0551 (code 2880248); or, for rebroadcast available through March 4, 2020, call 1-855-859-2056 (code 2880248).
1
Error Correction
The Company noted errors in previously issued financial statements relating to share-based compensation expense for stock options and restricted stock awards held by retirement eligible employees and directors. The Company determined that it would be appropriate to correct the errors in our previously issued consolidated financial statements by correcting such financial statements with the Company’s 2019 annual report. More details, including the impact to each of the annual and interim financial statements is described in detail in the Company’s 2019 annual report. The effect of the error correction for the year ending December 31, 2018 was a $0.2 million decrease in net income and $0.01 decrease in our diluted earnings per common share. The effect of the error correction for the quarter ending December 31, 2018 was a $0.4 million increase in net income and $0.01 increase in our diluted earnings per common share.
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
2
| AAON, Inc. and Subsidiaries | |||||||||||||||||||||||
| Unaudited Consolidated Statements of Income | |||||||||||||||||||||||
| Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||
| (in thousands, except share and per share data) | |||||||||||||||||||||||
| Net sales | $ | 122,574 | $ | 112,340 | $ | 469,333 | $ | 433,947 | |||||||||||||||
| Cost of sales | 86,193 | 84,494 | 349,908 | 330,414 | |||||||||||||||||||
| Gross profit | 36,381 | 27,846 | 119,425 | 103,533 | |||||||||||||||||||
| Selling, general and administrative expenses | 13,114 | 10,723 | 52,077 | 48,194 | |||||||||||||||||||
| Loss (gain) on disposal of assets | 41 | (3) | 337 | (12) | |||||||||||||||||||
| Income from operations | 23,226 | 17,126 | 67,011 | 55,351 | |||||||||||||||||||
| Interest income, net | 17 | 25 | 66 | 196 | |||||||||||||||||||
| Other (expense) income, net | (30) | (58) | (46) | (47) | |||||||||||||||||||
| Income before taxes | 23,213 | 17,093 | 67,031 | 55,500 | |||||||||||||||||||
| Income tax provision | 5,940 | 4,129 | 13,320 | 13,171 | |||||||||||||||||||
| Net income | $ | 17,273 | $ | 12,964 | $ | 53,711 | $ | 42,329 | |||||||||||||||
| Earnings per share: | |||||||||||||||||||||||
| Basic | $ | 0.33 | $ | 0.25 | $ | 1.03 | $ | 0.81 | |||||||||||||||
| Diluted | $ | 0.33 | $ | 0.25 | $ | 1.02 | $ | 0.80 | |||||||||||||||
| Cash dividends declared per common share: | $ | 0.16 | $ | 0.16 | $ | 0.32 | $ | 0.32 | |||||||||||||||
| Weighted average shares outstanding: | |||||||||||||||||||||||
| Basic | 52,094,125 | 52,086,247 | 52,079,865 | 52,284,616 | |||||||||||||||||||
| Diluted | 52,701,202 | 52,420,529 | 52,635,415 | 52,667,939 | |||||||||||||||||||
3
| AAON, Inc. and Subsidiaries | |||||||||||
| Unaudited Consolidated Balance Sheets | |||||||||||
| December 31, | |||||||||||
| 2019 | 2018 | ||||||||||
| Assets | (in thousands, except share and per share data) | ||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 26,797 | $ | 1,994 | |||||||
| Restricted cash | 17,576 | — | |||||||||
| Accounts receivable, net | 67,399 | 54,078 | |||||||||
| Income tax receivable | 772 | 5,901 | |||||||||
| Note receivable | 29 | 27 | |||||||||
| Inventories, net | 73,601 | 77,612 | |||||||||
| Prepaid expenses and other | 1,375 | 1,046 | |||||||||
| Total current assets | 187,549 | 140,658 | |||||||||
| Property, plant and equipment: | |||||||||||
| Land | 3,274 | 3,114 | |||||||||
| Buildings | 101,113 | 97,393 | |||||||||
| Machinery and equipment | 236,087 | 212,779 | |||||||||
| Furniture and fixtures | 16,862 | 16,597 | |||||||||
Total property, plant and equipment | 357,336 | 329,883 | |||||||||
Less: Accumulated depreciation | 179,242 | 166,880 | |||||||||
Property, plant and equipment, net | 178,094 | 163,003 | |||||||||
| Intangible assets, net | 272 | 506 | |||||||||
| Goodwill | 3,229 | 3,229 | |||||||||
| Right of use assets | 1,683 | — | |||||||||
| Note receivable | 597 | 598 | |||||||||
| Total assets | $ | 371,424 | $ | 307,994 | |||||||
| Liabilities and Stockholders' Equity | |||||||||||
| Current liabilities: | |||||||||||
| Revolving credit facility | $ | — | $ | — | |||||||
| Accounts payable | 11,759 | 10,616 | |||||||||
| Accrued liabilities | 44,269 | 36,875 | |||||||||
| Total current liabilities | 56,028 | 47,491 | |||||||||
| Deferred tax liabilities | 15,297 | 9,259 | |||||||||
| Other long-term liabilities | 3,639 | 1,801 | |||||||||
| New market tax credit obligation | 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, 52,078,515 and 51,991,242 issued and outstanding at December 31, 2019 and 2018, respectively | 208 | 208 | |||||||||
| Additional paid-in capital | 3,631 | — | |||||||||
| Retained earnings | 286,301 | 249,235 | |||||||||
| Total stockholders' equity | 290,140 | 249,443 | |||||||||
| Total liabilities and stockholders' equity | $ | 371,424 | $ | 307,994 | |||||||
4
| AAON, Inc. and Subsidiaries | |||||||||||
| Unaudited Consolidated Statements of Cash Flows | |||||||||||
| Years Ended December 31, | |||||||||||
| 2019 | 2018 | ||||||||||
| Operating Activities | (in thousands) | ||||||||||
| Net income | $ | 53,711 | $ | 42,329 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 22,766 | 17,655 | |||||||||
| Amortization of bond premiums | — | 13 | |||||||||
| Amortization of debt issuance costs | 7 | — | |||||||||
| Provision for losses on accounts receivable, net of adjustments | 91 | 174 | |||||||||
| Provision for excess and obsolete inventories | 1,454 | 152 | |||||||||
| Share-based compensation | 11,799 | 7,862 | |||||||||
| Loss (gain) on disposition of assets | 337 | (12) | |||||||||
| Foreign currency transaction (gain) loss | (27) | 55 | |||||||||
| Interest income on note receivable | (25) | (27) | |||||||||
| Deferred income taxes | 6,038 | 2,641 | |||||||||
| Changes in assets and liabilities: | |||||||||||
| Accounts receivable | (13,412) | (2,832) | |||||||||
| Income tax receivable | 5,129 | (4,448) | |||||||||
| Inventories | 2,557 | (5,598) | |||||||||
| Prepaid expenses and other | (329) | (528) | |||||||||
| Accounts payable | 280 | (1,176) | |||||||||
| Deferred revenue | 425 | 412 | |||||||||
| Accrued liabilities and donations | 7,124 | (1,816) | |||||||||
| Net cash provided by operating activities | 97,925 | 54,856 | |||||||||
| Investing Activities | |||||||||||
| Capital expenditures | (37,166) | (37,268) | |||||||||
| Cash paid in business combination | — | (6,377) | |||||||||
| Proceeds from sale of property, plant and equipment | 69 | 13 | |||||||||
| Investment in certificates of deposits | (6,000) | (7,200) | |||||||||
| Maturities of certificates of deposits | 6,000 | 10,080 | |||||||||
| Purchases of investments held to maturity | — | (9,001) | |||||||||
| Maturities of investments | — | 14,570 | |||||||||
| Proceeds from called investments | — | 495 | |||||||||
| Principal payments from note receivable | 51 | 53 | |||||||||
| Net cash used in investing activities | (37,046) | (34,635) | |||||||||
| Financing Activities | |||||||||||
| Proceeds from financing obligation, net of issuance costs | 6,614 | — | |||||||||
| Payments related to financing costs | (301) | — | |||||||||
| Stock options exercised | 12,625 | 4,987 | |||||||||
| Repurchase of stock | (19,586) | (26,846) | |||||||||
| Employee taxes paid by withholding shares | (1,207) | (1,097) | |||||||||
| Cash dividends paid to stockholders | (16,645) | (16,728) | |||||||||
| Net cash used in financing activities | (18,500) | (39,684) | |||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | 42,379 | (19,463) | |||||||||
| Cash, cash equivalents and restricted cash, beginning of period | 1,994 | 21,457 | |||||||||
| Cash, cash equivalents and restricted cash, end of period | $ | 44,373 | $ | 1,994 | |||||||
5