• AAON Reports Record Sales and Earnings For 2020

    Source: Nasdaq GlobeNewswire / 25 Feb 2021 06:00:02   America/Chicago

    TULSA, Okla., Feb. 25, 2021 (GLOBE NEWSWIRE) -- AAON, INC. (NASDAQ-AAON), today announced its results for the fourth quarter of 2020.

    Financial Highlights:Three Months Ended 
     December 31,    		 % Years Ending  
     December 31,    		 %
     2020 2019 Change 2020 2019 Change
     (in thousands, except share and per share data) (in thousands, except share and per share data)
    Net sales$116,700  $122,574  (4.8)% $514,551  $469,333  9.6%
    Gross profit33,923  36,381  (6.8)% 155,849  119,425  30.5%
    Gross profit %29.1% 29.7%   30.3% 25.4%  
    Selling, general and admin. expenses$14,622  $13,114  11.5% $60,491  $52,077  16.2%
    SG&A %12.5% 10.7%   11.8% 11.1%  
    Net income*18,892  17,273  9.4% 79,009  53,711  47.1%
    Net income %16.2% 14.1%   15.4% 11.4%  
    Effective Tax Rate26.6% 25.6%   22.5% 19.9%  
    Earnings per diluted share*$0.35  $0.33  6.1% $1.49  $1.02  46.1%
    Diluted average shares53,469,759  52,701,202  1.5% 53,061,169  52,635,415  0.8%
    *Includes $4.1 million or $0.08 per share related to a gain from insurance proceeds      
           
     December 31, December 31,%      
     2020 2019 Change      
     (in thousands)        
    Backlog$74,417  $142,747  (47.9)%      
    Cash & cash equivalents & restricted cash82,288  44,373  85.4%      
    Total current liabilities59,033  56,028  5.4%      

    Net sales for the fourth quarter 2020 decreased to $116.7 million from $122.6 million in 2019 primarily as a result of this year's six additional days of planned plant holiday closure at the end of December 2020. The Company reported diluted EPS of $0.35, up 6.1% from $0.33 in the prior year period. The Company had a gain of $4.1 million, net of profit sharing and taxes, associated with insurance proceeds related to a damaged roof incurred by adverse weather earlier in the year, which impacted our diluted EPS by $0.08.

    The Company finished the quarter with a backlog of $74.4 million. The decline in backlog was related to initiatives made to improve productivity and lead times to meet customer delivery expectations. New bookings in the quarter increased 6% compared to the same period one year ago. As of February 1, 2021, our backlog was approximately $103.8 million, compared to $129.2 million at February 1, 2020.

    For the twelve months ending December 31, 2020, sales were a record $514.6 million, an increase of 9.6% compared with $469.3 million in 2019. Diluted earnings per share increased 46.1% to $1.49.

    Gary Fields, President and CEO, said, "We are pleased to report all-time record sales and earnings in 2020 compared to any other year in our Company's history. I am especially proud we achieved these results in a year that presented many challenges to the Company and our end-markets. Achieving organic sales growth of nearly 10% while simultaneously improving our gross margins by 490 basis points to 30.3% is truly an achievement. At the same time, we continued to invest in growth as our capex spend for the year was up 82.4%, amounting to 13.2% of sales."

    Mr. Fields continued, "Our fourth quarter results demonstrate demand slowed as we finished the year. The outlook for 2021 continues to present uncertainty, especially for the first half of the year. Architectural billings and nonresidential construction starts in 2020 suggest new construction demand will be soft, particularly in end-markets significantly impacted by the COVID-19 pandemic such as the hospitality and office building markets."

    Mr. Fields added, "However, new bookings in the fourth quarter still grew year-over-year 6% and demand so far in 2021 has been surprisingly solid. Furthermore, we are starting to see positive signs in our replacement business and certain end-markets like data centers, warehouses and healthcare. We are also well positioned to take advantage of our customers' increased focus on indoor air quality to address COVID challenges, which we expect will drive incremental demand. Finally, ongoing progress in our transition from entrepreneurial leadership to a collaborative team-based management approach, a strengthening sales channel, improved productivity and lead times, new capacity at our Longview, Texas facility and a strong product development pipeline keeps us optimistic on the outlook of our business. While we believe demand will be soft to start the year, we think activity should be moderate in the first half and then accelerate in the second half."

    The Company finished 2020 in a strong financial position as evidenced by a current ratio of 3.7:1 at December 31, 2020. We had no debt and unrestricted cash and cash equivalents of $79.0 million as of December 31, 2020. Our capital expenditures during the twelve months ended December 31, 2020 were $67.8 million, as compared to $37.2 million for the same period a year ago, and we anticipate our full-year 2021 capital expenditures will total approximately $70.7 million.

    The Company will host a conference call today at 4:15 P.M. (Eastern Time) to discuss the fourth quarter 2020 results. To participate, call 1-833-674-0554 (code 3448509); or, for rebroadcast available through March 5, 2021, call 1-855-859-2056 (code 3448509).

    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
    Joseph Mondillo
    Director of Investor Relations
    Phone: (617) 877-6346
    Email: joseph.mondillo@aaon.com 

    AAON, Inc. and Subsidiaries
    Consolidated Statements of Income
    (Unaudited)
     
     Three Months Ended 
     December 31,    		 Years Ending  
     December 31,
     2020 2019 2020 2019
     (in thousands, except share and per share data)
    Net sales$116,700  $122,574  $514,551  $469,333 
    Cost of sales82,777  86,193  358,702  349,908 
    Gross profit33,923  36,381  155,849  119,425 
    Selling, general and administrative expenses14,622  13,114  60,491  52,077 
    (Gain) loss on disposal of assets and insurance recoveries(6,417) 41  (6,478) 337 
    Income from operations25,718  23,226  101,836  67,011 
    Interest income, net(2) 17  88  66 
    Other income (expense), net31  (30) 51  (46)
    Income before taxes25,747  23,213  101,975  67,031 
    Income tax provision6,855  5,940  22,966  13,320 
    Net income$18,892  $17,273  $79,009  $53,711 
    Earnings per share:       
    Basic$0.36  $0.33  $1.51  $1.03 
    Diluted$0.35  $0.33  $1.49  $1.02 
    Cash dividends declared per common share:$0.19  $0.16  $0.38  $0.32 
    Weighted average shares outstanding:       
    Basic52,240,829  52,094,125  52,168,679  52,079,865 
    Diluted53,469,759  52,701,202  53,061,169  52,635,415 


    AAON, Inc. and Subsidiaries
    Consolidated Balance Sheets
    (Unaudited)
     December 31, 2020 December 31, 2019
    Assets(in thousands, except share and per share data)
    Current assets:   
    Cash and cash equivalents$79,025  $26,797 
    Restricted cash3,263  17,576 
    Accounts receivable, net of allowance for credit losses of $506 and $353, respectively47,387  67,399 
    Income tax receivable4,587  772 
    Note receivable31  29 
    Inventories, net82,219  73,601 
    Prepaid expenses and other3,739  1,375 
    Total current assets220,251  187,549 
    Property, plant and equipment:   
    Land4,072  3,274 
    Buildings122,171  101,113 
    Machinery and equipment281,266  236,087 
    Furniture and fixtures18,956  16,862 
    Total property, plant and equipment426,465  357,336 
    Less:  Accumulated depreciation203,125  179,242 
    Property, plant and equipment, net223,340  178,094 
    Intangible assets, net38  272 
    Goodwill3,229  3,229 
    Right of use assets1,571  1,683 
    Note receivable579  597 
    Total assets$449,008  $371,424 
        
    Liabilities and Stockholders' Equity   
    Current liabilities:   
    Revolving credit facility$—  $— 
    Accounts payable12,447  11,759 
    Accrued liabilities46,586  44,269 
    Total current liabilities59,033  56,028 
    Deferred tax liabilities28,324  15,297 
    Other long-term liabilities4,423  3,639 
    New market tax credit obligation6,363  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, 52,224,767 and 52,078,515 issued and outstanding at December 31, 2020 and December 31, 2019, respectively209  208 
    Additional paid-in capital5,161  3,631 
    Retained earnings345,495  286,301 
    Total stockholders' equity350,865  290,140 
    Total liabilities and stockholders' equity$449,008  $371,424 


    AAON, Inc. and Subsidiaries
    Consolidated Statements of Cash Flows
    (Unaudited)
     Years Ending  
     December 31,
     2020 2019
    Operating Activities(in thousands)
    Net income$79,009  $53,711 
    Adjustments to reconcile net income to net cash provided by operating activities:   
    Depreciation and amortization25,634  22,766 
    Amortization of debt issuance cost43  7 
    Provision for credit losses on accounts receivable, net of adjustments153  91 
    Provision for excess and obsolete inventories1,108  1,454 
    Share-based compensation11,342  11,799 
    (Gain) loss on disposition of assets(6,478) 337 
    Foreign currency transaction (gain) loss(12) (27)
    Interest income on note receivable(24) (25)
    Deferred income taxes13,027  6,038 
    Changes in assets and liabilities:   
       Accounts receivable19,859  (13,412)
       Income taxes(3,815) 5,129 
       Inventories(9,726) 2,557 
       Prepaid expenses and other(2,364) (329)
       Accounts payable(2,155) 280 
       Deferred revenue1,010  425 
       Accrued liabilities2,203  7,124 
    Net cash provided by operating activities128,814  97,925 
    Investing Activities   
    Capital expenditures(67,802) (37,166)
    Proceeds from sale of property, plant and equipment60  69 
    Insurance proceeds6,417  — 
    Investment in certificates of deposits—  (6,000)
    Maturities of certificates of deposits—  6,000 
    Principal payments from note receivable52  51 
    Net cash used in investing activities(61,273) (37,046)
    Financing Activities   
    Proceeds from financing obligation, net of issuance costs—  6,614 
    Payment related to financing costs—  (301)
    Stock options exercised21,418  12,625 
    Repurchase of stock(30,060) (19,586)
    Employee taxes paid by withholding shares(1,169) (1,207)
    Dividends paid to stockholders(19,815) (16,645)
    Net cash used in financing activities(29,626) (18,500)
    Net increase in cash, cash equivalents and restricted cash37,915  42,379 
    Cash, cash equivalents and restricted cash, beginning of period44,373  1,994 
    Cash, cash equivalents and restricted cash, end of period$82,288  $44,373 


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