EX-99.1 2 aaon20161231pressreleaseex.htm EXHIBIT 99.1 Exhibit


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 23, 2017
 
For Further Information:
 
Jerry R. Levine Ÿ Phone: (914) 244-0292 Ÿ Fax: (914) 244-0295
 
Email: jrladvisor@yahoo.com

AAON REPORTS RECORD REVENUE AND EARNINGS
FOR 2016 DESPITE A SLUMP IN FOURTH QUARTER RESULTS

TULSA, OK, February 23, 2017 - AAON, INC. (NASDAQ-AAON), today announced its results for the fourth quarter and year 2016. Sales in the fourth quarter were $91.7 million, down 5.7% from $97.2 million in 2015. Net income was $11.4 million, declining 11.8% from $12.9 million in the same period a year ago. Sales for the year 2016 reached a record level, $384.0 million, representing a gain of 7.1% compared to $358.6 million in 2015. Net income for 2016 was also a record, $53.4 million, rising 16.7% compared to $45.7 million in 2015.

Earnings for the fourth quarter of 2016 and 2015 were $0.21 and $0.24 per diluted share, down 12.5%, based upon 53.4 million and 54.0 million diluted shares outstanding, respectively. Earnings per diluted share for the years 2016 and 2015 were $1.00 and $0.84, representing a gain of 19.0%, based upon 53.4 million and 54.5 million diluted shares outstanding, respectively.

Norman H. Asbjornson, CEO, stated, “We believe the sales rate slowed in the fourth quarter as our customers paused to await and absorb the November election results and the impact they could have on the business environment. In addition, we witnessed a decided shift in our product mix toward lower priced units. This may have been a by-product of the concern surrounding the political atmosphere. Nevertheless, while our unit volume increased 12.5% in 2016, our sales growth advanced only 7.1%."

Mr. Asbjornson continued, "We've been successful in controlling our total costs and maintaining our gross profit margin. Our gross margin last year climbed to 30.8% compared to 30.3% the year earlier. He continued, "Our balance sheet remained quite strong. At year end 2016 the current ratio was 3.6:1 (including cash and cash equivalents of $43.7 million). We continued to operate debt-free and our return on average stockholder equity was 27.7% in 2016 compared with 25.1% a year earlier."

Mr. Asbjornson concluded, "Our Water-Source Heat Pump production is ramping up, albeit at a somewhat slower rate than expected to assure delivery of quality product to customers. We are confident that the WSHP line will continue to show steady improvement throughout next year. Our backlog in 2016 decreased from $57.1 million to $49.1 million. Our business is somewhat seasonal, usually slowing in the fourth quarter. We are closely monitoring our raw material costs which play a major role in our ability to maintain gross margins. While 2017 will present certain challenges, we are encouraged by the tone of business witnessed since the beginning of the year. The incoming order rate and backlog have strengthened and are running at record first quarter levels. Despite some headwinds, we believe that we can achieve record sales and earnings in 2017."

The Company will host a conference call today at 3:30 P.M. (Eastern Time) to discuss the fourth quarter and year 2016 results. To participate, call 1-888-241-0551 (code 72961943); or, for rebroadcast, call 1-855-859-2056 (code 72961943).

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/water-source 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,
 
2016
 
2015
 
2016
 
2015
 
(in thousands, except share and per share data)
Net sales
$
91,668

 
$
97,229

 
$
383,977

 
$
358,632

Cost of sales
65,158

 
67,648

 
265,897

 
249,951

Gross profit
26,510

 
29,581

 
118,080

 
108,681

Selling, general and administrative expenses
8,632

 
9,859

 
38,506

 
37,438

Gain on disposal of assets
—

 
—

 
(20
)
 
(59
)
Income from operations
17,878

 
19,722

 
79,594

 
71,302

Interest income, net
69

 
74

 
292

 
161

Other income (expense), net
(10
)
 
(18
)
 
105

 
(124
)
Income before taxes
17,937

 
19,778

 
79,991

 
71,339

Income tax provision
6,517

 
6,830

 
26,615

 
25,611

Net income
$
11,420

 
$
12,948

 
$
53,376

 
$
45,728

Earnings per share:
 

 
 

 
 

 
 

Basic
$
0.22

 
$
0.24

 
$
1.01

 
$
0.85

Diluted
$
0.21

 
$
0.24

 
$
1.00

 
$
0.84

Cash dividends declared per common share:
$
0.13

 
$
0.11

 
$
0.24

 
$
0.22

Weighted average shares outstanding:
 
 
 
 
 

 
 

Basic
52,891,879

 
53,680,995

 
52,924,398

 
54,045,841

Diluted
53,419,948

 
54,036,021

 
53,449,754

 
54,481,484





2


AAON, Inc. and Subsidiaries
Unaudited Consolidated Balance Sheets
 
December 31,
 
2016
 
2015
Assets
(in thousands, except share and per share data)
Current assets:
 
 
 
Cash and cash equivalents
$
24,153

 
$
7,908

Certificates of deposit
5,512

 
10,080

Investments held to maturity at amortized cost
14,083

 
12,444

Accounts receivable, net
43,001

 
50,024

Income tax receivable
6,239

 
4,702

Note receivable
25

 
23

Inventories, net
47,352

 
38,499

Prepaid expenses and other
616

 
533

Total current assets
140,981

 
124,213

Property, plant and equipment:
 

 
 

Land
2,233

 
2,233

Buildings
78,806

 
68,806

Machinery and equipment
158,216

 
143,100

Furniture and fixtures
12,783

 
11,270

Total property, plant and equipment
252,038

 
225,409

Less:  Accumulated depreciation
137,146

 
124,348

Property, plant and equipment, net
114,892

 
101,061

Certificates of deposit
—

 
1,880

Investments held to maturity at amortized cost
—

 
5,039

Note receivable
657

 
661

Total assets
$
256,530

 
$
232,854

 
 
 
 
Liabilities and Stockholders' Equity
 

 
 

Current liabilities:
 

 
 

Revolving credit facility
$
—

 
$
—

Accounts payable
7,102

 
6,178

Accrued liabilities
31,940

 
37,235

Total current liabilities
39,042

 
43,413

Deferred revenue
1,498

 
698

Deferred tax liabilities
9,531

 
8,706

Donations
561

 
1,119

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, 52,651,448 and 53,012,363 issued and outstanding at December 31, 2016 and 2015, respectively
211

 
212

Additional paid-in capital
—

 
—

Retained earnings
205,687

 
178,706

Total stockholders' equity
205,898

 
178,918

Total liabilities and stockholders' equity
$
256,530

 
$
232,854




3


AAON, Inc. and Subsidiaries
Unaudited Consolidated Statements of Cash Flows
 
Years Ending December 31,
 
2016
 
2015
 
2014
Operating Activities
(in thousands)
Net income
$
53,376

 
$
45,728

 
$
44,158

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

 
 

 
 

Depreciation
13,035

 
11,741

 
11,553

Amortization of bond premiums
249

 
266

 
688

Provision for losses on accounts receivable, net of adjustments
(25
)
 
(48
)
 
(22
)
Provision for excess and obsolete inventories
625

 
178

 
135

Share-based compensation
4,357

 
2,891

 
2,178

Gain on disposition of assets
(20
)
 
(59
)
 
(305
)
Foreign currency transaction (gain) loss
(22
)
 
139

 
74

Interest income on note receivable
(28
)
 
(30
)
 
(36
)
Deferred income taxes
825

 
1,172

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

 
—

 
—

Changes in assets and liabilities:
 

 
 

 
 
Accounts receivable
7,048

 
(5,884
)
 
(5,007
)
Income tax receivable
(1,537
)
 
312

 
(257
)
Inventories
(9,478
)
 
(1,059
)
 
(5,613
)
Prepaid expenses and other
(83
)
 
76

 
(305
)
Accounts payable
654

 
(5,109
)
 
3,512

Deferred revenue
417

 
189

 
782

Accrued liabilities and donations
(5,470
)
 
4,852

 
4,094

Net cash provided by operating activities
63,923

 
55,355

 
53,518

Investing Activities
 

 
 

 
 
Capital expenditures
(26,604
)
 
(20,967
)
 
(16,127
)
Proceeds from sale of property, plant and equipment
28

 
63

 
319

Investment in certificates of deposits
(4,112
)
 
(6,680
)
 
(9,940
)
Maturities of certificates of deposits
10,560

 
6,098

 
9,310

Purchases of investments held to maturity
(10,384
)
 
(14,183
)
 
(6,880
)
Maturities of investments
10,021

 
11,408

 
14,197

Proceeds from called investments
3,514

 
1,013

 
3,029

Principal payments from note receivable
52

 
54

 
63

Net cash used in investing activities
(16,925
)
 
(23,194
)
 
(6,029
)
Financing Activities
 

 
 

 
 
Borrowings under revolving credit facility
761

 
—

 
—

Payments under revolving credit facility
(761
)
 
—

 
—

Stock options exercised
2,063

 
2,795

 
1,318

Repurchase of stock
(19,317
)
 
(36,558
)
 
(29,066
)
Employee taxes paid by withholding shares

(823
)
 
(585
)
 
(218
)
Cash dividends paid to stockholders
(12,676
)
 
(11,857
)
 
(9,656
)
Net cash used in financing activities
(30,753
)
 
(46,205
)
 
(37,622
)
Net increase (decrease) in cash and cash equivalents
16,245

 
(14,044
)
 
9,867

Cash and cash equivalents, beginning of period
7,908

 
21,952

 
12,085

Cash and cash equivalents, end of period
$
24,153

 
$
7,908

 
$
21,952



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,
 
 
 
2016
 
2015
 
2016
 
2015
 
(in thousands)
Net Income, a GAAP measure
$
11,420

 
$
12,948

 
$
53,376

 
$
45,728

Depreciation
3,488

 
3,154

 
13,035

 
11,741

Amortization of bond premiums
33

 
98

 
249

 
266

Share-based compensation
1,185

 
815

 
4,357

 
2,891

Interest (income) expense
(102
)
 
(172
)
 
(541
)
 
(427
)
Income tax expense
6,517

 
6,830

 
26,615

 
25,611

EBITDAX, a non-GAAP measure
$
22,541

 
$
23,673

 
$
97,091

 
$
85,810






5