Exhibit 99.1
AAON REPORTS EARNINGS & BACKLOG FOR THE THIRD QUARTER OF 2020
TULSA, OK, November 5, 2020 - AAON, INC. (NASDAQ-AAON), today announced its results for the third quarter of 2020.
| Financial Highlights: | Three Months Ended September 30, | % | Nine Months Ended September 30, | % | |||||||||||||||||||||||||||||||||||||
| 2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||||||||||||||||||||||||||||||
| (in thousands, except share and per share data) | (in thousands, except share and per share data) | ||||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 134,772 | $ | 113,500 | 18.7 | % | $ | 397,851 | $ | 346,759 | 14.7 | % | |||||||||||||||||||||||||||||
| Gross profit | 40,848 | 27,410 | 49.0 | % | 121,926 | 83,044 | 46.8 | % | |||||||||||||||||||||||||||||||||
| Gross profit % | 30.3 | % | 24.1 | % | 30.6 | % | 23.9 | % | |||||||||||||||||||||||||||||||||
| Selling, general and admin. expenses | $ | 14,716 | $ | 12,374 | 18.9 | % | $ | 45,869 | $ | 38,963 | 17.7 | % | |||||||||||||||||||||||||||||
| SG&A % | 10.9 | % | 10.9 | % | 11.5 | % | 11.2 | % | |||||||||||||||||||||||||||||||||
| Net income | 20,460 | 14,290 | 43.2 | % | 60,117 | 36,438 | 65.0 | % | |||||||||||||||||||||||||||||||||
| Net income % | 15.2 | % | 12.6 | % | 15.1 | % | 10.5 | % | |||||||||||||||||||||||||||||||||
| Effective Tax Rate | 21.8 | % | 4.9 | % | 21.1 | % | 16.8 | % | |||||||||||||||||||||||||||||||||
| Earnings per diluted share | $ | 0.38 | $ | 0.26 | 46.2 | % | $ | 1.14 | $ | 0.69 | 65.2 | % | |||||||||||||||||||||||||||||
| Diluted average shares | 53,151,295 | 52,722,127 | 0.8 | % | 52,955,049 | 52,624,583 | 0.6 | % | |||||||||||||||||||||||||||||||||
| September 30, | December 31, | % | |||||||||||||||||||||||||||||||||||||||
| 2020 | 2019 | Change | |||||||||||||||||||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||||||||||||||||||||
| Backlog | $ | 84,885 | $ | 142,747 | (40.5) | % | |||||||||||||||||||||||||||||||||||
| Cash & cash equivalents & restricted cash | 78,601 | 44,373 | 77.1 | % | |||||||||||||||||||||||||||||||||||||
| Total current liabilities | 61,506 | 56,028 | 9.8 | % | |||||||||||||||||||||||||||||||||||||
Gary Fields, CEO, said "We are pleased to report that our net sales for the third quarter were an all-time record for any quarter in our Company’s history. I am especially proud we achieved these results despite a slow start to the quarter due to a planned maintenance shutdown at our Tulsa facilities during the beginning of July. In addition, the continued challenges presented by the COVID-19 pandemic resulted in higher medical expenses. Our third quarter results demonstrate the ongoing progress in our transition from entrepreneurial leadership to a collaborative team-based management approach and validate our Company’s capability to produce great results even through challenging times. It should also be noted that the record sales along with favorable raw material costs and improved productivity had a significant impact on our gross profit, which increased to 30.3% from 24.1% for the corresponding quarter a year ago."
Mr. Fields continued, "The outlook for 2021 continues to present a lot of uncertainty. The Architecture Billings Index has been down for several months, indicating a decline in construction, which may start to impact the new nonresidential construction market in late 2020. Although construction may decline, our equipment is uniquely positioned to address COVID challenges by providing heightened filtration and sanitation through the use of MERV 13 filters, UV lights and bi-polar ionization installed in the factory. We are beginning to see increases in raw materials costs, which we are offsetting in part with our previously announced price increase, which will be effective January 2021. With approximately 50% of our total sales already represented by the replacement market, we are confident of our ability to grow our market share in the replacement market while we
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continue to pursue opportunities in the new construction market. With our improved lead times, we have been able to continue our planned reduction of our backlog to a more manageable level and we believe this will also allow our order intake to stay consistent but do not see significant growth opportunities in the near term."
Mr. Fields added "Our financial condition remains strong as evidenced by our current ratio of 3.7:1 at September 30, 2020. We had unrestricted cash and cash equivalents of $70.6 million as of September 30, 2020. Our capital expenditures during the nine months ended September 30, 2020 were $49.0 million, as compared to $30.8 million for the same period a year ago, and we anticipate our full-year 2020 capital expenditures will total approximately $73.2 million, with $41.3 million directed to our new facility in Longview Texas."
Mr. Fields concluded, "Our expansion project at our Longview, Texas facility is nearing completion and the new building is expected to be operational by January 2021. This project will not only add 220,000 square feet of additional capacity to the Longview facility, but will also create additional space and capacity at our Tulsa facility for future growth potential."
The Company will host a conference call today at 4:15 P.M. (Eastern Time) to discuss the third quarter 2020 results. To participate, call 1-833-634-8218 (code 1233199); or, for rebroadcast available through November 12, 2020, call 1-855-859-2056 (code 1233199).
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
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| AAON, Inc. and Subsidiaries | |||||||||||||||||||||||
| Consolidated Statements of Income | |||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| (in thousands, except share and per share data) | |||||||||||||||||||||||
| Net sales | $ | 134,772 | $ | 113,500 | $ | 397,851 | $ | 346,759 | |||||||||||||||
| Cost of sales | 93,924 | 86,090 | 275,925 | 263,715 | |||||||||||||||||||
| Gross profit | 40,848 | 27,410 | 121,926 | 83,044 | |||||||||||||||||||
| Selling, general and administrative expenses | 14,716 | 12,374 | 45,869 | 38,963 | |||||||||||||||||||
| Loss (gain) on disposal of assets | 1 | 6 | (61) | 296 | |||||||||||||||||||
| Income from operations | 26,131 | 15,030 | 76,118 | 43,785 | |||||||||||||||||||
| Interest income, net | 10 | 9 | 90 | 49 | |||||||||||||||||||
| Other income (expense), net | 15 | (7) | 20 | (16) | |||||||||||||||||||
| Income before taxes | 26,156 | 15,032 | 76,228 | 43,818 | |||||||||||||||||||
| Income tax provision | 5,696 | 742 | 16,111 | 7,380 | |||||||||||||||||||
| Net income | $ | 20,460 | $ | 14,290 | $ | 60,117 | $ | 36,438 | |||||||||||||||
| Earnings per share: | |||||||||||||||||||||||
| Basic | $ | 0.39 | $ | 0.27 | $ | 1.15 | $ | 0.70 | |||||||||||||||
| Diluted | $ | 0.38 | $ | 0.26 | $ | 1.14 | $ | 0.69 | |||||||||||||||
| Cash dividends declared per common share: | $ | — | $ | — | $ | 0.19 | $ | 0.16 | |||||||||||||||
| Weighted average shares outstanding: | |||||||||||||||||||||||
| Basic | 52,260,551 | 52,111,444 | 52,174,705 | 52,086,209 | |||||||||||||||||||
| Diluted | 53,151,295 | 52,722,127 | 52,955,049 | 52,624,583 | |||||||||||||||||||
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| AAON, Inc. and Subsidiaries | |||||||||||
| Consolidated Balance Sheets | |||||||||||
| (Unaudited) | |||||||||||
| September 30, 2020 | December 31, 2019 | ||||||||||
| Assets | (in thousands, except share and per share data) | ||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 70,603 | $ | 26,797 | |||||||
| Restricted cash | 7,998 | 17,576 | |||||||||
Accounts receivable, net of allowance for credit losses of $546 and $353, respectively | 62,195 | 67,399 | |||||||||
| Income tax receivable | 3,914 | 772 | |||||||||
| Note receivable | 29 | 29 | |||||||||
| Inventories, net | 78,819 | 73,601 | |||||||||
| Prepaid expenses and other | 1,973 | 1,375 | |||||||||
| Total current assets | 225,531 | 187,549 | |||||||||
| Property, plant and equipment: | |||||||||||
| Land | 3,804 | 3,274 | |||||||||
| Buildings | 115,600 | 101,113 | |||||||||
| Machinery and equipment | 267,763 | 236,087 | |||||||||
| Furniture and fixtures | 18,342 | 16,862 | |||||||||
| Total property, plant and equipment | 405,509 | 357,336 | |||||||||
| Less: Accumulated depreciation | 196,631 | 179,242 | |||||||||
| Property, plant and equipment, net | 208,878 | 178,094 | |||||||||
| Intangible assets, net | 97 | 272 | |||||||||
| Goodwill | 3,229 | 3,229 | |||||||||
| Right of use assets | 1,618 | 1,683 | |||||||||
| Note receivable | 560 | 597 | |||||||||
| Total assets | $ | 439,913 | $ | 371,424 | |||||||
| Liabilities and Stockholders' Equity | |||||||||||
| Current liabilities: | |||||||||||
| Revolving credit facility | $ | — | $ | — | |||||||
| Accounts payable | 16,038 | 11,759 | |||||||||
| Accrued liabilities | 45,468 | 44,269 | |||||||||
| Total current liabilities | 61,506 | 56,028 | |||||||||
| Deferred tax liabilities | 22,973 | 15,297 | |||||||||
| Other long-term liabilities | 4,191 | 3,639 | |||||||||
| New market tax credit obligation | 6,351 | 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, 52,264,801 and 52,078,515 issued and outstanding at September 30, 2020 and December 31, 2019, respectively | 209 | 208 | |||||||||
| Additional paid-in capital | 8,175 | 3,631 | |||||||||
| Retained earnings | 336,508 | 286,301 | |||||||||
| Total stockholders' equity | 344,892 | 290,140 | |||||||||
| Total liabilities and stockholders' equity | $ | 439,913 | $ | 371,424 | |||||||
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| AAON, Inc. and Subsidiaries | |||||||||||
| Consolidated Statements of Cash Flows | |||||||||||
| (Unaudited) | |||||||||||
| Nine Months Ended September 30, | |||||||||||
| 2020 | 2019 | ||||||||||
| Operating Activities | (in thousands) | ||||||||||
| Net income | $ | 60,117 | $ | 36,438 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 18,971 | 17,627 | |||||||||
| Amortization of debt issuance cost | 31 | — | |||||||||
| Provision for losses on accounts receivable, net of adjustments | 193 | 91 | |||||||||
| Provision for excess and obsolete inventories | 1,776 | 1,003 | |||||||||
| Share-based compensation | 8,546 | 9,854 | |||||||||
| (Gain) loss on disposition of assets | (61) | 296 | |||||||||
| Foreign currency transaction loss (gain) | 18 | (17) | |||||||||
| Interest income on note receivable | (19) | (19) | |||||||||
| Deferred income taxes | 7,676 | 3,614 | |||||||||
| Changes in assets and liabilities: | |||||||||||
| Accounts receivable | 5,011 | (2,096) | |||||||||
| Income taxes | (3,142) | 2,283 | |||||||||
| Inventories | (6,994) | (4,014) | |||||||||
| Prepaid expenses and other | (598) | (513) | |||||||||
| Accounts payable | 3,654 | 782 | |||||||||
| Deferred revenue | 1,128 | 263 | |||||||||
| Accrued liabilities | 688 | 4,991 | |||||||||
| Net cash provided by operating activities | 96,995 | 70,583 | |||||||||
| Investing Activities | |||||||||||
| Capital expenditures | (48,955) | (30,831) | |||||||||
| Proceeds from sale of property, plant and equipment | 61 | 68 | |||||||||
| Investment in certificates of deposits | — | (6,000) | |||||||||
| Maturities of certificates of deposits | — | 6,000 | |||||||||
| Principal payments from note receivable | 38 | 39 | |||||||||
| Net cash used in investing activities | (48,856) | (30,724) | |||||||||
| Financing Activities | |||||||||||
| Stock options exercised | 18,519 | 11,283 | |||||||||
| Repurchase of stock | (21,390) | (15,437) | |||||||||
| Employee taxes paid by withholding shares | (1,130) | (1,023) | |||||||||
| Cash dividends paid to stockholders | (9,910) | (8,303) | |||||||||
| Net cash used in financing activities | (13,911) | (13,480) | |||||||||
| Net increase in cash, cash equivalents and restricted cash | 34,228 | 26,379 | |||||||||
| Cash, cash equivalents and restricted cash, beginning of period | 44,373 | 1,994 | |||||||||
| Cash, cash equivalents and restricted cash, end of period | $ | 78,601 | $ | 28,373 | |||||||
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