Exhibit 99.1
AAON REPORTS EARNINGS & BACKLOG FOR THE FIRST QUARTER OF 2021
TULSA, OK, May 6, 2021 - AAON, INC. (NASDAQ-AAON), today announced its results for the first quarter of 2021.
| Financial Highlights: | Three Months Ended March 31, | % | |||||||||||||||
| 2021 | 2020 | Change | |||||||||||||||
| (in thousands, except share and per share data) | |||||||||||||||||
| Net sales | $ | 115,788 | $ | 137,483 | (15.8) | % | |||||||||||
| Gross profit | 33,157 | 42,947 | (22.8) | % | |||||||||||||
| Gross profit % | 28.6 | % | 31.2 | % | |||||||||||||
| Selling, general and admin. expenses | $ | 14,696 | $ | 15,214 | (3.4) | % | |||||||||||
| SG&A % | 12.7 | % | 11.1 | % | |||||||||||||
| Net income | 16,376 | 21,853 | (25.1) | % | |||||||||||||
| Net income % | 14.1 | % | 15.9 | % | |||||||||||||
| Effective Tax Rate | 11.4 | % | 21.5 | % | |||||||||||||
| Earnings per diluted share | $ | 0.30 | $ | 0.41 | (26.8) | % | |||||||||||
| Diluted average shares | 53,814,644 | 52,871,419 | 1.8 | % | |||||||||||||
| March 31, | December 31, | % | |||||||||||||||
| 2021 | 2020 | Change | |||||||||||||||
| (in thousands) | |||||||||||||||||
| Backlog | $ | 96,733 | $ | 74,417 | 30.0 | % | |||||||||||
| Cash & cash equivalents & restricted cash | 97,772 | 82,288 | 18.8 | % | |||||||||||||
| Total current liabilities | 66,679 | 59,033 | 13.0 | % | |||||||||||||
Net sales for the first quarter of 2021 decreased 15.8% to $115.8 million from $137.5 million in the first quarter of 2020. The year over year decline in net sales was partially attributable to fewer production days due to an extended holiday shutdown in early January and winter storm in February and is a reflection of our markets temporarily moderating at the end of 2020. Moreover, the prior year quarter was an all time record for the Company creating a tough relative comparison. The Company reported diluted EPS of $0.30, down 26.8% from $0.41 in the prior year period. The decline in EPS was largely due to the lower recognized revenue, partially offset by a lower effective tax rate. The lower tax rate compared to a year ago mainly related to a $1.8 million increase in excess tax benefits associated with stock awards.
The Company finished the quarter with a backlog of $96.7 million, down from $119.6 million one year ago but up from $74.4 million at the end of 2020. The sequential improvement reflects the improved demand that we experienced throughout the first quarter. New bookings in the quarter increased 21% compared to the same period one year ago. Demand has continued to strengthen through April. As of May 1, 2021, backlog was approximately $104.5 million.
Gary Fields, President and CEO, noted "As we've mentioned in our prior releases, we were previously overwhelmed with customer orders and did not have the capacity to handle all these orders which lead to lengthy lead times in 2019. We spent most of that year adding several Salvagnini sheet metal fabrication machines and rearranging our production lines for more efficient production. In Longview, we started construction of our 224,000 square feet building which also housed additional Salvagninis and was completed in early 2021. As all this was happening, we had our lead times come down which resulted in a
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record breaking year in 2020. Although the pandemic caused new construction to slow down, our customers started to increase their replacement orders in early 2021 as demonstrated in the growth of our backlog."
Gary Fields, President and CEO, said “Considering our soft backlog entering the quarter combined with the challenges we faced related to the new construction market as well as the adverse weather at both of our facilities in February, we are pleased with our performance in the first quarter of the year. The year over year decline in revenue and earnings was unsurprising considering the all-time record quarter we realized in the first quarter of 2020. We believe the fact that our performance in the first quarter of 2021 was very similar to the fourth quarter of 2020 suggests our business has stabilized and has already begun to pick up after some moderation we experienced at the end of last year.”
Mr. Fields added “We are confident demand is improving. Our backlog at the beginning of May was up considerably from both the end 2020 and the end of the first quarter. Replacement demand is already improving as the economy recovers, and while the new construction market is still facing some challenges, we are beginning to see signs of stabilization. Inflation remains a challenge, but we are confident we will be able to maintain our margin through disciplined price management. In conclusion, as we look to the rest of the year, we continue to anticipate revenue and earnings will progressively improve throughout 2021.”
As of March 31, 2021, the Company had no debt and unrestricted cash and cash equivalents of $97.0 million, which is up from $79.0 million at the end of 2020. Capital expenditures during the first three months of 2021 were $16.4 million, as compared to $21.9 million for the same period a year ago. Rebecca Thompson, CFO, stated “we continue to 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 first quarter 2021 results. To participate, call 1-888-241-0551 (code 7788949); or, for rebroadcast available through May 13, 2021, call 1-855-859-2056 (code 7788949).
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
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| AAON, Inc. and Subsidiaries | ||||||||||||||
| Consolidated Statements of Income | ||||||||||||||
| (Unaudited) | ||||||||||||||
| Three Months Ended March 31, | ||||||||||||||
| 2021 | 2020 | |||||||||||||
| (in thousands, except share and per share data) | ||||||||||||||
| Net sales | $ | 115,788 | $ | 137,483 | ||||||||||
| Cost of sales | 82,631 | 94,536 | ||||||||||||
| Gross profit | 33,157 | 42,947 | ||||||||||||
| Selling, general and administrative expenses | 14,696 | 15,214 | ||||||||||||
| (Gain) loss on disposal of assets | — | (62) | ||||||||||||
| Income from operations | 18,461 | 27,795 | ||||||||||||
| Interest income, net | 3 | 61 | ||||||||||||
| Other income (expense), net | 17 | (27) | ||||||||||||
| Income before taxes | 18,481 | 27,829 | ||||||||||||
| Income tax provision | 2,105 | 5,976 | ||||||||||||
| Net income | $ | 16,376 | $ | 21,853 | ||||||||||
| Earnings per share: | ||||||||||||||
| Basic | $ | 0.31 | $ | 0.42 | ||||||||||
| Diluted | $ | 0.30 | $ | 0.41 | ||||||||||
| Weighted average shares outstanding: | ||||||||||||||
| Basic | 52,293,464 | 52,071,839 | ||||||||||||
| Diluted | 53,814,644 | 52,871,419 | ||||||||||||
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| AAON, Inc. and Subsidiaries | |||||||||||
| Consolidated Balance Sheets | |||||||||||
| (Unaudited) | |||||||||||
| March 31, 2021 | December 31, 2020 | ||||||||||
| Assets | (in thousands, except share and per share data) | ||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 97,047 | $ | 79,025 | |||||||
| Restricted cash | 725 | 3,263 | |||||||||
Accounts receivable, net of allowance for credit losses of $493 and $506, respectively | 52,579 | 47,387 | |||||||||
| Income tax receivable | 7,353 | 4,587 | |||||||||
| Note receivable | 32 | 31 | |||||||||
| Inventories, net | 84,040 | 82,219 | |||||||||
| Prepaid expenses and other | 3,631 | 3,739 | |||||||||
| Total current assets | 245,407 | 220,251 | |||||||||
| Property, plant and equipment: | |||||||||||
| Land | 4,109 | 4,072 | |||||||||
| Buildings | 126,090 | 122,171 | |||||||||
| Machinery and equipment | 292,961 | 281,266 | |||||||||
| Furniture and fixtures | 19,971 | 18,956 | |||||||||
| Total property, plant and equipment | 443,131 | 426,465 | |||||||||
| Less: Accumulated depreciation | 210,483 | 203,125 | |||||||||
| Property, plant and equipment, net | 232,648 | 223,340 | |||||||||
| Goodwill and intangible assets, net | 3,229 | 3,267 | |||||||||
| Right of use assets | 1,522 | 1,571 | |||||||||
| Note receivable | 578 | 579 | |||||||||
| Total assets | $ | 483,384 | $ | 449,008 | |||||||
| Liabilities and Stockholders' Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 17,615 | $ | 12,447 | |||||||
| Accrued liabilities | 49,064 | 46,586 | |||||||||
| Total current liabilities | 66,679 | 59,033 | |||||||||
| Deferred tax liabilities | 32,982 | 28,324 | |||||||||
| Other long-term liabilities | 4,312 | 4,423 | |||||||||
| New market tax credit obligation | 6,373 | 6,363 | |||||||||
| 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, 52,423,579 and 52,224,767 issued and outstanding at March 31, 2021 and December 31, 2020, respectively | 210 | 209 | |||||||||
| Additional paid-in capital | 10,957 | 5,161 | |||||||||
| Retained earnings | 361,871 | 345,495 | |||||||||
| Total stockholders' equity | 373,038 | 350,865 | |||||||||
| Total liabilities and stockholders' equity | $ | 483,384 | $ | 449,008 | |||||||
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| AAON, Inc. and Subsidiaries | |||||||||||
| Consolidated Statements of Cash Flows | |||||||||||
| (Unaudited) | |||||||||||
| Three Months Ended March 31, | |||||||||||
| 2021 | 2020 | ||||||||||
| Operating Activities | (in thousands) | ||||||||||
| Net income | $ | 16,376 | $ | 21,853 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 7,398 | 6,002 | |||||||||
| Amortization of debt issuance cost | 10 | 10 | |||||||||
| (Recovery of) provision for credit losses on accounts receivable, net of adjustments | (13) | 294 | |||||||||
| Provision for excess and obsolete inventories | (194) | (274) | |||||||||
| Share-based compensation | 2,761 | 2,351 | |||||||||
| (Gain) loss on disposition of assets | — | (62) | |||||||||
| Foreign currency transaction (gain) loss | (8) | 51 | |||||||||
| Interest income on note receivable | (6) | (6) | |||||||||
| Deferred income taxes | 4,658 | (167) | |||||||||
| Changes in assets and liabilities: | |||||||||||
| Accounts receivable | (5,179) | (2,789) | |||||||||
| Income taxes | (2,766) | 772 | |||||||||
| Inventories | (1,627) | 1,020 | |||||||||
| Prepaid expenses and other | 108 | (670) | |||||||||
| Accounts payable | 4,904 | 2,742 | |||||||||
| Deferred revenue | 2,358 | 229 | |||||||||
| Accrued liabilities | 58 | 6,241 | |||||||||
| Net cash provided by operating activities | 28,838 | 37,597 | |||||||||
| Investing Activities | |||||||||||
| Capital expenditures | (16,404) | (21,877) | |||||||||
| Proceeds from sale of property, plant and equipment | — | 61 | |||||||||
| Principal payments from note receivable | 14 | 12 | |||||||||
| Net cash used in investing activities | (16,390) | (21,804) | |||||||||
| Financing Activities | |||||||||||
| Stock options exercised | 9,438 | 4,497 | |||||||||
| Repurchase of stock | (5,185) | (11,565) | |||||||||
| Employee taxes paid by withholding shares | (1,217) | (953) | |||||||||
| Net cash provided by (used in) financing activities | 3,036 | (8,021) | |||||||||
| Net increase in cash, cash equivalents and restricted cash | 15,484 | 7,772 | |||||||||
| Cash, cash equivalents and restricted cash, beginning of period | 82,288 | 44,373 | |||||||||
| Cash, cash equivalents and restricted cash, end of period | $ | 97,772 | $ | 52,145 | |||||||
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