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AAON Reports Earnings & Backlog for the Third Quarter of 2020

TULSA, Okla., Nov. 05, 2020 (GLOBE NEWSWIRE) -- 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 profit40,848  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 income20,460  14,290  43.2 %   60,117  36,438  65.0%
Net income %15.2% 12.6%     15.1% 10.5%  
Effective Tax Rate21.8% 4.9%     21.1% 16.8%  
Earnings per diluted share$0.38  $0.26  46.2 %   $1.14  $0.69  65.2%
Diluted average shares53,151,295  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 cash78,601  44,373  77.1 %        
Total current liabilities61,506  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 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

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

AAON, Inc. and Subsidiaries
Consolidated Statements of Income
 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 sales93,924  86,090  275,925  263,715 
Gross profit40,848  27,410  121,926  83,044 
Selling, general and administrative expenses14,716  12,374  45,869  38,963 
Loss (gain) on disposal of assets1  6  (61) 296 
Income from operations26,131  15,030  76,118  43,785 
Interest income, net10  9  90  49 
Other income (expense), net15  (7) 20  (16)
Income before taxes26,156  15,032  76,228  43,818 
Income tax provision5,696  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:       
Basic52,260,551  52,111,444  52,174,705  52,086,209 
Diluted53,151,295  52,722,127  52,955,049  52,624,583 

AAON, Inc. and Subsidiaries
Consolidated Balance Sheets
 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 cash7,998  17,576 
Accounts receivable, net of allowance for credit losses of $546 and $353, respectively62,195  67,399 
Income tax receivable3,914  772 
Note receivable29  29 
Inventories, net78,819  73,601 
Prepaid expenses and other1,973  1,375 
Total current assets225,531  187,549 
Property, plant and equipment:   
Land3,804  3,274 
Buildings115,600  101,113 
Machinery and equipment267,763  236,087 
Furniture and fixtures18,342  16,862 
Total property, plant and equipment405,509  357,336 
Less:  Accumulated depreciation196,631  179,242 
Property, plant and equipment, net208,878  178,094 
Intangible assets, net97  272 
Goodwill3,229  3,229 
Right of use assets1,618  1,683 
Note receivable560  597 
Total assets$439,913  $371,424 
Liabilities and Stockholders' Equity   
Current liabilities:   
Revolving credit facility$  $ 
Accounts payable16,038  11,759 
Accrued liabilities45,468  44,269 
Total current liabilities61,506  56,028 
Deferred tax liabilities22,973  15,297 
Other long-term liabilities4,191  3,639 
New market tax credit obligation6,351  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, respectively209  208 
Additional paid-in capital8,175  3,631 
Retained earnings336,508  286,301 
Total stockholders' equity344,892  290,140 
Total liabilities and stockholders' equity$439,913  $371,424 

AAON, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
 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 amortization18,971  17,627 
Amortization of debt issuance cost31   
Provision for losses on accounts receivable, net of adjustments193  91 
Provision for excess and obsolete inventories1,776  1,003 
Share-based compensation8,546  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 taxes7,676  3,614 
Changes in assets and liabilities:   
Accounts receivable5,011  (2,096)
Income taxes(3,142) 2,283 
Inventories(6,994) (4,014)
Prepaid expenses and other(598) (513)
Accounts payable3,654  782 
Deferred revenue1,128  263 
Accrued liabilities688  4,991 
Net cash provided by operating activities96,995  70,583 
Investing Activities   
Capital expenditures(48,955) (30,831)
Proceeds from sale of property, plant and equipment61  68 
Investment in certificates of deposits  (6,000)
Maturities of certificates of deposits  6,000 
Principal payments from note receivable38  39 
Net cash used in investing activities(48,856) (30,724)
Financing Activities   
Stock options exercised18,519  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 cash34,228  26,379 
Cash, cash equivalents and restricted cash, beginning of period44,373  1,994 
Cash, cash equivalents and restricted cash, end of period$78,601  $28,373 


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