TULSA, Okla., Nov. 03, 2016 (GLOBE NEWSWIRE) -- AAON, Inc. (NASDAQ:AAON) today announced its operating results for the third quarter and nine months ended September 30, 2016.
In the quarter, net sales were $104.6 million, up 10.8% from $94.4 million in 2015. Net income was $15.7 million, up 18.3% from $13.3 million in the same period a year ago. Net sales for the nine months ended September 30, 2016 were $292.3 million, up 11.8% from $261.4 million in 2015. Net income for the nine months ended September 30, 2016 was $42.0 million, up 28.0% from $32.8 million in 2015. Both sales and earnings in 2016 were all-time records for any third quarter in the history of AAON.
Earnings per diluted share in the third quarter of 2016 were $0.29, up 20.8% from $0.24 for the same period the previous year, based upon 53.4 million and 54.6 million diluted shares outstanding at September 30, 2016 and 2015, respectively. Earnings per diluted share for the nine months ended September 30, 2016 were $0.78, up 30.0% from $0.60 in 2015, based upon 53.5 million and 54.6 million diluted shares outstanding at September 30, 2016 and 2015, respectively.
The Company early adopted ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which requires that excess tax benefits and deficiencies are reported as an income tax benefit or expense on the statement of income rather than as a component of additional paid-in capital in the statement of equity. For the three and nine months ended September 30, 2016, the Company recognized $0.6 million and $1.8 million, respectively, of excess tax benefits in the Statement of Income. The three months ended September 30, 2016 also had a benefit of $0.5 million related to a return to tax provision adjustment.
Norman H. Asbjornson, President and CEO, stated, “Our volume continues to increase allowing us to gain efficiencies and cost savings in our manufacturing process and keep our gross profit stable. Our increased focus on quality is helping to keep our warranty costs low and reduce our SG&A expense as a percent of sales to approximately 9.9% and 10.2%, respectively, for the three and nine months ended September 30, 2016."
Mr. Asbjornson further added, “Our financial condition at September 30, 2016 remained quite strong with a current ratio of 3.3:1 (including cash and short-term investments totaling $41.3 million). We continue to remain debt free. Our backlog at September 30, 2016 increased 3% to $62.2 million, from $60.4 million for the same period a year ago.”
Mr. Asbjornson continued, “We've had a slower than expected start to our new Water-Source Heat Pump line this quarter due to manufacturing start-up, but have initiated production on our first orders and are moving this forward quickly. We expect steel prices will start to modestly impact us in the fourth quarter but we believe that our cost savings efforts elsewhere will allow us to maintain our gross profit level. We look forward to another year of record sales and earnings."
The Company will host a conference call today at 4:15 P.M. Eastern Time to discuss the third quarter results. To participate, call 1-844-255-9472 (code 2436766); or, for rebroadcast, call 1-855-859-2056 (code 2436766).
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 and coils. 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.
Certain statements in this news release may be “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended. 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.
|AAON, Inc. and Subsidiaries|
|Consolidated Statements of Income|
|Three Months Ended|
|Nine Months Ended|
|(in thousands, except share and per share data)|
|Cost of sales||71,476||64,175||200,739||182,303|
|Selling, general and administrative expenses||10,400||10,062||29,874||27,579|
|Gain on disposal of assets||—||(34||)||(20||)||(59||)|
|Income from operations||22,692||20,157||61,716||51,580|
|Other (expense) income, net||(12||)||(58||)||115||(106||)|
|Income before taxes||22,762||20,113||62,054||51,561|
|Income tax provision||7,080||6,862||20,098||18,781|
|Earnings per share:|
|Cash dividends declared per common share:||$||—||$||—||$||0.11||$||0.11|
|Weighted average shares outstanding:|
|AAON, Inc. and Subsidiaries|
|Consolidated Balance Sheets|
|September 30, 2016||December 31, 2015|
|Assets||(in thousands, except share and per share data)|
|Cash and cash equivalents||$||14,562||$||7,908|
|Certificates of deposit||6,232||10,080|
|Investments held to maturity at amortized cost||20,518||12,444|
|Accounts receivable, net||53,334||50,024|
|Income tax receivable||2,472||4,702|
|Prepaid expenses and other||820||533|
|Total current assets||141,364||124,213|
|Property, plant and equipment:|
|Machinery and equipment||156,932||143,100|
|Furniture and fixtures||12,543||11,270|
|Total property, plant and equipment||248,893||225,409|
|Less: Accumulated depreciation||133,659||124,348|
|Property, plant and equipment, net||115,234||101,061|
|Certificates of deposit||—||1,880|
|Investments held to maturity at amortized cost||—||5,039|
|Liabilities and Stockholders' Equity|
|Revolving credit facility||$||—||$||—|
|Total current liabilities||43,338||43,413|
|Deferred tax liabilities||7,187||8,706|
|Commitments and contingencies|
|Preferred stock, $.001 par value, 5,000,000 shares authorized, no shares issued||—||—|
|Common stock, $.004 par value, 100,000,000 shares authorized, 52,783,642 and 53,012,363 issued and outstanding at September 30, 2016 and December 31, 2015, respectively||211||212|
|Additional paid-in capital||—||—|
|Total stockholders' equity||204,776||178,918|
|Total liabilities and stockholders' equity||$||257,277||$||232,854|
|AAON, Inc. and Subsidiaries|
|Consolidated Statements of Cash Flows|
|Nine Months Ended|
|Operating Activities||(in thousands)|
|Adjustments to reconcile net income to net cash provided by operating activities:|
|Amortization of bond premiums||216||168|
|Provision for losses on accounts receivable, net of adjustments||30||(48||)|
|Provision for excess and obsolete inventories||420||(111||)|
|Gain on disposition of assets||(20||)||(59||)|
|Foreign currency transaction (gain) loss||(38||)||114|
|Interest income on note receivable||(21||)||(23||)|
|Deferred income taxes||(1,519||)||(1,000||)|
|Changes in assets and liabilities:|
|Prepaid expenses and other||(287||)||(154||)|
|Accrued liabilities and donations||(1,300||)||2,130|
|Net cash provided by operating activities||47,007||38,403|
|Proceeds from sale of property, plant and equipment||28||63|
|Investment in certificates of deposits||(4,112||)||(6,200||)|
|Maturities of certificates of deposits||9,840||4,658|
|Purchases of investments held to maturity||(10,384||)||(14,183||)|
|Maturities of investments||5,622||9,907|
|Proceeds from called investments||1,511||757|
|Principal payments from note receivable||39||42|
|Net cash used in investing activities||(21,083||)||(17,731||)|
|Borrowings under revolving credit facility||761||—|
|Payments under revolving credit facility||(761||)||—|
|Stock options exercised||1,681||2,640|
|Repurchase of stock||(14,572||)||(9,074||)|
|Employee taxes paid by withholding shares||(559||)||(362||)|
|Cash dividends paid to stockholders||(5,820||)||(5,965||)|
|Net cash used in financing activities||(19,270||)||(12,761||)|
|Net increase in cash and cash equivalents||6,654||7,911|
|Cash and cash equivalents, beginning of period||7,908||21,952|
|Cash and cash equivalents, end of period||$||14,562||$||29,863|
Use of Non-GAAP Financial Measures
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, provides 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 (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 September 30,||Nine Months Ended September 30,|
|Net Income, a GAAP measure||$||15,682||$||13,251||$||41,956||$||32,780|
|Amortization of bond premiums||65||62||216||168|
|Income tax expense||7,080||6,862||20,098||18,781|
|EBITDAX, a non-GAAP measure||$||27,010||$||23,882||$||74,550||$||62,137|
For Further Information: Jerry R. Levine Phone: (914) 244-0292 Fax: (914) 244-0295 Email: email@example.com