TULSA, Okla., Feb. 27, 2018 (GLOBE NEWSWIRE) -- AAON, INC. (NASDAQ:AAON) today announced its results for the fourth quarter and year 2017. Sales in the fourth quarter were $104.2 million, up 13.6% from $91.7 million in 2016. Net income was $15.8 million, increasing 38.1% from $11.4 million in the same period a year ago. Sales for the year 2017 reached a record level, $405.2 million, representing a gain of 5.5% compared to $384.0 million in 2016. Net income for 2017 was also a record, $54.5 million, rising 2.1% compared to $53.4 million in 2016.
Earnings for the fourth quarter of 2017 were $0.30 per diluted share, up 39.4% from $0.21 per diluted share in 2016, based upon 52.9 million and 53.4 million diluted shares outstanding, respectively. Earnings per diluted share for the years 2017 and 2016 were $1.03 and $1.00, representing a gain of 3.0%, based upon 53.1 million and 53.4 million diluted shares outstanding, respectively.
Selling, general and administrative expenses for the quarter increased $5.1 million to $13.7 million (13.2% of sales) from $8.6 million (9.4% of sales) as compared to the fourth quarter of 2016. This increase is due to warranty expense and increases in salaries and benefits. For the year, SG&A expenses increased $10.7 million to $49.2 million (12.2% of sales) from $38.5 million (10.0% of sales) as compared to 2016. In addition to the increases in warranty from modifications made to our warranty policy, the Company had two officers retire during the year, which resulted in accelerated vesting of stock awards and approximately $1.0 million in additional stock compensation expense. The Company expects our SG&A expense will return to a more normal level in 2018.
The Tax Cuts and Job Act (the "Act") was enacted on December 22, 2017. The Act lowered the corporate income tax rate from 35% to 21% starting in 2018. Due to this change, the Company remeasured its deferred tax assets and liabilities on the enactment date, which resulted in a $4.4 million benefit to our income tax provision.
Norman H. Asbjornson, CEO, said, "The Act allows us to improve our compensation to employees and cash distribution to shareholders as well as defer future price increases to customers."
Mr. Asbjornson continued, "Our financial condition at December 31, 2017 remained quite strong with a current ratio of 3.1:1 (including cash and short-term investments totaling $30.4 million). We also remain debt free. Our backlog at December 31, 2017 increased 65.3% to $81.2 million, from $49.1 million for the same period a year ago."
Gary Fields, President, added, "During 2018, we will continue to witness the results of our significant capital investment program. Two new Water-Source Heat Pump lines will begin production and our state of the industry laboratory will initiate operations. These investments, I believe, will have a major impact on AAON's growth in the years ahead."
The Company will host a conference call today at 4:15 P.M. (Eastern Time) to discuss the fourth quarter and year 2017 results. To participate, call 1-888-241-0551 (code 4187646); or, for rebroadcast, call 1-855-859-2056 (code 4187646).
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.
|AAON, Inc. and Subsidiaries|
|Unaudited Consolidated Statements of Income|
|Three Months Ended|
|(in thousands, except share and per share data)|
|Cost of sales||73,085||65,158||281,835||265,897|
|Selling, general and administrative expenses||13,714||8,632||49,249||38,506|
|(Gain) loss on disposal of assets||(1||)||—||45||(20||)|
|Income from operations||17,362||17,878||74,103||79,594|
|Interest income, net||83||69||298||292|
|Other income (expense), net||5||(10||)||91||105|
|Income before taxes||17,450||17,937||74,492||79,991|
|Income tax provision||1,680||6,517||19,994||26,615|
|Earnings per share:|
|Cash dividends declared per common share:||$||0.13||$||0.13||$||0.26||$||0.24|
|Weighted average shares outstanding:|
|AAON, Inc. and Subsidiaries|
|Unaudited Consolidated Balance Sheets|
|Assets||(in thousands, except share and per share data)|
|Cash and cash equivalents||$||21,457||$||24,153|
|Certificates of deposit||2,880||5,512|
|Investments held to maturity at amortized cost||6,077||14,083|
|Accounts receivable, net||50,338||43,001|
|Income tax receivable||1,643||6,239|
|Prepaid expenses and other||518||616|
|Total current assets||153,727||140,981|
|Property, plant and equipment:|
|Machinery and equipment||184,316||158,216|
|Furniture and fixtures||13,714||12,783|
|Total property, plant and equipment||292,338||252,038|
|Less: Accumulated depreciation||149,963||137,146|
|Property, plant and equipment, net||142,375||114,892|
|Liabilities and Stockholders' Equity|
|Revolving credit facility||$||—||$||—|
|Total current liabilities||50,065||39,042|
|Deferred tax liabilities||7,977||9,531|
|Commitments and contingencies|
|Preferred stock, $.001 par value, 5,000,000 shares authorized, no shares issued|
|Common stock, $.004 par value, 100,000,000 shares authorized, 52,422,801 and 52,651,448 issued and outstanding at December 31, 2017 and 2016, respectively||210||211|
|Additional paid-in capital||—||—|
|Total stockholders' equity||237,226||205,898|
|Total liabilities and stockholders' equity||$||296,780||$||256,530|
|AAON, Inc. and Subsidiaries|
|Unaudited Consolidated Statements of Cash Flows|
|Years Ending December 31,|
|Operating Activities||(in thousands)|
|Adjustments to reconcile net income to net cash provided by operating activities:|
|Amortization of bond premiums||47||249||266|
|Provision for losses on accounts receivable, net of adjustments||179||(25||)||(48||)|
|Provision for excess and obsolete inventories||264||625||178|
|Loss (gain) on disposition of assets||45||(20||)||(59||)|
|Foreign currency transaction (gain) loss||(59||)||(22||)||139|
|Interest income on note receivable||(25||)||(28||)||(30||)|
|Deferred income taxes||(1,554||)||825||1,172|
|Changes in assets and liabilities:|
|Income tax receivable||4,596||(1,537||)||312|
|Prepaid expenses and other||98||(83||)||76|
|Accrued liabilities and donations||6,353||(5,470||)||4,852|
|Net cash provided by operating activities||57,994||63,923||55,355|
|Proceeds from sale of property, plant and equipment||10||28||63|
|Investment in certificates of deposits||(5,280||)||(4,112||)||(6,680||)|
|Maturities of certificates of deposits||7,912||10,560||6,098|
|Purchases of investments held to maturity||(13,241||)||(10,384||)||(14,183||)|
|Maturities of investments||19,700||10,021||11,408|
|Proceeds from called investments||1,500||3,514||1,013|
|Principal payments from note receivable||60||52||54|
|Net cash used in investing activities||(31,052||)||(16,925||)||(23,194||)|
|Borrowings under revolving credit facility||—||761||—|
|Payments under revolving credit facility||—||(761||)||—|
|Stock options exercised||2,259||2,063||2,795|
|Repurchase of stock||(16,620||)||(19,317||)||(36,558||)|
|Employee taxes paid by withholding shares||(1,614||)||(823||)||(585||)|
|Cash dividends paid to stockholders||(13,663||)||(12,676||)||(11,857||)|
|Net cash used in financing activities||(29,638||)||(30,753||)||(46,205||)|
|Net increase (decrease) in cash and cash equivalents||(2,696||)||16,245||(14,044||)|
|Cash and cash equivalents, beginning of period||24,153||7,908||21,952|
|Cash and cash equivalents, end of period||$||21,457||$||24,153||$||7,908|
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 (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|
|Net Income, a GAAP measure||$||15,770||$||11,420||$||54,498||$||53,376|
|Amortization of bond premiums||8||33||47||249|
|Interest (income) expense||(91||)||(102||)||(345||)||(541||)|
|Income tax expense||1,680||6,517||19,994||26,615|
|EBITDAX, a non-GAAP measure||$||22,847||$||22,541||$||95,659||$||97,091|
For Further Information:
Jerry R. Levine
Phone: (914) 244-0292
Fax: (914) 244-0295