AAON Reports Record Second Quarter Sales and Earnings
/EINPresswire.com/ -- TULSA, OK--(Marketwired - August 04, 2016) - AAON, Inc. (NASDAQ: AAON) today announced its operating results for the second quarter and six months ended June 30, 2016.
In the quarter, net sales were $102.3 million, up 13.3% from $90.3 million in 2015. Net income was $14.3 million, up 28.8% from $11.1 million in the same period a year ago. Net sales for the six months ended June 30, 2016 were $187.7 million, up 12.4% from $167.0 million in 2015. Net income for the six months ended June 30, 2016 was $25.1 million, up 28.8% from $19.5 million in 2015. Both sales and earnings in 2016 were all-time records for any second quarter in the history of AAON.
Earnings per diluted share in the second quarter of 2016 were $0.27, up 35.0% from $0.20 for the same period the previous year, based upon 53.4 million and 54.7 million shares outstanding at June 30, 2016 and 2015, respectively. Earnings per diluted share for the six months ended June 30, 2016 were $0.47, up 30.6% from $0.36 in 2015, based upon 53.4 million and 54.7 million shares outstanding at June 30, 2016 and 2015, respectively.
Norman H. Asbjornson, President and CEO, stated, "The addition of new regional sales managers in 2015 is starting to show results with our gains in sales for 2016, however, the market appears to have softened. The increased production volume has also created efficiencies to help us maintain and slightly grow our gross profit as a percentage of sales to 32.0% compared to 30.0% a year ago. We have also been able to control our SG&A expense, keeping SG&A expense as a percent of sales flat at approximately 10.3% for both the quarter and six months ended 2016 and 2015."
Mr. Asbjornson further added, "Our financial condition at June 30, 2016 remained quite strong with a current ratio of 2.7:1 (including cash and short-term investments totaling $44.3 million). We continue to remain debt free. Our backlog at June 30, 2016 increased 5% to $69.3 million, from $66.0 million for the same period a year ago."
Mr. Asbjornson continued, "We are looking forward to introducing our new Water Source Heat Pump line this quarter, but we don't expect significant results from this new line to impact profit until 2018. We continue to monitor steel prices and look for ways to maintain our gross profit with rising raw material costs, although we currently believe the impact to costs will be less than the equivalent of 2% of sales. The next six months will be a challenge, but we expect to have a successful year."
The Company will host a conference call today at 4:15 P.M. Eastern Time to discuss the second quarter results. To participate, call 1-888-241-0551 (code 50519850); or, for rebroadcast, call 1-855-859-2056 (code 50519850).
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
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2016 2015 2016 2015
------------ ------------ ------------ ------------
(in thousands, except share and per share data)
Net sales $ 102,319 $ 90,275 $ 187,741 $ 167,043
Cost of sales 69,572 63,158 129,263 118,128
------------ ------------ ------------ ------------
Gross profit 32,747 27,117 58,478 48,915
Selling, general and
administrative expenses 10,561 9,200 19,474 17,517
Gain on disposal of
assets (12) (30) (20) (25)
------------ ------------ ------------ ------------
Income from operations 22,198 17,947 39,024 31,423
Interest income 67 29 141 73
Other income (expense),
net 10 27 127 (48)
------------ ------------ ------------ ------------
Income before taxes 22,275 18,003 39,292 31,448
Income tax provision 7,934 6,873 14,145 11,919
------------ ------------ ------------ ------------
Net income $ 14,341 $ 11,130 $ 25,147 $ 19,529
============ ============ ============ ============
Earnings per share:
Basic $ 0.27 $ 0.21 $ 0.47 $ 0.36
============ ============ ============ ============
Diluted $ 0.27 $ 0.20 $ 0.47 $ 0.36
============ ============ ============ ============
Cash dividends declared
per common share: $ 0.11 $ 0.11 $ 0.11 $ 0.11
============ ============ ============ ============
Weighted average shares
outstanding:
Basic 53,036,009 54,208,362 53,028,224 54,205,657
============ ============ ============ ============
Diluted 53,401,238 54,669,763 53,395,361 54,714,604
============ ============ ============ ============
AAON, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
June 30, December 31,
2016 2015
------------ ------------
(in thousands, except
Assets share and per share data)
Current assets:
Cash and cash equivalents $ 12,209 $ 7,908
Certificates of deposit 9,832 10,080
Investments held to maturity at amortized cost 22,303 12,444
Accounts receivable, net 58,483 50,024
Income tax receivable 669 4,702
Note receivable 25 23
Inventories, net 40,125 38,499
Prepaid expenses and other 1,083 533
------------ ------------
Total current assets 144,729 124,213
Property, plant and equipment:
Land 2,233 2,233
Buildings 75,912 68,806
Machinery and equipment 152,165 143,100
Furniture and fixtures 12,058 11,270
------------ ------------
Total property, plant and equipment 242,368 225,409
Less: Accumulated depreciation 130,505 124,348
------------ ------------
Property, plant and equipment, net 111,863 101,061
Certificates of deposit 240 1,880
Investments held to maturity at amortized cost - 5,039
Note receivable 695 661
------------ ------------
Total assets $ 257,527 $ 232,854
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Revolving credit facility $ - $ -
Accounts payable 9,367 6,178
Dividends payable 5,797 -
Accrued liabilities 38,087 37,235
------------ ------------
Total current liabilities 53,251 43,413
Deferred revenue 1,295 698
Deferred tax liabilities 6,855 8,706
Donations 1,142 1,119
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, 53,008,136 and 53,012,363
issued and outstanding at June 30, 2016 and
December 31, 2015, respectively 212 212
Additional paid-in capital - -
Retained earnings 194,772 178,706
------------ ------------
Total stockholders' equity 194,984 178,918
------------ ------------
Total liabilities and stockholders' equity $ 257,527 $ 232,854
============ ============
AAON, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended
June 30,
2016 2015
------------- -------------
Operating Activities (in thousands)
Net income $ 25,147 $ 19,529
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 6,346 5,599
Amortization of bond premiums 151 106
Provision for losses on accounts receivable,
net of adjustments (42) (102)
Provision for excess and obsolete
inventories 308 59
Share-based compensation 2,043 1,281
Excess tax benefits from stock options
exercised and restricted stock awards
vested (1,129) (2,452)
Gain on disposition of assets (20) (25)
Foreign currency transaction (gain) loss (48) 53
Interest income on note receivable (14) (16)
Deferred income taxes (1,851) (563)
Changes in assets and liabilities:
Accounts receivable (8,417) (1,286)
Income taxes 5,162 1,636
Inventories (1,934) (9,623)
Prepaid expenses and other (550) (446)
Accounts payable 1,848 (1,030)
Deferred revenue 220 136
Accrued liabilities and donations 1,252 (867)
------------- -------------
Net cash provided by operating activities 28,472 11,989
------------- -------------
Investing Activities
Capital expenditures (15,825) (9,304)
Proceeds from sale of property, plant and
equipment 1 30
Investment in certificates of deposits (4,112) -
Maturities of certificates of deposits 6,000 4,658
Purchases of investments held to maturity (9,782) -
Maturities of investments 3,801 9,201
Proceeds from called investments 1,010 504
Principal payments from note receivable 26 28
------------- -------------
Net cash (used in) provided by investing
activities (18,881) 5,117
------------- -------------
Financing Activities
Borrowings under revolving credit facility 761 -
Payments under revolving credit facility (761) -
Stock options exercised 1,255 2,534
Excess tax benefits from stock options
exercised and restricted stock awards vested 1,129 2,452
Repurchase of stock (7,674) (6,444)
------------- -------------
Net cash used in financing activities (5,290) (1,458)
------------- -------------
Net increase in cash and cash equivalents 4,301 15,648
------------- -------------
Cash and cash equivalents, beginning of period 7,908 21,952
------------- -------------
Cash and cash equivalents, end of period $ 12,209 $ 37,600
============= =============
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
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 June 30, Six Months Ended June 30,
2016 2015 2016 2015
-------------------------------------------------------
(in thousands)
Net Income, a GAAP
measure $ 14,341 $ 11,130 $ 25,147 $ 19,529
Depreciation 3,175 2,795 6,346 5,599
Amortization of bond
premiums 68 45 151 106
Share-based
compensation 1,095 843 2,043 1,281
Interest income (135) (74) (292) (179)
Income tax expense 7,934 6,873 14,145 11,919
------------- ------------- ------------- -------------
EBITDAX, a non-GAAP
measure $ 26,478 $ 21,612 $ 47,540 $ 38,255
============= ============= ============= =============
For Further Information:
Jerry R. Levine
Phone: (914) 244-0292
Fax: (914) 244-0295
Email: jrladvisor@yahoo.com
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