EX-99.1 2 aaonq12019pressreleaseexhi.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1                        
aaona02.jpg

AAON REPORTS FIRST QUARTER SALES AND EARNINGS

TULSA, Okla, May 2, 2019 - AAON, Inc. (NASDAQ-AAON) today announced its operating results for the first quarter and three months ended March 31, 2019.

In the quarter ended March 31, 2019, net sales were $113.8 million, up 14.9% from $99.1 million in 2018. Net income was $10.9 million, an increase of 155.9% from $4.3 million in the same period a year ago. Earnings per diluted share for the three months ended March 31, 2019 were $0.21, an increase of 162.5% from $0.08 in 2018, based upon 52.4 million and 52.9 million shares outstanding at March 31, 2019 and 2018, respectively.

Our backlog at March 31, 2019, increased 9.7% to $166.6 million, from $151.8 million at December 31, 2018, and increased 125% from $74.1 million at March 31, 2018.

Gross profit increased 67.6% to $25.8 million (22.7% of sales) versus $15.4 million (15.5% of sales). Norman H. Asbjornson, CEO, said, "While we witnessed increases in both labor and raw material costs, the price increases implemented during the second half of 2018, as well as increased productivity and higher sales helped partially offset these costs and had a positive impact on our gross margins in the first quarter. We expect our gross margins will continue to recover as our production increases and we work through the lower-priced portion of our backlog."

For the three months ended March 31, 2019, selling, general and administrative expenses increased 7.7% to $11.0 million (9.7% of sales) compared to $10.2 million (10.3% of sales) for the same period a year ago, positively impacted by moderating warranty costs, which we believe have stabilized.

Mr. Asbjornson continued, "Strong sales supported by an increasing backlog coupled with improving margins, secure financial condition (current ratio of 3.3:1, including cash totaling $7.1 million) and debt free balance sheet provide a solid foundation for future growth."

Gary Fields, President, stated, "We continue to gradually strengthen our manufacturing personnel and are beginning to witness increases in our production capacity as a result of our improved employee training and on-boarding initiatives. We are also improving our sheet metal manufacturing operations and we anticipate these enhancements will enable us to optimize our sheet metal manufacturing capacity before the end of the year."
 
Mr. Fields concluded, "As we continue to work through our lower-priced backlog and also improve productivity, we believe the Company is well positioned to capitalize on what we anticipate to be a sustainable growth opportunity as we enter our peak season."

The Company will host a conference call today at 4:15 P.M. Eastern Time to discuss the first quarter results. To participate, call 1-888-241-0551 (code 5189007); or, for rebroadcast, call 1-855-859-2056 (code 5189007).

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.

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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.

Contact Information
Jerry R. Levine
Phone: (561) 482-4046 or (914) 244-0292
Fax: (914) 244-0295
Email: jrladvisor@yahoo.com


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AAON, Inc. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
 
Three Months Ended 
 March 31,
 
2019
 
2018
 
(in thousands, except share and per share data)
Net sales
$
113,822

 
$
99,082

Cost of sales
88,029

 
83,692

Gross profit
25,793

 
15,390

Selling, general and administrative expenses
11,001

 
10,219

Loss (gain) on disposal of assets
284

 
(7
)
Income from operations
14,508

 
5,178

Interest income, net
9

 
68

Other expense, net
(26
)
 
(6
)
Income before taxes
14,491

 
5,240

Income tax provision
3,589

 
980

Net income
$
10,902

 
$
4,260

Earnings per share:
 
 
 
Basic
$
0.21

 
$
0.08

Diluted
$
0.21

 
$
0.08

Weighted average shares outstanding:
 
 
 
Basic
51,992,150

 
52,433,902

Diluted
52,369,660

 
52,910,223





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AAON, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
 
March 31, 2019
 
December 31, 2018
Assets
(in thousands, except share and per share data)
Current assets:
 
 
 
Cash and cash equivalents
$
7,143

 
$
1,994

Accounts receivable, net
58,688

 
54,078

Income tax receivable
4,756

 
6,104

Note receivable
27

 
27

Inventories, net
74,577

 
77,612

Prepaid expenses and other
1,607

 
1,046

Total current assets
146,798

 
140,861

Property, plant and equipment:
 

 
 

Land
3,114

 
3,114

Buildings
98,394

 
97,393

Machinery and equipment
215,928

 
212,779

Furniture and fixtures
17,079

 
16,597

Total property, plant and equipment
334,515

 
329,883

Less:  Accumulated depreciation
167,863

 
166,880

Property, plant and equipment, net
166,652

 
163,003

Intangible assets, net
447

 
506

Goodwill
3,229

 
3,229

Right of use assets
1,796

 
—

Note receivable
603

 
598

Total assets
$
319,525

 
$
308,197

 
 
 
 
Liabilities and Stockholders' Equity
 

 
 

Current liabilities:
 

 
 

Revolving credit facility
$
—

 
$
—

Accounts payable
5,947

 
10,616

Accrued liabilities
38,053

 
37,455

Total current liabilities
44,000

 
48,071

Deferred tax liabilities
12,713

 
10,826

Other long-term liabilities
3,442

 
1,801

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, 52,099,274 and 51,991,242 issued and outstanding at March 31, 2019 and December 31, 2018, respectively
208

 
208

Additional paid-in capital
969

 
—

Retained earnings
258,193

 
247,291

Total stockholders' equity
259,370

 
247,499

Total liabilities and stockholders' equity
$
319,525

 
$
308,197



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AAON, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
 
Three Months Ended 
 March 31,
 
2019
 
2018
Operating Activities
(in thousands)
Net income
$
10,902

 
$
4,260

Adjustments to reconcile net income to net cash provided by operating activities:
 

 
 

Depreciation and amortization
5,914

 
4,129

Amortization of bond premiums
—

 
5

Provision for losses on accounts receivable, net of adjustments
115

 
(11
)
Provision for excess and obsolete inventories
357

 
101

Share-based compensation
2,030

 
1,724

Loss (gain) on disposition of assets
284

 
(7
)
Foreign currency transaction gain
(16
)
 
3

Interest income on note receivable
(6
)
 
9

Deferred income taxes
1,887

 
420

Changes in assets and liabilities:
 

 
 

Accounts receivable
(4,725
)
 
(2,897
)
Income taxes
1,348

 
(5,673
)
Inventories
2,678

 
3,447

Prepaid expenses and other
(561
)
 
(712
)
Accounts payable
(5,730
)
 
9,833

Deferred revenue
25

 
37

Accrued liabilities and donations
411

 
(3,924
)
Net cash provided by operating activities
14,913

 
10,744

Investing Activities
 

 
 

Capital expenditures
(8,772
)
 
(8,451
)
Cash paid in business combination
—

 
(6,000
)
Proceeds from sale of property, plant and equipment
52

 
6

Investment in certificates of deposits
—

 
(4,320
)
Maturities of certificates of deposits
—

 
1,200

Purchases of investments held to maturity
—

 
(7,495
)
Maturities of investments
—

 
4,230

Proceeds from called investments
—

 
395

Principal payments from note receivable
17

 
14

Net cash used in investing activities
(8,703
)
 
(20,421
)
Financing Activities
 

 
 

Stock options exercised
4,010

 
1,340

Repurchase of stock
(4,483
)
 
(4,379
)
Employee taxes paid by withholding shares

(588
)
 
(568
)
Net cash used in financing activities
(1,061
)
 
(3,607
)
Net increase (decrease) in cash and cash equivalents
5,149

 
(13,284
)
Cash and cash equivalents, beginning of period
1,994

 
21,457

Cash and cash equivalents, end of period
$
7,143

 
$
8,173



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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 and amortization, (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 
 March 31,
 
 
2019
 
2018
 
(in thousands)
Net Income, a GAAP measure
$
10,902

 
$
4,260

Depreciation and amortization
5,914

 
4,129

Amortization of bond premiums
—

 
5

Share-based compensation
2,030

 
1,724

Interest income
(9
)
 
(73
)
Income tax expense
3,589

 
980

EBITDAX, a non-GAAP measure
$
22,426

 
$
11,025






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