• AAON Reports Sales and Record Backlog for the Third Quarter of 2021

    ソース: Nasdaq GlobeNewswire / 04 11 2021 16:01:00   America/New_York

    TULSA, Okla., Nov. 04, 2021 (GLOBE NEWSWIRE) -- AAON, INC. (NASDAQ-AAON), today announced its results for the third quarter of 2021.

    Financial Highlights:Three Months Ended 
     September 30,    		 %  Nine Months Ended 
     September 30,    		 %
     2021 2020 Change  2021 2020 Change
     (in thousands, except share and per share data)  (in thousands, except share and per share data)
    Net sales$138,571  $134,772  2.8 %  $398,235  $397,851  0.1 %
    Gross profit36,019  40,848  (11.8)%  111,283  121,926  (8.7)%
    Gross profit %26.0% 30.3%    27.9% 30.6%  
    Selling, general and admin. expenses$15,897  $14,716  8.0 %  $47,488  $45,869  3.5 %
    SG&A %11.5% 10.9%    11.9% 11.5%  
    Net income15,581  20,460  (23.8)%  52,572  60,117  (12.6)%
    Net income %11.2% 15.2%    13.2% 15.1%  
    Earnings per diluted share$0.29  $0.38  (23.7)%  $0.98  $1.14  (14.0)%
    EBITDA, a non-GAAP measure$27,726  $32,777  (15.4)%  $86,379  $95,109  (9.2)%
                 
     September 30, September 30,%       
     2021 2020 Change       
     (in thousands)         
    Backlog$181,813  $84,885  114.2 %       
    Cash & cash equivalents & restricted cash102,473  78,601  30.4 %       

    Net sales for the three months ended September 30, 2021 increased 2.8% to $138.6 million from $134.8 million in the same period in 2020. The year over year increase in net sales was driven by price increases and a favorable product mix, partially offset by unit volumes which were down approximately 11.2%. The decline in volume was mainly a result of a very tight labor market that restricted the Company's production ramp-up plans. While overall headcount has increased throughout the year, the increase is related to our Longview facility, with our Tulsa facility being slightly down year over year. In addition to labor shortage challenges, raw material inflation weighed on gross profit and earnings. Compared to the third quarter of 2020, gross profit declined 11.8% and as a percent of sales, contracted 430 basis points to 26.0%, both of which were a result of three factors. The first factor is the increase in material costs and wages rising quicker than previously announced price increases could counteract. Second, minor supply chain disruptions caused production to slow and be less efficient. Those inefficiencies together with lower overall production limited the Company's ability to absorb certain fixed costs. Third, the Company's Longview facility suffered from COVID-19 related absenteeism in the quarter which reduced the production of coils that were needed to complete units in Tulsa. SG&A expenses were essentially in line with Company expectations, but with lower sales volumes, they also adversely affected operating profit and earnings.  

    The Company finished the quarter with a backlog of $181.8 million, up 114% from $84.9 million one year ago and up 32% from $138.1 million at the end of the second quarter of 2021. The sequential increase in backlog reflects robust end-market demand as well as improvements the Company and channel partners have made to gain market share. New bookings in the quarter increased approximately 60% compared to the same period one year ago.

    As of September 30, 2021, the Company had no debt and unrestricted cash and cash equivalents of $101.8 million, which is up from $79.0 million at the end of 2020. Capital expenditures during the first nine months of 2021 were $42.6 million, as compared to $49.0 million for the same period a year ago. Rebecca Thompson, CFO, stated “We continue to anticipate our full-year 2021 capital expenditures will total approximately $60.0 million.”

    Gary Fields, President and CEO, stated, "I am extremely pleased with the growth we have seen in our backlog and new bookings. Our backlog being up year over year 114% and bookings up 60% is truly extraordinary. Moreover, our bookings were up year over year 19% in the third quarter of 2020, a period of time when our industry was still contracting. Thus, this growth was not a reflection of an easy comparison as the overall market realized. In this latest quarter, the growth reflects several factors, including solid end-market demand, competitive lead times, the strengthening of our independent sales channel and the compelling value proposition AAON equipment offers."

    Mr. Fields continued, "While we are pleased with many aspects of the third quarter, the overall results are disappointing. The main factors that contributed to the lower than anticipated profits were raw material inflation and labor shortages, which restricted us from ramping up production as quickly as we would have liked. Immediately prior to the June 1st price increase, we received a surge of orders. The increased backlog created by the order surge along with slightly longer lead times delayed the impact of the price increase hitting the floor so that it had minimal impact on the quarter. We also saw the highest priced materials to date coming out of our inventory and flowing through production. It has become clear that this dynamic has resulted in a temporary squeeze in gross margin."   

    Mr. Fields continued, “On a positive note, we believe the price/cost issue is largely a timing factor and that it will begin to dissipate as the year closes.   We have implemented additional price increases since the two in the first half of the year, bringing the total announced increases for the year to 18%, of which 5% was realized in the third quarter. As for the labor shortage challenges, we are working hard to overcome this issue and expect to make progress in the fourth quarter.   That said, this issue could linger into 2022 depending how the overall economy progresses. Even with these labor challenges, our lead times remain very competitive. While lead times have extended modestly, they are not nearly as extended as some of our competition."   

    Mr. Fields concluded, "Despite the current challenges that resulted in the disappointing third quarter earnings, we remain extremely optimistic on the fundamentals of the business. With a robust backlog that has an improving margin profile, continued strength in bookings and expected increases in headcount and production rates, we believe we are very much on track with our overall growth strategy.   Moreover, we continue to believe AAON is best positioned to benefit from an increased focus on decarbonization, electrification, energy efficiency and indoor air quality. Finally, although sustainability has just recently become a primary focus for many, it has been the backbone of our Company for decades. Recently, we published our 2020 Sustainability ESG Report, which can be found at https://www.aaon.com/Sustainability."      

    Earnings Conference Call Information
    The Company will host a conference call on November 4, 2021 at 5:30 P.M. (Eastern Time) to discuss the third quarter 2021 results. To participate, call 1-888-241-0551 (code 2466188); or, for rebroadcast available through November 11, 2021, call 1-855-859-2056 (code 2466188).

    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.

    Forward-Looking Statements
    This press release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “should”, “will”, and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligations to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Important factors that could cause results to differ materially from those in the forward-looking statements include (1) the timing and extent of changes in raw material and component prices, (2) the effects of fluctuations in the commercial/industrial new construction market, (3) the timing and extent of changes in interest rates, as well as other competitive factors during the year, and (4) general economic, market or business conditions.

    Contact Information
    Joseph Mondillo
    Director of Investor Relations
    Phone: (617) 877-6346
    Email: joseph.mondillo@aaon.com

    AAON, Inc. and Subsidiaries
    Consolidated Statements of Income
    (Unaudited)
     Three Months Ended 
    September 30,    		 Nine Months Ended 
    September 30,
     2021 2020 2021 2020
     (in thousands, except share and per share data)
    Net sales$138,571   $134,772  $398,235   $397,851  
    Cost of sales102,552   93,924  286,952   275,925  
    Gross profit36,019   40,848  111,283   121,926  
    Selling, general and administrative expenses15,897   14,716  47,488   45,869  
    (Gain) loss on disposal of assets(15)  1  (15)  (61) 
    Income from operations20,137   26,131  63,810   76,118  
    Interest (expense) income, net(10)  10  (11)  90  
    Other (expense) income, net(19)  15  37   20  
    Income before taxes20,108   26,156  63,836   76,228  
    Income tax provision4,527   5,696  11,264   16,111  
    Net income$15,581   $20,460  $52,572   $60,117  
    Earnings per share:       
    Basic$0.30   $0.39  $1.00   $1.15  
    Diluted$0.29   $0.38  $0.98   $1.14  
    Cash dividends declared per common share:$—   $—  $0.19   $0.19  
    Weighted average shares outstanding:       
    Basic52,420,711   52,260,551  52,392,300   52,174,705  
    Diluted53,546,513   53,151,295  53,664,997   52,955,049  


    AAON, Inc. and Subsidiaries
    Consolidated Balance Sheets
    (Unaudited)
     September 30, 2021 December 31, 2020
    Assets(in thousands, except share and per share data)
    Current assets:   
    Cash and cash equivalents$101,813  $79,025 
    Restricted cash660  3,263 
    Accounts receivable, net of allowance for credit losses of $477 and $506, respectively58,756  47,387 
    Income tax receivable1,999  4,587 
    Note receivable32  31 
    Inventories, net104,553  82,219 
    Prepaid expenses and other2,802  3,739 
    Total current assets270,615  220,251 
    Property, plant and equipment:   
    Land5,016  4,072 
    Buildings131,327  122,171 
    Machinery and equipment299,226  281,266 
    Furniture and fixtures21,679  18,956 
    Total property, plant and equipment457,248  426,465 
    Less:  Accumulated depreciation216,667  203,125 
    Property, plant and equipment, net240,581  223,340 
    Goodwill and intangible assets, net3,229  3,267 
    Right of use assets1,421  1,571 
    Note receivable557  579 
    Total assets$516,403  $449,008 
        
    Liabilities and Stockholders' Equity   
    Current liabilities:   
    Accounts payable$25,940  $12,447 
    Accrued liabilities48,266  46,586 
    Total current liabilities74,206  59,033 
    Deferred tax liabilities31,090  28,324 
    Other long-term liabilities4,434  4,423 
    New market tax credit obligation6,394  6,363 
    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, 52,420,486 and 52,224,767 issued and outstanding at September 30, 2021 and December 31, 2020, respectively210  209 
    Additional paid-in capital11,966  5,161 
    Retained earnings388,103  345,495 
    Total stockholders' equity400,279  350,865 
    Total liabilities and stockholders' equity$516,403  $449,008 


    AAON, Inc. and Subsidiaries
    Consolidated Statements of Cash Flows
    (Unaudited)
     Nine Months Ended 
    September 30,
     2021 2020
    Operating Activities(in thousands)
    Net income$52,572  $60,117 
    Adjustments to reconcile net income to net cash provided by operating activities:   
    Depreciation and amortization22,532  18,971 
    Amortization of debt issuance cost31  31 
    Provision for credit losses on accounts receivable, net of adjustments—  193 
    Provision for excess and obsolete inventories378  1,776 
    Share-based compensation8,784  8,546 
    (Gain) loss on disposition of assets(15) (61)
    Foreign currency transaction (gain) loss(1) 18 
    Interest income on note receivable(19) (19)
    Deferred income taxes2,766  7,676 
    Changes in assets and liabilities:   
    Accounts receivable(11,369) 5,011 
    Income taxes2,588  (3,142)
    Inventories(22,712) (6,994)
    Prepaid expenses and other937  (598)
    Accounts payable16,390  3,654 
    Deferred revenue316  1,128 
    Accrued liabilities1,525  688 
    Net cash provided by operating activities74,703  96,995 
    Investing Activities   
    Capital expenditures(42,636) (48,955)
    Proceeds from sale of property, plant and equipment19  61 
    Principal payments from note receivable41  38 
    Net cash used in investing activities(42,576) (48,856)
    Financing Activities   
    Stock options exercised14,573  18,519 
    Repurchase of stock(15,014) (21,390)
    Employee taxes paid by withholding shares(1,537) (1,130)
    Cash dividends paid to stockholders(9,964) (9,910)
    Net cash used in financing activities(11,942) (13,911)
    Net increase in cash, cash equivalents and restricted cash20,185  34,228 
    Cash, cash equivalents and restricted cash, beginning of period82,288  44,373 
    Cash, cash equivalents and restricted cash, end of period$102,473  $78,601 

    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.

    EBITDA
    EBITDA (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 EBITDA as net income, plus (1) depreciation and amortization, (2) interest expense (income), net and (3) income tax expense. EBITDA is not a measure of net income or cash flows as determined by GAAP.

    The Company’s EBITDA measure provides additional information which may be used to better understand the Company’s operations. EBITDA 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 EBITDA are significant components in understanding and assessing a company's financial performance. EBITDA, as used by the Company, may not be comparable to similarly titled measures reported by other companies. The Company believes that EBITDA 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 EBITDA (non-GAAP) for the periods indicated:

     Three Months Ended 
    September 30,    		 Nine Months Ended 
    September 30,
     2021 2020 2021 2020
     (in thousands)
    Net Income, a GAAP measure$15,581  $20,460  $52,572  $60,117 
    Depreciation and amortization7,608  6,631  22,532  18,971 
    Interest expense (income), net10  (10) 11  (90)
    Income tax expense4,527  5,696  11,264  16,111 
    EBITDA, a non-GAAP measure$27,726  $32,777  $86,379  $95,109 

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