AAON Reports Sales and Earnings

TULSA, OK--(Marketwired - Aug 7, 2014) - AAON, Inc. (NASDAQ: AAON) today announced its operating results for the second quarter and six months ended June 30, 2014. 

Net sales in the second quarter were a record $92.3 million, up 1.2% from $91.2 million in 2013. Net income was $11.4 million, down (6.2)% from $12.1 million in the same period a year ago. Net sales and net income for the six-month period ended June 30, 2014 were records for the first half of any year in the Company's history, with sales of $168.7 million, up 6.7% from $158.1 million in 2013, and income of $21.2 million, up 10.0% compared to $19.3 million in 2013.

Earnings per diluted share in the second quarter of 2014 were $0.20, down (9.1)% from $0.22 for the same period the previous year, based upon 55.6 million and 55.7 million shares outstanding at June 30, 2014 and 2013, respectively. Earnings per diluted share were $0.38, up 8.6% from $0.35, in the six months ended June 30, 2014 and 2013, respectively, based upon 55.6 million diluted shares outstanding for both periods. All per share earnings and shares reflect the three-for-two stock split effective July 16, 2014. 

Norman H. Asbjornson, President and CEO, stated, "The second quarter increase in sales primarily reflects price increases. Gross profit as a percent of sales remained steady at 30.2% compared to 30.3% a year ago. SG&A expense as a percent of sales increased 1.5% (from 10.0% to 11.5%), primarily due to a one-time donation of cash and equipment totaling $1.0 million made in the quarter toward rebuilding of the Tulsa Central Library."

Mr. Asbjornson continued, "The Company's balance sheet at June 30, 2014, was very strong, showing a current ratio of 2.9:1 (including cash and short-term investments totaling $45.6 million), plus long-term marketable investments of $11.7 million, and we remained debt-free. Additionally, our backlog increased from $66.2 million at June 30, 2013 to $67.1 million at June 30, 2014." 

Mr. Asbjornson then said, "Based on the first half year's results, our backlog and other relevant factors, we expect 2014 to surpass last year's record sales and earnings."

The Company will host a conference call today at 4:15 P.M. Eastern Time to discuss the second quarter results. To participate, call 1-866-222-0265; or, for rebroadcast, call 1-866-245-6755 (code 236665).

AAON, Inc. is a manufacturer of air conditioning and heating equipment consisting of rooftop units, chillers, outdoor mechanical rooms, air handling units, makeup air units, energy recovery units, condensing units, commercial 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, 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  June 30,							Six Months Ended  June 30,
			2014			2013				2014				2013
			(in thousands, except share and per share data)
Net sales			$	92,310		$	91,241			$	168,677			$	158,074
Cost of sales				64,434			63,565				118,955				115,086
Gross profit				27,876			27,676				49,722				42,988
Selling, general and administrative expenses				10,584			9,089				18,213				16,056
Gain on disposal of assets				--			(59	)			(24	)			(52	)
Income from operations				17,292			18,646				31,533				26,984
Interest income				71			57				140				91
Other income, net				34			253				13				237
Income before taxes				17,397			18,956				31,686				27,312
Income tax provision				6,034			6,837				10,501				8,053
Net income			$	11,363		$	12,119			$	21,185			$	19,259
Earnings per share:
	Basic*		$	0.21		$	0.22			$	0.38			$	0.35
	Diluted*		$	0.20		$	0.22			$	0.38			$	0.35
Cash dividends declared per common share*:			$	0.09		$	0.07			$	0.09			$	0.07
Weighted average shares outstanding:
	Basic*			55,004,175			55,139,577				55,036,281				55,140,260
	Diluted*			55,568,212			55,725,393				55,603,979				55,584,302

*Reflects three-for-two stock split effective July 16, 2014

AAON, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
				June 30, 2014			December 31, 2013
Assets				(in thousands, except share and per share data)
Current assets:
	Cash and cash equivalents			$	16,484		$	12,085
	Certificates of deposit				10,064			8,110
	Investments held to maturity at amortized cost				19,097			16,040
	Accounts receivable, net				52,895			39,063
	Income tax receivable				--			1,073
	Note receivable				29			29
	Inventories, net				36,608			32,140
	Prepaid expenses and other				829			304
	Deferred tax assets				5,895			4,779
Total current assets					141,901			113,623
Property, plant and equipment:
	Land				2,233			1,417
	Buildings				63,164			61,821
	Machinery and equipment				121,909			119,439
	Furniture and fixtures				10,136			9,748
		Total property, plant and equipment			197,442			192,425
		Less: Accumulated depreciation			110,277			105,142
	Property, plant and equipment, net				87,165			87,283
Certificates of deposit					6,000			2,638
Investments held to maturity at amortized cost					5,682			10,981
Note receivable					904			919
Total assets				$	241,652		$	215,444
Liabilities and Stockholders' Equity
Current liabilities:
	Revolving credit facility			$	--		$	--
	Accounts payable				10,904			7,779
	Dividends payable				4,779			--
	Accrued liabilities				33,857			28,550
Total current liabilities					49,540			36,329
Deferred revenue					841			585
Deferred tax liabilities					13,579			14,424
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, 55,049,445 and 55,067,031 issued and outstanding at June 30, 2014 and December 31, 2013, respectively*					220			221
Additional paid-in capital					--			--
Retained earnings					177,472			163,885
Total stockholders' equity					177,692			164,106
Total liabilities and stockholders' equity				$	241,652		$	215,444

*Reflects three-for-two stock split effective July 16, 2014

AAON, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
					Six Months Ended  June 30,
					2014				2013
Operating Activities					(in thousands)
	Net income				$	21,185			$	19,259
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation				5,719				6,268
		Amortization of bond premiums				389				304
		Provision for losses on accounts receivable, net of adjustments				(8	)			102
		Provision for excess and obsolete inventories, net				156				201
		Share-based compensation				984				695
		Excess tax benefits from stock options exercised and restricted stock awards vested				(680	)			(385	)
		Gain on disposition of assets				(24	)			(52	)
		Foreign currency transaction gain				--				43
		Interest income on note receivable				(20	)			(20	)
		Deferred income taxes				(1,961	)			(1,966	)
		Write-off of note receivable				--				75
		Changes in assets and liabilities:
			Accounts receivable			(13,824	)			(6,344	)
			Income tax receivable			1,753				3,942
			Inventories			(4,624	)			(1,718	)
			Prepaid expenses and other			(525	)			(160	)
			Accounts payable			3,422				1,101
			Deferred revenue			378				201
			Accrued liabilities			5,185				6,194
	Net cash provided by operating activities					17,505				27,740
Investing Activities
	Capital expenditures					(5,903	)			(1,949	)
	Proceeds from sale of property, plant and equipment					29				60
	Investment in certificates of deposits					(9,220	)			(958	)
	Maturities of certificates of deposits					3,904				1,440
	Purchases of investments held to maturity					(5,955	)			(9,969	)
	Maturities of investments					6,539				1,710
	Proceeds from called investment					1,269				--
	Principal payments from note receivable					35				40
	Net cash used in investing activities					(9,302	)			(9,626	)
Financing Activities
	Borrowings under revolving credit facility					--				2,321
	Payments under revolving credit facility					--				(2,321	)
	Stock options exercised					632				767
	Excess tax benefits from stock options exercised and restricted stock awards vested					680				385
	Repurchase of stock					(5,116	)			(3,010	)
	Net cash used in financing activities					(3,804	)			(1,858	)
Net increase in cash and cash equivalents						4,399				16,256
Cash and cash equivalents, beginning of period						12,085				3,159
Cash and cash equivalents, end of period					$	16,484			$	19,415