TULSA, OK--(Marketwired - May 07, 2015) - AAON, Inc. (
Sales in the first quarter were a record of $76.8 million, up 0.5% from $76.4 million in 2014. Net income was $8.4 million, down (14.5)% from $9.8 million for the same period a year ago. Earnings per diluted share in the first quarter of 2015 was $0.15, down (16.7)% from $0.18 for the same period the previous year, based upon 54.6 million and 55.6 million shares outstanding at March 31, 2015 and 2014, respectively. All per share earnings and shares reflect the three-for-two stock split effective July 16, 2014.
The Company's effective income tax rate for the three months ended March 31, 2015 was 37.5% compared to 31.3% for the same period a year ago, or approximately $0.02 per share. The first quarter of 2014 had an abnormally low tax rate due to a change in method of accounting for state investment tax credits. The Company expects its tax rate to be approximately 37.0% for the year 2015.
Norman H. Asbjornson, President and CEO, stated, "The first quarter increase in sales primarily reflects an increase in units sold during the period while gross profit as a percent of sales remained steady at 28.4% compared to 28.6% a year ago. SG&A expense as a percent of sales increased 0.8% (from 10.0% to 10.8%), due to additional sales tax expense and payments of approximately $0.6 million."
Mr. Asbjornson said, "Based upon all available forecasts, we anticipated a better quarter. There were three primary reasons for this result. First, we have a strong market presence in the Northeast and Upper Mid-west which was affected by adverse weather conditions. We also have a major market position in energy producing states that suffered by reason of the drop in oil prices. In addition, there was a general unease in the manufacturing sector which delayed expenditures."
Mr. Asbjornson continued, "The Company's balance sheet at March 31, 2015, was very strong, showing a current ratio of 3.5:1 (including cash and short-term investments totaling $42.7 million), plus long-term marketable investments of $6.6 million, and we remained debt-free. Additionally, our backlog increased from $51.7 million at March 31, 2014, to $55.4 million at March 31, 2015."
Mr. Asbjornson next said, "While our backlog increased during the first quarter, we remain concerned about stagnation in non-residential construction. For this reason our outlook for the remainder of the year is cloudy."
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 36418406); or, for rebroadcast, call 1-855-859-2056 (code 36418406).
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, 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 March 31, |
||||||||
| 2015 | 2014 | |||||||
| (in thousands, except share and per share data) | ||||||||
| Net sales | $ | 76,768 | $ | 76,367 | ||||
| Cost of sales | 54,970 | 54,521 | ||||||
| Gross profit | 21,798 | 21,846 | ||||||
| Selling, general and administrative expenses | 8,317 | 7,629 | ||||||
| Loss (gain) on disposal of assets | 5 | (24 | ) | |||||
| Income from operations | 13,476 | 14,241 | ||||||
| Interest income | 44 | 69 | ||||||
| Other expense, net | (75 | ) | (21 | ) | ||||
| Income before taxes | 13,445 | 14,289 | ||||||
| Income tax provision | 5,046 | 4,467 | ||||||
| Net income | $ | 8,399 | $ | 9,822 | ||||
| Earnings per share: | ||||||||
| Basic* | $ | 0.16 | $ | 0.18 | ||||
| Diluted* | $ | 0.15 | $ | 0.18 | ||||
| Cash dividends declared per common share*: | $ | - | $ | - | ||||
| Weighted average shares outstanding: | ||||||||
| Basic* | 54,083,897 | 55,041,831 | ||||||
| Diluted* | 54,640,389 | 55,613,190 | ||||||
*Reflects three-for-two stock split effective July 16, 2014
| AAON, Inc. and Subsidiaries | |||||||||
| Consolidated Balance Sheets | |||||||||
| (Unaudited) | |||||||||
| March 31, 2015 | December 31, 2014 | ||||||||
| Assets | (in thousands, except share and per share data) | ||||||||
| Current assets: | |||||||||
| Cash and cash equivalents | $ | 33,526 | $ | 21,952 | |||||
| Certificates of deposit | 4,180 | 6,098 | |||||||
| Investments held to maturity at amortized cost | 4,984 | 11,972 | |||||||
| Accounts receivable, net | 39,865 | 44,092 | |||||||
| Income tax receivable | 2,381 | 2,569 | |||||||
| Note receivable | 25 | 30 | |||||||
| Inventories, net | 44,546 | 37,618 | |||||||
| Prepaid expenses and other | 910 | 609 | |||||||
| Deferred tax assets | 6,272 | 6,143 | |||||||
| Total current assets | 136,689 | 131,083 | |||||||
| Property, plant and equipment: | |||||||||
| Land | 2,233 | 2,233 | |||||||
| Buildings | 65,676 | 64,938 | |||||||
| Machinery and equipment | 130,474 | 127,968 | |||||||
| Furniture and fixtures | 10,068 | 10,388 | |||||||
| Total property, plant and equipment | 208,451 | 205,527 | |||||||
| Less: Accumulated depreciation | 115,680 | 113,605 | |||||||
| Property, plant and equipment, net | 92,771 | 91,922 | |||||||
| Certificates of deposit | 4,560 | 5,280 | |||||||
| Investments held to maturity at amortized cost | 1,993 | 4,015 | |||||||
| Note receivable | 746 | 817 | |||||||
| Total assets | $ | 236,759 | $ | 233,117 | |||||
| Liabilities and Stockholders' Equity | |||||||||
| Current liabilities: | |||||||||
| Revolving credit facility | $ | - | $ | - | |||||
| Accounts payable | 10,125 | 11,370 | |||||||
| Accrued liabilities | 28,518 | 31,343 | |||||||
| Total current liabilities | 38,643 | 42,713 | |||||||
| Deferred revenue | 955 | 1,006 | |||||||
| Deferred tax liabilities | 13,363 | 13,677 | |||||||
| Donations | 1,677 | 1,662 | |||||||
| 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, 54,171,201 and 54,041,829 | 217 | 216 | |||||||
| issued and outstanding at March 31, 2015 and December 31, 2014, respectively | |||||||||
| Additional paid-in capital | - | - | |||||||
| Retained earnings | 181,904 | 173,843 | |||||||
| Total stockholders' equity | 182,121 | 174,059 | |||||||
| Total liabilities and stockholders' equity | $ | 236,759 | $ | 233,117 | |||||
| AAON, Inc. and Subsidiaries | ||||||||||
| Consolidated Statements of Cash Flows | ||||||||||
| (Unaudited) | ||||||||||
| Three Months Ended March 31, |
||||||||||
| 2015 | 2014 | |||||||||
| Operating Activities | (in thousands) | |||||||||
| Net income | $ | 8,399 | $ | 9,822 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
| Depreciation | 2,804 | 2,808 | ||||||||
| Amortization of bond premiums | 61 | 216 | ||||||||
| Provision for losses on accounts receivable, net of adjustments | (59 | ) | (130 | ) | ||||||
| Provision for excess and obsolete inventories, net | 41 | 4 | ||||||||
| Share-based compensation | 438 | 412 | ||||||||
| Excess tax benefits from stock options exercised and restricted stock awards vested | (1,098 | ) | (356 | ) | ||||||
| Loss (gain) on disposition of assets | 5 | (24 | ) | |||||||
| Foreign currency transaction loss | 70 | 31 | ||||||||
| Interest income on note receivable | (8 | ) | (10 | ) | ||||||
| Deferred income taxes | (443 | ) | (1,154 | ) | ||||||
| Changes in assets and liabilities: | ||||||||||
| Accounts receivable | 4,286 | (6,511 | ) | |||||||
| Income tax receivable | 1,286 | 1,429 | ||||||||
| Inventories | (6,969 | ) | (2,755 | ) | ||||||
| Prepaid expenses and other | (301 | ) | (397 | ) | ||||||
| Accounts payable | (1,316 | ) | 3,441 | |||||||
| Deferred revenue | 64 | 204 | ||||||||
| Accrued liabilities | (2,925 | ) | 2,039 | |||||||
| Net cash provided by operating activities | 4,335 | 9,069 | ||||||||
| Investing Activities | ||||||||||
| Capital expenditures | (3,587 | ) | (3,616 | ) | ||||||
| Proceeds from sale of property, plant and equipment | - | 27 | ||||||||
| Maturities of certificates of deposits | 2,638 | 1,403 | ||||||||
| Maturities of investments | 8,445 | 2,717 | ||||||||
| Proceeds from called investments | 504 | 253 | ||||||||
| Principal payments from note receivable | 14 | 17 | ||||||||
| Net cash provided by investing activities | 8,014 | 801 | ||||||||
| Financing Activities | ||||||||||
| Borrowings under revolving credit facility | - | - | ||||||||
| Payments under revolving credit facility | - | - | ||||||||
| Stock options exercised | 1,082 | 340 | ||||||||
| Excess tax benefits from stock options exercised and restricted stock awards vested | 1,098 | 356 | ||||||||
| Repurchase of stock | (2,955 | ) | (2,981 | ) | ||||||
| Net cash used in financing activities | (775 | ) | (2,285 | ) | ||||||
| Net increase in cash and cash equivalents | 11,574 | 7,585 | ||||||||
| Cash and cash equivalents, beginning of period | 21,952 | 12,085 | ||||||||
| Cash and cash equivalents, end of period | $ | 33,526 | $ | 19,670 | ||||||
Use of Non-GAAP Financial Measures
To supplement the Company's consolidated financial statements presented in accordance with generally accepted accounting principles ("GAAP"), additional non-GAAP financial measures are provided and reconciled in the following tables. The Company believes that these non-GAAP financial measures, 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 these non-GAAP financial measures enhance 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 March 31, |
|||||||
| 2015 | 2014 | ||||||
| (in thousands) | |||||||
| Net Income, a GAAP measure | $ | 8,399 | $ | 9,822 | |||
| Depreciation | 2,804 | 2,808 | |||||
| Amortization of bond premiums | 61 | 216 | |||||
| Share-based compensation | 438 | 412 | |||||
| Interest (income) | (105 | ) | (285 | ) | |||
| Income tax expense | 5,046 | 4,467 | |||||
| EBITDAX, a non-GAAP measure | $ | 16,643 | $ | 17,440 | |||
Adjusted Net Income and Adjusted Earnings per Share
The Company defines Adjusted Net Income and the related per share amount as (1) net income, plus (2) non-recurring donations, less (3) the impact on profit sharing expense from the non-recurring donations and (4) the impact on income tax expense from the non-recurring donations. These measures provide additional information which may be used to better understand the Company's operations.
The following tables provide a reconciliation of net income and earnings per share-diluted (GAAP) to adjusted net income and adjusted earnings per share-diluted (non-GAAP) for the periods indicated:
| Three Months Ended March 31, |
|||||||
| 2015 | 2014 | ||||||
| (in thousands except per share data) | |||||||
| Net Income, a GAAP measure | $ | 8,399 | $ | 9,822 | |||
| Non-recurring donations | 15 | - | |||||
| Profit-sharing | (2 | ) | - | ||||
| Income tax expense | (5 | ) | - | ||||
| Adjusted Net Income, a non-GAAP measure | $ | 8,407 | $ | 9,822 | |||
| Earnings per share-diluted, a GAAP measure | $ | 0.15 | $ | 0.18 | |||
| Non-recurring donations | - | - | |||||
| Profit-sharing | - | - | |||||
| Income tax expense | - | - | |||||
| Adjusted earnings per share-diluted, a non-GAAP measure | $ | 0.15 | $ | 0.18 | |||
Contact Information:
For Further Information:
Jerry R. Levine
Phone: (914) 244-0292
Fax: (914) 244-0295
Email: jrladvisor@yahoo.com
AAON, Inc.
2425 South Yukon Ave.
Tulsa, OK 74107-2728
Ph: (918) 583-2266
Fax: (918) 583-6094
http://www.aaon.com