AAON Reports Second Quarter Results
TULSA, OK -- (Marketwired) -- 08/06/15 --
AAON, Inc. (NASDAQ: AAON) today announced its operating results for the second quarter and six months ended June 30, 2015.
In the quarter, net sales were $90.3 million, down 2.2% from $92.3 million in 2014. Net income was $11.1 million, down 2.1% from $11.4 million in the same period a year ago. Net sales for the six-month period ended June 30, 2015 were $167.0 million, down 1.0% from $168.7 million in 2014. Net income for the six-month period ended June 30, 2015 was $19.5 million, down 7.8% from $21.2 million in 2014.
Earnings per diluted share in the second quarter of 2015 held constant at $0.20, compared to the same period the previous year, based upon 54.7 million and 55.6 million shares outstanding at June 30, 2015 and 2014, respectively. Earnings per diluted share for the six- month period ended June 30, 2015 were $0.36, down 5.3% from $0.38 in 2014, based upon 54.7 million and 55.6 million shares outstanding at June 30, 2015 and 2014, respectively.
Norman H. Asbjornson, President and CEO, stated, "As previously reported, we expected a better quarter with increases in our sales. Market data suggests there is a fall-off in replacement sales and that new construction may not be as strong as previously thought. However, we continue to maintain our gross profit percentage through lower raw material costs and increased productivity. Our gross profit as a percent of sales remained relatively steady for the quarter at 30.0% compared to 30.2% a year ago and for the six-month period ended June 30, 2015 at 29.3% compared to 29.5% in the same period a year ago. We also have seen decreases in our SG&A expense as a percent of sales of 1.3% (from 11.5% to 10.2%) for the quarter and 0.3% (from 10.8% to 10.5%) for the six-month period."
Mr. Asbjornson continued, "The Company's balance sheet at June 30, 2015, continues to be very strong, showing a current ratio of 3.2:1 (including cash and short-term investments totaling $49.9 million), plus long-term marketable investments of $0.6 million, and we remain debt-free."
Mr. Asbjornson concluded, "Nonetheless, we have made changes to strengthen our organization by hiring three (75% increase) new regional sales managers who we expect will make a positive impact on the performance of our representatives as well as replacing some representatives with new firms. In addition, we are about to introduce a number of new products within the next few months. These steps should aid in stimulating new business in the final half of this year and particularly in 2016."
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 86989685); or, for rebroadcast, call 1-855-859-2056 (code 86989685).
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 Six Months Ended
June 30, June 30,
2015 2014 2015 2014
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(in thousands, except share and per share data)
Net sales $ 90,275 $ 92,310 $ 167,043 $ 168,677
Cost of sales 63,158 64,434 118,128 118,955
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Gross profit 27,117 27,876 48,915 49,722
Selling, general and
administrative expenses 9,200 10,584 17,517 18,213
Gain on disposal of
assets (30) - (25) (24)
---------------------------------------------------
Income from operations 17,947 17,292 31,423 31,533
Interest income 29 71 73 140
Other income (expense),
net 27 34 (48) 13
---------------------------------------------------
Income before taxes 18,003 17,397 31,448 31,686
Income tax provision 6,873 6,034 11,919 10,501
---------------------------------------------------
Net income $ 11,130 $ 11,363 $ 19,529 $ 21,185
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Earnings per share:
Basic $ 0.21 $ 0.21 $ 0.36 $ 0.38
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Diluted $ 0.20 $ 0.20 $ 0.36 $ 0.38
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Cash dividends declared
per common share: $ 0.11 $ 0.09 $ 0.11 $ 0.09
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Weighted average shares
outstanding:
Basic 54,208,362 55,004,175 54,205,657 55,036,281
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Diluted 54,669,763 55,568,212 54,714,604 55,603,979
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AAON, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
June 30, December 31,
2015 2014
----------------------------
(in thousands, except share
and per share data)
Assets
Current assets:
Cash and cash equivalents $ 37,600 $ 21,952
Certificates of deposit 6,240 6,098
Investments held to maturity at amortized cost 6,101 11,972
Accounts receivable, net 45,480 44,092
Income tax receivable 3,385 2,569
Note receivable 26 30
Inventories, net 47,182 37,618
Prepaid expenses and other 1,055 609
Deferred tax assets 5,837 6,143
----------------------------
Total current assets 152,906 131,083
Property, plant and equipment:
Land 2,233 2,233
Buildings 66,583 64,938
Machinery and equipment 134,745 127,968
Furniture and fixtures 10,581 10,388
----------------------------
Total property, plant and equipment 214,142 205,527
Less: Accumulated depreciation 118,347 113,605
----------------------------
Property, plant and equipment, net 95,795 91,922
Certificates of deposit 480 5,280
Investments held to maturity at amortized cost 75 4,015
Note receivable 756 817
----------------------------
Total assets $ 250,012 $ 233,117
----------------------------
Liabilities and Stockholders' Equity
Current liabilities:
Revolving credit facility - $ -
Accounts payable 10,513 11,370
Dividends payable 5,982 -
Accrued liabilities 30,755 31,343
----------------------------
Total current liabilities 47,250 42,713
Deferred revenue 833 1,006
Deferred tax liabilities 12,808 13,677
Donations 1,692 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, 54,263,876 and 54,041,829
issued and outstanding at June 30, 2015 and
December 31, 2014, respectively 217 216
Additional paid-in capital - -
Retained earnings 187,212 173,843
----------------------------
Total stockholders' equity 187,429 174,059
----------------------------
Total liabilities and stockholders' equity $ 250,012 $ 233,117
----------------------------
AAON, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended
June 30,
2015 2014
----------------------
Operating Activities (in thousands)
Net income $ 19,529 $ 21,185
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 5,599 5,719
Amortization of bond premiums 106 389
Provision for losses on accounts receivable, net
of adjustments (102) (8)
Provision for excess and obsolete inventories, net 59 156
Share-based compensation 1,281 984
Excess tax benefits from stock options exercised
and restricted stock awards vested (2,452) (680)
Gain on disposition of assets (25) (24)
Foreign currency transaction loss 53 -
Interest income on note receivable (16) (20)
Deferred income taxes (563) (1,961)
Changes in assets and liabilities:
Accounts receivable (1,286) (13,824)
Income tax receivable 1,636 1,753
Inventories (9,623) (4,624)
Prepaid expenses and other (446) (525)
Accounts payable (1,030) 3,422
Deferred revenue 136 378
Accrued liabilities (867) 5,185
----------------------
Net cash provided by operating activities 11,989 17,505
----------------------
Investing Activities
Capital expenditures (9,304) (5,903)
Proceeds from sale of property, plant and equipment 30 29
Investment in certificates of deposits - (9,220)
Maturities of certificates of deposits 4,658 3,904
Purchases of investments held to maturity - (5,955)
Maturities of investments 9,201 6,539
Proceeds from called investments 504 1,269
Principal payments from note receivable 28 35
----------------------
Net cash provided by (used in) investing activities 5,117 (9,302)
----------------------
Financing Activities
Stock options exercised 2,534 632
Excess tax benefits from stock options exercised and
restricted stock awards vested 2,452 680
Repurchase of stock (6,444) (5,116)
----------------------
Net cash used in financing activities (1,458) (3,804)
----------------------
Net increase in cash and cash equivalents 15,648 4,399
----------------------
Cash and cash equivalents, beginning of period 21,952 12,085
----------------------
Cash and cash equivalents, end of period $ 37,600 $ 16,484
----------------------
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 Six Months Ended
June 30, June 30,
2015 2014 2015 2014
----------------------------------------
(in thousands)
Net Income, a GAAP measure $ 11,130 $ 11,363 $ 19,529 $ 21,185
Depreciation 2,795 2,911 5,599 5,719
Amortization of bond premiums 45 173 106 389
Share-based compensation 843 572 1,281 984
Interest (income) (74) (244) (179) (529)
Income tax expense 6,873 6,034 11,919 10,501
----------------------------------------
EBITDAX, a non-GAAP measure $ 21,612 $ 20,809 $ 38,255 $ 38,249
----------------------------------------
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 Six Months Ended
June 30, June 30,
2015 2014 2015 2014
----------------------------------------
(in thousands except per share data)
Net Income, a GAAP measure $ 11,130 $ 11,363 $ 19,529 $ 21,185
Non-recurring donations (210) 1,000 (195) 1,000
Profit-sharing 21 (100) 19 (100)
Income tax expense 85 (312) 80 (298)
----------------------------------------
Adjusted Net Income, a non-GAAP
measure $ 11,026 $ 11,951 $ 19,433 $ 21,787
----------------------------------------
Earnings per share-diluted, a GAAP
measure $ 0.20 $ 0.20 $ 0.36 $ 0.38
Non-recurring donations - 0.02 - 0.02
Profit-sharing - - - -
Income tax expense - (0.01) - (0.01)
----------------------------------------
Adjusted earnings per share-diluted,
a non-GAAP measure $ 0.20 $ 0.21 $ 0.36 $ 0.39
----------------------------------------
Jerry R. LevinePhone: (914) 244-0292Fax: (914) 244-0295Email: [email protected]
Source: AAON