GlobeNewswire Inc | May 6, 2021 07:00AM EDT

May 06, 2021

TULSA, Okla., May 06, 2021 (GLOBE NEWSWIRE) -- AAON, INC. (NASDAQ-AAON), today announced its results for the first quarter of 2021.

Financial Highlights: Three Months Ended % March 31, 2021 2020 Change (in thousands, except share and per share data)Net sales $ 115,788 $ 137,483 (15.8 )%Gross profit 33,157 42,947 (22.8 )%Gross profit % 28.6 % 31.2 % Selling, general and admin. expenses $ 14,696 $ 15,214 (3.4 )%SG&A % 12.7 % 11.1 % Net income 16,376 21,853 (25.1 )%Net income % 14.1 % 15.9 % Effective Tax Rate 11.4 % 21.5 % Earnings per diluted share $ 0.30 $ 0.41 (26.8 )%Diluted average shares 53,814,644 52,871,419 1.8 % March 31, December 31, % 2021 2020 Change (in thousands) Backlog $ 96,733 $ 74,417 30.0 %Cash & cash equivalents & restricted 97,772 82,288 18.8 %cashTotal current liabilities 66,679 59,033 13.0 %

Net sales for the first quarter of 2021 decreased 15.8% to $115.8 million from $137.5 million in the first quarter of 2020. The year over year decline in net sales was partially attributable to fewer production days due to an extended holiday shutdown in early January and winter storm in February and is a reflection of our markets temporarily moderating at the end of 2020. Moreover, the prior year quarter was an all time record for the Company creating a tough relative comparison. The Company reported diluted EPS of $0.30, down 26.8% from $0.41 in the prior year period. The decline in EPS was largely due to the lower recognized revenue, partially offset by a lower effective tax rate. The lower tax rate compared to a year ago mainly related to a $1.8 million increase in excess tax benefits associated with stock awards.

The Company finished the quarter with a backlog of $96.7 million, down from $119.6 million one year ago but up from $74.4 million at the end of 2020. The sequential improvement reflects the improved demand that we experienced throughout the first quarter. New bookings in the quarter increased 21% compared to the same period one year ago. Demand has continued to strengthen through April. As of May 1, 2021, backlog was approximately $104.5 million.

Gary Fields, President and CEO, noted, "As we've mentioned in our prior releases, we were previously overwhelmed with customer orders and did not have the capacity to handle all these orders which lead to lengthy lead times in 2019. We spent most of that year adding several Salvagnini sheet metal fabrication machines and rearranging our production lines for more efficient production. In Longview, we started construction of our 224,000 square feet building which also housed additional Salvagninis and was completed in early 2021. As all this was happening, we had our lead times come down which resulted in a record breaking year in 2020. Although the pandemic caused new construction to slow down, our customers started to increase their replacement orders in early 2021 as demonstrated in the growth of our backlog."

Gary Fields, President and CEO, said, Considering our soft backlog entering the quarter combined with the challenges we faced related to the new construction market as well as the adverse weather at both of our facilities in February, we are pleased with our performance in the first quarter of the year. The year over year decline in revenue and earnings was unsurprising considering the all-time record quarter we realized in the first quarter of 2020. We believe the fact that our performance in the first quarter of 2021 was very similar to the fourth quarter of 2020 suggests our business has stabilized and has already begun to pick up after some moderation we experienced at the end of last year.

Mr. Fields added, We are confident demand is improving. Our backlog at the beginning of May was up considerably from both the end 2020 and the end of the first quarter. Replacement demand is already improving as the economy recovers, and while the new construction market is still facing some challenges, we are beginning to see signs of stabilization. Inflation remains a challenge, but we are confident we will be able to maintain our margin through disciplined price management. In conclusion, as we look to the rest of the year, we continue to anticipate revenue and earnings will progressively improve throughout 2021.

As of March 31, 2021, the Company had no debt and unrestricted cash and cash equivalents of $97.0 million, which is up from $79.0 million at the end of 2020. Capital expenditures during the first three months of 2021 were $16.4 million, as compared to $21.9 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 $70.7 million.

The Company will host a conference call today at 4:15 P.M. (Eastern Time) to discuss the first quarter 2021 results. To participate, call 1-888-241-0551 (code 7788949); or, for rebroadcast available through May 13, 2021, call 1-855-859-2056 (code 7788949).

About AAONAAON, 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 visitwww.AAON.com.

Forward-Looking StatementsCertain 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, including risks related to the impact of the error correction, that could cause actual results and developments to differ materially from the forward-looking statements.

Contact InformationJoseph MondilloDirector of Investor RelationsPhone: (617) 877-6346Email: joseph.mondillo@aaon.com

AAON, Inc. and SubsidiariesConsolidated Statements of Income(Unaudited) Three Months Ended March 31, 2021 2020 (in thousands, except share and per share data)Net sales $ 115,788 $ 137,483 Cost of sales 82,631 94,536 Gross profit 33,157 42,947 Selling, general and administrative 14,696 15,214 expenses(Gain) loss on disposal of assets ? (62 )Income from operations 18,461 27,795 Interest income, net 3 61 Other income (expense), net 17 (27 )Income before taxes 18,481 27,829 Income tax provision 2,105 5,976 Net income $ 16,376 $ 21,853 Earnings per share: Basic $ 0.31 $ 0.42 Diluted $ 0.30 $ 0.41 Weighted average shares outstanding: Basic 52,293,464 52,071,839 Diluted 53,814,644 52,871,419

AAON, Inc. and SubsidiariesConsolidated Balance Sheets(Unaudited) March 31, December 2021 31, 2020Assets (in thousands, except share and per share data)Current assets: Cash and cash equivalents $ 97,047 $ 79,025 Restricted cash 725 3,263 Accounts receivable, net of allowance for credit 52,579 47,387 losses of $493 and $506, respectivelyIncome tax receivable 7,353 4,587 Note receivable 32 31 Inventories, net 84,040 82,219 Prepaid expenses and other 3,631 3,739 Total current assets 245,407 220,251 Property, plant and equipment: Land 4,109 4,072 Buildings 126,090 122,171 Machinery and equipment 292,961 281,266 Furniture and fixtures 19,971 18,956 Total property, plant and equipment 443,131 426,465 Less:Accumulated depreciation 210,483 203,125 Property, plant and equipment, net 232,648 223,340 Goodwill and intangible assets, net 3,229 3,267 Right of use assets 1,522 1,571 Note receivable 578 579 Total assets $ 483,384 $ 449,008 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 17,615 $ 12,447 Accrued liabilities 49,064 46,586 Total current liabilities 66,679 59,033 Deferred tax liabilities 32,982 28,324 Other long-term liabilities 4,312 4,423 New market tax credit obligation 6,373 6,363 Commitments and contingencies Stockholders' equity: Preferred stock, $.001 par value, 5,000,000 shares ? ? authorized, no shares issuedCommon stock, $.004 par value, 100,000,000 sharesauthorized, 52,423,579 and 52,224,767 issued and 210 209 outstanding at March31, 2021 and December 31, 2020,respectivelyAdditional paid-in capital 10,957 5,161 Retained earnings 361,871 345,495 Total stockholders' equity 373,038 350,865 Total liabilities and stockholders' equity $ 483,384 $ 449,008

AAON, Inc. and SubsidiariesConsolidated Statements of Cash Flows(Unaudited) Three Months Ended March 31, 2021 2020Operating Activities (in thousands)Net income $ 16,376 $ 21,853 Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization 7,398 6,002 Amortization of debt issuance cost 10 10 (Recovery of) provision for credit losses on accounts (13 ) 294 receivable, net of adjustmentsProvision for excess and obsolete inventories (194 ) (274 )Share-based compensation 2,761 2,351 (Gain) loss on disposition of assets ? (62 )Foreign currency transaction (gain) loss (8 ) 51 Interest income on note receivable (6 ) (6 )Deferred income taxes 4,658 (167 )Changes in assets and liabilities: Accounts receivable (5,179 ) (2,789 )Income taxes (2,766 ) 772 Inventories (1,627 ) 1,020 Prepaid expenses and other 108 (670 )Accounts payable 4,904 2,742 Deferred revenue 2,358 229 Accrued liabilities 58 6,241 Net cash provided by operating activities 28,838 37,597 Investing Activities Capital expenditures (16,404 ) (21,877 )Proceeds from sale of property, plant and equipment ? 61 Principal payments from note receivable 14 12 Net cash used in investing activities (16,390 ) (21,804 )Financing Activities Stock options exercised 9,438 4,497 Repurchase of stock (5,185 ) (11,565 )Employee taxes paid by withholding shares (1,217 ) (953 )Net cash provided by (used in) financing activities 3,036 (8,021 )Net increase in cash, cash equivalents and restricted 15,484 7,772 cashCash, cash equivalents and restricted cash, beginning of 82,288 44,373 periodCash, cash equivalents and restricted cash, end of period $ 97,772 $ 52,145