GlobeNewswire Inc | Nov 5, 2020 07:00AM EST

November 05, 2020

TULSA, Okla., Nov. 05, 2020 (GLOBE NEWSWIRE) -- AAON, INC. (NASDAQ-AAON), today announced its results for the third quarter of 2020.

Financial Three Months Ended % Nine Months Ended %Highlights: September 30, September 30, 2020 2019 Change 2020 2019 Change (in thousands, except share and per share (in thousands, except share and per data) share data)Net sales $ 134,772 $ 113,500 18.7 % $ 397,851 $ 346,759 14.7 %Gross 40,848 27,410 49.0 % 121,926 83,044 46.8 %profitGross 30.3 % 24.1 % 30.6 % 23.9 % profit %Selling,general and $ 14,716 $ 12,374 18.9 % $ 45,869 $ 38,963 17.7 %admin.expensesSG&A % 10.9 % 10.9 % 11.5 % 11.2 % Net income 20,460 14,290 43.2 % 60,117 36,438 65.0 %Net income 15.2 % 12.6 % 15.1 % 10.5 % %Effective 21.8 % 4.9 % 21.1 % 16.8 % Tax RateEarningsper diluted $ 0.38 $ 0.26 46.2 % $ 1.14 $ 0.69 65.2 %shareDilutedaverage 53,151,295 52,722,127 0.8 % 52,955,049 52,624,583 0.6 %shares September 30, December 31, % 2020 2019 Change (in thousands) Backlog $ 84,885 $ 142,747 (40.5 ) % Cash & cashequivalents& 78,601 44,373 77.1 % restrictedcashTotalcurrent 61,506 56,028 9.8 % liabilities

Gary Fields, CEO, said "We are pleased to report that our net sales for the third quarter were an all-time record for any quarter in our Companys history. I am especially proud we achieved these results despite a slow start to the quarter due to a planned maintenance shutdown at our Tulsa facilities during the beginning of July. In addition, the continued challenges presented by the COVID-19 pandemic resulted in higher medical expenses. Our third quarter results demonstrate the ongoing progress in our transition from entrepreneurial leadership to a collaborative team-based management approach and validate our Companys capability to produce great results even through challenging times. It should also be noted that the record sales along with favorable raw material costs and improved productivity had a significant impact on our gross profit, which increased to 30.3% from 24.1% for the corresponding quarter a year ago."

Mr. Fields continued, "The outlook for 2021 continues to present a lot of uncertainty. The Architecture Billings Index has been down for several months, indicating a decline in construction, which may start to impact the new nonresidential construction market in late 2020. Although construction may decline, our equipment is uniquely positioned to address COVID challenges by providing heightened filtration and sanitation through the use of MERV 13 filters, UV lights and bi-polar ionization installed in the factory. We are beginning to see increases in raw materials costs, which we are offsetting in part with our previously announced price increase, which will be effective January 2021. With approximately 50% of our total sales already represented by the replacement market, we are confident of our ability to grow our market share in the replacement market while we continue to pursue opportunities in the new construction market. With our improved lead times, we have been able to continue our planned reduction of our backlog to a more manageable level and we believe this will also allow our order intake to stay consistent but do not see significant growth opportunities in the near term."

Mr. Fields added "Our financial condition remains strong as evidenced by our current ratio of 3.7:1 at September30, 2020. We had unrestricted cash and cash equivalents of $70.6 million as of September30, 2020. Our capital expenditures during the nine months ended September 30, 2020 were $49.0 million, as compared to $30.8 million for the same period a year ago, and we anticipate our full-year 2020 capital expenditures will total approximately $73.2 million, with $41.3 million directed to our new facility in Longview Texas."

Mr. Fields concluded, "Our expansion project at our Longview, Texas facility is nearing completion and the new building is expected to be operational by January 2021. This project will not only add 220,000 square feet of additional capacity to the Longview facility, but will also create additional space and capacity at our Tulsa facility for future growth potential."

The Company will host a conference call today at 4:15 P.M. (Eastern Time) to discuss the third quarter 2020 results. To participate, call 1-833-634-8218 (code 1233199); or, for rebroadcast available through November 12, 2020, call 1-855-859-2056 (code 1233199).

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 InformationJerry R. LevinePhone: (914) 244-0292Fax: (914) 244-0295Email:jrladvisor@yahoo.com

AAON, Inc. and SubsidiariesConsolidated Statements of Income(Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 (in thousands, except share and per share data)Net sales $ 134,772 $ 113,500 $ 397,851 $ 346,759 Cost of sales 93,924 86,090 275,925 263,715 Gross profit 40,848 27,410 121,926 83,044 Selling, general and 14,716 12,374 45,869 38,963 administrative expensesLoss (gain) on disposal 1 6 (61 ) 296 of assetsIncome from operations 26,131 15,030 76,118 43,785 Interest income, net 10 9 90 49 Other income (expense), 15 (7 ) 20 (16 )netIncome before taxes 26,156 15,032 76,228 43,818 Income tax provision 5,696 742 16,111 7,380 Net income $ 20,460 $ 14,290 $ 60,117 $ 36,438 Earnings per share: Basic $ 0.39 $ 0.27 $ 1.15 $ 0.70 Diluted $ 0.38 $ 0.26 $ 1.14 $ 0.69 Cash dividends declared $ ? $ ? $ 0.19 $ 0.16 per common share:Weighted average shares outstanding:Basic 52,260,551 52,111,444 52,174,705 52,086,209 Diluted 53,151,295 52,722,127 52,955,049 52,624,583

AAON, Inc. and SubsidiariesConsolidated Balance Sheets(Unaudited) September December 30, 2020 31, 2019 Assets (in thousands, except share and per share data)Current assets: Cash and cash equivalents $ 70,603 $ 26,797 Restricted cash 7,998 17,576 Accounts receivable, net of allowance for credit 62,195 67,399 losses of $546 and $353, respectivelyIncome tax receivable 3,914 772 Note receivable 29 29 Inventories, net 78,819 73,601 Prepaid expenses and other 1,973 1,375 Total current assets 225,531 187,549 Property, plant and equipment: Land 3,804 3,274 Buildings 115,600 101,113 Machinery and equipment 267,763 236,087 Furniture and fixtures 18,342 16,862 Total property, plant and equipment 405,509 357,336 Less:Accumulated depreciation 196,631 179,242 Property, plant and equipment, net 208,878 178,094 Intangible assets, net 97 272 Goodwill 3,229 3,229 Right of use assets 1,618 1,683 Note receivable 560 597 Total assets $ 439,913 $ 371,424 Liabilities and Stockholders' Equity Current liabilities: Revolving credit facility $ ? $ ? Accounts payable 16,038 11,759 Accrued liabilities 45,468 44,269 Total current liabilities 61,506 56,028 Deferred tax liabilities 22,973 15,297 Other long-term liabilities 4,191 3,639 New market tax credit obligation 6,351 6,320 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, 52,264,801 and 52,078,515 issued and 209 208 outstanding at September30, 2020 and December 31,2019, respectivelyAdditional paid-in capital 8,175 3,631 Retained earnings 336,508 286,301 Total stockholders' equity 344,892 290,140 Total liabilities and stockholders' equity $ 439,913 $ 371,424

AAON, Inc. and SubsidiariesConsolidated Statements of Cash Flows(Unaudited) Nine Months Ended September 30, 2020 2019 Operating Activities (in thousands)Net income $ 60,117 $ 36,438 Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization 18,971 17,627 Amortization of debt issuance cost 31 ? Provision for losses on accounts receivable, net of 193 91 adjustmentsProvision for excess and obsolete inventories 1,776 1,003 Share-based compensation 8,546 9,854 (Gain) loss on disposition of assets (61 ) 296 Foreign currency transaction loss (gain) 18 (17 )Interest income on note receivable (19 ) (19 )Deferred income taxes 7,676 3,614 Changes in assets and liabilities: Accounts receivable 5,011 (2,096 )Income taxes (3,142 ) 2,283 Inventories (6,994 ) (4,014 )Prepaid expenses and other (598 ) (513 )Accounts payable 3,654 782 Deferred revenue 1,128 263 Accrued liabilities 688 4,991 Net cash provided by operating activities 96,995 70,583 Investing Activities Capital expenditures (48,955 ) (30,831 )Proceeds from sale of property, plant and equipment 61 68 Investment in certificates of deposits ? (6,000 )Maturities of certificates of deposits ? 6,000 Principal payments from note receivable 38 39 Net cash used in investing activities (48,856 ) (30,724 )Financing Activities Stock options exercised 18,519 11,283 Repurchase of stock (21,390 ) (15,437 )Employee taxes paid by withholding shares (1,130 ) (1,023 )Cash dividends paid to stockholders (9,910 ) (8,303 )Net cash used in financing activities (13,911 ) (13,480 )Net increase in cash, cash equivalents and restricted 34,228 26,379 cashCash, cash equivalents and restricted cash, beginning of 44,373 1,994 periodCash, cash equivalents and restricted cash, end of period $ 78,601 $ 28,373