GlobeNewswire Inc | Aug 6, 2020 07:00AM EDT

August 06, 2020

TULSA, Okla., Aug. 06, 2020 (GLOBE NEWSWIRE) -- TULSA, OK, August6, 2020 - AAON, INC. (NASDAQ-AAON), today announced its results for the second quarter of 2020.

Financial Three Months Ended % Six Months Ended %Highlights: June 30, June 30, 2020 2019 Change 2020 2019 Change (in thousands, except share and per (in thousands, except share and per share data) share data)Net sales $ 125,596 $ 119,437 5.2 % $ 263,079 $ 233,259 12.8 %Gross 38,131 30,204 26.2 % 81,078 55,634 45.7 %profitGross 30.4 % 25.3 % 30.8 % 23.9 % profit %Selling,general and $ 15,939 $ 12,912 23.4 % $ 31,153 $ 26,589 17.2 %admin.expensesSG&A % 12.7 % 10.8 % 11.8 % 11.4 % Net income 17,804 13,391 33.0 % 39,657 22,148 79.1 %Net income 14.2 % 11.2 % 15.1 % 9.5 % %Earningsper diluted $ 0.34 $ 0.25 36.0 % $ 0.75 $ 0.42 78.6 %shareDilutedaverage 52,750,401 52,747,199 ? % 52,885,491 52,589,845 0.6 %shares June 30, December 31, % 2020 2019 Change (in thousands) Backlog $ 103,508 $ 142,747 (27.5) % Cash & cashequivalents& 70,845 44,373 59.7 % restrictedcashTotalcurrent 76,620 56,028 36.8 % liabilities

Gary Fields, CEO, said "It has been a challenging quarter for us. As an essential business, we were able to maintain continuous operations during the quarter but our workforce was impacted by employee absences, most significantly in the latter part of June. These unexpected employee absences resulted in reduced shipments and longer lead times. Our dedicated team members worked hard to overcome the challenges as demonstrated by our positive results reflected above. Our improved efficiency, fiscal responsibility and declining raw material costs helped us improve our gross profit and bottom line."

Mr. Fields continued, "Thankfully, most of our workforce affected by COVID-19 has recovered and returned to work, resulting in significant improvement in our employee absenteeism levels in the first part of July. We continuously work to keep our workforce safe and healthy. We have implemented several safety procedures concerning COVID-19 including mandatory use of masks, daily temperature scanning and health screens of all employees and visitors at our facilities."

Mr. Fields added "Our financial condition remains strong as evidenced by our current ratio of 2.9:1 at June30, 2020. We had unrestricted cash and cash equivalents of $61.3 million as of June30, 2020, which, along with improved free cash flow, enabled us to declare an $0.19 per share semi-annual cash dividend, paid on July 1, 2020, an 18.8% increase from the $0.16 semi-annual dividend paid last year. Our capital expenditures during the first half of the year were $33.5 million, as compared to $16.8 million for the same period a year ago, and we anticipate our full-year 2020 capital expenditures will total approximately $73.2 million."

Mr. Fields concluded, "Our incoming order rate has recently softened slightly due to less than optimal lead times and turmoil in the market resulting from COVID-19. We are back on schedule and anticipate orders will increase as our lead times improve during our peak selling season. Uncertainty in the education industry could negatively impact our employee attendance levels as well as our bookings. The outlook for the remainder of the year is hard to predict during these uncertain times. Despite this uncertainty, we remain cautiously optimistic that the year will end with modest revenue growth over 2019."

The Company will host a conference call today at 4:15 P.M. (Eastern Time) to discuss the second quarter 2020 results. To participate, call 1-833-634-8218 (code 9699424); or, for rebroadcast available through August 20, 2020, call 1-855-859-2056 (code 9699424).

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 Six Months Ended June 30, June 30, 2020 2019 2020 2019 (in thousands, except share and per share data)Net sales $ 125,596 $ 119,437 $ 263,079 $ 233,259 Cost of sales 87,465 89,233 182,001 177,625 Gross profit 38,131 30,204 81,078 55,634 Selling, generaland 15,939 12,912 31,153 26,589 administrativeexpensesLoss (gain) ondisposal of ? 6 (62 ) 290 assetsIncome from 22,192 17,286 49,987 28,755 operationsInterest income, 19 31 80 40 netOther income 32 17 5 (9 ) (expense), netIncome before 22,243 17,334 50,072 28,786 taxesIncome tax 4,439 3,943 10,415 6,638 provisionNet income $ 17,804 $ 13,391 $ 39,657 $ 22,148 Earnings per share:Basic $ 0.34 $ 0.26 $ 0.76 $ 0.43 Diluted $ 0.34 $ 0.25 $ 0.75 $ 0.42 Cash dividendsdeclared per $ 0.19 $ 0.16 $ 0.19 $ 0.16 common share:Weighted averageshares outstanding:Basic 52,099,694 52,120,272 52,160,348 52,087,626 Diluted 52,750,401 52,747,199 52,885,491 52,589,845

AAON, Inc. and SubsidiariesConsolidated Balance Sheets(Unaudited) June 30, December 31, 2020 2019Assets (in thousands, except share and per share data)Current assets: Cash and cash equivalents $ 61,284 $ 26,797 Restricted cash 9,561 17,576 Accounts receivable, net 56,394 67,399 Income tax receivable 5,154 772 Note receivable 28 29 Inventories, net 85,411 73,601 Prepaid expenses and other 1,943 1,375 Total current assets 219,775 187,549 Property, plant and equipment: Land 3,804 3,274 Buildings 112,735 101,113 Machinery and equipment 260,548 236,087 Furniture and fixtures 17,926 16,862 Total property, plant and equipment 395,013 357,336 Less:Accumulated depreciation 190,585 179,242 Property, plant and equipment, net 204,428 178,094 Intangible assets, net 155 272 Goodwill 3,229 3,229 Right of use assets 1,665 1,683 Note receivable 555 597 Total assets $ 429,807 $ 371,424 Liabilities and Stockholders' Equity Current liabilities: Revolving credit facility $ ? $ ? Accounts payable 19,698 11,759 Dividends payable 9,930 ? Accrued liabilities 46,992 44,269 Total current liabilities 76,620 56,028 Deferred tax liabilities 20,358 15,297 Other long-term liabilities 3,794 3,639 New market tax credit obligation 6,340 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, 52,234,119 and 52,078,515 issued and 209 208 outstanding at June30, 2020 and December 31, 2019,respectivelyAdditional paid-in capital 6,451 3,631 Retained earnings 316,035 286,301 Total stockholders' equity 322,695 290,140 Total liabilities and stockholders' equity $ 429,807 $ 371,424

AAON, Inc. and SubsidiariesConsolidated Statements of Cash Flows(Unaudited) Six Months Ended June 30, 2020 2019Operating Activities (in thousands)Net income $ 39,657 $ 22,148 Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization 12,340 11,760 Amortization of debt issuance cost 20 ? Provision for losses on accounts receivable, net of 76 128 adjustmentsProvision for excess and obsolete inventories (193 ) 1,153 Share-based compensation 5,694 7,786 (Gain) loss on disposition of assets (62 ) 290 Foreign currency transaction loss (gain) 30 (13 ) Interest income on note receivable (12 ) (26 ) Deferred income taxes 5,061 3,318 Changes in assets and liabilities: Accounts receivable 10,929 (14,983 ) Income taxes (4,382 ) 2,925 Inventories (11,617 ) (585 ) Prepaid expenses and other (568 ) (650 ) Accounts payable 2,893 (2,592 ) Deferred revenue 473 172 Accrued liabilities 2,423 5,041 Net cash provided by operating activities 62,762 35,872 Investing Activities Capital expenditures (33,510 ) (16,784 ) Proceeds from sale of property, plant and equipment 61 59 Investment in certificates of deposits ? (6,000 ) Maturities of certificates of deposits ? 2,000 Principal payments from note receivable 25 28 Net cash used in investing activities (33,424 ) (20,697 ) Financing Activities Stock options exercised 14,173 7,685 Repurchase of stock (15,937 ) (10,191 ) Employee taxes paid by withholding shares (1,102 ) (980 ) Net cash used in financing activities (2,866 ) (3,486 ) Net increase in cash, cash equivalents and restricted 26,472 11,689 cashCash, cash equivalents and restricted cash, beginning 44,373 1,994 of periodCash, cash equivalents and restricted cash, end of $ 70,845 $ 13,683 period