TULSA,
Okla., May 2, 2024 /PRNewswire/ -- AAON, INC.
(NASDAQ-AAON), a provider of premier, configurable HVAC solutions
that bring long-term value to customers and owners, today announced
its results for the first quarter of 2024.
Net sales for the first quarter of 2024 decreased 1.4% to
$262.1 million from $266.0 million in the first quarter of 2023. The
year-over-year decline was driven by the AAON Coil Products and
BASX segments, which realized respective declines of 27.4% and
9.3%, modestly offset by 4.0% growth at the AAON Oklahoma
segment. Total sales volume in the quarter was down 5.7%,
while pricing contributed 4.3%.
Gross profit margin in the quarter expanded to 35.2%, up from
29.0% in the comparable quarter in 2023. Gross margin
expansion was primarily a result of more favorable pricing relative
to moderating cost inflation. SG&A expenses as a percent
of sales increased to 17.3%, up from 12.4% in the comparable
quarter in 2023. On an absolute basis, SG&A expenses were
in line with Company expectations, up year-over-year due primarily
to higher professional fees and long-term investments.
Earnings per diluted share for the three months ended
March 31, 2024, was $0.46, up slightly from the first quarter of
2023. Earnings benefited from an excess tax benefit of
$4.4 million from share based
compensation within the quarter.
Financial
Highlights:
|
Three Months
Ended
March 31,
|
|
%
|
|
2024
|
|
2023
|
|
Change
|
|
(in thousands,
except share and per share data)
|
GAAP
Measures
|
|
|
|
|
|
Net sales
|
$
262,099
|
|
$
265,953
|
|
(1.4) %
|
Gross profit
|
$
92,242
|
|
$
77,154
|
|
19.6 %
|
Gross profit
margin
|
35.2 %
|
|
29.0 %
|
|
|
Operating
income
|
$
46,970
|
|
$
44,206
|
|
6.3 %
|
Operating
margin
|
17.9 %
|
|
16.6 %
|
|
|
Net income
|
$
39,016
|
|
$
36,814
|
|
6.0 %
|
Earnings per diluted
share1
|
$
0.46
|
|
$
0.44
|
|
4.5 %
|
Diluted average
shares1
|
84,044,670
|
|
82,860,958
|
|
1.4 %
|
1 Reflects three-for-two stock split effective August
16, 2023.
|
|
Non-GAAP
Measure
|
|
|
|
|
|
EBITDA2
|
$
60,484
|
|
$
54,594
|
|
10.8 %
|
2
This is a non-GAAP measure. See "Use of
Non-GAAP Financial Measures" below for reconciliation to GAAP
measure.
|
Backlog
March 31,
2024
|
|
December 31,
2023
|
|
March 31,
2023
|
(in
thousands)
|
$
558,443
|
|
$
510,028
|
|
$
599,912
|
The Company finished the first quarter of 2024 with a backlog of
$558.4 million, up for a second
straight quarter. Year-over-year, backlog was down 6.9% from
$599.9 million, largely due to supply
chain constraints early last year that resulted in extended lead
times. Bookings outpaced sales for a second straight quarter
and were particularly strong in the data center market for both
traditional airside and liquid cooling products.
Gary Fields, CEO, stated, "First
quarter performance was mixed relative to our expectations.
Bookings remain strong across all business segments with
quarter-over-quarter increases in backlog. This is especially
true for AAON Coil Products and BASX segments which began the
quarter with strong backlogs and continued to strengthen backlogs
through the end of the first quarter, even as timing of production
resulted in a softer than expected first quarter. Even at
these lower production levels, total gross margin was better than
expected and SG&A was in line with our expectations. We
continue to manage pricing and costs well, and while it was not
fully reflected in the first quarter results with lower volumes,
operations across the facilities are poised to deliver even
stronger results as production increases to deliver on our growing
backlog."
Mr. Fields continued, "Despite the slow start to the year, we
believe results will continue to improve as we progress through
2024. Our independent sales reps continue to indicate strong
levels of activity in the near-term, and while the upcoming
refrigerant regulations may continue to cause some volatility on a
month-to-month basis, we think order flow will further improve as
we approach the point in time later this year in which customers
will no longer be able to order equipment with R410A
refrigerant. And as we anticipate an acceleration of backlog
conversion at the AAON Coil Products and BASX segments, their
production will also drive improved results throughout the
year."
Mr. Fields concluded, "Long-term, based on real opportunities
and a large pipeline of projects, especially with mega projects in
the data center market, we remain very positive in our
outlook. As such, we continue to invest in more production
capacity, both with new production square footage and through ways
to increase output with our existing resources. We also
continue to invest in people and technology that will help us
manage the business more effectively and ensure we are able to
efficiently adapt to the robust growth rates we continue to target
over the
long-term."
As of March 31, 2024, the Company had cash, cash
equivalents and restricted cash of $28.4
million and a zero balance on its revolving credit facility.
Rebecca Thompson, CFO and Treasurer,
commented, "In the quarter, cash flow from operations was strong at
$92.4 million, up from $4.8 million in the first quarter of 2023.
Working capital as a percent of sales improved for a third straight
quarter, resulting in better cash conversion. Capital
expenditures during the quarter increased year-over-year 33.0% to
$38.7 million. Even with the
higher capex budget, we were able to fully pay down our line of
credit and finance the quarterly dividend while marginally building
our cash position. Overall, the Company is financially
strong, positioning us to fully leverage growth
opportunities."
Conference Call
The Company will host a conference call and webcast today at
5:15 P.M. EDT to discuss the first
quarter 2024 results and outlook. The conference call will be
accessible via dial-in for those who wish to participate in Q&A
as well as a listen-only webcast. The dial-in is accessible
at 1-800-836-8184. To access the listen-only webcast, please
register at https://app.webinar.net/2E7VGLw0vnl. On the next
business day following the call, a replay of the call will be
available on the Company's website at
https://investors.aaon.com.
About AAON
Founded in 1988, AAON is a global leader in HVAC solutions for
commercial and industrial indoor environments. The Company's
industry-leading approach to designing and manufacturing highly
configurable equipment to meet exact needs creates a premier
ownership experience with greater efficiency, performance and
long-term value. AAON is headquartered in Tulsa, Oklahoma, where its world-class
innovation center and testing lab allows AAON engineers to
continuously push boundaries and advance the industry. For more
information, please visit www.AAON.com.
Forward-Looking Statements
This press release includes "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of
1995. Words such as "expects", "anticipates", "intends", "plans",
"believes", "seeks", "estimates", "should", "will", and variations
of such words and similar expressions are intended to identify such
forward-looking statements. These statements are not guarantees of
future performance and involve certain risks, uncertainties and
assumptions, which are difficult to predict. Therefore, actual
outcomes and results may differ materially from what is expressed
or forecasted in such forward-looking statements. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date on which they are made.
We undertake no obligations to update publicly any forward-looking
statements, whether as a result of new information, future events
or otherwise. Important factors that could cause results to differ
materially from those in the forward-looking statements include (1)
the timing and extent of changes in raw material and component
prices, (2) the effects of fluctuations in the
commercial/industrial new construction market, (3) the timing and
extent of changes in interest rates, as well as other competitive
factors during the year, and (4) general economic, market or
business conditions.
Contact Information
Joseph
Mondillo
Director of Investor Relations
Phone: (617) 877-6346
Email: joseph.mondillo@aaon.com
AAON, Inc. and
Subsidiaries
|
Consolidated
Statements of Income
|
(Unaudited)
|
|
|
|
|
|
Three Months
Ended
March 31,
|
|
2024
|
|
2023
|
|
(in thousands,
except share and per share data)
|
Net sales
|
$
262,099
|
|
$
265,953
|
Cost of
sales
|
169,857
|
|
188,799
|
Gross profit
|
92,242
|
|
77,154
|
Selling, general and
administrative expenses
|
45,288
|
|
32,942
|
(Gain) loss on disposal
of assets
|
(16)
|
|
6
|
Income from
operations
|
46,970
|
|
44,206
|
Interest expense,
net
|
(239)
|
|
(1,150)
|
Other income,
net
|
77
|
|
114
|
Income before
taxes
|
46,808
|
|
43,170
|
Income tax
provision
|
7,792
|
|
6,356
|
Net income
|
$
39,016
|
|
$
36,814
|
Earnings per
share:
|
|
|
|
Basic1
|
$
0.48
|
|
$
0.46
|
Diluted1
|
$
0.46
|
|
$
0.44
|
Cash dividends declared
per common share1:
|
$
0.08
|
|
$
0.08
|
Weighted average shares
outstanding:
|
|
|
|
Basic1
|
81,661,972
|
|
80,460,897
|
Diluted1
|
84,044,670
|
|
82,860,958
|
1 Reflects three-for-two stock split effective August
16, 2023.
|
AAON, Inc. and
Subsidiaries
|
Consolidated Balance
Sheets
|
(Unaudited)
|
|
March 31,
2024
|
|
December 31,
2023
|
Assets
|
(in thousands,
except share and per share data)
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
8,385
|
|
$
287
|
Restricted
cash
|
19,982
|
|
8,736
|
Accounts receivable,
net
|
109,662
|
|
138,108
|
Inventories,
net
|
196,252
|
|
213,532
|
Contract
assets
|
50,581
|
|
45,194
|
Prepaid expenses and
other
|
7,365
|
|
3,097
|
Total current
assets
|
392,227
|
|
408,954
|
Property, plant and
equipment:
|
|
|
|
Land
|
15,918
|
|
15,438
|
Buildings
|
224,128
|
|
205,841
|
Machinery and
equipment
|
401,637
|
|
391,366
|
Furniture and
fixtures
|
42,861
|
|
40,787
|
Total property, plant
and equipment
|
684,544
|
|
653,432
|
Less: Accumulated depreciation
|
293,980
|
|
283,485
|
Property, plant and
equipment, net
|
390,564
|
|
369,947
|
Intangible assets,
net
|
70,664
|
|
68,053
|
Goodwill
|
81,892
|
|
81,892
|
Right of use
assets
|
16,696
|
|
11,774
|
Other long-term
assets
|
878
|
|
816
|
Total assets
|
$
952,921
|
|
$
941,436
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
15,438
|
|
$
27,484
|
Accrued
liabilities
|
93,198
|
|
85,508
|
Contract
liabilities
|
16,527
|
|
13,757
|
Total current
liabilities
|
125,163
|
|
126,749
|
Revolving credit
facility, long-term
|
—
|
|
38,328
|
Deferred tax
liabilities
|
5,030
|
|
12,134
|
Other long-term
liabilities
|
21,926
|
|
16,807
|
New market tax credit
obligation
|
15,994
|
|
12,194
|
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, 82,117,680 and 81,508,381
issued and outstanding at March 31, 2024 and December 31,
2023, respectively1
|
329
|
|
326
|
Additional paid-in
capital
|
139,184
|
|
122,063
|
Retained
earnings1
|
645,295
|
|
612,835
|
Total stockholders'
equity
|
784,808
|
|
735,224
|
Total liabilities and
stockholders' equity
|
$
952,921
|
|
$
941,436
|
1
Reflects three-for-two stock split effective August 16,
2023.
|
|
|
|
AAON, Inc. and
Subsidiaries
|
Consolidated
Statements of Cash Flows
|
(Unaudited)
|
|
Three Months
Ended
March 31,
|
|
2024
|
|
2023
|
Operating
Activities
|
(in
thousands)
|
Net income
|
$
39,016
|
|
$
36,814
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
13,437
|
|
10,274
|
Amortization of debt
issuance costs
|
31
|
|
11
|
Amortization of right
of use assets
|
12
|
|
29
|
Provision for
(recoveries of) credit losses on
accounts receivable, net of adjustments
|
112
|
|
(56)
|
Provision for
excess and obsolete inventories, net of
write-offs
|
581
|
|
221
|
Share-based
compensation
|
3,957
|
|
3,519
|
(Gain) loss
on disposition of assets
|
(16)
|
|
6
|
Foreign currency
transaction loss (gain)
|
11
|
|
(2)
|
Interest income on
note receivable
|
(5)
|
|
(6)
|
Deferred income
taxes
|
(740)
|
|
921
|
Changes in assets and
liabilities:
|
|
|
|
Accounts
receivable
|
28,334
|
|
(33,740)
|
Income
taxes
|
8,221
|
|
5,262
|
Inventories
|
16,699
|
|
(861)
|
Contract
assets
|
(5,387)
|
|
25
|
Prepaid expenses and
other long-term assets
|
(4,349)
|
|
(3,613)
|
Accounts
payable
|
(9,968)
|
|
(16,318)
|
Contract
liabilities
|
2,770
|
|
713
|
Extended
warranties
|
698
|
|
777
|
Accrued liabilities
and other long-term liabilities
|
(1,044)
|
|
847
|
Net cash provided by
operating activities
|
92,370
|
|
4,823
|
Investing
Activities
|
|
|
|
Capital
expenditures
|
(34,688)
|
|
(28,935)
|
Proceeds from sale of
property, plant and equipment
|
16
|
|
102
|
Software development
expenditures
|
(4,055)
|
|
—
|
Principal payments
from note receivable
|
13
|
|
14
|
Net cash used in
investing activities
|
(38,714)
|
|
(28,819)
|
Financing
Activities
|
|
|
|
Proceeds from
financing obligation, net of issuance costs
|
4,186
|
|
—
|
Payment related to
financing costs
|
(417)
|
|
—
|
Borrowings under
revolving credit facility
|
115,130
|
|
105,172
|
Payments under
revolving credit facility
|
(153,458)
|
|
(92,512)
|
Stock options
exercised
|
9,844
|
|
15,856
|
Employee taxes paid by
withholding shares
|
(3,041)
|
|
(1,030)
|
Cash dividends paid to
stockholders
|
(6,556)
|
|
(6,459)
|
Net cash (used in)
provided by financing activities
|
(34,312)
|
|
21,027
|
Net increase
(decrease) in cash, cash equivalents and restricted
cash
|
19,344
|
|
(2,969)
|
Cash, cash
equivalents and restricted cash, beginning of period
|
9,023
|
|
5,949
|
Cash, cash
equivalents and restricted cash, end of period
|
$
28,367
|
|
$
2,980
|
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 this non-GAAP
financial measure enhances the ability of investors to analyze the
Company's business trends and operating performance as they are
used by management to better understand operating performance.
Since EBITDA is a non-GAAP measure and is susceptible to varying
calculations, EBITDA, as presented, may not be directly comparable
with other similarly titled measures used by other companies.
EBITDA
EBITDA (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 EBITDA
as net income, plus (1) depreciation and amortization, (2) interest
expense (income), net and (3) income tax expense. EBITDA is not a
measure of net income or cash flows as determined by GAAP. EBITDA
margin is defined as EBITDA as a percentage of net sales.
The Company's EBITDA measure provides additional information
which may be used to better understand the Company's operations.
EBITDA 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 EBITDA are significant
components in understanding and assessing a company's financial
performance. EBITDA, as used by the Company, may not be comparable
to similarly titled measures reported by other companies. The
Company believes that EBITDA 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 EBITDA (non-GAAP) for the periods indicated:
|
Three Months
Ended
March 31,
|
|
2024
|
|
2023
|
|
(in
thousands)
|
Net income, a GAAP
measure
|
$
39,016
|
|
$
36,814
|
Depreciation and
amortization
|
13,437
|
|
10,274
|
Interest expense,
net
|
239
|
|
1,150
|
Income tax
expense
|
7,792
|
|
6,356
|
EBITDA, a non-GAAP
measure
|
$
60,484
|
|
$
54,594
|
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SOURCE AAON