• AAON Reports Earnings, Record Sales & Backlog for the Second Quarter of 2022

    Источник: Nasdaq GlobeNewswire / 08 авг 2022 16:01:00   America/New_York

    TULSA, Okla., Aug. 08, 2022 (GLOBE NEWSWIRE) -- 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 second quarter of 2022.

    Net sales for the second quarter of 2022 increased 45.1% to $208.8 million from $143.9 million in the second quarter of 2021. The additional sales from BasX of $24.6 million is the largest contributing factor to our year over year growth. Revenue synergies from this acquisition have materialized faster than expected. Subsequent to quarter end, we have already received an order for $16.2 million of BasX equipment that we plan to build in our Longview, TX facility in order to free up capacity at our Redmond, OR facility for the overwhelming demand BasX is experiencing. The legacy business also had strong organic volume growth of 10.3% during the quarter.

    Gross profit margin for the quarter decreased due to increased material, component, labor and freight costs. Similar to the first quarter of 2022, the second quarter was impacted by lower priced orders in our backlog. However, gross profit margin improved materially throughout the second quarter, a trend we expect will continue through the second half of the year as higher priced orders in our backlog hit the production floor.

    Earnings per diluted share for the second quarter of 2022 declined 21.1% to $0.30 from $0.38 in the second quarter of 2021. The decline in earnings was primarily due to the contraction in gross profit. As a percent of sales, SG&A expenses, excluding BasX, were down 20 basis points from a year ago.

    Financial Highlights:Three Months Ended 
     June 30,
     %  Six Months Ended 
     June 30,
     %
      2022   2021  Change   2022   2021  Change
     (in thousands, except share and per share data)  (in thousands, except share and per share data)
    GAAP Measures            
    Net sales$208,814  $143,876  45.1%  $391,585  $259,664  50.8%
    Gross profit 47,376   42,107  12.5%  $93,440  $75,264  24.1%
    Gross profit margin 22.7%  29.3%     23.9%  29.0%  
    Operating income$20,453  $25,212  (18.9)%  $43,463  $43,673  (0.5)%
    Operating margin 9.8%  17.5%      11.1%  16.8%   
    Net income 15,946   20,615  (22.6)%  $34,005  $36,991  (8.1)%
    Earnings per diluted share$0.30  $0.38  (21.1)%  $0.63  $0.69  (8.7)%
    Diluted average shares 53,661,876   53,603,932  0.1%   53,944,616   53,736,134  0.4%
                 
    Non-GAAP Measures            
    EBITDA1$29,897  $32,777  (8.8)%  $60,004  $58,653  2.3%
    EBITDA margin1 14.3%  22.8%     15.3%  22.6%  
    1These are non-GAAP measures. See "Use of Non-GAAP Financial Measures" below for reconciliation to GAAP measures.
     

    Backlog

    June 30, 2022 March 31, 2022 December 31, 2021 June 30, 2021
    (in thousands)
    $464,025 $461,400 $260,164 $138,131
               

    The Company finished the second quarter of 2022 with a record backlog of $464.0 million, up 235.9% from $138.1 million a year ago, and up 78.4% from $260.2 million at the end of the fourth quarter of 2021. Excluding BasX's backlog, organic backlog was up 163.6% from the prior year quarter.

    Gary Fields, President and CEO, stated, “Despite lower second quarter margin and earnings, we are very optimistic on the outlook for the second half of the year. Moreover, the outlook for the next several years has continued to improve since earlier in the year. I am very pleased to report our backlog remains robust. Our total backlog is up 235.9% and organically up 163.6% from prior year, which positions us well as we enter the second half of the year. Most important though, the margin profile of the backlog is improving substantially. The majority of the Company's backlog at the end of June 2022 will ship within the next twelve months. At June 30, 2022, our backlog of $464.0 million mostly relates to our legacy business, which includes both the 8% price increase from January 2022 and 7% price increase from March 2022. Beginning in June, we implemented a 1% per month price increase, which we expect to begin realizing in the fourth quarter of this year. Given this, the pricing of orders within the backlog relative to our cost of inventory and trending prices of raw materials has significantly improved from just three to six months ago. As such, we are positioned to hit our target margins in the second half of the year.”

    Mr. Fields continued, “We continue to successfully add incremental headcount, which is helping drive record production rates. Total headcount for the legacy business at the end of the second quarter was up approximately 20% from a year ago. Supply chain constraints remain a week-to-week issue, resulting in inefficiencies and larger than normal inventory. However, the combination of our unique configurable manufacturing operations and flexible engineering team allows us to cope better than most of our competitors. This, along with the incremental headcount additions, is helping us maintain competitive lead times, which is allowing us to continue to take market share.”

    Mr. Fields continued, “The BasX acquisition, which we closed on in December, has progressed very well. While supply chain issues and inflation have caused similar issues that our legacy business is realizing, I am pleased with how BasX has been so flexible to adapt to challenges. I cannot say enough about how the revenue synergies related to the acquisition are being realized and am pleased with the integration progress. At the end of the second quarter, the backlog at BasX was nearly triple from what it was at the end of 2021. Along with the orders for a new data center project received subsequent to the end of the second quarter, the pipeline of construction projects for BasX's data center and clean room end-markets is robust. Overall, we are excited about the growth opportunities that BasX is bringing to AAON."

    Mr. Fields concluded, “While the market dynamics over the past year proved to be a challenge, they forced us to make certain changes to our organization, helping us emerge as a much stronger company. Near-term, our robust backlog with an improving margin profile and increased production headcount positions us for improved financial results in the second half of the year. Long-term, we remain very optimistic with the Company’s outlook. The innovations of our premier product offering combined with our advanced manufacturing process and strong independent sales channel positions us to fully take advantage of the secular market trends related to decarbonization and indoor air quality. Leveraging BasX as well as many other initiatives and changes we are making to the AAON organization adds to the opportunities. Overall, we continue to believe the fundamentals of the Company have never been better.”

    As of June 30, 2022, the Company had cash and cash equivalents of $17.6 million and total debt of $106.2 million. Rebecca Thompson, CFO, commented, “Within the quarter, we had net borrowings of $41.2 million from our line of credit to finance the purchase of the BasX building and meet our working capital needs. We are investing in working capital to facilitate the robust growth we are experiencing, while overcoming supply chain issues.”

    Ms. Thompson continued, “Our balance sheet remains strong. At the end of the second quarter, our leverage ratio increased to 1.06, from 0.63 at the end of the first quarter. We continue to anticipate cash flow will improve significantly in the second half of the year, allowing us to start reducing net debt by year-end. Overall, we are very comfortable with our financial position and liquidity, and we will continue to invest in our long-term growth plans.”

    Conference Call
    The Company will host a conference call and webcast today at 5:15 P.M. ET to discuss the second quarter 2022 results and outlook. The conference call will be accessible via a dial-in for those who wish to participate in Q&A as well as a listen-only webcast. The accessible dial-in is 1-833-630-1956 for domestic callers or 1-412-317-1837 for international callers. To access the listen-only webcast, please register at https://edge.media-server.com/mmc/p/vppmz7k5.

    About AAON
    Founded in 1988, AAON is a world 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. AAON's culture of 360° innovation empowers its team to deliver solutions that lead to a cleaner and more sustainable future. For more information, please visit www.AAON.com.

    Forward-Looking Statements
    Certain 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 that could cause actual results and developments to differ materially from the forward-looking statements.

    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 
     June 30,
     Six Months Ended 
     June 30,
      2022   2021   2022   2021 
     (in thousands, except share and per share data)
    Net sales$208,814  $143,876  $391,585  $259,664 
    Cost of sales 161,438   101,769   298,145   184,400 
    Gross profit 47,376   42,107   93,440   75,264 
    Selling, general and administrative expenses 26,933   16,895   49,989   31,591 
    Gain on disposal of assets (10)     (12)   
    Income from operations 20,453   25,212   43,463   43,673 
    Interest expense, net (550)  (4)  (740)  (1)
    Other income, net 220   39   241   56 
    Income before taxes 20,123   25,247   42,964   43,728 
    Income tax provision 4,177   4,632   8,959   6,737 
    Net income$15,946  $20,615  $34,005  $36,991 
    Earnings per share:       
    Basic$0.30  $0.39  $0.64  $0.71 
    Diluted$0.30  $0.38  $0.63  $0.69 
    Cash dividends declared per common share:$0.19  $0.19  $0.19  $0.19 
    Weighted average shares outstanding:       
    Basic 53,095,286   52,432,822   52,992,439   52,389,989 
    Diluted 53,661,876   53,603,932   53,944,616   53,736,134 
                    


    AAON, Inc. and Subsidiaries
    Consolidated Balance Sheets
    (Unaudited)
     June 30, 2022 December 31, 2021
    Assets(in thousands, except share and per share data)
    Current assets:   
    Cash and cash equivalents$17,647  $2,859 
    Restricted cash 563   628 
    Accounts receivable, net of allowance for credit losses of $563 and $549, respectively 124,335   70,780 
    Income tax receivable 7,618   5,723 
    Inventories, net 164,001   130,270 
    Contract assets 8,569   5,749 
    Prepaid expenses and other 4,679   2,071 
    Total current assets 327,412   218,080 
    Property, plant and equipment:   
    Land 7,916   5,016 
    Buildings 162,962   135,861 
    Machinery and equipment 332,178   318,259 
    Furniture and fixtures 24,571   23,072 
    Total property, plant and equipment 527,627   482,208 
    Less:  Accumulated depreciation 235,163   224,146 
    Property, plant and equipment, net 292,464   258,062 
    Intangible assets, net 66,409   70,121 
    Goodwill 81,892   85,727 
    Right of use assets 5,886   16,974 
    Other long-term assets 2,649   1,216 
    Total assets$776,712  $650,180 
        
    Liabilities and Stockholders' Equity   
    Current liabilities:   
    Accounts payable$36,189  $29,020 
    Dividends payable 10,096    
    Accrued liabilities 60,125   50,206 
    Contract liabilities 29,759   7,542 
    Total current liabilities 136,169   86,768 
    Revolving credit facility, long-term 106,249   40,000 
    Deferred tax liabilities 31,866   31,993 
    Other long-term liabilities 5,495   18,843 
    New market tax credit obligation 6,427   6,406 
    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, 53,127,055 and 52,527,985 issued and outstanding at June 30, 2022 and December 31, 2021, respectively 213   210 
    Additional paid-in capital 82,078   81,654 
    Retained earnings 408,215   384,306 
    Total stockholders' equity 490,506   466,170 
    Total liabilities and stockholders' equity$776,712  $650,180 
            


    AAON, Inc. and Subsidiaries
    Consolidated Statements of Cash Flows
    (Unaudited)
     Six Months Ended 
     June 30,
      2022   2021 
    Operating Activities(in thousands)
    Net income$34,005  $36,991 
    Adjustments to reconcile net income to net cash (used in) provided by operating activities:   
    Depreciation and amortization 16,300   14,924 
    Amortization of debt issuance cost 21   20 
    Amortization of right of use assets 143    
    Provision for credit losses on accounts receivable, net of adjustments 181   12 
    Provision for excess and obsolete inventories 148   292 
    Share-based compensation 6,908   5,793 
    Gain on disposition of assets (12)   
    Foreign currency transaction (gain) loss 9   (11)
    Interest income on note receivable (11)  (19)
    Deferred income taxes (127)  2,747 
    Changes in assets and liabilities:   
    Accounts receivable (53,736)  (5,936)
    Income tax receivable (1,895)  1,248 
    Inventories (33,879)  (5,472)
    Contract assets (2,820)   
    Prepaid expenses and other long-term assets (3,066)  799 
    Accounts payable 6,490   10,650 
    Contract liabilities 22,217    
    Deferred revenue 421   574 
    Accrued liabilities and other long-term liabilities 7,123   300 
    Net cash (used in) provided by operating activities (1,580)  62,912 
    Investing Activities   
    Capital expenditures (27,227)  (33,157)
    Cash paid for building (22,000)   
    Cash paid in business combination, net of cash acquired (249)   
    Proceeds from sale of property, plant and equipment 12   2 
    Principal payments from note receivable 27   29 
    Net cash used in investing activities (49,437)  (33,126)
    Financing Activities   
    Borrowings under revolving credit facility 94,900    
    Payments under revolving credit facility (28,651)   
    Principal payments on financing lease (28)   
    Stock options exercised 6,385   11,848 
    Repurchase of stock (5,912)  (10,271)
    Employee taxes paid by withholding shares (954)  (1,532)
    Net cash provided by financing activities 65,740   45 
    Net increase in cash, cash equivalents and restricted cash 14,723   29,831 
    Cash, cash equivalents and restricted cash, beginning of period 3,487   82,288 
    Cash, cash equivalents and restricted cash, end of period$18,210  $112,119 
            

    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 and EBITDA margin are non-GAAP measures and are susceptible to varying calculations, EBITDA and EBITDA margin, 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) and for the periods indicated:

     Three Months Ended 
     June 30,
     Six Months Ended 
     June 30,
      2022   2021   2022   2021 
     (in thousands)
    Net income, a GAAP measure$15,946  $20,615  $34,005  $36,991 
    Depreciation and amortization 9,224   7,526   16,300   14,924 
    Interest expense, net 550   4   740   1 
    Income tax expense 4,177   4,632   8,959   6,737 
    EBITDA, a non-GAAP measure$29,897  $32,777  $60,004  $58,653 
    EBITDA margin 14.3%  22.8%  15.3%  22.6%
                    

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