AAON REPORTS RECORD SALES & EARNINGS FOR THE THIRD QUARTER OF 2024
Net sales for the third quarter of 2024 increased 4.9% to a record
Gross profit margin in the quarter was 34.9%, down from 37.2% in the comparable quarter in 2023. The contraction in gross margin was a result of lower volumes at the AAON Oklahoma segment and temporary inefficiencies at BASX, partially offset by strong results at the
SG&A expenses for the quarter ended
Financial Highlights: |
Three Months Ended
|
|
% |
|
Nine Months Ended September 30, |
|
% |
||||
|
2024 |
|
2023 |
|
Change |
|
2024 |
|
2023 |
|
Change |
|
(in thousands, except share and per share data) |
|
(in thousands, except share and per share data) |
||||||||
GAAP Measures |
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ 327,252 |
|
$ 311,970 |
|
4.9 % |
|
$ 902,917 |
|
$ 861,880 |
|
4.8 % |
Gross profit |
$ 114,158 |
|
$ 116,109 |
|
(1.7) % |
|
$ 319,494 |
|
$ 287,281 |
|
11.2 % |
Gross profit margin |
34.9 % |
|
37.2 % |
|
|
|
35.4 % |
|
33.3 % |
|
|
Operating income |
$ 65,520 |
|
$ 64,664 |
|
1.3 % |
|
$ 179,689 |
|
$ 163,610 |
|
9.8 % |
Operating margin |
20.0 % |
|
20.7 % |
|
|
|
19.9 % |
|
19.0 % |
|
|
Net income |
$ 52,625 |
|
$ 48,078 |
|
9.5 % |
|
$ 143,869 |
|
$ 130,574 |
|
10.2 % |
Earnings per diluted share |
$ 0.63 |
|
$ 0.58 |
|
8.6 % |
|
$ 1.72 |
|
$ 1.57 |
|
9.6 % |
Diluted average shares |
83,107,077 |
|
83,393,054 |
|
(0.3) % |
|
83,579,989 |
|
83,275,208 |
|
0.4 % |
|
|
|
|
|
|
|
|||||
Non-GAAP Measures |
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjusted net income1 |
$ 52,625 |
|
$ 53,188 |
|
(1.1) % |
|
$ 143,869 |
|
$ 136,082 |
|
5.7 % |
Non-GAAP adjusted earnings per diluted share1 |
$ 0.63 |
|
$ 0.64 |
|
(1.6) % |
|
$ 1.72 |
|
$ 1.63 |
|
5.5 % |
Adjusted EBITDA1 |
$ 82,863 |
|
$ 83,710 |
|
(1.0) % |
|
$ 225,207 |
|
$ 204,169 |
|
10.3 % |
Adjusted EBITDA margin1 |
25.3 % |
|
26.8 % |
|
|
|
24.9 % |
|
23.7 % |
|
|
1 This is a non-GAAP measure. See "Use of Non-GAAP Financial Measures" below for reconciliation to GAAP measure. |
Backlog
|
|
|
|
|
(in thousands) |
||||
$ 647,694 |
|
$ 650,005 |
|
$ 490,591 |
At
As of
Conference Call
The Company will host a conference call and webcast today at
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
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
Director of Investor Relations
Phone: (617) 877-6346
Email: joseph.mondillo@aaon.com
|
|||||||
Consolidated Statements of Income |
|||||||
(Unaudited) |
|||||||
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
(in thousands, except share and per share data) |
||||||
Net sales |
$ 327,252 |
|
$ 311,970 |
|
$ 902,917 |
|
$ 861,880 |
Cost of sales |
213,094 |
|
195,861 |
|
583,423 |
|
574,599 |
Gross profit |
114,158 |
|
116,109 |
|
319,494 |
|
287,281 |
Selling, general and administrative expenses |
48,637 |
|
51,470 |
|
139,820 |
|
123,684 |
Loss (gain) on disposal of assets |
1 |
|
(25) |
|
(15) |
|
(13) |
Income from operations |
65,520 |
|
64,664 |
|
179,689 |
|
163,610 |
Interest expense, net |
(1,091) |
|
(1,266) |
|
(1,697) |
|
(3,959) |
Other income, net |
81 |
|
93 |
|
333 |
|
370 |
Income before taxes |
64,510 |
|
63,491 |
|
178,325 |
|
160,021 |
Income tax provision |
11,885 |
|
15,413 |
|
34,456 |
|
29,447 |
Net income |
$ 52,625 |
|
$ 48,078 |
|
$ 143,869 |
|
$ 130,574 |
Earnings per share: |
|
|
|
|
|
|
|
Basic |
$ 0.65 |
|
$ 0.59 |
|
$ 1.77 |
|
$ 1.61 |
Diluted |
$ 0.63 |
|
$ 0.58 |
|
$ 1.72 |
|
$ 1.57 |
Cash dividends declared per common share: |
$ 0.08 |
|
$ 0.08 |
|
$ 0.24 |
|
$ 0.24 |
Weighted average shares outstanding: |
|
|
|
|
|
|
|
Basic |
81,089,476 |
|
81,418,800 |
|
81,448,413 |
|
81,140,473 |
Diluted |
83,107,077 |
|
83,393,054 |
|
83,579,989 |
|
83,275,208 |
|
|||
Consolidated Balance Sheets |
|||
(Unaudited) |
|||
|
|
|
|
Assets |
(in thousands, except share and per share data) |
||
Current assets: |
|
|
|
Cash and cash equivalents |
$ 15 |
|
$ 287 |
Restricted cash |
6,650 |
|
8,736 |
Accounts receivable, net |
143,806 |
|
138,108 |
Income tax receivable |
1,125 |
|
— |
Inventories, net |
177,731 |
|
213,532 |
Contract assets |
95,120 |
|
45,194 |
Prepaid expenses and other |
3,389 |
|
3,097 |
Total current assets |
427,836 |
|
408,954 |
|
|
|
|
Property, plant and equipment, net |
427,652 |
|
369,947 |
Intangible assets, net and goodwill |
158,838 |
|
149,945 |
Right of use assets |
15,505 |
|
11,774 |
Other long-term assets |
794 |
|
816 |
Total assets |
$ 1,030,625 |
|
$ 941,436 |
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ 27,199 |
|
$ 27,484 |
Accrued liabilities |
96,243 |
|
85,508 |
Contract liabilities |
16,391 |
|
13,757 |
Total current liabilities |
139,833 |
|
126,749 |
|
|
|
|
Revolving credit facility, long-term |
55,677 |
|
38,328 |
Deferred tax liabilities |
1,658 |
|
12,134 |
Other long-term liabilities |
20,527 |
|
16,807 |
New market tax credit obligation |
16,074 |
|
12,194 |
Commitments and contingencies |
|
|
|
Stockholders' equity: |
|
|
|
Preferred stock, |
— |
|
— |
Common stock, |
325 |
|
326 |
Additional paid-in capital |
59,398 |
|
122,063 |
Retained earnings |
737,133 |
|
612,835 |
Total stockholders' equity |
796,856 |
|
735,224 |
Total liabilities and stockholders' equity |
$ 1,030,625 |
|
$ 941,436 |
|
|||
Consolidated Statements of Cash Flows |
|||
(Unaudited) |
|||
|
Nine Months Ended
|
||
|
2024 |
|
2023 |
Operating Activities |
(in thousands) |
||
Net income |
$ 143,869 |
|
$ 130,574 |
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
Depreciation and amortization |
45,185 |
|
33,439 |
Amortization of debt issuance costs |
111 |
|
57 |
Amortization of right of use assets |
133 |
|
166 |
Provision for (recoveries of) credit losses on accounts receivable, net of adjustments |
815 |
|
(92) |
Provision for excess and obsolete inventories, net of write-offs |
1,848 |
|
2,979 |
Share-based compensation |
12,814 |
|
12,102 |
Gain on disposition of assets |
(15) |
|
(13) |
Foreign currency transaction loss |
10 |
|
— |
Interest income on note receivable |
(14) |
|
(15) |
Deferred income taxes |
(4,112) |
|
(3,917) |
Changes in assets and liabilities: |
|
|
|
Accounts receivable |
(6,513) |
|
(32,040) |
Income taxes |
(2,295) |
|
(12,472) |
Inventories |
33,953 |
|
(18,547) |
Contract assets |
(49,926) |
|
(10,155) |
Prepaid expenses and other long-term assets |
(304) |
|
(896) |
Accounts payable |
1,733 |
|
(15,631) |
Contract liabilities |
2,634 |
|
(1,848) |
Extended warranties |
1,249 |
|
2,049 |
Accrued liabilities and other long-term liabilities |
10,512 |
|
21,405 |
Net cash provided by operating activities |
191,687 |
|
107,145 |
Investing Activities |
|
|
|
Capital expenditures |
(99,371) |
|
(82,900) |
Proceeds from sale of property, plant and equipment |
21 |
|
129 |
Software development expenditures |
(14,436) |
|
— |
Principal payments from note receivable |
38 |
|
39 |
Net cash used in investing activities |
(113,748) |
|
(82,732) |
Financing Activities |
|
|
|
Proceeds from financing obligation, net of issuance costs |
4,186 |
|
6,061 |
Payment related to financing costs |
(417) |
|
(398) |
Borrowings under revolving credit facility |
410,503 |
|
444,072 |
Payments under revolving credit facility |
(393,154) |
|
(436,656) |
Stock options exercised |
25,645 |
|
25,251 |
Repurchase of stock |
(100,034) |
|
(25,009) |
Employee taxes paid by withholding shares |
(7,455) |
|
(1,202) |
Cash dividends paid to stockholders |
(19,571) |
|
(19,946) |
Net cash used in financing activities |
(80,297) |
|
(7,827) |
Net (decrease) increase in cash, cash equivalents and restricted cash |
(2,358) |
|
16,586 |
Cash, cash equivalents and restricted cash, beginning of period |
9,023 |
|
5,949 |
Cash, cash equivalents and restricted cash, end of period |
$ 6,665 |
|
$ 22,535 |
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.
Non-GAAP Adjusted Net Income
The Company defines non-GAAP adjusted net income as net income adjusted for any one-time events, such as litigation settlements, net of profit sharing and tax effect, in the periods presented.
The following table provides a reconciliation of net income (GAAP) to non-GAAP adjusted net income for the periods indicated:
|
Three Months Ended
|
|
Nine Months Ended
|
||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
(in thousands) |
||||||
Net income, a GAAP measure |
$ 52,625 |
|
$ 48,078 |
|
$ 143,869 |
|
$ 130,574 |
Litigation settlement |
— |
|
7,500 |
|
— |
|
7,500 |
Profit sharing effect |
— |
|
(750) |
|
— |
|
(750) |
Tax effect |
— |
|
(1,640) |
|
— |
|
(1,242) |
Non-GAAP adjusted net income |
$ 52,625 |
|
$ 53,188 |
|
$ 143,869 |
|
$ 136,082 |
Non-GAAP adjusted earnings per diluted share |
$ 0.63 |
|
$ 0.64 |
|
$ 1.72 |
|
$ 1.63 |
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.
Adjusted EBITDA is calculated as EBITDA adjusted by items in non-GAAP adjusted net income, above, except for taxes, as taxes are already excluded from EBITDA.
The following table provides a reconciliation of net income (GAAP) to EBITDA (non-GAAP) and Adjusted EBITDA (non-GAAP) for the periods indicated:
|
Three Months Ended
|
|
Nine Months Ended
|
||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
(in thousands) |
||||||
Net income, a GAAP measure |
$ 52,625 |
|
$ 48,078 |
|
$ 143,869 |
|
$ 130,574 |
Depreciation and amortization |
17,262 |
|
12,203 |
|
45,185 |
|
33,439 |
Interest expense, net |
1,091 |
|
1,266 |
|
1,697 |
|
3,959 |
Income tax expense |
11,885 |
|
15,413 |
|
34,456 |
|
29,447 |
EBITDA, a non-GAAP measure |
$ 82,863 |
|
$ 76,960 |
|
$ 225,207 |
|
$ 197,419 |
Litigation settlement |
— |
|
7,500 |
|
— |
|
7,500 |
Profit sharing effect1 |
— |
|
(750) |
|
— |
|
(750) |
Adjusted EBITDA, a non-GAAP measure |
$ 82,863 |
|
$ 83,710 |
|
$ 225,207 |
|
$ 204,169 |
Adjusted EBITDA margin |
25.3 % |
|
26.8 % |
|
24.9 % |
|
23.7 % |
1Profit sharing effect of litigation settlement in the respective period. |
View original content to download multimedia:https://www.prnewswire.com/news-releases/aaon-reports-record-sales--earnings-for-the-third-quarter-of-2024-302299258.html
SOURCE AAON