AAON REPORTS RECORD SALES, EARNINGS & BACKLOG FOR THE SECOND QUARTER OF 2024

About this update from Aaon, Inc.

TULSA, Okla. , Aug. 1, 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 second quarter of 2024. Net sales for the second quarter of 2024 increased 10.4% to a record $313.6 million from $284.0 million in the second quarter of 2023. The year-over-year increase was largely driven by the BASX segment, which recognized an increase in sales of 58.3%, a majority of which was spurred by sales of data center equipment. Sales at the AAON Oklahoma and AAON Coil Products segments grew year-over-year 3.4% and 4.3%, respectively. Gross profit margin in the quarter expanded to 36.1%, up from 33.1% in the comparable quarter in 2023. Gross margin expansion was a result of greater operational efficiencies at the AAON Oklahoma and AAON Coil Products segments as well as lower material costs across the organization. Earnings per diluted share for the three months ended June 30, 2024 , were a record $0.62 , up 12.7% from the second quarter of 2023. Financial Highlights: Three Months Ended June 30, % Six Months Ended June 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 $ 313,566 $ 283,957 10.4 % $ 575,665 $ 549,910 4.7 % Gross profit $ 113,094 $ 94,018 20.3 % $ 205,336 $ 171,172 20.0 % Gross profit margin 36.1 % 33.1 % 35.7 % 31.1 % Operating income $ 67,199 $ 54,740 22.8 % $ 114,169 $ 98,946 15.4 % Operating margin 21.4 % 19.3 % 19.8 % 18.0 % Net income $ 52,228 $ 45,682 14.3 % $ 91,244 $ 82,496 10.6 % Earnings per diluted share1 $ 0.62 $ 0.55 12.7 % $ 1.09 $ 0.99 10.1 % Diluted average shares1 83,786,222 83,469,581 0.4 % 83,527,717 83,478,498 0.1 % 1 Reflects three-for-two stock split effective August 16, 2023 . Non-GAAP Measure EBITDA2 $ 81,860 $ 65,865 24.3 % $ 142,344 $ 120,459 18.2 % 2 This is a non-GAAP measure. See "Use of Non-GAAP Financial Measures" below for reconciliation to GAAP measure. Backlog June 30, 2024 December 31, 2023 June 30, 2023 (in thousands) $ 650,005 $ 510,028 $ 526,209 At June 30, 2024 , we had a record backlog of $650.0 million , up sequentially for a third straight quarter. Compared to a year ago, backlog was up 23.5% from $526.2 million , driven by the BASX and AAON Coil Products segments. The increase in bookings for the quarter primarily related to solutions for the data center market. Gary Fields , CEO, stated, "Our second quarter performance exceeded expectations. Production issues from the first quarter were largely resolved, leading to increased volume output and productivity across all three segments. This resulted in record quarterly sales and earnings. The BASX segment saw a significant rebound from the first quarter, with sales increasing 103.7% and gross profit rising by 182.2%, quarter-over-quarter. AAON Oklahoma and AAON Coil Products segments also realized sequential improvements. Our operating margin in the quarter expanded to 21.4%, making it the most profitable quarter in the Company's history. We achieved these results with premium pricing and operating efficiencies, which drove our performance." Mr. Fields continued, "Bookings in the second quarter performed exceptionally well, resulting in a record backlog at the end of June. The data center market continues to be robust and AAON is well positioned to take advantage of the growing opportunity. Beyond the bookings that made up the backlog at quarter-end, there remains a large pipeline of data center projects for both airside and liquid cooling products that the Company is pursuing. For AAON's traditional packaged rooftop business, bookings in the first half of 2024 were up year-over-year, including in the second quarter. However, growth moderated from prior years. This business is impacted more by the softening macro conditions and disruptions associated with the refrigerant transition, which is resulting in an increased amount of uncertainty regarding near-term demand. Any softness in the rooftop market will be more than offset with our data center products. We anticipate sales and earnings will improve in the second half of the year from the first half, mostly realized in the fourth quarter." Mr. Fields concluded, "AAON is strategically positioned for long-term success. As regulations and demands for higher quality HVAC equipment increase, AAON is becoming increasingly cost competitive. Furthermore, the Company is leading the industry in the development of cold climate heat pumps. The opportunities within the data center market are vast and promising, which we anticipate will drive accelerated growth and further market share gains. Consequently, we are investing in expanded production capacity through new facilities and enhanced output within our existing facilities. Additionally, we continue to invest in our people and technology to effectively manage the business and adapt efficiently to the robust growth rates we are targeting for the long-term." As of June 30, 2024 , the Company had cash, cash equivalents and restricted cash of $12.1 million and a balance on its revolving credit facility of $85.9 million . Rebecca Thompson , CFO and Treasurer, commented, "During the quarter, we completed our share repurchase program totaling $100.0 million . This initiative reflects our confidence in the long-term prospects of the Company and our commitment to delivering value to our shareholders. Looking ahead, we remain focused on executing our growth strategy with continued investments in capex and maintaining a healthy balance sheet through disciplined financial management." Conference Call The Company will host a conference call and webcast today at 5:15 P.M. EDT to discuss the second 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/OdbYjYb31qR . 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 RelationsPhone: (617) 877-6346Email: [email protected] AAON, Inc. and Subsidiaries Consolidated Statements of Income (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 (in thousands, except share and per share data) Net sales $ 313,566 $ 283,957 $ 575,665 $ 549,910 Cost of sales 200,472 189,939 370,329 378,738 Gross profit 113,094 94,018 205,336 171,172 Selling, general and administrative expenses 45,895 39,272 91,183 72,214 (Gain) loss on disposal of assets — 6 (16) 12 Income from operations 67,199 54,740 114,169 98,946 Interest expense, net (367) (1,543) (606) (2,693) Other income, net 175 163 252 277 Income before taxes 67,007 53,360 113,815 96,530 Income tax provision 14,779 7,678 22,571 14,034 Net income $ 52,228 $ 45,682 $ 91,244 $ 82,496 Earnings per share: Basic1 $ 0.64 $ 0.56 $ 1.12 $ 1.02 Diluted1 $ 0.62 $ 0.55 $ 1.09 $ 0.99 Cash dividends declared per common share1: $ 0.08 $ 0.08 $ 0.16 $ 0.16 Weighted average shares outstanding: Basic1 81,791,792 81,439,691 81,339,153 81,263,523 Diluted1 83,786,222 83,469,581 83,527,717 83,478,498 1 Reflects three-for-two stock split effective August 16, 2023 . AAON, Inc. and Subsidiaries Consolidated Balance Sheets (Unaudited) June 30 , 2024 December 31, 2023 Assets (in thousands, except share and per share data) Current assets: Cash and cash equivalents $ 13 $ 287 Restricted cash 12,065 8,736 Accounts receivable, net 149,149 138,108 Income tax receivable 4,969 — Inventories, net 182,988 213,532 Contract assets 68,171 45,194 Prepaid expenses and other 5,740 3,097 Total current assets 423,095 408,954 Property, plant and equipment: Land 16,018 15,438 Buildings 240,317 205,841 Machinery and equipment 403,664 391,366 Furniture and fixtures 41,128 40,787 Total property, plant and equipment 701,127 653,432 Less: Accumulated depreciation 287,893 283,485 Property, plant and equipment, net 413,234 369,947 Intangible assets, net 75,560 68,053 Goodwill 81,892 81,892 Right of use assets 16,086 11,774 Other long-term assets 849 816 Total assets $ 1,010,716 $ 941,436 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 28,958 $ 27,484 Accrued liabilities 85,499 85,508 Contract liabilities 26,862 13,757 Total current liabilities 141,319 126,749 Revolving credit facility, long-term 85,884 38,328 Deferred tax liabilities 5,811 12,134 Other long-term liabilities 21,170 16,807 New market tax credit obligation 16,034 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, 80,950,856 and 81,508,381 issued and outstanding at June 30, 2024 and December 31, 2023 , respectively1 324 326 Additional paid-in capital 49,174 122,063 Retained earnings1 691,000 612,835 Total stockholders' equity 740,498 735,224 Total liabilities and stockholders' equity $ 1,010,716 $ 941,436 1 Reflects three-for-two stock split effective August 16, 2023 . AAON, Inc. and Subsidiaries Consolidated Statements of Cash Flows (Unaudited) Six Months Ended June 30, 2024 2023 Operating Activities (in thousands) Net income $ 91,244 $ 82,496 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 27,923 21,236 Amortization of debt issuance costs 71 32 Amortization of right of use assets 73 67 Provision for (recoveries of) credit losses on accounts receivable, net of adjustments 1,169 (171) Provision for excess and obsolete inventories, net of write-offs 641 1,458 Share-based compensation 8,451 7,823 (Gain) loss on disposition of assets (16) 12 Foreign currency transaction loss (gain) 15 (13) Interest income on note receivable (9) (10) Deferred income taxes 41 (4,438) Changes in assets and liabilities: Accounts receivable (12,210) (26,782) Income taxes (6,139) (15,171) Inventories 29,903 (17,927) Contract assets (22,977) (4,711) Prepaid expenses and other long-term assets (2,708) (2,502) Accounts payable (1,804) (14,874) Contract liabilities 13,105 (1,162) Extended warranties 1,195 1,526 Accrued liabilities and other long-term liabilities (56) 33,051 Net cash provided by operating activities 127,912 59,940 Investing Activities Capital expenditures (65,381) (60,629) Proceeds from sale of property, plant and equipment 16 104 Software development expenditures (10,058) — Principal payments from note receivable 26 28 Net cash used in investing activities (75,397) (60,497) 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 272,526 279,961 Payments under revolving credit facility (224,970) (272,429) Stock options exercised 15,821 23,244 Repurchase of stock (100,034) — Employee taxes paid by withholding shares (3,493) (1,162) Cash dividends paid to stockholders (13,079) (13,004) Net cash (used in) provided by financing activities (49,460) 22,273 Net increase in cash, cash equivalents and restricted cash 3,055 21,716 Cash, cash equivalents and restricted cash, beginning of period 9,023 5,949 Cash, cash equivalents and restricted cash, end of period $ 12,078 $ 27,665 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 measures 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. 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 June 30, Six Months Ended June 30, 2024 2023 2024 2023 (in thousands) Net income, a GAAP measure $ 52,228 $ 45,682 $ 91,244 $ 82,496 Depreciation and amortization 14,486 10,962 27,923 21,236 Interest expense, net 367 1,543 606 2,693 Income tax expense 14,779 7,678 22,571 14,034 EBITDA, a non-GAAP measure $ 81,860 $ 65,865 $ 142,344 $ 120,459 View original content to download multimedia: https://www.prnewswire.com/news-releases/aaon-reports-record-sales-earnings--backlog-for-the-second-quarter-of-2024-302212771.html SOURCE AAON

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