8-K - AAON - Equibles

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 06, 2021

AAON, INC.

(Exact name of Registrant as Specified in Charter)

Nevada			0-18953	87-0448736
(State or Other Jurisdiction			(Commission File Number: )	(IRS Employer Identification No.)
of Incorporation)
2425 South Yukon Ave.,	Tulsa,	Oklahoma		74107
(Address of Principal Executive Offices)				(Zip Code)

(Registrant's telephone number, including area code): (918) 583-2266

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	AAON	NASDAQ

Item 2.02 Results of Operations and Financial Conditions.

On May 6, 2021, AAON, Inc. (the "Company") announced its financial and operating results and backlog for the first quarter ended March 31, 2021. A copy of the Company's press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference. The Company plans to host a teleconference at 4:15 P.M (Eastern Time) on May 6, 2021 to discuss these results. To access the call, please dial 1-888-241-0551 (code 7788949). A replay of the call will be available through May 13, 2021 at 1-855-859-2056 (code 7788949).

In accordance with General Instruction B.2 of Form 8-K, the information in this Item shall not be deemed "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing.

Item 7.01 Regulation FD Disclosure.

On May 6, 2021, the Company issued the press release described above in Item 2.02 of this Current Report on Form 8-K. A copy of the press release is attached hereto as Exhibit 99.1.

All statements in the teleconference, other than historical financial information, may be deemed to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit Number	Description
99.1	Press release dated May 6, 2021 announcing financial and operating results and backlog.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		AAON, INC.
Date:	May 6, 2021	By:	/s/ Luke A. Bomer
			Luke A. Bomer, Secretary

Document

Exhibit 99.1

AAON REPORTS EARNINGS & BACKLOG FOR THE FIRST QUARTER OF 2021

TULSA, OK, May 6, 2021 - AAON, INC. (NASDAQ-AAON), today announced its results for the first quarter of 2021.

Financial Highlights:		Three Months Ended <br> March 31,						%
				2021				2020				Change
	(in thousands, except share and per share data)
Net sales				$	115,788			$	137,483			(15.8)	%
Gross profit				33,157				42,947				(22.8)	%
Gross profit %				28.6		%		31.2		%
Selling, general and admin. expenses				$	14,696			$	15,214			(3.4)	%
SG&A %				12.7		%		11.1		%
Net income				16,376				21,853				(25.1)	%
Net income %				14.1		%		15.9		%
Effective Tax Rate				11.4		%		21.5		%
Earnings per diluted share				$	0.30			$	0.41			(26.8)	%
Diluted average shares				53,814,644				52,871,419				1.8	%
			March 31,				December 31,				%
				2021				2020				Change
		(in thousands)
Backlog				$	96,733			$	74,417			30.0	%
Cash & cash equivalents & restricted cash				97,772				82,288				18.8	%
Total current liabilities				66,679				59,033				13.0	%

Net sales for the first quarter of 2021 decreased 15.8% to $115.8 million from $137.5 million in the first quarter of 2020. The year over year decline in net sales was partially attributable to fewer production days due to an extended holiday shutdown in early January and winter storm in February and is a reflection of our markets temporarily moderating at the end of 2020. Moreover, the prior year quarter was an all time record for the Company creating a tough relative comparison. The Company reported diluted EPS of $0.30, down 26.8% from $0.41 in the prior year period. The decline in EPS was largely due to the lower recognized revenue, partially offset by a lower effective tax rate. The lower tax rate compared to a year ago mainly related to a $1.8 million increase in excess tax benefits associated with stock awards.

The Company finished the quarter with a backlog of $96.7 million, down from $119.6 million one year ago but up from $74.4 million at the end of 2020. The sequential improvement reflects the improved demand that we experienced throughout the first quarter. New bookings in the quarter increased 21% compared to the same period one year ago. Demand has continued to strengthen through April. As of May 1, 2021, backlog was approximately $104.5 million.

Gary Fields, President and CEO, noted "As we've mentioned in our prior releases, we were previously overwhelmed with customer orders and did not have the capacity to handle all these orders which lead to lengthy lead times in 2019. We spent most of that year adding several Salvagnini sheet metal fabrication machines and rearranging our production lines for more efficient production. In Longview, we started construction of our 224,000 square feet building which also housed additional Salvagninis and was completed in early 2021. As all this was happening, we had our lead times come down which resulted in a

record breaking year in 2020. Although the pandemic caused new construction to slow down, our customers started to increase their replacement orders in early 2021 as demonstrated in the growth of our backlog."

Gary Fields, President and CEO, said “Considering our soft backlog entering the quarter combined with the challenges we faced related to the new construction market as well as the adverse weather at both of our facilities in February, we are pleased with our performance in the first quarter of the year. The year over year decline in revenue and earnings was unsurprising considering the all-time record quarter we realized in the first quarter of 2020. We believe the fact that our performance in the first quarter of 2021 was very similar to the fourth quarter of 2020 suggests our business has stabilized and has already begun to pick up after some moderation we experienced at the end of last year.”

Mr. Fields added “We are confident demand is improving. Our backlog at the beginning of May was up considerably from both the end 2020 and the end of the first quarter. Replacement demand is already improving as the economy recovers, and while the new construction market is still facing some challenges, we are beginning to see signs of stabilization. Inflation remains a challenge, but we are confident we will be able to maintain our margin through disciplined price management. In conclusion, as we look to the rest of the year, we continue to anticipate revenue and earnings will progressively improve throughout 2021.”

As of March 31, 2021, the Company had no debt and unrestricted cash and cash equivalents of $97.0 million, which is up from $79.0 million at the end of 2020. Capital expenditures during the first three months of 2021 were $16.4 million, as compared to $21.9 million for the same period a year ago. Rebecca Thompson, CFO, stated “we continue to anticipate our full-year 2021 capital expenditures will total approximately $70.7 million.”

The Company will host a conference call today at 4:15 P.M. (Eastern Time) to discuss the first quarter 2021 results. To participate, call 1-888-241-0551 (code 7788949); or, for rebroadcast available through May 13, 2021, call 1-855-859-2056 (code 7788949).

About AAON

AAON, 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 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, 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 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 <br> March 31,
			2021		2020
		(in thousands, except share and per share data)
Net sales			$	115,788	$	137,483
Cost of sales			82,631		94,536
Gross profit			33,157		42,947
Selling, general and administrative expenses			14,696		15,214
(Gain) loss on disposal of assets			—		(62)
Income from operations			18,461		27,795
Interest income, net			3		61
Other income (expense), net			17		(27)
Income before taxes			18,481		27,829
Income tax provision			2,105		5,976
Net income			$	16,376	$	21,853
Earnings per share:
Basic			$	0.31	$	0.42
Diluted			$	0.30	$	0.41
Weighted average shares outstanding:
Basic			52,293,464		52,071,839
Diluted			53,814,644		52,871,419
AAON, Inc. and Subsidiaries
---	---	---	---	---
Consolidated Balance Sheets
(Unaudited)
	March 31, 2021		December 31, 2020
Assets	(in thousands, except share and per share data)
Current assets:
Cash and cash equivalents	$	97,047	$	79,025
Restricted cash	725		3,263
Accounts receivable, net of allowance for credit losses of $493 and $506, respectively	52,579		47,387
Income tax receivable	7,353		4,587
Note receivable	32		31
Inventories, net	84,040		82,219
Prepaid expenses and other	3,631		3,739
Total current assets	245,407		220,251
Property, plant and equipment:
Land	4,109		4,072
Buildings	126,090		122,171
Machinery and equipment	292,961		281,266
Furniture and fixtures	19,971		18,956
Total property, plant and equipment	443,131		426,465
Less: Accumulated depreciation	210,483		203,125
Property, plant and equipment, net	232,648		223,340
Goodwill and intangible assets, net	3,229		3,267
Right of use assets	1,522		1,571
Note receivable	578		579
Total assets	$	483,384	$	449,008
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	17,615	$	12,447
Accrued liabilities	49,064		46,586
Total current liabilities	66,679		59,033
Deferred tax liabilities	32,982		28,324
Other long-term liabilities	4,312		4,423
New market tax credit obligation	6,373		6,363
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, 52,423,579 and 52,224,767 issued and outstanding at March 31, 2021 and December 31, 2020, respectively	210		209
Additional paid-in capital	10,957		5,161
Retained earnings	361,871		345,495
Total stockholders' equity	373,038		350,865
Total liabilities and stockholders' equity	$	483,384	$	449,008
AAON, Inc. and Subsidiaries
---	---	---	---	---
Consolidated Statements of Cash Flows
(Unaudited)
	Three Months Ended <br> March 31,
	2021		2020
Operating Activities	(in thousands)
Net income	$	16,376	$	21,853
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	7,398		6,002
Amortization of debt issuance cost	10		10
(Recovery of) provision for credit losses on accounts receivable, net of adjustments	(13)		294
Provision for excess and obsolete inventories	(194)		(274)
Share-based compensation	2,761		2,351
(Gain) loss on disposition of assets	—		(62)
Foreign currency transaction (gain) loss	(8)		51
Interest income on note receivable	(6)		(6)
Deferred income taxes	4,658		(167)
Changes in assets and liabilities:
Accounts receivable	(5,179)		(2,789)
Income taxes	(2,766)		772
Inventories	(1,627)		1,020
Prepaid expenses and other	108		(670)
Accounts payable	4,904		2,742
Deferred revenue	2,358		229
Accrued liabilities	58		6,241
Net cash provided by operating activities	28,838		37,597
Investing Activities
Capital expenditures	(16,404)		(21,877)
Proceeds from sale of property, plant and equipment	—		61
Principal payments from note receivable	14		12
Net cash used in investing activities	(16,390)		(21,804)
Financing Activities
Stock options exercised	9,438		4,497
Repurchase of stock	(5,185)		(11,565)
Employee taxes paid by withholding shares	(1,217)		(953)
Net cash provided by (used in) financing activities	3,036		(8,021)
Net increase in cash, cash equivalents and restricted cash	15,484		7,772
Cash, cash equivalents and restricted cash, beginning of period	82,288		44,373
Cash, cash equivalents and restricted cash, end of period	$	97,772	$	52,145