In the quarter, net sales were a record high of $70.9 million, up 11% from $64.2 million during the corresponding period in 2006, and net income equaled the third quarter record level of $5.4 million or $0.28 per share set in the same period a year ago. Net sales for the first nine months of 2007 were up 13% to a record $200.4 million, compared to $176.9 million in 2006, and earnings increased by 48% to a record $18.6 million or $0.98 per share, compared to $12.6 million or $0.66 per share. Per share earnings are on a diluted basis and reflect the three-for-two stock split on August 21, 2007.
Norman H. Asbjornson, President and CEO, stated that, "These results were achieved despite a loss of $515,000 or $0.03 per share in the third quarter attributable to pricing problems on products manufactured in Canada, primarily caused by an adverse Canada-U.S. currency conversion. The lower margins on these products significantly reduced overall gross and operating margins. We are considering various strategic options to deal with these problems in the near future."
Mr. Asbjornson added that, "Based on the nine months' results and other relevant factors, e.g., a strong influx of orders during the last three months, we expect record sales and earnings for the year 2007, record sales for the fourth quarter and generally good earnings for the fourth quarter except for a continuation of the pricing problems on products manufactured in Canada."
It was also announced that the Board of Directors has authorized the Company to repurchase up to 10% (approximately 1.8 million shares) of its outstanding common stock. Under the terms of the Company's repurchase program, purchases may be made from time to time in the open market or through privately negotiated transactions at prevailing market prices, depending on market conditions. All shares purchased will be restored to the status of authorized but unissued stock.
Mr. Asbjornson stated, "We believe that at current market prices, AAON stock is substantially undervalued. These purchases should have the effect of enhancing the book value and earnings per share of the Company's remaining outstanding shares." He added that, "We expect to fund the stock purchases out of earnings. We believe our sizeable cash flow can be best utilized by repurchasing our stock at prices that do not reflect the Company's true value."
The Company will host a conference call today at 4:15 P.M. EST to discuss the third quarter results. To participate, call 1-877-879-6203.
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.
AAON, Inc., & Subsidiaries
Consolidated Statements of Operations
(unaudited)
Three Months Ended Nine Months Ended
September September September September
30, 2007 30, 2006 30, 2007 30, 2006
---------- ---------- ---------- ----------
(in thousands, except share and per share
data)
Net sales $ 70,907 $ 64,153 $ 200,370 $ 176,910
Cost of sales 57,267 50,562 155,410 142,816
---------- ---------- ---------- ----------
Gross profit 13,640 13,591 44,960 34,094
Selling, general and
administrative expenses 5,492 5,963 16,509 15,381
---------- ---------- ---------- ----------
Income from operations 8,148 7,628 28,451 18,713
Interest expense (3) (36) (10) (58)
Interest income 1 - 7 24
Other income (expense), net (346) 157 (76) 421
---------- ---------- ---------- ----------
Income before income taxes 7,800 7,749 28,372 19,100
Income tax provision 2,418 2,352 9,796 6,505
---------- ---------- ---------- ----------
Net income $ 5,382 $ 5,397 $ 18,576 $ 12,595
========== ========== ========== ==========
Earnings per share:
Basic* $ 0.29 $ 0.29 $ 1.00 $ 0.68
========== ========== ========== ==========
Diluted* $ 0.28 $ 0.28 $ 0.98 $ 0.66
========== ========== ========== ==========
Weighted average shares
outstanding:
Basic* 18,740,666 18,478,343 18,665,035 18,455,997
========== ========== ========== ==========
Diluted* 19,003,150 18,991,789 18,976,093 18,985,616
========== ========== ========== ==========
* Reflects three-for-two stock split effective August 21, 2007.
AAON, Inc., & Subsidiaries
Consolidated Balance Sheets
(unaudited)
September 30, December 31,
2007 2006
------------- -------------
(in thousands, except share
and per share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 2,715 $ 288
Accounts receivable, net 41,887 36,748
Inventories, net 32,738 29,502
Prepaid expenses and other 409 267
Deferred tax assets 4,473 3,954
------------- -------------
Total current assets 82,222 70,759
------------- -------------
PROPERTY, PLANT AND EQUIPMENT
Land 2,332 2,196
Buildings 31,945 31,272
Machinery and equipment 81,473 74,053
Furniture and fixtures 6,507 5,883
------------- -------------
Total property, plant & equipment 122,257 113,404
Less: accumulated depreciation 61,254 54,182
------------- -------------
Net property, plant & equipment 61,003 59,222
------------- -------------
NOTES RECEIVABLE, LONG-TERM 75 75
------------- -------------
Total assets $ 143,300 $ 130,056
============= =============
LIABILITIES & STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ - $ 59
Accounts payable 12,284 15,821
Dividends payable - 2,465
Accrued liabilities 20,448 16,058
------------- -------------
Total current liabilities 32,732 34,403
------------- -------------
OTHER LONG-TERM LIABILITIES 72 -
------------- -------------
DEFERRED TAX LIABILITIES 3,658 4,061
------------- -------------
STOCKHOLDERS’ EQUITY:
Preferred Stock, $.001 par, 7,500,000
shares authorized, no shares issued*
Common Stock, $.004 par, 75,000,000
shares authorized, and 18,770,234 and
18,508,248 issued and outstanding at
September 30, 2007, and December 31,
2006, respectively* 75 74
Additional paid-in capital* - 185
Accumulated other comprehensive income,
net of tax 1,762 667
Retained earnings 105,001 90,666
------------- -------------
Total stockholders’ equity 106,838 91,592
------------- -------------
Total liabilities and stockholders’ equity $ 143,300 $ 130,056
============= =============
* Reflects three-for-two stock split effective August 21, 2007.
AAON, Inc., & Subsidiaries
Consolidated Statements of Cash Flows
(unaudited)
Nine Nine
Months Months
Ended Ended
September September
30, 2007 30, 2006
--------- ---------
(in thousands)
OPERATING ACTIVITIES
Net income $ 18,576 $ 12,595
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 7,153 6,836
Provision for losses on accounts receivable 221 174
Gain on disposition of assets (11) -
Share-based compensation 466 380
Excess tax benefits from stock options
exercised (2,743) (1,280)
Deferred income taxes (662) (535)
Changes in assets and liabilities:
Accounts receivable (4,975) (13,935)
Inventories (3,032) (5,949)
Prepaid expenses and other (139) 430
Accounts payable (3,303) 7,570
Accrued liabilities 6,300 4,948
--------- ---------
Net cash provided by operating activities 17,851 11,234
INVESTING ACTIVITIES
Proceeds from sale of property, plant and
equipment 21 -
Proceeds from matured certificate of deposit - 3,000
Investment in certificate of deposit - (2,000)
Capital expenditures (8,650) (15,821)
--------- ---------
Net cash used in investing activities (8,629) (14,821)
FINANCING ACTIVITIES
Borrowings under revolving credit facility 12,142 42,967
Payments under revolving credit facility (12,142) (36,470)
Payments of long-term debt (59) (81)
Stock options exercised 2,404 1,018
Excess tax benefits from stock options exercised 2,743 1,280
Repurchase of stock (7,149) (3,108)
Cash dividends paid to stockholders (4,958) (2,478)
--------- ---------
Net cash (used in) provided by financing activities (7,019) 3,128
--------- ---------
Effect of exchange rate on cash 224 89
--------- ---------
Net increase (decrease) in cash and cash equivalents 2,427 (370)
--------- ---------
Cash and cash equivalents, beginning of year 288 837
--------- ---------
Cash and cash equivalents, end of period $ 2,715 $ 467
========= =========
For Further Information:
Jerry R. Levine
Phone: (914) 244-0292
Fax: (914) 244-0295
Email: Email Contact