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AAON Reports Record Quarterly Sales, Robust Rise in Backlog

Aug. 10, 2021
"Positioned well," HVAC manufacturer is bullish on economy. "Order trends show no sign of slowing," says CEO. "We are seeing early signs of a strong recovery in new project planning."

PRESS RELEASE

TULSA, OK, Aug. 05, 2021 (GLOBE NEWSWIRE) -- AAON, INC. (NASDAQ-AAON), today announced its results for the second quarter of 2021. Net sales for the three months ended June 30, 2021 increased 14.6% to an all-time record high of $143.9 million from $125.6 million in the same period in 2020.

“Our performance in the second quarter was better than we expected," said Gary Fields, AAON President and CEO. "Organic sales growth of 14.6% was particularly noteworthy."

The year-over-year increase in net sales was driven by robust replacement demand broadly across the nonresidential building market that increased our volume 24.6%. The return to historical employee attendance levels helped drive our production up year-over-year, which led to an increase in our overall revenues even as our product mix shifted to lower priced units.

AAON reported diluted earnings per share (EPS) of $0.38, up 11.8% from $0.34 in the prior year period. The increase in EPS was driven by the higher revenue, improved productivity, lower SG&A expenses as a percent of sales and a lower tax rate, partially offset by inflationary cost pressures. The lower tax rate compared to a year ago was associated with lower corporate income tax rates in the State of Oklahoma that were signed into law during the quarter. This resulted in a one-time benefit of $0.8 million, and will also lower our effective rate starting in 2022.

The Company finished the quarter with a backlog of $138.1 million, up from $103.5 million one year ago and up from $96.7 million at the end of the first quarter of 2021. The sequential improvement in backlog reflects the improved demand that we experienced throughout the second quarter. New bookings in the quarter increased approximately 70%, compared to the same period one year ago.

"Unlike much of the commercial HVAC market that faced a very easy year-over-year comparison due to the effects the pandemic on the market in the second quarter of 2020, we did not face such a comparison," noted Fields. "Our sales in the second quarter of 2020 were up year-over-year 5% versus the commercial market being down approximately 20%-25%. We were also pleased with our gross profit performance, especially considering the inflationary challenges of tight labor markets and increased raw material costs. We will continue to improve productivity and increase prices to counteract these cost pressures.”

Fields continued, “Looking to the second half of the year, we are optimistic sales and earnings growth will accelerate. The backlog at the end of the second quarter was up 33.4% from a year ago and 42.8% from the end of the first quarter, which positions us well. Order trends are robust and we show no sign of slowing. We are particularly optimistic considering the new construction market has yet to recover from the pandemic-related downturn. That said, we are seeing early signs of a strong recovery in new construction project planning. In addition to robust demand, we are optimistic our gross profit will continue to improve. Our disciplined pricing strategy combined with expected productivity improvements should drive higher gross and operating profits. Lastly, we continue to manage the business for the long-term as we maintain a positive outlook on the fundamentals of the company over the next several years.”

As of June 30, 2021, AAON had no debt and unrestricted cash and cash equivalents of $111.4 million, up from $79 million at the end of 2020. Capital expenditures during the first six months of 2021 were $33.2 million, compared to $33.5 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.”

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.

Contact: Joseph Mondillo, Director of Investor Relations, [email protected].