AAON Reports Record Earnings for Fourth Quarter and Year 2013

TULSA, OK--(Marketwired - Mar 13, 2014) -  AAON, INC. (NASDAQ: AAON), today announced its operating results for the fourth quarter and year 2013. Sales in the fourth quarter were $73.4 million, down 5.9% from $78.0 million in 2012. Net income was a record $7.8 million, up 2.6% from $7.6 million in the same period a year ago. Sales for the year 2013 were a record $321.1 million, up 5.9% compared to $303.1 million in 2012. Earnings for 2013 were also a record, $37.5 million, up 36.9% compared to $27.4 million in 2012.

Earnings for the fourth quarter of 2013 and 2012 were both $0.21 per diluted share, based upon 37.1 million and 36.9 million diluted shares outstanding, respectively. Earnings per diluted share for year 2013 were $1.01, up 36.5% from $0.74 in 2012, based upon 37.1 million and 37.0 million diluted shares outstanding, respectively. All per share earnings reflect the 3-for-2 stock split effective July 2, 2013.

Norman H. Asbjornson, President and CEO, stated, "The 2013 gains in sales and income from operations primarily reflect increases in market share, as well as price increases and a decline in cost of materials; gross profit as a percent of sales increased from 23.3% to 28.0%, but SG&A expenses as a percent of sales also increased from 8.7% to 10.6%, the majority of which (SG&A) represents increases in warranty expense and 'profit sharing'."

Mr. Asbjornson continued, "The Company's backlog increased from $43.6 million at December 31, 2012 to $45.3 million at December 31, 2013. In addition, the Company's balance sheet at year end was strong. The current ratio was 3.1:1 (including cash and investments of $49.9 million). We remained debt free and our return on average stockholder equity was 24.8% in 2013."

Mr. Asbjornson next said, "It appears from information available to us that there will be a flat to modestly improving economy in our segments of the HVAC industry in 2014. Based upon this forecast and other factors, we anticipate AAON having another good year in 2014."

The Company will host a conference call today at 4:15 P.M. EDT to discuss the fourth quarter and year 2013 results. To participate, call 1-866-544-4631; or, for rebroadcast, call 1-866-245-6755 (code 14576).

AAON, Inc. is a manufacturer of air-conditioning and heating equipment consisting of rooftop units, chillers, air-handling units, condensing units, heat recovery units, commercial self-contained units and coils. Its products serve the new construction and replacement markets. The Company has successfully gained market share through its "semi-custom" product lines, which offer the customer value, quality, function, serviceability and efficiency.

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. and Subsidiaries
Unaudited Consolidated Statements of Income
			Three Months Ended  December 31,									Years Ending December 31,
			2013				2012					2013				2012
			(in thousands, except share and per share data)
Net sales			$	73,376			$	78,008				$	321,140			$	303,114
Cost of sales				53,188				59,279					231,348				232,615
Gross profit				20,188				18,729					89,792				70,499
Selling, general and administrative expenses				8,246				6,634					33,989				26,261
Gain (loss) on disposal of assets				30				21					(22	)			4
Income from operations				11,912				12,074					55,825				44,234
Interest income, net				70				30					221				42
Other (expense) income, net				(4	)			(9	)				248				41
Income before taxes				11,978				12,095					56,294				44,317
Income tax provision				4,212				4,517					18,747				16,868
Net income			$	7,766			$	7,578				$	37,547			$	27,449
Earnings per share:
	Basic*		$	0.21			$	0.21				$	1.02			$	0.75
	Diluted*		$	0.21			$	0.21				$	1.01			$	0.74
Cash dividends declared per common share*:			$	0.10			$	0.16		(1)		$	0.20			$	0.24		(1)
Weighted average shares outstanding:
	Basic*			36,726,609				36,787,893					36,746,100				36,825,170
	Diluted*			37,107,870				36,944,489					37,058,254				37,048,826

*Reflects three-for-two stock split effective July 2, 2013

(1) Includes special dividend of $0.08 per common share paid on December 24, 2012.

AAON, Inc. and Subsidiaries
Unaudited Consolidated Balance Sheets
				December 31,
				2013			2012
Assets				(in thousands, except share and per share data)
Current assets:
	Cash and cash equivalents			$	12,085		$	3,159
	Certificates of deposit				8,110			3,120
	Investments held to maturity at amortized cost				16,040			2,832
	Accounts receivable, net				39,063			43,866
	Income tax receivable				1,073			694
	Note receivable				29			28
	Inventories, net				32,140			32,614
	Prepaid expenses and other				304			740
	Deferred tax assets				4,779			4,493
Total current assets					113,623			91,546
Property, plant and equipment:
	Land				1,417			1,340
	Buildings				61,821			59,761
	Machinery and equipment				119,439			117,617
	Furniture and fixtures				9,748			8,906
		Total property, plant and equipment			192,425			187,624
		Less: Accumulated depreciation			105,142			96,929
	Property, plant and equipment, net				87,283			90,695
Certificates of deposit					2,638			2,120
Investments held to maturity at amortized cost					10,981			8,041
Notes receivable					919			1,091
Total assets				$	215,444		$	193,493
Liabilities and Stockholders' Equity
Current liabilities:
	Revolving credit facility			$	--		$	--
	Accounts payable				7,779			13,047
	Accrued liabilities				28,550			26,578
Total current liabilities					36,329			39,625
Deferred revenue					585			--
Deferred tax liabilities					14,424			15,732
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.001 par value, 5,000,000 shares authorized, no shares issued
Common stock, $.004 par value, 50,000,000 shares authorized, 36,711,354 and 36,776,624 issued and outstanding at December 31, 2013 and 2012, respectively*					147			147
Additional paid-in capital
Retained earnings					163,959			137,989
Total stockholders' equity					164,106			138,136
Total liabilities and stockholders' equity				$	215,444		$	193,493

*Reflects three-for-two stock split effective July 2, 2013

AAON, Inc. and Subsidiaries
Unaudited Consolidated Statements of Cash Flows
				Years Ending December 31,
				2013				2012				2011
Operating Activities				(in thousands)
Net income				$	37,547			$	27,449			$	13,986
	Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation				12,312				13,407				11,397
	Amortization of bond premiums				790				155				156
	Provision for losses on accounts receivable, net of adjustments				141				(83	)			(289	)
	Provision for excess and obsolete inventories				243				63				(50	)
	Share-based compensation				1,763				1,294				680
	Excess tax benefits from stock options exercised and restricted stock awards vested				(843	)			(393	)			(211	)
	Gain on disposition of assets				(22	)			4				1,802
	Foreign currency transaction gain				67				(27	)			(8	)
	Interest income on note receivable				(40	)			(42	)			--
	Deferred income taxes				(1,594	)			(2,028	)			10,122
	Write-off of note receivable				75				--				--
	Changes in assets and liabilities:
		Accounts receivable			4,662				(9,646	)			6,053
		Income tax receivable			464				9,715				(10,016	)
		Inventories			231				2,271				(1,296	)
		Prepaid expenses and other			436				(17	)			(67	)
		Accounts payable			(5,197	)			2,461				(2,751	)
		Deferred revenue			615				--				--
		Accrued liabilities			1,942				6,584				(3,024	)
Net cash provided by operating activities					53,592				51,167				26,484
Investing Activities
	Capital expenditures				(9,041	)			(14,147	)			(35,914	)
	Proceeds from sale of property, plant and equipment				92				11				482
	Investment in certificates of deposits				(9,108	)			(6,540	)			--
	Maturities of certificates of deposits				3,600				1,300				1,503
	Purchases of investments held to maturity				(22,275	)			(11,654	)			--
	Maturities of investments				2,005				--				9,364
	Proceeds from called investments				3,332				626				--
	Principal payments from note receivable				69				69				27
	Net cash used in investing activities				(31,326	)			(30,335	)			(24,538	)
Financing Activities
	Borrowings under revolving credit facility				8,325				34,847				82,078
	Payments under revolving credit facility				(8,325	)			(39,422	)			(77,503	)
	Stock options exercised				1,467				1,996				494
	Excess tax benefits from stock options exercised and restricted stock awards vested				843				393				211
	Repurchase of stock				(8,222	)			(6,660	)			(3,671	)
	Cash dividends paid to stockholders				(7,428	)			(8,840	)			(5,935	)
	Net cash used in financing activities				(13,340	)			(17,686	)			(4,326	)
Net increase (decrease) in cash and cash equivalents					8,926				3,146				(2,380	)
Cash and cash equivalents, beginning of period					3,159				13				2,393
Cash and cash equivalents, end of period				$	12,085			$	3,159			$	13