AAON Reports 2010 Results and Record Fourth Quarter Sales

| Source: AAON AAON

TULSA, OK--(Marketwire - March 10, 2011) - AAON, Inc. (NASDAQ: AAON) today announced its operating results for the year 2010. Sales decreased to $244.6 million from $245.3 million in 2009, and net income decreased 21% to $21.9 million compared to $27.7 million in the previous year. Year 2009 earnings benefited by a $2.2 million reduction in cost of sales, of which $1.2 million occurred in the fourth quarter, resulting from hedging of copper ($1.4 million and $0.8 million net of tax, respectively).

Sales in the fourth quarter of 2010 reached a record level of $65.8 million, up 21% from $54.2 million in 2009, primarily reflecting the favorable reception of AAON's new products. Nevertheless, net income fell 6% to $5.8 million from $6.2 million for a number of reasons including the poor economic conditions which caused substantial pressure on our margins, exacerbated by cost increases led by commodity prices, plus the aforementioned absence of gains from hedging in 2010, although benefiting from a lower effective tax rate.

Norman H. Asbjornson, President and CEO, stated that, "We were pleased that sales in 2010 were substantially level with sales in 2009, despite a 14.1% decline in non-residential construction spending. The 2010 reduction in net income was caused by substantially the same reasons mentioned above, plus one-time costs associated with relocation and the addition of production facilities."

Earnings for the fourth quarter of 2010 were $0.35 per diluted share compared to $0.36 per diluted share in 2009, based upon 16.6 million and 17.3 million diluted shares outstanding, respectively, while earnings per diluted share for year 2010 were $1.30 compared to $1.60 in 2009, based upon 16.9 million and 17.3 million diluted shares outstanding, respectively.

Mr. Asbjornson said, "We anticipate modestly improving industry economic conditions and a better year in 2011. An indicator is that AAON's backlog at yearend 2010 was $38.4 million, up 19% from $32.2 million a year ago."

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.

The Company will host a conference call today at 4:15 P.M. EST to discuss year 2010 and the fourth quarter results. To participate, call 1-877-737-1669 (Pass code VA 87132).

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  
Consolidated Statements of Income  
   
    Three Months Ended   Twelve Months Ended  
    December 31,     December 31,   December 31,     December 31,  
    2010     2009   2010     2009  
    (in thousands, except per share data)  
                               
Net sales   $ 65,826     $ 54,228   $ 244,552     $ 245,282  
                               
Cost of sales     51,635       39,449     189,364       177,737  
                               
    Gross profit     14,191       14,779     55,188       67,545  
                               
Selling, general and administrative expenses     5,881       5,150     22,473       23,791  
                               
    Income from operations     8,310       9,629     32,715       43,754  
                               
Interest expense     (41 )     -     (45 )     (9 )
                               
Interest income     96       -     258       71  
                               
Other income (expense), net     (49 )     75     (235 )     76  
                               
Income before income taxes     8,316       9,704     32,693       43,892  
                               
Income tax provision     2,534       3,549     10,799       16,171  
                               
    Net income   $ 5,782     $ 6,155   $ 21,894     $ 27,721  
                               
Earnings per share:                              
  Basic   $ 0.35     $ 0.36   $ 1.30     $ 1.61  
  Diluted   $ 0.35     $ 0.36   $ 1.30     $ 1.60  
                               
Cash dividends declared per common share:   $ 0.18     $ 0.18   $ 0.36     $ 0.36  
                               
Weighted average shares outstanding:                              
  Basic     16,523       17,213     16,799       17,187  
  Diluted     16,633       17,281     16,893       17,309  
   
   
   
   
   
AAON, Inc., and Subsidiaries  
Consolidated Balance Sheets  
   
    December 31, 2010   December 31, 2009  
    (in thousands, except share and per share data)  
Assets              
Current assets:              
  Cash and cash equivalents   $ 2,393   $ 25,639  
  Certificates of deposit     1,503     -  
  Investments held to maturity at amortized cost     9,520     -  
  Accounts receivable, net     39,901     33,381  
  Note receivable, current     26     -  
  Inventories, net     33,602     28,788  
  Prepaid expenses and other     656     1,087  
  Financial derivative asset     -     2,200  
  Assets held for sale, net     -     1,522  
  Deferred tax assets     4,147     3,623  
Total current assets     91,748     96,240  
               
Property, plant and equipment              
  Land     1,328     1,328  
  Buildings     45,482     41,697  
  Machinery and equipment     100,559     90,213  
  Furniture and fixtures     6,356     7,225  
    Total property, plant and equipment     153,725     140,463  
    Less: Accumulated depreciation     86,307     80,567  
Property, plant and equipment, net     67,418     59,896  
               
Note receivable, long-term     1,111     75  
Total assets   $ 160,277   $ 156,211  
               
Liabilities & Stockholders' Equity               
Current liabilities:              
  Current maturities of long-term debt     -     76  
  Accounts payable     15,046     8,524  
  Dividends payable     -     3,100  
  Accrued liabilities     21,200     19,186  
Total current liabilities     36,246     30,886  
               
Deferred tax liabilities     7,292     7,326  
Commitments and contingencies              
Stockholder's Equity              
  Preferred stock, $.001 par value, 7,500,000 shares authorized, no shares issued     -     -  
  Common stock, $.004 par value, 75,000,000 shares authorized, 16,505,653 and 17,214,979 issued and outstanding at December 31, 2010 and 2009, respectively     68     71  
  Additional paid-in capital     -     644  
  Accumulated other comprehensive income, net of tax     -     1,077  
  Retained earnings     116,671     116,207  
Total stockholders' equity     116,739     117,999  
Total liabilities and stockholders' equity   $ 160,277   $ 156,211  
   
   
   
   
   
AAON, Inc., and Subsidiaries  
Consolidated Statements of Cash Flows  
   
    Twelve Months     Twelve Months  
    Ended     Ended  
    December 31, 2010     December 31, 2009  
    (in thousands)  
Operating Activities                
  Net income   $ 21,894     $ 27,721  
                 
  Adjustments to reconcile net income to net cash provided by operating activities:                
    Depreciation     9,886       9,061  
    Amortization of bond premiums     379       -  
    Provision for losses on accounts receivable, net of adjustments     (117 )     10  
    Provision for excess and obsolete inventories     -       410  
    Share-based compensation     791       848  
    Excess tax benefits from stock options exercised and restricted stock awards vested     (356 )     (703 )
    Gain on disposition of assets     (73 )     (59 )
    Unrealized gain on financial derivative assets     (14 )     (2,200 )
    Deferred income taxes     (558 )     3,531  
    Changes in assets and liabilities:                
      Accounts receivable     (6,403 )     5,495  
      Inventories     (4,814 )     7,243  
      Prepaid expenses and other     431       (660 )
      Financial derivative asset     2,214       -  
      Accounts payable     6,522       (6,334 )
      Accrued liabilities     2,370       842  
  Net cash provided by operating activities     32,152       45,205  
                 
Investing Activities                
  Proceeds from sale of property, plant, and equipment     136       135  
  Investment in certificates of deposit     (2,745 )     -  
  Maturities of certificates of deposit     1,242       -  
  Investments held to maturity     (12,018 )     -  
  Maturities of investments     2,119       -  
  Proceeds from assets held for sale     460       -  
  Capital expenditures     (17,470 )     (9,774 )
  Net cash used in investing activities     (28,276 )     (9,639 )
                 
Financing Activities                
  Borrowings under revolving credit facility     20,839       9,972  
  Payments under revolving credit facility     (20,839 )     (12,873 )
  Payments of long-term debt     (76 )     (136 )
  Stock options exercised     1,168       1,236  
  Excess tax benefits from stock options exercised and restricted stock awards vested     356       703  
  Repurchase of stock     (19,480 )     (3,129 )
  Cash dividends paid to stockholders     (9,168 )     (5,874 )
  Net cash used in financing activities     (27,200 )     (10,101 )
Effect of exchange rate on cash     78       (95 )
Net increase (decrease) in cash and cash equivalents     (23,246 )     25,370  
Cash and cash equivalents, beginning of year     25,639       269  
Cash and cash equivalents, end of year   $ 2,393     $ 25,639  
                 

Contact Information:

For Further Information:
Jerry R. Levine
Phone: (914) 244-0292
Fax: (914) 244-0295

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