AAON (AAON) Q4 2019 earnings summary

Executive summary

• Record FY2019 net sales of $469.3M, up 8.2% YoY; management said Q4 sales and margin reflected recovery from production constraints.

• Capacity investments, a new R&D center, and leadership changes were positioned to support longer-term growth.

Financial highlights

• FY2019 net sales were $469.333M vs. $433.947M in 2018; net income was $53.711M vs. $42.329M.

• FY2019 operating income was $67.011M vs. $55.351M; gross profit was $119.425M vs. $103.533M.

• Q4 2019 net sales were $122.574M, gross profit $36.381M, net income $17.273M, and diluted EPS $0.33; Q4 2018 net sales were $112.340M and net income $12.964M.

• Operating cash flow was $97.925M; capital expenditures were $37.166M; cash, cash equivalents and restricted cash ended the year at $44.373M.

Outlook and guidance

• FY2020 capital spending was estimated at $72M–$74M in the annual letter and $73.2M in the cash flow discussion; management described the program as a record.

• Parts sales were projected to rise 20% to $42.5M in 2020; water-source heat pump sales were forecast to increase 25% to $31.9M.

• Longview’s 220,000-square-foot expansion was expected to be completed in late 2020; the facility expansion was also described as expected by Q4 2020.

• Backlog was $129.2M as of February 1, 2020, compared with $147.0M a year earlier; firm orders were targeted for fulfillment within 60–90 days.