AAON Inc. (NASDAQ:AAON) filed Quarterly Report for the period ended 2010-03-31.
Aaon Inc. has a market cap of $387.8 million; its shares were traded at around $22.57 with a P/E ratio of 14 and P/S ratio of 1.5. The dividend yield of Aaon Inc. stocks is 1.7%. Aaon Inc. had an annual average earning growth of 10.7% over the past 10 years.AAON is in the portfolios of Chuck Royce of Royce& Associates.
Highlight of Business Operations:Net sales decreased $14.7 million or 23% to $49.3 million from $64.0 million for the three months ended March 31, 2010 and 2009, respectively. The decrease in net sales was a result of the decreased volume related to the current economic environment. The current economic environment has negatively impacted commercial construction markets with some projects delayed, postponed indefinitely or cancelled. The replacement market has also been affected by customers delaying equipment replacement as a cost saving strategy.
Gross profit decreased $3.9 million or 23% to $13.0 million from $16.9 million for the three months ended March 31, 2010 and 2009, respectively. As a percentage of sales, gross margins were 26.4% compared to 26.5% for the three months ended March 31, 2010 and 2009, respectively. Despite lower sales, in the first three months of 2010, our gross margin percentages remained consistent with the same period in 2009, which was accomplished by a continuation of improved production and labor efficiencies and a reduction in manufacturing related expenses.
Other expense increased $0.3 million to $0.1 million compared to other income of $0.2 million for the three months ended March 31, 2010 and 2009, respectively. The increase in other expense was primarily related to termination of the lease on our expansion facility.
We did not have an outstanding balance under the revolving credit facility at March 31, 2010 or December 31, 2009. Borrowings available under the revolving credit facility at March 31, 2010 were $14.3 million. At March 31, 2010, we were in compliance with our financial ratio covenants. The covenants are related to our tangible net worth, total liabilities to tangible net worth ratio and working capital. At March 31, 2010 our tangible net worth was $121.5 million which meets the requirement of being at or above $75.0 million. Our total liabilities to tangible net worth ratio was 1 to 3 which meets the requirement of not being above 2 to 1. Our working capital was $62.8 million which meets the requirement of being at or above $30.0 million. On July 30, 2009, we renewed the line of credit with a maturity date of July 30, 2010, with terms substantially the same as the previous agreement.
Cash flows used in investing activities were $17.9 million and $3.5 million for the three months ended March 31, 2010 and 2009, respectively. The increase in cash flows used in investing activities in 2010 was related to investments of $2.5 million ($1.8 million of current assets) in certificates of deposit and $11.8 million ($7.9 million of current assets) in corporate notes and bonds. We did not invest in any certificates of deposits or other investments in 2009. Capital expenditures remained constant at $3.5 million for the three months ended March 31, 2010 and 2009. Management utilizes cash flows provided from operating activities to fund capital expenditures that are expected to increase growth and create efficiencies. We have budgeted capital expenditures of approximately $7.0 million to $8.0 million in 2010 for renovation of the previously third party leased production facility and equipment purchases. We expect our cash requirements to be provided by cash flows from operations.
We received cash from stock options exercised of approximately $128,000 and classified the excess tax benefit of stock options exercised and restricted stock awards vested of approximately $16,000 in financing activities for the three months ended March 31, 2010. The cash received for options exercised and income tax effect partially offset the stock repurchase and dividend payments for the three months ended March 31, 2010. The cash received from stock options exercised for the same period in 2009 was approximately $10,000 and the excess tax benefit of stock options exercised and restricted stock awards vested was approximately $2,000.
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