AAON(US:AAON)2025-08-11 11:10Revenue Performance - For the three months ended June 30, 2025, total revenue was $311.6 million, a decrease of 0.8% compared to $313.6 million for the same period in 2024[34] - For the six months ended June 30, 2025, total revenue was $633.6 million, a decrease of 10.1% compared to $575.7 million for the same period in 2024[34] - Aftermarket part sales for the three months ended June 30, 2025, were $20.7 million, up 9.5% from $18.9 million in 2024[34] Contract and Asset Management - Contract assets increased to $233.8 million as of June 30, 2025, compared to $135.8 million as of December 31, 2024[43] - Contract liabilities increased to $33.8 million as of June 30, 2025, compared to $14.9 million as of December 31, 2024[43] - Costs incurred on uncompleted contracts for the six months ended June 30, 2025, were $162.2 million, an increase from $118.7 million in 2024[44] - Estimated earnings on uncompleted contracts for the six months ended June 30, 2025, were $136.4 million, compared to $90.8 million in 2024[44] Employee Compensation and Benefits - The Company awarded annual merit raises of 3.3% in March 2024 and 4.0% in March 2025[28] - Payments to representatives for the three months ended June 30, 2025, were $12.0 million, compared to $10.2 million in 2024[42] - The profit sharing bonus plan for the three months ended June 30, 2025, was $2,038,000, down from $6,477,000 in the same period of 2024, indicating a decrease of 68%[98] - Medical premium payments rose to $5,573,000 for the three months ended June 30, 2025, compared to $3,924,000 in 2024, reflecting a 42% increase[100] Financial Position and Liquidity - As of June 30, 2025, total accounts receivable increased to $171,881,000 from $148,472,000 as of December 31, 2024, representing a growth of 15.7%[51] - The net inventories as of June 30, 2025, amounted to $234,980,000, up from $187,420,000 as of December 31, 2024, indicating a 25.3% increase[52] - Total property, plant, and equipment increased to $898,412,000 as of June 30, 2025, compared to $819,998,000 as of December 31, 2024, reflecting a growth of 9.6%[53] - The total future lease payments as of June 30, 2025, are estimated at $22,320,000, with the largest portion due in 2026 at $3,890,000[50] - The allowance for credit losses increased to $1,308,000 as of June 30, 2025, from $1,038,000 as of December 31, 2024, marking a rise of 25.9%[51] Debt and Financing - The company increased its available Revolver to $230,000,000 in April 2025, up from $200,000,000, to support additional working capital needs[61] - The total Revolver commitment was increased to $500,000,000 as of June 30, 2025, compared to $200,000,000 on December 31, 2024[63] - The weighted average interest rate for the Revolver was 5.6% for the three and six months ended June 30, 2025, down from 6.6% in the same periods of 2024[66] - The company’s leverage ratio was 1.4 to 1.0 as of June 30, 2025, well below the covenant requirement of not exceeding 3 to 1[68] Taxation - The provision for income taxes for the three months ended June 30, 2025, was $4,018,000, compared to $14,779,000 for the same period in 2024, indicating a significant decrease[69] - The effective tax rate for the three months ended June 30, 2025, was 20.6%, compared to 22.1% for the same period in 2024[70] - The company expects the reinstatement of 100% bonus depreciation under the One Big Beautiful Bill Act to increase its June 30, 2025, tax receivable by approximately $4,000,000[77] - The repeal of mandatory capitalization of domestic R&D expenses is expected to increase the company's June 30, 2025, income tax receivable by approximately $10,700,000[78] Stock and Shareholder Information - The 2024 Long-Term Incentive Plan ("2024 Plan") was adopted, providing for approximately 2.7 million new shares and 3.7 million shares from the 2016 Plan, which are now authorized for issuance under the 2024 Plan[81] - As of June 30, 2025, the total intrinsic value of options exercised was $22.3 million, compared to $23.8 million for the same period in 2024[85] - The total pre-tax compensation cost related to unvested stock options not yet recognized as of June 30, 2025, is $15.8 million, expected to be recognized over approximately 2.3 years[84] - The fair value of unvested restricted stock awards at June 30, 2025, was approximately $9.1 million, expected to be recognized over a weighted average period of 2.1 years[86] - The total pre-tax compensation cost related to unvested performance restricted stock units (PSUs) not yet recognized as of June 30, 2025, is $5.9 million, expected to be recognized over approximately 1.7 years[88] - Share-based compensation expense for the six months ended June 30, 2025, totaled $22.5 million, compared to $19.2 million for the same period in 2024[91] - The Company matches 175.0% up to 6.0% of employee contributions in the defined contribution plan[95] - Contributions to the defined contribution plan increased to $5,977,000 for the three months ended June 30, 2025, compared to $4,366,000 in the same period of 2024, representing a 37% increase[96] Sales Performance by Segment - For the three months ended June 30, 2025, AAON Oklahoma reported external sales of $185.1 million, a decrease from $225.7 million in the same period of 2024[133] - AAON Coil Products achieved external sales of $58.5 million for the three months ended June 30, 2025, compared to $31.4 million in the same period of 2024[133] - BASX reported external sales of $68.0 million for the three months ended June 30, 2025, up from $56.5 million in the same period of 2024[133] - Consolidated gross profit for the three months ended June 30, 2025, was $82.7 million, down from $113.1 million in the same period of 2024[133] Economic and Market Conditions - The company is facing inflationary cost pressures and supply chain disruptions impacting demand for products and financial position[202] - There are concerns regarding the creditworthiness of customers and their access to capital, which may affect revenue generation[202] - The company is monitoring the timing and market acceptance of new products as a key factor for future growth[202] - Labor market tightening is affecting the company's ability to hire employees necessary for continued growth[202] - The company is assessing the impact of economic and market conditions specific to its industry on operational performance[202] - Future capital expenditures and research and development levels are critical for the company's growth strategy[202] - Legal and regulatory compliance is essential for the company to meet mandated standards and specifications[202] - Integration of acquired businesses is a focus area to realize synergies and cost savings[202] - The company is evaluating the effects of natural disasters and extreme weather on manufacturing locations[202] - Cybersecurity risks, including breaches and compromised data, are being closely monitored to protect information technology systems[202]