AAON(US:AAON)2025-11-06 12:06Revenue and Sales Performance - Total revenue for the three months ended September 30, 2025, was $384.238 million, compared to $327.252 million for the same period in 2024, representing a year-over-year increase of approximately 17.4%[35] - Aftermarket part sales for the three months ended September 30, 2025, were $24.9 million, up from $21.1 million in 2024, reflecting a growth of about 17.9%[35] - The company recognized revenue of $11.8 million for the nine months ended September 30, 2025, that was included in the contract liability balance at the beginning of the period, compared to $12.4 million for the same period in 2024[45] - For the three months ended September 30, 2025, AAON Oklahoma reported external sales of $238.7 million, while AAON Coil Products and BASX reported external sales of $70.2 million and $75.2 million, respectively[142] Financial Position and Assets - Contract assets increased to $207.739 million as of September 30, 2025, from $135.820 million at the end of 2024, indicating a significant rise of approximately 53%[44] - Total accounts receivable increased to $267,568 thousand as of September 30, 2025, up from $148,472 thousand in December 31, 2024, representing an increase of 80.3%[53] - Total inventories increased to $256,728 thousand as of September 30, 2025, compared to $192,612 thousand as of December 31, 2024, reflecting a growth of 33.3%[54] - Total property, plant, and equipment rose to $947,478 thousand as of September 30, 2025, from $819,998 thousand as of December 31, 2024, marking an increase of 15.6%[56] - Total long-lived assets increased to $608.7 million as of September 30, 2025, compared to $525.8 million as of December 31, 2024[144] Liabilities and Debt - The company’s total contract liabilities as of September 30, 2025, were $(19.974) million, compared to $(14.913) million at the end of 2024, indicating an increase in liabilities[44] - The total minimum lease obligations, net of present value of minimum lease payments, amounted to $14,902 thousand as of September 30, 2025[52] - The company entered into a Third Amendment to its Loan Agreement, including an $80 million term loan and a $200 million revolving credit facility, which was increased to $230 million in April 2025[66] - As of September 30, 2025, the total Revolver commitment was $500 million, with outstanding borrowings of $360,142,000, leaving $139,204,000 available[68] - The Company had an outstanding balance of $360.1 million on its combined Revolver and Term Loan as of September 30, 2025[208] Expenses and Costs - Costs incurred on uncompleted contracts for the nine months ended September 30, 2025, totaled $192.207 million, compared to $132.844 million for the same period in 2024, marking an increase of approximately 44.7%[45] - Depreciation expense for the three months ended September 30, 2025, was $18,419 thousand, compared to $14,636 thousand for the same period in 2024, representing a 25.5% increase[57] - The total amount paid to representatives for the three months ended September 30, 2025, was $11.1 million, compared to $10.7 million for the same period in 2024, reflecting a year-over-year increase of approximately 3.7%[43] - Accrued liabilities increased to $120,468,000 as of September 30, 2025, from $99,347,000 as of December 31, 2024, representing a growth of approximately 21.3%[65] Tax and Compliance - The effective income tax rate for the nine months ended September 30, 2025, was 16.4%, compared to 19.3% for the same period in 2024[75] - The company recorded deferred tax assets of $10.2 million (Federal) and $2.3 million (State) related to net operating loss carryforwards of approximately $48.6 million as of September 30, 2025[84] - The company recognized an increase in deferred tax liabilities of $30.9 million due to changes in tax law effective January 1, 2025[82] Shareholder and Employee Compensation - The company awarded annual merit raises resulting in a 3.3% increase in wages in March 2024 and a 4.0% increase in March 2025[29] - The total share-based compensation expense for the nine months ended September 30, 2025, was $13.4 million, compared to $12.8 million for the same period in 2024[98] - The Company matches 175.0% up to 6.0% of employee contributions in its defined contribution plan[102] - Contributions to the defined contribution plan increased to $5,975,000 for the three months ended September 30, 2025, compared to $4,570,000 for the same period in 2024, representing a 30.8% increase[103] Market and Operational Challenges - The company is facing inflationary cost pressures and supply chain disruptions due to global health issues, impacting demand for products and financial position[209] - There are concerns regarding the tightening of labor markets, affecting the ability to hire employees for continued growth[209] - The company is monitoring fluctuations in the commercial/industrial new construction market, which may influence future performance[209] - Future levels of capital expenditures and research and development are critical for the company's growth strategy[209] - The company is focused on the integration of acquired businesses to realize synergies and cost savings[209] - Legal, regulatory, and environmental compliance is essential for the company's operations and product standards[209] - The company is assessing the creditworthiness of customers and their access to capital, which could affect revenue generation[209] - Changes in interest rates and competitive factors are being closely monitored as they may impact financial results[209] - The company is addressing cybersecurity risks and potential impacts on information technology systems[209] - The timing and market acceptance of new product introductions are crucial for future revenue growth[209] Profitability and Shareholder Returns - Basic earnings per share for the nine months ended September 30, 2025, was $0.93, down from $1.77 in 2024, a decline of 47.2%[109] - The company repurchased approximately $30.0 million of shares as of September 30, 2025, with $70.0 million remaining under the current board authorization[110] - The company declared cash dividends of $0.10 per share for the periods ending March 5, 2025, May 13, 2025, and August 14, 2025, with an annualized dividend of $0.40[113] - The company reported net income of $30,782,000 for the three months ended September 30, 2025, compared to $52,625,000 in 2024, a decrease of 41.5%[109]