AAON Inc. (AAON, Financial) filed Quarterly Report for the period ended 2010-06-30.
Aaon Inc. has a market cap of $432.2 million; its shares were traded at around $25.24 with a P/E ratio of 16.6 and P/S ratio of 1.8. The dividend yield of Aaon Inc. stocks is 1.4%. 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.
Gross profit decreased $2.6 million or 14% to $15.5 million from $18.1 million for the three months ended and decreased $6.5 million or 19% to $28.5 million from $35.0 million for the six months ended June 30, 2010 and 2009, respectively. As a percentage of sales, gross margins were 24.0% compared to 26.4% for the three months ended and 25.0% compared to 26.4% for the six months ended June 30, 2010 and 2009, respectively. Our gross margin percentages decreased from the same period in 2009 due to lower sales, higher raw material costs and increased labor expenses to set up manufacturing lines for the Tulsa building addition and related supplies to stock these lines.
SG&A expenses decreased $0.2 million or 3% to $6.6 million from $6.8 million for the three months ended and decreased $1.9 million or 14% to $11.4 million from $13.3 million for the six months ended June 30, 2010 and 2009, respectively. The decrease was primarily due to lower bad debt expense to reduce the bad debt reserve, a decrease in sales related expenses and a decrease in profit sharing due to lower net income.
Other expense stayed consistent at $0.1 million for the three months ended and other expense increased $0.3 million to $0.1 million compared to other income of $0.2 million for the six months ended June 30, 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 June 30, 2010 or December 31, 2009. Borrowings available under the revolving credit facility at June 30, 2010 were $14.3 million. At June 30, 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 June 30, 2010 our tangible net worth was $110.2 million which meets the requirement of being at or above $75.0 million. Our total liabilities to tangible net worth ratio was 1 to 2 which meets the requirement of not being above 2 to 1. Our working capital was $52.8 million which meets the requirement of being at or above $30.0 million. On July 30, 2010, we renewed the line of credit with a maturity date of July 30, 2011, with terms substantially the same as the previous agreement.
Cash flows used in investing activities were $21.6 million and $5.8 million for the six months ended June 30, 2010 and 2009, respectively. The increase in cash flows used in investing activities in 2010 was related to investments of $2.0 million ($1.8 million of current assets) in certificates of deposit and $13.1 million ($10.6 million of current assets) in corporate notes and bonds. We did not invest in any certificates of deposit or other investments in 2009. Capital expenditures increased to $6.5 million from $5.8 million for the six months ended June 30, 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 $8.0 million to $10.0 million in 2010 to set up manufacturing lines for the Tulsa building addition which was completed in the fourth quarter of 2009. We expect our cash requirements to be provided by cash flows from operations.
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Aaon Inc. has a market cap of $432.2 million; its shares were traded at around $25.24 with a P/E ratio of 16.6 and P/S ratio of 1.8. The dividend yield of Aaon Inc. stocks is 1.4%. 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 $4.1 million or 6% to $64.5 million from $68.6 million for the three months ended and decreased $18.8 million or 14% to $113.8 million from $132.6 million for the six months ended June 30, 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 $2.6 million or 14% to $15.5 million from $18.1 million for the three months ended and decreased $6.5 million or 19% to $28.5 million from $35.0 million for the six months ended June 30, 2010 and 2009, respectively. As a percentage of sales, gross margins were 24.0% compared to 26.4% for the three months ended and 25.0% compared to 26.4% for the six months ended June 30, 2010 and 2009, respectively. Our gross margin percentages decreased from the same period in 2009 due to lower sales, higher raw material costs and increased labor expenses to set up manufacturing lines for the Tulsa building addition and related supplies to stock these lines.
SG&A expenses decreased $0.2 million or 3% to $6.6 million from $6.8 million for the three months ended and decreased $1.9 million or 14% to $11.4 million from $13.3 million for the six months ended June 30, 2010 and 2009, respectively. The decrease was primarily due to lower bad debt expense to reduce the bad debt reserve, a decrease in sales related expenses and a decrease in profit sharing due to lower net income.
Other expense stayed consistent at $0.1 million for the three months ended and other expense increased $0.3 million to $0.1 million compared to other income of $0.2 million for the six months ended June 30, 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 June 30, 2010 or December 31, 2009. Borrowings available under the revolving credit facility at June 30, 2010 were $14.3 million. At June 30, 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 June 30, 2010 our tangible net worth was $110.2 million which meets the requirement of being at or above $75.0 million. Our total liabilities to tangible net worth ratio was 1 to 2 which meets the requirement of not being above 2 to 1. Our working capital was $52.8 million which meets the requirement of being at or above $30.0 million. On July 30, 2010, we renewed the line of credit with a maturity date of July 30, 2011, with terms substantially the same as the previous agreement.
Cash flows used in investing activities were $21.6 million and $5.8 million for the six months ended June 30, 2010 and 2009, respectively. The increase in cash flows used in investing activities in 2010 was related to investments of $2.0 million ($1.8 million of current assets) in certificates of deposit and $13.1 million ($10.6 million of current assets) in corporate notes and bonds. We did not invest in any certificates of deposit or other investments in 2009. Capital expenditures increased to $6.5 million from $5.8 million for the six months ended June 30, 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 $8.0 million to $10.0 million in 2010 to set up manufacturing lines for the Tulsa building addition which was completed in the fourth quarter of 2009. We expect our cash requirements to be provided by cash flows from operations.
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