Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2021 | Nov. 01, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2021 | |
Document Transition Report | false | |
Entity File Number | 0-18953 | |
Entity Registrant Name | AAON, INC. | |
Entity Central Index Key | 0000824142 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Incorporation, State or Country Code | NV | |
Entity Tax Identification Number | 87-0448736 | |
Entity Address, Address Line One | 2425 South Yukon Ave., | |
Entity Address, City or Town | Tulsa, | |
Entity Address, State or Province | OK | |
Entity Address, Postal Zip Code | 74107 | |
City Area Code | 918 | |
Local Phone Number | 583-2266 | |
Title of 12(b) Security | Common Stock | |
Trading Symbol | AAON | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 52,428,030 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 | |
Current assets: | |||
Cash and cash equivalents | $ 101,813 | $ 79,025 | |
Restricted Cash | 660 | 3,263 | |
Accounts receivable, net of allowance for credit losses of $477 and $506, respectively | 58,756 | 47,387 | |
Income tax receivable | 1,999 | 4,587 | |
Notes receivable | 32 | 31 | |
Inventories, net | 104,553 | 82,219 | |
Prepaid expenses and other | 2,802 | 3,739 | |
Total current assets | 270,615 | 220,251 | |
Property, plant and equipment: | |||
Land | 5,016 | 4,072 | |
Buildings | 131,327 | 122,171 | |
Machinery and equipment | 299,226 | 281,266 | |
Furniture and fixtures | 21,679 | 18,956 | |
Total property, plant and equipment | 457,248 | 426,465 | |
Less: Accumulated depreciation | 216,667 | 203,125 | |
Property, plant and equipment, net | 240,581 | 223,340 | |
Goodwill and intangible assets, net | 3,229 | 3,267 | |
Right of use assets | 1,421 | 1,571 | |
Note receivable | 557 | 579 | |
Total assets | 516,403 | 449,008 | |
Current liabilities: | |||
Accounts payable | 25,940 | 12,447 | |
Accrued liabilities | 48,266 | 46,586 | |
Total current liabilities | 74,206 | 59,033 | |
Deferred tax liabilities | 31,090 | 28,324 | |
Other long-term liabilities | 4,434 | 4,423 | |
New market tax credit obligation | [1] | 6,394 | 6,363 |
Commitments and contingencies | |||
Stockholders' equity: | |||
Preferred stock, $.001 par value, 5,000,000 shares authorized, no shares issued | 0 | 0 | |
Common stock, $.004 par value, 100,000,000 shares authorized, 52,420,486 and 52,224,767 issued and outstanding at September 30, 2021 and December 31, 2020, respectively | 210 | 209 | |
Additional paid-in capital | 11,966 | 5,161 | |
Retained earnings | 388,103 | 345,495 | |
Total stockholders' equity | 400,279 | 350,865 | |
Total liabilities and stockholders' equity | $ 516,403 | $ 449,008 | |
[1] | (a) Held by variable interest entities (Note 14) |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Stockholders' equity: | ||
Allowance for doubtful accounts | $ 477 | $ 506 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value | $ 0.004 | $ 0.004 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 52,420,486 | 52,224,767 |
Common stock, shares outstanding | 52,420,486 | 52,224,767 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Income Statement [Abstract] | ||||
Net Sales | $ 138,571 | $ 134,772 | $ 398,235 | $ 397,851 |
Cost of sales | 102,552 | 93,924 | 286,952 | 275,925 |
Gross profit | 36,019 | 40,848 | 111,283 | 121,926 |
Selling, general and administrative expenses | 15,897 | 14,716 | 47,488 | 45,869 |
Gain on disposal of assets | (15) | 1 | (15) | (61) |
Income from operations | 20,137 | 26,131 | 63,810 | 76,118 |
Interest (expense) income, net | (10) | 10 | (11) | 90 |
Other (expense) income, net | (19) | 15 | 37 | 20 |
Income before taxes | 20,108 | 26,156 | 63,836 | 76,228 |
Income tax provision | 4,527 | 5,696 | 11,264 | 16,111 |
Net income | $ 15,581 | $ 20,460 | $ 52,572 | $ 60,117 |
Earnings per share: | ||||
Basic (usd per share) | $ 0.30 | $ 0.39 | $ 1 | $ 1.15 |
Diluted (usd per share) | 0.29 | 0.38 | 0.98 | 1.14 |
Cash dividends declared per common share (in dollars per share) | $ 0 | $ 0 | $ 0.19 | $ 0.19 |
Weighted average shares outstanding: | ||||
Basic (in shares) | 52,420,711 | 52,260,551 | 52,392,300 | 52,174,705 |
Diluted (in shares) | 53,546,513 | 53,151,295 | 53,664,997 | 52,955,049 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Paid-in Capital | Retained Earnings |
Balance (in shares) at Dec. 31, 2019 | 52,079 | |||
Balance at Dec. 31, 2019 | $ 290,140 | $ 208 | $ 3,631 | $ 286,301 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | 60,117 | 60,117 | ||
Stock options exercised and restricted stock awards granted (in shares) | 616 | |||
Stock options exercised and restricted stock awards granted | 18,519 | $ 2 | 18,517 | |
Share-based compensation | 8,546 | 8,546 | ||
Stock repurchased and retired (in shares) | (430) | |||
Stock repurchased and retired | (22,520) | $ (1) | (22,519) | 0 |
Dividends | (9,910) | (9,910) | ||
Balance (in shares) at Sep. 30, 2020 | 52,265 | |||
Balance at Sep. 30, 2020 | 344,892 | $ 209 | 8,175 | 336,508 |
Balance (in shares) at Jun. 30, 2020 | 52,234 | |||
Balance at Jun. 30, 2020 | 322,695 | $ 209 | 6,451 | 316,035 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | 20,460 | 20,460 | ||
Stock options exercised and restricted stock awards granted (in shares) | 126 | |||
Stock options exercised and restricted stock awards granted | 4,346 | $ 0 | 4,346 | |
Share-based compensation | 2,852 | 2,852 | ||
Stock repurchased and retired (in shares) | (95) | |||
Stock repurchased and retired | (5,474) | $ 0 | (5,474) | 0 |
Dividends | 13 | 13 | ||
Balance (in shares) at Sep. 30, 2020 | 52,265 | |||
Balance at Sep. 30, 2020 | 344,892 | $ 209 | 8,175 | 336,508 |
Balance (in shares) at Dec. 31, 2020 | 52,225 | |||
Balance at Dec. 31, 2020 | 350,865 | $ 209 | 5,161 | 345,495 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | 52,572 | 52,572 | ||
Stock options exercised and restricted stock awards granted (in shares) | 438 | |||
Stock options exercised and restricted stock awards granted | 14,573 | $ 2 | 14,571 | |
Share-based compensation | 8,784 | 8,784 | ||
Stock repurchased and retired (in shares) | (243) | |||
Stock repurchased and retired | (16,551) | $ (1) | (16,550) | 0 |
Dividends | (9,964) | (9,964) | ||
Balance (in shares) at Sep. 30, 2021 | 52,420 | |||
Balance at Sep. 30, 2021 | 400,279 | $ 210 | 11,966 | 388,103 |
Balance (in shares) at Jun. 30, 2021 | 52,416 | |||
Balance at Jun. 30, 2021 | 383,726 | $ 210 | 10,998 | 372,518 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | 15,581 | 15,581 | ||
Stock options exercised and restricted stock awards granted (in shares) | 77 | |||
Stock options exercised and restricted stock awards granted | 2,725 | $ 0 | 2,725 | |
Share-based compensation | 2,991 | 2,991 | ||
Stock repurchased and retired (in shares) | (73) | |||
Stock repurchased and retired | (4,748) | $ 0 | (4,748) | 0 |
Dividends | 4 | 4 | ||
Balance (in shares) at Sep. 30, 2021 | 52,420 | |||
Balance at Sep. 30, 2021 | $ 400,279 | $ 210 | $ 11,966 | $ 388,103 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Operating Activities | ||
Net income | $ 52,572 | $ 60,117 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 22,532 | 18,971 |
Amortization of debt issuance costs | 31 | 31 |
Provision for credit losses on accounts receivable, net of adjustments | 0 | 193 |
Provision for excess and obsolete inventories | 378 | 1,776 |
Share-based compensation | 8,784 | 8,546 |
Gain on disposal of assets | (15) | (61) |
Foreign currency transaction (gain) loss | (1) | 18 |
Interest income on note receivable | (19) | (19) |
Deferred | 2,766 | 7,676 |
Changes in assets and liabilities: | ||
Accounts receivable | (11,369) | 5,011 |
Income taxes | 2,588 | (3,142) |
Inventories | (22,712) | (6,994) |
Prepaid expenses and other | 937 | (598) |
Accounts payable | 16,390 | 3,654 |
Deferred revenue | 316 | 1,128 |
Accrued liabilities | 1,525 | 688 |
Net cash provided by operating activities | 74,703 | 96,995 |
Investing Activities | ||
Capital expenditures | (42,636) | (48,955) |
Proceeds from sale of property, plant and equipment | 19 | 61 |
Principal payments from note receivable | 41 | 38 |
Net cash used in investing activities | (42,576) | (48,856) |
Financing Activities | ||
Stock options exercised | 14,573 | 18,519 |
Repurchase of stock | (15,014) | (21,390) |
Employee taxes paid by withholding shares | (1,537) | (1,130) |
Cash dividends paid to stockholders | (9,964) | (9,910) |
Net cash used in financing activities | (11,942) | (13,911) |
Net increase in cash, cash equivalents and restricted cash | 20,185 | 34,228 |
Cash, cash equivalents and restricted cash, beginning of period | 82,288 | 44,373 |
Cash, cash equivalents and restricted cash, end of period | $ 102,473 | $ 78,601 |
General
General | 9 Months Ended |
Sep. 30, 2021 | |
Basis of Presentation and Significant Accounting Policies [Abstract] | |
General | General Basis of Presentation The accompanying unaudited consolidated financial statements of AAON, Inc., a Nevada corporation, and our operating subsidiaries, all of which are wholly-owned, (collectively, the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the rules and regulations of the Securities and Exchange Commission (“SEC”). Our financial statements consolidate all of our affiliated entities in which we have a controlling financial interest. Because we hold certain rights that give us the power to direct the activities of two variable interest entities ("VIEs") (Note 14) that most significantly impact the VIEs economic performance, combined with a variable interest that gives us the right to receive potentially significant benefits or the obligation to absorb potentially significant losses, we have a controlling financial interest in those VIEs. These financial statements have not been audited by the Company's independent registered public accounting firm, except that the consolidated balance sheet at December 31, 2020 is derived from audited consolidated financial statements. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. The financial statements reflect all adjustments (all of which are of a normal recurring nature) which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of the results that may be expected for a full year. Certain disclosures have been condensed in or omitted from these consolidated financial statements. The accompanying unaudited financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. All intercompany balances and transactions have been eliminated in consolidation. We are engaged in the engineering, manufacturing, marketing, and sale of air conditioning and heating equipment consisting of standard, semi-custom and custom rooftop units, chillers, packaged outdoor mechanical rooms, air handling units, makeup air units, energy recovery units, condensing units, geothermal/water-source heat pumps, coils, and controls. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Because these estimates and assumptions require significant judgment, actual results could differ from those estimates and could have a significant impact on our results of operations, financial position and cash flows. We reevaluate our estimates and assumptions as needed, but at a minimum on a quarterly basis. The most significant estimates include, but are not limited to, inventory reserves, warranty accrual, worker's compensation accrual, medical insurance accrual, income taxes and share-based compensation. Actual results could differ materially from those estimates. Impact of February 2021 Weather In February 2021, record-breaking winter storms affected Oklahoma and Texas, causing sustained below freezing temperatures, hazardous driving conditions, rolling blackouts, water main breaks, and a host of other weather related issues. In addition to significant absenteeism as a result of employees being unable to travel to and from work due to inadequate transportation and/or hazardous road conditions, the Company made the decision to shut down the Tulsa, OK and Longview, TX plants for several days. This decision was based on the expected employee absenteeism as well as the expected rolling blackouts caused by the increased demand on the electrical and natural gas power grids. Although we lost several production days in mid-February 2021, we do not believe that the impact of this weather event had a material adverse effect on the results of our operations, financial position and cash flows as of and for the year ending December 31, 2021. Impact of COVID-19 Pandemic In March 2020, the World Health Organization characterized the coronavirus ("COVID-19") a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency. The rapid spread of the pandemic and the continuously evolving responses to combat it have had an increasingly negative impact on the global economy. Our manufacturing operations are considered a critical infrastructure industry, as defined by the U.S. Department of Homeland Security, as such, the decrees issued by national, state, and local governments in response to the COVID-19 pandemic have had minimal impact on our operations except for higher employee absenteeism, mostly in June 2020, in our manufacturing facilities. Our Longview, TX facility suffered from COVID-19 related absenteeism in the quarter ending September 30, 2021, which reduced the production of coils that were needed to complete units at our Tulsa, OK facility. We maintained continuous operations during the nine months ended September 30, 2021, except for planned maintenance in January and the weather related shutdown in February 2021. For the most part, our workers are able to socially distance themselves during the manufacturing process. Additional precautions have been taken to social distance workers that work in close environments and we have facilitated voluntary on-site COVID-19 vaccine clinics. The Company utilizes sanitation stations and performs additional cleaning and sanitation throughout the day. We witnessed increases in some of our raw material prices, especially in copper and steel, which appear to be an impact of COVID-19, and have put in place price increases in our products and continue to make strategic purchases of materials when we see opportunities. Although, we have experienced some supply chain challenges, due to our strong vendor relationships as well as our favorable liquidity position, we have experienced minimal disruption to our supply chain due to COVID-19. We anticipate that the average cost of raw materials and certain components purchased, including the impact of rising inflation and tariffs, for the remainder of 2021 will be higher than the costs experienced during the year ended December 31, 2020. The magnitude of the impact of COVID-19 remains unpredictable and we, therefore, continue to anticipate potential supply chain disruptions, some employee absenteeism, and additional health and safety costs related to the COVID-19 pandemic that could unfavorably impact our business. While our supply chain disruptions to date have been minimal and intermittent, they have impacted the production process which creates inefficiencies and can deteriorate our profit margins. Additionally, we continue to experience challenges in a tight labor market, especially the hiring of both skilled and unskilled production labor. In July 2021, we increased starting wages for our production workforce by 7.0%. We also have put a cost of living increase of 3.5% in place in October for all employees below the Director level. We will continue to implement human resource initiatives to retain and attract labor to further improve productivity and production efficiencies. Because we have managed to maintain almost continuous operations with reasonable lead times through 2020 and 2021, our order intake is strong and has increased throughout 2021 as the economy has opened back up and COVID-19 restrictions have lessened. We expect to increase our production for the remainder of 2021 and into 2022. We do not believe that the impact of the COVID-19 pandemic will have a material adverse effect on the results of our operations, financial position and cash flows as of and for the year ended December 31, 2021. However, we are continually monitoring the progression of the COVID-19 pandemic, including the recent Delta variant, and its potential effects on our financial position, results of operations, and cash flows. Accounting Policies A comprehensive discussion of our critical accounting policies and management estimates is included in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2020. Fair Value Measurements We adopted ASU No. 2018-13, Fair Value Measurements (Topic 820) , as amended, as of January 1, 2020. The ASU includes additional disclosure requirements for unrealized gains and losses for Level 3 fair value measurements and significant observable inputs used to develop Level 3 fair value measurements. There was not a material impact to financial statements upon adoption. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. Fair value is based upon assumptions that market participants would use when pricing an asset or liability. We use the following fair value hierarchy, which prioritizes valuation technique inputs used to measure fair value into three broad levels: • Level 1: Quoted prices in active markets for identical assets and liabilities that we have the ability to access at the measurement date. • Level 2: Inputs (other than quoted prices included within Level 1) that are either directly or indirectly observable for the asset or liability, including (i) quoted prices for similar assets or liabilities in active markets, (ii) quoted prices for identical or similar assets or liabilities in inactive markets, (iii) inputs other than quoted prices that are observable for the asset or liability, and (iv) inputs that are derived from observable market data by correlation or other means. • Level 3: Unobservable inputs for the asset or liability including situations where there is little, if any, market activity for the asset or liability. Items categorized in Level 3 include the estimated fair values of property, plant and equipment, intangible assets, and goodwill acquired in a business combination. The fair value hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable inputs (Level 3). In some cases, the inputs used to measure fair value might fall into different levels of the fair value hierarchy. The lowest level input that is significant to a fair value measurement determines the applicable level in the fair value hierarchy. Assessing the significance of a particular input to a fair value measurement requires judgment, considering factors specific to the asset or liability. Intangible Assets Our intangible assets include various trademarks, service marks and technical knowledge acquired in our February 2018 business combination. We amortize our intangible assets on a straight-line basis over the estimated useful lives of the assets. We evaluate the carrying value of our amortizable intangible assets for potential impairment when events and circumstances warrant such a review. As of March 31, 2021, our intangible assets were fully amortized. As of December 31, 2020, our intangible assets, net of amortization, were approximately $38 thousand. The amount of amortization was $58 thousand for the three months ended September 30, 2020 and $38 thousand and $175 thousand for the nine months ended September 30, 2021 and 2020, respectively. Goodwill Goodwill represents the excess of the consideration paid for the acquired business, in our February 2018 business combination, over the fair value of the individual assets acquired, net of liabilities assumed. Goodwill at September 30, 2021 is deductible for income tax purposes. Goodwill is not amortized, but instead is evaluated for impairment at least annually. We perform our annual assessment of impairment during the fourth quarter of our fiscal year, and more frequently if circumstances warrant. As of September 30, 2021 and December 31, 2020, our goodwill was approximately $3.2 million. Recent Accounting Pronouncements Changes to U.S. GAAP are established by the Financial Accounting Standards Board ("FASB") in the form of Accounting Standards Updates ("ASUs") to the FASB's Accounting Standards Codification ("ASC"). We consider the applicability and impact of all ASUs. ASUs were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial statements and notes thereto. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition Disaggregated net sales by major source: Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, (in thousands) Rooftop units $ 103,900 $ 102,750 $ 298,695 $ 312,725 Condensing units 6,797 6,304 20,630 15,307 Air handlers 6,279 5,805 19,958 18,068 Outdoor mechanical rooms 208 867 1,183 2,216 Water source heat pumps 5,215 6,770 16,305 14,269 Part sales 12,102 10,484 30,325 24,562 Other 4,070 1,792 11,139 10,704 Net Sales $ 138,571 $ 134,772 $ 398,235 $ 397,851 Disaggregated units sold by major source: Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, Rooftop units 3,746 4,372 11,362 12,179 Condensing units 560 593 1,696 1,447 Air handlers 646 534 1,846 1,545 Outdoor mechanical rooms 2 6 22 22 Water source heat pumps 1,576 1,847 5,108 5,109 Total Units 6,530 7,352 20,034 20,302 The Company recognizes revenue, presented net of sales tax, when it satisfies the performance obligation in its contracts. The primary performance obligation in our contract is delivery of the requested manufactured equipment. Most of the Company’s products are highly customized, cannot be resold to other customers and the cost of rework to be resold is not economical. The Company has a formal cancellation policy and generally does not accept returns on these units. As a result, many of the Company’s products do not have an alternative use and therefore, for these products we recognize revenue over the time it takes to produce the unit. For all other products that are part sales or standardized units, we satisfy the performance obligation when the control is passed to the customer, generally at time of shipment. Final sales prices are fixed based on purchase orders. Sales allowances and customer incentives are treated as reductions to sales and are provided for based on historical experiences and current estimates. Sales of our products are moderately seasonal with the peak period being May-October of each year. We are responsible for billings and collections resulting from all sales transactions, most of which are initiated by our independent manufacturer representatives (“Representatives”). Representatives are national companies that are in the business of providing heating, ventilation, and air conditioning ("HVAC") units and other related products and services to customers. The end user customer orders a bundled group of products and services from the Representative and expects the Representative to fulfill the order. These additional products and services may include, without limitation, controls purchased from another manufacturer to operate the unit, start-up services, and curbs for supporting the unit (“Third Party Products”). All of these items are associated with the purchase of a HVAC unit but may be provided by the Representative or another third party. Only after the specifications are agreed to by the Representative and the customer, and the decision is made to use an AAON HVAC unit, will we receive notice of the order. We establish the amount we must receive for our HVAC unit (“minimum sales price”), but do not control the total order price that is negotiated by the Representative with the end user customer. The Representatives submit the total order price to us for invoicing and collection. The total order price includes our minimum sales price and an additional amount which may include both the Representatives’ fee and amounts due for additional products and services required by the customer. The Company is considered the principal for the equipment we design and manufacture and records that revenue. The Company has no control over the Third Party Products to the end customer and the Company is under no obligation related to the Third Party Products. Amounts related to Third Party Products are not recognized as revenue but are recorded as a liability and are included in accrued liabilities on the consolidated balance sheet. The Representatives’ fee and Third Party Products amounts (“Due to Representatives”) are paid only after all amounts associated with the order are collected from the customer. The amount of payments to our Representatives were $9.5 million and $11.5 million for the three months ended September 30, 2021 and 2020, respectively. The amount of payments to our Representatives were $34.5 million and $39.0 million for the nine months ended September 30, 2021 and 2020, respectively. The Company also sells extended warranties on parts for various lengths of time ranging from six months to 10 years. Revenue for these separately priced warranties is deferred and recognized on a straight-line basis over the separately priced warranty period. |
Accounts Receivable
Accounts Receivable | 9 Months Ended |
Sep. 30, 2021 | |
Receivables [Abstract] | |
Accounts Receivable | Accounts Receivable Accounts receivable and the related allowance for credit losses are as follows: September 30, December 31, 2020 (in thousands) Accounts receivable $ 59,233 $ 47,893 Less: Allowance for credit losses (477) (506) Total, net $ 58,756 $ 47,387 Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, Allowance for credit losses: (in thousands) Balance, beginning of period $ 518 $ 429 $ 506 $ 353 Provisions (recoveries) for expected credit (12) 117 — 193 losses, net of adjustments Accounts receivable written off, net of recoveries (29) — (29) — Balance, end of period $ 477 $ 546 $ 477 $ 546 |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2021 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories are valued at the lower of cost or net realizable value. Cost is determined by the first-in, first-out (“FIFO”) method. We establish an allowance for excess and obsolete inventories based on product line changes, the feasibility of substituting parts and the need for supply and replacement parts. The components of inventories and related changes in the allowance for excess and obsolete inventories account are as follows: September 30, December 31, 2020 (in thousands) Raw materials $ 97,167 $ 76,238 Work in process 4,749 2,088 Finished goods 4,929 7,154 Total, gross 106,845 85,480 Less: Allowance for excess and obsolete inventories (2,292) (3,261) Total, net $ 104,553 $ 82,219 Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, Allowance for excess and obsolete inventories: (in thousands) Balance, beginning of period $ 2,726 $ 2,373 $ 3,261 $ 2,644 Provisions for excess and obsolete 86 1,969 378 1,776 inventories Inventories written off (520) (230) (1,347) (308) Balance, end of period $ 2,292 $ 4,112 $ 2,292 $ 4,112 |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 9 Months Ended |
Sep. 30, 2021 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Cash Flow Information | Supplemental Cash Flow Information Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, Supplemental disclosures: (in thousands) Income taxes paid $ 3,167 $ 1,841 $ 5,909 $ 11,576 Non-cash investing and financing activities: Non-cash capital expenditures 1 $ (1,052) $ (4,421) $ (2,897) $ 625 1 Includes non-cash changes in accrued capital expenditures |
Warranties
Warranties | 9 Months Ended |
Sep. 30, 2021 | |
Guarantees [Abstract] | |
Warranties | Warranties The Company has product warranties with various terms ranging from one year from the date of first use or 18 months for parts to 25 years for certain heat exchangers. The Company has an obligation to replace parts if conditions under the warranty are met. A provision is made for estimated warranty costs at the time the related products are sold based upon the warranty period, historical trends, new products, and any known identifiable warranty issues. Changes in the warranty accrual are as follows: Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, Warranty accrual: (in thousands) Balance, beginning of period $ 14,008 $ 13,160 $ 13,522 $ 12,652 Payments made (1,825) (1,687) (4,834) (4,481) Provisions 1,272 2,054 4,767 5,356 Balance, end of period $ 13,455 $ 13,527 $ 13,455 $ 13,527 Warranty expense: $ 1,272 $ 2,054 $ 4,767 $ 5,356 |
Accrued Liabilities
Accrued Liabilities | 9 Months Ended |
Sep. 30, 2021 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities | Accrued Liabilities Accrued liabilities were comprised of the following: September 30, December 31, 2020 (in thousands) Warranty $ 13,455 $ 13,522 Due to representatives 8,006 8,296 Payroll 8,770 8,155 Profit sharing 2,360 2,902 Worker's compensation 303 594 Medical self-insurance 1,574 1,546 Customer prepayments 5,296 5,067 Donations 370 570 Employee vacation time 3,747 3,321 Other 4,385 2,613 Total $ 48,266 $ 46,586 |
Revolving Credit Facility
Revolving Credit Facility | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
Revolving Credit Facility | Revolving Credit Facility On July 26, 2021, the Company entered into a new revolving credit facility which provides for maximum borrowings of $30.0 million. Under the line of credit, there is one standby letter of credit totaling $1.8 million. Borrowings available under the revolving credit facility at September 30, 2021 were $28.2 million. Interest on borrowings is payable monthly at LIBOR plus 2.0%. The new revolving credit facility includes fallback language clearly defining an alternative reference rate which provides for specified replacement rates, as defined in the revolving credit facility agreement, upon a LIBOR cessation event. At the time of a LIBOR cessation event, the replacement rate self-executes without the need for negotiations or a formal amendment process. No fees are associated with the unused portion of the committed amount. The revolving credit facility expires on July 26, 2024. We had no outstanding balance under our revolving credit facility at September 30, 2021 and December 31, 2020. As of September 30, 2021, we were in compliance with our financial covenants related to the new revolving credit facility. These financial covenants require that we meet certain parameters related to our consolidated leverage ratio and our consolidated total liabilities to tangible net worth ratio. At September 30, 2021, our consolidated leverage ratio was 0.02 to 1 and met the requirement of being less than 2 to 1. Our consolidated total liabilities to tangible net worth ratio was 0.3 to 1, and met the requirement of being less than 2 to 1. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The provision (benefit) for income taxes consists of the following: Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, (in thousands) Current $ 4,508 $ 3,081 $ 8,498 $ 8,435 Deferred 19 2,615 2,766 7,676 Income tax provision $ 4,527 $ 5,696 $ 11,264 $ 16,111 The provision for income taxes differs from the amount computed by applying the Federal statutory income tax rate before the provision for income taxes. The reconciliation of the Federal statutory income tax rate to the effective income tax rate is as follows: Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, Federal statutory rate 21.0 % 21.0 % 21.0 % 21.0 % State income taxes, net of Federal benefit 3.4 2.3 3.0 4.0 Excess tax benefits (2.2) (2.3) (6.0) (3.3) Return to provision adjustments 0.6 0.5 — 0.2 Other (0.3) 0.3 (0.4) (0.8) Effective tax rate 22.5 % 21.8 % 17.6 % 21.1 % On May 21, 2021, the State of Oklahoma enacted House Bill 2960, effectively reducing the corporate income tax rate in Oklahoma from 6% to 4%. As a result of these changes, the Company adjusted its state deferred tax assets and liabilities in the second quarter of 2021 using the newly enacted rate for the periods when they are expected to be realized. This resulted in a benefit of $0.8 million included in the table above under State income taxes, net of Federal benefit, for the nine months ended September 30, 2021. During the nine months ended September 30, 2021, the Company recorded an excess tax benefit of $3.8 million as compared to $2.5 million during the same period in 2020, an increase of 54%. The increase was primarily due to timing of stock option exercises as a result of our high stock price during the three months ended March 31, 2021. We earn investment tax credits from the state of Oklahoma’s manufacturing property investment program. We use the flow-through method to account for investment tax credits earned on eligible tangible asset expenditures. Under this method, the investment tax credits are recognized as a reduction to our Oklahoma income tax expense in the year they are used. As of September 30, 2021, we have investment tax credit carryforwards of approximately $3.7 million. These credits have estimated expirations ranging from the year 2036 through 2040. The Company's estimated annual 2021 effective tax rate, excluding discrete events, is approximately 25%. We file income tax returns in the U.S., as well as various state and foreign income tax returns jurisdictions. We are subject to U.S. income tax examinations for tax years 2017 to present, and to non-U.S. income tax examinations for the tax years 2016 to present. In addition, we are subject to state and local income tax examinations for the tax years 2016 to present. The Company continues to evaluate its need to file returns in various state jurisdictions. Any interest or penalties would be recognized as a component of income tax expense. Coronavirus Aid, Relief, and Economic Security Act The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted on March 27, 2020, and includes a retroactive correction to the 2017 Tax Cuts and Jobs Act that allows for much faster depreciation of qualified improvement property that is placed in service after December 31, 2017. Under current rules, the calculation of depreciation or repair deductions for prior years can be recomputed and a one-time catch-up adjustment is allowed in the current tax year for missed deductions. The adjustment is the difference between depreciation or repair deductions claimed versus depreciation or repair deductions that could have been claimed by the end of the prior tax year and does not require amending any prior year tax returns. The Company completed the prior year adjustment and the current-year catch up with the 2019 tax return as filed in the fourth quarter of 2020 resulting in a increase to our deferred tax liability of $4.7 million. For tax years 2020 and forward, the Company includes this treatment for our qualified property placed in service. American Rescue Plan Act |
Share-Based Compensation
Share-Based Compensation | 9 Months Ended |
Sep. 30, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Share-Based Compensation | Share-Based Compensation On May 22, 2007, our stockholders adopted a Long-Term Incentive Plan (“LTIP”) which provided an additional 3.3 million shares that could be granted in the form of stock options, stock appreciation rights, restricted stock awards, performance units and performance awards, in addition to the shares from the previous plan, the 1992 Plan. Under the LTIP, the exercise price of shares granted could not be less than 100% of the fair market value at the date of the grant. On May 24, 2016, our stockholders adopted the 2016 Long-Term Incentive Plan (as amended, the "2016 Plan") which provides for approximately 8.9 million shares, comprised of 3.4 million new shares provided for under the 2016 Plan, approximately 0.4 million shares that were available for issuance under the previous LTIP that are now authorized for issuance under the 2016 Plan, approximately 2.6 million shares that were approved by the stockholders on May 15, 2018, and an additional 2.5 million shares that were approved by the stockholders on May 12, 2020. Under the 2016 Plan, shares can be granted in the form of stock options, stock appreciation rights, restricted stock awards, performance awards, dividend equivalent rights, and other awards. Under the 2016 Plan, the exercise price of shares granted may not be less than 100% of the fair market value at the date of the grant. The 2016 Plan is administered by the Compensation Committee of the Board of Directors or such other committee of the Board of Directors as is designated by the Board of Directors (the “Committee”). Membership on the Committee is limited to independent directors. The Committee determines the persons to whom awards are to be made, the type, size and terms of awards, interprets the 2016 Plan, establishes and revises rules and regulations relating to the 2016 Plan and makes any other determinations that it believes necessary for the administration of the 2016 Plan. The Committee may delegate certain duties to one or more officers of the Company as provided in the 2016 Plan. Options The total pre-tax compensation cost related to unvested stock options not yet recognized as of September 30, 2021 is $19.5 million and is expected to be recognized over a weighted average period of approximately 2.5 years. The following weighted average assumptions were used to determine the fair value of the stock options granted on the original grant date for expense recognition purposes for options granted during the nine months ended September 30, 2021 and 2020 using a Black Scholes-Merton Model: Nine months ended September 30, 2021 September 30, 2020 Directors and SLT 1 : Expected dividend rate $0.38 $0.33 Expected volatility 35.78% 31.63% Risk-free interest rate 0.51% 0.64% Expected life (in years) 4.0 5.0 Employees: Expected dividend rate $0.38 $0.32 Expected volatility 38.69% 31.31% Risk-free interest rate 0.30% 0.68% Expected life (in years) 3.0 5.0 1 Senior Leadership Team ("SLT") consists of officers and key members of management. The expected term of the options is based on evaluations of historical and expected future employee exercise behavior. The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected life at the grant date. Volatility is based on historical volatility of our stock over time periods equal to the expected life at grant date. The following is a summary of stock options vested and exercisable as of September 30, 2021: Range of Number Weighted Average Remaining Contractual Life (in years) Weighted Intrinsic Value ( in thousands ) $ 8.17 - $ 40.87 593,901 4.88 $ 30.33 $ 20,790 $ 41.37 - $ 41.37 415,541 6.72 41.37 9,961 $ 42.42 - $ 73.36 139,605 8.36 45.08 2,828 Total 1,149,047 5.97 $ 36.12 $ 33,579 The following is a summary of stock options vested and exercisable as of September 30, 2020: Range of Number Weighted Average Remaining Contractual Life (in years) Weighted Intrinsic Value ( in thousands ) $ 7.18 - $ 36.95 526,235 5.51 $ 28.03 $ 16,957 $ 37.00 - $ 40.87 1,978 7.34 38.50 43 $ 41.37 - $ 60.32 210,496 8.19 41.53 3,940 Total 738,709 6.28 $ 31.90 $ 20,940 A summary of stock option activity under the plans is as follows: Stock Options Shares Weighted Outstanding at December 31, 2020 3,752,945 $ 39.00 Granted 360,980 72.93 Exercised (412,284) 35.35 Forfeited or Expired (140,077) 48.51 Outstanding at September 30, 2021 3,561,564 $ 42.49 Exercisable at September 30, 2021 1,149,047 $ 36.12 The total intrinsic value of options exercised during the nine months ended September 30, 2021 and 2020 was $15.1 million and $12.1 million, respectively. The cash received from options exercised during the nine months ended September 30, 2021 and 2020 was $14.6 million and $18.5 million, respectively. The impact of these cash receipts is included in financing activities in the accompanying Consolidated Statements of Cash Flows. Performance Awards We have awarded performance restricted stock units ("PSUs") to certain officers and key employees under our 2016 Plan. Unlike our restricted stock awards, these PSUs are not considered legally outstanding and do not accrue dividends during the vesting period. These PSUs vest based on the level of achievement with respect to the Company's three year total shareholder return ("TSR") benchmarked against similar companies included in the capital goods sector of the S&P SmallCap 600 Index. The TSR measurement period is the three years ending December 31, 2023. At the end of the measurement period, each award will be converted into common stock at 0% to 200% of the PSUs held, depending on overall TSR as compared to the S&P SmallCap 600 Index benchmark companies. The total pre-tax compensation cost related to unvested PSUs not yet recognized as of September 30, 2021 is $1.1 million and is expected to be recognized over a weighted average period of approximately 2.2 years. The following weighted average assumptions were used to determine the fair value of the PSUs granted on the original grant date for expense recognition purposes for PSUs granted during the nine months ended September 30, 2021 using a Monte Carlo Model: Nine months ended September 30, 2021 Expected dividend rate $0.38 Expected volatility 39.10% Risk-free interest rate 0.28% Expected life (in years) 2.60 The expected term of the PSUs is based on the remaining performance period ending December 31, 2023. The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected life at the grant date. Volatility is based on historical volatility of our stock over time periods equal to the expected life at grant date. A summary of the unvested PSUs is as follows: Shares Weighted Unvested at December 31, 2020 — $ — Granted 18,483 87.78 Vested — — Forfeited (1,632) 87.78 Unvested at September 30, 2021 16,851 $ 87.78 Restricted Stock The fair value of restricted stock awards is based on the fair market value of AAON, Inc. common stock on the respective grant dates, reduced for the present value of dividends. At September 30, 2021, unrecognized compensation cost related to unvested restricted stock awards was approximately $4.8 million, which is expected to be recognized over a weighted average period of approximately 2.3 years. A summary of the unvested restricted stock awards is as follows: Shares Weighted Unvested at December 31, 2020 224,691 $ 38.22 Granted 32,600 69.12 Vested (89,523) 35.85 Forfeited (7,051) 49.81 Unvested at September 30, 2021 160,717 $ 45.29 Share-Based Compensation A summary of share-based compensation is as follows: Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, Grant date fair value of awards during the period: (in thousands) Options $ 152 $ 258 $ 6,870 $ 12,332 Performance awards 32 — 1,622 — Restricted stock 80 — 2,253 3,316 Total $ 264 $ 258 $ 10,745 $ 15,648 Share-based compensation expense: Options $ 2,167 $ 2,208 $ 6,594 $ 6,136 Performance awards 166 — 355 — Restricted stock 658 644 1,835 2,410 Total $ 2,991 $ 2,852 $ 8,784 $ 8,546 Income tax benefit/(deficiency) related to share-based compensation: Options $ 440 $ 579 $ 3,010 $ 1,990 Restricted stock 1 9 820 503 Total $ 441 $ 588 $ 3,830 $ 2,493 Share-based compensation expense is recognized on a straight-line basis over the service period of the related stock options and restricted stock awards. Historically, stock options and restricted stock awards, granted to employees, vest at a rate of 20% per year. Restricted stock awards granted to directors historically vest one-third each year or, if granted on or after May 2019, vest over the shorter of directors' remaining elected term or one-third each year. As of March 2021, all new grants of stock options and restricted stock awards, granted to employees, vest at a rate of 33.3% per year. Forfeitures are accounted for as they occur. Historically, if the employee or director is retirement eligible (as defined by the applicable LTIP or 2016 Plan) or becomes retirement eligible during service period of the related stock options and restricted stock award, the service period (and compensation expense recognition) is the lesser of 1) the grant date, if retirement eligible on grant date, or 2) the period between grant date and retirement eligible date. All stock options and restricted stock awards granted on or after March 1, 2020 to retirement eligible employees or directors contain a one Share-based compensation expense is recognized on a straight-line basis over the service period of the performance awards. The performance awards cliff vest at the end of the performance period. The performance awards are subject to several service conditions and market conditions, as defined by the performance restricted stock unit agreement, which allows the holder to retain a pro-rata amount of awards as a result of certain termination conditions, retirement, change in common control or death. Forfeitures are accounted for as they occur. |
Employee Benefits
Employee Benefits | 9 Months Ended |
Sep. 30, 2021 | |
Retirement Benefits [Abstract] | |
Employee Benefits | Employee Benefits Defined Contribution Plan - 401(k ) We sponsor a defined contribution plan (the “Plan”). Eligible employees may make contributions in accordance with the Plan and IRS guidelines. In addition to the traditional 401(k), eligible employees are given the option of making an after-tax contribution to a Roth 401(k) or a combination of both. The Plan provides for automatic enrollment and for an automatic increase to the deferral percentage at January 1st of each year and each year thereafter. Eligible employees are automatically enrolled in the Plan at a 6% deferral rate and currently contributing employees deferral rates will be increased to 6% unless their current rate is above 6% or the employee elects to decline the automatic enrollment or increase. Administrative expenses are paid for by Plan participants. The Company paid no administrative expenses during the nine months ended September 30, 2021 and 2020. The Company matches 175%, up to 6%, of employee contributions of eligible compensation in Company stock. The Company match vests over six years, with 20% vesting each year after two years of service. Additionally, Plan participant forfeitures are used to reduce the cost of the Company contributions. Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, (in thousands) Contributions, net of forfeitures, made to the defined contribution plan $ 2,526 $ 2,242 $ 6,924 $ 6,791 Profit Sharing Bonus Plan We maintain a discretionary profit sharing bonus plan under which approximately 10% of pre-tax profit is paid to eligible employees on a quarterly basis in order to reward employee productivity. Eligible employees are regular full-time employees who are actively employed and working on the first and last days of the calendar quarter and who were employed full-time for at least three full months prior to the beginning of the calendar quarter, excluding the Company's SLT. Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, (in thousands) Profit sharing bonus plan expense $ 2,358 $ 3,000 $ 7,409 $ 8,691 Employee Medical Plan We self-insure for our employees' health insurance. Eligible employees are regular full-time employees who are actively employed and working. Participants are expected to pay a portion of the premium costs for coverage of the benefits provided under the Plan. We estimate our self-insurance liabilities using an analysis provided by our claims administrator and our historical claims experience. In addition, the Company matches 175% of a participating employee's allowed contributions to a qualified health saving account to assist employees with our health insurance plan deductibles. Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, (in thousands) Medical claim payments $ 2,342 $ 2,985 $ 6,188 $ 6,843 Health saving account contributions 888 890 2,621 2,663 |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2021 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic net income per share is calculated by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted net income per share assumes the conversion of all potentially dilutive securities and is calculated by dividing net income by the sum of the weighted average number of shares of common stock outstanding plus all potentially dilutive securities. Dilutive common shares consist primarily of stock options, restricted stock awards and performance restricted stock units. The following table sets forth the computation of basic and diluted earnings per share: Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, Numerator: (in thousands, except share and per share data) Net income $ 15,581 $ 20,460 $ 52,572 $ 60,117 Denominator: Basic weighted average shares 52,420,711 52,260,551 52,392,300 52,174,705 Effect of dilutive stock options, restricted stock 1,125,802 890,744 1,272,697 780,344 and performance awards Diluted weighted average shares 53,546,513 53,151,295 53,664,997 52,955,049 Earnings per share: Basic $ 0.30 $ 0.39 $ 1.00 $ 1.15 Diluted $ 0.29 $ 0.38 $ 0.98 $ 1.14 Anti-dilutive shares: Shares 375,428 118,832 291,236 473,295 |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2021 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Stock Repurchases The Board has authorized three stock repurchase programs for the Company. The Company may purchase shares on the open market from time to time, up to a total of 5.7 million shares. The Board must authorize the timing and amount of these purchases and all repurchases are in accordance with the rules and regulations of the SEC allowing the Company to repurchase shares from the open market. Our open market repurchase programs are as follows: Effective Date Authorized Repurchase $ Expiration Date May 16, 2018 1 $15 million March 1, 2019 March 5, 2019 1 $20 million March 4, 2020 March 13, 2020 $20 million ** 2 1 The 2018 and 2019 purchase authorizations were executed under 10b5-1 programs. 2 Expiration Date is at Board's discretion. The Company is authorized to effectuate repurchases of the Company's common stock on terms and conditions approved in advance by the Board. The Company also has a stock repurchase arrangement by which employee-participants in our 401(k) savings and investment plan are entitled to have shares of AAON, Inc. stock in their accounts sold to the Company. The maximum number of shares to be repurchased is contingent upon the number of shares sold by employee-participants. Lastly, the Company repurchases shares of AAON, Inc. stock from certain of its directors and employees for payment of statutory tax withholdings on stock transactions. All other repurchases from directors or employees are contingent upon Board approval. All repurchases are done at current market prices. Our repurchase activity is as follows: Nine Months Ended September 30, 2021 September 30, 2020 (in thousands, except share and per share data) Program Shares Total $ $ per share Shares Total $ $ per share Open market — $ — $ — 103,689 $ 4,987 $ 48.10 401(k) 220,336 15,014 68.14 303,112 16,403 54.12 Directors and employees 21,779 1,537 70.57 22,655 1,130 49.88 Total 242,115 $ 16,551 $ 68.36 429,456 $ 22,520 $ 52.44 Our repurchase activity since Company inception, including our current authorized stock repurchase programs, are as follows: Inception to September 30, 2021 (in thousands, except share and per share data) Program Shares Total $ $ per share Open market 4,205,255 $ 74,793 $ 17.79 401(k) 8,126,996 160,014 19.69 Directors and employees 2,026,980 22,288 11.00 Total 14,359,231 $ 257,095 $ 17.90 Subsequent to September 30, 2021 and through November 1, 2021, the Company repurchased 19,545 shares for $1.3 million from our 401(k) savings and investment plan. Dividends At the discretion of the Board, we pay semi-annual cash dividends. Board approval is required to determine the date of declaration and amount for each semi-annual dividend payment. Our recent dividends are as follows: Declaration Date Record Date Payment Date Dividend per Share May 15, 2020 June 3, 2020 July 1, 2020 $0.19 November 10, 2020 November 27, 2020 December 18, 2020 $0.19 May 17, 2021 June 3, 2021 July 1, 2021 $0.19 |
New Market Tax Credit
New Market Tax Credit | 9 Months Ended |
Sep. 30, 2021 | |
New Market Tax Credit [Abstract] | |
New Market Tax Credit | New Markets Tax Credit On October 24, 2019, the Company entered into a transaction with a subsidiary of an unrelated third-party financial institution (the “Investor”) and a certified Community Development Entity under a qualified New Markets Tax Credit (“NMTC”) program pursuant to Section 45D of the Internal Revenue Code of 1986, as amended, related to an investment in plant and equipment to facilitate the expansion of our Longview, Texas manufacturing operations (the “Project”). In connection with the NMTC transaction, the Company received a $23.0 million NMTC allocation for the Project and secured low interest financing and the potential for future debt forgiveness related to the Project. Upon closing of the NMTC transaction, the Company provided an aggregate of approximately $15.9 million to the Investor, in the form of a loan receivable, with a term of twenty-five years, bearing an interest rate of 1.0%. This $15.9 million in proceeds plus capital contributed from the Investor was used to make an aggregate $22.5 million loan to a subsidiary of the Company. This financing arrangement is secured by equipment at the Company's Longview, Texas facilities and a guarantee from the Company, including an unconditional guarantee of NMTCs. This transaction also includes a put/call feature that either of which can be exercised at the end of the seven-year compliance period. The Investor may exercise its put option or the Company can exercise the call, both of which could serve to trigger forgiveness of a portion of the debt. The Investor's interest of $6.3 million is recorded in New market tax credit obligation on the consolidated balance sheet. The Company incurred approximately $0.3 million of debt issuance costs related to the above transactions, which are being amortized over the life of the transaction. The Investor is subject to 100 percent recapture of the NMTC it receives for a period of seven years, as provided in the Internal Revenue Code and applicable U.S. Treasury regulations in the event that the financing facility of the Borrower under the transaction (AAON Coil Products, Inc.) becomes ineligible for NMTC treatment per the Internal Revenue Code requirements. The Company is required to be in compliance with various regulations and contractual provisions that apply to the NMTC arrangement. Noncompliance with applicable requirements could result in the Investor’s projected tax benefits not being realized and, therefore, require the Company to indemnify the Investor for any loss or recapture of the NMTC related to the financing until such time as the recapture provisions have expired under the applicable statute of limitations. The Company does not anticipate any credit recapture will be required in connection with this financing arrangement. The Investor and its majority owned community development entity are considered VIEs and the Company is the primary beneficiary of the VIEs. Because the Company is the primary beneficiary of the VIEs, they have been included in the consolidated financial statements. There are no other assets, liabilities or transaction in these VIEs outside of the financing transactions executed as part of the NMTC arrangement. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies We are subject to various claims and legal actions that arise in the ordinary course of business. We closely monitor these claims and legal actions and frequently consult with our legal counsel to determine whether they may, when resolved, have a material adverse effect on our financial position, results of operations or cash flows and we accrue and/or disclose loss contingencies as appropriate. We have concluded that the likelihood is remote that the ultimate resolution of any pending litigation or claims will be material or have a material adverse effect on the Company's business, financial position, results of operations and/or cash flows. We are occasionally party to short-term, cancellable and occasionally non-cancellable, fixed price contracts with major suppliers for the purchase of raw material and component parts. We expect to receive delivery of raw materials for use in our manufacturing operations. These contracts are not accounted for as derivative instruments because they meet the normal purchase and normal sales exemption. We had no material contractual purchase obligations as of September 30, 2021. |
Related Parties
Related Parties | 9 Months Ended |
Sep. 30, 2021 | |
Related Party Transactions [Abstract] | |
Related Parties | Related PartiesThe Company purchases some supplies from an entity controlled by the Company’s Executive Chairman. The Company sometimes makes sales to the Executive Chairman and CEO/President. Additionally, the Company sells units to an entity owned by a member of the CEO/President's immediate family. This entity is also one of the Company’s Representatives and as such, the Company makes payments to the entity for Third Party Products. The following is a summary of transactions and balance with affiliates: Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, (in thousands) Sales to affiliates $ 1,560 $ 662 $ 2,372 $ 2,550 Payments to affiliates 23 110 153 207 September 30, December 31, (in thousands) Due from affiliates $ 544 $ 342 Due to affiliates — — |
Segments
Segments | 9 Months Ended |
Sep. 30, 2021 | |
Segment Reporting [Abstract] | |
Segments | Segments The following table summarizes certain financial data related to our segments. Transactions between segments are recorded based on prices negotiated between the segments. Sales of units represent the selling price of our units plus freight and other miscellaneous charges less any returns and allowances. Parts include sales of purchased and fabricated parts including our coils along with the related freight and less any returns and allowances. The “Other” category in the table below includes certain expenses that are not allocated to the reportable segments and are primarily engineering related expenses. Asset information by segment is not easily identifiable or reviewed by the chief operating decision maker. As such, this information is not included below. Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, (in thousands) Sales Units $ 125,862 $ 123,827 $ 366,597 $ 372,267 Parts - External 12,977 11,222 32,369 26,162 Parts - Inter-segment 6,325 5,659 19,005 18,074 Other (268) (277) (731) (578) Eliminations (6,325) (5,659) (19,005) (18,074) Net sales $ 138,571 $ 134,772 $ 398,235 $ 397,851 Gross Profit Units $ 35,167 $ 41,675 $ 111,247 $ 128,523 Parts - External 5,072 4,917 12,385 11,641 Parts - Inter-segment (366) (758) (527) (1,587) Other (4,220) (5,744) (12,349) (18,238) Eliminations 366 758 527 1,587 Net gross profit $ 36,019 $ 40,848 $ 111,283 $ 121,926 |
General (Policies)
General (Policies) | 9 Months Ended |
Sep. 30, 2021 | |
Basis of Presentation and Significant Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Because these estimates and assumptions require significant judgment, actual results could differ from those estimates and could have a significant impact on our results of operations, financial position and cash flows. We reevaluate our estimates and assumptions as needed, but at a minimum on a quarterly basis. The most significant estimates include, but are not limited to, inventory reserves, warranty accrual, worker's compensation accrual, medical insurance accrual, income taxes and share-based compensation. Actual results could differ materially from those estimates. |
Fair Value Measurements | Fair Value Measurements We adopted ASU No. 2018-13, Fair Value Measurements (Topic 820) , as amended, as of January 1, 2020. The ASU includes additional disclosure requirements for unrealized gains and losses for Level 3 fair value measurements and significant observable inputs used to develop Level 3 fair value measurements. There was not a material impact to financial statements upon adoption. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. Fair value is based upon assumptions that market participants would use when pricing an asset or liability. We use the following fair value hierarchy, which prioritizes valuation technique inputs used to measure fair value into three broad levels: • Level 1: Quoted prices in active markets for identical assets and liabilities that we have the ability to access at the measurement date. • Level 2: Inputs (other than quoted prices included within Level 1) that are either directly or indirectly observable for the asset or liability, including (i) quoted prices for similar assets or liabilities in active markets, (ii) quoted prices for identical or similar assets or liabilities in inactive markets, (iii) inputs other than quoted prices that are observable for the asset or liability, and (iv) inputs that are derived from observable market data by correlation or other means. • Level 3: Unobservable inputs for the asset or liability including situations where there is little, if any, market activity for the asset or liability. Items categorized in Level 3 include the estimated fair values of property, plant and equipment, intangible assets, and goodwill acquired in a business combination. The fair value hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable inputs (Level 3). In some cases, the inputs used to measure fair value might fall into different levels of the fair value hierarchy. The lowest level input that is significant to a fair value measurement determines the applicable level in the fair value hierarchy. Assessing the significance of a particular input to a fair value measurement requires judgment, considering factors specific to the asset or liability. |
Intangible Assets | Intangible Assets Our intangible assets include various trademarks, service marks and technical knowledge acquired in our February 2018 business combination. We amortize our intangible assets on a straight-line basis over the estimated useful lives of the assets. We evaluate the carrying value of our amortizable intangible assets for potential impairment when events and circumstances warrant such a review. As of March 31, 2021, our intangible assets were fully amortized. As of December 31, 2020, our intangible assets, net of amortization, were approximately $38 thousand. The amount of amortization was $58 thousand for the three months ended September 30, 2020 and $38 thousand and $175 thousand for the nine months ended September 30, 2021 and 2020, respectively. |
Goodwill | Goodwill Goodwill represents the excess of the consideration paid for the acquired business, in our February 2018 business combination, over the fair value of the individual assets acquired, net of liabilities assumed. Goodwill at September 30, 2021 is deductible for income tax purposes. Goodwill is not amortized, but instead is evaluated for impairment at least annually. We perform our annual assessment of impairment during the fourth quarter of our fiscal year, and more frequently if circumstances warrant. As of September 30, 2021 and December 31, 2020, our goodwill was approximately $3.2 million. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Changes to U.S. GAAP are established by the Financial Accounting Standards Board ("FASB") in the form of Accounting Standards Updates ("ASUs") to the FASB's Accounting Standards Codification ("ASC"). We consider the applicability and impact of all ASUs. ASUs were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial statements and notes thereto. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue | Disaggregated net sales by major source: Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, (in thousands) Rooftop units $ 103,900 $ 102,750 $ 298,695 $ 312,725 Condensing units 6,797 6,304 20,630 15,307 Air handlers 6,279 5,805 19,958 18,068 Outdoor mechanical rooms 208 867 1,183 2,216 Water source heat pumps 5,215 6,770 16,305 14,269 Part sales 12,102 10,484 30,325 24,562 Other 4,070 1,792 11,139 10,704 Net Sales $ 138,571 $ 134,772 $ 398,235 $ 397,851 Disaggregated units sold by major source: Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, Rooftop units 3,746 4,372 11,362 12,179 Condensing units 560 593 1,696 1,447 Air handlers 646 534 1,846 1,545 Outdoor mechanical rooms 2 6 22 22 Water source heat pumps 1,576 1,847 5,108 5,109 Total Units 6,530 7,352 20,034 20,302 |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Receivables [Abstract] | |
Accounts Receivable | September 30, December 31, 2020 (in thousands) Accounts receivable $ 59,233 $ 47,893 Less: Allowance for credit losses (477) (506) Total, net $ 58,756 $ 47,387 |
Allowance for Doubtful Accounts | Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, Allowance for credit losses: (in thousands) Balance, beginning of period $ 518 $ 429 $ 506 $ 353 Provisions (recoveries) for expected credit (12) 117 — 193 losses, net of adjustments Accounts receivable written off, net of recoveries (29) — (29) — Balance, end of period $ 477 $ 546 $ 477 $ 546 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Inventory Disclosure [Abstract] | |
Inventories | The components of inventories and related changes in the allowance for excess and obsolete inventories account are as follows: September 30, December 31, 2020 (in thousands) Raw materials $ 97,167 $ 76,238 Work in process 4,749 2,088 Finished goods 4,929 7,154 Total, gross 106,845 85,480 Less: Allowance for excess and obsolete inventories (2,292) (3,261) Total, net $ 104,553 $ 82,219 |
Inventories (Allowance) | Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, Allowance for excess and obsolete inventories: (in thousands) Balance, beginning of period $ 2,726 $ 2,373 $ 3,261 $ 2,644 Provisions for excess and obsolete 86 1,969 378 1,776 inventories Inventories written off (520) (230) (1,347) (308) Balance, end of period $ 2,292 $ 4,112 $ 2,292 $ 4,112 |
Supplemental Cash Flow Inform_2
Supplemental Cash Flow Information (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Cash Flow Information | Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, Supplemental disclosures: (in thousands) Income taxes paid $ 3,167 $ 1,841 $ 5,909 $ 11,576 Non-cash investing and financing activities: Non-cash capital expenditures 1 $ (1,052) $ (4,421) $ (2,897) $ 625 1 Includes non-cash changes in accrued capital expenditures |
Warranties (Tables)
Warranties (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Guarantees [Abstract] | |
Warranty | Changes in the warranty accrual are as follows: Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, Warranty accrual: (in thousands) Balance, beginning of period $ 14,008 $ 13,160 $ 13,522 $ 12,652 Payments made (1,825) (1,687) (4,834) (4,481) Provisions 1,272 2,054 4,767 5,356 Balance, end of period $ 13,455 $ 13,527 $ 13,455 $ 13,527 Warranty expense: $ 1,272 $ 2,054 $ 4,767 $ 5,356 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities | Accrued liabilities were comprised of the following: September 30, December 31, 2020 (in thousands) Warranty $ 13,455 $ 13,522 Due to representatives 8,006 8,296 Payroll 8,770 8,155 Profit sharing 2,360 2,902 Worker's compensation 303 594 Medical self-insurance 1,574 1,546 Customer prepayments 5,296 5,067 Donations 370 570 Employee vacation time 3,747 3,321 Other 4,385 2,613 Total $ 48,266 $ 46,586 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense (Benefit) | The provision (benefit) for income taxes consists of the following: Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, (in thousands) Current $ 4,508 $ 3,081 $ 8,498 $ 8,435 Deferred 19 2,615 2,766 7,676 Income tax provision $ 4,527 $ 5,696 $ 11,264 $ 16,111 |
Schedule of Effective Income Tax Rate Reconciliation | The reconciliation of the Federal statutory income tax rate to the effective income tax rate is as follows: Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, Federal statutory rate 21.0 % 21.0 % 21.0 % 21.0 % State income taxes, net of Federal benefit 3.4 2.3 3.0 4.0 Excess tax benefits (2.2) (2.3) (6.0) (3.3) Return to provision adjustments 0.6 0.5 — 0.2 Other (0.3) 0.3 (0.4) (0.8) Effective tax rate 22.5 % 21.8 % 17.6 % 21.1 % |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Summary of Stock Option Assumptions | The following weighted average assumptions were used to determine the fair value of the stock options granted on the original grant date for expense recognition purposes for options granted during the nine months ended September 30, 2021 and 2020 using a Black Scholes-Merton Model: Nine months ended September 30, 2021 September 30, 2020 Directors and SLT 1 : Expected dividend rate $0.38 $0.33 Expected volatility 35.78% 31.63% Risk-free interest rate 0.51% 0.64% Expected life (in years) 4.0 5.0 Employees: Expected dividend rate $0.38 $0.32 Expected volatility 38.69% 31.31% Risk-free interest rate 0.30% 0.68% Expected life (in years) 3.0 5.0 1 Senior Leadership Team ("SLT") consists of officers and key members of management. The following weighted average assumptions were used to determine the fair value of the PSUs granted on the original grant date for expense recognition purposes for PSUs granted during the nine months ended September 30, 2021 using a Monte Carlo Model: Nine months ended September 30, 2021 Expected dividend rate $0.38 Expected volatility 39.10% Risk-free interest rate 0.28% Expected life (in years) 2.60 |
Summary of Stock Options Outstanding | The following is a summary of stock options vested and exercisable as of September 30, 2021: Range of Number Weighted Average Remaining Contractual Life (in years) Weighted Intrinsic Value ( in thousands ) $ 8.17 - $ 40.87 593,901 4.88 $ 30.33 $ 20,790 $ 41.37 - $ 41.37 415,541 6.72 41.37 9,961 $ 42.42 - $ 73.36 139,605 8.36 45.08 2,828 Total 1,149,047 5.97 $ 36.12 $ 33,579 The following is a summary of stock options vested and exercisable as of September 30, 2020: Range of Number Weighted Average Remaining Contractual Life (in years) Weighted Intrinsic Value ( in thousands ) $ 7.18 - $ 36.95 526,235 5.51 $ 28.03 $ 16,957 $ 37.00 - $ 40.87 1,978 7.34 38.50 43 $ 41.37 - $ 60.32 210,496 8.19 41.53 3,940 Total 738,709 6.28 $ 31.90 $ 20,940 |
Summary of Stock Option Activity | A summary of stock option activity under the plans is as follows: Stock Options Shares Weighted Outstanding at December 31, 2020 3,752,945 $ 39.00 Granted 360,980 72.93 Exercised (412,284) 35.35 Forfeited or Expired (140,077) 48.51 Outstanding at September 30, 2021 3,561,564 $ 42.49 Exercisable at September 30, 2021 1,149,047 $ 36.12 |
Summary of Unvested Restricted Stock Awards | A summary of the unvested restricted stock awards is as follows: Shares Weighted Unvested at December 31, 2020 224,691 $ 38.22 Granted 32,600 69.12 Vested (89,523) 35.85 Forfeited (7,051) 49.81 Unvested at September 30, 2021 160,717 $ 45.29 |
Schedule of Nonvested Performance-based Units Activity | A summary of the unvested PSUs is as follows: Shares Weighted Unvested at December 31, 2020 — $ — Granted 18,483 87.78 Vested — — Forfeited (1,632) 87.78 Unvested at September 30, 2021 16,851 $ 87.78 |
Summary of Share-Based Compensation Expense | A summary of share-based compensation is as follows: Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, Grant date fair value of awards during the period: (in thousands) Options $ 152 $ 258 $ 6,870 $ 12,332 Performance awards 32 — 1,622 — Restricted stock 80 — 2,253 3,316 Total $ 264 $ 258 $ 10,745 $ 15,648 Share-based compensation expense: Options $ 2,167 $ 2,208 $ 6,594 $ 6,136 Performance awards 166 — 355 — Restricted stock 658 644 1,835 2,410 Total $ 2,991 $ 2,852 $ 8,784 $ 8,546 Income tax benefit/(deficiency) related to share-based compensation: Options $ 440 $ 579 $ 3,010 $ 1,990 Restricted stock 1 9 820 503 Total $ 441 $ 588 $ 3,830 $ 2,493 |
Employee Benefits (Tables)
Employee Benefits (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Retirement Benefits [Abstract] | |
Schedule of Contributions Made to Defined Contribution Plan | The Company matches 175%, up to 6%, of employee contributions of eligible compensation in Company stock. The Company match vests over six years, with 20% vesting each year after two years of service. Additionally, Plan participant forfeitures are used to reduce the cost of the Company contributions. Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, (in thousands) Contributions, net of forfeitures, made to the defined contribution plan $ 2,526 $ 2,242 $ 6,924 $ 6,791 |
Schedule of Profit Sharing Bonus Plan | We maintain a discretionary profit sharing bonus plan under which approximately 10% of pre-tax profit is paid to eligible employees on a quarterly basis in order to reward employee productivity. Eligible employees are regular full-time employees who are actively employed and working on the first and last days of the calendar quarter and who were employed full-time for at least three full months prior to the beginning of the calendar quarter, excluding the Company's SLT. Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, (in thousands) Profit sharing bonus plan expense $ 2,358 $ 3,000 $ 7,409 $ 8,691 |
Schedule of Employee Medical Plan | We self-insure for our employees' health insurance. Eligible employees are regular full-time employees who are actively employed and working. Participants are expected to pay a portion of the premium costs for coverage of the benefits provided under the Plan. We estimate our self-insurance liabilities using an analysis provided by our claims administrator and our historical claims experience. In addition, the Company matches 175% of a participating employee's allowed contributions to a qualified health saving account to assist employees with our health insurance plan deductibles. Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, (in thousands) Medical claim payments $ 2,342 $ 2,985 $ 6,188 $ 6,843 Health saving account contributions 888 890 2,621 2,663 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | The following table sets forth the computation of basic and diluted earnings per share: Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, Numerator: (in thousands, except share and per share data) Net income $ 15,581 $ 20,460 $ 52,572 $ 60,117 Denominator: Basic weighted average shares 52,420,711 52,260,551 52,392,300 52,174,705 Effect of dilutive stock options, restricted stock 1,125,802 890,744 1,272,697 780,344 and performance awards Diluted weighted average shares 53,546,513 53,151,295 53,664,997 52,955,049 Earnings per share: Basic $ 0.30 $ 0.39 $ 1.00 $ 1.15 Diluted $ 0.29 $ 0.38 $ 0.98 $ 1.14 Anti-dilutive shares: Shares 375,428 118,832 291,236 473,295 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Market Repurchase | Our open market repurchase programs are as follows: Effective Date Authorized Repurchase $ Expiration Date May 16, 2018 1 $15 million March 1, 2019 March 5, 2019 1 $20 million March 4, 2020 March 13, 2020 $20 million ** 2 1 The 2018 and 2019 purchase authorizations were executed under 10b5-1 programs. 2 Expiration Date is at Board's discretion. The Company is authorized to effectuate repurchases of the Company's common stock on terms and conditions approved in advance by the Board. |
Schedule of Share Repurchases | Our repurchase activity is as follows: Nine Months Ended September 30, 2021 September 30, 2020 (in thousands, except share and per share data) Program Shares Total $ $ per share Shares Total $ $ per share Open market — $ — $ — 103,689 $ 4,987 $ 48.10 401(k) 220,336 15,014 68.14 303,112 16,403 54.12 Directors and employees 21,779 1,537 70.57 22,655 1,130 49.88 Total 242,115 $ 16,551 $ 68.36 429,456 $ 22,520 $ 52.44 Our repurchase activity since Company inception, including our current authorized stock repurchase programs, are as follows: Inception to September 30, 2021 (in thousands, except share and per share data) Program Shares Total $ $ per share Open market 4,205,255 $ 74,793 $ 17.79 401(k) 8,126,996 160,014 19.69 Directors and employees 2,026,980 22,288 11.00 Total 14,359,231 $ 257,095 $ 17.90 |
Schedule of Dividends Payable | Our recent dividends are as follows: Declaration Date Record Date Payment Date Dividend per Share May 15, 2020 June 3, 2020 July 1, 2020 $0.19 November 10, 2020 November 27, 2020 December 18, 2020 $0.19 May 17, 2021 June 3, 2021 July 1, 2021 $0.19 |
Related Parties (Tables)
Related Parties (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | The following is a summary of transactions and balance with affiliates: Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, (in thousands) Sales to affiliates $ 1,560 $ 662 $ 2,372 $ 2,550 Payments to affiliates 23 110 153 207 September 30, December 31, (in thousands) Due from affiliates $ 544 $ 342 Due to affiliates — — |
Segments (Tables)
Segments (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment [Table Text Block] | The following table summarizes certain financial data related to our segments. Transactions between segments are recorded based on prices negotiated between the segments. Sales of units represent the selling price of our units plus freight and other miscellaneous charges less any returns and allowances. Parts include sales of purchased and fabricated parts including our coils along with the related freight and less any returns and allowances. The “Other” category in the table below includes certain expenses that are not allocated to the reportable segments and are primarily engineering related expenses. Asset information by segment is not easily identifiable or reviewed by the chief operating decision maker. As such, this information is not included below. Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, (in thousands) Sales Units $ 125,862 $ 123,827 $ 366,597 $ 372,267 Parts - External 12,977 11,222 32,369 26,162 Parts - Inter-segment 6,325 5,659 19,005 18,074 Other (268) (277) (731) (578) Eliminations (6,325) (5,659) (19,005) (18,074) Net sales $ 138,571 $ 134,772 $ 398,235 $ 397,851 Gross Profit Units $ 35,167 $ 41,675 $ 111,247 $ 128,523 Parts - External 5,072 4,917 12,385 11,641 Parts - Inter-segment (366) (758) (527) (1,587) Other (4,220) (5,744) (12,349) (18,238) Eliminations 366 758 527 1,587 Net gross profit $ 36,019 $ 40,848 $ 111,283 $ 121,926 |
General (Details)
General (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($)numberOfVIEs | Sep. 30, 2020USD ($) | Oct. 31, 2021 | Jul. 31, 2021 | Dec. 31, 2020USD ($) | |
Basis of Presentation and Significant Accounting Policies [Abstract] | ||||||
Number of variable interest entities with directed activities | numberOfVIEs | 2 | |||||
Percent of increase in starting wages for production workforce | 7.00% | |||||
Intangible assets, net | $ 38 | |||||
Amortization of intangible assets | $ 58 | $ 38 | $ 175 | |||
Goodwill | $ 3,200 | $ 3,200 | ||||
Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Percent of cost of living increase | 3.50% |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregated Net Sales (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021USD ($)unit | Sep. 30, 2020USD ($)unit | Sep. 30, 2021USD ($)unit | Sep. 30, 2020USD ($)unit | |
Disaggregation of Revenue [Line Items] | ||||
Net Sales | $ 138,571 | $ 134,772 | $ 398,235 | $ 397,851 |
Total Units | unit | 6,530,000 | 7,352,000 | 20,034,000 | 20,302,000 |
Rooftop units | ||||
Disaggregation of Revenue [Line Items] | ||||
Net Sales | $ 103,900 | $ 102,750 | $ 298,695 | $ 312,725 |
Total Units | unit | 3,746,000 | 4,372,000 | 11,362,000 | 12,179,000 |
Condensing units | ||||
Disaggregation of Revenue [Line Items] | ||||
Net Sales | $ 6,797 | $ 6,304 | $ 20,630 | $ 15,307 |
Total Units | unit | 560,000 | 593,000 | 1,696,000 | 1,447,000 |
Air handlers | ||||
Disaggregation of Revenue [Line Items] | ||||
Net Sales | $ 6,279 | $ 5,805 | $ 19,958 | $ 18,068 |
Total Units | unit | 646,000 | 534,000 | 1,846,000 | 1,545,000 |
Outdoor mechanical rooms | ||||
Disaggregation of Revenue [Line Items] | ||||
Net Sales | $ 208 | $ 867 | $ 1,183 | $ 2,216 |
Total Units | unit | 2,000 | 6,000 | 22,000 | 22,000 |
Water source heat pumps | ||||
Disaggregation of Revenue [Line Items] | ||||
Net Sales | $ 5,215 | $ 6,770 | $ 16,305 | $ 14,269 |
Total Units | unit | 1,576,000 | 1,847,000 | 5,108,000 | 5,109,000 |
Part sales | ||||
Disaggregation of Revenue [Line Items] | ||||
Net Sales | $ 12,102 | $ 10,484 | $ 30,325 | $ 24,562 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Net Sales | $ 4,070 | $ 1,792 | $ 11,139 | $ 10,704 |
Revenue Recognition - Additiona
Revenue Recognition - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | ||||
Payments to representatives | $ 9.5 | $ 11.5 | $ 34.5 | $ 39 |
Extended product warranties, minimum length | 6 months | |||
Extended product warranties, maximum length | 10 years |
Accounts Receivable - Receivabl
Accounts Receivable - Receivables (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Receivables [Abstract] | ||
Accounts receivable | $ 59,233 | $ 47,893 |
Less: Allowance for credit losses | (477) | (506) |
Total, net | $ 58,756 | $ 47,387 |
Accounts Receivable - Allowance
Accounts Receivable - Allowance (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||||
Balance, beginning of period | $ 518 | $ 429 | $ 506 | $ 353 |
Provisions (recoveries) for expected credit losses, net of adjustments | (12) | 117 | 0 | 193 |
Accounts receivable written off, net of recoveries | (29) | 0 | (29) | 0 |
Balance, end of period | $ 477 | $ 546 | $ 477 | $ 546 |
Inventories - Components (Detai
Inventories - Components (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Jun. 30, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||||||
Raw materials | $ 97,167 | $ 76,238 | ||||
Work in process | 4,749 | 2,088 | ||||
Finished goods | 4,929 | 7,154 | ||||
Total, gross | 106,845 | 85,480 | ||||
Less: Allowance for excess and obsolete inventories | (2,292) | $ (2,726) | (3,261) | $ (4,112) | $ (2,373) | $ (2,644) |
Total, net | $ 104,553 | $ 82,219 |
Inventories - Allowance (Detail
Inventories - Allowance (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Inventory Valuation Reserves [Roll Forward] | ||||
Balance, beginning of period | $ 2,726 | $ 2,373 | $ 3,261 | $ 2,644 |
Provisions for excess and obsolete inventories | 86 | 1,969 | 378 | 1,776 |
Inventories written off | (520) | (230) | (1,347) | (308) |
Balance, end of period | $ 2,292 | $ 4,112 | $ 2,292 | $ 4,112 |
Supplemental Cash Flow Inform_3
Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Supplemental disclosure: | ||||
Income taxes paid | $ 3,167 | $ 1,841 | $ 5,909 | $ 11,576 |
Non-cash investing and financing activities: | ||||
Non-cash capital expenditures | $ (1,052) | $ (4,421) | $ (2,897) | $ 625 |
Warranties - Additional Informa
Warranties - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2021 | |
Product Information [Line Items] | |
Product warranty accrual, minimum length | 1 year |
Product warranty accrual, maximum length | 25 years |
Parts | |
Product Information [Line Items] | |
Product warranty accrual, minimum length | 18 months |
Warranties - Change in Accruals
Warranties - Change in Accruals (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | ||||
Balance, beginning of period | $ 14,008 | $ 13,160 | $ 13,522 | $ 12,652 |
Payments made | (1,825) | (1,687) | (4,834) | (4,481) |
Provisions | 1,272 | 2,054 | 4,767 | 5,356 |
Balance, end of period | 13,455 | 13,527 | 13,455 | 13,527 |
Warranty expense | $ 1,272 | $ 2,054 | $ 4,767 | $ 5,356 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Payables and Accruals [Abstract] | ||
Warranty | $ 13,455 | $ 13,522 |
Due to representatives | 8,006 | 8,296 |
Payroll | 8,770 | 8,155 |
Profit sharing | 2,360 | 2,902 |
Worker's compensation | 303 | 594 |
Medical self-insurance | 1,574 | 1,546 |
Customer prepayments | 5,296 | 5,067 |
Donations | 370 | 570 |
Employee vacation time | 3,747 | 3,321 |
Other | 4,385 | 2,613 |
Total | $ 48,266 | $ 46,586 |
Revolving Credit Facility (Deta
Revolving Credit Facility (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2021 | Dec. 31, 2020 | Oct. 24, 2019 | |
Line of Credit Facility [Line Items] | |||
Leverage coverage ratio | 0.02 | ||
Maximum leverage coverage ratio required for compliance | 2 | ||
Ratio of total consolidated liability to net worth | 0.3 | ||
Maximum ratio of total consolidated liability to net worth required for compliance | 2 | ||
Revolving Credit Facility | |||
Line of Credit Facility [Line Items] | |||
Credit facility maximum borrowings | $ 30,000,000 | $ 23,000,000 | |
Standby letter of credit | 1,800,000 | ||
Borrowings available under the revolving credit facility | $ 28,200,000 | ||
Frequency of periodic payment | monthly | ||
Fees associated with unused portion of committed amount | $ 0 | ||
Borrowings outstanding under revolving credit facility | $ 0 | $ 0 | |
Revolving Credit Facility | LIBOR | |||
Line of Credit Facility [Line Items] | |||
Stated percentage | 2.00% |
Income Taxes - Provision (Benef
Income Taxes - Provision (Benefit) for Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | ||||
Current | $ 4,508 | $ 3,081 | $ 8,498 | $ 8,435 |
Deferred | 19 | 2,615 | 2,766 | 7,676 |
Income tax provision | $ 4,527 | $ 5,696 | $ 11,264 | $ 16,111 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Federal Statutory Income Tax Rate (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | ||||
Federal statutory rate | 21.00% | 21.00% | 21.00% | 21.00% |
State income taxes, net of Federal benefit | 3.40% | 2.30% | 3.00% | 4.00% |
Excess tax benefits | (2.20%) | (2.30%) | (6.00%) | (3.30%) |
Return to provision adjustments | 0.60% | 0.50% | 0.00% | 0.20% |
Other | (0.30%) | 0.30% | (0.40%) | (0.80%) |
Effective tax rate | 22.50% | 21.80% | 17.60% | 21.10% |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Jun. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |||||
Share-based payment arrangement, expense, tax benefit | $ 441 | $ 588 | $ 3,830 | $ 2,493 | |
Increase in hare-based payment arrangement, expense, tax benefit, percent | 54.00% | ||||
Expected effective income tax rate for the year | 25.00% | ||||
Increase in deferred tax liability | $ 4,700 | ||||
Tax Credit Carryforward [Line Items] | |||||
Income tax benefit | (4,527) | $ (5,696) | $ (11,264) | $ (16,111) | |
Investment Tax Credit Carryforward | |||||
Tax Credit Carryforward [Line Items] | |||||
Tax credit carryforward | 3,700 | $ 3,700 | |||
State and Local | |||||
Tax Credit Carryforward [Line Items] | |||||
Income tax benefit | $ 800 |
Share-Based Compensation - Addi
Share-Based Compensation - Additional Information (Details) - USD ($) $ in Thousands | May 24, 2016 | May 22, 2007 | Jun. 30, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | May 12, 2020 | May 15, 2018 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Stock authorized to be issued under plan (in shares) | 8,900,000 | ||||||
Unrecognized pre-tax compensation cost | $ 19,500 | ||||||
Weighted average recognition period (in years) | 2 years 6 months | ||||||
Total intrinsic value of options exercised during period | $ 15,100 | $ 12,100 | |||||
Cash received from options exercised during period | $ 14,573 | $ 18,519 | |||||
Award requisite service period | 1 year | ||||||
2007 Long-Term Incentive Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Stock authorized to be issued under plan (in shares) | 400,000 | 3,300,000 | |||||
Exercise price of shares granted may not be less than fair market value (percentage) | 100.00% | ||||||
Unrecognized pre-tax compensation cost | $ 4,800 | ||||||
Weighted average recognition period (in years) | 2 years 3 months 18 days | ||||||
2016 Long-Term Incentive Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Stock authorized to be issued under plan (in shares) | 3,400,000 | 2,500,000 | 2,600,000 | ||||
Exercise price of shares granted may not be less than fair market value (percentage) | 100.00% | ||||||
Performance Award | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Unrecognized pre-tax compensation cost | $ 1,100 | ||||||
Weighted average recognition period (in years) | 2 years 2 months 12 days | ||||||
Performance Award | Minimum | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Award, percent of conversion in common stock | 0.00% | ||||||
Performance Award | Maximum | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Award, percent of conversion in common stock | 200.00% | ||||||
Employees | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Award vesting rights, percentage | 20.00% | 33.30% |
Share-Based Compensation - Summ
Share-Based Compensation - Summary of Assumptions (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Performance Award | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected dividend rate | $ 0.38 | |
Expected volatility | 39.10% | |
Risk-free interest rate | 0.28% | |
Expected life | 2 years 7 months 6 days | |
Directors and Senior Leadership Team | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected dividend rate | $ 0.38 | $ 0.33 |
Expected volatility | 35.78% | 31.63% |
Risk-free interest rate | 0.51% | 0.64% |
Expected life | 4 years | 5 years |
Employees | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected dividend rate | $ 0.38 | $ 0.32 |
Expected volatility | 38.69% | 31.31% |
Risk-free interest rate | 0.30% | 0.68% |
Expected life | 3 years | 5 years |
Share-Based Compensation - Su_2
Share-Based Compensation - Summary of Stock Options Outstanding (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Number of shares vested and exercisable | 1,149,047 | 738,709 |
Options vested and exercisable weighted average remaining contractual life | 5 years 11 months 19 days | 6 years 3 months 10 days |
Options vested and exercisable weighted average exercise price | $ 36.12 | $ 31.90 |
Options vested and exercisable intrinsic value | $ 33,579 | $ 20,940 |
$8.17 - $40.87 | ||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Range of exercise prices, lower range | $ 8.17 | |
Range of exercise prices, upper range | $ 40.87 | |
Number of shares vested and exercisable | 593,901 | |
Options vested and exercisable weighted average remaining contractual life | 4 years 10 months 17 days | |
Options vested and exercisable weighted average exercise price | $ 30.33 | |
Options vested and exercisable intrinsic value | $ 20,790 | |
$41.37 - $41.37 | ||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Range of exercise prices, lower range | $ 41.37 | |
Range of exercise prices, upper range | $ 41.37 | |
Number of shares vested and exercisable | 415,541 | |
Options vested and exercisable weighted average remaining contractual life | 6 years 8 months 19 days | |
Options vested and exercisable weighted average exercise price | $ 41.37 | |
Options vested and exercisable intrinsic value | $ 9,961 | |
$42.42 - $73.36 | ||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Range of exercise prices, lower range | $ 42.42 | |
Range of exercise prices, upper range | $ 73.36 | |
Number of shares vested and exercisable | 139,605 | |
Options vested and exercisable weighted average remaining contractual life | 8 years 4 months 9 days | |
Options vested and exercisable weighted average exercise price | $ 45.08 | |
Options vested and exercisable intrinsic value | $ 2,828 | |
$7.18 - $36.95 | ||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Range of exercise prices, lower range | $ 7.18 | |
Range of exercise prices, upper range | $ 36.95 | |
Number of shares vested and exercisable | 526,235 | |
Options vested and exercisable weighted average remaining contractual life | 5 years 6 months 3 days | |
Options vested and exercisable weighted average exercise price | $ 28.03 | |
Options vested and exercisable intrinsic value | $ 16,957 | |
$37.00 - $40.87 | ||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Range of exercise prices, lower range | $ 37 | |
Range of exercise prices, upper range | $ 40.87 | |
Number of shares vested and exercisable | 1,978 | |
Options vested and exercisable weighted average remaining contractual life | 7 years 4 months 2 days | |
Options vested and exercisable weighted average exercise price | $ 38.50 | |
Options vested and exercisable intrinsic value | $ 43 | |
$41.37 - $60.32 | ||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Range of exercise prices, lower range | $ 41.37 | |
Range of exercise prices, upper range | $ 60.32 | |
Number of shares vested and exercisable | 210,496 | |
Options vested and exercisable weighted average remaining contractual life | 8 years 2 months 8 days | |
Options vested and exercisable weighted average exercise price | $ 41.53 | |
Options vested and exercisable intrinsic value | $ 3,940 |
Share-Based Compensation - Su_3
Share-Based Compensation - Summary of Stock Option Activity (Details) - $ / shares | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Shares [Roll Forward] | ||
Outstanding, beginning of period (in shares) | 3,752,945 | |
Granted (in shares) | 360,980 | |
Exercised (in shares) | (412,284) | |
Forfeited or Expired (in shares) | (140,077) | |
Outstanding, end of period (in shares) | 3,561,564 | |
Exercisable, end of period (in shares) | 1,149,047 | 738,709 |
Weighted Average Exercise Price [Roll Forward] | ||
Outstanding, beginning of period (weighted average exercise price) | $ 39 | |
Granted (weighted average exercise price) | 72.93 | |
Exercised (weighted average exercise price) | 35.35 | |
Forfeited or Expired (weighted average exercise price) | 48.51 | |
Outstanding, end of period (weighted average exercise price) | 42.49 | |
Exercisable, end of period (weighted average exercise price) | $ 36.12 | $ 31.90 |
Share-Based Compensation - Su_4
Share-Based Compensation - Summary of Unvested Performance Awards (Details) - Performance Award | 9 Months Ended |
Sep. 30, 2021$ / sharesshares | |
Shares [Roll Forward] | |
Unvested, beginning of period (in shares) | shares | 0 |
Granted (in shares) | shares | 18,483 |
Vested (in shares) | shares | 0 |
Forfeited (in shares) | shares | (1,632) |
Unvested, end of period (in shares) | shares | 16,851 |
Weighted Average Grant Date Fair Value [Roll Forward] | |
Unvested, beginning of period (weighted average grant date fair value) | $ / shares | $ 0 |
Granted (weighted average grant date fair value) | $ / shares | 87.78 |
Vested (weighted average grant date fair value) | $ / shares | 0 |
Forfeited (weighted average grant date fair value) | $ / shares | 87.78 |
Unvested, end of period (weighted average grant date fair value) | $ / shares | $ 87.78 |
Share-Based Compensation - Su_5
Share-Based Compensation - Summary of Unvested Restricted Stock Awards (Details) - Restricted Stock | 9 Months Ended |
Sep. 30, 2021$ / sharesshares | |
Shares [Roll Forward] | |
Unvested, beginning of period (in shares) | shares | 224,691 |
Granted (in shares) | shares | 32,600 |
Vested (in shares) | shares | (89,523) |
Forfeited (in shares) | shares | (7,051) |
Unvested, end of period (in shares) | shares | 160,717 |
Weighted Average Grant Date Fair Value [Roll Forward] | |
Unvested, beginning of period (weighted average grant date fair value) | $ / shares | $ 38.22 |
Granted (weighted average grant date fair value) | $ / shares | 69.12 |
Vested (weighted average grant date fair value) | $ / shares | 35.85 |
Forfeited (weighted average grant date fair value) | $ / shares | 49.81 |
Unvested, end of period (weighted average grant date fair value) | $ / shares | $ 45.29 |
Share-Based Compensation - Su_6
Share-Based Compensation - Summary of Grant Date Fair Value of Awards (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Grant date fair value of awards during the period: | ||||
Options | $ 152 | $ 258 | $ 6,870 | $ 12,332 |
Performance Awards | 32 | 0 | 1,622 | 0 |
Restricted stock | 80 | 0 | 2,253 | 3,316 |
Total | 264 | 258 | 10,745 | 15,648 |
Share-based compensation expense: | ||||
Options | 2,167 | 2,208 | 6,594 | 6,136 |
Performance awards | 166 | 0 | 355 | 0 |
Restricted stock | 658 | 644 | 1,835 | 2,410 |
Total | 2,991 | 2,852 | 8,784 | 8,546 |
Income tax benefit/(deficiency) related to share-based compensation: | ||||
Options | 440 | 579 | 3,010 | 1,990 |
Restricted stock | 1 | 9 | 820 | 503 |
Total | $ 441 | $ 588 | $ 3,830 | $ 2,493 |
Employee Benefits (Details)
Employee Benefits (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Defined Benefit Plan Disclosure [Line Items] | ||||
Defined contribution employee automatic contribution, percent | 6.00% | |||
Administrative expense | $ 0 | $ 0 | ||
Award vesting period | 6 years | |||
Contributions, net of forfeitures, made to the defined contribution plan | $ 2,526,000 | $ 2,242,000 | $ 6,924,000 | 6,791,000 |
Profit sharing, percent of pre-tax profit paid to eligible employees on quarterly basis | 10.00% | |||
Profit sharing bonus plan expense | 2,358,000 | 3,000,000 | $ 7,409,000 | 8,691,000 |
Medical claim payments | 2,342,000 | 2,985,000 | 6,188,000 | 6,843,000 |
Health saving account contributions | $ 888,000 | $ 890,000 | $ 2,621,000 | $ 2,663,000 |
Each Year After Two Years of Service | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Award vesting rights, percentage | 20.00% | |||
Effective January 1, 2016 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Percent of match | 175.00% | |||
Defined contribution employer, maximum match percent | 6.00% |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Earnings Per Share [Abstract] | ||||
Net income | $ 15,581 | $ 20,460 | $ 52,572 | $ 60,117 |
Basic weighted average shares (in shares) | 52,420,711 | 52,260,551 | 52,392,300 | 52,174,705 |
Effect of dilutive stock options, restricted stock and performance awards (in shares) | 1,125,802 | 890,744 | 1,272,697 | 780,344 |
Diluted weighted average shares (in shares) | 53,546,513 | 53,151,295 | 53,664,997 | 52,955,049 |
Basic (usd per share) | $ 0.30 | $ 0.39 | $ 1 | $ 1.15 |
Diluted (usd per share) | $ 0.29 | $ 0.38 | $ 0.98 | $ 1.14 |
Anti-dilutive shares (in shares) | 375,428 | 118,832 | 291,236 | 473,295 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | May 17, 2021 | Nov. 10, 2020 | May 15, 2020 | Nov. 01, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Jun. 30, 2020 | Jun. 30, 2020 | Jun. 30, 2020 | Mar. 13, 2020 | Mar. 05, 2019 | May 16, 2018 | May 19, 2015 |
Schedule of Shareholders' Equity [Line Items] | |||||||||||||||
Stock repurchase program, authorized amount | $ 20,000,000 | $ 20,000,000 | $ 15,000,000 | ||||||||||||
Stock repurchased during period (in shares) | 242,115 | 429,456 | 14,359,231 | ||||||||||||
Aggregate price of shares repurchased since inception | $ 16,551,000 | $ 22,520,000 | $ 257,095,000 | ||||||||||||
Average price of shares repurchased since inception (per share) | $ 68.36 | $ 52.44 | $ 17.90 | ||||||||||||
Cash dividends declared per common share (in dollars per share) | $ 0 | $ 0 | $ 0.19 | $ 0.19 | |||||||||||
Dividend Declared | |||||||||||||||
Schedule of Shareholders' Equity [Line Items] | |||||||||||||||
Cash dividends declared per common share (in dollars per share) | $ 0.19 | $ 0.19 | $ 0.19 | ||||||||||||
Open market | |||||||||||||||
Schedule of Shareholders' Equity [Line Items] | |||||||||||||||
Stock repurchase program amount authorized (in shares) | 5,700,000 | ||||||||||||||
Stock repurchased during period (in shares) | 0 | 103,689 | 4,205,255 | ||||||||||||
Aggregate price of shares repurchased since inception | $ 0 | $ 4,987,000 | $ 74,793,000 | ||||||||||||
Average price of shares repurchased since inception (per share) | $ 0 | $ 48.10 | $ 17.79 | ||||||||||||
401(k) | |||||||||||||||
Schedule of Shareholders' Equity [Line Items] | |||||||||||||||
Stock repurchased during period (in shares) | 220,336 | 303,112 | 8,126,996 | ||||||||||||
Aggregate price of shares repurchased since inception | $ 15,014,000 | $ 16,403,000 | $ 160,014,000 | ||||||||||||
Average price of shares repurchased since inception (per share) | $ 68.14 | $ 54.12 | $ 19.69 | ||||||||||||
401(k) | Subsequent Event | |||||||||||||||
Schedule of Shareholders' Equity [Line Items] | |||||||||||||||
Stock repurchased during period (in shares) | 19,545 | ||||||||||||||
Aggregate price of shares repurchased since inception | $ 1,300,000 | ||||||||||||||
Directors and employees | |||||||||||||||
Schedule of Shareholders' Equity [Line Items] | |||||||||||||||
Stock repurchased during period (in shares) | 21,779 | 22,655 | 2,026,980 | ||||||||||||
Aggregate price of shares repurchased since inception | $ 1,537,000 | $ 1,130,000 | $ 22,288,000 | ||||||||||||
Average price of shares repurchased since inception (per share) | $ 70.57 | $ 49.88 | $ 11 |
New Market Tax Credit (Details)
New Market Tax Credit (Details) - USD ($) | Oct. 24, 2019 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 |
Line of Credit Facility [Line Items] | ||||
Due to related parties | $ 0 | $ 0 | ||
Amortization of debt issuance costs | 31,000 | $ 31,000 | ||
Subsidiary | ||||
Line of Credit Facility [Line Items] | ||||
Due to related parties | $ 22,500,000 | |||
Investor | ||||
Line of Credit Facility [Line Items] | ||||
Loans receivable | $ 15,900,000 | |||
Loans receivable, term | 25 years | |||
Loans receivable, interest rate | 1.00% | |||
Proceeds from debt | $ 15,900,000 | |||
Interest from counterparty | 6,300,000 | |||
Debt issuance costs | 300,000 | |||
Revolving Credit Facility | ||||
Line of Credit Facility [Line Items] | ||||
Credit facility maximum borrowings | $ 23,000,000 | $ 30,000,000 |
Related Parties (Details)
Related Parties (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Related Party Transactions [Abstract] | |||||
Sales to affiliates | $ 1,560 | $ 662 | $ 2,372 | $ 2,550 | |
Payments to affiliates | 23 | $ 110 | 153 | $ 207 | |
Due from affiliates | 544 | 544 | $ 342 | ||
Due to related parties | $ 0 | $ 0 | $ 0 |
Segments (Details)
Segments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Segment Reporting Information [Line Items] | ||||
Net sales | $ (138,571) | $ (134,772) | $ (398,235) | $ (397,851) |
Gross profit | (36,019) | (40,848) | (111,283) | (121,926) |
Operating Segments | Units | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | (125,862) | (123,827) | (366,597) | (372,267) |
Gross profit | (35,167) | (41,675) | (111,247) | (128,523) |
Operating Segments | Parts | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | (12,977) | (11,222) | (32,369) | (26,162) |
Gross profit | (5,072) | (4,917) | (12,385) | (11,641) |
Other | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 268 | 277 | 731 | 578 |
Gross profit | 4,220 | 5,744 | 12,349 | 18,238 |
Inter-segment | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | (6,325) | (5,659) | (19,005) | (18,074) |
Gross profit | $ 366 | $ 758 | $ 527 | $ 1,587 |