AAON : Reports Fourth Quarter and Full Year 2018 Sales and Earnings

Exhibit 99.1

AAON REPORTS SALES AND EARNINGS FOR THE FOURTH QUARTER AND YEAR 2018

TULSA, OK, February 28, 2019 - AAON, INC. (NASDAQ-AAON), today announced its results for the fourth quarter and year 2018. Sales in the fourth quarter were $112.3 million, up 7.9% from $104.2 million in 2017. Net income for the fourth quarter was $12.5 million, a decrease of 20.5% from $15.8 million in the same period a year ago. The fourth quarter of 2017 had a benefit of $4.4 million related to the enactment of the Tax Cuts and Jobs Act (the "Act") discussed below. Sales for the year 2018 reached a record level, $433.9 million, representing a gain of 7.1% compared to $405.2 million in 2017. Net income for 2018 was $42.6 million, a decrease of 21.9% compared to $54.5 million in 2017.

Our backlog at December 31, 2018 increased 86.8% to $151.8 million, from $81.2 million for the same period a year ago.

Earnings for the fourth quarter of 2018 were $0.24 per diluted share, down 19.7% from $0.30 per diluted share in 2017, based upon 52.4 million and 52.9 million diluted shares outstanding, respectively. Earnings per diluted share for the year 2018 were $0.81, decrease of 21.4% from $1.03 for the year 2017 based upon 52.7 million and 53.1 million diluted shares outstanding, respectively.

For the three months ended December 31, 2018, gross profit as a percent of sales was 24.7% compared to 29.8% for the three months ended December 31, 2017. For the year ended December 31, 2018, gross profit was a percent of sales was 23.9% compared to 30.5% in the same period a year ago. Norman H. Asbjornson, CEO, said "Our gross profit has been negatively impacted in 2018 mainly due to labor issues and increased costs in raw materials. The Company elevated staffing levels going into 2018 when orders were slower in anticipation of increased order volume and also struggled to hire qualified labor during our peak season. Our fourth quarter was negatively impacted by production inefficiencies and we have modified our onboarding and new-hire training practices to address these issues. We believe our gross profit percentage will continue to improve to normal levels as our production increases in the coming year."

Selling, general and administrative expenses for the quarter decreased $2.5 million to $11.3 million (10.0% of sales) from $13.7 million (13.2% of sales) as compared to the fourth quarter of 2017. For the year, SG&A expenses decreased $1.5 million to $47.8 million (11.0% of sales) from $49.2 million (12.2% of sales) as compared to 2017. The Company's warranty costs continue to improve with claims paid in 2018 down 9.4% from 2017.

For the three months ended December 31, 2018, our effective tax rate was 24.0% compared to 9.6% for the three months ended December 31, 2017. For the year ended December 31, 2018, effective tax rate was 23.9% compared to 26.8% in the same period a year ago. As a result of the changes provided under the Act, the Company adjusted its deferred tax assets and liabilities existing at the date of enactment using the newly enacted rates for the periods when they are expected to be realized. This remeasurement resulted in a benefit to income taxes of $4.4 million for the three months and year ended December 31, 2017.

Gary Fields, President, added "We are starting to see the benefits of the price increases put in place at the end of 2017 and expect continuation of these benefits as a result of the additional price increases during 2018. With our backlog at record levels, we expect to witness significant improvements in both our sales and earnings in 2019."

Norman H. Asbjornson, CEO, concluded "Our financial condition at December 31, 2018 remained quite strong with a current ratio of 2.9:1 and we continue to operate debt free. "

The Company will host a conference call today at 4:15 P.M. (Eastern Time) to discuss the fourth quarter and year 2018 results. To participate, call 1-888-241-0551 (code 1296698); or, for rebroadcast, call 1-855-859-2056 (code 1296698).

About AAON

AAON, Inc. is 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. Since the founding of AAON in 1988, AAON has maintained a commitment to design, develop, manufacture and deliver heating and cooling products to perform beyond all expectations and demonstrate the value of AAON to our customers. For more information, please visitwww.AAON.com.

Certain statements in this news release may be "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933. Statements regarding future prospects and developments are based upon current expectations and involve certain risks and uncertainties that could cause actual results and developments to differ materially from the forward-looking statements.

Contact Information

Jerry R. Levine Phone: [phone] Fax: [phone]

Email:[e-mail]

AAON, Inc. and Subsidiaries Unaudited Consolidated Statements of Income

Three Months Ended

December 31,2018

Years Ending December 31,2017

2018

2017

(in thousands, except share and per share data)

Cost of sales 84,545

73,085

330,414

281,835

Selling, general and administrative expenses 11,260

13,714

47,755

49,249

Income from operations 16,538

17,362

55,790

74,103

Other (expense) income, net (58

)

5

(47

91

Income tax provision 3,969

1,680

13,367

19,994

Earnings per share:

Diluted $

0.24

$

0.30

$

0.81

$

1.03

Weighted average shares outstanding:

Net sales	$	112,340	$	104,160	$	433,947	$	405,232
Gross profit	27,795	31,075	103,533	123,397
(Gain) loss on disposal of assets	(3)	(1)	(12)	45
Interest income, net	25	83	196	298
Income before taxes	16,505	17,450	55,939	74,492
Net income	$	12,536	$	15,770	$	42,572	$	54,498
Basic	$	0.24	$	0.30	$	0.81	$	1.04
Cash dividends declared per common share:	$	0.16	$	0.13	$	0.32	$	0.26
Basic	52,086,247	52,457,780	52,284,616	52,572,496

Diluted

52,420,529

52,931,796

52,667,939

53,078,734

AAON, Inc. and Subsidiaries Unaudited Consolidated Balance Sheets

December 31, 2018 2017

Assets Current assets:

(in thousands, except share and per share data)

Cash and cash equivalents $ 1,994

$ 21,457

Investments held to maturity at amortized cost -

6,077

Income tax receivable 6,104

1,643

Inventories, net 77,612

70,786

Total current assets 140,861

153,727

Land 3,114

2,233

Machinery and equipment 212,779

184,316

Total property, plant and equipment 329,883

292,338

Property, plant and equipment, net 163,003

142,375

Goodwill 3,229

-

Total assets $

308,197

$

296,780

Liabilities and Stockholders' Equity

Revolving credit facility $ -

$ -

Accrued liabilities 37,455

39,098

Deferred revenue 1,655

1,512

Donations 146

-

Stockholders' equity:

Common stock, $.004 par value, 100,000,000 shares authorized, 51,991,242 and 52,422,801 issued and outstanding at December 31, 2018 and 2017, respectively 208

210

Retained earnings 247,291

237,016

Certificates of deposit	-	2,880
Accounts receivable, net	54,078	50,338
Note receivable	27	28
Prepaid expenses and other	1,046	518
Property, plant and equipment:
Buildings	97,393	92,075
Furniture and fixtures	16,597	13,714
Less: Accumulated depreciation	166,880	149,963
Intangible assets, net	506	-
Note receivable	598	678
Current liabilities:
Accounts payable	10,616	10,967
Total current liabilities	48,071	50,065
Deferred tax liabilities	10,826	7,977
Commitments and contingencies
Preferred stock, $.001 par value, 5,000,000 shares authorized, no shares issued	-	-
Additional paid-in capital	-	-
Total stockholders' equity	247,499	237,226

Total liabilities and stockholders' equity

$

308,197

$

296,780

AAON, Inc. and Subsidiaries

Unaudited Consolidated Statements of Cash Flows

Adjustments to reconcile net income to net cash provided by operating activities:

Amortization of bond premiums

13

47

249

Provision for excess and obsolete inventories

152

264

625

(Gain) loss on disposition of assets

(12)

45

(20)

Interest income on note receivable

(27)

(25)

(28)

Changes in assets and liabilities:

Income tax receivable

(4,461)

4,596

(1,537)

Prepaid expenses and other

(528)

98

(83)

Deferred revenue

412

258

417

Net cash provided by operating activities

54,856

57,994

63,923

Capital expenditures

(37,268)

(41,713)

(26,604)

Proceeds from sale of property, plant and equipment

13

10

28

Maturities of certificates of deposits

10,080

7,912

10,560

Maturities of investments

14,570

19,700

10,021

Principal payments from note receivable

53

60

52

Financing Activities

Payments under revolving credit facility

-

-

(761)

Repurchase of stock

(26,846)

(16,620)

(19,317)

Cash dividends paid to stockholders

(16,728

)

(13,663

(12,676

Net (decrease) increase in cash and cash equivalents

(19,463

)

(2,696

16,245

2016
Operating Activities
Net income	42,572	$	54,498	53,376
Depreciation and amortization	17,655	15,007	13,035
Provision for losses on accounts receivable, net of adjustments	174	179	(25)
Share-based compensation	7,374	6,458	4,357
Foreign currency transaction loss (gain)	55	(59)	(22)
Deferred income taxes	2,849	(1,554)	825
Accounts receivable	(2,832)	(7,516)	7,048
Inventories	(5,598)	(23,698)	(9,478)
Accounts payable	(1,176)	3,043	654
Accrued liabilities and donations	(1,766)	6,353	(5,470)
Investing Activities
Cash paid in business combination	(6,377)	-	-
Investment in certificates of deposits	(7,200)	(5,280)	(4,112)
Purchases of investments held to maturity	(9,001)	(13,241)	(10,384)
Proceeds from called investments	495	1,500	3,514
Net cash used in investing activities	(34,635)	(31,052)	(16,925)
Borrowings under revolving credit facility	-	-	761
Stock options exercised	4,987	2,259	2,063
Employee taxes paid by withholding shares	(1,097)	(1,614)	(823)
Net cash used in financing activities	(39,684)	(29,638)	(30,753)
Cash and cash equivalents, beginning of period	21,457	24,153	7,908

Years Ending December 31, 2017

2018

$

(in thousands)

$

Cash and cash equivalents, end of period

$

1,994

$

21,457

$

24,153