What changed in this filing

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Item 1. Financial Statements

2021-08-05 compared with 2021-05-06 · 181 added, 107 removed, 568 unchanged (34% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Assets (in thousands, except share and per share data)

24 unchanged sentences

Accounts payable $ 21,250 $ 12,447

Dividends payable 9,970 —

Accrued liabilities 47,291 46,586

6 unchanged sentences

Preferred stock, $ .001 par value, 5,000,000 shares authorized, no shares issued

Common stock, $ .004 par value, 100,000,000 shares authorized, 52,423,579 and 52,224,767 issued and outstanding at March 31, 2021 and December 31, 2020, respectively

Common stock, $ .004 par value, 100,000,000 shares authorized, 52,416,014 and 52,224,767 issued and outstanding at June 30, 2021 and December 31, 2020, respectively

Additional paid-in capital 10,998 5,161

7 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

(in thousands, except share and per share data)

3 unchanged sentences

Selling, general and administrative expenses 16,895 15,939 31,591 31,153

(Gain) loss on disposal of assets — ( 62 )

Gain on disposal of assets — — — ( 62 )

Income from operations 25,212 22,192 43,673 49,987

Interest income, net 3 61

Interest (expense) income, net ( 4 ) 19 ( 1 ) 80

Other income (expense), net 39 32 56 5

5 unchanged sentences

Diluted $ 0.38 $ 0.34 $ 0.69 $ 0.75

Cash dividends declared per common share:

$ 0.19 $ 0.19 $ 0.19 $ 0.19

Weighted average shares outstanding:

4 unchanged sentences

Consolidated Statements of Stockholders' Equity

Three Months Ended March 31, 2021

Six Months Ended June 30, 2021

Common Stock Paid-in Retained

7 unchanged sentences

Stock repurchased and retired ( 170 ) ( 1 ) ( 11,802 ) — ( 11,803 )

Dividends — — — ( 9,968 ) ( 9,968 )

Balances at June 30, 2021 52,416 $ 210 $ 10,998 $ 372,518 $ 383,726

Three Months Ended June 30, 2021

Common Stock Paid-in Retained

Shares Amount Capital Earnings Total

(in thousands)

Balances at March 31, 2021 52,424 $ 210 $ 10,957 $ 361,871 $ 373,038

Three Months Ended March 31, 2020

Net income — — — 20,615 20,615

Stock options exercised and restricted 75 — 2,410 — 2,410

stock awards granted

Share-based compensation — — 3,032 — 3,032

Stock repurchased and retired ( 83 ) — ( 5,401 ) — ( 5,401 )

Dividends — — — ( 9,968 ) ( 9,968 )

Balances at June 30, 2021 52,416 $ 210 $ 10,998 $ 372,518 $ 383,726

Six Months Ended June 30, 2020

Common Stock Paid-in Retained

7 unchanged sentences

Stock repurchased and retired ( 335 ) ( 1 ) ( 17,045 ) — ( 17,046 )

Dividends — — — ( 9,923 ) ( 9,923 )

Balances at June 30, 2020 52,234 $ 209 $ 6,451 $ 316,035 $ 322,695

Three Months Ended June 30, 2020

Common Stock Paid-in Retained

Shares Amount Capital Earnings Total

(in thousands)

Balances at March 31, 2020 52,044 $ 208 $ — $ 306,115 $ 306,323

Net income — — — 17,804 17,804

Stock options exercised and restricted 278 1 9,675 — 9,676

stock awards granted

Share-based compensation — — 3,343 — 3,343

Stock repurchased and retired ( 88 ) — ( 6,567 ) 2,039 ( 4,528 )

Dividends — — — ( 9,923 ) ( 9,923 )

Balances at June 30, 2020 52,234 $ 209 $ 6,451 $ 316,035 $ 322,695

The accompanying notes are an integral part of these consolidated financial statements.

1 unchanged sentence

Consolidated Statements of Cash Flows

Three Months Ended

Six Months Ended

Operating Activities (in thousands)

3 unchanged sentences

Amortization of debt issuance cost 20 20

(Recovery of) provision for credit losses on accounts receivable, net of adjustments ( 13 ) 294

Provision for excess and obsolete inventories ( 194 ) ( 274 )

Provision for credit losses on accounts receivable, net of adjustments 12 76

Provision (recoveries) for excess and obsolete inventories 292 ( 193 )

Share-based compensation 5,793 5,694

52 unchanged sentences

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 shutdown the Tulsa, OK and Longview, TX plants for several days.

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 had several lost production days in mid-February 2021, we do not believe that the impact of this weather event 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.

Although we lost several production days in mid-February 2021, we do not believe that the impact of this weather event will have 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

3 unchanged sentences

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.

We had continuous operations during the three months ended March 31, 2021, except for the weather related shut-down in February 2021.

We maintained continuous operations during the six months ended June 30, 2021, except for 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.

The Company utilizes sanitation stations, requires the use of a facial covering when unable to socially distance, and performs additional cleaning and sanitation throughout the day and deep cleaning overnight.

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 and deep cleaning overnight.

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.

Although these disruptions and costs are expected to be temporary, there is uncertainty around the duration and overall impact to our business operations.

The Company experienced some slower demand in late 2020, that is beginning to rebound.

As COVID-19 restrictions are lessened in 2021, we are seeing increases in our order intake and minimal disruption to our operations.

We have seen increases in some of our raw material prices which appear to be an indirect result of COVID-19, and have put in place price increases in our products and work to make strategic purchases of materials at lower prices when possible.

Although these disruptions and costs are expected to be temporary, there is uncertainty concerning the duration and overall impact to our business operations.

The Company experienced decreased demand in late 2020, however that demand began to rebound in the first quarter of 2021.

As COVID-19 restrictions lessened in 2021, we experienced increases in our order intake and minimal disruption to our operations.

We witnessed increases in some of our raw material prices 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.

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 and its potential effect on our financial position, results of operations, and cash flows.

However, we are continually monitoring the progression of the COVID-19 pandemic and its potential effects on our financial position, results of operations, and cash flows.

Accounting Policies

13 unchanged sentences

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

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.

1 unchanged sentence

Our intangible assets include various trademarks, service marks and technical knowledge acquired in our February 2018 business combination.

We amortized our intangible assets on a straight-line basis over the estimated useful lives of the assets.

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.

1 unchanged sentence

As of December 31, 2020, our intangible assets, net of amortization, were approximately $ 38.0 thousand.

The amount of amortization was $ 38.0 thousand and $ 59.0 thousand for the three months ended March 31, 2021 and 2020, respectively.

Goodwill represents the excess of the consideration paid for the acquired businesses, in our February 2018 business combination, over the fair value of the individual assets acquired, net of liabilities assumed.

Goodwill at March 31, 2021 is deductible for income tax purposes.

The amount of amortization was $ 58.0 thousand for the three months ended June 30, 2020 and $ 38.0 thousand and $ 117.0 thousand for the six months ended June 30, 2021 and 2020, respectively.

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 June 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 March 31, 2021 and December 31, 2020, our goodwill was approximately $ 3.2 million.

As of June 30, 2021 and December 31, 2020, our goodwill was approximately $ 3.2 million.

Recent Accounting Pronouncements

5 unchanged sentences

Disaggregated net sales by major source:

Three Months Ended

2021 March 31,

Three Months Ended Six Months Ended

2021 June 30,

2020 June 30,

2021 June 30,

(in thousands)

8 unchanged sentences

Disaggregated units sold by major source:

Three Months Ended

2021 March 31,

Three Months Ended Six Months Ended

2021 June 30,

2020 June 30,

2021 June 30,

Rooftop units 4,657 3,746 7,616 7,807

3 unchanged sentences

Water source heat pumps 1,908 1,645 3,532 3,262

7,903 6,344 13,504 12,950

The Company recognizes revenue, presented net of sales tax, when it satisfies the performance obligation in its contracts.

7 unchanged sentences

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, including those initiated by our independent manufacturer representatives (“Representatives”).

Representatives are national companies that are in the business of providing HVAC units and other related products and services to customers.

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 controls purchased from another manufacturer to operate the unit, start-up services, and curbs for supporting the unit (“Third Party Products”).

All are associated with the purchase of a HVAC unit but may be provided by the Representative or another third party.

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.

6 unchanged sentences

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 $ 11.0 million and $ 12.6 million for the three months ended March 31, 2021 and 2020, respectively.

The amount of payments to our Representatives were $ 14.0 million and $ 14.9 million for the three months ended June 30, 2021 and 2020, respectively.

The amount of payments to our Representatives were $ 25.0 million and $ 27.5 million for the six months ended June 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.

7 unchanged sentences

$ 53,311 $ 47,387

Three Months Ended

2021 March 31,

Three Months Ended Six Months Ended

2021 June 30,

2020 June 30,

2021 June 30,

Allowance for credit losses:

1 unchanged sentence

Balance, beginning of period $ 493 $ 647 $ 506 $ 353

(Recoveries) provisions for expected credit ( 13 ) 294

Provisions (recoveries) for expected credit 25 ( 218 ) 12 76

losses, net of adjustments

12 unchanged sentences

$ 87,399 $ 82,219

Three Months Ended

2021 March 31,

Three Months Ended Six Months Ended

2021 June 30,

2020 June 30,

2021 June 30,

Allowance for excess and obsolete inventories:

1 unchanged sentence

Balance, beginning of period $ 2,304 $ 2,365 $ 3,261 $ 2,644

(Recoveries) provisions for excess and ( 194 ) ( 274 )

Provisions (recoveries) for excess and 486 81 292 ( 193 )

obsolete inventories

2 unchanged sentences

Supplemental Cash Flow Information

Three Months Ended

2021 March 31,

Three Months Ended Six Months Ended

2021 June 30,

2020 June 30,

2021 June 30,

Supplemental disclosures:

3 unchanged sentences

Non-cash capital expenditures 1

$ ( 2,109 ) $ 6,046 $ ( 1,845 ) $ 5,046

Dividends declared 9,970 $ 9,930 $ 9,970 $ 9,930

1 Includes non-cash changes in accrued capital expenditures

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.

2 unchanged sentences

Changes in the warranty accrual are as follows:

Three Months Ended

2021 March 31,

Three Months Ended Six Months Ended

2021 June 30,

2020 June 30,

2021 June 30,

Warranty accrual:

24 unchanged sentences

Under the line of credit, there is one standby letter of credit totaling $ 1.8 million.

Borrowings available under the revolving credit facility at March 31, 2021 were $ 28.2 million.

Borrowings available under the revolving credit facility at June 30, 2021 were $ 28.2 million.

Interest on borrowings is payable monthly at LIBOR plus 2.0 %.

No fees are associated with the unused portion of the committed amount.

We had no outstanding balance under the revolving credit facility at March 31, 2021 and December 31, 2020.

The revolving credit facility expires on July 26, 2021.

The Company expects to renew the facility with similar terms.

As of March 31, 2021, we were in compliance with our financial covenants.

These covenants require that we meet certain parameters related to our tangible net worth and total liabilities to tangible net worth ratio.

At March 31, 2021, our tangible net worth was $ 373.0 million and met the requirement of being at or above $ 175.0 million.

Our total liabilities to tangible net worth ratio was 0.3 to 1, and met the requirement of not being above 2 to 1.

We had no outstanding balance under the revolving credit facility at June 30, 2021 and December 31, 2020.

On July 26, 2021, the Company entered into a new revolving credit facility.

The lender, borrowing terms, interest terms on borrowings, standby letter of credit, and fees associated with the unused portion of the committed amount are similar to the previous revolving credit facility.

Additionally, 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.

The new revolving credit facility also contains financial covenants.

As of June 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 June 30, 2021, our consolidated leverage ratio was 0.01 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.

The provision (benefit) for income taxes consists of the following:

Three Months Ended

2021 March 31,

Three Months Ended Six Months Ended

2021 June 30,

2020 June 30,

2021 June 30,

(in thousands)

4 unchanged sentences

The reconciliation of the Federal statutory income tax rate to the effective income tax rate is as follows:

Three Months Ended

2021 March 31,

Three Months Ended Six Months Ended

2021 June 30,

2020 June 30,

2021 June 30,

Federal statutory rate 21.0 % 21.0 % 21.0 % 21.0 %

4 unchanged sentences

Effective tax rate 18.3 % 20.0 % 15.4 % 20.8 %

During the three months ended March 31, 2021, the Company recorded an excess tax benefit of $ 2.9 million as compared to $ 1.1 million during the same period in 2020, an increase of 173 % 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.

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.

During the six months ended June 30, 2021, the Company recorded an excess tax benefit of $ 3.4 million as compared to $ 1.9 million during the same period in 2020, an increase of 78 %.

The increase was primarily due to timing of stock option exercises as a result of our 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.

1 unchanged sentence

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 March 31, 2021, we have investment tax credit carryforwards of approximately $ 2.8 million.

These credits have estimated expirations from the year 2036 through 2040.

As of June 30, 2021, we have investment tax credit carryforwards of approximately $ 2.8 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., state and foreign income tax returns jurisdictions.

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.

1 unchanged sentence

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.

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.

7 unchanged sentences

American Rescue Plan Act

On March 11, 2021, the American Rescue Plan Act (the “ARM”) was enacted and signed into law.

The ARM is an economic stimulus package in response to the COVID-19 pandemic, which contains tax provisions that are not expected to have a material impact to our consolidated financial statements.

In accordance with accounting standards for income taxes, the impact of this new tax legislation was taken into account in our first quarter of 2021, the period in which it was enacted.

On March 11, 2021, the American Rescue Plan Act (the “ARPA”) was enacted and signed into law.

The ARPA is an economic stimulus package in response to the COVID-19 pandemic, which contains tax provisions that are not expected to have a material impact to our consolidated financial statements.

In accordance with accounting standards for income taxes, the impact of this new tax legislation was taken into account in the first quarter of 2021, the period in which it was enacted.

Share-Based Compensation

8 unchanged sentences

The Committee may delegate certain duties to one or more officers of the Company as provided in the 2016 Plan.

The total pre-tax compensation cost related to unvested stock options not yet recognized as of March 31, 2021 is $ 24.8 million and is expected to be recognized over a weighted average period of approximately 2.9 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 three months ended March 31, 2021 and 2020 using a Black Scholes-Merton Model:

Three months ended

March 31, 2021 March 31, 2020

The total pre-tax compensation cost related to unvested stock options not yet recognized as of June 30, 2021 is $ 22.0 million and is expected to be recognized over a weighted average period of approximately 2.7 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 six months ended June 30, 2021 and 2020 using a Black Scholes-Merton Model:

Six months ended

June 30, 2021 June 30, 2020

Directors and SLT 1 :

12 unchanged sentences

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 March 31, 2021:

The following is a summary of stock options vested and exercisable as of June 30, 2021:

Prices Number

7 unchanged sentences

Total 1,216,917 6.25 $ 36.05 $ 32,299

The following is a summary of stock options vested and exercisable as of March 31, 2020:

The following is a summary of stock options vested and exercisable as of June 30, 2020:

Prices Number

15 unchanged sentences

( 95,846 ) 48.92

Outstanding at March 31, 2021

Outstanding at June 30, 2021

3,673,794 $ 42.35

Exercisable at March 31, 2021

Exercisable at June 30, 2021

1,216,917 $ 36.05

The total intrinsic value of options exercised during the three months ended March 31, 2021 and 2020 was $ 10.7 million and $ 3.9 million, respectively.

The cash received from options exercised during the three months ended March 31, 2021 and 2020 was $ 9.4 million and $ 4.5 million, respectively.

The total intrinsic value of options exercised during the six months ended June 30, 2021 and 2020 was $ 12.7 million and $ 8.8 million, respectively.

The cash received from options exercised during the six months ended June 30, 2021 and 2020 was $ 11.8 million and $ 14.2 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 key officers and employees under our 2016 Plan.

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 ended December 31, 2023.

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 March 31, 2021 is $ 1.5 million and is expected to be recognized over a weighted average period of approximately 2.8 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 three months ended March 31, 2021 using a Monte Carlo Model:

Three months ended

March 31, 2021

The total pre-tax compensation cost related to unvested PSUs not yet recognized as of June 30, 2021 is $ 1.3 million and is expected to be recognized over a weighted average period of approximately 2.4 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 six months ended June 30, 2021 using a Monte Carlo Model:

Six months ended

June 30, 2021

Expected dividend rate $ 0.38

9 unchanged sentences

Unvested at December 31, 2020

Unvested at March 31, 2021

( 1,632 ) 87.78

Unvested at June 30, 2021

16,482 $ 87.78

Restricted Stock

1 unchanged sentence

common stock on the respective grant dates, reduced for the present value of dividends.

At March 31, 2021, unrecognized compensation cost related to unvested restricted stock awards was approximately $ 5.4 million, which is expected to be recognized over a weighted average period of approximately 2.7 years.

At June 30, 2021, unrecognized compensation cost related to unvested restricted stock awards was approximately $ 5.4 million, which is expected to be recognized over a weighted average period of approximately 2.6 years.

A summary of the unvested restricted stock awards is as follows:

4 unchanged sentences

( 5,690 ) 51.19

Unvested at March 31, 2021

Unvested at June 30, 2021

161,103 $ 45.12

1 unchanged sentence

A summary of share-based compensation is as follows:

Three Months Ended

2021 March 31,

Three Months Ended Six Months Ended

2021 June 30,

2020 June 30,

2021 June 30,

Grant date fair value of awards during the period:

32 unchanged sentences

Administrative expenses are paid for by Plan participants.

The Company paid no administrative expenses during the three months ended March 31, 2021 and 2020.

The Company paid no administrative expenses during the six months ended June 30, 2021 and 2020.

The Company matches 175 % up to 6 % of employee contributions of eligible compensation.

Additionally, Plan participant forfeitures are used to reduce the cost of the Company contributions.

Three Months Ended

2021 March 31,

Three Months Ended Six Months Ended

2021 June 30,

2020 June 30,

2021 June 30,

(in thousands)

3 unchanged sentences

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

2021 March 31,

Three Months Ended Six Months Ended

2021 June 30,

2020 June 30,

2021 June 30,

(in thousands)

6 unchanged sentences

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

2021 March 31,

Three Months Ended Six Months Ended

2021 June 30,

2020 June 30,

2021 June 30,

(in thousands)

6 unchanged sentences

The following table sets forth the computation of basic and diluted earnings per share:

Three Months Ended

2021 March 31,

Three Months Ended Six Months Ended

2021 June 30,

2020 June 30,

2021 June 30,

(in thousands, except share and per share data)

26 unchanged sentences

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 in AAON, Inc.

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.

5 unchanged sentences

Our repurchase activity is as follows:

Three Months Ended

March 31, 2021 March 31, 2020

Six Months Ended

June 30, 2021 June 30, 2020

(in thousands, except share and per share data)

5 unchanged sentences

Our repurchase activity since Company inception, including our current authorized stock repurchase programs, are as follows:

Inception to March 31, 2021

Inception to June 30, 2021

(in thousands, except share and per share data)

4 unchanged sentences

14,287,139 $ 252,347 $ 17.66

Subsequent to March 31, 2021 and through May 3, 2021, the Company repurchased 13,337 shares for $ 0.9 million from our 401(k) savings and investment plan.

Subsequent to June 30, 2021 and through August 2, 2021, the Company repurchased 20,970 shares for $ 1.3 million from our 401(k) savings and investment plan.

At the discretion of the Board, we pay semi-annual cash dividends.

4 unchanged sentences

November 10, 2020 November 27, 2020 December 18, 2020 $ 0.19

May 17, 2021 June 3, 2021 July 1, 2021 $ 0.19

New Markets Tax Credit

23 unchanged sentences

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 March 31, 2021.

We had no material contractual purchase obligations as of June 30, 2021.

Related Parties

4 unchanged sentences

The following is a summary of transactions and balance with affiliates:

Three Months Ended

2021 March 31,

Three Months Ended Six Months Ended

2021 June 30,

2020 June 30,

2021 June 30,

(in thousands)

9 unchanged sentences

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 sales cost and expenses that are not allocated to the reportable segments.

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

2021 March 31,

Three Months Ended Six Months Ended

2021 June 30,

2020 June 30,

2021 June 30,

(in thousands)

12 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements