AAON secures $80 million term loan for Memphis plant expansion

AAON , Inc. (NASDAQ:AAON), a manufacturer of air conditioning and heating equipment with a market capitalization of $10 billion, announced on Monday that it has entered into a material definitive agreement, amending its existing loan facilities to secure additional funding. According to InvestingPro analysis, AAON maintains a "GREAT" financial health score, with strong liquidity metrics and efficient capital management.

The Tulsa-based company, along with its wholly-owned subsidiaries, has obtained an $80 million term loan and made significant changes to its $200 million revolving credit facility.

The new term loan was arranged with a consortium of lenders, including BOKF, NA dba Bank of Oklahoma, Wells Fargo (NYSE:WFC) Bank, National Association, and U.S. Bank, N.A., with Bank of Oklahoma serving as the administrative agent.

The loan, effective from Monday, will mature on December 16, 2029, and will require monthly principal payments of approximately $1.3 million over 60 months. InvestingPro data shows AAON operates with a moderate debt level, maintaining a healthy current ratio of 3.06 and total debt of just $71.76 million before this new facility.

The proceeds from the term loan will be utilized to finance the construction and outfitting of AAON's Memphis plant location, which includes the development of buildings, machinery, and equipment.

In a related transaction, Wells Fargo Bank, National Association, has taken over approximately $50 million of the revolver commitment previously held by JPMorgan Chase (NYSE:JPM) Bank, N.A.

This financial move comes as part of AAON's broader efforts to enhance its production efficiency and meet the growing demand for its products. By bolstering its Memphis operations, AAON aims to fortify its position in the market and ensure long-term operational success.

With annual revenue of $1.21 billion and strong cash flows sufficient to cover interest payments, the company appears well-positioned for expansion. For deeper insights into AAON's financial health and growth prospects, investors can access the comprehensive Pro Research Report available on InvestingPro, which covers over 1,400 US stocks with detailed analysis and actionable intelligence.

In other recent news, AAON Inc. has reported significant growth in its Q3 2024 financial results, with revenue increasing by 4.9% to $327.3 million and diluted earnings per share rising by 8.6% to $0.63. Despite a contraction in gross margin to 34.9%, the company achieved a 25.3% adjusted EBITDA margin, marking one of its strongest quarters.

AAON also reported a surge in demand, particularly for data center equipment, leading to a 27% year-to-date increase in bookings and a 32% increase in total backlog from the previous year.

In addition to these financial highlights, AAON has committed to the U.S. Department of Energy's Better Buildings Commercial Building Heat Pump Technology Challenge. The company is collaborating with industry leaders, including Copeland and several universities, to develop advanced HVAC technologies that align with the DOE's new regulations. This collaboration is expected to position AAON as a potential leader in energy efficiency and sustainability.

AAON is currently expanding its production capacity and anticipates a temporary softening in demand. However, the company remains optimistic about recovery and growth into 2025 and is focusing on long-term growth and efficiency.

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