Sales and Market Performance - In 2023, foreign sales accounted for approximately $39.9 million, representing 3.4% of net sales, compared to $27.6 million (3.1%) in 2022 and $14.8 million (3.0%) in 2021[12] - Major customer Texas AirSystems accounted for approximately 13.8% of sales in 2023, with additional sales through affiliated groups contributing 2.3%[23] - The company has seen a shift in sales patterns, with sales becoming more constant throughout the year due to increased demand and backlog[33] Business Segments and Strategy - The company operates through three business segments: AAON Oklahoma, AAON Coil Products, and BASX, focusing on HVAC systems and solutions[9] - The company emphasizes a business strategy of mass semi-customization, leveraging flexible manufacturing systems to produce highly configurable HVAC equipment[11] - The integration of acquired businesses is a key strategy for realizing synergies and cost savings, contributing to overall financial performance[6] Product Performance and Innovation - The performance characteristics of products range in cooling capacity from 2 to 261 tons and heating capacity from 7,200 to 4,500,000 BTUs, with many products exceeding minimum efficiency standards[15] - The company’s products are engineered for performance and flexibility, with a focus on meeting evolving regulatory standards in the HVAC industry[29] - The company’s innovative ASHPs are capable of operating in ambient temperatures as low as zero degrees Fahrenheit, addressing the demand for building decarbonization[13] Research and Development - The company’s research and development efforts are focused on energy performance, durability, efficiency, and indoor air quality, ensuring compliance with various regulatory standards[12] - Research and development expenses were approximately $43.7 million in 2023, reflecting a commitment to product performance and innovation[29] - The company operates a unique research and development laboratory, the NAIC, which includes capabilities for testing large HVAC systems, enhancing its competitive edge in the industry[29] Sustainability and Environmental Responsibility - The company achieved Platinum level in the Sustainability Alliance Scor3card program in both 2023 and 2022, indicating high performance in sustainability metrics[36] - Approximately 36% of the company's energy portfolio is currently derived from renewable sources, with ongoing efforts to increase this percentage[36] - The company is committed to reducing greenhouse gas emissions and increasing the percentage of non-fossil fuel powered units produced[36] Employee and Operational Growth - The total number of employees increased to 3,856 as of February 20, 2024, up from 3,666 in 2023 and 2,881 in 2022[38] - The company offers competitive employee benefits, including a 401(k) plan with a 175% employer match and a profit-sharing bonus plan[38] - The company has a program to enhance service capabilities across its North America representative network, providing training and business plan assistance[20] Manufacturing and Supply Chain - The company has multiple suppliers for raw materials, ensuring adequate supply to meet manufacturing requirements for the foreseeable future[26] - The company’s controls division provides factory-developed control options that enhance the unique features of its HVAC products, ensuring compliance with safety and quality standards[15] Backlog and Order Fulfillment - The company's backlog as of February 1, 2024, was approximately $507.7 million, with lead times for fulfilling orders generally around 11 weeks[24] - The backlog as of February 1, 2024, was approximately $507.7 million, with lead times to fulfill orders generally around 11 weeks[24] Waste Management and Recycling - The company successfully diverted over 694 tons of waste from landfills in 2023 through partnerships with waste-to-energy facilities, compared to 668 tons in 2022 and 460 tons in 2021[36] - The company recycled over 13,678 tons of metal at its Tulsa and Longview facilities in 2023, compared to 14,928 tons in 2022 and 13,793 tons in 2021[36]

Financial Performance - Net sales for Q4 2023 increased 20.4% to a record $306.6 million, compared to $254.6 million in Q4 2022[2] - Gross profit for the quarter rose 42.3% to $111.7 million, representing a gross profit margin of 36.4%, up from 30.8% in the same period last year[3] - Earnings per diluted share in Q4 2023 increased 19.1% to $0.56, compared to $0.47 in Q4 2022[3] - Operating income for Q4 2023 increased 37.1% to $63.9 million, with an operating margin of 20.8%[4] - Net income for 2023 was $177,623 thousand, up from $100,376 thousand in 2022, representing a 77% increase[15] - Net income for December 2023 was $47,049 thousand, up from $38,898 thousand in December 2022, representing a growth of 21.7%[22] - EBITDA for 2023 was $224,091 thousand, up from $135,482 thousand in 2022, marking a 65% increase[19] - EBITDA for December 2023 reached $77,046 thousand, compared to $56,184 thousand in December 2022, reflecting an increase of 37.1%[22] - Adjusted net income for 2023 was $183,131 thousand, compared to $100,376 thousand in 2022, reflecting an increase of 83%[18] - Adjusted EBITDA for the year ended December 2023 was $281,215 thousand, significantly higher than $162,266 thousand for the previous year, marking a growth of 73.2%[22] Cash Flow and Assets - Cash flows from operating activities grew year-over-year by 189.0% in Q4 2023 and 159.1% for the full year, exceeding capital expenditures[6] - Current assets increased to $408,954 thousand in 2023 from $349,116 thousand in 2022, a growth of 17%[13] - Cash and cash equivalents at the end of the period rose to $9,023 thousand in 2023 from $5,949 thousand in 2022, an increase of 51%[15] - The company reported a net cash provided by operating activities of $158,895 thousand in 2023, compared to $61,318 thousand in 2022, a growth of 159%[15] Liabilities and Equity - Total liabilities decreased to $206,012 thousand in 2023 from $227,189 thousand in 2022, a reduction of 9%[13] - Total stockholders' equity increased to $735,224 thousand in 2023 from $560,714 thousand in 2022, a rise of 31%[13] Market Outlook and Strategy - The company anticipates sales and earnings growth in 2024, albeit at slower rates than in recent years, due to external market factors[6] - The company is focused on enhancing productivity and leveraging new refrigerant technology to gain market share[6] Inventory and Capital Expenditures - The company’s inventories increased to $213,532 thousand in 2023 from $198,939 thousand in 2022, a rise of 7%[13] - Capital expenditures for 2023 were $104,294 thousand, significantly higher than $54,024 thousand in 2022, indicating a 93% increase[15] Other Financial Metrics - Gross profit margin for the full year 2023 was 34.1%, up from 26.7% in 2022[4] - Depreciation and amortization expenses increased to $13,029 thousand in December 2023 from $9,482 thousand in December 2022, a rise of 37.0%[22] - Interest expense decreased slightly to $884 thousand in December 2023 from $933 thousand in December 2022, a decline of 5.3%[22] - Income tax expense rose to $16,084 thousand in December 2023, compared to $6,871 thousand in December 2022, an increase of 134.5%[22] - The company recorded a litigation settlement effect of $7,500 thousand for the year ended December 2023[22] - Profit sharing effect for the year ended December 2023 was $(750) thousand, indicating a negative impact on adjusted EBITDA[22] - The company continues to focus on enhancing its EBITDA performance through strategic initiatives and operational efficiencies[22] Backlog - Backlog at the end of Q4 2023 was $510.0 million, up 4.0% from $490.6 million at the end of Q3 2023, but down 6.9% from $548.0 million at the end of Q4 2022[5]

Core Viewpoint - AAON, Inc. is set to discuss its fourth quarter 2023 financial results in a conference call scheduled for February 28, 2024, at 5:15 p.m. EST, with results released after market close on the same day [1] Company Overview - AAON, founded in 1988, is a global leader in HVAC solutions for commercial and industrial indoor environments [2] - The company specializes in designing and manufacturing highly configurable and custom-made equipment, enhancing efficiency, performance, and long-term value for customers [2] - AAON is headquartered in Tulsa, Oklahoma, featuring a world-class innovation center and testing lab that supports continuous advancements in the HVAC industry [2]

Core Investment Insights - The article emphasizes the importance of selecting stocks that provide stable returns and regular income through dividends for retirement portfolios [1] - Companies with essential products, loyal customer bases, and strong balance sheets are identified as ideal candidates for long-term investment [1] PepsiCo (PEP) - PepsiCo is highlighted as a cornerstone stock for retirement portfolios, known for stable returns and a growing dividend stream [2][3] - The company reported nearly 7% year-over-year revenue growth and a 14% increase in profits, showcasing its resilience in turbulent market conditions [3] - PepsiCo has an impressive 87% gross margin and is recognized as a Dividend King with 52 consecutive years of dividend increases, currently yielding 3% [3][4] Caterpillar (CAT) - Caterpillar is recommended as a core long-term portfolio anchor due to its essential role in global infrastructure projects [5][6] - The company experienced a 12% year-over-year sales increase and a 37% jump in earnings per share, outperforming expectations [7] - Caterpillar has a strong dividend history with 29 consecutive years of increases, currently yielding 1.7% [7] FTAI Aviation (FTAI) - FTAI Aviation operates in the commercial aircraft engine leasing sector, providing a stable investment with growth potential [8][9] - The company has quadrupled its revenue over the last two years and its stock price has increased by over 260% since September 2022 [9] - FTAI currently offers a 2.2% dividend yield and is positioned well in the growing global travel market [10] McDonald's (MCD) - McDonald's is presented as a resilient investment, thriving during economic downturns and maintaining strong sales and profit growth [11][12] - The company reported a 14% year-over-year revenue increase and a 19% rise in earnings for Q3 2023 [11] - McDonald's has a robust share repurchase program and a 48-year history of dividend growth, currently yielding 2.3% [12] Itochu (ITOCF) - Itochu is noted for its diversified business model across various sectors, providing stability and resilience [13][14] - The company offers a secure 2.65% dividend yield, making it a solid choice for long-term investors [14] Airbus (EADSY) - Airbus is positioned to benefit from increasing demand for commercial air travel and is expected to grow revenue by 12% in 2023 [15][16] - The company has secured over $163 billion in new airplane orders, indicating a strong production pipeline [16] Aaon (AAON) - Aaon specializes in HVAC equipment, with a significant increase in demand due to climate change [17] - The company reported a 29% year-over-year sales increase and a 75% rise in profits, supported by a strong balance sheet [17][18]

Core Insights - The Zacks Building Products - Air Conditioner & Heating industry is well-positioned to benefit from the energy transition and pro-environmental trends, with growing demand for renewable solutions expected in 2024 and beyond [1][3] - Companies like Watsco, Comfort Systems USA, and AAON are capitalizing on maintenance and repair services, alongside effective cost management practices, despite inflationary pressures [1][4] - The industry has shown strong performance, outperforming the broader Zacks Construction sector and S&P 500 over the past year, with a 58.4% gain compared to 37.1% and 21.4% respectively [8] Industry Overview - The industry includes designers, manufacturers, and marketers of products for heating, ventilation, air conditioning, and refrigeration, covering a wide range of equipment and services [2] - Key products include rooftop units, chillers, air-handling units, and various HVAC components, serving residential, commercial, and industrial markets [2] Trends Impacting the Industry - U.S. administration's focus on reducing greenhouse gas emissions is driving demand for clean energy systems, benefiting companies involved in controlled-environment agriculture [3] - Continuous investments in technology and e-commerce are vital for enhancing customer experience and expanding market reach [4] - The industry is experiencing stable revenue from maintenance and repair services, which are less affected by fluctuations in the construction market [4] Challenges Faced - Rising raw material costs and supply chain issues have impacted profit margins, alongside increasing operating expenses [5] - The industry is subject to stringent regulations regarding energy efficiency and emissions, which pose additional challenges [5] Market Performance - The Zacks Building Products - Air Conditioner & Heating industry holds a Zacks Industry Rank of 36, indicating strong near-term prospects [6] - The industry's forward 12-month price-to-earnings ratio is currently at 29.5X, higher than the S&P 500's 19.8X and the sector's 16.4X [9] Notable Companies - **Watsco, Inc. (WSO)**: The largest distributor of HVAC equipment in North America, with a 45% stock gain over the past year and expected earnings growth of 7.8% in 2024 [12] - **Comfort Systems USA, Inc. (FIX)**: A national provider of HVAC services, with a 74.7% stock gain and projected earnings growth of 13.5% in 2024 [13] - **AAON, Inc. (AAON)**: Focused on air conditioning and heating equipment, with a 44% stock gain and expected earnings growth of 9.6% in 2024 [15]

Financial Data and Key Metrics Changes - Net sales increased by 28.6% to $312 million from $242.6 million, driven by improved operational efficiencies and pricing contributing 16.7% to growth [10][11] - Gross profit rose by 77% to $116.1 million, with gross profit margin improving to 37.2% from 27% in Q3 2022 [10][11] - Diluted earnings per share increased by 70.6% to $0.58, with non-GAAP adjusted EPS at $0.64, a year-over-year increase of approximately 90% [10][11] Business Line Data and Key Metrics Changes - The parts business saw a 14% growth, representing 5.8% of total sales, with expectations to double or triple in the next five years [8] - The AAON, Oklahoma, and BASX segments experienced robust growth, contributing to overall volume growth of 11.9% [10] Market Data and Key Metrics Changes - The market environment remains busy, with bookings and the book-to-bill ratio improving quarter-over-quarter, despite macroeconomic signals [7][14] - Industry trends favor AAON, with a focus on decarbonization, energy efficiency, and electrification driving demand for high-quality custom equipment [7] Company Strategy and Development Direction - AAON is aggressively investing in production capacity, sales and marketing, product development, and IT infrastructure to position for long-term growth [8][20] - The company anticipates continued market share gains due to new refrigerant regulations effective January 1, 2025, and expects to leverage its early readiness in this area [20][54] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2024, expecting another solid year of growth with a healthy backlog, particularly in strong markets like data centers and semiconductor manufacturing [17][19] - The company noted that while some macro indicators suggest a slowdown, many end markets remain strong, and independent sales representatives maintain a positive outlook [19] Other Important Information - The leadership team is undergoing changes, with Matt Tobolski becoming President and COO, focusing on day-to-day operations while Gary Fields narrows his focus to strategic objectives [22][23] - Capital expenditures for the year are expected to be approximately $100 million, reflecting a 99.3% increase from the previous year [13] Q&A Session Summary Question: Thoughts on pricing as AAON approaches 2024 - Management indicated that while gross margins are strong, they expect a new range for margins rather than a return to historical levels [29] Question: Status of Longview Coil Products business - Management acknowledged hurdles but expects continuous improvement throughout the next year as they align manufacturing processes [31][33] Question: Enhancements made that are yet to be financially recognized - Management highlighted productivity improvements and ongoing CapEx projects that have not yet fully realized their potential [35][37] Question: Competitive landscape between core rooftop and BASX - Management noted a narrowing price delta between AAON products and competitors, with BASX products maintaining a value-driven proposition [40][41] Question: Potential market share gains from refrigerant regulations - Management expressed confidence in gaining market share due to being ahead in readiness for new refrigerant regulations [46][60] Question: Factors contributing to elevated SG&A expenses - Management confirmed that elevated SG&A was due to profit sharing and investments in long-term growth, which are factored into Q4 guidance [55][56]

Q3 2023 Earnings Conference Call November 6, 2023 Forward-Looking Statements and Other References Certain statements and information set forth in this presentation contains “forward-looking statements” and “forward-looking information” within the meaning of the Private Securities Litigation Reform Act of 1995. Except for statements of historical fact, certain information contained herein constitutes forward-looking statements which include management’s assessment of future plans and operations and are based ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________________ to ____________________ Commission file number: 0-18953 AAON, INC. (Exact name of registrant as specified in its charter) Nevada 87-0448736 (Sta ...

Q2 2023 Earnings Conference Call August 3, 2023 Forward-Looking Statements and Other References Certain statements and information set forth in this presentation (some of which are beyond the Company’s control) and assumptions contains “forward-looking statements” and “forward-looking that could cause actual future results to differ materially from the information” within the meaning of the Private Securities Litigation Company’s historical experience and its present expectations or Reform Act of 1995. Exce ...

AAON, Inc. (NASDAQ:AAON) Q2 2023 Earnings Conference Call August 4, 2023 5:00 PM ET Company Participants Joseph Mondillo - Director, Investor Relations Gary Fields - President & CEO Rebecca Thompson - Chief Financial Officer & Treasurer Conference Call Participants Julio Romero - Sidoti & Company Chris Moore - CJS Securities Brent Thielman - DA Davidson Jon Braatz - Oppenheimer Operator Welcome to the AAON Inc. Second Quarter 2023 Earnings Conference Call. Our host for today's call is Joseph Mondillo, Direc ...