Financial Performance - Organic revenue increased by 11% in Q1 2025[9, 16], driven by strong volume growth, positive price realization, and productivity[16] - Adjusted EPS increased by 26% in Q1 2025[9, 16], reaching $245 compared to $194 in Q1 2024[16] - Adjusted EBITDA margin increased by 130 basis points in Q1 2025[9, 16], and adjusted operating margin increased by 100 basis points[16] Bookings and Backlog - The book-to-bill ratio was 113% in Q1 2025[9, 10], with organic bookings up by 4%[10] - The ending backlog reached $73 billion, up approximately $500 million or 8% from year-end 2024[9, 10] - Americas CHVAC experienced record quarterly bookings, with a book-to-bill ratio of 115% and backlog up approximately $400 million from year-end 2024[10] Segment Results - Americas revenue increased by 13% organically[18] - EMEA revenue increased by 6% organically[18] - Asia Pacific revenue decreased by 3% organically[18] Guidance - The company expects organic revenue growth of 7% to 8% for FY 2025[9, 23] - The company expects adjusted EPS of $1270 to $1290 for FY 2025[9, 23] - The company anticipates approximately 8% organic revenue growth for Q2 2025, with adjusted EPS of approximately $375[23, 39] Capital Deployment - Approximately $775 million in capital was deployed YTD in April 2025, including approximately $210 million in dividends and approximately $550 million in share repurchases[31] - The company targets approximately $25 billion to $30 billion in total capital deployed for FY 2025[30, 31], including approximately $800 million in dividends and $150 million in debt retirement[31]

Financial Data and Key Metrics Changes - Net sales decreased by 2.9% to $297.7 million from $306.6 million, primarily driven by a 16.1% decline in the AAON Oklahoma segment, partially offset by a 129.9% growth in the AAON Coil Products segment [23][24] - Gross profit decreased by 30.5% to $77.6 million, with gross profit margin dropping to 26.1% from 36.4% in 2023, reflecting lower volumes and fixed cost deleveraging [24] - Diluted earnings per share fell by 46.4% to $0.30 from $0.56, influenced by a large excess tax benefit related to stock-based compensation [26] Business Line Data and Key Metrics Changes - The Basics brand saw a significant year, with net sales up 35.1% and data center equipment sales up approximately 85%, leading to a total backlog increase of 70% [15][18] - The AAON brand faced challenges, with sales down modestly in the low single digits, but bookings were up in the mid-teens, resulting in a backlog increase of approximately 20% [17][18] Market Data and Key Metrics Changes - Bookings in the fourth quarter were up approximately 62%, with year-end backlog reaching $867.1 million, driven by data center equipment bookings, including a large $200 million-plus order [18][19] - The AAON Oklahoma segment experienced a slowdown due to the transition to new refrigerants, impacting production and sales volumes [20][30] Company Strategy and Development Direction - The company aims to be an industry leader in innovation and customization, focusing on engineering capabilities and customized solutions [42][43] - The strategic priorities include driving sustainable organic growth, with expectations for the data center equipment business to grow to over $1 billion within a few years [47][48] - The company is reorganizing to efficiently manage growth and capacity expansion, with significant investments in new manufacturing facilities [50] Management's Comments on Operating Environment and Future Outlook - Management noted that 2024 was a year of challenges but also highlighted strong fundamentals for both AAON and Basics brands, anticipating a return to robust growth [52][54] - The outlook for 2025 includes sales growth in the mid to high teens, with expectations for gross margins similar to 2024 [57][58] Other Important Information - Capital expenditures in the fourth quarter were $99.3 million, up nearly fourfold from the previous year, primarily for the new Memphis facility [28] - The company plans to ramp up production in the Memphis facility, with expectations for significant contributions to financials by the end of 2025 [102] Q&A Session Summary Question: Outlook for Oklahoma sales in Q1 - Management indicated that flat sales are expected due to inventory of R410A affecting momentum, with a transition to R454B impacting the run rate [62][64] Question: Reasons for Basics sales decline - Management clarified that the decline is due to capacity limitations at the Redmond facility, despite strong demand and backlog for Basics branded products [66][68] Question: Growth expectations for 2025 - Management explained that while strong growth is anticipated in the data center segment, caution is warranted due to uncertainties in the Oklahoma segment [71][75] Question: Data center construction outlook - Management reported that the data center market remains strong, with capital expenditures increasing and a positive outlook for investments [82] Question: Pricing strategy for R454B - Management stated that they will monitor bookings before implementing any price increases related to R454B, focusing on strengthening demand first [126][130] Question: Capacity and efficiency at Longview and Basics - Management acknowledged inefficiencies during ramp-up phases but expects sequential improvement in margins throughout 2025 as production stabilizes [104][137]