AAON, INC. Q1 FY2025 earnings call

• Core Strategic Pillars: Consist of leading in innovation, driving sustainable organic growth, and being a best-in-class operator. - First Quarter Results: Total net sales grew 22.9% year-over-year. Backlog finished at a record $1 billion. BASX-branded equipment sales were robust, while AAON-branded production was affected by refrigerant transition and supply chain challenges. - Financials: Gross profit decreased 6.4%, SG&A expenses increased 13.3%, diluted earnings per share were $0.35 (down 23.9% year-over-year). Cash, cash equivalents, and restricted cash balances totaled $2.4 million, and debt was $252.4 million. Capital expenditures through the first quarter increased 30.2% to $50.4 million.

AAON-branded equipment: Net sales declined 19.1% year-over-year. Production was impacted by weak bookings in the fourth quarter and supply chain issues related to the new R454B refrigerant. BASX-branded equipment: Net sales surged 374.8% year-over-year, driven by demand for airside and liquid cooling solutions for data centers. AAON Coil Products: Net sales increased 287.8% year-over-year, contributing to gross margin expansion. AAON Oklahoma: Net sales dropped 23% year-over-year. Gross margin at this segment decreased 1,380 basis points due to lower production volumes and overhead absorption.

• Full year outlook: Anticipates mid-to-high teens sales growth, gross margin similar to 2024, SG&A decline of 25-50 basis points, and CapEx of approximately $220 million. - Second quarter: Sees sales and earnings modestly up from the first quarter. Tax rate was unusually low in Q1, interest expense in Q2 will be higher, and a 6% tariff mitigation surcharge is in effect for the remainder of the year.

• Supply Chain Issues: Related to the transition to the new R454B refrigerant, causing production delays for AAON-branded equipment. - Macro-economic Uncertainties: Creating uncertainty for the back half of the year. - Tariffs: Impact on supply chain and costs, though AAON is better positioned due to vertical integration and reliance on U.S. partners.

Q: Stockholder query on NYSE listing?

A: Joe Mondillo stated he would follow up on the query regarding AAON's listing status on the NYSE.