Slide 1: Q1 2023 Earnings Conference Call
Q1 2023 Earnings Conference Call May 4, 2023
Slide 2: Forward-Looking Statements and Other References
Forward-Looking Statements and Other References Certain statements and information set forth in this presentation contains future results to differ materially from the Company’s historical experience “forward-looking statements” and “forward-looking information” within the and its present expectatio
Slide 3: Q1 2023 Summary
Q1 2023 Summary SALES $266.0M GROSS PROFIT MARGIN 29.0% Organic growth +45.5% Y/Y +380 bps Y/Y • -180 bps Q/Q EBITDA $54.6M DILUTED EPS $0.67 +81.3% Y/Y • 20.5% margin +103.0% Y/Y BACKLOG $599.9M +30.0% Y/Y • +9.5% Q/Q 3
Slide 4: Q1 2023 Sales Bridge
Q1 2023 Sales Bridge Q1 Highlights Record quarterly sales +19.1% Organic sales growth +45.5% +26.7% Organic volume growth +23.5% +41.0% +22.0% Reflects strong backlog +23.5% Record production rates Organic headcount growth +27.3% Parts sales growth +38.5% Robust growth at BASX 4
Slide 5: Q1 2023 Gross Profit Margin
Q1 2023 Gross Profit Margin 35% Q1 Highlights 30.8% 30% 28.6% 29.3% 29.0% 27.0% 26.0% 25.2% + Improved pricing 25% 22.7% + Moderating cost inflation 19.5% + Production output 20% 15% ⁻ Higher component costs and wages 10% ⁻ Supply chain issues ⁻ Temporary productivity decline 5% 0% Q1'21 Q2'21 Q3'21
Slide 6: Q1 2023 SG&A
Q1 2023 SG&A $35 14% Q1 Highlights $30 13% $25 + As a percent of sales, SG&A 13% declined 20 bps to 12.4% $20 (in millions) 12% + SG&A grew y/y 42.9% on total $15 sales growth of 45.5% 12% $10 + SG&A includes investments $5 11% that will help facilitate long- $0 11% term growth Q1'21 Q2'21 Q3'21 Q4'
Slide 7: Q1 2023 Income from Operations
Q1 2023 Income from Operations $50 20% Q1 Highlights $45 18% + Operating income grew 92.1% $40 15.1% 16% on total sales growth of 45.5% $35 14% + Operating margin expanded $30 12% y/y 400 basis points to 16.6% (in millions) $25 10% 14.5% $20 8% + Robust sales combined with $15 6% moderating cost inf
Slide 8: Q1 2023 Diluted EPS
Q1 2023 DILUTED EPS $0.80 $0.71 Q1 Highlights $0.70 $0.67 $0.60 + Y/Y growth +103.0% $0.51 + Second strongest quarterly EPS $0.50 in history $0.38 $0.40 $0.33 $0.30 $0.29 $0.30 $0.30 ⁻ Q/Q decline -5.6% ⁻ EPS was partially boosted by an $0.20 $0.11 excess tax benefit of $3.8M $0.10 $0.00 Q1'21 Q2'21
Slide 9: Q1 2023 Balance Sheet and Liquidity
Q1 2023 Balance Sheet and Liquidity Unrestricted Cash Debt $6.0 $100.0 Q1 Highlights $5.0 $80.0 Balance sheet remains strong $4.0 $60.0 $3.0 $40.0 Debt of $83.7 million is up y/y $2.0 $20.0 $18.7 million, but still only $1.0 equates to a leverage ratio of $0.0 $0.0 Q1'22 Q1'23 Q1'22 Q1'23 0.47,
Slide 10: Record Organic Volume and Production
Record Organic Volume and Production Production Capacity Productivity Backlog Strengthening Sales Channel Squeezing additional Mitigating supply Strong backlog More alignment with capacity out of existing chain issues better entering quarter channel partners footprint More efficient Tota
Slide 11: Pricing Strategy Driving Gross Profit Margin
Pricing Strategy Driving Gross Profit Margin Q1 Highlights Managing Pricing to Market Gross Margin Factors that resulted in Favorable market trends are Q/Q margin contraction are resulting in AAON managing 35% 30.8% isolated to Q1 its pricing more to market 29.3% 29.0% 30% 28.6% 26.0% 27.0% 25.2
Slide 12: Backlog Continues To Climb
Backlog Continues To Climb Q1 Highlights $600 Organic backlog +30.0% y/y, +9.5% q/q $500 Bookings continue to outpace $400 production (in millions) $300 Narrowing price premium of AAON equipment versus market $200 AAON equipment offers most $100 attractive value proposition $0 Strengthenin
Slide 13: We Continue To Invest in Production Capacity
We Continue To Invest in Production Capacity CAPEX Q1 Highlights $150 AAON’s lead-times are still an industry-best, 29% $100 CAGR but they continue to expand (in millions) $50 Orders remain robust, making it difficult to reduce lead-times $0 2018 2019 2020 2021 2022 2023E We will continue to i
Slide 14: Macroeconomic Indicators Remain Positive
Macroeconomic Indicators Remain Positive Dodge Nonresidential Construction Starts Nonresidential Construction Spending - AAON Sectors Nonresidential Construction Starts Y/Y change ConstructConnect Nonresidential Construction 30.0% 560,000 $700,000 160% Starts - 3-Month Rolling Average Y/Y Change 25.
Slide 15: Focusing on Parts and Service
Focusing on Parts and Service Q1 Highlights $60,000 Parts sales were up 38.5% in Q1 $50,000 Parts sales were up 30.3% in 2022 $40,000 (in thousands) On a two-year stack, parts sales $30,000 were up 64.6% in 2022 $20,000 Parts sales should accelerate as $10,000 supply chain issues wane $0 L
Slide 16: Outlook
Outlook Highlights Record backlog entering Q2 Improving margin profile of backlog entering Q2 Orders trends remain positive Production and productivity will improve throughout 2023 Anticipate sales and EPS will improve through at least Q3 Modelling Assumptions Pricing contribution to 2023