Slide 1: Q3 2023 Earnings Conference Call
Q3 2023 Earnings Conference Call November 6, 2023 AAON INC. 1
Slide 2: Forward-Looking Statements and Other References
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 fa
Slide 3: Q3 2023 Summary
Q3 2023 Summary Sales $312.0M Organic +28.6% Y/Y Gross Profit Margin 37.2% +1020 bps Y/Y • +410 bps Q/Q Adjusted EBITDA $83.7M +81.7% Y/Y • 26.8% adjusted margin Diluted EPS $0.58 +70.6% Y/Y Backlog $490.6M -4.7% Y/Y • -6.8% Q/Q AAON INC. 3
Slide 4: Record Organic Volume and Production
Record Organic Volume and Production Production Capacity Productivity Backlog Strengthening Sales Channel Expanding capacity within Supply chain issues waning Strong backlog entering More alignment with existing footprint quarter channel partners More efficient hiring Total headcount +21.5% y/y prac
Slide 5: Favorable Secular Market Trends
Favorable Secular Market Trends Decarbonization Electrification Govt. Regulations Economics From niche to mainstream. AAON INC. 5
Slide 6: Continued Investment in Production Capacity
Continued Investment in Production Capacity Q3 Highlights AAON’s lead-times are still an industry-best CAPEX and have begun to decline Lead times are still above normal We will continue to invest in production capacity Headcount +21.5% y/y Organic volume was up 11.9% y/y, reflecting Headcount increa
Slide 7: Q3 2023 Sales Bridge
Q3 2023 Sales Bridge Q3 Highlights Record quarterly sales Organic sales growth +28.6% Organic unit volume growth +11.9% Volume growth reflects strong backlog at end +16.7% of Q2, increased capacity, improved +11.9% productivity, and robust growth at the AAON Oklahoma and BASX segments Parts sales gr
Slide 8: Q3 2023 Gross Profit Margin
Q3 2023 Gross Profit Margin Q3 Highlights Positives Increased pricing Improved production output Improved efficiencies +16.7% +11.9% Better fixed cost absorption Negatives Higher wages AAON INC. 8
Slide 9: Q3 2023 SG&A
Q3 2023 SG&A Q3 Highlights As a percent of sales, SG&A increased y/y 460 bps to 16.5% Excluding a one-time settlement fee of $7.5 million and the related effect the exclusion has on profit sharing expenses, non- GAAP adjusted SG&A as a percent of sales increased 240 bps to 14.3% The biggest increase
Slide 10: Q3 2023 Diluted EPS
Q3 2023 Diluted EPS Q3 Highlights Y/Y growth +70.6% Excluding a one-time settlement fee and the related effect the exclusion has on profit sharing expenses and taxes, non-GAAP adjusted diluted EPS was $0.64 AAON INC. 10
Slide 11: Q3 2023 Balance Sheet and Liquidity
Q3 2023 Balance Sheet and Liquidity Restricted Cash, Cash & Cash Equivalents Debt Q3 Highlights Balance sheet remains strong Debt of $78.4 million is up compared to the end of 2022 by $7.4 million, but still only equates to a leverage ratio of 0.33, down from 0.46 at prior year-end Increase in debt
Slide 12: Backlog Remains Strong
Backlog Remains Strong +19.1% Q3 Highlights +26.7% Organic backlog -4.7% y/y, -6.8% q/q +22.0% Industry-best lead-times and on-time delivery rates Narrowing price premium of AAON equipment versus market AAON equipment offers most attractive value proposition Strengthening sales channel Robust demand
Slide 13: Outlook
Outlook Highlights • Strong backlog entering Q4 • Margin profile of backlog continues to improve entering Q4 • Strong pipeline of business • Anticipate typical sales and EPS seasonality in Q4 • Early outlook for 2024 is positive Modeling Assumptions Pricing contribution to 2023 sales growth: Mid dou
Slide 14: AAON Third Quarter 2023 Appendix
AAON Third Quarter 2023 Appendix AAON INC. 14
Slide 15: Q3 2023 Non-GAAP Financial Measures
Q3 2023 Non-GAAP Financial Measures Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 (in thousands) Net income, a GAAP measure $ 48,078 $ 27,473 $ 130,574 $ 61,478 Litigation settlement 7,500 — 7,500 — Profit sharing effect (750) — (750) — Tax effect (1,640) — (1,