Aaon, Inc. · NASDAQ:AAON
Aaon — Q2 2023 Earnings Presentation
16 slides from Aaon's earnings presentation, Aug 3, 2023
Slide 1: Q2 2023 Earnings Conference Call
Q2 2023 Earnings Conference Call August 3, 2023 1
Slide 2: Forward-Looking Statements and Other References
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 fr
Slide 3: Q2 2023 Summary
Q2 2023 Summary SALES $284.0M GROSS PROFIT MARGIN 33.1% Organic +36.0% Y/Y +1040 bps Y/Y • +410 bps Q/Q EBITDA $65.9M DILUTED EPS $0.82 +120.3% Y/Y • 23.2% margin +173.3% Y/Y BACKLOG $526.2M +13.4% Y/Y • -12.3% Q/Q 3
Slide 4: Sales Bridge
Q2 2023 Sales Bridge Q2 Highlights • Record quarterly sales • Organic sales growth +36.0% • Organic unit volume growth +16.0% • Reflects strong backlog +20.0% +16.0% • Record production rates • Organic headcount growth +26.1% • Parts sales growth +14.2% • Robust growth at BASX 4
Slide 5: Gross Profit Margin
Q2 2023 Gross Profit Margin Q2 Highlights Positives • Improved pricing • Moderating cost inflation • Increased production output Negatives • Higher wages • Temporary inefficiencies 5
Slide 6: SG&A
Q2 2023 SG&A Q2 Highlights • As a percent of sales, SG&A increased y/y 90 bps to 13.8% • SG&A grew y/y 45.8% on total sales growth of 36.0% • The biggest increase in SG&A is from our profit sharing that has increased due to our record earnings • SG&A includes investments that will help facilitate lo
Slide 7: Income from Operations
Q2 2023 Income from Operations Q2 Highlights • Operating income grew 167.6% on total sales growth of 36.0% • Operating margin expanded y/y 950 basis points to 19.3% • Robust sales combined with moderating cost inflation • Operating margin expanded q/q 270 bps 7
Slide 8: Diluted EPS
Q2 2023 DILUTED EPS Q2 Highlights • Y/Y growth +173.3% • Strongest quarterly EPS in history • EPS was partially boosted by a one-time tax benefit of $3.1 million 8
Slide 9: Balance Sheet and Liquidity
Q2 2023 Balance Sheet and Liquidity Restricted Cash, Cash & Cash Debt Q2 Highlights Equivalents • Balance sheet remains strong • Debt of $78.5 million is down as compared to year-end by $7.5 million, but still only equates to a leverage ratio of 0.37, down from 0.46 at prior year-end Working Capital
Slide 10: Record Organic Volume and Production
RecordRecord Organic Volume Organic and Production Volume and Production Production Capacity Productivity Backlog Strengthening Sales Channel • Squeezing additional • Supply chain issues • Strong backlog entering • More alignment with capacity out of existing waning quarter channel partners footprin
Slide 11: Pricing Strategy Driving Gross Profit Margin
Pricing Strategy Driving Gross Profit Margin Q2 Highlights Managing Pricing to Market • Strong gross margin • Favorable market trends expansion are resulting in AAON managing its pricing more • Anticipate gross to market margin will continue to improve in the • Higher minimum efficiency second half
Slide 12: Backlog Continues to Climb
Backlog Continues to Climb +19.1% Q2 Highlights +26.7% • Organic backlog +13.4% y/y, -12.3% 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 chann
Slide 13: Macroeconomic Indicators Remain Positive
Macroeconomic Indicators Remain Positive +26.7% +41.0% +23.5% Source: www.data.census.gov, www.aia.org, www.constructconnect.com, www.construction.com 13
Slide 14: We Continue To Invest in Production Capacity
We Continue To Invest in Production Capacity CAPEX Q2 Highlights • AAON’s lead-times are still an industry-best and have begun to decline • Lead-times are still above normal • We will continue to invest in production capacity HEADCOUNT • Headcount +26.1% y/y, +7.1% q/q • Despite a continuance of man
Slide 15: Focusing on Parts
Focusing on Parts Q2 Highlights • Parts sales were up 14.2% in Q2 and 24.4% in the first six months of the year • Parts sales were up 30.3% in 2022 • Parts sales should accelerate as supply chain issues wane • Long-term fundamentals are strong 15
Slide 16: Outlook
Outlook Highlights • Strong backlog entering Q3 • Margin profile of backlog continues to improve entering Q3 • Strong pipeline of business • Productivity will improve in the second half of the year • Anticipate sales and EPS will modestly improve in Q3 Modeling Assumptions Pricing contribution to 20