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• Net Sales: Increased 22.9% to $322.1 million from $262.1 million in Q1 2024.

• Basics Branded Equipment Sales: Grew 374.8% year-over-year.

• AAON Branded Equipment Sales: Declined 19.1% year-over-year.

• Gross Profit: Decreased 6.4% to $86.4 million; gross margin was 26.8% compared to 35.2% in Q1 2024.

• SG&A Expenses: Increased 13.3% to $51.3 million; as a percent of sales, decreased to 15.9% from 17.3%.

• Diluted Earnings Per Share: $0.35, down 23.9% from a year ago; adjusted earnings were $0.37, down 20%.

• Backlog: Reached a record level of $1 billion, up 83.9% year-over-year.

• Cash Equivalents and Restricted Cash: Totaled $2.4 million as of March 31, 2025.

• Debt: $252.4 million at the end of the quarter.

• Leverage Ratio: 0.95.

• Cash Flow from Operations: Used $9.2 million year-to-date compared to $92.4 million provided in the prior year.

• Capital Expenditures: Increased 30.2% to $50.4 million; anticipated to be $220 million for 2025.

• Warning! GuruFocus has detected 4 Warning Signs with AAON.

Release Date: May 01, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• AAON Inc (NASDAQ:AAON) reported a 22.9% year-over-year increase in net sales, driven by a significant 374.8% growth in Basics branded equipment sales.

• The company's total backlog reached a record level of $1 billion, up 83.9% year-over-year, indicating strong future demand.

• Operational efficiency improvements at AAON's Oregon and Texas facilities contributed to improved segment margins.

• AAON Inc (NASDAQ:AAON) is seeing strong demand for its heat pump configured rooftop units, with plans to expand this product line further.

• The company is making progress with its national account strategy, which is expected to have a meaningful impact on growth, particularly with its Alpha Class air source heat pumps.

Negative Points

• Sales of AAON branded equipment declined by 19.1% year-over-year, primarily due to weak bookings and supply chain issues related to new refrigerant components.

• Total gross margin contracted by 840 basis points compared to the same quarter last year, reflecting lower production volumes and operating leverage effects.

• The AAON Oklahoma segment experienced a significant gross margin decline of 1,380 basis points year-over-year.

• Diluted earnings per share decreased by 23.9% from the previous year, reflecting lower production volumes and profits of AAON branded equipment.

• The macroeconomic environment remains uncertain, creating potential challenges for the second half of the year, particularly in terms of bookings and production.