AAON (AAON) Q2 2024 earnings summary

Executive summary

• Q2 2024 net sales reached $313.6 million, up 10.4% year-over-year, driven by strong BASX segment growth and robust data center demand; backlog hit a record $650 million, up 23.5% year-over-year and 16.4% sequentially.

• Gross profit margin expanded to 36.1% from 33.1% a year ago, reflecting operational efficiencies, price realization, and lower material costs.

• Diluted EPS was $0.62, up 12.7% year-over-year; net income for Q2 was $52.2 million, and EBITDA rose 24.3% to $81.9 million.

• Capacity expansions and production layout reconfigurations are underway to support further growth, especially in data center markets.

• Share repurchases totaled $100 million in Q2 2024, with a total of $103.5 million for the first half of the year.

Financial highlights

• Net sales rose 10.4% year-over-year to $313.6 million, led by BASX's 58.3% growth; Oklahoma and Coil Products segments grew 3.4% and 4.3%, respectively.

• Gross profit increased 20.3% to $113.1 million, with gross margin improving to 36.1%; operating income was $67.2 million, and EBITDA margin reached 26.1%.

• SG&A expenses increased 16.9% to $45.9 million, or 14.6% of sales, due to higher investments in technology and professional services.

• Cash flow from operations for the first half of 2024 was $127.9 million, up from $59.9 million a year ago; capital expenditures rose to $75.4 million.

• Effective tax rate for Q2 was 22.1%; estimated annual effective tax rate is approximately 25%.

Outlook and guidance

• 2024 volume expected to be flat, with mid-single-digit pricing contribution and higher gross margin year-over-year; CapEx guidance maintained at $125 million.

• Q3 sales and GAAP EPS expected to be flat to modestly up year-over-year; most growth expected in Q4 as new capacity comes online.

• Management expects current liquidity, cash flows, and credit facility to meet operational and capital needs for 2024.