AAON (AAON) Q4 2021 earnings summary

Executive summary

• 2021 net sales reached a record $534.5 million, up 3.9%; price increases drove growth while volumes declined 2% and earnings fell amid inflation, labor constraints and supply disruptions.

• Backlog rose 249.6% to a record $260.2 million; organic backlog increased 200.7% to $223.8 million, and organic bookings grew 55%.

• A December acquisition added exposure to data center cooling, cleanrooms and custom HVAC; long-term strategy targets double-digit organic sales growth and a shift from niche to mainstream market participation.

Financial highlights

• FY2021 net sales were $534.5 million versus $514.6 million; gross profit was $137.8 million versus $155.8 million, and operating income was $69.3 million versus $101.8 million.

• Net income was $58.8 million versus $79.0 million; diluted EPS was $1.09 versus $1.49.

• Price increases contributed approximately $26.3 million in realized sales; BasX added $4.1 million after acquisition close, while lower volumes reduced sales by approximately $10.8 million.

• SG&A rose to $68.6 million from $60.5 million, including $4.4 million in BasX transaction costs; 2020 operating income included a $6.4 million insurance recovery gain.

• Operating cash flow was $61.2 million versus $128.8 million; investing cash outflow was $158.7 million, including $103.4 million paid for the acquisition.

Outlook and guidance

• 2022 sales and earnings were expected to increase significantly as production accelerated and supply pressures began to ease, despite early-year inflation and supply-chain challenges.

• Long-term targets: annual organic sales growth in the double digits, gross margin above 30%, and SG&A growth slower than sales.

• 2022 capital expenditure budget was $100.4 million, focused on capacity, IT infrastructure and growth initiatives.

• Management expected BasX to grow sales at a CAGR of at least 15% over several years and expand EBITDA margins from the mid-teens to 20%-plus.

• Backlog at February 1, 2022 was $347.6 million versus $103.8 million a year earlier; fulfillment goal was 60–90 days after orders become firm, subject to cancellations.