AAON (AAON) Q4 2023 earnings summary

Executive summary

• FY23 net sales, EBITDA and earnings reached records; sales totaled $1,168.5M, while Q4 sales reached a record $306.6M.

• Q4 productivity gains supported higher output and margin expansion; bookings rose for a second consecutive quarter and exceeded production.

Financial highlights

• Q4 net sales rose 20.4% YoY to $306.6M; organic unit volume grew 9.3%, with $23.7M from volume and $28.3M from price.

• Q4 gross profit rose 42.3% YoY to $111.7M; gross margin expanded to 36.4% from 30.8%.

• Q4 operating income was $63.9M vs. $46.6M, and net income was $47.0M vs. $38.9M; diluted EPS rose 19.1% to $0.56 from $0.47.

• FY23 operating income was $227.5M vs. $126.8M, net income was $177.6M vs. $100.4M, and diluted EPS was $2.13 vs. $1.24.

• FY23 EBITDA was $274.5M and adjusted EBITDA was $281.2M; adjusted net income was $183.1M and adjusted diluted EPS was $2.20.

Outlook and guidance

• FY24 sales and earnings growth are anticipated at slower rates than recent years; management was cautiously optimistic amid external uncertainties.

• Sales growth assumptions include mid-single-digit pricing contribution and low-single-digit volume growth; gross margin is expected to expand YoY, with SG&A as a share of sales rising modestly.

• Expected FY24 capital expenditures are $125.0M to support organic growth opportunities; further improvement in earnings-to-cash conversion is targeted.

• Backlog was healthy entering 2024, bookings were steady, and sales-channel sentiment was positive; productivity improvements are expected to continue.