AAON (AAON) Q4 2024 earnings summary

Executive summary

• Q4 2024 sales and earnings declined due to refrigerant transition and weak nonresidential construction, but backlog surged 70% to $867.1 million, driven by BASX data center equipment and liquid cooling orders.

• Organic revenue was flat for 2024, with BASX brand showing strong growth and AAON Oklahoma segment facing headwinds.

• CEO transition announced for May 2025, with Gary Fields stepping down and Matt Tobolski taking over; Fields will remain on the board and as special advisor.

• BASX launched a custom liquid cooling solution, fueling backlog and bookings growth.

• Q4 2024 results were softer than anticipated, but management expects a steeper recovery as new capacity ramps up.

Financial highlights

• Q4 2024 net sales were $297.7 million, down 2.9% year-over-year; AAON Oklahoma sales down 16.1%, AAON Coil Products up 129.9%.

• Gross profit margin contracted to 26.1% in Q4, down from 36.4% a year ago; gross profit was $77.6 million.

• Q4 EBITDA was $47.0 million, down 39% year-over-year, with a 15.8% margin.

• Diluted EPS for Q4 2024 was $0.30, down 46.4% year-over-year, partially offset by excess tax benefit from stock compensation.

• Cash and equivalents at year-end were $6.5 million; total debt $154.9 million; leverage ratio 0.57.

Outlook and guidance

• 2025 sales growth expected in the mid to high teens, with gross margin similar to 2024 and SG&A as a percent of sales to decline by 25–50 basis points.

• CapEx for 2025 projected at $220 million, mainly for Memphis facility preparation.

• Q1 2025 sales and earnings anticipated to be modestly down sequentially due to seasonality, refrigerant transition, and Memphis start-up costs.

• Majority of $867.1 million backlog expected to convert to revenue in 2025, with margin improvement as Memphis ramps up.

• Management expects refrigerant transition headwinds to persist through Q1 2025, with improvement in Q2.