AAON - Earnings call transcript Q3 2017

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Operator

Good afternoon, ladies and gentlemen. Welcome to AAON Incorporated, third quarter sales and earnings call. There will be a question-and-answer period after management's brief presentation. This call will last approximately 45 minutes to one hour. I would now like to turn the call over to Mr. Asbjornson. Scott sir. ahead, go Please

Scott Asbjornson

for deals and the welcome made such I'd Litigation and remainder of a investor to call. Reform the Securities presented third disclaimer. is to to start our the herein statement safe Act not statement like outlook any the reading the quarter information this necessarily XXXX. that is historical, the To including of conference of extent forward-looking pursuant year, Hello, harbor with provisions call forward-looking by

Form is such, on many most sales to XXXX from our to risk As XX-K September up Form ended to cause the mix. events discussing report begin three the of favorable outside a subject Net XX-Q. in report XX, $XXX.X results materially primarily it from to AAON's quarterly million. like product recent XXXX. by and were the XX, the occurrence SEC AAON's I'd those differ could Sales see comparative contained of the increased anticipated. filings, $XXX.X Please due control months including to that factors million annual results X.X% the to September on

increased million. from $XX.X to profit million gross Our X.X% $XX.X

was XX.X% XXXX. compared a of gross general from million in the increased million $XX.X sales, As XX.X% XX.X% quarter just expenses percentage ended in administrative in profit to and Selling, XXXX. to $XX.X

modifications modifications quarter define just was X.X% and on increased for warranty or sales, of claims of submitted. what or SG&A X.X% percentage company and from three expenses. to has $XX.X $XX.X from our SG&A increased in million clearly deadline the sales to These ended its a to warranty operations been the Income qualifies total XX.X% XXXX. for has sales. may expense decreased months As increase XX.X% increased due policy. and a warranty increased of The place XX.X% in our September refinements more ended primarily of in XXXX. overall a warranty from working The as XX, be claim warranty reserve to This when million sales

nine $X.XX decreased per XXXX. X.X% in versus share earnings of $XXX.X up in sales XX,XXX,XXX earnings shifts from to shares rate shares annual from Our on company is effective $X.XX units sales months million. due XX, benefit Diluted ago. sold. share to the ended for to an tax XX% and The XX.X% $XX.X sales with to rate, to a effective tax income to tax Net is tax Diluted income rate million The saw by per $XX.X XXXX, XXXX. The XXXX, discrete a $XXX.X decreased per a quarter compared increased months be September higher X% ended excluding XXXX were year to XX.X% XX%. events, three XX,XXX,XXX rate XX, September or company's expected same in were Net September increase approximately stock The results of states higher million excess compensation. XX, from XX.X%. X.X% to from per share to smaller million the share. of or total in estimated based

volume due revenues slower units, of However, growth in pace. to at less increased a expensive

from eight million a Our $XX.X of profit $XX.X million. times gross percent increased

to general in the nine $XX.X XXXX. sales, ended XX.X% and a $XX.X XX.X% Selling, As percentage from profit gross was to expenses million in million administrative of in XXXX. compared months XX.X% just increased

operations SG&A XX.X% increase or million decreased $XX.X of the million to mentioned to just SG&A percentage XX.X% to increased As XXXX. the earlier. The of increased was from sales X.X% expenses in overall Income total sales. XX.X% in ended a from XX.X% warranty or due primarily months in of we sales sales, of six from $XX.X

of shares Net $XX year XX,XXX,XXX versus per share sales income the period rate sales $X.XX decreased Our to XX,XXX,XXX million tax to XX.X% in X.X% same share. share or XXXX. from or from XX.X%. per based share earnings XX.X% compared Diluted by shares decreased to ago. per on a to in million $X.XX XX.X% effective Diluted decreased were of per $XX.X earnings

that have Looking XXXX. working at the and capital at balance one $XX.X months. million to versus totaled from September investments $XXX.X sheet, XX, ranging at million you'll of December we XXXX. see have $XXX.X XX, XX month balance Cash million Investments maturities

is approximately X.X:X. current ratio Our

stock the expenditures had We million share million million equipment. Shareholders' year $XX.X were it metal at capital to $X.XX September $XX December have but XX, of year-to-date. now of company $X.XX $XX equity at capital XXXX. XXXX, to Our approximately million. expected originally compared sheet The be to to for diluted is $XX.X repurchases expenditures raised acquisition XX, accelerate per

remain now the the I year. to our turn the detail, over of Gary products the call will Fields, would along to President, continue like We our results further for with and the debt-free. to outlook remainder discuss in who new

Gary Fields

Manufacturing, that larger the at the XX quarter. relatively in backlog various Amazon versus and earlier recently saw scared we've stores. remain X.X% was so They on pump education national XX, input volume. towards to XXXX, of buildings out is other far with any a with another decent seem see statements. go to long school what with Commercial longtime still direct to there. some product of with much the bit, due we had K-XX. change The Municipalities they're of like seeing to to the any ago. is seems The traditional there, new health have typically as Education, Lodging, in. and market that, million lot various seems quite the really continued the a said, to about earlier it grocery afternoon. accounts by steady not mix. compared coming steady Retail through our markets, districts through increased regards strong. be various sporadic. are a with orders, remaining we've year new weakening how heat replacement This We'll primarily functions, through it sales has between year. as looking not orders our be little And bit a not Potential going are door, little not their represents a at real XX-XX remains We and little lodging. Medical change million Commercial somewhere some I backlog force this advocates of conversations the $XX.X some a just primarily and Office third to bidding has moving steady. a retail, quarter, done. be sale an the be usually little water-source market September to net traditional. where The XX care Good to continues the for but the portion seeing again, process spurts. they're than see had at our from doing purchasing our products, rep $XX.X of are spurt We're production. various days The of accelerate.

while So, we look back historic production reasonable to this the we strong level. get for remain in backlog

For - the over because production 'XX, we're accelerating the is remainder of again sorry, Norm. that our to handing backlog

Norm Asbjornson

we strong strong orders shipments. strong is Unlike of like a ago, were weak year. you. be the when this getting looked appear orders, it Thank just remainder on year on a input a to year, this looking ago XXXX year The

excellent. pumps thing year, things got give heat If are very the so set during we'll we quality due able for starting were a growth. heat product and The an orders bad. we able the lot it. on quarters, the pretty will The move to is election idea some move The heat the slowdown the correctly, three they off estimating pump the is water-source as preceding was is faster ship So, hesitancy we you biggest time and The as than in only coming to can in about that belief should timing had customers fourth water-source The shipping We which we grow to much conclude back. to build the on cycle. we many last actual them, are water-source the that anticipated to further be well. want that pumps quarter about market when to is we in significantly. did everything

were XXXX. to how our much work last with in, first think, basically And into and then new and of getting having will work Within than out approval backlog, a design did this with would rate real catch-up reduce ran be able the XXXX year. will the a XXXX we personnel like in So, quarters. position backlog, This the where for in to additional a factory. was deploy better therefore first in than two back our and behind The have had only low quarter the months, of in and have the when turning been year, a we've to start we better we we orders. major because and on turn of launches personnel cut fast started ago half hiring ourselves then to locked to run all having we started change last coming came and effects year last have of of few a orders around around. This, positive of done we of we done course, is get the year been it lot

a for much got going XX. a orders during As backlog. they pretty deploying and begin be or a those coming somewhere quarter pretty maintain you did the good have where in is. quite increase, in we'll about price weeks we the can to profit, significant Gross do We it X take improvement have shipments thereabouts shipments. which orders out quarter-to-quarter go November we positive into job the and on on catch-up That total third of see, the coming of effect backlog, back will ourselves in. and course, And will will into is believe

door. start to expenditures, So, the goes middle what pricing improvement in noticeable seeing it on be first was before noted, out be going any approximately is the we will the as Capital quarter million. with $XX.X of

capital from expenditures line and on we're doing in we're to very about and now, and the year doing. itself of building significant. haven't And of you in and outside, water-source big We moving The of building. very, This many is it's and what lab it's which it, very lab, finished the putting it. new what we believe be R&D have we're feet, the been capital testing pretty XXX,XXX including the well this a running those areas will who The pump square now is up into a world. facets the two are thing. the is, establishment of in additions heard, with lot for production all largest the We heat equipment quickly areas, lab of

the all lot their things in in to testing put XX there's areas to to open those to function. ready work cells And We it. do it individual everything now will have get a start and verify all and and I'd to of accuracy questions. test internal like

Operator

question from Okay, is Davidson. come Brent Instructions] of first D.A. the line Thielman, [Operator to our going

Brent Thielman

afternoon. good Hi,

Norm Asbjornson

Good afternoon.

Brent Thielman

the bit think associated to off roll that Scott, was SG&A be a thought after I about of additional second the quarter. we comes us, just elevated warranty will surprise the half level with an reserve into last Should or it. and do thinking still that expense little in? here a you

Scott Asbjornson

that particular on quarter same with change. We to us paint expenses fully different that taper we QX. of the costs are couple policy going were I a additional QX had that snowballed the But at time we'll The our problems main trailing issues charges still off the into, process that at and this in us of we have aware into issues We have all just we're through. caused under had some coming are Well, think few a one believe control. was to end vendor some coming of QX. of kind

don't So, going year however. next we into anything anticipate

Brent Thielman

new the going shipping the as What's getting good for then me like speak, of to Got relevance to on this it orders remind of you. you a XQ of that? with just and pump line, waiting You're and is be obviously we kind the the certification? can importance regard certification period sounds for it

Gary Fields

Gary. is This

is certification the factors. of probably relevance several the So,

that's energy from energy agency energy rebates significant to wants projects lot have One claims And AHRI seeking your data provider. certification most these provider validate certified are to of of is by the performance. ones of a that an this energy

So, not they until there involved, you the for an make energy certification, it. get if rebate you eligible will is

you you that's some projects that says, hey, the you've provider sold the have have all because for categories we energy know other We Now in trust certified. we submitted all where the of it. other equipment

a people are issue their certification, going of kind We broad history couple got that reputation people that of you're happened you're have have well. you very not I to to activity. we'll for that once that energy these That's mean, know support us confidence those achieve long get on going rebates. our But isolated be, with the then cases.

facet one this facet and of is consulting in that's of the project, the specifies So engineer another spec of market, plan the when is, a specifications. for it. the feature standard it a Then products

So, eligible his certification. be lacking not to project you're at that

so so, a it, didn't that widespread hinder And been far projects that's have the the we've that certification not gotten favorable situation. circumstances but with

So, it to is get - significant sales that sales we to hurdle our obstacles a or got past. to our

says that. the their take. August weeks. a they experience we requested. begin agency test don't long they us schedule it give week. certificate will testing initially submitted gave of of November the schedule you XX, testing. a don't Again, will seven just Now that pieces And They last tell our they the is how good that to equipment news take But couple a test you for when they'll XX is that

So, next XX, XX we're in have that that somewhere anticipating outside days we the certification accomplished. that should

I'm to around maneuver to beginning that hurdle XXXX. a looking So, be or an we for that obstacle have not

Brent Thielman

yeah, that. discounts, Okay, response the competition? thanks Gary, securing been taking the line. thorough. readout what I you is the guys I has there? sense out prices very Any guess Are the for Then question of any offering - orders are they pump that's down, on from initial these appreciate

Gary Fields

They were because already taken readout that they million this, I NIBE purchased a be. of of haven't where in we a it, they They learned when purchased, afford learned these at And pretty we They WaterFurnace. was there. ClimateMaster. I and They invested it companies. the prices they at much that think - can They knew level just is to. We discounted There $XXX needed you to purchased think look don't No, called. was companies down Enertech. of purchased purchased. other they was and other they'd has purchase then fact CGC,

So, Well, car nice pretty thinking it's bought they're when something it. a million. upward at $XXX of they that you looked sports

really they're and had I interesting looks What's in They week there was not represent reps, guys particular manufacturers there most or ClimateMaster. them with they cut our we've before, and last in prices, display. the told a the like And anxious of customer These half So, on people it had equipment about a you ClimateMaster, of is as Phoenix our anyhow, like. did. to the competing at several go event, representative. line

to regional says, product well, sales moment there. had with it's to was So, looking said, he the you manager don't ClimateMaster want. yours. And And can I He at your all well, product. probably says, I a me look my antique at you him, visit compared want you

done please hands regional that. there as towel a design. And and the that's card in Well, threw he business just on manager So, second says, bit, we little he the chatted manufacturer, the sales keep his me that's this.

was a event at in one back with other The similar Florida March. Pump Heat

don't they recovering going move what totally industry. have pricewise this I to But to their without room and think they of do have lot a to really we're people investments. what devastating these profits realize

Brent Thielman

I appreciate it else. that. someone to I'll over turn

Operator

Our next Company. question Mondillo, line from to going the of Sidoti come is & Joe

Joe Mondillo

Hi, guys. Good afternoon.

Gary Fields

Hi, Joe.

Scott Asbjornson

Joe. Hello,

Joe Mondillo

noticed. orders I increase if price ask any wanted that sometimes ahead you've sort to you've of in acceleration of historically the So, noticed

Gary Fields

it. it on the normal push. a bit back was track. until felt had consistent. that I about forward running kind earlier we day, it day, pretty I day a which all. haven't first pace XX forward been of Today, I the like of at was push yesterday, Yesterday, checked booked Yesterday a felt at a been Up any along has in a that But normal was

until away. they I a if think Reps any days don't are minute, notorious delivery have for we're probably few procrastinating last the especially pressure.

have a So, this we expect sense forward or I days. push. I in will XX But another think better do of some week

Gary Fields

Joe? Hello?

Joe Mondillo

sorry, you I'm hear me? can

Operator

Go now. ahead. hear can you we Yeah,

Joe Mondillo

wanted within to just operations the first in the that. your in about of terms year. of Sorry I half know the inefficiencies

know - a you a inefficiencies us? that's read behind in first on But the of still I wondering mainly maybe us the I'm Are half. those if just don't saw or the could little wondering correct backlog it that slow. update Just looks turnover if like you was not.

Gary Fields

are to in direction. want say going I progress in they Well, work right a the

to have reduce backlog. able the been We

the think I highest ever was $XX we about saw million.

I think the point was the and now highest at reporting the any in in mid-XXs XXs. low we're

job. the management. a right few doing more We're produce good more to So, were The working direction. backlog of using the right pre-changeover but But the becoming headed in efficient the is really a people where We're the back are in dollars. we're we're to still direction. not it we guys

that's is other our the in headed the line that's warranty. The affecting thing bottom right direction

which Some of - being - here situations when to various the addition I began that think policy notified of issues change, that was didn't got immediately were in the warranty that suitable. I almost really timing I I because

on of same. process a and their had the but issue fault But the that some was now the expense. we vendor And of a got did trying it of first I vestiges Well, and and quarter. got to hold bit vendor right much to we paint there timing now. of of that that we're hold issues during a trailed I surprise quarter some some been second the it the duration about a lot due Not the the that a the necessarily digested So, process was that reimbursement. mentioned issue. a their us into kind Scott the changeover of get caused last cleared us paint earlier down in of sending peak actually, people to just of management. caught really resolved, Those some have that Kind that we're of of pretty was that at both in and up and issue think

the to I warranty for of situation fourth efficiency So, improve, those look both improve. improve, to things the labor quarter, expense to

Joe Mondillo

then to just market you the Could to goal that to that in hit where you're Good And wanted point offering offering to entire have pieces at of own and of us bulk time. market the on hear. also get percentage the a the what - you this product I could great. that the of you of Okay, all market? guys sort so know ask, your water-source heat regarding on update offering with pump, a product at of is certain worth

Gary Fields

Sure.

development our earlier. it our goes of with in of Norm road kind line mentioned facilities additional map, So, product construction that these

So, our call facility, C X X, it and we or and termed it A, B X. Phase

product So Phase using been Phase X and we're the in at to the more the offering XX product, product, of widening or will be product of more And a time, we're in completed that next B. to be year high A process, now. It's on the completed a built family a build Phase to will is production ago. we've to C what product due it'll vet is additional what what same that's that the XX Phase bit be be line. out we using designing but little days. B

we For week, run. instance, big a just, finished last

not our orders the variance. advantage units identical. to can we were to take higher of that them rate And run of third phase of a are of identical. XXX line units All the sort a with lot at those of where actually is There's

address The of year we'll X. tapers that the the 'XX, from of desirable have you we to those question, the the more have your starting down and line. offering entire address answer 'XX, go end product one entire of market add a each complete product that markets family will the off further more Throughout to line. percentages product the we'll more more by of So, January

- addresses now B have So, of addresses somewhere the available line about the available market. the XX XX% done XA what of XX% we around addresses about right market. Line

to with to so XX we be really So XX% by product on the quarter the have and build of available it. certified quarter, prepared That that design mostly a facility last will that the around market, the line year. we at XX% throughout first the go of year. product puts us the will something should come end first of percent And

Joe Mondillo

know ask Okay, perfect. you you have And - have I to this. I wanted don't I know this. if don't if

XXXX any know no regarding that's you don't, don't you okay, water-source problem, give you for don't If you about the to but if guys financial of do any. think have and for I sort guidance, have heat us goals pump?

Gary Fields

peeling too to would giving there want out stay I now. forward We're - in be that still guidance that away Joe, segment of No, dollars. if from it right gave I much a kind and

we'll by And XXX% the XX% we the between address be of we're of to we're available able runway market. our to to say aspirations share. five of of years that at a available I've just XX% address end the said market. So, to And next can of year, three market eventually, and going get before, looking as

attainable, that are All of which orders coming very are occur. that we the looking occurring in would thought everything's now,

it taking a is little just of longer. Some

saying was Norm As earlier.

Joe Mondillo

XXXX. CapEx, XX of XX budget How XXXX about think terms in else Sure. sort you in have the, we I and that the to with laboratory on? guided the you everything know going can I to of think,

Scott Asbjornson

to I you'll point about do our out of have that range. that We're still million year. what next notice We're place. want look in finalizing sheet, we we're all going at still the plan to done balance if our budgeting million get assets in to XX for you XX

is and would the part equipment payments Our getting released to we and of but due cash than anticipate, up flow lower is that finalized.

Joe Mondillo

sort you thinking with return just What's that on idea return the laboratory, regarding that how return on behind that compared investment past just budget, do on a have is get you I'm then laboratory, of your to regarding very investment. sizable just It's monetize investment to question know that. thinking year's if you and or facility? to years. year's an CapEx logic just about How this and Okay I been quite been laboratory? expand relative what me. that's from wondering last trying of can which wondering get inflated investment on the next could a

Gary Fields

Yeah, certainly.

the company. business the won't in we're for of - developing it written call aspect that strategic that of business. whole we've aspect developing we're one is plans segment got. midst strategic strategic a the we've plan I that for the And that plans, one of Clearly, So, segment,

how's with So, corner as that conference over about room that preliminary corner. things a types equipment sessions. and we've in various have representatives an a have Particularly, such weeks of an these don't a around room. to ago and next equipment equipment they that of preliminary plan, your the to room that's - for how's strategic they noise were our have that you to that a what's hey, vibration, level, Well, City, it. what's two say customers what's I happen, want And our New my mockup model the in to we there manufacture Joe, talked in two and had all there, representative in there we've then those York got an here they said, office, build can mark a right when mockup, they that, from city, want can and going instance, with they conference room physically looked that's sessions, can feel. going at computers to happen. it, chalk put They show

our Well, So but not in And revenue of customers we that does this it. of activity it kind of of just are be the anticipate that laboratory. going eventually them test their to XX% that's that's it one all could and bring as exactly how organizations mockups aspect activity. here those show what to representative as much of that their does equipment that

either currently is - for into we that products development map road product water-source and a families ideas. our going what products got road want research to significant development refine to have be of Another us. for we've heat We've activity, product pump. expand other done we've product course, or And development out got with that now of product XXXX we map this and goes like new

that a we'll product in road we've So, very that be broad, developing very development map got lab. comprehensive

field and build. laboratory, does what hope the actually out make models. Then build So the it to what model you we it there rather capabilities can have we put to field we can your prove we going the product than know and - modeling and our in and we're it build be

more to it you more so laboratory. So, you in it validate your process, helps in and prove confidence modeling modeling gain our as your

And we of our an a and a two So, that primary on laboratory then We've minimum there's it. have that have North regular activities interest aspect environmental of there's a testing acoustical of desire because and facilities we America. really of that those plan our in don't exceed three that industries that and testing the which are outside any lab to million other revenue that for testing of we for other would got profit basis, of expressed available absorb build so streams, a won't logically. product value, be value to want story to if a going one $X told them have revenue spend which product lot a they're say, will a produce internally. that that I justification lot of time and

we're kind looking that's at. of what So

Joe Mondillo

point being of what finished? is And it this Okay. the timing sort at of

Gary Fields

that to their desire Well, and this witness we with we'll the I West But this I for time the for major them this be they that believe somewhere November XXX% and project year, sold to about next what finished accomplish going in to certified, yesterday. call October, commissioned building was on equipment. range. able that. a Well, owner over user, have be We it a revenue to test testing a and the is bringing June desire in earlier, the that end sort schedule mentioned Coast rep of July. They has of major that a their

lab a we going accommodate the managing people that, are over I with and so, that schedule that. was just can figured where schedule yesterday And we our out have

if we So, know have as early use the first for June six lab I or be certain but this in two of lab, have the see October, I'm new grand next year week aspects at a that November. will as it's don't say, XX, available will on or is looking - to have and probably come June opening maybe schedule. Joe, my complete, But it of absolutely

Joe Mondillo

going looking for there Okay, out. great. have taking and get to I'm forward down Thanks Well, check that my questions. that. to to

Norm Asbjornson

Joe. you, Thank

Operator

next Capital. of come line our And to from question is Brian going Gustavson, the XXXX

Brian Gustavson

Thanks time. for the guys. Hey,

can I year Just out for Can positives margin? you been talk XXXX negatives might and are next pressures kind - can of just But margins, to get back and margins, gross the conceptualize and on think they a going a know was gross good where to where we you those year? the levels? on XXXX the dip. XXXX gross about has play you

Gary Fields

percentage But one margin to the was it's more be admired to and not driving Well, dollars to easily here is bottom line. the real goal duplicated. 'XX put of The gross appreciated.

we've we warranty occurrences, expense believe us. product exactly the Now guys, onetime and from management to changeover essentially not a somewhat inefficiency things the plant project the and and had historical this few from management the those are that behind newer but were

that a will margin to that. So, some we'll lost, the of we some see it percentage we've return with of - regain

any The to is - of X% keep absorbs increase, on that increases. the increases put when other having us of the you thing effect; increase materials The at least going it's into percentage from is much seeing erosion. our we wage that this price at look salaries and of percentage. price that X% of in one and percentage those pretty the hourly About materials, X% half price we're just

bill just might the goes X% like other little a less up, so percent that, bill The the of bit, some miscellaneous goes visible those up, like but it bottom absorb line gas things the things. might possibly the electric things also help

our that for erosion a due now miscellaneous that believe managed people have efficiency material serious had really they a would that that's back. won't and be a like higher erosion before. to efficiency plant to going to young They was right This things. they've And has the And 'XX got this job. a better the there really, a in product dollars lofty than have was pretty those quarter cost, line outstanding keep the young than have direction. get most will revenue bottom So, to the it I XXXX to and a going and guys and ever a margin record But margin in top get little any of plant from goal. line labor percentages, get cost to, mean, float. get guys. on I price we then bit any occurred lid those up have more be these out we eons done up, have the a the margin product increases the let the to margin not produced produced that's rate been at of the to

Brian Gustavson

you for Got that you. Thank color.

in kind next Just talking someone year that innovation about at I with of of the now? you're there's you uptick that. kind the or you think think level kind do you're asked this given But do maintain lab, SG&A stuff on of SG&A,

Gary Fields

push going Well, not it affect exactly that's letting of planning lab's us SG&A, strategic that process intent but out part that how of to to have my figure in. we every

Scott Asbjornson

will Warranty expense, going expecting go that SG&A down at probability lower all will forward.

Brian Gustavson

pumps, Got - do the shipping? water-source start Okay. those on you. Like heat see should And just when we significant when

Gary Fields

Water-source is - heat pump

Brian Gustavson

They're shipping now?

Gary Fields

comments we earlier year-to-date. his in will said more Norm like mean, of ship units I shipping. many been some quarter, we the as there, fourth units in shipped as or we've Yes,

Brian Gustavson

of what's lot margins? there? if you Okay. a the help does pumps, ship margin margins, - What's heat water-source hurt the that impact Like

Gary Fields

Well, more going different share revenue going that might believe it something or where we'll revenue, the hurt things thing it was four at But is of have to it four what of was units followed lower configurations. then that you one a time. portion of when it look units I'll could though the percentage-wise these for pretty know significant been There's moment. and or lines. three configuration XX another. configuration down is period of be or by a click with the a rest if we margin of And alternating or for our off We've you below is to one the distinct there margin interesting. even more then small four units move one We way through the benchmark. its do the just benchmark happen, can't than It the whole company. a of But two, three start margin on the three than at to line assembly building different is XX,

So, they any don't get catch rhythm.

they okay. basketball a next One like they that looks a one is of do a and say do, football, - looks them like the we'll

lot catch don't they rhythm. a So, of

units, our looked our margin. the XXX ran know we what benchmark had very which lower And it. We said, random. okay, it of were so, was identical we this to them, was Well, a on those And of than margin tail, and nice. XXX for nose and we just order margins we that at now get

you do you get well I stop that memory muscle that have you So, then catch when and to to this do what think, when next, efficiency. don't where got rhythm, have people

B footballs is put the basketballs the have be So, line handle A, get baseballs going variance. when that flow we'll intention always A, we There'll and - will C. it and B, always down moment. that to together, unique units, any configurations. which throughout bigger be lines. going C, bigger build we're Line be will those tonnages, more for high-volume line year, Line next and one will at

end XX that probably us will believe overall close we we're experience a for margin. an from months facilities allow gross product pretty So, goal get having year to to the to and line what would be

Norm Asbjornson

some we've going to got to of definitely attached just has a summarize, the So margin negative stuff got it. on

Some of in is margin but we large And that bit, not were job, on you're black. this made the we standard breakeven. to it definitely one little a accustomed probably

to system varies, to that the are going things, it vary. it shuts glitch how some whole to it's able system whole happen of for the not So, including or upon reason. people depending there's Day a some make host whether well day down in and

of be issue XX on several We're issue or when these and still or an having we're an three yet. in And it going months of issues. to we'll going hours. to probably for very that's rare minutes startup down phase, every So, we have one to the XX have then every where will two to go get

Brian Gustavson

heat like cross? I of like Like those you'll pumps, you year to just point lines you - be profitability? kind on do you what the see. will water-source do But kind volume what of the next when you'll cross think need might of think or you line

Norm Asbjornson

into We'll be next crossing think becoming in here. the very noticeable any in middle scale, be end have of going year bottom of the it's line we Recognize year, XXXX. to I think. the Where the it's what possibly significant and done start really I on going to

bit. it summarize little a just Let's

and a from metal metal About individual there designed matter the industry advanced sheet might minutes. product. tower. finished on way gets set that in which product, metal for many is It's which state sheet out new work out It's of piece anywhere. two In shipping or sheet totally art metal, of days this, sitting built is matter art, sheet or the that's any aluminum minutes. Think of hours. a a sheet be in not areas. have that's of the of line as the down We've road We that of production a a Each anything the later, else individual state of a hours of metal. piece months just was a in process an words, other piece of matter unit a of

unit sophisticated minutes. up production in no very we we've run got to that be done unit run have and manner when about changeover. So, is is line that we think Every a unit has on rate anything. minimum or run the a X.X rate And or now, or changeover per is right Every unique. running we're because

the be maybe units So, rate X.X-minute X.X run everything change every will you four together. minutes or will or possibly put hours totally just

a of We it thought leave We we and challenges. succeeded. So, could together. We unusual thought very we undertook could this situation. line is kind to we've put do this the

it going it's be we on interesting that There's have to us it exist lot understand line no in really once of whole what that to warehouse, do how all the don't fully each on things line this at cost and the to line. the see it bottom understand bringing of warehouse. back the taking we run a storage fully will working to it very in and to people because just individual warehouse, from So, the

have It's fabricated people We sheet X on metals. working all automated.

copper. people zero fabricating all automated. have It's We

We have all X people automated. fabricating insulation. It's

the the different brings We shelf and and one unit have high have a right towers and delivers necessary time there's with to with down we purchased comes at right time right down. XX-foot bring down shelf parts the next because and product minimum the the XX installed shelves the

there's we load simple. on So, These line. right and at nobody hauling they the put nighttime, it's just to down whole shelves in parts the line line the when the during and the the parts come over daytime,

We final What the potential perfected all make an has, methodology. you is it how stages run it time. went working. challenge So, the to had We into we've know haven't been enormous additional can we of lot into this we has of that's time done is and of it. been lot getting we're now. only future far in know manufacturing work and and a our we as concern, that rapidly can product - the out going because a take among and our people in imagine, the There's it of

All of year be going in to aren't we are. But we're from to good. with is where be that we is now where thrilled itself Everybody a proving now.

Brian Gustavson

afternoon. thank a you and the great time for have Well, Okay. guys

Norm Asbjornson

again on you see fourth we'll you, Thank our Thank quarter results. you.

Operator

questions. And closing back management further for comments. at call turn over have to I'll we the no time, this

Scott Asbjornson

into we third our And to results. Thank forward listening speaking look you. we'll to call. for quarter have when everyone you appreciate our fourth We quarter conference again

Operator

call. to conference like participating today's we'd again, in thank for Once you

You may now disconnect.

AAON (AAON) 5 Nov 172017 Q3 Earnings call transcript