AAON - Earnings call transcript Q1 2018

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Operator

Good afternoon, ladies and gentlemen. Welcome to the AAON, Inc.

First 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 an hour. turn over to Mr. like would the to meeting I

go Ash Please Mr. Pearson [ph]. ahead,

Pearson. Ash

Unidentified Company Representative

is XXXX. like necessarily provisions I'd Litigation To presented information year, safe outlook any afternoon. read harbor of remainder made the statement including Act the that Reform pursuant for with the the deals statement Good Securities herein to and extent of disclaimer. is the the such historical, of the forward-looking not forward looking to

occurrence the differ of events such, Asbjornson, like I’d anticipated. report it SEC to As the report cause introduce contained to to subject control now filings, AAON's results Please factors annual quarterly could Officer. on recent on materially many Form Chief that our risk is our Scott Financial outside those most Form XX-Q. in including the see XX-K AAON's the from and

Scott Asbjornson

versus the Net $XX.X results Welcome $XX.X ended March call. the to our million. million conference XXXX comparative XX like to discussing XX.X% three to months were by up March begin first of from I'd XX sales XXXX.

due New the for mainly products. and to heat quarter the rooftop increases in water source sales our pump

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

lowered quarter profit the by XX, and increased In of employee just percentage in tax bonus taxes result Tax $XXXX bonus $X.X Act, all corporate as time act in of company As a ended per Cut federal employees XX.X% was paid the January XX.X% excluding of which from to sales, the gross compared XXXX the XXXX. of Jobs benefit. a one million, a sales XX%. XX% and rate of cost This to the

the is quarter ever company's company its has seasonality sales other as of of of still decreased $XX.X given XXXX. and in the lower workforce water of workforce end and a is higher profitable level production. maintained expenses growing The production general of the this million XXXX margin Selling, through business. beginning in part anticipation business source XXXX early also fourth business lower and and Additionally, the in $XX.X typically being our with pump a of products. in profit to company first The from as heat million in stages it X% and administrative has yet not

X.X% of and decreased As from SG&A decreased was a XX.X% overall $XX.X decrease of in in XX.X% decrease percentage sales The million ended total quarter profit million sales from from of Income just primarily sales of to sharing. operations the or advertising to percent due XXXX. expense or SG&A XX.X% in in to the XX.X% $X.X sales.

$X.XX sales now XX,XXX,XXX year based our and Rebecca per X.X% earnings of per XX,XXX,XXXXshares Accounting things share or earnings to from Treasurer. per compared by quarter turn in ago. in same shares over I'll share XX.X% of XXXX. $X.XX share. $XX.X rate were XX.X% The or Our discrete to The the income decrease federal effective corporate annual decreased and Net the December that Cuts estimated XX.X% to excluding on $X.X events to in rate XXnd to XXXX XX.X%. decreased expected rate, was rate million XXXX be tax approximately is Officer sales Thompson, million a to decreased to Act versus Tax the on share was to effective Jobs effective Diluted tax XX%. enacted due XX%. from Diluted our company's per lowering Chief

Rebecca Thomson

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

X.XX. Our current ratio is approximately

million. $X.X were expenditures capital Our

year-to-date. [ph] purchased be XXXX. December to for to stopped per XXXX [ph] $X.X the operations $X million. company diluted expenditures at XX last approximately We at is March substantially million compared $XX.X XX the We The $X.XX year year award has share equity million. all and $X.XX Shareholders purchases expect for at the assets

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

Gary Fields

Net workers to of sales about to details. increased we've demand. XX.X% actions. with quarter, first unable we of identified hire clearly for In quarter were of was XXXX, [ph] and meet quarter I'd fraught the the those first quick like various corrective enough our to the issues plant talk which implemented some

quarter XX%. forecast, February occurred. versus XXXX, a March we actually stronger we down retained down were a forecast, in order were January greater of coming So input first were into versus down we we the In anticipation than of much plant In workforce XX%. XX.X%.

weren’t orders these forecast. rate near that were door coming they the in So the

these in any that is Now to other time These comparative were only bit that to period. April of comparative are are one The X% above forecasts. forecast. good news not we

all the were us. want note positive way the over through to of the But consistently mark So sales Architectural our Index short that in is of the Billing I channel the XX has to the many It just past forecast down direction. bit of in that went that and trending right the was providing months. This April make end been in going to up territory. a of supported forecasts. loop we still turned

slower orders somewhat to timing want confirmed the were sales increases. as go over release in assertion. to next pipeline expected. that further confirmed forecast, but I of price that originally is the the than The Our April channel

to in a had increase increase, price built So we've of of applied first XX% price quarter X% had we the what November approximately it. XXXX that in

The Beginning established April, on the price new product is of other the right price all before in that that being Xst was increase. was the built accumulated at November. backlog XX%

price of in increase. our backlog implement the prices So so increased, not pressure component did had able to yet because Xst, it first prices on those built January mostly increased beginning that XX% quarter was that been we effectively had the component

forecast were had as with and steel this our time. While all utilized. but that impact, quarter, was impact they've elevated great partners this the at the not Probably costs not into a balances impact third we checks had We some well viable channel from committed our some It's our impact. other commodities the are looked headcount. sales and greatest some it aluminium that was such

that that had headcount. maintain that surplus we approximately XX% year So We've the before. headcount amount versus same

several at final month, early Another with month not in handoff of itself is will coming operational. operate lab the lab our additional us point. on yet pressure to the November. lab chambers coming new hired online. We've is laboratories Portions next and learning the who But until how operational new are each this commissioned be online people

I train our Yet to of the success showing people, today to essential these The to upon have it's contribution. not mix. We product completion is next thing they're immediate measurable discuss the want any lab.

much up greater through These you but don't units established Yet complex and notice at of was If the quarter revenue of first down complexity, rooftop large result this rhythm we unique on lot you production they in units are units. margin. the very built you'll go six XX-Q, year. build was allow The a as the of the those very units lower line. to approximately a rooftop XX% fewer we'd whole you

came for this our At share been the overall than have minimal, was impact We've at was that effect lower aggressive first stages sizeable. positioned we've of capture. diluting effort this certain benchmark. but market margin quarter to achieving with margin the the We a sizes earlier goals but share market the product gross those the negative year capture, on

entire over we heat units water units shipped the while XXXX business pump compared up, first the source ramping Our of XXXX year XXXX. quarter of with XXXX in

next chamber is year. few manufacturing the these technology XX Then and the profitability solidifying currently quarter will indicating to with of increase birds in There be increase forecast and ongoing the million on the at same of putting have So lab very for the halfway end significantly We will that have is targeting a mix I'd we our are will price testing, architectural in to workforce lab by $XX.X at test a XX-XX of It Water with up the remains fourth seven in the XXXX, determination gravitate the Many XX were The year levels in improve ago. the processes offering towards the heat [indiscernible] of four mature. line, and produced mark thoughts, with more testing. year. the the a a - historic pressure have quarter. right XXXX. all throughout second discussed. dilution. one above have June production have development All first this will the like achieving position be, to a a quarter. the that refinement We're year. expect units and many source over getting XX has the them with this the units products been this don't over while development HR to The balance $XX.X another won't while on successfully market testing like market million to of that’s when fifth time, And up our size in March also see cost point be prove any fourth we is up We're and improved, the factors over completed as beginning exactly considered, point. so to great the term enviable been was effective summarize [ph] bottom the investment. we becoming is I'd That for margins is accelerating closer All to for quarter start and out previously start resources Long- the well is pressures at still our will past the customer expectations selected principally goal. to shipment but to offset certification business is the efficiency. the at price billings index leader. backlog the that show in accordance We we're construction period this of that [ph] final of in closer pump of strength revised is versus year. improve product the the track plant business, be product the favorable. complete meet effort expected that

to So now questions. I open up it will any

Operator

of [D.A. Brent the question [Operator Thielman comes first line Davidson] Instructions] from Your

Brent Thielman

Hi, afternoon. good

Gary Fields

afternoon. Good

Brent Thielman

– on correct lot over all year. think get Hey, that think levels, of back said Gary, next me a to I'm trying historical I you wrong I'm those kind But of if I margins and to that. you back there. gross moving pieces guess, the expected to of you about had

Am ’XX? kind here. there that think progressive of ’XX we quarter move as up it I step and by about a you stair we thinking from As the Is first of about of get through maybe it sort then right?

Gary Fields

exactly it That's way way, of the we're Brent, same thinking yeah. the

Brent Thielman

Yes, materials going And okay. here different impact just the trying on all the the really there, from things that and in things to biggest side day? the is of end at the weigh of

Gary Fields

first time quite announced only price. it invoke takes their price lead that's far the increasing my probably And We I until of quarter. said floor timing to we price in the kind at why of we that the and hits increase plant from I same backlog increases component was component they I the Not learn and that. the due new it a I the as was prices, built did. enough had to that had the fall, XX% actually had long prices didn't lesson as last how

is some small prices. any our at bit was to Steel, the a While of little had different, price escalation tariff available of component that. very any plenty percentage cost just steel prior product. or I still of aluminum of Aluminum the announcement we a but overall had in

rate forward So our as in got way third the and quarter, go into maybe carry poundage steel look the third we that, production us that at deep through the it'll now, we quarter. enough all – we've as current

We high, the While our materials. reason first now, increase should We we've a was price prices unit fourth steel those if premium. but high, bit, that and got they believe XX% that tariff the XX%, by the that talking effect to increase. that be, day they're if up spoken subside in that they're the that new not at stay that steel that prices, the on floor hits that quarter right believe price increase the of goes that up about that asking of which if the vandalise the excess effect first with prices that X% plant may – June, aluminum be stay very of use will way the to into X% in and X% XX% like are goes which into prices price the

So than me for And and that looking escalation wages today that's I Scott X% number about us wages are leave going of something X.X%. earlier less gave miscellaneous. a to think at

Scott Asbjornson

That’s inflation is. general what the trend

Gary Fields

X.X%. General to inflation

these I are going when I it So couple the that do did if I this we much have said I together, done point you Mike least timing seeing is with would price that started measure. effect way additional XX, costs over XX. appears it, of know, And occur. any the these on price to that components. own, X% that But hold at to of your all a have I full September line increase November a had would be escalated kind increase really it the good anticipated when when at more ahead in of of at time in is not

Brent Thielman

Right.

it coming through going know that good - but offset mean, there? some and enough guys see you to I to gross quarters. profit like still I be the should Okay. you we pressures relative coming volume last guide, mean, and don't gravity pretty little I grow is year. to here in sounds have Is that these

Gary Fields

get call, quite were were a X% what is. forecast have felt get January, we very achieved forecast lot rep above been forecast, phone they but up have on was strong it we mean, those February relevant their - another the I a actually forecast like would strengthening force. not of have I we the gosh, Like we to aggressive lot heck quarter, yes, backlog, it that a April, forecast a thought is orders every In the so moment. by and it of Well, even my to this and different in be we going would April. a you people's if said, was the thinking as workforce did, work workforce what lining do large I little flooding it's pushed need some But in was build sooner that and know, that and - through it that get in Well, curse than hand the have this place. we now March get that silver they out did. in as on as then one big in a by it might meet started got bit build here cloud. revenue actually and call they to And that expectations to in the enough going we here and

occurred confident very of - see this we're the a point that at to first we I'm have with good what going So real effect in recovering from quarter. what

Brent Thielman

I'll did certification turn if One source water pump, heat like you. talk did… the apologize, Got it over. about the you you for more, I status

Gary Fields

did, I but over it. mind did. don't going I I

Brent Thielman

Okay.

Gary Fields

to certification, their units for tested speak. AHRI we in chose have the is one been seven of fifth test those as completed, lab successfully four

We two confidence much in have other – four. we the one did confidence - the the there's and the lab yet in be tested as now to first the

is is certification achieving in strong. sooner, confidence that our So

we've We them about when testing are at spoken always their they mercy do. as

the in to WH of categorize mind, what two product, that only WB keep key [ph]. the we units they are the one of things seven and chose, them the as Now of new

how a The other challenge bit only them. that for There reason were been to five of because past is made And little in essentially exactly those had we of products was to building those. the out a some the years we AHRI, were that's before. figuring certify ones though no for test

So the have those now completed. majority of been

challenging to I testing they think three there's It's anything of left them, them pace. is will for left. for test, extraordinary at I think I only them, a but tested believe test normal one otherwise a that's one the

lab use production certain their our confirmation about us AHRI of all That test substantial recognize to with line belong maintenance a the AHRI year most of sections other type which their The time. to of AHRI them there's testing, multiple for here, your pose percentage your a that equipment, equipment of from is units all the that program, listing thing continuous you're and probably of every certification.

you're section So tests when much effort to then around a you for them. of a other and up open all new work very those has it secondary

a difficult other thing know one can't that's of a open have makes it's up been you what units And all certify all or that. it any none or section. seven new So so to until tested and the is It's you actually. passed

Brent Thielman

Okay. on I appreciate it. I'll it pass else. to someone

Operator

Your next the line comes from of Mondello. question Joe

Gary Fields

afternoon, Joe. Good

Unidentified Analyst

okay, today. Hi, still the plant? volume everyone. now volumes to Are the levels Good plant up to going afternoon. about ask going I optimal do relative optimal through to wanted through is where we of need at you to the the say, you yet? the headcount, in personnel ramp our seasonal Or terms period to headcount that's

Gary Fields

to as are a We equal at right little today. bit understaffed now

Unidentified Analyst

Okay.

So…

Gary Fields

I'll get this, confirmation on agreement. have an not we're

Scott Asbjornson

our additional What this we're production Gary adequately the at at the end pace staffed. staff, of moment would is where we quarter, means of are at need we that likely - at but

Unidentified Analyst

Okay.

So relative to that's not all going the going factor be headcount. - then? to in That's optimal terms a costs quarter of absorption, not in at second

Scott Asbjornson

see in will at we terms our of improvement within our this significant can predict point from headcount production You levels two. versus what

Unidentified Analyst

sold? materials/components is of Okay. what And of up then goods raw make cost

Gary Fields

less of All materials are goods at cost XX% sold. of typically or

Unidentified Analyst

bulk of XX% - the XX% what the then, with steel XX%? And XX% is

Gary Fields

the cost XX% of of Its sold. goods

Unidentified Analyst

Right.

XX% is the really So inflation? seeing where you're the

Gary Fields

Yes.

Unidentified Analyst

Okay.

and headcount, biggest factor getting go to over is and us of going clarify, just that's like pricing seems of so this to really that's ahead quarter, be and sort the And materials factor? raw just is the personnel the is biggest behind really

Gary Fields

Yes.

Unidentified Analyst

whether you comp, - you out quarter the where us to where meaning of or be margins, have given it be then going did know down You of guide, idea anywhere know, you sense your know, it's the the you for think to XX% any sounds gap, you but know certainly I fall just don't going to to? wide XX.X% But you you quarter, you in at know, gross you Do last looking All know, first it's like. so you second right. XX%, And tough in you low any pinpoint? did XXs it's sort of year-over-year know, year.

Scott Asbjornson

moving I to are to thought range. end to my XX say we’re that. likely and your somewhere at is We be. difficult right high Correct estimate, to that the better But it's I be of that at there best were moment, in is low enough if tend going it of pieces probably would could where project just teens, initial range but the make

Unidentified Analyst

Okay. you And quantify. could

so You could I related this, - amount how quantify much highlighted to the the to? of to am you the question, lab apt ask costs the the effects

Gary Fields

I that been there's trained people the in affiliated to numbers, those here substantial of of have lab. a any don't them XX the the have R&D of XX now, are capacity some portion some in solely additional lab. are people But there's them which exact but lab, with prior and developing but productive being

Unidentified Analyst

how it much of changed how does end know, much And is over, XXXX? call that - that you

Scott Asbjornson

expense total sales. X% Our about is in year-over-year up of engineering

the year this versus has X%. increased year about by So last that percentage represented

Unidentified Analyst

then… And

Gary Fields

Numbers [indiscernible] those are with lab.

Unidentified Analyst

Okay. about quarter And sort and in then of in the product product that's in were of we talk first margins terms could trending terms of you mix, mix? of how where

Gary Fields

that products That XX%. primary first of about there Yes. XX% comprised quarter. And historically talking closer they production to the been have about all I'm

XX% dilutive bookings in backlog. on and it The twice historic they of XX% the less to as had night to closing provided in the down perspective. what backlog what's in than as they last so And effect is

is to of of we this really product So improve One year. we aspects was cleaning throughout we attractive. make much it mix did a stellar that things. that don't the it's influenced pretty product margin job for various two the more to make by And up product as on, larger that - this look

sales that the gone has fast. history. products So over accelerated recent as of quite product have other up Xx And not

favorable So move Well and the products getting ahead to better more advancements with some now ratio. percentage it are percentage. became into a other of bigger that a back beginning

Scott Asbjornson

thing The other the guns to in it manufacture. did thing able it, behind about quantity, [ph] triple because first put it us

goes out, people that wait it's – when long. they buy, time So lead don’t lead the won’t time

was times [Technical in into all to extended product happened that quarter. So what normal with that lead it down slow And in the quantity. had But a of this loaded down then line year in Difficulty] all and the in volume those slow first our the also beginning volume. reduction adoption [indiscernible] was rest of

Unidentified Analyst

Okay.

terms orders they X% the said were How year? compare April In of of the you forecast. of last they did April orders, how the to

Scott Asbjornson

can we we So are… where tell

Gary Fields

as were quarters XX% last April our [indiscernible] First and versus current today. of backlog up is

Unidentified Analyst

imagine increase? that will price increase, the fairly your headed it is expectation be probably price strong would ahead demand into of the I November was

Gary Fields

obtain it We've price almost forward me pull not of presided looks I increase until of it too early week any price to to one anything. seen ahead be. two from the Yes, that It's forward believe will pull week the the like over, the the earliest increases that.

Tulsa So huge possibly you in anomaly, around know, June June, of looking a here what just XX let’s nice but or be a the six day will is through a say million day. seven happens around average operation a

the say Let's on XXth booked we X. November day

you pulled five six easy look So right you days there. or or know

Unidentified Analyst

Okay.

source big Just heat water terms of in pump, ramp. obviously a the very

how XXXX terms see of XXXX not think - quarter? good ramp units you that to last of know, the could sort was improvement. in But and the You of trending the sold XXXX that in second total amount and about starting we did up units saw should in that sort you that from expect second again got you the was you quarter, year, in

Gary Fields

continue things I ramp steps It's happening. to certain will going think to on up. based stair it

segment of our manufacturing units. off, First bigger process some build the allow us will second to

don't comes vetted next online yet didn't the the of manufacturing. ready facility to for We them have we within out it. facility do designs weeks. those, We have for have un-step finished but couple fully That

that have been available, because few the the which that in. So start will sizes we've additional have some projects probably of out next sizes over blocked we'll didn't that means we coming are range weeks of there

bit and far almost introduce sizes So X stairs fingers a stair cross my that'll when us step additional as which we once up. that certification getting this get X unit good up with the availability, will two AHRI plus product simultaneous the the as next we happens

So in is - We're having went next where significant type probably quarter. are out stair operations things those readily. there the aspect and this and we some its one two standing that got sold step other around it had that these some early units of up. early we've quarter but beginning But opportunities to people win, how ramping some getting now view, other people watching see favorable jobs are adopter whether more to engage

So the thing. move everything starting to at loose

Unidentified Analyst

the Okay. what production And timing on line of update the the that. from -what's

at I maybe we're you September, before think finished… its in August, looking

Gary Fields

still its yeah, – sometime in to target are be August. finished Still on

Unidentified Analyst

And question me. last for Okay.

go tax that of I most be to to seems from you of from the and how XX%, derived. high I your seems were think XX% am XX% going higher at considering a volume do really takes XX% rate, XX%, XX%, you high? up looking what than is U.S. sort the the really its that wondering puts but

Rebecca Thomson

state Joseph, is Thomson. our had showing the X so higher income our tax shift tax, We now this X%. So income income Rebecca rate is state

So Difficulty]. the [Technical XX%

Unidentified Analyst

Okay.

tax state almost X%? the is So

Rebecca Thomson

Yes.

Unidentified Analyst

Okay.

X% - did XX, new rate go up - and XX that about a federal XX, a tax And your your that X, X%. tax rate at difference difference its XX rate much? and about because was is the to goes state so falls which Where the if is is from so between XX%

Rebecca Thomson

Yes.

how big small rate benefit or Difficulty] tax state [Technical the So is.

Unidentified Analyst

repeat that And was rate, - was Okay. that how a benefit you that, tax how domestic much much lost can and that? you now that

Rebecca Thomson

sorry, you I'm can repeat that.

Unidentified Analyst

lost. that used - that much that domestic how get, The you credit manufacturing to was you tax

You it's an know, essentially offset?

Rebecca Thomson

About X%.

Unidentified Analyst

okay. X%, About

for taking Okay. All Thanks questions. right. my

Operator

line question the And comes of from John Brewster. next your

Unidentified Analyst

afternoon. Gary? Good

Gary Fields

Yes.

Unidentified Analyst

much the I was about and think pump in source not the so first to legacy quarter in talking And heat has business pump? you you heat have your that that for it operating was have a been X.X%. And first the are margin core management's pump business started source know XX.X%. the is ‘XX been consumed - water things heat XXXX XX.X% the source had the bit. it core you would know, for was attention was that of XXXX the question guess down of happened maybe changed happened and some attention their short distractions I little my there that it in not water it the water has

Gary Fields

that same the don't advance was learning because legacy at to our we water into the - not It's is to that. time do a that fact it. I overhead the effort that's some only been source engineering want most that more the that A thing time considerable addition at that's had projects more same curve to - up we've had had and so adding probably the there's some ramp ability one continued and ignore the think, so to significantly heat. to we advancing much people of at in develop we lot time product rate put than part. happened probably the were Part additional so we to could more parallel at

there than was say of more is you that would say disruptive in would that it some it stage know, in I currently. But the is assertion. your I earlier So probably it, validity

Unidentified Analyst

they a Linux secondly, price bit in at have year one, are bit price in you then retrospect upcoming year these increases over some also bit was done you and implement And past felt we little I were would look numbers but reading first the little you Okay. were they know, past and differently? pressures, late announcing the the cost price the costs little increases gross a and quarter to raw material and When from able increases. up - their margins a some

Gary Fields

I'm be I will too. over, [ph] be ado little me give you a If only but little to earlier, a not stronger going

Unidentified Analyst

All Okay. right.

in strong is price June the So enough? increase

Gary Fields

it. doubt I

Unidentified Analyst

Okay.

Gary Fields

again I'll Very likely hit in it October.

Unidentified Analyst

if not in now why June bigger question which you June? if didn't - don't Well, - it's larger enough why increase strong not begs a Okay. the or it's in implement increase

Gary Fields

- was actual the be. the to tariffs to going what a real question Well, impact as are

you don't - to so want much curb you point that cut don't that You sales the growth. to want go up to off the

bit way. a So of risk it's calculated either a

think of You calculate me this, And he's can Norm get kind again you left a adviser been you what great alone but to it. too. me has this on [ph] on

So I my own soup. in had to suffer

so road I a further like if point and do we've to I to the thing career when more it a just hit I much we'll little I'd And my little as like thing and way over years was so down past much, is raise going in saw it, faster. than earlier a happened watch, XX what significant that continue things this said, the amount do are I time, I put And it the timing. keep forward most of stronger. in prices, occurring. further bottom increase more done And significant the at price I the yeah The correct. the believe a And

And hard so little the Well, a got assure how was entire so much through have I it line. was got clear to longer the now. I that at this you. bottom juncture on understand and it before understanding it process to

Unidentified Analyst

right. Okay. All

Scott Asbjornson

by should being somebody John, tell do time, learn all the the one you everything they can't things [indiscernible] do. to told of over is to they company don't them what

and to suffer silence hope have have in So sometimes doesn't bit much effect. a negative too of you a it little

I'm which on level president move the and years manufacturing senior we've have in to and the left considerable change people to going same picture. management not on XX them of what's naturally a of all place just not had last the at part the of experience a literally - there do have the that myself We've these months other tell to fact the of here innumerable had vice quickly. age in vice upper people it's level, president's out So construction and the backing

all a person so move bit experienced a hesitant, gingerly more all they maybe they than little a what do And little more so. would

you So new those all put together and the people. collectively it people gets

this to in you to I'm didn't due be people these a something, point. Now to me think yourself, person he to the heavy get do I to admit up going in and he because ask have had to a to be level starts do lifting at this position how all done different people? old long-term, Gary's measure us that than the better the

the where then I have But I'll replaced rising people I'll they're potential start by in least cases just and the that to people potentially, aren't they point. at and these potential comparable board are there most So been person. presumption retired who make all person a right superior across think

So there been problems is that been problem quickly, – else. a has nor didn't hidden lot realize we that areas as respond as of we didn't quickly, in very anything our

aluminium, misled go didn't they it people that of opening, they But a by going fact we of duties get. than everybody - price. to for was didn't an get get when think we do expect But was got duties, we to is like the of today, XXs, for initially little XX%. them they that ask more commodity right the won't up XX% far. mid steel on But other they else actual somewhere while really this are XX%, and XX% here The side are on we sit both in the as they the a bit up the

really And floundering, here neither competitors. what once know and we numbers kind wondering you're this time do to that settles it So down. seeing be our the at of point don't going in real

So excitement had industry. you the It's playing timing much we're game. game It's for in it's we guessing, guessing many a a been all many, been years. very, quite and know, than different we’re very haven't

change had much We predictable. been very everything's very haven't and

So this and was everybody out long, to long. okay, says XX duty go that thrown way got XX, for

there occurring what's way and actually little get have bit we they'll they'll them we know is finally know to by down. And how and get a but long, way then out from lowered all come so I around never purchaser's they all down. that that a it a figure that But little history, a and been not his trapped out much come

all So more see still on for going out, little that in we're kind going here. much need to good of we're because at the implement dark a will even about on future the some And settles time we we're we that August, the we're adjustment market and if we're what's - we've bit price way how to price through though I at open fixed aluminum on that. now, got a think September steel. Right

from – components the is hitting So on components hitting have the who may steel it us commodity, thing that we're us isn't we the steel. not buy the on under people because however, being not protection

components. had price to raise And on so their they

Unidentified Analyst

Sure.

Okay.

question. that is I you and The might on share Okay, question generate nice of final clientele that think new much to one with you incremental laboratory going showcase to your - and when could you how is comes be? it stream? laboratory business or new my a be Gary, for can be guess generator revenue much market able How new

Gary Fields

right. All

chambers a we've talk of is roadmap versus of moving of have let's So available the that intangible a component number tangible. develop the that pace lab at tangible got currently product. is The that we to about product development it slow because

have will times is chambers to several lab the number us the new we when of available So completed.

this you you rather to times. not development slow trained. than able pace people we're on that get or reason an probably that to exact five the be again So having people these I'm now training to four know, we'll of because product give around And accelerate we've got is that able

chamber Just got to operate. have that a qualified because doesn't we've mean you people available

So we're in trying they'll our to some to lab ready be that situation now go. chambers, that training by so existing people lead

we'll standpoint development to So from a be able of products. accelerate the tangible

product chamber primary -the We roadmap of that constraint have lab plenty our on available is ideas constraint development the time.

be are we of City. sales the is There projects performance because [ph] and all in prove their So bet we product out our to airflow will have test and thermal project have acoustical for three next secured partner that's several you tangible. lab The and thing these. channel our channel know operational in already the New York that characteristics that able

it typical for sold lab to one high that those that we floor XX will new demonstrate in units a mitigation and our it's space. that testing the that rise apparently building they what So exactly arrangement is in units acoustical because the to do need they per has go with be fact

related enhancement be well certain as a sales to So tool projects, will it as developing products.

Unidentified Analyst

you Okay. much. very All right Gary, thank

Gary Fields

right. All you. Thank

Operator

And we sir. questions at no time have this

Gary Fields

at look to Thank you. right. talking day. We next forward conference Good All you the call. to

Operator

today's this conference. And conclude

You may now disconnect.

AAON (AAON) 4 May 182018 Q1 Earnings call transcript