- Earnings call transcript Q3 2022

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Operator

Ladies and gentlemen, thank you for standing by and welcome to AAON’s Third Quarter 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session. [Operator Instructions] Thank you. Joe Mondillo, Director of IR, you may begin your conference.

Joe Mondillo

good and operator, you, afternoon, everyone. Thank release was issued press found our announcing and our results financial on aaon.com. website XXXX quarter corporate after be third can A market today close

then Rebecca are on me our CEO; third and the be with further provide on the the Gary on Shortly, today call open Rebecca, quarter Thompson, Joining to along call Gary off go then CFO commentary Q&A. our though, and forward-looking through results. with to to our outlook, call President policy. Fields, and I’ll to handing the Treasurer. insight we’ll and the our for up that will quarter statement Prior we customary her begin

is the is pursuant and Act Act of the each and made the Harbor forward-looking Safe of not Act Exchange historical Securities statement call XXXX, information During any Litigation to considered XXXX Securities of presented as provisions the dealing Securities Reform amended. XXXX, the that of with

As subject to cause of control differ of occurrence such, it outside materially and could to results AAON’s is those many AAON’s anticipated. that events from the

are of all difficulties, inherent and in You making statements. the uncertainties predictive risks aware

statements. XX-Q not of have filed to the duty that do that with and afternoon over update detail those I this And in forward-looking to some that, the from differ call Our release cause our press note, Rebecca. Please the we that Form factors risk will results important we may actual our turn our predictions. to

Rebecca Thompson

from record XX.X%, Company’s million. headcount September production. XX, XX.X%. increase Improved Volume factor XXXX. organic volume, production. in XX% straight September organic results productivity, helped begin The discussing of strong quarter which the to comparative increased drive was growth with along approximate a and ended third an largest the backlog I’d $XXX.X Net $XXX.X of reflected growth driving contributed the three XX, Joe. to months versus Thank million by like sales increased the you, XXXX the

legacy perform and contributed volume, well EBITDA second of BasX while record of the from business, quarter history, end XXXX. in acquisition In addition in its and to of XX.X% realized pricing the BasX its contributed XX.X% extremely the quarter backlog sales to any of BasX the the XX.X%. Similar increasing quarter.

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

second percentage partially a expansion adverse to The the in was million gross of quarter the in effects of third pricing the sales was of Similar higher profit offset XXXX. realized third gross XX.X% from in increased the As XXXX. chain the third million quarter Selling, $XX.X to margin Gross quarter margin costs $XX.X higher trends expenses driven of highest profit profit XX% by the and and issues. XXXX. improved in of throughout XXXX to XX%, general since was productivity, profit quarter. administrative second improved by gross and the of compared quarter supply

a percentage increased to from As quarter third the XXXX. XX.X% of XX.X% in of SG&A sales,

down BasX, SG&A a XX.X% from XX.X% increased XX year sales, basis and of Excluding expenses totaled ago. points

operations increased from a XXXX. to million XX.X% sales $XX.X Income of XX.X% of continue third sales the from of of controlling XX.X% good do million, these We $XX.X to in job quarter expenses. or or

$XX.X third XX.X% quarter sales Net in increased million rate XXXX. share. to to XX.X% effective $X.XX share rate per events, compared earnings estimated income XXXX to Diluted the XX.X% sales, XX%. be XX.X%. of per from excluding or per The to annual from approximately to of XX.X% increased or expected increased Our tax Company’s tax is million effective discrete share of $XX.X $X.XX

$XX.X end of XXXX. $XXX.X of total XXXX, million September million at that totaled Turning working debt XX, at million. to we and the a balance XX, $XXX.X December on totaled $XX.X sheet, you’ll had that cash the balance Unrestricted see million the versus quarter capital

September quarter. Fields. million. Within growth. I’d million. paid We December capacity per call and X.XX over to like September XX, Shareholders’ to $XX.X compared be end to trajectory capital during invest for to on now the in to continue nine year for Gary now from turn the we and approximately expect CEO down regularly repurchases months at months We X.XX approximately million growth were equity second Company million $X.XX the expenditures is at share to the of first $X.XX of XX, the diluted line at the long-term expenditures XXXX. had we credit, stock monitor The year of our of quarter, ratio $X.X President, leverage XXXX. the Capital and our our XXXX, $XX ended our the XX, lowering nine $XX.X

Gary Fields

volume highest third results, pleased and the record continue XX%. comp of several third was easy. second very quarter of was operating Volume was ago. On we of factors. industry. and quarter the record I’m growth we in earnings pretty in And environment. quarter operations Organic margin in a third is team period to to the overall Gross sales, this pleased performing the realized performance XX.X% Company The Gross compared challenging is Overall, we’re X% it production be, volume our be a in to progress. a want from backlog. third year the to quarter substantial particularly up result record two-year quarter and and unheard where we XXXX. commend The their where just This have well, at made been a performance. down much not able EBITDA, production, record XXXX. months want not have with margin extremely margin was realized ago that straight say of XX couple quarters were an we in just since third extremely of is of third the still was commendable. with truly a And stock very the to to quarter is but quarter last is

was company the up legacy of XX%. headcount mentioned, Rebecca as First,

a new with We continue job onboarding to do good employees.

a all the operating at on production price basis, trend sales this can When And And Second, improved highest say third per employee much increases. eliminating improved when I The it’s year. our per October. was that all unit operation we at level. legacy is the been that’s quarter day the look continued productivity a has through significantly.

sales reflection thank well premier able also volume Lastly, and rep for sales is the of our us. been of of the as generate channel our a have to to our growth partners, backlog channel I’d our like partners all internal support. as all

channel is has now. sales as realizing. strong never it gains been we’re we’ve seeing as right Our share And through the been it

discuss and channel, margins. gross our deeper into diving sales our and the Before backlog pricing want I to

with XX% saw profile XXXX. discussed from exactly second XXX margin dealing while at in and track been quarter. was quarter. The gross As to the the on year channel the basis It the third XXX the second has hyper-demand been up practices the and a margin been margins. that’s in was the basis quarter what the in report past, the margin quarter I’m of since thrilled our best has we hyperinflation the time quarter gross to points same drive ago up realized points from strongest saying backlog or We’ve in partners gross challenging. maintaining we’ve with recovery

happy to very see We’re that.

been the The margin We’re continue improved going still in forward. profile backlog a to not going but throughout see of we to margin we’re be gross need over quarter. where best improvements productivity current is the to year, it’s the

on is fully to versus well of margin’s related gross largely a recover. Our to price track This cost. normalization improvement

productivity improved contributing addition, In is also factor. a

third that In a it’s gross You margin the in to throughout of segment, profit Products all well. this quarter not AAON the at a almost realized of been generated gross driver it pricing, but as our can the of happening exact specifically It’s see have only organization. AAON XXXX. Coil Products improvements Coil result productivity amount

remains up especially is at at backlog end strong. We was second ago from were at up is Bookings in BasX. chain to volume continue, is up year XX.X% expect they X.X% up XXXX strong, ease. end very bookings that which quarter sign the mostly we’re strong quarter. from particularly a The Overall backlog backlog our year because Organic is Total for backlog Backlog and of a quarter XX.X%, XXX.X% since demand were increasing. the BasX up fact demand year-over-year end up compared from XXX.X% and issues with continues is the were BasX as of what Demand XXX.X% to that Sequentially, was Returning the factor end of XX%. ago also a remains quarter. second up will seeing to and demand. driven. XX%. of the up and from increase the sequentially second the that quarter. the production XX.X% second up Organically, supply

continues backlog While to BasX continue both the to production levels, and to record grow. increase business legacy

the manufacturing lead BasX. Our end be factor remains buildings are and But and education of very to continues still outside healthcare Demand markets, remain remain as strong. markets semiconductor sectors legacy office are strong, in and quite far are a most times bookings broad Data soft. business fairly growth to that lodging contributing of based centers as both good. solid, and

remains in robust good. is the seems bit, seeing still We’re to quite across [ph] demand demand Overall, pretty strong Grow board. facility. the slowing a be but Warehouse

track levels. positive everyone And all of the such leading to data it. for to do encouraging. and we our channel starts the as Sentiment continue slowdown and Construction the suggesting not months will indicators are pre-pandemic we spending we monitor among track strong. also continue construction Dodge the anticipating, is to the is macro XX see very seems remains While Index, Momentum we back that ABI, it that is partners be next the

challenge is production fast up Our right biggest now enough. ramping

times, actually improving by we’re headcount, great backlog see time, see at which think job happy same While invest with start to down, team and is to improving doing we’re lead a see to adding everyone to in in while we’d is start XXXX. to to the The continuing come capacity. like I going growing, led productivity backlog

is and provide the continue to year sales air efficiency probably continue best the best channel to To with partners best CapEx CapEx have most about value and as basis be invest absolute in increase to the related of XXXX. quality. to product want an lead accommodate sales going at will customers indoor on to that this We percent we’re We we our and Our a and times. offering the X% both in likely demands going this, business. to energy of decarbonization, increasing do feel to strongly the

that it lines. portfolio set to company couple share. complement made lead to entered time, XXXX million to innovative an financial This to to for and little This we’ll a a on. deliver And configured very of the is them And to equipment of vulnerabilities enable be this. exit business at In generate very take of of not to continue we that It’s margins our require on portion market up heat been like is changes competitive product market we’re and our units. the We’ve haven’t continued XXXX. with want of a to and decided in in I the determined and we As business capital. best my a to unusual as provide thought make refrigerant like going product done, would horizontal company equipment, source pump to $XX portfolio. our our similar channel indoor of color continue we business, standard the efficient performance we to partners the not water always specifically able Furthermore, do sales pricing product decision arrival, a success the capitalize use to we’ve XXXX, we on for expect. minimal our track the would energy power. this capital terminate this generated the could monitor organically that of and had investment portion would approximately we vertically prior has AAON upcoming regulations profit maximum

but So, since sales. We about of immaterial water-source heat it’s business openly so inception. to only normally X% something pump address we’ve wouldn’t revenue, discussed the

high lend to appropriate to doing provide information we’re As capacity by be doing. high for what such, Also, equipment. growth margin, this, it it’s felt on more would going some we

briefly quarter and of XX.X% been of a at were lot channel our production parts XX.X% of line were the past touch the make in a XXXX. XXXX. will both repurpose margins internally focusing gross once quarterly straight Parts growth against our been generate with success. were small down a in wound Company the and our But we’ve something still I X.X%. on quarter. The part of strongest in third it’s early equipment product realized great some up for for headcount to percentage XX.X% on comp parts XX.X% Parts we’ve XXXX, sales has also which of the record be third up partners, sales a and business, will in We sales the the this Compared having growth quarter company. was quarter. this up second to want

ours. business growing So, will of this to continue focus a strong be

up productivity, we the earnings a quarter will on and we sequentially. fourth holidays likely will year due want I be the the most note. Before to Margins will on the on finish rest profile to the off quarter. and to finishing backlog, the improving handing in call provide margin year. comparable to and continue we our the see outlook anticipate the Based of off the improve the of information the size quarter of Q&A, some increasing production capacity the for backlog and for Sales the high third in

will of been talking that margins recover fully expect range target to to we’ve We gross the XX% about. finally XX%

capacity to our but from employees, pave out Backlog And And by invest will all open will early, up customers. to in still way channel sales growth. entering for XXXX, partners continue the closing, want thanking margin finish and price, up Q&A. for Long-term, continuing remain optimistic. In we year continued more a and you. year now we the ago. we’re Looking which improvement. of should Thank to will to I be I realize substantially

Operator

the question CJS Securities. [Operator Chris Instructions] Your first line Moore of comes with from

Chris Moore

delta price be you market. AAON in do talk And looks parity. driving maybe new a this that to premium in be some historically the single recent high normal? that priced your been digits, to about Can expect XX% with pricing at cases close increases bit to has you roughly the closing to maybe gap? Even what’s little

Gary Fields

to market. need always of because to a margin, we we Well, to managed that I think much our carefully. not competitors. attention value kind over that we’re watching so to We’ve of are But pay most

warrants a a that premium. think I definitely the So, equipment bit of

work I’ve a there’s in past to talents quite in of past, while premium, into channel the it a back, some pretty proving goes in As do took a strong calls, the said XX% sales amount And that. at value. the fair

comes explain premium of to As becomes down to take it begin that people XX%, notice easier and much it better. to much

of but value. tools we’ve like to also that that sure in explain that I’d added So, a make lot help we stay that range marketing

be first by we’ll the side have new a have where quarter visual representation along with opening equipment without of calculations. probably We different building strong quite XXXX that’s equipment to our up a lot going competitors sitting of itself and by is side

Chris Moore

Very one it. more. Got helpful. Maybe just

the the have guess a of climate us how air questions to compared heat trend? there. is they source here, relative And market? reacting the significant them? How the How pumps guys some capabilities maybe rest introduced cold the are decarbonization few I to whole You do market to lastly

Gary Fields

them at model is not particular and some they looking in what client units. This them see we available quite the that originally news to their some witness doing proven recently and they data, to so the made All building going as kind their bring owners testing what We some characteristics buildings first But those it. significant with the right. empirical of into to. We’ve for recently as with market I’ll display but performance, laboratory already decarbonization to has they’re of intended unit loving start the with keep have. people, much a is part. back of not trying your they performance data. had had building to The goals can existing for compliance

construction growing think a looking way. e-commerce, where at lot our warehouses, clients But down. it’s multiple that’s on I And changed that have slowed to And new it on going be maybe impact substantially. have we is basis that So, out. of a

that, that don’t the latest air may new of percentage, recall but pump the figures I third to new The about you it the to source -- a I driving of next and years that. we to part I is replacement. of And it’s last cold XX% XX% somewhere thing your think second statement Another I amount question got approaching heat fair with company been replacement were We’ve time the have on capable made very that. while ago, application. And I growing replacement. then capabilities, I came was on XX% construction raise upwards successful when also XX% the saw you was, the goal thing repeat construction the our the your here... ask on climate I’ll six

Chris Moore

Yes.

relative just are how products second decarbonization these was The trend? to whole the significant

Gary Fields

portion When air of that zero and that efficiency you or at very degree significant. United It’s America good North look a significant. with the source for capable the pump matter Well, Fahrenheit good applies. they’re States capacity heat

with that to completed have ongoing the in take us new Fahrenheit. changeover. technology going We XX minus to down will development refrigerant be that’s But conjunction with also

So, at time, this support seeing zero strong and degree for we’ve in we’re opened that. up with lot capable, possibilities of a point

As we I very get part that and third again. me very, I’ve forgotten the think are pieces the And new minus be your third parts for part. XX, it’ll significant. required Give

Chris Moore

of… Just in terms

Gary Fields

is the Is What it there? Yes. of compared to else rest market? out

Okay.

systems, great Fahrenheit. XX be degrees in not majority, vast most rooftops. selections split there’s even in pumps the of that package research are my maybe vast air XX has a below, out seem source a according them big viable of team majority but to of that residential to selection, in not not heat provided There rooftops, unitary, there, So the me, are but selection or the which huge that package degrees there’s

to not the in areas. a smaller operating use huge number hours of that degrees. capture So, are Sunbelt being able degrees will from down captures amount areas to That delta, zero that XX

the say, significant. got already with products we’ve like materials. And with research been I lab it’s pretty and tested in the that they’ve prototype So,

available, significant just become to people that we’re those of As more -- going that commercially able capture want to decarbonize. be a to

Operator

line Your next from Brent comes of Thielman the with Davidson. question D.A.

Brent Thielman

XX% the like from was Hey wondering X% I reported think that you’ve was percentage price represented you’ve -- the in of about is if Gary. any thereafter? I which any guess the today? XX% price X got of And growth. total the It I looks march got increases you of still in revenue point increase,

Gary Fields

Rebecca ask know for market good maybe percentage that get I’ll the up -- exact more a at in the don’t that. and to have October, quarter. about At I she occurred. we’re X% you very one see up a of look Yes, getting looked how bit if it got can I percentage, the have might X%, to in increase. that price We was time, I in October. that we her told

it come but very beginning been have tail to the it So, into was quarter, would the end.

Xst, we and So, a as starting mentioned, then X% bit that’s yet. gain. there’s had quite And place. still June per not discontinued We’ve to in left you that month,

Brent Thielman

And a opportunity is a set of front? and then any that Gary, customer last customers, making for that about quarter, maybe all some product the you maybe to or update on BasX on the Longview of out bit guys produce talked inroads progress is there

Gary Fields

Yes.

we the was what could but o vetted built more final manufacturable And it learn client. units giving We what going there we There’s have was Longview, In on ended may manufacturable it them expectations be to the process. prototype we to manufacturing go. prototypes, the unit. a the week, actually up right now for out way thought first to one we testing. were three The a more meet was the laboratory Last little ready of most them We the facilities now. than give originally by finished. been It that built. to

you then once you out production not not January you if and till units around design it, blown we’re forth. vetting hundreds, build and now design these full anticipating remember, thousands Xst. manufacturing So, build one the it we’ll Between times. of once, refining it and so process, be and starting Because then of --

you go but to of very number they large when materials So, of you doing bill get are a it. front custom in the put very, fairly

as possible. up And process cleaning the you make sure and of now. we’re what to So as that’s want everything’s finishing in right up optimized

Rebecca Thompson

back Hey question. Brent, circle to I can on you that pricing

of over August, in saw price For that October. X%. the almost little in and a We increase in of X% X% was X% September, about it that of that March

So we got to…

Brent Thielman

one. your Yes. here some you in Gary, maybe to Rebecca. lead come XXXX mentioned backlog Thanks, And for as potential point then, just in at times another improve.

in some XXXX the you can of I even about has Maybe there could this of ‘XX, talked in talk comment And times guess, just and you competitions So, the visibility what terms if out continued see, industry. you that. lead for around on at point? stretched

Gary Fields

back I to when began manufacturing, all six Well, with became that and stayed took I I could build years could ago the go statement the It’s over walked me sell. made AAON. last that back week the I President to engineering, Company beginning. And of the the as want sales, door to President, stuff as Norm in we Norm. office the than more I

to improve proved -- about being and was unfortunately, holding so, And I knew that good, successful. sales from very ‘XX why we That’s we ‘XX with channel lot ‘XX statement. challenging. back working them on pretty of were And that did things Norm ‘XX, I a incorrect more went

manufacturing capacity. out to we began it in quarter figured had we had had actually this that and show ‘XX, deficiency, we Third corrected good

documented. process lot this and There’s a we all Now measure. of objectives of is monitor that well

very we’re so, confident capacity we know that And what is. our

you’ve seen CapEx additional investments the ahead well substantial as been got we were, of have we in where So, capacity.

they until for second. And new Let’s a prior double production back that in that But been produced to of now ‘XX. circle two new it’s building. they it of a years just are producing what to be won’t building. February Longview over built We

that put ‘XX. channel certain prove equipment. there lot was the that. for adding look for what there manufacturing them ‘XX, proved them. sales can to capacity. product demand investment way efficiently. do The to And to So, for have that job intently of great into for should on felt I the them help like sales in What capabilities more a us. just they a positioning we done listened close And that back They’ve we we’ve continue

And an I and business of to in said see awful of so, finally things kind down for the all lot quarter then but little aspects of they’re we’ve fourth hit, for while. ‘XX, fruition. And you the those it, slowed coming in like us invested to a pandemic and began

So a able components supply now, thawed totally time And been to strain, we’re not manufacturing to but headcount chain ramp infrastructure. time. the have -- has the substantially out lot. we’re up from to along with It’s the able already it’s without improved. scarce these little that availability We had a of

So, all And is of these power to production. things demand very to are us solid. going increase the

backlog I were say, the of reduced increased like production. to not because bookings, going if little, So, going to to because of reduce be we be a it’s it’s

Operator

of question the Julio with Romero next Your comes Sidoti. line from

Julio Romero

in order If the number number you quarter put speak? is that talk to you the customer guys kind order X% cleaner the up with just And about less of could so monthly. reception shift pricing to strategy secondly a to the in noise,

Gary Fields

So running just appropriate. let’s month roughly I proper the to before very of like certain of was we increases. get very Norm. said kind were XX%, about the used X% some short and had We that per with range, it felt inflation needed was through talk He guardrails. the we in call the big between inflationary from lived there, back and advice strategy I between X% I make moves that successful. get once then, had -- that Once took price felt it XXs, to had to we times

that that. And yet channel have expect. not exactly predictable. know to did looking we’re down. shut because increases. very really it’s wage electronic So, sales hasn’t component at inflation And we They our increases, appreciate we just They shut what yet mean, that. rate said, I off,

not. While materials have the component come down have some raw cost

bit price So, very month. it margins our and we’ll handled X% we’re if continue the we’ve which until really with And well strengthen historic, a a likely probably able yet like that keep ‘XX, could for to we see happen we that things these while feel above got in increases. per

bookings rate the bookings make the at down anything. you we’ve increased not as look sure see, can the backlog also And we’ve are bookings and slowed down. the that they not slowed way We with to

increase we’re second we’re that very part, Julio? doing with what what So, strategy. price on was And satisfied your

Julio Romero

Yes.

see said, price spikes, the increase, was to you number, order process you On is the I less my predictable, it’s ahead would of as price see a thought if, monthly of just very kind looking with increase.

to if order So on more is than just prior underlying relative trying that of number indicative for a see least at quarters? demand basis that

Gary Fields

relative a is. it basis, On

there increases, damaged margins X%, We’re It a of -- for pull so long X%, had we We pulled we saw for three mean, just what X%, not on XXX quarters. quite when not a our a Xst couple seeing the was was saw X% million, that’s price absurd. high huge I forward. January forward in pull that. that XXXs And forward.

not at the much seeing with fairly absent, totally insignificant. X%, all. but so, forward And it’s pretty It’s not insignificant. pull It’s we’re

way is mean, now. that normalized. I this think bookings the I the back rate So, to all June goes

That’s projection actually what’s from that. going to the us So, several that prediction, And our much we’ve happen. our happening. telling department sales pretty month, months each that’s done what’s

high on We’re the low any side not having or surprises the side.

Julio Romero

change pricing cost I price And talk guess, you that with where are alignment. in strategy, about with

coming mentioned, those still are of least if not not down? rising, component I you think at costs some

Gary Fields

Yes.

it’s they’re something a telling absolutely to we that going little to strengthen. things just is then, What looks are. need that we’ve happy we’ll a boring, together stable something in market last probably years like been And the job the might Whit we we If they’ve what range. the like, they quarter and continue XX% It’s couple FPNA been And first so be proven. it’s for the that is dynamic see are value of way with information is an team. in their than So, pretty FPNA to team’s put were that us. well providing all into to very our me, stronger of. XQ I’m it’s if very when, possibly of see XX% margins stay

confident So,, along. we’ll monitor and range we’re in But very capable staying just we’re to in that I’m this that that range. have of that

Julio Romero

last higher just flowing does your then And go I backlog? through. how potentially for that margin on that one on just know, that you are Like don’t for what margin mentioned higher backlog that’s me, guys? long the tailwind on you duration of thoughts

Gary Fields

of and Well, about quarter company had bookings, orders the run and months, have the the the house. were down absolute first fourth a and at bit a always you’re rate at bit. if not absolute a backlog, And slower you slope on cold of in looking it’s steady has a slowed look of bell six little lot quarter Historically, curve like the putting seen that. climate pumps, better I together, heat the opportunity product acquiring up. BasX. we’ve result a think been growth we’re a air a and as than capable source the yet is second And third not that quarter, that This

of going to strengthen keeping and we’ve these we to going bit. margin regards the to going it’s things it, got margin, continue All to want are with and forward where up. a And that again, that

Operator

Your Braatz question comes City Kansas with from next Jon Capital. of the line

Jon Braatz

additional the productivity headcount Obviously, in next sales need look headcount do kind quarter indicated XX% that type the for products One year-over-year. year? of improving, increase headcount that too? need the of think going question, you the door. And opportunities up was you out at in you’re production forward, you moving what a out as year or opportunity And you the lot might but next is of I

Gary Fields

that and can surplus on a monitoring manufacturing measure the to probably and around it headcount, need capacity -- XX% XX% facility has as headcount between whole maximum probably the so that as The based that we whole. in a you effectively. somewhere it, is measure XX% more We’re

them turnover seen, you’ve you’ll as our you’ll fast, you low or measured have too XX%, gone And productivity If productivity. but either has bring in have we’ve in up.

So, procedures, few our are ago. years much they what onboarding advanced were procedures training over a

bring So, we’re say, chain. supply more that what HR we’re parts are to relay as able monitoring to us is now then available, and And people.

we’re back of people. more forth kind two been the so, And we’ve that are parts as coming, and ratcheting adding between

inefficient. become fast around put add to so And is That’s people ‘XX So, I twofold. we together. want parts factor think number don’t our one. to limiting without number two I don’t in standing I is people want that

high manufacture we content Now, of equipment. our very a

and back One with you. supplied designing what And called bought Controls. They’re the go more had they’ve far challenged And Missouri, ago, in with that. now Corporation, components years keep five than things successful that. very that we moving in of not the or forward we of electronic them historically they AAON with four units our from WattMaster building They us. Parkville, to been

The a we that with April able XX,XXX components intellectual fans along was than the They’re were year, back how ever our instructions. purchase next manufacturer we teaching handle buying have that all fans. the fixtures, were late thing the had of have in So we them fan the us better set to XX,XXX, that past. property, a on tooling, to in from build we

do And bat thought was us, fun, had starting that. we’re So, our or issues. month in Slowed here, of ironically, equipment build them little chain major Those by went to to the purchasing to so. department pretty a equipment them, down which fans purchase our build another for for innovative. we I and of some to had the people parts bit some got and to in Tulsa supply

And so, told another control months our not supply being of own of But these build us able we is to lot pieces of what they’re long they to ago. on. probably getting that the a three questions equipment ahead can us fans had thing big so

What being else is to innovative So, we what do? very we can continue that. creative and integration, we’re look vertical else with And at constrained?

do continue going that. We’re to to

some XXXX exact more. that dedicated be increasing quest even manufactured content to towards of our CapEx is is And going our

Jon Braatz

a very, incorrectly question. -- looks is that more and you of thought we BasX that manufacturers one strong. And I new center done Is little a opportunities? quarter, they talked of have with a bit emerging a about sort good lot BasX Obviously, the semiconductor work little but something a before? semiconductor very maybe had other as Okay, data Gary, talked company, and

Gary Fields

Well, he built heritage PACE Brod left began founders’ Benson for was went he actually, the with semiconductor. career Intel. in And Intel, & Company his Portland, McClung from Intel. units when to Dave and

been some probably with not allowing with were top infrastructure I have maybe because they five say they’ve don’t those of orders building physically of It I huge And to and by rooms. huge, around an decades about enough them semiconductor that that the if building see is And think off time. didn’t technologically to of something doing is order but it. capable AAON do clean XX% of but number got would they alignment previously semiconductor. to -- I to is The those revenue physical So, head, -- at with he’s a they their wanted have my that give the experience was XX% of accelerating.

helped a got the new too. built then more facilities them legacy So little helped building that. And to that prior now, they’ve bit just infrastructure, us purchasing they AAON the

high those. strong So, capitalize something them. a opportunity foundation underneath for They got very is good for that’s us allow very, now, their will regard to very them abilities. And the have that they’ve industry a on this in

Jon Braatz

continue business, with legacy the have have in do sales? things footprint say, If to, they well for they double combination -- BasX, do let’s your

Gary Fields

we’re just center for What itself in data them to able their Longview, sales. the Easily. in doubles do

Operator

are There the at closing callback like questions Mr. remarks. no this turn Joe for I’d time. Mondillo to to further

Joe Mondillo

on has speaking like thank everyone days to today’s myself. we feel with over And Thank weeks, for If in rest questions right. you. free you joining day. and All forward any out anyone of future. the reach look coming call. to great a to the the to Have please I’d

Operator

conference today’s call. This concludes

You may disconnect. now

AAON (AAON) 8 Nov 222022 Q3 Earnings call transcript