AAON Inc Reports Record Net Sales and Gross Profits

AAON Inc (NASDAQ:AAON) reports a 28.6% increase in net sales for Q3 2023, reaching $312.0 million.

Gross profit margin for the quarter rose to 37.2%, up from 27.0% in Q3 2022.

Net income for the quarter was $48.1 million, a 75.0% increase compared to the prior year quarter.

AAON's backlog at the end of Q3 2023 was $490.6 million, down 4.7% from $514.7 million a year ago.

AAON Inc (NASDAQ:AAON), a leading provider of HVAC solutions, announced its third-quarter results for 2023 on November 6, 2023. The company reported record net sales and gross profits for the second consecutive quarter, with all three segments performing well. The AAON Oklahoma and BASX segments saw robust double-digit organic net sales growth and record gross profits, while the AAON Coil Products segment recorded its highest profits over the last four quarters.

Financial Highlights
Net sales for the third quarter of 2023 increased by 28.6% to $312.0 million, up from $242.6 million in the third quarter of 2022. This marks the seventh straight quarter of record sales in the company's history. The gross profit margin for the quarter increased to 37.2%, up from 27.0% in the same quarter in 2022 and up from 33.1% in the previous quarter. Net income for the quarter was $48.1 million, an increase of $20.6 million or 75.0% compared to the prior year quarter.

Performance Analysis
AAON's strong performance in the third quarter was driven by improved productivity across all three segments, incremental pricing, and improved overhead absorption. The company's manufacturing teams improved the efficiency of operations while continuing to add production capacity. Supply chain disruptions, which had been a concern in previous quarters, continued to abate, contributing to the rising production rates.

Backlog and Future Outlook
The company finished the third quarter of 2023 with a backlog of $490.6 million, down 4.7% from $514.7 million a year ago, and down from $526.2 million at the end of the second quarter of 2023. Despite the decrease in backlog, AAON remains optimistic about the future. The company anticipates that upcoming new refrigerant regulations will disrupt the industry in 2024, which AAON views as a positive opportunity to gain market share.

Financial Position
As of September 30, 2023, the company had cash, cash equivalents, and restricted cash of $22.5 million and a balance of $78.4 million on the revolving credit facility. The company's balance sheet remains strong with a current ratio of 3.0 and a leverage ratio of 0.33.

Price Momentum
AAON is trading in the middle of its 52-week range and near its 200-day simple moving average.

What does this mean?
Investors are still evaluating the share price, and the stock is still trying to generate some momentum. This is a Positive sign for the stock's future value.

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