AAON, Inc. (NASDAQ:AAON) Q4 2022 Earnings Call Transcript

Joseph Mondillo: Well, what I would say is that the backlog is very strong. The order trends have trended very positively as we have entered 2023. So, the first half of the year is positioned really good. As you get into the second quarter, the comps start to get very tough. And certainly, when you get into the back half of the year, the comps are — become much tougher. So, you should see substantial volume growth early in the year just based on the comps and the strength in the backlog. And then the back half of the year should slow. I’m not going to — we’re not going to factual guidance on it, but hopefully, that helps.

Chris Moore: That’s helpful. I appreciate that. It was $16.2 million data center contract that you guys have been talking about for a while. Is that something that has started to ship at this point in time? Is that something that happens in Q1?

Matt Tobolski: Yeah, that project is in production. It’s overall shipping schedule and basically having a product out the door is basically imminent. So as we continue producing that product throughout the year, it will have an impact on the — basically first half of the calendar year.

Chris Moore: Got it. And, I guess most importantly from that is there’s kind of a theme that you’ve talked about in terms of these bigger orders likely coming. That’s still something that you’re — that you have some visibility on?

Matt Tobolski: Yeah. So from an opportunity perspective and visibility perspective, the ability to leverage the Longview facility for BasX data center product remains extremely strong. And as you indicated, the overall sale of those projects continue to be of a highly attractive scale.

Joseph Mondillo: I just wanted to add one other thing regarding that t $16 million order that you’re referring to. Like Matt said, it is on schedule to some extent. However, it has got pushed a little bit. So it will end up hitting some partially in the second half of the year as well. I just don’t want you to fully think about modeling that fully shipped by the end of the second quarter.

Chris Moore: Got it. And it’s helpful. I leave it there. Appreciate it guys.

Operator: Your next question will come from Jon Braatz with Kansas City Capital.

Jon Braatz: Good afternoon everyone.

Matt Tobolski: Good afternoon.

Jon Braatz: Matt, sort of a strategic question. You talked about the pricing within the industry and your premium narrowing a little bit. How do you think about maybe as things continue to maybe returning to more of a premium price product and maybe giving up some volume? How do you think about — strategically about going back to a higher premium price given what we’re seeing in the industry at this time?

Matt Tobolski: Yeah, sure. As we indicated on the call, so we’re certainly evaluating pricing from a market based pricing perspective. And with that, obviously, continuing to focus on the value proposition that AAON provides. So we certainly expect there to be a continued value €“ or basically additional value provided by AAON product, and we’ll price that accordingly. As we move forward, we certainly want to understand — and really where we’ve always been successful as in the organization is selling the overall value of the product beyond just first cost. And so the AAON product, even given the pricing dynamics of the market, the AAON product continues to provide a superior overall total value to our end user, and we will continue to market and price accordingly for that consideration.