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

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Jon Braatz: So would you characterize it as maybe being that there is some upside potential to pricing based on market dynamics?

Matt Tobolski: There certainly is the opportunity for some upside in the overall pricing as we look at how AAON’s product is positioned in the marketplace.

Jon Braatz: Okay. All right. Thank you. Rebecca, a second question, capital spending is pretty heavy this year, $135 million. I take it, there may be some timing differences between cash flow and so on that you might have to go to the bank and borrow some money and your debt balances may move up and down a little bit from the current levels?

Rebecca Thompson : Yes, certainly. So we do expect to see our operating cash flows resume their normal level. I can say, our CapEx spend is heavily weighted to the first half of the year. So we do have some negative free cash flow in Q1. But after Q1, we kind of start to see our free cash flow get back to its more normal level and about the 70% to 75% earnings free cash flow ratio by the second half of the year. And so I mean we don’t anticipate needing to get any additional like liquidity under our credit agreement. In fact, we somewhat anticipate it could be paid off by the end of the year.

Jon Braatz: Okay. All right. Thank you very much.

Operator: We’ll take a follow-up question from Julio Romero with Sidoti & Company.

Julio Romero: Thanks . I assume you realized all of the March increase by now. Where did you guys exit December in terms of realizing monthly price increases?

Rebecca Thompson : Well, so Julio, I think this will answer your question. I have in front of me, our January backlog. So like at the end of January, we have less than 1% of the backlog that’s March or January price increase. So everything now that’s pretty much left in our backlog is the various 1% price increases that will be flowing out over the next year.

Julio Romero: Got you. Okay. Appreciate taking the follow-up.

Operator: It appears there are no further questions at this time. Mr. Mondillo, I’ll turn the call back to you for any closing remarks.

Joseph Mondillo : All right. I’d like to thank everyone for joining us on today’s call. If anyone has any other questions over the coming days and weeks, please feel free to reach out to myself. As Matt mentioned at the closing of his remarks, we have Investor Day on May 17 and 18. We’re attending the Sidoti conference on March 22, and we’ll be at the Wells Fargo conference later in — on June 13. So hope to see you at those events. And again, if you have any other questions over the next few days, feel free to reach out. Thanks, and have a great day.

Operator: This concludes today’s conference call. Thank you for attending.

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