# EDGAR Filing Document

**Accession Number:** 0000824142
**File Stem:** 0000824142-23-000020
**Filing Date:** 2023-2
**Character Count:** 32702
**Document Hash:** 6ed3ff96a80ab8dfdf553d36bd65c33f
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000824142-23-000020.hdr.sgml**: 20230227

**ACCESSION NUMBER**: 0000824142-23-000020

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 14

**CONFORMED PERIOD OF REPORT**: 20230227

**ITEM INFORMATION**: Results of Operations and Financial Condition

**ITEM INFORMATION**: Regulation FD Disclosure

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20230227

**DATE AS OF CHANGE**: 20230227

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** AAON, INC.
- **CENTRAL INDEX KEY:** 0000824142
- **STANDARD INDUSTRIAL CLASSIFICATION:** AIR COND & WARM AIR HEATING EQUIP & COMM & INDL REFRIG EQUIP [3585]
- **IRS NUMBER:** 870448736
- **STATE OF INCORPORATION:** NV
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-18953
- **FILM NUMBER:** 23675246

**BUSINESS ADDRESS:**
- **STREET 1:** 2425 SOUTH YUKON AVE.
- **CITY:** TULSA
- **STATE:** OK
- **ZIP:** 74107
- **BUSINESS PHONE:** 9185832266

**MAIL ADDRESS:**
- **STREET 1:** 2425 SOUTH YUKON AVE.
- **CITY:** TULSA
- **STATE:** OK
- **ZIP:** 74107

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** AAON INC
- **DATE OF NAME CHANGE:** 19920703

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** DIAMOND HEAD RESOURCES INC
- **DATE OF NAME CHANGE:** 19900808

?xml version="1.0" ? aaon-20230227

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

Washington, D.C. 20549

**FORM 8-K** 

**CURRENT REPORT**

**Pursuant to Section 13 or 15(d) of the**

**Securities Exchange Act of 1934**

Date of Report (Date of earliest event reported): February 27, 2023

**AAON, INC.** 

(Exact name of Registrant as Specified in Charter)

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Nevada** | **Nevada** | **Nevada** | **0-18953** | **87-0448736** |
| (State or Other Jurisdiction | (State or Other Jurisdiction | (State or Other Jurisdiction | (Commission File Number:) | (IRS Employer Identification No.) |
| of Incorporation) | of Incorporation) | of Incorporation) |  |  |
| **2425 South Yukon Ave.,** | **Tulsa,** | **Oklahoma** |  | **74107** |
| (Address of Principal Executive Offices) | (Address of Principal Executive Offices) | (Address of Principal Executive Offices) |  | (Zip Code) |

---

(Registrant's telephone number, including area code): **(918) 583-2266** 

**Not Applicable**

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐&nbsp;&nbsp;&nbsp;&nbsp;Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐&nbsp;&nbsp;&nbsp;&nbsp;Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐&nbsp;&nbsp;&nbsp;&nbsp;Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐&nbsp;&nbsp;&nbsp;&nbsp;Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered <br> <u>Common Stock</u> <u>AAON</u> <u>NASDAQ</u>

------

**Item 2.02&nbsp;&nbsp;&nbsp;&nbsp;Results of Operations and Financial Conditions.**

On February 27, 2023, AAON, Inc. (the "Company") announced its financial and operating results and backlog for the fourth quarter ended December 31, 2022. A copy of the Company's press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference. The Company plans to host a teleconference at 5:15 P.M (Eastern Time) on February 27, 2023 to discuss these results. The conference call will be accessible via a dial-in for those who wish to participate in Q&A as well as a listen-only webcast. The accessible dial-in is 1-877-550-1858 for domestic callers or 1-848-488-9160 for international callers, both accessible with the conference ID 1754341. To access the listen-only webcast, register at https://app.webinar.net/rbzdMK9Vv27. On the next business day following the call, a replay of the call will be available on the Company's website at <u>https://aaon.com/Investors</u>.

In accordance with General Instruction B.2 of Form 8-K, the information in this Item shall not be deemed "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing.

**Item 7.01&nbsp;&nbsp;&nbsp;&nbsp;Regulation FD Disclosure.**

On February 27, 2023, the Company issued the press release described above in Item 2.02 of this Current Report on Form 8-K. A copy of the press release is attached hereto as Exhibit 99.1.

All statements in the teleconference, other than historical financial information, may be deemed to be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "expects", "anticipates", "intends", "plans", "believes", "seeks", "estimates", "should", "will", and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Participants and readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligations to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Important factors that could cause results to differ materially from those in the forward-looking statements include (1) the timing and extent of changes in raw material and component prices, (2) the effects of fluctuations in the commercial/industrial new construction market, (3) the timing and extent of changes in interest rates, as well as other competitive factors during the year, and (4) general economic, market or business conditions.

In accordance with General Instruction B.2 of Form 8-K, the information in this Item shall not be deemed "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing.

**Item 9.01&nbsp;&nbsp;&nbsp;&nbsp;Financial Statements and Exhibits.**

(d)&nbsp;&nbsp;&nbsp;&nbsp;*Exhibits*

---

| | |
|:---|:---|
| Exhibit Number | Description |
| <u>[99.1](aaonq42022pressreleaseexs.htm)</u> | Press release dated February 27, 2023 announcing financial and operating results and backlog. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |

---

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

---

| | | | |
|:---|:---|:---|:---|
| | | **AAON, INC.** | **AAON, INC.** |
| Date: | February 27, 2023 | By: | /s/ Luke A. Bomer |
|  |  |  | Luke A. Bomer, Secretary |

---

## Exhibit 99.1

**Exhibit 99.1**&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

![aaona05.jpg](aaona05.jpg)

**AAON REPORTS RECORD SALES, EARNINGS & BACKLOG** 

**FOR THE FOURTH QUARTER OF 2022**

TULSA, OK, February 27, 2023 - AAON, INC. (NASDAQ-AAON), a provider of premier, configurable HVAC solutions that bring long-term value to customers and owners, today announced its results for the fourth quarter of 2022.

Net sales for the fourth quarter of 2022 increased 86.8% to a record $254.6 million from $136.3 million in the fourth quarter of 2021. Organic volume growth and product mix contributed approximately 41.0% to year-over-year growth. Volume growth reflected the Company's strong backlog and a fourth straight quarter of record production. In addition to volume, pricing contributed 26.7% of growth and inorganic growth contributed 19.1%.

Gross profit for the quarter increased 195.9% to $78.5 million, or 30.8% of sales compared to the same period a year ago. While 2021 was negatively impacted by supply chain, constrained production, inefficiencies and unabsorbed fixed costs, the fourth quarter of 2022 benefited from multiple prices increases initiated throughout the year, reduced impacts from supply chain and significant production efficiency improvements over all of the plant floors. The Company continues to successfully demonstrate our ability to adapt quickly and maximize production even with the ongoing challenges of parts shortages.

Earnings per diluted share in the fourth quarter of 2022 increased 545.5% to $0.71 from $0.11 in the fourth quarter of 2021. As noted above, the increase in earnings was the result of volume growth, improved gross profit margin and a full year of BASX operations. The year-over-year increase was also attributable to abnormally low gross margin in the fourth quarter of 2021 as well as the $4.4 million of acquisition-related transaction fees from the closing of the BASX acquisition in December 2021.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Financial Highlights:** | **Three Months Ended <br> December 31,** | **Three Months Ended <br> December 31,** | **%** | **Years Ending <br> December 31,** | **Years Ending <br> December 31,** | **%** |
|  | **2022** | **2021** | **Change** | **2022** | **2021** | **Change** |
|  | *(in thousands, except share and per share data)* | *(in thousands, except share and per share data)* | *(in thousands, except share and per share data)* | *(in thousands, except share and per share data)* | *(in thousands, except share and per share data)* | *(in thousands, except share and per share data)* |
| **GAAP Measures** |  |  |  |  |  |  |
| Net sales | $254598 | $136282 | 86.8% | $888788 | $534517 | 66.3% |
| Gross profit | $78541 | 26547 | 195.9% | 237572 | 137830 | 72.4% |
| &nbsp;&nbsp;&nbsp;&nbsp;Gross profit margin | 30.8% | 19.5% |  | 26.7% | 25.8% |  |
| Operating income | $46598 | 5443 | 756.1% | 126761 | 69253 | 83.0% |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating margin | 18.3% | 4.0% |  | 14.3% | 13.0% |  |
| Net income | $38898 | $6186 | 528.8% | $100376 | $58758 | 70.8% |
| &nbsp;&nbsp;&nbsp;&nbsp;Earnings per diluted share | $0.71 | $0.11 | 545.5% | $1.86 | $1.09 | 70.6% |
| Diluted average shares | 54807611 | 53948763 | 1.6% | 54097072 | 53728989 | 0.7% |
| **Non-GAAP Measures** |  |  |  |  |  |  |
| EBITDA<sup>1</sup> | $56184 | $13278 | 323.1% | $162266 | $99657 | 62.8% |
| &nbsp;&nbsp;&nbsp;&nbsp;EBITDA margin<sup>1</sup> | 22.1% | 9.7% |  | 18.3% | 18.6% |  |
| Adjusted EBITDA<sup>1</sup> | $56184 | $17208 | 226.5% | $162266 | $103587 | 56.6% |
| &nbsp;&nbsp;&nbsp;&nbsp;Adjusted EBITDA margin<sup>1</sup> | 22.1% | 12.6% |  | 18.3% | 19.4% |  |
| <sup>1</sup>These are non-GAAP measures. See "Use of Non-GAAP Financial Measures" below for reconciliation to GAAP measures. | <sup>1</sup>These are non-GAAP measures. See "Use of Non-GAAP Financial Measures" below for reconciliation to GAAP measures. | <sup>1</sup>These are non-GAAP measures. See "Use of Non-GAAP Financial Measures" below for reconciliation to GAAP measures. | <sup>1</sup>These are non-GAAP measures. See "Use of Non-GAAP Financial Measures" below for reconciliation to GAAP measures. | <sup>1</sup>These are non-GAAP measures. See "Use of Non-GAAP Financial Measures" below for reconciliation to GAAP measures. | <sup>1</sup>These are non-GAAP measures. See "Use of Non-GAAP Financial Measures" below for reconciliation to GAAP measures. | <sup>1</sup>These are non-GAAP measures. See "Use of Non-GAAP Financial Measures" below for reconciliation to GAAP measures. |

---

------

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Backlog** | | | | | |
| |<br>**December 31, 2022** |<br>**September 31, 2022** |<br>**June 30, 2022** |<br>**March 31, 2022** |<br>**December 31, 2021** |
| Backlog | $548022 | $514735 | 464025 | 461400 | 260164 |
| Year over year change | 110.6% | 183.1% | 235.9% | 377.0% | 249.6% |

---

The Company finished the fourth quarter of 2022 with a record backlog of $548.0 million, up 110.6% from $260.2 million at December 31, 2021. Orders booked in the quarter at the legacy business were robust, outpacing orders booked in both the year ago quarter as well as the previous quarter. Orders at BASX were also strong. Backlog at BASX finished the year up 260.9%.

Gary Fields, President and CEO, stated, "I am extremely pleased with our overall results for 2022, particularly with how we finished the year. We started the year with a significant number of challenges, resulting in a slow start. However, we were able to quickly assess the issues, adapt and overcome. Despite the slow start, we finished 2022 with record sales, EBITDA and earnings for the year. We reported record earnings in the third quarter and followed that up with another record in the fourth quarter. At the same time, we finished the year with a record backlog that has a much-improved margin profile, so we are entering 2023 with positive momentum."

Mr. Fields continued, "In the fourth quarter, our operations built on the progress made in the third quarter. Gross margin of 30.8% was the high-water mark for the year and was the highest of any quarter since the first quarter of 2020. The price increases we initiated early in the year finally began to hit the production floor, resulting in a realignment of pricing and costs. In addition, productivity improvements and an increase in our headcount helped accelerate throughput. Headcount in the quarter was up 36.2% from a year ago and up 5.9% from the third quarter. Overall, our operations improved significantly throughout the year and we are now performing at the highest level in over a year."

Mr. Fields continued, "In addition to our manufacturing operations, I am extremely pleased with how well our sales channel is performing. Despite being up against tough comparisons, orders continued to grow, both on a year-over-year and quarter-over-quarter basis, and our backlog finished the year at a record level. Even with price increases removed, bookings still outpaced sales. We clearly continue to take market share, a testament to how well our sales channel partners are performing. We will support our sales channel, so our partners can best leverage the compelling value proposition AAON equipment offers in a market that is increasingly open to investing in premium energy efficient equipment that AAON has specialized in for decades."

Mr. Fields concluded, "As we celebrate the one year anniversary of closing on BASX and progress into the early part of 2023, we are very positive on the business. Production rates and productivity levels continue to increase, the margin profile of the backlog is the best that it has ever been and order trends remain positive. While it is early in the year, we are optimistic AAON is positioned to achieve another record year of sales and earnings."

As of December 31, 2022, the Company had cash and cash equivalents of $5.5 million and total debt of $71.0 million. Rebecca Thompson, CFO and Treasurer, commented, "Within the quarter, we paid down $5.3 million on our line of credit and our balance sheet remains strong. At the end of the fourth quarter, our leverage ratio decreased to 0.46, from 0.65 at the end of the third quarter. In 2023, we anticipate cash flows from operations will remain strong, allowing us to continue to reduce our borrowings under the line of credit while making necessary capital investments for long-term growth. We anticipate capital expenditures of approximately $135.0 million for 2023."

**Conference Call and Webcast**

The Company will host a conference call and webcast to discuss its financial results and outlook on February 27, 2023 at 5:15 P.M. ET. The conference call will be accessible via a dial-in for those who wish to participate in Q&A as well as a listen-only webcast. The accessible dial-in is 1-877-550-1858 for domestic callers or 1-848-488-9160 for international callers, both accessible with the conference ID 1754341. To access the listen-only webcast, register at https://app.webinar.net/rbzdMK9Vv27. On the next business day following the call, a replay of the call will be available on the Company's website at <u>https://aaon.com/Investors</u>.

**About AAON**

Founded in 1988, AAON is a world leader in HVAC solutions for commercial and industrial indoor environments. The Company's industry-leading approach to designing and manufacturing highly configurable equipment to meet exact needs creates a premier ownership experience with greater efficiency, performance and long-term value. AAON is headquartered in Tulsa, Oklahoma, where its world-class innovation center and testing lab allows AAON engineers to continuously push boundaries and advance the industry. For more information, please visit www.AAON.com.

------

**Forward-Looking Statements**

This press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "expects", "anticipates", "intends", "plans", "believes", "seeks", "estimates", "should", "will", and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligations to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Important factors that could cause results to differ materially from those in the forward-looking statements include (1) the timing and extent of changes in raw material and component prices, (2) the effects of fluctuations in the commercial/industrial new construction market, (3) the timing and extent of changes in interest rates, as well as other competitive factors during the year, and (4) general economic, market or business conditions.

**Contact Information**

Joseph Mondillo

Director of Investor Relations

Phone: (617) 877-6346

Email: joseph.mondillo@aaon.com

------

---

| | | | | |
|:---|:---|:---|:---|:---|
| **AAON, Inc. and Subsidiaries** | **AAON, Inc. and Subsidiaries** | **AAON, Inc. and Subsidiaries** | **AAON, Inc. and Subsidiaries** | **AAON, Inc. and Subsidiaries** |
| **Consolidated Statements of Income** | **Consolidated Statements of Income** | **Consolidated Statements of Income** | **Consolidated Statements of Income** | **Consolidated Statements of Income** |
| **(Unaudited)** | **(Unaudited)** | **(Unaudited)** | **(Unaudited)** | **(Unaudited)** |
| | **Three Months Ended <br> December 31,** | **Three Months Ended <br> December 31,** | **Years Ending <br> December 31,** | **Years Ending <br> December 31,** |
|  | **2022** | **2021** | **2022** | **2021** |
|  | *(in thousands, except share and per share data)* | *(in thousands, except share and per share data)* | *(in thousands, except share and per share data)* | *(in thousands, except share and per share data)* |
| Net sales | $254598 | $136282 | $888788 | $534517 |
| Cost of sales | 176057 | 109735 | 651216 | 396687 |
| Gross profit | 78541 | 26547 | 237572 | 137830 |
| Selling, general and administrative expenses | 31943 | 21110 | 110823 | 68598 |
| Gain on disposal of assets |  | (6) | (12) | (21) |
| Income from operations | 46598 | 5443 | 126761 | 69253 |
| Interest expense | (933) | (121) | (2627) | (132) |
| Other income, net | 104 | 24 | 399 | 61 |
| Income before taxes | 45769 | 5346 | 124533 | 69182 |
| Income tax provision (benefit) | 6871 | (840) | 24157 | 10424 |
| Net income | $38898 | $6186 | $100376 | $58758 |
| Earnings per share: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic | $0.73 | $0.12 | $1.89 | $1.12 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Diluted | $0.71 | $0.11 | $1.86 | $1.09 |
| Cash dividends declared per common share: | $0.24 | $0.19 | $0.43 | $0.38 |
| Weighted average shares outstanding: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic | 53317011 | 52467696 | 53054986 | 52404199 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Diluted | 54807611 | 53948763 | 54097072 | 53728989 |

---

------

---

| | | |
|:---|:---|:---|
| **AAON, Inc. and Subsidiaries** | **AAON, Inc. and Subsidiaries** | **AAON, Inc. and Subsidiaries** |
| **Consolidated Balance Sheets** | **Consolidated Balance Sheets** | **Consolidated Balance Sheets** |
| **(Unaudited)** | **(Unaudited)** | **(Unaudited)** |
| | **December 31, 2022** | **December 31, 2021** |
| **Assets** | *(in thousands, except share and per share data)* | *(in thousands, except share and per share data)* |
| Current assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | $5451 | $2859 |
| &nbsp;&nbsp;&nbsp;&nbsp;Restricted cash | 498 | 628 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net of allowance for credit losses of $477 and $549, respectively | 127158 | 70780 |
| &nbsp;&nbsp;&nbsp;&nbsp;Income tax receivable |  | 5723 |
| &nbsp;&nbsp;&nbsp;&nbsp;Inventories, net | 198939 | 130270 |
| &nbsp;&nbsp;&nbsp;&nbsp;Contract assets | 15151 | 5749 |
| &nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other | 1919 | 2071 |
| Total current assets | 349116 | 218080 |
| Property, plant and equipment: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Land | 8537 | 5016 |
| &nbsp;&nbsp;&nbsp;&nbsp;Buildings | 169156 | 135861 |
| &nbsp;&nbsp;&nbsp;&nbsp;Machinery and equipment | 342045 | 318259 |
| &nbsp;&nbsp;&nbsp;&nbsp;Furniture and fixtures | 30033 | 23072 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total property, plant and equipment | 549771 | 482208 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Less: Accumulated depreciation | 245026 | 224146 |
| Property, plant and equipment, net | 304745 | 258062 |
| Intangible assets, net | 64606 | 70121 |
| Goodwill | 81892 | 85727 |
| Right of use assets | 7123 | 16974 |
| Other long-term assets | 6421 | 1216 |
| Total assets | $813903 | $650180 |
| **Liabilities and Stockholders' Equity** |  |  |
| Current liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | 45513 | 29020 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued liabilities | 78630 | 50206 |
| &nbsp;&nbsp;&nbsp;&nbsp;Contract liabilities | 21424 | 7542 |
| Total current liabilities | 145567 | 86768 |
| Revolving credit facility, long-term | 71004 | 40000 |
| Deferred tax liabilities | 18661 | 31993 |
| Other long-term liabilities | 11508 | 18843 |
| New market tax credit obligation | 6449 | 6406 |
| Commitments and contingencies |  |  |
| Stockholders' equity: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Preferred stock, $.001 par value, 5,000,000 shares authorized, no shares issued |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Common stock, $.004 par value, 100,000,000 shares authorized, 53,425,184 and 52,527,985 issued and outstanding at December 31, 2022 and December 31, 2021, respectively | 214 | 210 |
| &nbsp;&nbsp;&nbsp;&nbsp;Additional paid-in capital | 98735 | 81654 |
| &nbsp;&nbsp;&nbsp;&nbsp;Retained earnings | 461765 | 384306 |
| Total stockholders' equity | 560714 | 466170 |
| Total liabilities and stockholders' equity | $813903 | $650180 |

---

------

---

| | | |
|:---|:---|:---|
| **AAON, Inc. and Subsidiaries** | **AAON, Inc. and Subsidiaries** | **AAON, Inc. and Subsidiaries** |
| **Consolidated Statements of Cash Flows** | **Consolidated Statements of Cash Flows** | **Consolidated Statements of Cash Flows** |
| **(Unaudited)** | **(Unaudited)** | **(Unaudited)** |
| | **Years Ending <br> December 31,** | **Years Ending <br> December 31,** |
|  | **2022** | **2021** |
| **Operating Activities** | *(in thousands)* | *(in thousands)* |
| &nbsp;&nbsp;&nbsp;Net income | $100376 | $58758 |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 35106 | 30343 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of debt issuance cost | 43 | 43 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of right of use assets | 324 | 73 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision for credit losses on accounts receivable, net of adjustments | (72) | 43 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision for excess and obsolete inventories | 2740 | 629 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Share-based compensation | 13700 | 11812 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on disposition of assets | (12) | (21) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Foreign currency transaction loss (gain) | 41 | (1) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest income on note receivable | (22) | (24) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income taxes | (13332) | 3669 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | (56306) | (9737) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income taxes | 18195 | (1136) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories | (71409) | (45955) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contract assets | (9402) | 1886 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other long-term assets | (2367) | 1374 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | 11574 | 10899 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contract liabilities | 13882 | (229) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Extended warranties | 1314 | 447 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued liabilities and other long-term liabilities | 16945 | (1690) |
| &nbsp;&nbsp;&nbsp;Net cash provided by operating activities | 61318 | 61183 |
| **Investing Activities** |  |  |
| &nbsp;&nbsp;&nbsp;Capital expenditures | (54024) | (55362) |
| &nbsp;&nbsp;&nbsp;Cash paid for building | (22000) |  |
| &nbsp;&nbsp;&nbsp;Cash paid in business combination, net of cash acquired | (249) | (103430) |
| &nbsp;&nbsp;&nbsp;Proceeds from sale of property, plant and equipment | 12 | 19 |
| &nbsp;&nbsp;&nbsp;Principal payments from note receivable | 48 | 54 |
| &nbsp;&nbsp;&nbsp;Net cash used in investing activities | (76213) | (158719) |
| **Financing Activities** |  |  |
| &nbsp;&nbsp;&nbsp;Borrowings under revolving credit facility | 225758 | 40000 |
| &nbsp;&nbsp;&nbsp;Payments under revolving credit facility | (194754) |  |
| &nbsp;&nbsp;&nbsp;Principal payments on financing lease | (115) |  |
| &nbsp;&nbsp;&nbsp;Stock options exercised | 23140 | 21148 |
| &nbsp;&nbsp;&nbsp;Repurchase of stock | (12737) | (20876) |
| &nbsp;&nbsp;&nbsp;Employee taxes paid by withholding shares | (1018) | (1590) |
| &nbsp;&nbsp;&nbsp;Dividends paid to stockholders | (22917) | (19947) |
| &nbsp;&nbsp;&nbsp;Net cash provided by financing activities | 17357 | 18735 |
| **Net increase (decrease) in cash, cash equivalents and restricted cash** | 2462 | (78801) |
| **Cash, cash equivalents and restricted cash, beginning of period** | 3487 | 82288 |
| **Cash, cash equivalents and restricted cash, end of period** | $5949 | $3487 |

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**Use of Non-GAAP Financial Measures**

To supplement the Company's consolidated financial statements presented in accordance with generally accepted accounting principles ("GAAP"), additional non-GAAP financial measures are provided and reconciled in the following tables. The Company believes that these non-GAAP financial measures, when considered together with the GAAP financial measures, provide information that is useful to investors in understanding period-over-period operating results. The Company believes that this non-GAAP financial measure enhances the ability of investors to analyze the Company's business trends and operating performance as they are used by management to better understand operating performance. Since adjusted net income, adjusted net income per diluted share, EBITDA, adjusted EBITDA, and adjusted EBITDA margin are non-GAAP measures and are susceptible to varying calculations, adjusted net income, adjusted net income per diluted share, EBITDA, adjusted EBITDA, and adjusted EBITDA margin, as presented, may not be directly comparable with other similarly titled measures used by other companies.

**EBITDA and Adjusted EBITDA**

EBITDA (as defined below) is presented herein and reconciled from the GAAP measure of net income because of its wide acceptance by the investment community as a financial indicator of a company's ability to internally fund operations. The Company defines EBITDA as net income, plus (1) depreciation and amortization, (2) interest expense (income), net and (3) income tax expense. EBITDA is not a measure of net income or cash flows as determined by GAAP.

The Company's EBITDA measure provides additional information which may be used to better understand the Company's operations. EBITDA is one of several metrics that the Company uses as a supplemental financial measurement in the evaluation of its business and should not be considered as an alternative to, or more meaningful than, net income, as an indicator of operating performance. Certain items excluded from EBITDA are significant components in understanding and assessing a company's financial performance. EBITDA, as used by the Company, may not be comparable to similarly titled measures reported by other companies. The Company believes that EBITDA is a widely followed measure of operating performance and is one of many metrics used by the Company's management team and by other users of the Company's consolidated financial statements.

Adjusted EBITDA is calculated as EBITDA adjusted by items in non-GAAP adjusted net income, above, except for taxes, as taxes are already excluded from EBITDA.

The following table provides a reconciliation of net income (GAAP) to EBITDA (non-GAAP) and Adjusted EBITDA (non-GAAP) for the periods indicated:

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended <br> December 31,** | **Three Months Ended <br> December 31,** | **Years Ended<br> December 31,** | **Years Ended<br> December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
|  | *(in thousands)* | *(in thousands)* | *(in thousands)* | *(in thousands)* |
| Net income, a GAAP measure | $38898 | $6186 | $100376 | $58758 |
| &nbsp;&nbsp;Depreciation and amortization | 9482 | 7811 | 35106 | 30343 |
| &nbsp;&nbsp;Interest expense | 933 | 121 | 2627 | 132 |
| &nbsp;&nbsp;Income tax expense | 6871 | (840) | 24157 | 10424 |
| EBITDA, a non-GAAP measure | 56184 | 13278 | 162266 | 99657 |
| &nbsp;&nbsp;Acquisition-related fees |  | 4367 |  | 4367 |
| &nbsp;&nbsp;Profit sharing effect<sup>1</sup> |  | (437) |  | (437) |
| Adjusted EBITDA, a non-GAAP measure | $56184 | $17208 | $162266 | $103587 |
| Adjusted EBITDA margin | 22.1% | 12.6% | 18.3% | 19.4% |
| <sup>1</sup>Profit sharing effect of BASX acquisition-related fees in the respective period. | <sup>1</sup>Profit sharing effect of BASX acquisition-related fees in the respective period. | <sup>1</sup>Profit sharing effect of BASX acquisition-related fees in the respective period. | <sup>1</sup>Profit sharing effect of BASX acquisition-related fees in the respective period. | <sup>1</sup>Profit sharing effect of BASX acquisition-related fees in the respective period. |

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