Aaon Q3 2020 Earnings Report
Key Takeaways
AAON reported record net sales for the third quarter of 2020, driven by progress in transitioning to a collaborative team-based management approach. Gross profit increased significantly due to favorable raw material costs and improved productivity. The company anticipates challenges in 2021 due to a potential decline in construction, but remains confident in its ability to grow market share in the replacement market.
Net sales for the third quarter were an all-time record.
Gross profit increased to 30.3% from 24.1% for the corresponding quarter a year ago.
The company is uniquely positioned to address COVID challenges with heightened filtration and sanitation technologies.
Expansion project at the Longview, Texas facility is nearing completion and expected to be operational by January 2021.
Aaon
Aaon
Forward Guidance
The outlook for 2021 continues to present a lot of uncertainty. The Architecture Billings Index has been down for several months, indicating a decline in construction, which may start to impact the new nonresidential construction market in late 2020.
Positive Outlook
- Equipment is uniquely positioned to address COVID challenges by providing heightened filtration and sanitation.
- Seeing increases in raw materials costs, which we are offsetting in part with our previously announced price increase, which will be effective January 2021.
- Approximately 50% of our total sales already represented by the replacement market.
- Confident of ability to grow market share in the replacement market.
- Improved lead times.
Challenges Ahead
- The outlook for 2021 continues to present a lot of uncertainty.
- The Architecture Billings Index has been down for several months, indicating a decline in construction.
- Construction may start to impact the new nonresidential construction market in late 2020.
- Beginning to see increases in raw materials costs.
- Do not see significant growth opportunities in the near term.