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Sep 30, 2021
Aaon Q3 2021 Earnings Report
AAON's financial performance was impacted by raw material inflation and labor shortages, despite a significant increase in backlog and new bookings.
Key Takeaways
AAON reported a 2.8% increase in net sales to $138.6 million for the third quarter of 2021. However, gross profit declined by 11.8% due to rising material costs and labor shortages. The company's backlog increased by 114% year-over-year, reaching $181.8 million.
Net sales increased by 2.8% to $138.6 million compared to the same period in 2020.
Gross profit decreased by 11.8% due to raw material inflation and labor shortages.
Backlog increased by 114% year-over-year to $181.8 million.
New bookings increased by approximately 60% compared to the same period last year.
Aaon
Aaon
Forward Guidance
AAON anticipates that the price/cost issue is largely a timing factor and will begin to dissipate as the year closes. The company expects to make progress on labor shortage challenges in the fourth quarter, but this issue could linger into 2022. AAON believes it is well-positioned to benefit from an increased focus on decarbonization, electrification, energy efficiency and indoor air quality.
Positive Outlook
- Price/cost issue is expected to dissipate as the year closes.
- Additional price increases have been implemented, bringing the total announced increases for the year to 18%.
- Progress is expected on labor shortage challenges in the fourth quarter.
- AAON is well-positioned to benefit from an increased focus on decarbonization.
- AAON is well-positioned to benefit from an increased focus on electrification.
Challenges Ahead
- Labor shortage challenges could linger into 2022.
- Raw material inflation.
- Labor shortages restricted the company from ramping up production as quickly as desired.
- Increased backlog created by the order surge delayed the impact of the price increase hitting the floor so that it had minimal impact on the quarter.
- The company saw the highest priced materials to date coming out of inventory and flowing through production.