AAON, Inc.

Good afternoon, ladies and gentlemen. Welcome to Aon, Inc., fourth quarter sales and earnings call. There will be a question and answer period after management's brief presentation. This call will last approximately 45 minutes to an hour. I would like to turn the meeting over to Mr. Gary Fields. Please go ahead, sir.

Good afternoon. I want to read a disclaimer to begin with, forward-looking disclaimer. To the extent any statement presented herein deals with information that is not historical, including the outlook for the remainder of the year, such statement is necessarily forward-looking and made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. As such, it is subject to the occurrence of many events outside Aon's control that could cause Aon's results to differ materially from those anticipated. Please see the risk factors contained in our most recent SEC filings, including the annual report on Form 10-K and the quarterly report on Form 10-Q. So I want to thank all of the employees of Aon for their safe behavior and due diligence with regards to coronavirus. We have done temperature checks and wellness exams as well as When they clock in, they certify that they are safe and symptom-free. So, again, we want to thank those employees because we've had very, very good success with our experience with the coronavirus. I want to turn the call over to Scott Asbjornson, our Chief Financial Officer.

Thank you, Gary. I'd like to begin by discussing the comparative results of the three months under December 31, 2020 versus December 31, 2019. Net sales were down 4.8% to $116.7 million from $122.6 million. Net sales for the quarter are down primarily to our planned Tulsa plant shutdown during the last week of December 2020 for plant and machine maintenance, as well as for a deserved employee holiday break. Our gross profit decreased 6.8% to $33.9 million from $36.4 million. As a percentage of sales, gross profit was 29.1% in the quarter just ended compared to 29.7% in 2019. Due to the planned shutdown in Tulsa, we saw an increase in repairs and maintenance expenses along with lower overhead absorption. Selling, general, and administrative expenses increased 11.5% to $14.6 million from $13.1 million in 2019. Additionally, as a percentage of sales, SG&A increased to 12.5% of total sales compared to 10.7% in the same period in 2019. SG&A is up due to increases in profit sharing and employee incentives due to the increased earnings. Income from operations increased 10.7% to $25.7 million or 22% of sales from $23.2 million or 18.9% of sales in 2019. Income from operations is up due to the 6.4 million pre-tax gain as a result of insurance proceeds received in November 2020. Our effective tax rate increased to 26.6% from 25.6%. Net income increased to 18.9 million or 16.2% of sales compared to 17.3 million were 14.1% of sales in 2019. Net income included $4.1 million related to insurance proceeds. Diluted earnings per share increased 6.1% to $0.35 per share from $0.33 per share. The insurance proceeds mentioned previously amounted to $0.08 per share. Now for the comparative results of the year ended December 31, 2020. versus December 31st, 2019. Net sales were up 9.6% to $514.6 million from $469.3 million. Net sales for the year are up due primarily to our increased production of rooftop units and full realization of price increases put in place in prior years. Our gross profit increased 30.5% to $155.8 million from $119.4 million. As a percentage of sales, gross profit was 30.3% in the year just ended compared to 25.4% in 2019. We have experienced decreased material costs and improved overhead absorption. Selling general and administrative expenses increased 16.2% to $60.5 million from $52.1 million in 2019. Additionally, as a percentage of sales, SG&A increased slightly to 11.8% of total sales in the year just ended from 11.1% in 2019. SG&A expenses are up due to increases in our profit-sharing program, employee incentives, and a one-time donation of $1.25 million to Winifred Public School in honor of our founder, Norman Asbjornson. Income from operations increased 52% to 101.8 million or 19.8% of sales from 67 million or 14.3% of sales in 2019. Our effective tax rate increased to 22.5% from 19.9%. In 2019, our tax rate benefited from additional credits we were able to capture. Net income in 2020 increased 47% to $79 million or 15.4% of sales compared to $53.7 million or 11.4% of sales in 2019. Diluted earnings per share increased by 46.1% to $1.49 per share from $1.02 per share. At this time, I'll turn the call over to Rebecca Thompson, are Chief Accounting Officer and Treasurer.