AAON, Inc.

Good afternoon, ladies and gentlemen. Welcome to AA on, Inc., second 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. Thank you for joining us. I'd like to read a forward-looking disclaimer to begin with. A reminder, 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, the Securities Act of 1933, and the Securities and Exchange Act of 1934, each as amended. 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. Joining me today on the call is Rebecca Thompson, our Chief Financial Officer and Treasurer. Rebecca will open by reviewing our financial performance.

Thank you, Gary. I'd like to begin by discussing the comparative results of the three months ended September 30, 2021 versus September 30, 2020. Net sales increased 2.8% to $138.6 million from $134.8 million. The year-over-year increase was fully driven by price increases and a favorable product mix partially offset by unit volumes which were down approximately 11.2%. The decline in unit volumes is mainly a result of a very tight labor market that limited the company's ability to ramp up production. Our gross profit decreased 11.8% to $36 million from $40.8 million. As a percentage of sales, gross profit was 26% compared to 30.3% in the third quarter of 2020. The decline in gross profit was related to increases in material costs and wages rising quicker than our price increases could counteract, inefficiencies caused by minor supply chain disruptions, and COVID-19 absenteeism in the quarter, which reduced our production of coils. Selling, general, and administrative expenses increased 8% to $15.9 million from $14.7 million in 2020. as a percentage of sales, SG&A increased to 11.5% of total sales from 10.9% in the third quarter of 2020. SG&A as a percent of sales increased primarily due to the lower unit volumes. Income from operations decreased 22.9% to 20.1 million or 14.5% of sales from 26.1 million or 19.4% of sales in 2020. Our effective tax rate increased 22.5% from 21.8%. Net income decreased to 15.6 million or 11.2% of sales compared to 20.5 million or 15.2% of sales in third quarter of 2020. Diluted earnings per share decreased by 23.7% to 29 cents per diluted share from 38 cents per diluted share in 2020. Turning to the balance sheet, you'll see that we had a working capital balance of $196.4 million versus $161.2 million at December 31, 2020. Cash and cash equivalents totaled $101.8 million at September 30, 2021, up from $79 million at the end of 2020. Our current ratio is approximately 3.6 to 1. Our capital expenditures were $42.6 million for the nine months ended September 30, 2021. We expect capital expenditures for the year to be approximately $60 million. The company had stock repurchases of $15 million during the nine months ended September 30, 2021. Shareholder's equity per diluted share is $7.46 at September 30, 2021, compared to $6.61 at December 31st, 2020. I'd now like to turn the call back over to Gary Fields, our CEO and president.