AAON, Inc.

Good morning, ladies and gentlemen, and welcome to the AAON Incorporated's first quarter 2025 earnings release conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, May 1st, 2025. I would now like to turn the conference over to Joe Mandillo, Director of Investor Relations, Please go ahead.

Thank you, operator, and good morning, everyone. The press release announcing our first quarter financial results was issued earlier this morning and can be found on our corporate website, aaon.com. The call today is accompanied with a presentation that you can also find on our website, as well as on the Listen Only webcast. Please turn to slide two. We begin with our customary forward-looking statement policy. During the call, any statement presented dealing with information that is not historical is considered 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 of AON's control that could cause AON's results to differ materially from those anticipated. You are all aware of the inherent difficulties, risks, and uncertainties in making predictive statements. Our press release in Form 10-Q that we filed this morning details some of the important risk factors that may cause our actual results to differ from those in our predictions. Please note that we do not have the duty to update our forward-looking statements. Our press release and portion of today's call use non-GAAP financial measures as defined in Regulation G. You can find the related reconciliations to the GAAP measures in our press release and presentation. Joining me on today's call is Gary Field, CEO, Matt Cebulski, President and COO, and Rebecca Thompson, CFO and Treasurer. Gary will start us off with some opening remarks. Rebecca will follow with a walkthrough of the quarterly results. Matt will then provide further details on our operations and outlook going forward. And before taking questions, Gary will finish with some closing remarks. With that, I will turn the call over to Gary.

Starting on slide three, prior to jumping into the results, I want to start off by reminding you of our core strategic pillars. These pillars consist of leading in innovation and custom solutions, driving sustainable organic growth, and being a best-in-class operator. These three pillars help guide our long-term strategic planning and remind us of what we are trying to accomplish when forming tactical strategies. All of these pillars did not always exist at Aon. Since our founding, leading in innovation has always been core to who Aon is. Over the past several years, our strategy has built upon this with a focus on developing ways to drive sustainable, long-term, organic growth, and being a best-in-class operator. All of the tactical initiatives that we've taken, such as transitioning to a leadership team, putting in place succession planning, formally constructing and documenting long-term strategy planning, adopting a one-aeon principle, and I could go on and on. All of this was to better leverage our core to drive sustainable and efficient long-term growth. This company has never had a better long-term strategy with a better leadership team to execute it. What we're doing with the development of heat pumps on the Aon side of the business and custom air side and liquid cooling data center solutions on the basic side is very exciting. The strategies we're taking regarding the other two pillars ensures that we will fully leverage these innovations along with the already premier solutions we provide to drive market share gains at highly profitable levels. Now, turning to slide four. The first quarter was a solid quarter for Aon. Net sales, margin, and earnings per share notably improved from the fourth quarter, and backlog grew to a record level. Total net sales grew year over year 22.9%. Sales of Basics branded equipment were up 374.8%. Both air side and liquid cooling solutions for data centers were driving factors. Partially offsetting this strength, sales of Aon branded equipment were down 19.1%. Production of our rooftop units was impacted by the weak bookings we received throughout most of the fourth quarter. Additionally, supply chain issues with certain components associated with the new R454B refrigerant were also a factor. On a positive note, bookings of this equipment year to date have been strong. We also have begun to see these supply chain issues abate early in the second quarter. Total gross margin contracted 840 basis points versus the comparable quarter a year ago. This reflected weak production volume of Aon branded rooftop units and the resulting operating deleverage effect. Gross margin at the Aon Oklahoma segment was down 1,380 basis points. Strong sales of BASICS branded equipment along with operational efficiency improvements drove solid gross margin expansion at the Aon coil products and BASICS segments. Gross margin at these two segments were up year-over-year 100 and 350 basis points respectively. Total backlog finished the quarter at a record level $1 billion, up year-over-year 83.9%, and up quarter-over-quarter 18.4%. First quarter bookings of both Aon-branded and Basic-branded equipment were robust. Backlog of Aon-branded equipment was up quarter-over-quarter, 23.4%. And this was the highest level since the first quarter of 2023. Bookings of rooftop units were very strong and strengthened throughout the quarter. Backlog of Basics-branded equipment was up quarter-over-quarter, 15.4%, driven by bookings of both airside and liquid cooling data center equipment. Given the backlog on both sides of the business, we're positioned well entering the second quarter. I will now hand it off to Rebecca Thompson, who will walk through the quarterly financials in more depth.