What changed in this filing

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Item 1. Financial Statements

2024-05-02 compared with 2023-11-06 · 197 added, 276 removed, 708 unchanged (40% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Assets (in thousands, except share and per share data)

2 unchanged sentences

Restricted cash 19,982 8,736

Accounts receivable, net of allowance for credit losses of $ 385 and $ 477 , respectively

160,108 127,158

Accounts receivable, net 109,662 138,108

Inventories, net 196,252 213,532

24 unchanged sentences

Other long-term liabilities 21,926 16,807

New market tax credit obligation 1

New markets tax credit obligations 1

15,994 12,194

Commitments and contingencies

1 unchanged sentence

Preferred stock, $ .001 par value, 5,000,000 shares authorized, no shares issued

Common stock, $ .004 par value, 100,000,000 shares authorized, 81,231,513 and 80,137,776 issued and outstanding at September 30, 2023 and December 31, 2022, respectively 2

Common stock, $ .004 par value, 100,000,000 shares authorized, 82,117,680 and 81,508,381 issued and outstanding at March 31, 2024 and December 31, 2023, respectively

Additional paid-in capital 139,184 122,063

Retained earnings 645,295 612,835

572,285 461,657

Total stockholders' equity 784,808 735,224

1 unchanged sentence

1 Held by variable interest entities (Note 16)

2 Reflects three-for-two stock split effective August 16, 2023.

The accompanying notes are an integral part of these consolidated financial statements.

2 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(in thousands, except share and per share data)

3 unchanged sentences

Selling, general and administrative expenses 45,288 32,942

Loss (gain) on disposal of assets ( 25 ) — ( 13 ) ( 12 )

(Gain) loss on disposal of assets ( 16 ) 6

Income from operations 46,970 44,206

16 unchanged sentences

Consolidated Statements of Stockholders' Equity

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Common Stock Paid-in Retained

2 unchanged sentences

(in thousands)

Balances at December 31, 2022

Balance at December 31, 2023

81,508 $ 326 $ 122,063 $ 612,835 $ 735,224

Net income — — — 39,016 39,016

Stock options exercised, restricted stock awards 1,517 5 25,246 — 25,251

granted, and contingent shares issued (Note 15)

Share-based compensation — — 12,102 — 12,102

Stock repurchased and retired ( 423 ) ( 2 ) ( 26,209 ) — ( 26,211 )

Dividends — — — ( 19,946 ) ( 19,946 )

Balances at September 30, 2023 81,232 $ 325 $ 109,874 $ 572,285 $ 682,484

Three Months Ended September 30, 2023

Common Stock Paid-in Retained

Capital Earnings 1

(in thousands)

Balances at June 30, 2023 81,569 $ 326 $ 128,636 $ 531,149 $ 660,111

Net income — — — 48,078 48,078

Stock options exercised and restricted 403 2 9,842 — 9,844

stock awards granted

Contingent shares issued (Note 15)

243 1 6,363 — 6,364

Share-based compensation — — 3,957 — 3,957

1 unchanged sentence

Dividends — — — ( 6,556 ) ( 6,556 )

Balances at September 30, 2023 81,232 $ 325 $ 109,874 $ 572,285 $ 682,484

Nine Months Ended September 30, 2022

Balance at March 31, 2024 82,118 $ 329 $ 139,184 $ 645,295 $ 784,808

Three Months Ended March 31, 2023

Common Stock Paid-in Retained

3 unchanged sentences

Net income — — — 36,814 36,814

Stock options exercised, restricted stock awards 1,265 3 10,987 — 10,990

granted, and contingent shares issued (Note 15)

Share-based compensation — — 10,229 — 10,229

Stock repurchased and retired ( 234 ) — ( 8,921 ) — ( 8,921 )

Contingent consideration

— — ( 6,000 ) — ( 6,000 )

Dividends — — — ( 10,088 ) ( 10,088 )

Balances at September 30, 2022 79,823 $ 321 $ 87,949 $ 435,588 $ 523,858

Three Months Ended September 30, 2022

Common Stock Paid-in Retained

Capital Earnings 1

(in thousands)

Balances at June 30, 2022 79,691 $ 321 $ 82,078 $ 408,107 $ 490,506

Net income — — — 27,473 27,473

Stock options exercised and restricted 1,183 3 15,853 — 15,856

3 unchanged sentences

Dividends — — — ( 6,459 ) ( 6,459 )

Balances at September 30, 2022 79,823 $ 321 $ 87,949 $ 435,588 $ 523,858

Balance at March 31, 2023 81,303 $ 325 $ 117,077 $ 492,012 $ 609,414

The accompanying notes are an integral part of these consolidated financial statements.

1 unchanged sentence

Consolidated Statements of Cash Flows

Nine Months Ended

September 30,

Three Months Ended

Operating Activities (in thousands)

2 unchanged sentences

Depreciation and amortization 13,437 10,274

Amortization of debt issuance cost 57 32

Amortization of debt issuance costs 31 11

Amortization of right of use assets 12 29

(Recoveries of) provision for credit losses on accounts receivable, net of adjustments

Provision for (recoveries of) credit losses on accounts receivable, net of adjustments

Provision for excess and obsolete inventories, net of write-offs

Share-based compensation 3,957 3,519

Gain on disposition of assets

( 13 ) ( 12 )

Foreign currency transaction loss

(Gain) loss on disposition of assets

Foreign currency transaction loss (gain)

Interest income on note receivable

( 15 ) ( 17 )

Deferred income taxes ( 740 ) 921

10 unchanged sentences

Net cash provided by operating activities

107,145 43,414

Investing Activities

Capital expenditures ( 34,688 ) ( 28,935 )

Cash paid for building (Note 18)

Cash paid in business combination, net of cash acquired — ( 249 )

Proceeds from sale of property, plant and equipment 16 102

Software development expenditures ( 4,055 ) —

Principal payments from note receivable 13 14

6 unchanged sentences

Payments under revolving credit facility ( 153,458 ) ( 92,512 )

Principal payments on financing lease — ( 115 )

Stock options exercised 9,844 15,856

Repurchase of stock ( 25,009 ) ( 7,943 )

Employee taxes paid by withholding shares ( 3,041 ) ( 1,030 )

2 unchanged sentences

( 34,312 ) 21,027

Net increase in cash, cash equivalents and restricted cash 16,586 7,781

Net increase (decrease) in cash, cash equivalents and restricted cash 19,344 ( 2,969 )

Cash, cash equivalents and restricted cash, beginning of period 9,023 5,949

14 unchanged sentences

Our financial statements consolidate all of our affiliated entities in which we have a controlling financial interest.

Because we hold certain rights that give us the power to direct the activities of five variable interest entities ("VIEs") (Note 16) that most significantly impact the VIEs economic performance, combined with a variable interest that gives us the right to receive potentially significant benefits or the obligation to absorb potentially significant losses, we have a controlling financial interest in those VIEs.

Because we hold certain rights that give us the power to direct the activities of eight variable interest entities ("VIEs") (Note 16) that most significantly impact the VIEs economic performance, combined with a variable interest that gives us the right to receive potentially significant benefits or the obligation to absorb potentially significant losses, we have a controlling financial interest in those VIEs.

These financial statements have not been audited by the Company's independent registered public accounting firm, except that the consolidated balance sheet at December 31, 2023 is derived from audited consolidated financial statements.

6 unchanged sentences

All intercompany balances and transactions have been eliminated in consolidation.

We are engaged in the engineering, manufacturing, marketing, and sale of premium air conditioning and heating equipment consisting of standard, semi-custom, and custom rooftop units, data center cooling solutions, cleanroom systems, packaged outdoor mechanical rooms, air handling units, makeup air units, energy recovery units, condensing units, geothermal/water-source heat pumps, coils, and controls.

We are engaged in the engineering, manufacturing, marketing, and sale of premium air conditioning and heating equipment consisting of standard, semi-custom, and custom rooftop units, data centers cooling solutions, cleanroom systems, packaged outdoor mechanical rooms, air handling units, makeup air units, energy recovery units, condensing units, geothermal/water-source heat pumps, coils, and controls.

Use of Estimates

The preparation of financial statements in conformity with U.S.

The preparation of consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

1 unchanged sentence

We reevaluate our estimates and assumptions as needed, but at a minimum on a quarterly basis.

The most significant estimates include, but are not limited to, inventory valuation, inventory reserves, warranty accrual, medical insurance accrual, income taxes, useful lives of property, plant, and equipment, estimated future use of leased property, share-based compensation, business combinations, revenue percentage of completion and estimated costs to complete.

The most significant estimates include, but are not limited to, inventory valuation, inventory reserves, warranty accrual, workers' compensation accrual, medical insurance accrual, income taxes, useful lives of property, plant, and equipment, estimated future use of leased property, share-based compensation, revenue percentage of completion and estimated costs to complete.

Actual results could differ materially from those estimates.

Inflation and Labor Market

In 2022 and continuing into 2023, we have witnessed increases in our raw material and component prices.

In 2023, we saw the slowing of inflation and some stabilization of raw material and component prices.

Due to our favorable liquidity position, we continue to make strategic purchases of materials when we see opportunities.

We continue to manage the increase in the cost of raw materials through price increases for our products.

We continue to monitor and manage increases in the cost of raw materials through price increases for our products.

We have also experienced supply chain challenges related to specific manufacturing parts, which we have managed through our strong vendor relationships as well as expanding our list of vendors.

2 unchanged sentences

• In March 2023, we awarded annual merit raises for an overall 3.9 % increase to wages.

• In October 2022, we implemented a cost of living increase of 3.5 % in place for all employees

below the Senior Leadership Team ("SLT") level.

• In March 2024, we awarded annual merit raises for an overall 3.3 % increase to wages.

We will continue to implement human resource initiatives to retain and attract labor to further increase production capacity.

We continue to implement human resource initiatives to retain and attract labor to further increase production capacity.

Beginning in 2023, initiatives included changing our employee paid time off policy, historically awarded in arrears at the beginning of each quarter, to accrue ratably over each pay period.

1 unchanged sentence

Despite efforts to mitigate the impact of inflation, supply chain issues and the tight labor market, future disruptions, while temporary, could negatively impact our consolidated financial position, results of operations and cash flows.

Change in Estimate

During the first quarter of 2022, a review of the Company’s useful lives for certain sheet metal manufacturing equipment at our Longview, Texas location resulted in a change in estimate that increased the useful lives from between ten and twelve years to fifteen years.

This determination was based on recent and estimated future production levels as well as management’s knowledge of the equipment and historical and future use of the equipment.

The change in estimate was made prospectively and resulted in a decrease to depreciation expense within cost of sales on our consolidated statements of income of $ 1.8 million during the nine months ended September 30, 2022.

WH Series and WV Series Water Source Heat Pump Units

14 unchanged sentences

Unobservable inputs for the asset or liability including situations where there is little, if any, market activity for the asset or liability.

Items categorized in Level 3 include the estimated fair values of property, plant and equipment, intangible assets, contingent consideration, and goodwill acquired in a business combination.

Items categorized in Level 3 include the estimated fair values of intangible assets, contingent consideration, and goodwill acquired in a business combination.

The fair value hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable inputs (Level 3).

3 unchanged sentences

Definite-Lived Intangible Assets

Our definite-lived intangible assets include various trademarks, service marks, and technical knowledge acquired in business combinations.

We amortize our definite-lived intangible assets on a straight-line basis over the estimated useful lives of the assets.

Our definite-lived intangible assets include various trademarks, service marks, and technical knowledge acquired in business combinations or asset acquisitions.

We amortize our definite-lived intangible assets on a straight-line basis over the estimated

useful lives of the assets.

We evaluate the carrying value of our amortizable intangible assets for potential impairment when events and circumstances warrant such a review.

2 unchanged sentences

Customer relationships 14 years

Software Development Costs

We capitalize costs incurred to purchase or develop software for internal use.

Internal-use software development costs are capitalized during the application development stage.

These capitalized costs are reflected in intangible assets, net on the consolidated balance sheets and are amortized over the estimated useful life of the software.

The useful life of our internal-use software development costs is generally 1 - 6 years.

Goodwill and Indefinite-Lived Intangible Assets

3 unchanged sentences

The changes in the carrying amount of goodwill were as follows:

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

1 unchanged sentence

$ 81,892 $ 81,892

Additions due to acquisitions

Decreases due to business combination revisions 1

Additions (decreases) during the period

Balance, end of period $ 81,892 $ 81,892

1 Revisions related to the December 2021 acquisition of BASX.

Recent Accounting Pronouncements

5 unchanged sentences

The following tables show disaggregated net sales by reportable segment (Note 19) by major source, net of intercompany sales eliminations.

Three Months Ended September 30, 2023

AAON Oklahoma AAON Coil Products BASX Total

(in thousands)

Rooftop units $ 221,417 $ — $ — $ 221,417

Condensing units — 7,636 — 7,636

Air handlers — 9,862 7,558 17,420

Outdoor mechanical rooms — 62 — 62

Cleanroom systems — — 5,355 5,355

Data center cooling solutions — 3,284 25,726 29,010

Water-source heat pumps — 3,898 — 3,898

Part sales 17,756 4 371 18,131

7,281 1,023 737 9,041

$ 246,454 $ 25,769 $ 39,747 $ 311,970

Three Months Ended September 30, 2022

AAON Oklahoma AAON Coil Products BASX Total

(in thousands)

Rooftop units $ 154,171 $ — $ — $ 154,171

Condensing units — 12,720 — 12,720

Air handlers — 14,380 2,211 16,591

Outdoor mechanical rooms 58 118 — 176

Cleanroom systems — — 15,283 15,283

Data center cooling solutions — — 14,884 14,884

Water-source heat pumps 3,236 2,445 — 5,681

Part sales 15,724 — 176 15,900

5,980 841 378 7,199

$ 179,169 $ 30,504 $ 32,932 $ 242,605

1 Other sales include freight, extended warranties and miscellaneous revenue.

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

AAON Oklahoma AAON Coil Products BASX Total

10 unchanged sentences

$ 210,140 $ 24,247 $ 27,712 $ 262,099

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

AAON Oklahoma AAON Coil Products BASX Total

18 unchanged sentences

Changes in job performance, job conditions, and estimated profitability, including those arising from contract penalty provisions and final contract settlements, may result in revisions to costs and income, and are estimated and recognized by the Company throughout the life of the contract.

The aggregate of costs incurred and income recognized on uncompleted contracts in excess of billings is shown as a contract asset within our consolidated balance sheets, and the aggregate of billings on uncompleted contracts in excess of related costs incurred and income recognized is shown as a contract liability within our consolidated balance sheets.

The aggregate of costs incurred and income recognized on uncompleted contracts in excess of billings is shown as a contract asset within our consolidated

balance sheets, and the aggregate of billings on uncompleted contracts in excess of related costs incurred and income recognized is shown as a contract liability within our consolidated balance sheets.

For all other products that are part sales or standardized units, the Company recognizes revenue, presented net of sales tax, when it satisfies the performance obligation in its contracts.

3 unchanged sentences

Historically, sales of our products were moderately seasonal with the peak period being May-October of each year due to timing of construction projects being directly related to warmer weather.

However, in recent years, given the increases in demand of our product and increases in our backlog, sales have become more constant throughout the year.

However, in recent years, given the increases in demand of our product and increases in our backlog, sales has become more constant throughout the year.

Product Warranties

18 unchanged sentences

The Representatives’ fee and Third Party Products amounts (“Due to Representatives”) are paid only after all amounts associated with the order are collected from the customer.

The amount of payments to our Representatives were $ 20.1 million and $ 10.8 million for the three months ended September 30, 2023 and 2022, respectively, and $ 46.4 million and $ 28.7 million for the nine months ended September 30, 2023 and 2022, respectively.

The amount of payments to our Representatives were $ 10.8 million and $ 13.3 million for the three months ended March 31, 2024 and 2023, respectively.

The Company has various lease arrangements for certain manufacturing and warehousing facilities, equipment rental, as well as administrative facilities.

Lease expiration dates, including expected renewal options, range from April 2025 to November 2033.

The discount rates used to calculate the present value of lease payment range from 1.3% to 6.6% as of March 31, 2024.

Currently, all leases are classified as operating leases.

The following table presents the balances by lease type:

Balance Sheet Classification September 30, 2023 December 31, 2022

Balance Sheet Classification March 31, 2024 December 31, 2023

Operating Leases

2 unchanged sentences

Lease liability, long-term Other long-term liabilities $ 14,882 $ 10,201

Since 2018, the Company has leased the manufacturing, engineering and office space used by our operations in Parkville, Missouri, which is classified as an operating lease.

In October 2022, the Parkville, Missouri lease was amended to expand our manufacturing and office space from 51,000 square feet to 86,000 square feet.

The amended lease provides for approximately 31,000 square feet of additional manufacturing and engineering space and approximately 4,000 square feet of additional office space.

The amended lease extends the lease term through December 31, 2032.

Since 2018, the Company has leased the manufacturing, engineering, and office space used by our operations in Parkville, Missouri.

The lease provides approximately 86,000 square feet of manufacturing and office space.

The lease expires December 31, 2032.

In November 2022, the Company entered into a lease agreement for land and facilities in Tulsa, Oklahoma which provides an additional 198,000 square feet to support our operations.

The lease term will expire October 31, 2025.

On July 28, 2023, the Company entered into a lease agreement with a start date of September 1, 2023, for land and approximately 72,000 square feet of facilities in Redmond, Oregon to support our manufacturing operations.

In January 2024, we amended the lease for an additional 157,550 square feet for operations and parts distribution.

The amended lease term will expire November 30, 2029.

In July 2023, the Company entered into a lease agreement with a start date of September 1, 2023, for land and approximately 72,000 square feet of facilities in Redmond, Oregon to support our manufacturing operations.

The lease term is approximately five years with additional renewal options.

We also lease several properties near our Redmond, Oregon location.

In the aggregate, these leases contain approximately 104,500 square feet of additional warehouse space.

These leases have expiring terms from February 2025 to November 2033.

Total undiscounted future lease payments are as follows:

(in thousands)

Thereafter 6,403

Accounts Receivable

Accounts receivable and the related allowance for credit losses are as follows:

September 30,

2024 December 31, 2023

3 unchanged sentences

$ 109,662 $ 138,108

Three Months Ended Nine Months Ended

September 30,

2023 September 30,

2022 September 30,

2023 September 30,

Three Months Ended

2024 March 31,

Allowance for credit losses:

2 unchanged sentences

Provisions for (recoveries of) expected credit

79 119 ( 92 ) 300

losses, net of adjustments

Accounts receivable written off, net of recoveries

— — — ( 167 )

Balance, end of period $ 435 $ 421

3 unchanged sentences

The components of inventories and related changes in the allowance for excess and obsolete inventories account are as follows:

September 30,

2024 December 31, 2023

6 unchanged sentences

$ 196,252 $ 213,532

Three Months Ended Nine Months Ended

September 30,

2023 September 30,

2022 September 30,

2023 September 30,

Three Months Ended

2024 March 31,

Allowance for excess and obsolete inventories:

7 unchanged sentences

Our intangible assets consist of the following:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Definite-lived intangible assets (in thousands)

1 unchanged sentence

Customer relationships 47,547 47,547

Capitalized internal-use software 7,640 3,323

Accumulated amortization ( 11,544 ) ( 9,838 )

4 unchanged sentences

Amortization expense recorded in selling, general and administrative expenses is as follows:

Three Months Ended Nine Months Ended

September 30,

2023 September 30,

2022 September 30,

2023 September 30,

Three Months Ended

2024 March 31,

(in thousands)

Amortization expense $ 1,706 $ 902

Excluding the impact of any future acquisitions, the Company anticipates amortization expense to be $ 3.6 million for each of the years ending 2023 through 2027.

Total future amortization expense for finite-lived intangible assets was estimated as follows:

(in thousands)

Thereafter 29,073

Total future amortization expense 51,255

Internal-use software projects in process 4,838

Total $ 56,093

Supplemental Cash Flow Information

Three Months Ended Nine Months Ended

September 30,

2023 September 30,

2022 September 30,

2023 September 30,

Three Months Ended

2024 March 31,

Supplemental disclosures:

4 unchanged sentences

Non-cash capital expenditures $ ( 2,078 ) $ 366

Contingent shares issued (Note 15)

The Company has product warranties with various terms from one year from the date of first use or 18 months for parts, data center cooling solutions, and cleanroom systems to 25 years for certain heat exchangers.

2 unchanged sentences

Changes in the warranty accrual are as follows:

Three Months Ended Nine Months Ended

September 30,

2023 September 30,

2022 September 30,

2023 September 30,

Three Months Ended

2024 March 31,

Warranty accrual:

6 unchanged sentences

Accrued liabilities were comprised of the following:

September 30,

2024 December 31, 2023

8 unchanged sentences

Donations, short-term 381 381

Litigation settlement (Note 17 )

Accrued income taxes 9,391 1,170

Employee vacation time 10,670 10,315

Extended warranties, short-term 2,614 2,387

Lease liability, short-term 2,274 2,021

Property taxes 1,164 —

Extended warranties, short-term 2,909 1,330

Other 2,299 3,389

1 unchanged sentence

Other long-term liabilities were comprised of the following:

September 30,

2024 December 31, 2023

6 unchanged sentences

On May 27, 2022, we amended our $ 100.0 million Amended and Restated Loan Agreement dated November 24, 2021 (as amended, “Revolver”), to provide for maximum borrowings of $ 200.0 million.

As of September 30, 2023 and December 31, 2022, we had $ 78.4 million and $ 71.0 million outstanding under the Revolver, respectively.

We have two standby letters of credit totaling $ 2.3 million as of September 30, 2023.

Borrowings available under the Revolver at September 30, 2023 were $ 119.3 million.

As of March 31, 2024 we had no amounts outstanding under our Revolver.

As of December 31, 2023, we had $ 38.3 million outstanding under the Revolver.

We have two standby letters of credit totaling $ 2.3 million as of March 31, 2024.

Borrowings available under the Revolver at March 31, 2024 were $ 197.7 million.

The Revolver expires on May 27, 2027.

On April 20, 2023, we amended the Revolver to allow for the occurrence of transactions associated with the New Markets Tax Credit executed on April 25, 2023 (Note 16).

We have amended the Revolver to allow for the occurrence of transactions associated with the New Markets Tax Credit transactions (Note 16).

Any outstanding loans under the Revolver bear interest at the daily compounded secured overnight financing rate ("SOFR") plus the applicable margin.

2 unchanged sentences

The applicable fee percentage is determined quarterly based on the Company's leverage ratio.

The weighted average interest rate on borrowings outstanding on the Revolver was 6.5 % and 6.3 % for the three and nine months ended September 30, 2023, respectively, as compared to 3.5 % and 2.5 % for the three and nine months ended September 30, 2022, respectively.

Fees associated with the unused portion of the committed amount are included in interest expense on our consolidated statements of income for the three and nine months ended September 30, 2023 and 2022.

The weighted average interest rate on borrowings outstanding on the Revolver was 6.6 % and 6.0 % for the three months ended March 31, 2024 and 2023, respectively.

Fees associated with the unused portion of the committed amount are included in interest expense on our consolidated statements of income for the three months ended March 31, 2024 and 2023, respectively.

If SOFR cannot be determined pursuant to the definition, as defined by the Revolver agreement, any outstanding affected loans will be deemed to have been converted into alternative base rate ("ABR") loans.

ABR loans would bear interest at a rate per annum equal to the highest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Rate in effect on such day plus 0.50 %, or (c) daily simple SOFR for a one-month tenor in effect on such day plus 1.00 %.

At September 30, 2023, we were in compliance with our covenants, as defined by the Revolver.

At March 31, 2024, we were in compliance with our covenants, as defined by the Revolver.

Our financial covenants require that we meet certain parameters related to our leverage ratio.

At September 30, 2023, our leverage ratio was 0.33 to 1.0, which meets the requirement of not being above 3 to 1.

At March 31, 2024, our leverage ratio was 0.01 to 1.0, which meets the requirement of not being above 3 to 1.

The provision (benefit) for income taxes consists of the following:

Three Months Ended Nine Months Ended

September 30,

2023 September 30,

2022 September 30,

2023 September 30,

Three Months Ended

2024 March 31,

(in thousands)

4 unchanged sentences

The reconciliation of the Federal statutory income tax rate to the effective income tax rate is as follows:

Three Months Ended Nine Months Ended

September 30,

2023 September 30,

2022 September 30,

2023 September 30,

Three Months Ended

2024 March 31,

Federal statutory rate 21.0 % 21.0 %

3 unchanged sentences

Return to provision ( 0.2 ) ( 0.3 )

Non-deductible executive compensation 1.0 —

Research and development credits ( 1.4 ) ( 1.5 )

Change in valuation allowance (Oklahoma Investment Credit) — — ( 2.0 ) —

Other 0.3 0.3

3 unchanged sentences

Under this method, the investment tax credits are recognized as a reduction to our Oklahoma income tax expense in the year they are used.

As part of our expansion projects in Oklahoma, we identified a separate, more advantageous Oklahoma credit program (non income tax related) which will cause us to discontinue our accumulation of credits for Oklahoma’s manufacturing property investment program after the 2022 tax year.

The Company had investment tax credit carryforwards with a valuation allowance reserved against them as we did not have sufficient taxable income to utilize the carryforwards, in part because we generated more credit each year than we were able to utilize.

Because the Company will not generate additional excess credits after our 2022 tax year, we will be able to use our credit carryforwards against future taxable income and the related valuation allowance was reversed resulting in a one-time benefit of $ 3.1 million to the income tax provision for the nine months ended September 30, 2023.

As of September 30, 2023, we have investment tax credit carryforwards of approximately $ 3.8 million.

As part of our expansion projects in Oklahoma, we identified a separate, more advantageous Oklahoma credit program (not income tax related) which resulted in us discontinuing our accumulation of credits for Oklahoma’s manufacturing property investment program after the 2022 tax year.

As of March 31, 2024, we have investment tax credit carryforwards of approximately $ 2.3 million.

These credits have estimated expirations from the year 2039 through 2043.

In accordance with the 2017 Tax Cuts & Jobs Act, under Internal Revenue Code Section 162(m), the tax deduction for covered executives of public companies is limited to $1.0 million per individual.

Because of the increase in our stock price and timing of executive stock option exercises this resulted in an increase to the income tax provision of $ 0.5 million for the three months ended March 31, 2024.

In accordance with the 2017 Tax Cuts & Jobs Act, under Internal Revenue Code Section 174, research and development expenses incurred after December 31, 2021 are required to be capitalized and amortized over 5 years.

The amortization requirements for tax purposes is a mid-year convention, meaning that the tax amortization is 10% in the year of acquisition, 20% in the following 4 years, and 10% in the final year.

The Company's estimated annual 2024 effective tax rate, excluding discrete events, is approximately 25.6 %.

We file income tax returns in the U.S., state and foreign income tax returns jurisdictions.

We file income tax returns in the U.S., state and foreign income tax return jurisdictions.

We are subject to U.S.

16 unchanged sentences

The Committee determines the persons to whom awards are to be made, determines the type, size and terms of awards, interprets the 2016 Plan, establishes and revises rules and regulations relating to the 2016 Plan and makes any other determinations that it believes necessary for the administration of the 2016 Plan.

The following weighted average assumptions were used to determine the fair value of the stock options granted on the original grant date for expense recognition purposes for options granted during the nine months ended September 30, 2023 and 2022 using a Black Scholes-Merton Model:

Nine months ended

September 30, 2023 September 30, 2022

The following weighted average assumptions were used to determine the fair value of the stock options granted on the original grant date for expense recognition purposes for options granted during the three months ended March 31, 2024 and 2023 using a Black Scholes-Merton Model:

Three months ended

March 31, 2024 March 31, 2023

Directors and SLT 1 :

12 unchanged sentences

Volatility is based on historical volatility of our stock over time periods equal to the expected life at grant date.

The following is a summary of stock options vested and exercisable as of September 30, 2023:

The following is a summary of stock options vested and exercisable as of March 31, 2024:

Prices Number

15 unchanged sentences

( 7,502 ) 50.27

Outstanding at September 30, 2023

Outstanding at March 31, 2024

3,705,492 $ 37.84

Exercisable at September 30, 2023

Exercisable at March 31, 2024

2,578,058 $ 30.36

The total pre-tax compensation cost related to unvested stock options not yet recognized as of September 30, 2023 is $ 10.7 million and is expected to be recognized over a weighted average period of approximately 1.3 years.

The total intrinsic value of options exercised during the nine months ended September 30, 2023 and 2022 was $ 27.6 million and $ 6.7 million, respectively.

The cash received from options exercised during the nine months ended September 30, 2023 and 2022 was $ 25.3 million and $ 11.0 million, respectively.

The total pre-tax compensation cost related to unvested stock options not yet recognized as of March 31, 2024 is $ 14.7 million and is expected to be recognized over a weighted average period of approximately 2.3 years.

The total intrinsic value of options exercised during the three months ended March 31, 2024 and 2023 was $ 14.2 million and $ 16.7 million, respectively.

The cash received from options exercised during the three months ended March 31, 2024 and 2023 was $ 9.8 million and $ 15.9 million, respectively.

The impact of these cash receipts is included in financing activities in the accompanying consolidated statements of cash flows.

2 unchanged sentences

common stock on the respective grant dates, reduced for the present value of dividends.

At September 30, 2023, unrecognized compensation cost related to unvested restricted stock awards was approximately $ 5.7 million, which is expected to be recognized over a weighted average period of approximately 1.5 years.

At March 31, 2024, unrecognized compensation cost related to unvested restricted stock awards was approximately $ 7.6 million, which is expected to be recognized over a weighted average period of approximately 2.1 years.

A summary of the unvested restricted stock awards is as follows:

4 unchanged sentences

( 1,230 ) 48.79

Unvested at September 30, 2023

Unvested at March 31, 2024

167,576 $ 57.28

4 unchanged sentences

At the end of the measurement period, each award will be converted into common stock at 0 % to 200 % of the PSUs held, depending on overall TSR as compared to the S&P SmallCap 600 Index benchmark companies.

The total pre-tax compensation cost related to unvested PSUs not yet recognized as of September 30, 2023 is $ 5.0 million and is expected to be recognized over a weighted average period of approximately 1.7 years.

The following weighted average assumptions were used to determine the fair value of the PSUs granted on the original grant date for expense recognition purposes for PSUs granted during the nine months ended September 30, 2023 and 2022 using a Monte Carlo Model:

Nine months ended

September 30, 2023 September 30, 2022

The total pre-tax compensation cost related to unvested PSUs not yet recognized as of March 31, 2024 is $ 8.5 million and is expected to be recognized over a weighted average period of approximately 2.0 years.

The following weighted average assumptions were used to determine the fair value of the PSUs granted on the original grant date for expense recognition purposes for PSUs granted during the three months ended March 31, 2024 and 2023 using a Monte Carlo Model:

Three months ended

March 31, 2024 March 31, 2023

Expected (annual) dividend rate $ 0.32 $ 0.32

10 unchanged sentences

152,112 $ 54.88

Unvested at September 30, 2023 1

46,699 106.24

Additional target payout 1

( 21,919 ) 58.53

( 2,362 ) 58.53

Unvested at March 31, 2024 2

176,589 $ 68.01

1 The additional number of PSUs earned based on a 110% achievement at December 31, 2023 for awards vesting in 2024.

2 Consists of 71,760 PSUs cliff vesting December 31, 2024, 58,130 PSUs cliff vesting December 31, 2025, and 46,699 PSUs cliff vesting December 31, 2026.

2 unchanged sentences

Unlike our restricted stock awards under the 2016 Plan, the Key Employee Awards are not considered legally outstanding and do not accrue dividends during the vesting period.

The potential future issuance of the Key Employee Awards is contingent upon BASX meeting certain post-closing earn-out milestones during each of the years ending 2021, 2022 and 2023 as defined by the BASX acquisition membership interest purchase agreement ("MIPA Agreement") and continued employment with the Company.

At the end of the earn-out period, ending December 31, 2023, each eligible Key Employee Award will vest and be converted into common stock.

The issuance of the Key Employee Awards was contingent upon BASX meeting certain post-closing earn-out milestones during each of the years ending 2021, 2022 and 2023 as defined by the BASX acquisition membership interest purchase agreement ("MIPA Agreement") and continued employment with the Company.

At the end of the earn-out period, ending December 31, 2023, each eligible Key Employee Award vested and was converted into common stock.

The fair value of Key Employee Awards is based on the fair market value of AAON common stock on the grant date.

The total pre-tax compensation cost related to unvested Key Employee Awards not yet recognized as of September 30, 2023 is $ 0.3 million and is expected to be recognized over a weighted average period of approximately 0.3 years.

All pre-tax compensation cost has been recognized as of December 31, 2023 and all awards vested in March 2024.

A summary of the unvested Key Employee Awards is as follows:

2 unchanged sentences

39,899 $ 53.45

Unvested at September 30, 2023

( 39,899 ) 53.45

Unvested at March 31, 2024

Share-Based Compensation

A summary of share-based compensation is as follows:

Three Months Ended Nine Months Ended

September 30,

2023 September 30,

2022 September 30,

2023 September 30,

Three Months Ended

2024 March 31,

Grant date fair value of awards during the period:

6 unchanged sentences

Options $ 2,207 $ 2,065

PSUs 737 188 1,820 665

Restricted stock 1,126 826

4 unchanged sentences

Restricted stock 808 465

Key Employee Awards 282 —

Total $ 4,406 $ 3,786

11 unchanged sentences

Forfeitures are accounted for as they occur.

The Key Employee Awards cliff vest on December 31, 2023.

Share-based compensation expense is recognized on a straight-line basis over the service period of the Key Employee Awards when it is probable that the performance conditions will be satisfied.

The Key Employee Awards are subject to several service and performance conditions, as defined by the Key Employee Award agreement, which allows the holder to retain an amount of the awards as a result of certain termination conditions or change in common control.

Forfeitures are accounted for as they occur.

Employee Benefits

6 unchanged sentences

Administrative expenses are paid for by Plan participants.

The Company paid no administrative expenses during the nine months ended September 30, 2023 and 2022.

The Company paid no administrative expenses during the three months ended March 31, 2024 and 2023.

The Company matches 175 % up to 6 % of employee contributions of eligible compensation.

Additionally, Plan participant forfeitures are used to reduce the cost of the Company contributions.

Three Months Ended Nine Months Ended

September 30,

2023 September 30,

2022 September 30,

2023 September 30,

Three Months Ended

2024 March 31,

(in thousands)

1 unchanged sentence

Profit Sharing Bonus Plans

We maintain a discretionary profit sharing bonus plan under which approximately 10 % of pre-tax profit from AAON Oklahoma and AAON Coil Products is paid to eligible employees on a quarterly basis in order to reward employee productivity.

Eligible employees are regular full-time employees of AAON Oklahoma or AAON Coil Products who are actively employed and working on the first and last days of the calendar quarter and who were employed full-time for at least three full months prior to the beginning of the calendar quarter, excluding the Company's senior leadership team.

BASX has a separate employee incentive program (EIP) under which 5 % of BASX's pre-tax profit, plus certain add backs, is paid ratably to eligible employees based on days-of-pay during the fiscal year.

We maintain a discretionary profit sharing bonus plan under which approximately 8.5 % of pre-tax profit (10% prior to January 1, 2024) from the Company is paid to eligible employees on a quarterly basis in order to reward employee productivity.

Eligible employees are regular full-time non-exempt employees of the Company who are actively employed and working on the first and last day of the calendar quarter.

BASX employees are eligible to participate in the discretionary profit sharing bonus plan on January 1, 2024.

Prior to January 1, 2024, BASX had a separate employee incentive program (EIP) under which 5 % of BASX's pre-tax profit, plus certain add backs, is paid ratably to eligible employees based on days-of-pay during the fiscal year.

Eligible employees are regular full-time and part-time employees who have worked during the year and are still employed when the EIP payment is made following the end of the fiscal year, excluding members of BASX's senior leadership team and any employee paid commissions or royalties.

Three Months Ended Nine Months Ended

September 30,

2023 September 30,

2022 September 30,

2023 September 30,

This incentive program ended December 31, 2023.

Three Months Ended

2024 March 31,

(in thousands)

1 unchanged sentence

Employee Medical Plan

At AAON Oklahoma and AAON Coil Products, we self-insure for our employees' health insurance, and make medical claim payments up to certain stop-loss amounts.

W e self-insure for our employees' health insurance, and make medical claim payments up to certain stop-loss amounts.

We estimate our self-insurance liabilities using an analysis provided by our claims administrator and our historical claims experience.

1 unchanged sentence

Participants are expected to pay a portion of the premium costs for coverage of the benefits provided under the Plans.

In addition, the Company matches 175 % of a participating AAON Oklahoma and AAON Coil Products employee's allowed contributions to a qualified health saving account to assist employees with health insurance plan deductibles.

BASX is insured for healthcare coverage through a third party.

In addition, the Company matches 175 % of a participating employee's allowed contributions to a qualified health saving account to assist employees with health insurance plan deductibles.

BASX employees joined the Company's medical plan and benefits on January 1, 2024.

BASX was insured for healthcare coverage through a third party through December 31, 2023.

Eligible employees are regular full-time employees who are actively employed and working.

1 unchanged sentence

In addition, the Company contributes certain amounts for BASX's employees enrolled in a high deductible plan to a qualified health savings account to assist employees with health insurance plan deductibles.

Three Months Ended Nine Months Ended

September 30,

2023 September 30,

2022 September 30,

2023 September 30,

This healthcare coverage ended December 31, 2023.

Three Months Ended

2024 March 31,

(in thousands)

5 unchanged sentences

Dilutive common shares consist primarily of stock options and restricted stock awards.

The following table sets forth the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2023 and 2022:

Three Months Ended Nine Months Ended

September 30,

2023 September 30,

2022 September 30,

2023 September 30,

The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2024 and 2023:

Three Months Ended

2024 March 31,

(in thousands, except share and per share data)

23 unchanged sentences

Effective Date Authorized Repurchase $ Expiration Date

March 13, 2020 $ 20 million November 9, 2022

November 3, 2022 $ 50 million ** 1, 2

November 3, 2022 $ 50 million February 27, 2024

February 27, 2024 $ 50 million ** 1, 2

1 Expiration Date is at Board's discretion.

The Company is authorized to effectuate repurchases of the Company's common stock on terms and conditions approved in advance by the Board.

2 As of September 30, 2023, there is approximately $ 25.0 million remaining under the current stock repurchase program.

2 As of March 31, 2024, there is approximately $50.0 million remaining under the current stock repurchase program.

The remaining amount available is subject to a Board authorized 10b5-1 plan requiring certain market conditions and requirements.

The Company repurchases shares of AAON, Inc.

7 unchanged sentences

Our repurchase activity is as follows:

Nine Months Ended

September 30, 2023 September 30, 2022

Three Months Ended

March 31, 2024 March 31, 2023

(in thousands, except share and per share data)

2 unchanged sentences

Total $ $ per share 1

Open market 402,873 $ 25,009 $ 62.08 53,218 $ 2,030 $ 38.14

401(k) — — — 155,904 5,913 37.93

Employees 36,860 3,041 82.50 17,509 1,030 58.83

423,091 $ 26,211 $ 61.95 234,011 $ 8,921 $ 38.12

1 Reflects three-for-two stock split effective August 16, 2023.

Our repurchase activity since Company inception, including our current authorized stock repurchase programs, are as follows:

Inception to September 30, 2023

Inception to March 31, 2024

(in thousands, except share and per share data)

10 unchanged sentences

Our recent cash dividends are as follows:

Declaration Date 1

Record Date Payment Date Dividend

Declaration Date Record Date Payment Date Dividend

Annualized Dividend

May 18, 2022 June 3, 2022 July 1, 2022 $ 0.13 $ 0.26

November 8, 2022 November 28, 2022 December 16, 2022 $ 0.16 $ 0.32

March 1, 2023 March 13, 2023 March 31, 2023 $ 0.08 $ 0.32

1 unchanged sentence

August 18, 2023 September 8, 2023 September 29, 2023 $ 0.08 $ 0.32

1 Effective with the cash dividend declared on March 1, 2023 (paid on March 31, 2023), the Company moved from semi-annual cash dividends to quarterly cash dividends.

November 10, 2023 November 29, 2023 December 18, 2023 $ 0.08 $ 0.32

March 5, 2024 March 18, 2024 March 29, 2024 $ 0.08 $ 0.32

1 Reflects three-for-two stock split effective August 16, 2023.

10 unchanged sentences

The shares do not accrue dividends.

Under the MIPA Agreement, the potential future issuance of the shares is contingent upon BASX meeting certain post-closing earn-out milestones during each of the years ended 2021, 2022, and 2023.

Based on the final allocation of the consideration paid, we estimated the fair value of contingent consideration related to these shares to be approximately $ 60.0 million, which is included in additional paid-in capital on the consolidated balance sheets.

As of September 30, 2023, 0.58 million shares and 0.73 million shares related to the earn-out milestones for the years ended 2022 and 2021, respectively, have been issued to the former owners of BASX as private placements exempt from registration with the SEC under Rule 506(b), which are included in common stock on the consolidated statements of stockholders' equity.

Under the MIPA Agreement, the issuance of shares to the former owners of BASX was contingent upon BASX meeting certain post-closing earn-out milestones during each of the years ended 2021, 2022, and 2023.

In March 2024, we issued the remaining 0.24 million shares related to the earn-out milestone for the year ended 2023.

As a result of the shares issued in March 2024, the tax basis exceeded the book basis for consideration paid resulting in a deferred tax asset and an increase to additional paid-in capital of $ 6.4 million, respectively, on our consolidated balance sheet.

The deferred tax asset is expected to be amortized over fifteen years.

We previously issued 0.58 million shares in March 2023, related to the earn-out milestone for the year ended 2022.

All shares have been issued as private placements exempt from registration with the SEC under Rule 506(b) and are included in common stock on the consolidated statements of stockholders' equity.

New Markets Tax Credit

15 unchanged sentences

This financing arrangement is secured by a guarantee from the Company, including an unconditional guarantee of the NMTCs.

The net proceeds from the closing of the 2023 NMTC is included in restricted cash on our consolidated balance sheets required to be used for the 2023 Project.

The net proceeds from the closing of the 2023 NMTC are included in restricted cash on our consolidated balance sheets required to be used for the 2023 Project.

This transaction also includes a put/call feature either of which can be exercised at the end of the seven-year compliance period.

2 unchanged sentences

The Company incurred approximately $ 0.4 million of debt issuance costs related to the above transactions, which are being amortized over the life of the transaction.

The 2019 Investor and 2023 Investor are each subject to 100 percent recapture of the 2019 and 2023 NMTC, respectively, it receives for a period of seven years, as provided in the Internal Revenue Code and applicable U.S.

2024 New Markets Tax Credit

On February 27, 2024, the Company entered into a transaction with a subsidiary of an unrelated third-party financial institution (the “2024 Investor”) and a certified Community Development Entity under a qualified New Markets Tax Credit (“2024 NMTC”) program pursuant to Section 45D of the Internal Revenue Code of 1986, as amended, related to an investment in real estate to facilitate 2023 Project.

In connection with the 2024 NMTC transaction, the Company received a $ 15.5 million NMTC allocation for the 2023 Project and secured low interest financing and the potential for future debt forgiveness related to the expansion of its Longview, Texas facilities.

Upon closing of the 2024 NMTC transaction, the Company provided an aggregate of approximately $ 11.0 million to the Investor, in the form of a loan receivable, with a term of twenty-five years , bearing an interest rate of 1.0 %.

This $ 11.0 million in proceeds plus capital contributed from the Investor was used to make an aggregate $ 16.0 million loan to a subsidiary of the Company.

This financing arrangement is secured by a guarantee from the Company, including an unconditional guarantee of the NMTCs.

The net proceeds from the closing of the 2024 NMTC are included in restricted cash on our consolidated balance sheets required to be used for the 2023 Project.

This transaction also includes a put/call feature that either of which can be exercised at the end of the seven-year compliance period.

The Investor may exercise its put option or the Company can exercise the call, both of which could serve to trigger forgiveness of a portion of the debt.

The 2024 Investor's interest of $ 3.8 million is recorded in New market tax credit obligations on the consolidated balance sheets.

The Company incurred approximately $ 0.4 million of debt issuance costs related to the above transactions, which are being amortized over the life of the transaction.

The 2019 Investor, 2023 Investor, and 2024 Investor are each subject to 100 percent recapture of the 2019, 2023, and 2024 NMTC, respectively, it receives for a period of seven years, as provided in the Internal Revenue Code and applicable U.S.

Treasury regulations in the event that the financing facility of the Borrower under the transaction (AAON Coil Products, Inc.) becomes ineligible for NMTC treatment per the Internal Revenue Code requirements.

The Company is required to be in compliance with various regulations and contractual provisions that apply to the 2019 NMTC arrangements and 2023 NMTC arrangements, respectively.

Noncompliance with applicable requirements could result in the 2019 and/or 2023 Investors' projected tax benefits not being realized and, therefore, require the Company to indemnify the 2019 Investor and 2023 Investor for any loss or recapture of the 2019 NMTC and 2023 NMTC, respectively, related to the financing until such time as the recapture provisions have expired under the applicable statute of limitations.

The Company does not anticipate any credit recapture will be required in connection with either of these financing arrangements.

The 2019 Investor and 2023 Investor and its majority owned community development entity are considered VIEs and the Company is the primary beneficiary of the VIEs.

Because the Company is the primary beneficiary of the VIEs, they have been included in the consolidated financial statements.

There are no other assets, liabilities or transactions in these VIEs outside of the financing transactions executed as part of the 2019 NMTC or 2023 NMTC arrangements, respectively.

The Company is required to be in compliance with various regulations and contractual provisions that apply to the 2019 NMTC arrangements, 2023 NMTC arrangements, and 2024 NMTC arrangements, respectively.

Noncompliance with applicable requirements could result in the 2019 and/or 2023 and/or 2024 Investors' projected tax benefits not being realized and, therefore, require the Company to indemnify the 2019 Investor, 2023 Investor, and 2024 Investor for any loss or recapture of the 2019 NMTC, 2023 NMTC, and 2024 NMTC, respectively, related to the financing until such time as the recapture provisions have expired under the applicable statute of limitations.

The Company does not anticipate any credit recapture will be required in connection with any of these financing arrangements.

The 2019 Investor, 2023 Investor, and 2024 Investor and its majority owned community development entity are considered VIEs and the Company is the primary beneficiary of the VIEs.

Because the Company is the primary beneficiary of the VIEs,

they have been included in the consolidated financial statements.

There are no other assets, liabilities or transactions in these VIEs outside of the financing transactions executed as part of the 2019 NMTC, 2023 NMTC, or 2024 NMTC arrangements, respectively.

Commitments and Contingencies

18 unchanged sentences

These contracts are not accounted for as derivative instruments because they meet the normal purchase and normal sales exemption.

We had no material contractual purchase obligations as of September 30, 2023, except as noted below.

On April 27, 2022, the Company entered into a purchase and sale agreement with a third-party manufacturer to purchase certain assets to design and manufacture fan wheels for the purchase price of $ 6.5 million.

As of September 30, 2023, we have paid approximately $ 3.5 million related to this agreement, which is included in other long-term assets and property, plant and equipment, with the remaining $ 3.0 million included in accounts payable and other long-term assets on our consolidated balance sheets.

The final payment was made on October 30, 2023.

We had no material contractual purchase obligations as of March 31, 2024, except as noted below.

In 2023, the Company executed a five-year purchase commitment for refrigerants.

For the three months ended March 31, 2024 and 2023, the Company made payments of $ 3.6 million and $ 2.4 million, respectively, on this contract.

Estimated minimum future payments are $ 8.3 million, $ 9.1 million, $ 10.5 million, and $ 11.2 million for 2024, 2025, 2026, and 2027, respectively.

We had no other material contractual purchase obligations as of March 31, 2024.

Related Parties

The following is a summary of transactions and balances with related parties:

Three Months Ended Nine Months Ended

September 30,

2023 September 30,

2022 September 30,

2023 September 30,

Three Months Ended

2024 March 31,

(in thousands)

1 unchanged sentence

Payments to affiliates 615 392

September 30,

2024 December 31,

3 unchanged sentences

The nature of our related party transactions is as follows:

• The Company sells units to an entity owned by a member of the CEO/President's immediate family.

• The Company sells units to an entity owned by a member of the CEO's immediate family.

This entity is also one of the Company’s Representatives and as such, the Company makes payments to the entity for third party products.

1 unchanged sentence

• The Company periodically makes part sales and makes payments to a board member related to a consulting agreement.

• The Company periodically rents space partially owned by the CEO/President for various Company meetings.

• From December 10, 2021 through May 31, 2022, the Company leased a manufacturing and office facility in Redmond, Oregon from an entity in which certain members of BASX management have an ownership interest.

This facility was purchased 100 % by the Company on May 31, 2022.

• The Company periodically rents space partially owned by the CEO for various Company meetings.

• The Company leases flight time of an aircraft partially owned by our COO and Vice President.

The Company has determined that it has three reportable segments for financial reporting purposes.

16 unchanged sentences

The Gross Profit amounts shown below are presented after elimination entries.

Three Months Ended Nine Months Ended

September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

Net Sales (in thousands)

Three Months Ended

March 31, 2024 March 31, 2023

AAON Oklahoma

12 unchanged sentences

Gross profit $ 92,242 $ 77,154

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Long-lived assets (in thousands)

9 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements