What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-08-11 compared with 2025-05-01 · 149 added, 63 removed, 281 unchanged (43% of the section changed)

11 unchanged sentences

We sell our products to all 50 states in the United States and certain provinces in Canada.

Foreign sales were approximately $11.3 million of our total net sales for the three months ended March 31, 2025, and $7.4 million of our sales during the same period of 2024.

Foreign sales were approximately $7.5 million and $18.8 million the three and six months ended June 30, 2025, respectively, as compared to $7.1 million and $14.5 million for the three and six months ended June 30, 2024, respectively.

Our business can be affected by a number of economic factors, including the level of economic activity in the markets in which we operate.

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economy and global economy.

At March 31, 2025, the price (year to date average) for copper and aluminum increased 6.5% and 3.0%, respectively, while galvanized steel and stainless steel decreased 3.4% and 30.8%, respectively, as compared to the price (year to date average) at March 31, 2024.

At June 30, 2025, the price (year to date average) for copper increased 10.3% while stainless steel decreased 27.5%, respectively.

The price (year to date average) for galvanized steel and aluminum remained relatively flat, as compared to the price (year to date average) at June 30, 2024.

We attempt to limit the impact of price fluctuations on these materials by entering into cancellable and non-cancellable contracts with our major suppliers for periods of six to 18 months.

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and could impact the availability of supply from our vendors.

We source raw materials domestically, but historically have seen those suppliers increase prices when tariffs are increased.

Additionally, while we source most components domestically, our vendors may be impacted by tariffs if they use foreign parts and materials and often pass any additional costs as a result of tariffs through to us.

We expect to continue to pass along some of these costs to our customers, but the increased price of our products could adversely affect the demand, which could have an adverse effect on our business and our earnings.

Due to our favorable liquidity position, we are well positioned to make strategic purchases of materials when we see opportunities or potential disruptions in our supply chain.

While we source a significant amount of our inventory and supplies from domestic vendors, certain vendors may source components internationally.

We have experienced supply chain challenges related to specific manufacturing parts, which could be exacerbated by the trade conflict.

We manage our supply chain challenges through strong vendor relationships as well as expanding our list of available vendors.

Additionally, we continue to experience challenges in a tight labor market, especially the hiring of both skilled and unskilled production labor.

Additionally, we continue to experience challenges in a tight labor market, especially the hiring of production labor.

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

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2025 December 31,

2024 March 31,

2024 June 30,

(in thousands)

2 unchanged sentences

Total Backlog $ 995,320 $ 867,090 $ 650,005

At March 31, 2025, our consolidated backlog is at a record $1,026.9 million, an increase of 83.9%, or $468.4 million, as compared to March 31, 2024.

Backlog was up from a year ago for both AAON Products and BASX Products with BASX Products increasing 122.7%, or $343.2 million, when compared to March 31, 2024.

At June 30, 2025, our consolidated backlog is $995.3 million, an increase of 53.1%, or $345.3 million, as compared to June 30, 2024.

Backlog was up from a year ago for both AAON Products and BASX Products with BASX Products increasing 27.0%, or $106.6 million, when compared to June 30, 2024.

Most of these orders were associated with the BASX branded data center liquid cooling solutions.

Consolidated Results of Operations

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2025 2024 2025 2024

(in thousands)

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The following are recent highlights and items that impacted our results of operations, cash flows and financial condition:

• Consolidated net sales for the three months ended March 31, 2025, increased 22.9%, or $59.9 million, due to an increase in sales of our BASX branded products.

BASX branded products increased 374.8%, or $104.6 million when compared to 2024, offset by a decrease of our AAON branded products of 19.1%, or $44.7 million when compared to 2024.

• We increased our dividend from $0.08 per share per quarter to $0.10 per share per quarter, an increase of 25.0%.

• We continue to see strong demand and growth of the BASX brand with increases in net sales of $51.7 million and $156.3 million for the three and six months ended June 30, 2025, respectively.

This growth is primarily driven by data center demand for our liquid cooling solutions.

• The AAON brand has experienced challenges with a softer rooftop market due to macroeconomic factors like higher interest rates and slowing construction starts.

Additionally, the refrigerant change that went into effect on January 1, 2025 created supply chain constraints for components with the new refrigerant that challenged the first quarter and lingered into the second quarter.

As a result, net sales for the AAON brand were down $53.6 million and $98.3 million for the three and six months ended June 30, 2025, respectively.

• The Company went live with its new Enterprise Resource Planning (“ERP”) system on April 1, 2025 at its Longview, Texas facility.

The adoption of this new system has caused some disruptions due to changes in processes.

These disruptions primarily impacted the AAON Coil Products segment with decreased net sales and gross profit margins during the three months ended, June 30, 2025.

To a lesser extent, the impact to the coil production at AAON Coil Products also impacted AAON Oklahoma’s ability to ramp up production, which contributed to the lower net sales and gross profit margins for that segment during the quarter.

• We continue to invest in the future growth of the Company as evidenced by our $89.6 million in capital expenditures in 2025, an increase of $14.1 million or 18.7% when compared to 2024.

• We completed the repurchase of 0.4 million shares for $30.0 million during the three months ended March 31, 2025.

• We completed the repurchase of 0.4 million shares for $30.0 million during the six months ended June 30, 2025.

We report our financial results based on three reportable segments:

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The CODM does not evaluate operating segments using asset or liability information.

Segment Operating Results for Three Months Ended March 31, 2025 and Three Months Ended March 31, 2024

Segment Operating Results for Three Months Ended June 30, 2025 and Three Months Ended June 30, 2024

Three Months Ended

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2 Presented after intercompany eliminations.

Total net sales increased $60.0 million, or 22.9%.

BASX increased by 138.9%, or $38.5 million, and AAON Coil Products increased 287.8%, or $69.8 million, both primarily related to demand from the BASX branded data center products.

AAON Oklahoma sales decreased 23.0%, or $48.3 million due to challenges from the industry-regulated refrigerant transition and nonresidential construction activity that experienced weakened demand during the three months ended March 31, 2025 as compared to 2024.

Gross profit as a percent of sales decreased to 26.8% during the three months ended March 31, 2025 as compared to 35.2% in 2024.

As noted above, challenges from the industry-regulated refrigerant transition and nonresidential construction activity significantly affected our largest segment, AAON Oklahoma, resulting in decreased volumes and lower overhead absorption.

Our AAON Coil Products segment gross profit increased $24.3 million, or 299.1%, as compared to 2024.

Our new Longview, Texas plant expansion was completed in early January 2025, increasing overall plant capacity to be primarily utilized for the production of BASX branded data center products.

Our BASX segment gross profit also increased $10.2 million, or 179.5%, as compared to 2024.

The temporary inefficiencies associated with our Redmond, Oregon facility construction in 2024 have abated and we continue to ramp up production of this facility.

The increased production in Redmond helped improve gross profit as a percent of sales for the BASX segment, increasing it to 24.0% during the three months ended March 31, 2025 as compared to 20.5% in 2024.

Total net sales decreased $2.0 million, or 0.6%.

AAON Oklahoma had net sales of $185.1 million, a decrease of 18.0% compared to the same period in the prior year.

This decrease was driven by lingering supply chain issues from the refrigerant transition at the beginning of the quarter and coil supply shortages in the end of the quarter due to our ERP implementation at our Longview, Texas facility which slowed production of coils made for our Tulsa plant.

Sales were up 86.4%, at AAON Coil Products primarily driven by growth in BASX branded products of $40.1 million for a large liquid cooling data center.

AAON branded products declined $13.0 million due to disruptions caused by the change in ERP systems.

BASX net sales were up 20.4% to $68.0 million due to the continued demand for data center solutions.

Gross profit decreased $30.4 million or 26.8% and from 36.1% of sales to 26.6% of sales.

AAON Oklahoma’s decrease in gross profit is primarily driven by the lower volumes discussed above that resulted in sub optimal overhead absorption.

Additionally, our new plant in Memphis contributed $3.0 million in cost of sales with minimal net sales to offset this cost to the AAON Oklahoma segment.

AAON Coil Products decreased 1,990 basis points in gross profit margin is a result of slower production from implementing our ERP system at the beginning of the quarter.

BASX gross profit margin of 27.9% is slightly down year over year due to higher indirect costs for warehouse personnel offset by slightly lower cost of materials.

As shown in the table below, we have experienced fluctuations in the cost of several raw materials.

Raw Material Costs

Three-month average raw material cost per pound as of March 31:

Three-month average raw material cost per pound as of June 30:

2025 2024 % Change

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Three Months Ended Percent of Sales

2025 March 31,

2025 June 30,

(in thousands)

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Professional fees 1,775 1,241 0.6 % 0.4 %

Memphis incentive fee 3,405 — 1.1 % — %

Donations 310 755 0.1 % 0.2 %

1 unchanged sentence

Total SG&A $ 59,147 $ 45,895 19.0 % 14.6 %

Selling, general and administrative expenses increased $6.0 million for the three months ended March 31, 2025, from the prior year period.

Depreciation and amortization increased $3.0 million during the three months ended March 31, 2025, due to increased investments in back office technology and automation.

Professional fees decreased $3.1 million during the three months ended March 31, 2025, due to various professional, regulatory, and legal corporate requirements incurred in 2024.

Other expenses increased $6.6 million or 82.2% during the three months ended March 31, 2025, due to increased travel, consulting expenses, and approximately $2.7 million of incentive fees due to our real estate broker associated with the acquisition of our Memphis, Tennessee plant for a percentage of the incentives awarded to us by various entities.

Selling, general and administrative expenses increased $13.3 million for the three months ended June 30, 2025, from the prior year period.

Profit sharing is down as a result of our lower earnings in the quarter.

Salaries and benefits have increased as we add additional headcount to help build out our organizational capacity for future growth.

Depreciation and amortization increased $3.1 million during the three months ended June 30, 2025, due to increased investments from our ERP implementation.

We incurred approximately $3.4 million in incentive fees due to our real estate broker associated with the acquisition of our Memphis, Tennessee plant for a percentage of the incentives awarded to us by various entities.

Other includes an increase in expense of $3.4 million for technology related consulting fees along with increased expenses related to travel and other consulting expenses.

Three Months Ended Effective Tax Rate

2025 March 31,

2025 June 30,

(in thousands)

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The Company’s estimated annual 2025 effective tax rate, excluding discrete events, is expected to be approximately 24.5%.

During the three months ended March 31, 2025, the Company recorded an excess tax benefit of $7.2 million as compared to $4.4 million during the same period in 2024.

The excess tax benefit is related to the timing of stock option exercises as a result of our high stock price during the three months ended March 31, 2025 and 2024, respectively.

During the three months ended June 30, 2025, the Company recorded an excess tax benefit of $4.1 million as compared to $1.3 million during the same period in 2024.

The excess tax benefit is related to the timing of stock option exercises as a result of our high stock price during the three months ended June 30, 2025 and 2024, respectively.

Segment Operating Results for Six Months Ended June 30, 2025 and Six Months Ended June 30, 2024

Six Months Ended

2025 Percent of Sales 1

2024 Percent of Sales 1

$ Change % Change

(in thousands)

AAON Oklahoma $ 346,958 54.8 % $ 435,867 75.7 % $ (88,909) (20.4) %

AAON Coil Products 152,488 24.1 % 55,620 9.7 % 96,868 174.2 %

BASX 134,175 21.2 % 84,178 14.6 % 49,997 59.4 %

Net sales $ 633,621 $ 575,665 $ 57,956 10.1 %

Cost of Sales 2

AAON Oklahoma $ 258,102 74.4 % 273,586 62.8 % $ (15,484) (5.7) %

AAON Coil Products 107,140 70.3 % 34,322 61.7 % 72,818 212.2 %

BASX 99,286 74.0 % 62,421 74.2 % 36,865 59.1 %

Cost of sales $ 464,528 73.3 % $ 370,329 64.3 % $ 94,199 25.4 %

Gross Profit 2

AAON Oklahoma $ 88,856 25.6 % $ 162,281 37.2 % $ (73,425) (45.2) %

AAON Coil Products 45,348 29.7 % 21,298 38.3 % 24,050 112.9 %

BASX 34,889 26.0 % 21,757 25.8 % 13,132 60.4 %

Gross profit $ 169,093 26.7 % $ 205,336 35.7 % $ (36,243) (17.7) %

1 Cost of sales and gross profit for each segment are calculated as a percentage of the respective segment’s net sales.

Total cost of sales and total gross profit are calculated as a percentage of total net sales.

2 Presented after intercompany eliminations.

Total net sales increased $58.0 million, or 10.1%.

AAON Oklahoma had net sales of $347.0 million, a decrease of 20.4% compared to the same period in the prior year.

This decrease was driven by supply chain issues from the refrigerant transition at the beginning of the year and coil supply shortages in the second quarter due to our ERP implementation at our Longview, Texas facility which slowed production of coils made for our Tulsa plant.

Sales were up 174.2% for AAON Coil Products primarily driven by growth in BASX branded products of $106.3 million for a large liquid cooling data center.

AAON branded products declined $9.4 million due to disruptions caused by our ERP implementation.

BASX net sales were up 59.4% to $134.2 million due to the continued demand for data center solutions.

Gross profit decreased $36.2 million or 17.7% and from 35.7% of sales to 26.7% of sales.

AAON Oklahoma’s decrease in gross profit is primarily driven by the lower volumes discussed above that resulted in sub optimal overhead absorption.

Additionally, our new plant in Memphis contributed $5.3 million in cost of sales with minimal net sales to offset this cost for the AAON Oklahoma segment.

AAON Coil Products 860 basis point drop in gross profit margin is a result of slower production from implementing our ERP system at the beginning of the second quarter.

Raw Material Costs

Six-month average raw material cost per pound as of June 30:

2025 2024 % Change

Copper $ 5.99 $ 5.43 10.3 %

Galvanized steel $ 0.58 $ 0.58 — %

Stainless steel $ 1.92 $ 2.65 (27.5) %

Aluminum $ 2.36 $ 2.36 — %

Selling, General and Administrative Expenses

Six Months Ended Percent of Sales

2025 June 30,

(in thousands)

Warranty $ 6,810 $ 6,718 1.1 % 1.2 %

Profit sharing 5,335 11,077 0.8 % 1.9 %

Salaries & benefits 33,554 29,899 5.3 % 5.2 %

Stock compensation 5,747 5,085 0.9 % 0.9 %

Advertising 2,671 1,604 0.4 % 0.3 %

Depreciation & amortization 14,228 8,136 2.2 % 1.4 %

Insurance 4,167 4,008 0.7 % 0.7 %

Professional fees 3,262 5,861 0.5 % 1.0 %

Memphis incentive fee 6,105 — 1.0 % — %

Donations 484 925 0.1 % 0.2 %

Other 28,077 17,870 4.4 % 3.1 %

Total SG&A $ 110,440 $ 91,183 17.4 % 15.8 %

Selling, general and administrative expenses increased $19.3 million for the six months ended June 30, 2025, from the prior year period.

Profit sharing is down as a result of our lower earnings in the period.

Salaries and benefits have increased as we add additional headcount to help build out our organizational capacity for future growth.

Depreciation and amortization increased $6.1 million during the period due to increased investments from our ERP implementation.

We incurred approximately $6.1 million in incentive fees due to our real estate broker associated with the acquisition of our Memphis, Tennessee plant for a percentage of the incentives awarded to us by various entities.

Other includes an increase in expense of $5.7 million for technology related consulting fees along with increased expenses related to travel and other consulting expenses.

Six Months Ended Effective Tax Rate

2025 June 30,

(in thousands)

Income tax provision $ 7,209 $ 22,571 13.9 % 19.8 %

During the six months ended June 30, 2025, the Company recorded an excess tax benefit of $9.0 million as compared to $6.7 million during the same period in 2024.

The excess tax benefit is related to the timing of stock option exercises as a result of our high stock price during the six months ended June 30, 2025 and 2024, respectively.

Liquidity and Capital Resources

Our working capital and capital expenditure requirements are generally met through net cash provided by operations and the use of the revolving bank line of credit based on our current liquidity at the time.

Working Capital - Our unrestricted cash increased $1.0 million from December 31, 2024 to March 31, 2025.

Working Capital - Our unrestricted cash remained stable at a nominal amount from December 31, 2024 to June 30, 2025.

Our restricted cash decreased $5.2 million due to funding requirements related to our Longview, Texas expansion.

Outstanding Debt - On December 16, 2024, we amended our Amended and Restated Loan Agreement dated November 24, 2021 (as amended, “Amended Loan Agreement”) to include an $80.0 million term loan (“Term Loan”) in addition to the $200.0 million revolving credit facility (the “Revolver”).

As of March 31, 2025 and December 31, 2024, we had $178.0 million and $76.5 million outstanding under the Revolver, respectively.

We have one standby letter of credit totaling $0.7 million as of March 31, 2025 and one standby letter of credit totaling $0.3 million as of December 31, 2024.

At March 31, 2025, we have $21.4 million of borrowings available under the Revolver.

The Revolver expires May 27, 2027.

We have amended the Revolver to allow for the occurrence of transactions associated with the New Markets Tax Credit transactions (Note 18).

The Term Loan had an outstanding balance of $74.4 million and $78.4 million as of March 31, 2025 and December 31, 2024 respectively.

The Term Loan is payable in equal month installments, plus interest, over 60 months, expiring December 16, 2029.

Outstanding Debt - On December 16, 2024, we entered into the Third Amendment and Restated Loan Agreement dated November 24, 2021, to include an $80.0 million term loan payable in equal monthly installments, plus interest, over 60 months, expiring December 16, 2029 (“Term Loan”).

The agreement provided for a $200.0 million revolving credit facility and an option to increase the maximum borrowings to $300.0 million.

In April 2025, we increased our available Revolver to $230.0 million, an increase of $30.0 million, to fund our additional working capital needs.

On May 29, 2025, we entered into the Fifth Amendment to the Amended and Restated Loan Agreement dated November 24, 2021 (as amended, “Amended Loan Agreement”) whereby the remaining balance of the Term Loan, approximately $72.0 million, was rolled into the amended Revolving Loan (“Amended Revolver”), the capacity of which was increased from $230.0 million to $500.0 million.

The Amended Revolver is prepayable without penalty.

As of June 30, 2025 and December 31, 2024, we had $317.3 million and $76.5 million outstanding under the Amended Revolver, respectively.

We have one standby letter of credit totaling $0.7 million as of June 30, 2025 and one standby letter of credit totaling $0.3 million as of December 31, 2024.

At June 30, 2025, we have $182.1 million of borrowings available under the Amended Revolver.

The Amended Revolver expires May 27, 2030.

The Term Loan had no outstanding balance as of June 30, 2025 and a balance of $78.4 million as of December 31, 2024 respectively.

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

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

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, 2025 and 2024.

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 six months ended June 30, 2025 and 2024.

Weighted average interest rate of our borrowings outstanding are as follows:

2025 March 31,

Three months ended Six months ended

2025 June 30,

2024 June 30,

2025 June 30,

Revolver 5.6% 6.6% 5.6% 6.6%

1 unchanged sentence

1 Funds were borrowed on December 16, 2024.

No borrowings outstanding during the three months ended March 31, 2024

No borrowings outstanding during the six months ended June 30, 2024.

If SOFR cannot be determined pursuant to the definition, as defined by the Amended Loan Agreement, any outstanding effected loans will be deemed to have been converted into alternative base rate (“ABR”) loans.

1 unchanged sentence

As of December 16, 2024, as defined by the Amended Loan Agreement, if the SOFR cannot be determined any outstanding balance will bear interest at the Prime Rate in effect on such day.

At March 31, 2025, we were in compliance with our financial covenants, as defined by the Amended Loan Agreement.

At June 30, 2025, we were in compliance with our financial covenants, as defined by the Amended Loan Agreement.

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

At March 31, 2025, our leverage ratio was 0.95 to 1.0, which meets the requirement of not being above 3 to 1.

At June 30, 2025, our leverage ratio was 1.4 to 1.0, which meets the requirement of not being above 3 to 1.

2019 New Markets Tax Credit - On October 24, 2019, the Company entered into a transaction with a subsidiary of an unrelated third-party financial institution (the “2019 Investor”) and a certified Community Development Entity under a qualified New Markets Tax Credit (“2019 NMTC”) program pursuant to Section 45D of the Internal Revenue Code of 1986, as amended, related to an investment in plant and equipment to facilitate the expansion of our Longview, Texas manufacturing operations (the “2019 Project”).

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

As of March 31, 2025, approximately $70.0 million remains under the current board authorization.

4 As of March 31, 2025, approximately $30.0 million of shares have been repurchased in accordance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended.

As of June 30, 2025, approximately $70.0 million remains under the current board authorization.

4 As of June 30, 2025, approximately $30.0 million of shares have been repurchased in accordance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended.

The Company also repurchases shares of AAON, Inc.

1 unchanged sentence

Our repurchase activity is as follows:

Three Months Ended

March 31, 2025 March 31, 2024

Six Months Ended

June 30, 2025 June 30, 2024

(in thousands, except share and per share data)

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March 5, 2025 March 18, 2025 March 28, 2025 $0.10 $0.40

May 13, 2025 June 6, 2025 June 27, 2025 $0.10 $0.40

Based on historical performance and current expectations, we believe our cash and cash equivalents balance, the projected cash flows generated from our operations, our existing committed revolving credit facility (or comparable financing) and our expected ability to access capital markets will satisfy our working capital needs, capital expenditures, and other liquidity requirements associated with our operations in 2025 and the foreseeable future.

1 unchanged sentence

Statement of Cash Flows

The following table reflects the major categories of cash flows for the three months ended March 31, 2025 and 2024.

The following table reflects the major categories of cash flows for the six months ended June 30, 2025 and 2024.

For additional details, see the consolidated financial statements.

Three Months Ended

2025 March 31,

Six Months Ended

2025 June 30,

(in thousands)

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Payment related to financing costs (1,395) (417)

Borrowings under revolving credit facility 235,925 115,130

Payments under revolving credit facility (138,411) (153,458)

Borrowings of debt 415,126 272,526

Payments of debt (252,982) (224,970)

Stock options exercised 10,025 15,821

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Collections and payments cycles are on a normal pattern and fluctuate due to timing of receipts and payments.

Historically, the Company increased the purchase of inventory to take advantage of favorable pricing opportunities and also to mitigate the impact of future supply chain disruptions on our operations;

however, we continue to make significant purchases of inventory related to data center orders.

Historically, the Company increases the purchase of inventory to take advantage of favorable pricing opportunities and also to mitigate the impact of future supply chain disruptions on our operations.

Additionally, we continue to make significant purchases of inventory related to data center orders.

These purchases are allocated to customer jobs and show as increases to our contract assets.

1 unchanged sentence

Cash Flows Used in Investing Activities

Capital expenditures during the three months ended March 31, 2025, relate to additional infrastructure and machinery for both replacement and production growth, finalizing our new production space in our Redmond, Oregon and Longview, Texas locations, additional equipment and production capacity in Parkville, Missouri, and new equipment for our Memphis,

Capital expenditures during the six months ended June 30, 2025, relate to additional infrastructure and machinery for both replacement and production growth, finalizing our new production space in our Redmond, Oregon and Longview, Texas locations, additional equipment and production capacity in Parkville, Missouri, and new equipment for our Memphis,

Tennessee facility.

We have also made investments to purchase or develop software for internal use in anticipation of future Company growth.

Many of these projects are subject to review and cancellation at the discretion of our CEO and Board of Directors without incurring substantial charges.

The capital expenditure program for 2025 is estimated to be approximately $220.0 million.

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The change in cash from financing activities in 2025 is primarily related to borrowings under our revolving credit facility to manage our working capital needs, especially strategic purchases of inventory to avoid supply chain delays and the funding of certain capital expenditures, offset by repayments we were able to make due to our operating results and financial condition.

During the three months ended March 31, 2025, we repurchased $30.0 million under our open market share repurchase programs.

During the six months ended June 30, 2025, we repurchased $30.0 million under our open market share repurchase programs.

Furthermore, cash flows from financing activities is historically affected by the timing of stock options exercised by our employees.

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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 March 31, 2025, except as described below.

We had no material contractual purchase obligations as of June 30, 2025, except as described below.

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

Payments made in satisfaction of the purchase commitment were approximately $0.6 million and $3.6 million the three months ended March 31, 2025 and 2024, respectively.

Payments made in satisfaction of the purchase commitment were approximately $1.5 million and $2.1 million the three and six months ended June 30, 2025, respectively, as compared to $3.0 million and $6.6 million for the three and six months ended June 30, 2024, respectively.

Estimated minimum future payments are $7.0 million, $10.5 million, and $11.2 million for 2025, 2026, and 2027, respectively.

Critical Accounting Policies

There have been no material changes in the Company’s critical accounting policies during the three months ended March 31, 2025.

There have been no material changes in the Company’s critical accounting policies during the six months ended June 30, 2025.

Recent Accounting Pronouncements

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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 2. Management’s Discussion and Analysis