Thanks for being here. This is the Aon presentation. I'm Ryan Merkel. I cover building products at William Blair. Before we begin, I need to remind you that a complete list of disclosures and conflicts of interest is available on our website. With us today is Matt Tobolsky, CEO, and Andy Chung, CFO. Andy joined the company in April, so Andy is very new. Aon is a leading OEM of premium equipment for the light commercial and data center markets. The company wins by designing custom solutions that deliver superior total cost of ownership. We believe Aon will be one of the fastest growing companies in our coverage list the next few years. I'm going to turn it over to Matt. He's going to do a few minutes of introduction, and then we're going to do a fireside chat for Matt. Matt.

Fantastic. Yeah, thanks, Ryan. And, you know, just kind of at a high level and really talking about Aon as a business, we really run the business through two brands. So the Aon brand, which is really the legacy of the business, and the basic brand, which is where all the data center exposure comes into play. But both sides of the business have a common theme, which is really selling semi-custom and custom solutions that provide a total cost of ownership of value-failed conversation to our owner base. And on the rooftop side of the business, we do that on the Aon brand through a highly configurable software platform that allows us to really fine-tune selections for commercial rooftop units to maximize performance for a given owner's application. And that really resonates with the owner-operators. You know, 25% of our revenue comes from the K-12 market. And a lot of the growth that we're seeing in the Aon side of the business, obviously we have the anchor, the core of the business, and our transactional side of the business. But over the last two years, we've put a lot of investment into a national account strategy to really capitalize on that value proposition that we're selling into the national account market. So think everything from healthcare markets to big box retail to warehouse and distribution centers. And so we've seen a lot of good momentum that is really providing some outsized growth and market share acquisition on the rooftop side of the business, coupled with a recovering kind of more traditional-like commercial market. It's providing a lot of good growth in 2026 and beyond. On the basic side of the business, obviously, I think we can all acknowledge the dynamic growth inside the data center space. The basics brand really goes to market with a customization aspect of it, which is really focused on providing a fit-for-purpose solution for our customers. And that really resonates with large hyperscale and large developers of full location and neocloud facilities. And so we've seen a tremendous amount of growth and a lot of resonation with that value proposition, with dynamic growth inside the basic side of the world and capitalizing on good demand in the data center space. The biggest piece of where we've focused in the last 12 months has been beyond just the product side of it, but it's really about building out the platform to operate at scale. You know, we rewind the clock four and a half years ago, and Aon was primarily a single-site manufacturer out of Tulsa, Oklahoma. We've gone from 2 million square feet or under 2 million square feet of factory space to over 4 million square feet of space in four years. We've gone from 2,000 employees to 7,000 employees and really seen very aggressive growth inside both sides of the business. And so a lot of the work that we've been focused on over the last 12 months is really a natural evolution of this business to operate at that scale. So we've invested heavily in our operations and our supply chain teams, bringing on Andy on board from a finance and really building out capabilities to really enhance the operating discipline and allow this business to thrive not just today, but far into the future with a much better and tighter operating discipline.

All right, fantastic. Matt, why don't we start with a question on the macro. What's your outlook for the light commercial market in 2026, And do you expect A&M to outperform that market?

Yeah, we've definitely seen signs of recovery inside the commercial HBSD market. I would start off by saying just looking at 2025, kind of coming into 26. But 2025, you know, we had volumes that were down, but relative to the overall market, were down nowhere near as much as the rest of the market. So we saw a good, strong outperformance in 2025 at the kind of like commercial side of the business. As we exited 25, and we talked about this a little bit on the Q1 call, we continue to see more and more conversations in our traditional transactional-type business, so that they're more, you know, your everyday, like, commercial market. The amount of new prospects that our sales channel partners are bringing forward continue to accelerate, so we continue to see more and more opportunities coming forth. If you ask me this in Q3 to Q4, I'd say there are signs of life, but we weren't seeing that convert to actual booking. I would say in Q1, we saw a lot of that inertia really start translating into strength in booking. And we are seeing signs of basically a recovery, not a fast recovery, but we're seeing signs of momentum in the right direction on the white commercial market. And definitely are seeing an outperformance in our side with bookings and that transactional market relative to the greater market as a whole. So we see 26 as being a good, strong recovery year for the Aon side of the business, Aon brand of the business, and definitely see it being a market share cap per year.

Okay, that's great. Great to hear. Let's talk about the last quarter. Aon had production issues in 25 and a little bit in the first quarter of 26. Are those issues behind you, and what has changed?

Yeah, so when we look at the production issues at 25 and kind of what was in front of us at 26, And I just want to kind of start off by saying they're different in kind of what they were. So 25, some of the production issues, 25 had a lot of noise. I mean, I'm just going to be very open on the Aon side of the business. There was a lot of noise in 2025. We were coming out of the EPA-mandated refrigerant transition, which caused a lot of noise in our bookings cadence in 24 and 25. So that caused a lot of pressure in the first half of the year on the Aon side of the business. That was exacerbated by supply chain constraints as our supply base changed to a new refrigerant in all the components. And so we had a lot of noise at the beginning of the year. We then went live with an ERP, which caused some disruption in our coil production down at our Longview site, which caused kind of reduced capacity and throughput in our Longview site. But it also bled into our Tulsa site, given our internal supply of coils from Longview to Tulsa. So we had a lot of a lot of basically operational noise kind of throughout 2025. Coming out of the year, a lot of that momentum was in the right direction, but there were still pockets of noise. In 26, I would just start off by saying he wanted 26 on the Aon side in the Oklahoma side of the business. We had really good strength. I mean, we were running record run rates inside of the Oklahoma. And so we came out of, you know, the back end of Q1, and the velocity and volumes through Tulsa, Oklahoma were at record high, things we had never done before as a company in volume. So we've recovered well. Now, the question mark around the operational challenges then comes to margin. And the conversation on margin, you know, we talked about this in the Q1 call. Part of the margin pressure, about 200 basis points of depression and margin, was outsourcing. And it was outsourcing because we were basically – we were having to prioritize coil production in support of Basics product in Longview. And that's because of our data center customers. We have tighter quality requirements to qualify vendors that makes multisourcing take more time. So we had to prioritize internal capacity in support of Basics, which meant we outsourced Aon Coil. And that created a margin pressure in the Aon Oklahoma segment of the business. There was also some price-cost dynamics that, you know, we capped, we identified in Q3, Q4 of last year and have already put pricing actions in place. And so we had some temporary constraints that certainly put some margin pressures on us. But going forward, you know, we're definitely getting a lot of better-priced products flowing through the factory, which will show margin improvement. The coil outsourcing, though, coil outsourcing will continue, and that is just a dynamic of how much growth we're seeing. We updated our guidance on the Q1 call to a 40-ish percent year-over-year growth rate from a consolidated basis. And so that rate of growth is such that the internal toil capacity is not ramping quite as fast. So we will leverage outsourcing in the near term to basically allow it to capture that volume. But the net economic effect, the net earnings growth is very, very reasonable to make those decisions.

Okay. That's helpful. On gross margins, can you talk about what will be normalized gross margins for both the Aon business and basics in the long term?

Yeah, I mean, from a long-term perspective, the Aon side of the business, that mid to high 30s range that we've gotten to in the past is very much the target that we're driving back towards. There's going to be some good near to midterm recovery kind of margin from Q1 of this year throughout this year. And that's given the price-cost dynamics I talked about that we have embedded in the backlog. But the outsourcing definitely will cause some pressures on a little bit more of an extended basis. So, you know, we don't necessarily expect to exit the year back of that on the Oklahoma segment, but certainly building momentum back towards that. On the basic side of the business, you know, the target margin profile that we talk about is more in that 30% range. And really part of that constraint is just the rate of growth. The basic side of the business has doubled last year, doubling this year, doubled the year before that. And so that rate of growth has just put some pressure just on the execution of things that is pressuring margins. But as we kind of get more of this capacity to have its legs underneath it, there'll definitely be opportunity to make some intentional efforts to keep driving that forward.

Well, let's shift and talk about data centers. On the last call, you raised your outlook for data centers to $1 billion. Talk about why demand is strong, and then is most of the growth for liquid cooling?

Yeah, so at a high level, I mean, the demand has been there. So the demand certainly didn't materialize over the quarter. And we talked about this really over the last three quarters, and that is we believe firmly in ensuring that what we sell, we deliver at the quality and delivery schedule that our customers expect. And so as we rapidly ramp up our facility capacity, it becomes an important balance for us to commit to orders that we can fulfill in the time frame that we commit to. And so the Memphis site that we brought online, I mean, that was the first really large-scale investment that Aon has ever made from a new facility perspective. You know, I guess you could say 1988 when the company was founded. That might have been the first. But since then, I mean, it's all been incremental expansion to have been the primary growth driver of the facility expansion today on. And so Memphis, you know, adding 800,000 square feet under roof, that was the first really big stair step that we've made as an organization. And so in that, it's very easy to get excited and try to go sell through that capacity. But from a discipline standpoint, we've got to have surety of our ramp rate. We've got to make sure that, you know, we're bringing on that facility at the quality expectations that we have for ourselves. We have to make sure that, you know, we have confidence in the rate of growth that's going to come through there. And so three quarters ago, when we talk about, you know, why didn't the backlog grow so much in Q3, Q2 of last year, it's because we weren't sure of exactly when that ramp was going to happen. And we wanted to get more runtime underneath it. And so as we got runtime in Q2 and Q3 into Q4, we knew now what we could sell and where that would convert to from a delivery perspective. And that's what's allowed us to continue now capturing more and more of that demand. And really that discipline, even through this growth with all this new production capacity coming online, it is that discipline that we will not stray from to make sure that we don't overcommit our capacity and we do deliver what we say. And so what we've seen over the last couple of quarters is really that surety of supply that's allowed us to basically take on some more of these orders. And as we continue getting more and more runtime and more and more visibility into how that facility and all of our facilities as a whole are ramping, it'll allow us to continue taking on more and more of those orders.

And what types of equipment are you mainly selling? Are you selling CDUs, fan walls? Are you selling chillers? Just to give people a sense.

Yeah, it's broad based. And I think that's the one thing I always, you know, all the AI conversation, all of the liquid cooling conversation, to a certain extent, I feel like people forget that there still is a very large amount of demand for the traditional air side product that we built this business on in the first place. So we continue to see very strong demand for the air side product that we've always manufactured. And they go into both cloud data centers as well as AI data centers. And, you know, even a liquid-cooled data center, you're still going to have to buy 30% to 40% of your capacity via air. So you're still seeing that demand basically in the marketplace. But the backlog growth that you see in Q1 is actually relatively even with air-side products, filler products, and liquid-cooled products kind of in that order book for the quarter.

And then talk about the outlook for basics growth the next couple years. Obviously, 26% is pretty strong, but should we be penciling in like a 40%, 50% CAGR over the next few years? How should we think about it?

Yeah, I mean, going back to the comment I made earlier, it really comes into how that capacity matures and comes online. When we look at Memphis today, and really maybe let's talk fleet-wide for a second, the Oregon site is relatively close to capacity. I mean, there's always a little bit of incremental capacity that we're going to be able to unlock, but Oregon, you know, roughly in that $300 million range, that's kind of what it is. You might see a little bit of growth out of that, but not a lot. But Longview, certainly two years ago, a year ago, that was a lot of the growth that we saw as we brought on that new expansion. So a lot of that Longview capacity coming online has really been some of that more, you know, last year growth that you've seen on liquid cooling products. But even Longview, we haven't turned on all the production lines. So there's still our production lines that we can turn on, and there's still ability to run that facility with more ships. So that comes down to that facility continuing to mature. So we see that growing, continuing to grow throughout this year and the next year as we continue getting that operation really kind of fine-tuned from an execution standpoint. So there's some growth that you're going to see out of that. But the biggest single site that's going to be the sort of uptick in capacity and really volume, that is the Memphis site. And we're really only running one product through that today. We're doing that very intentionally because it's a brand-new site, and so we are focused on execution. But as we get more run time within that facility, we have four production lines that are sitting vacant right now. So we've got four production lines that are sitting there ready to basically be turned on, and we will continue turning those on. You'll see some of those turn on towards the end of this year and then more into next year. And so when we look at that ramp, you know, we anticipate seeing, you know, basically a decent stair-stepping capacity come online at the end of this year, another one next year, and then seeing more of a linear capacity ramp inside the Long Beach site. So, you know, the rate of growth, we certainly haven't guided next year, but I would just say that continued strong growth rates, you know, not 100%, 100%, 100%. You're not going to keep seeing that in the basic side, but definitely, you know, you're going to see meaningful growth coming through.

And how much data center revenue capacity do you have today?

Yeah, in the basic side of the business, you know, we have over $2 billion of capacity sitting inside that fleet. Now, I always say it's not a light switch, so it's not like I can just walk in and say, here's $2 billion of revenue. We are ramping these new facilities. But inside these new facilities, we know we have at least $2 billion of kind of capacity as a whole from the basic brand. The big goal, though, is really the challenge to our operations team is to really quantify how much more than $2 billion exists inside that investment. And, you know, we were talking earlier in one of our one-on-ones, you know, discussing cash management and talking about, you know, inventory reduction. And I joke that, you know, Andy looks at inventory reduction from a cash perspective. I look at inventory reduction actually as a lever to get more capacity. And I say that because if you walk through a lot of our facilities, especially our legacy facilities, you see racking all across the production floor. You see a lot of space taken up by storing inventory on our production floor. And as we continue to evolve and we really invest heavily in a lean transformation effort inside of our fleet, one of our big objectives there in our lean transformation is actually a reduction in inventory to free up more production space. And if I can free up in Tulsa just one production line in Tulsa, that is a huge amount of incremental revenue capacity that we've just gained with relatively little investment in dollars. And so that's a lot of the focus that we have is across all the fleet to say, hey, we've got $2 billion that we know on the basic side of the business. But the challenge is let's figure out how much more. Let's figure out what those rocks are that are in the way of that. And let's make much smaller incremental investments and actually drive as much volume to our existing investments as possible.

Great. Who would you consider your top competitors for liquid cooling?

Yeah, I mean, I would say out of the gate, if anyone walks to any data center show and walks down a exhibit or exhibit center, you're going to see TDUs from everybody and their brother. I mean, there are CDUs everywhere out there. And I always start off by saying, you know, just because everyone makes a CDU doesn't mean we're competing. And I mean that the same way I would say it on the Aon rooftop units. You know, we don't go after every type of data center. We don't go after every project on a rooftop unit because we know where the value proposition resonates and where it doesn't. And so when we think about where we go after and what we focus on from a CDU perspective, You know, we are not focused on selling a 500-kilowatt commoditized CDU. Like, that is not even on the product roadmap. That's not a focus of where we go. You know, we're talking about highly customized solutions for hyperscale operators. We're talking about large-capacity CDUs, not in the kilowatts, but in the megawatts, and two, four, five, six-megawatt CDUs. That tends to be where we focus. And so, you know, in that space, while we may walk through a data center hall and see from a from a trade show perspective, 100 manufacturers of PDUs, there's only maybe five or 10 of those that really are doing what we're doing inside that space. And so, you know, that's the likes we see to a certain extent, you know, Motivare. We see certainly some on the Modine side of the business, a little bit on the Vertis side. So we certainly see some of the big players kind of in that space. But I would also say the vast majority of PDU liquid cooling manufacturers we see, we're not really competing from a product perspective. Got it.

All right, let's transition and talk about the ERP implementation. What is the game plan by location, and can you comment on long view? Is that back to normal operations or not yet?

Yeah, so at a high level on the ERP side of things, we talked about this. We basically said, hey, we're pressing pause on additional sites right now. And the reason we're pressing pause is because the rate of growth, you know, we updated guidance from high teens to 40% growth rate this calendar year. So that is a marked increase in the overall top line revenue that we're going to push through our facilities. And we made the decision to say we're going to pause kind of scheduling other ERP go-lives given that rate of growth. We want operational focus to be on execution and don't want to add any additional noise into that with additional go-lives. So kind of where we sit today, we're live in Longview, we're live in Memphis. The intended next site would be Oregon, and then after that would be Tulsa. But we really have no date assigned to those next two go-live. The focus is to make sure this system is not only allowing us to run as fast as we want to in Longview and in Memphis, but also to put the additional work in right now and adding some additional features that weren't part of the additional go-live strategy. So if we rewind the clock two years ago, the whole philosophy was we're going to go live, get all of our sites live, and then add some additional enhancements along the way. What we've actually come to the realization on is those enhancements are actually pretty essential to how we want to operate. So we're going to basically focus on getting some of those additional enhancements in place in Longview and in Memphis, have all that vetted to ensure we're operating properly, and really drive as much velocity through those sites before we even have a conversation on a long view or on a PULSA or a Redmond. Makes sense.

Let's transition and talk about the rooftop business. What is your price premium today versus your competitors who sell standard equipment? And is that allowing you to take market share if it's a lower premium industry?

So I always want to start off by saying there's a range of what we say standard equipment. And the reason I say that is when we talk price premium, we're talking kind of to our closest competitor, kind of in that more catalog product. And I say that out of the gate to say there are products you can buy for, you know, 20, 30 percent less than an Aon Rooftop. But the feature set is nowhere near the same. I mean, it's an apples and oranges conversation. So when we talk about, you know, this 10-ish percent premium that we sit at today, that's relative to, I'll say, a relatively close competitor. that still is not doing everything that we do. And so in that case, you know, we're selling those competitors, or sorry, against those competitors, really around the energy efficiency. We're selling it on the durability and longevity of the cabinet, on the ability to configure more for indoor air quality requirements, as well as just the life cycle of the product as a whole. We kind of do that math to show that that 10% premium for an owner-operator is more than paid for within a relatively short period of time. And so there definitely is the focus on, you know, the value sale, the value proposition. And where we sit today with that premium, you know, we continue to see our ability to take market share. Obviously, you're seeing that in the numbers. So you're seeing us be able to take that. And that 10% premium certainly is seeming to be a pretty good kind of area. We probably dipped into the 7-inch percent for a bit there and kind of have had some price discipline pushing it back up. Okay.

Talk about that Alpha Class cold climate heat pump. What is unique about it, and how is it helping you unlock a national account opportunity?

Yeah, so the Alpha Class product, you know, out of the gate, it's not just one type of heat pump. So the Alpha Class really is a three-tiered heat pump solution for rooftops. And so we have the Eco, the Pro, and the Extreme Series inside of the Alpha Class. And I always want to clarify that to say the Eco Series, that is as close to a traditional heat pump that you buy from a competitor. So the Alpha Class Eco Series, you're going to get basically a heat pump heating solution down to about 37 degrees Fahrenheit. And that's sort of the relatively standard heat pump solution. But if I'm delivering a heat pump to, let's just say, a southern Florida market, that's all I need. When we move on to the Pro Series, the Pro Series provides heating down to zero degree Fahrenheit, outdoor ambient temperatures, and the Extreme Series goes all the way to a negative 20 degree Fahrenheit heat pump operating condition. So it's a platform, basically, of three series of products that provide electric heating inside a heat pump solution. And why that's important for a national account is a national account owner doesn't have all of their sites in one geographic region. A national account owner is talking about geographic diversity across the country. And so if we want to go in and talk hypothetically to a big box retailer who has sites from the northern border down to the southern border, it doesn't make sense for me to try to sell that customer the extreme series product that works in northern climates down in the southern climate. That doesn't make any sense from a price point standpoint. So having that full platform of the Eco, Pro, and Extreme Series, it allows us to go in there with one of the national account customers and be able to provide a platform that is right-sized for the various geographic regions so that you're optimizing your price efficiency in a southern climate relative to a northern climate, but still getting the benefit of the overall heat pump solution. So it's been something we've seen resonate really, really well with our national accounts. But I would also say that the success that we have in national accounts, it's not limited. We're not selling just heat pumps into the national account. Our traditional units are also seeing tremendous success in the national account. And so, yes, we're seeing great benefit of the Alpha Class product, helping us get in with national accounts. But by no means are we only winning national accounts because of heat pumps.

All right, my next question is a little more open-ended. What investments are you making, excluding the ERP, to help professionalize the business? I feel like that's maybe underappreciated by investors. And maybe Andy can pitch in as well if he's got some thoughts.

Yeah, I'll start at high level. And Andy, you can definitely dive into the finance side. So I made the comment earlier that four and a half years ago, Aon was really a single-site, false-allocation company. That's the way it was run. That's the way it operated. And, you know, four and a half years ago at roughly $500, I think $20 million of revenue to this year, we're talking about $2 billion of revenue. It's a markedly different company, much more footprint, much more people inside the organization, much more sophisticated customers. I mean, data center customers have a level of sophistication in buying that is much different than a transactional rooftop unit customer. So the business is fundamentally different than it was four and a half, five years ago. And the demands on the business, the complexity of operations, everything is markedly different. And so, you know, I've been in this seat, I guess, 12 and a half months now. And in that 12 and a half months, the real focus has been to not just build this organization to be successful today, but to maintain this momentum that we have and allow it to really succeed five years, ten years down the road. And when we talk about $2 billion this year, we think about a $3, $4, $5 billion kind of organization. We've got to run it differently. And in the last 12 months, we've been very focused on evolving this organization. I would say transform has a little bit of a kind of four-letter word kind of connotation to it because Aon was tremendously successful. Aon built a great business, and this is a natural evolution. It's not something that was broken in Aon. It's just the growth and the success that we've had is fundamentally changing the way we need to lead this business. And so we're evolving the organization to be successful. Twelve months ago, we didn't have a supply chain department at Aon. We had a purchasing department at Aon. So we bought based on whatever someone told us we needed. We didn't have long-term contracts. We didn't do strategic sourcing. And we've built out in the last 12 months from the ground up a true professional supply chain organization that is unlocking a tremendous amount of value in not just cost savings, but cost avoidance in inflationary markets. But beyond that, we're getting a lot better supply surety. We're getting, you know, vendor scorecards and vendor management is getting much more sophisticated so that we know that when I say I need a part, that part's going to show up. On the operations side, you know, we've built out and really rethought the way that we run operations. We brought in a true focus on lean manufacturing and building best-in-class multi-site manufacturing model. We didn't have, 12 months ago, a robust KPI set for operating a five-site manufacturing organization. So you can't fix what you can't measure. I mean, a very simple principle, you've got to measure it to be able to fix it and prove it. And so we've been very disciplined on building out operational discipline and cadence and really have invested heavily in bringing in top tier talent to help transform this. And, you know, lean manufacturing wasn't a thing that was talked about at Aon 12 months ago. And we're seeing, you know, on our highest volume line in Tulsa, which is our 30 ton line in Tulsa, we ran through a series of eight Kaizen events over the last starting back in November. Remember, we increased volume 20% on that line and reduced the workforce on that line just through eight lean initiatives, just very simple, focused, you know, low-hanging fruit-type opportunities. And so we're driving that throughout the organization and then bringing in finance to then connect all the dots and understand what to focus on to drive most value.

Yeah, absolutely. I would say I have background in automotive, industrial. What Aon did in the last decade was incredible, but we are just really stretching on the surface in terms of the efficiency, the optimization. So there's a lot to be gained here, really investing in people, the training, and in the process. That's what I see is the opportunity lie ahead of Aon right now. And if you just go back to the story about Matt and I look at inventory, maybe a little bit differently. Matt is thinking about growth. I'm thinking about maximizing cash, minimizing risk. So that kind of complementary views and now we're investing in people connecting the dots is where we think that is the next return on investment.

Fantastic. Well, we're out of time. Thanks, everyone. Appreciate it. Thank you.