AAON, INC. (AAON): Results of Operations and Financial Condition
AAON, INC. (AAON) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 AAON Reports Record Second Quarter 2026 Results Driven by Strong Demand, Accelerating Throughput, and Improved Operating Execution Net sales increased 101%, Operating income increased 192%, Diluted EPS increased 258% Raises Full-Year Outlook Second Quarter 2026 Highl
How this was made
The 30-second read
Why it matters
Q2 results show accelerating throughput and backlog conversion, while management updates FY2026 targets for sales growth, gross margins, and SG&A as a percent of sales. Traders should focus on whether margin work and backlog conversion sustain through the year.
Market read
This is a primary earnings-and-guidance disclosure with record quarter metrics and explicit FY2026 targets, which can drive repricing versus prior expectations.
What to watch
Gross margin fell vs prior-year (24.3% vs 26.6%) even with record revenue, implying the market may scrutinize the path and timing to the 25% to 26% gross margin target.
AAON Reports Record Second Quarter 2026 Results Driven by Strong Demand, Accelerating Throughput, and Improved Operating Execution
Record net sales, sharply higher operating income and EPS, elevated backlog, and a higher full-year sales-growth outlook outweighed lower reported gross margin and a reduced gross-margin outlook.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net salesGAAP | $627.0 million | – | 101.2% |
| Gross profitGAAP | $152.5 million | – | 84.3% |
| Gross profit marginGAAP | 24.3% | – | – |
| Selling, general and administrative expenses as a percent of salesGAAP | 13.3% | – | declined 570 basis points |
| Operating incomeGAAP | 68.9 million | – | 192.1% |
| Diluted earnings per shareGAAP | $0.68 | – | 257.9% |
| Adjusted diluted EPSnon-GAAP | $0.69 | – | 213.6% |
| Infrequent expense related to an incentive fee associated with the Memphis, Tenn. facility, net of the profit sharing and tax effectnon-GAAP | $1.4 million | – | – |
| AAON-branded salesGAAP | $282.2 million | – | 39.3% |
| BASX-branded salesGAAP | $345 million | – | 216.2% |
| Total backlogother | $ 1,970,844 (in thousands) | decreased 7.4% | 98.0% |
| AAON-branded products backlogother | $ 540,465 (in thousands) | increased 6.0% | 9.4% |
| BASX-branded products backlogother | $ 1,430,379 (in thousands) | – | 185.4% |
| Year-to-date operating cash flowGAAP | $55.0 million | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| AAON OklahomaGrowth was driven by stronger execution against a robust backlog, supported by ongoing production improvements that accelerated backlog conversion. | $ 262,276 (in thousands) | – | 41.7% |
| AAON Coil ProductsGrowth was driven primarily by BASX-branded liquid cooling sales of $126.6 million, up 208.4% during the period. | $ 146,680 (in thousands) | – | 150.9% |
| BASXThe specific segment driver discussion was truncated in the provided filing text. | $ 218,020 (in thousands) | – | 220.7% |
FY26 outlook
- Revenue55%-60%
- Gross margin25%-26%
- Operating expensesSG&A as a % of sales 13%-14%
- NoteDepreciation & Amortization $95M-$100M
What drove it
- Net sales growth reflected strong demand across both the AAON and BASX brands, improved manufacturing throughput, and increased utilization of recently added production capacity.
- BASX-branded sales reflected momentum in data center demand, higher production output, and greater utilization of recently added manufacturing capacity.
- AAON-branded sales benefitted by a healthy backlog and continued progress in production throughput.
- Selling, general and administrative expenses as a percent of sales declined 570 basis points, reflecting continued operating leverage and disciplined cost management as revenue growth outpaced overhead investments.
- Total backlog decreased sequentially primarily reflecting accelerated backlog conversion into record revenue and the inherent timing variability of large BASX project awards.
Concerns
- Gross profit margin was 24.3%, compared with 26.6% in the prior-year period.
- Reported gross profit was affected by ramping recently added manufacturing capacity, including the Memphis facility, outsourced components used to support accelerated growth, and inflationary cost pressures.
- AAON Oklahoma segment profitability was impacted by $18.1 million of overhead expenses associated with the Memphis facility, compared with $3.0 million in the prior-year period.
- AAON Coil Products margin performance reflected inflationary cost pressures, outsourcing-related costs, freight pressure, and price-cost timing.
- Current FY26 gross profit margin guidance of 25%-26% is below prior FY26 guidance of 27%-28%.
- Management cited timing variability of large BASX project awards and stated that customer awards and order conversion can vary from quarter to quarter.
What to watch
- Sequential margin improvement in the second half of the year from higher production volumes, better utilization, pricing actions, sourcing initiatives, and continued operational discipline.
- Conversion of backlog with improved pricing into revenue.
- Utilization of recently added capacity, including the Memphis facility.
- BASX customer investment activity in data center infrastructure and the timing of large project awards.
- AAON-branded order activity and share gains amid a soft commercial HVAC market backdrop.
- Benefits from pricing, sourcing, productivity, and operational initiatives at AAON Coil Products.
Balance sheet and cash flow
- Year-to-date, operating cash flow improved to $55.0 million, compared with negative $31.0 million a year ago.
Analysis
AAON delivered a record second quarter, with net sales of $627.0 million, up 101.2%, and gross profit of $152.5 million, up 84.3%. Operating income increased 192.1% to 68.9 million, while GAAP diluted EPS increased 257.9% to $0.68. The release attributes the step-up in revenue and earnings to demand across both brands, improved manufacturing throughput, expanded capacity utilization, and faster backlog conversion. Year-to-date operating cash flow improved to $55.0 million from negative $31.0 million a year ago.
Growth was concentrated in BASX-related activity. BASX-branded sales grew 216.2% to $345 million, supported by data center demand, higher production output, and expanded manufacturing capacity utilization. AAON-branded sales grew 39.3% to $282.2 million, supported by backlog and throughput progress. At the segment level, AAON Oklahoma net sales were $ 262,276 (in thousands), AAON Coil Products net sales were $ 146,680 (in thousands), and BASX net sales were $ 218,020 (in thousands). AAON Coil Products cited BASX-branded liquid cooling sales of $126.6 million, up 208.4%.
The central offset is margin. Consolidated gross profit margin was 24.3%, compared with 26.6% in the prior-year period, despite a 570-basis-point decline in SG&A as a percent of sales to 13.3%. Management identified Memphis capacity ramp costs, outsourced components, and inflationary cost pressures as gross-margin headwinds. AAON Oklahoma reported $18.1 million of Memphis facility overhead expense, compared with $3.0 million in the prior-year period. AAON Coil Products reported cost, freight, outsourcing, and price-cost timing pressure.
Backlog remained elevated while revenue conversion accelerated. Total backlog ended June 30, 2026 at $ 1,970,844 (in thousands), up 98.0% from $ 995,320 (in thousands) a year earlier, but down 7.4% from $ 2,129,455 (in thousands) at March 31, 2026. BASX-branded backlog was up 185.4% year over year, while AAON-branded backlog increased 9.4% year over year and 6.0% sequentially. The company attributes the sequential total-backlog decline to accelerated conversion and timing variability for large BASX awards.
Management raised FY26 sales-growth guidance to 55%-60% from 40%-45% and reduced SG&A as a percent of sales guidance to 13%-14% from 14%-15%. At the same time, it reduced gross profit margin guidance to 25%-26% from 27%-28%, while maintaining depreciation and amortization guidance at $95M-$100M. The key operating issue for the second half is whether higher volumes, utilization, pricing, sourcing, and productivity actions translate into the sequential margin improvement management expects.
Management, verbatim
Our second quarter results demonstrate the continued strength of demand for our solutions and the progress we are making scaling the company to meet that demand,
Matt Tobolski, President and CEO of AAON
We are also clear-eyed about the margin work ahead.
Matt Tobolski, President and CEO of AAON
The direction is clear. We expect sequential margin improvement in the second half of the year as higher production volumes, better utilization, pricing actions, sourcing initiatives, and continued operational discipline begin to show more clearly in reported results.
Matt Tobolski, President and CEO of AAON
Not in the filing
stated, not guessed- GAAP net income
- Non-GAAP net income
- Total selling, general and administrative expense in dollars
- Prior-year selling, general and administrative expenses as a percent of sales
- Quarterly operating cash flow
- Free cash flow
- Cash and cash equivalents
- Debt and other balance-sheet debt metrics
- Share repurchases
- Dividends
- Capital-return amounts
- FY26 tax-rate guidance
- Prior-quarter consolidated net sales, gross profit, gross margin, operating income, and EPS
- Prior-year adjusted non-GAAP EPS
- Quarterly financial information and additional BASX segment discussion beyond the truncated provided filing text
- A separately provided previous quarterly outlook for comparison with reported second-quarter results
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
AAON is a high-performing, energy-efficient HVAC solutions provider with two brands, AAON and BASX, and is scaling capacity to meet demand.
Ticker impact
AAON filed an 8-K with Q2 results showing record net sales of $627.0M, EPS $0.68, and a raised 2026 outlook.
Likely positive bias for AAON shares on guidance credibility, with volatility tied to margin normalization assumptions.
The filing discloses multiple fresh, decision-relevant datapoints: record revenue/EPS, backlog near $2.0B, improved operating cash flow, and explicit FY26 sales growth and margin targets.
Market effects
Data-center HVAC demand and backlog conversion strength may support sentiment for energy-efficient HVAC and custom-engineered equipment suppliers.
Limited direct regional read-through beyond Oklahoma-based AAON operations and manufacturing capacity ramp.
Primarily US demand and manufacturing execution; global relevance is secondary unless data-center capex trends broaden.
Counterpoint
Margin compression risk is explicitly acknowledged from capacity ramp and outsourced components, so upside may fade if utilization or pricing actions lag.
Key entities
- public_companyAAON, Inc.
NASDAQ-listed HVAC solutions company reporting Q2 2026 results and raising FY2026 outlook.
- business_unitBASX brand
AAON’s data-center focused brand; disclosed record sales growth and backlog expansion.
- executiveMatt Tobolski
CEO quoted on demand strength, capacity scaling, and margin work ahead.
