AAON, Inc.

What they do

AAON designs and builds semi-custom and custom HVAC systems, including rooftop units, air handlers, energy recovery units, coils, and controls, through its AAON Oklahoma, AAON Coil Products, and BASX segments. AAON Oklahoma produces HVAC systems and controls from facilities in Tulsa, Memphis, and Parkville; AAON Coil Products makes semi-custom systems and coils in Longview, Texas; BASX makes custom cooling and ventilation solutions for data centers and cleanrooms. Products are sold through independent manufacturer representatives and a small internal sales force, primarily in the U.S. and Canada.

Revenue drivers

• AAON Oklahoma — Core HVAC segment selling highly configurable systems and aftermarket parts; generated record sales in Q2 2026 with 39.3% growth to $282.2 million, benefiting from backlog and improved throughput.
• BASX — Custom cooling solutions for hyperscale data centers, cleanrooms, and specialized air handlers; Q2 2026 sales grew 216.2% to $345 million, driven by data center demand and capacity expansion.
• AAON Coil Products — Manufactures semi-custom and custom HVAC systems and heating/cooling coils, primarily for internal use by AAON Oklahoma and BASX, supporting overall product configuration.

Recent performance

For Q2 2026 (quarter ended June 30, 2026), net sales rose 101.2% year-over-year to a record $627.0 million, gross profit increased 84.3% to $152.5 million, and operating income jumped 192.1% to $68.9 million. Diluted EPS increased 257.9% to $0.68, and backlog reached $2.0 billion, up 98% year-over-year. Six-month 2026 revenue was $1.12 billion (Q1 $496.9M + Q2 $627.0M). Annual revenue grew from $1.20B in 2024 to $1.44B in 2025, but net income fell from $168.6M to $107.6M, with 2025 operating cash flow of just $534,000.

Strategy

Management emphasizes mass semi-customization, using flexible manufacturing to deliver tailor-made equipment at scale. They are investing heavily in capacity, including the Memphis facility and other expansions, to support data center demand and convert backlog faster. The strategy includes improving supply chain, manufacturing throughput, and operational execution to drive margin expansion, while continuing product leadership and R&D for energy efficiency and indoor air quality. They compete on technical excellence and customer outcomes rather than price.

Risks

• Data center demand concentration — BASX is heavily dependent on the data center market, and a slowdown or shift in AI/high-performance compute investment could significantly reduce demand.
• Macroeconomic cyclicality — Commercial/industrial new construction is contracting since late 2024, and a recession or higher interest rates could further reduce sales volumes and profitability.
• Customer concentration — A significant portion of sales comes from a limited number of customers, and losing one could materially hurt results.
• Margin pressure from rapid expansion — Ramping new capacity, using outsourced components, and inflationary costs compressed gross margin to 24.3% in Q2 2026 from 26.6% a year earlier, with pressures expected to continue near-term.

Outlook

AAON raised its full-year 2026 outlook to net sales growth of 55-60%, gross margin of approximately 25-26%, and SG&A as a percent of sales of 13-14%. Management expects continued strong demand across both brands, with BASX benefiting from data center investment and AAON gaining share in a softer commercial HVAC market. The company sees a clear path to improved margins through higher utilization, productivity gains, sourcing initiatives, and pricing actions.