AAON Reports Fourth Quarter and Full Year 2025 Results

Rhea-AI Summary

AAON (NASDAQ:AAON) reported full-year 2025 net sales of $1.44 billion (+20.1% YoY) and GAAP diluted EPS of $1.29 versus $2.02 in 2024. Fourth-quarter sales were $424.2 million (+42.5% YoY) with EPS of $0.39. Year-end backlog reached $1.83 billion (+110.9% YoY), driven by BASX growth. Company expects 2026 sales growth of 18-20% and gross margins of 29-31%, with D&A of $95-100M and SG&A ~16% of sales.

The company cited capacity expansion, ERP implementation impacts, and a rapid Memphis facility ramp as drivers of near-term margin pressure and longer-term operating leverage.

Positive

• Net sales +20.1% to $1.44B in 2025
• Year-end backlog $1.83B, +110.9% YoY
• BASX revenue more than doubled; backlog +141.3%
• Manufacturing capacity increased ~25%; Memphis facility adds 787,000 sq ft

Negative

• Gross margin declined to 26.7% from 33.1% in 2024
• GAAP diluted EPS fell to $1.29 from $2.02
• Cash and restricted cash of only $1.2M with $398.3M drawn on revolver

Key Figures

FY25 Net Sales: $1.44 billion FY25 Gross Margin: 26.7% FY25 GAAP Diluted EPS: $1.29 +5 more

8 metrics

FY25 Net Sales $1.44 billion Up 20.1% vs $1.20 billion in 2024

FY25 Gross Margin 26.7% Down from 33.1% in 2024

FY25 GAAP Diluted EPS $1.29 Down from $2.02 in 2024

Year-End Backlog $1.83 billion Up 110.9% year-over-year

Q4 2025 Net Sales $424.2 million Up 42.5% vs Q4 2024

Q4 2025 GAAP Diluted EPS $0.39 Up from $0.30 in Q4 2024

BASX Q4 Sales $181.4 million Up 138.8% year-over-year

2026 Sales Outlook 18%-20% growth Company guidance for FY26 revenue growth

Market Reality Check

Price: $101.20 Vol: Volume 950,234 is close t...

normal vol

$101.20 Last Close

Volume Volume 950,234 is close to the 20-day average of 924,048, suggesting typical trading interest pre-release. normal

Technical Price at $101.20 sits above the 200-day MA of $88.60 and about 12.79% below the 52-week high of $116.04.

Peers on Argus

AAON was up 2.34% pre-release while key building-products peers showed mixed mov...

AAON was up 2.34% pre-release while key building-products peers showed mixed moves (e.g., LPX +3.03%, FBIN +1.53%, SPXC -1.28%), indicating stock-specific focus rather than a uniform sector rotation.

Previous Earnings Reports

5 past events · Latest: Nov 06 (Positive)

Same Type Pattern 5 events

Date	Event	Sentiment	Move	Catalyst
Nov 06	Q3 2025 earnings	Positive	+7.0%	Strong sales and BASX growth with record backlog despite margin compression.
Aug 11	Q2 2025 earnings	Negative	-10.5%	Sales decline, EPS drop over 60%, margin contraction and lowered outlook.
Apr 30	Q1 2025 earnings	Positive	+5.7%	Strong revenue and BASX surge with record backlog despite lower margins and EPS.
Feb 27	Q4 2024 earnings	Negative	-22.9%	Sales and EPS declines and lower gross profit, partly offset by higher backlog.
Nov 07	Q3 2024 earnings	Positive	+16.1%	Record sales and solid EPS with strong BASX and coil products performance.

Pattern Detected

Earnings releases have often featured strong sales and backlog growth alongside margin and EPS pressure. Despite an average next-day move of -0.92%, markets have frequently rewarded reports highlighting BASX-driven growth and record backlogs, with price reactions generally aligning with the overall positive or negative tone of each release.

Recent Company History

Over the past five earnings cycles, AAON has consistently emphasized BASX data center growth and expanding backlog, while navigating margin compression and ERP-related challenges. Q3 2024 and Q1/Q3 2025 showed solid sales growth and record backlog, generating positive price reactions. In contrast, Q4 2024 and Q2 2025 highlighted sales declines, sharply lower EPS, and margin deterioration, which saw notable selloffs. Today’s full-year 2025 and Q4 results continue the themes of strong revenue growth, BASX expansion, and elevated backlog against pressured full-year margins and EPS.

Historical Comparison

-0.9% avg move · Across the last five earnings releases, AAON’s average next-day move was -0.92%, reflecting mixed re...

earnings

-0.9%

Average Historical Move earnings

Across the last five earnings releases, AAON’s average next-day move was -0.92%, reflecting mixed reactions to strong growth but volatile margins and EPS.

Earnings updates show a progression from Q4 2024 weakness through 2025, with BASX and backlog expanding rapidly while margins and EPS remain under pressure as Memphis ramps and ERP implementation advances.

Market Pulse Summary

This announcement highlights AAON’s record FY25 revenue of $1.44 billion, a sharply higher backlog o...

Analysis

This announcement highlights AAON’s record FY25 revenue of $1.44 billion, a sharply higher backlog of $1.83 billion, and exceptional BASX growth, driven by data center demand. At the same time, full-year gross margin compressed to 26.7% and GAAP EPS declined to $1.29, reflecting heavy investment in capacity and ERP implementation. Investors may focus on how 2026 guidance for 18%-20% sales growth and 29%-31% gross margin is supported by Memphis ramp execution, backlog conversion, and leverage on the revolving credit facility.

Key Terms

enterprise resource planning ("erp"), revolving credit facility, sg&a, depreciation & amortization

4 terms

enterprise resource planning ("erp") technical

"We made substantial progress stabilizing and advancing the implementation of our new Enterprise Resource Planning ("ERP") system."

Enterprise resource planning (ERP) is a company-wide software system that connects and organizes core business functions—such as accounting, inventory, purchasing, payroll and production—into a single database and user interface. Like a central nervous system for a business, it makes information flow faster and more accurate, which can lower costs, improve forecasting and support faster growth; for investors, ERP implementations and upgrades affect profitability, operational risk and future capital needs.

revolving credit facility financial

"the company had cash, cash equivalents and restricted cash of $1.2 million and a balance on its revolving credit facility of $398.3 million."

A revolving credit facility is a type of loan that a business can borrow from whenever it needs money, up to a set limit. It’s like having a credit card for companies—allowing them to borrow, pay back, and borrow again as needed, providing flexibility for managing cash flow or funding short-term expenses.

sg&a financial

"We also anticipate SG&A expenses as a percentage of sales will be approximately 16%"

SG&A stands for Selling, General, and Administrative expenses. It includes the costs a company spends on selling products, running the business day-to-day, and managing staff, like advertising, rent, and salaries. These expenses matter because they affect how much profit a company can make from its sales.

depreciation & amortization financial

"and expect depreciation and amortization expenses of $95-$100 million."

Depreciation & amortization are accounting methods that spread the cost of a long‑lived asset over the years it is expected to be useful: depreciation applies to physical items like machinery or buildings, while amortization applies to intangible items like patents or software. They matter to investors because they reduce reported profit each period without an immediate cash outlay, much like budgeting the gradual wear and replacement of a car, so they help reveal true earnings, cash flow and future capital needs.

AI-generated analysis. Not financial advice.

Carries Record Backlog into 2026 

Full Year 2025 Results

(All comparisons are year-over-year, unless otherwise noted)

• Delivered strong sales growth in 2025, while margins and earnings reflected strategic investments in production expansion and ERP implementation to support future growth
  • Net sales increased 20.1% to $1.44 billion compared to $1.20 billion in 2024
  • Gross margin was 26.7% compared to 33.1% in 2024
  • GAAP diluted EPS was $1.29 compared to $2.02 in 2024
• Robust bookings trends of both AAON- and BASX-branded equipment support continued market share gains
  • Record year-end backlog of $1.83 billion, up 110.9% year-over-year, providing strong visibility entering 2026

Fourth Quarter 2025 Results

(All comparisons are year-over-year, unless otherwise noted)

• Delivered strong sales growth in the quarter, while margins reflected capacity expansions and upfront fixed costs absorption associated with production ramp-up
  • Net sales increased 42.5% to $424.2 million compared to $297.7 million in the fourth quarter of 2024
  • Gross margin was 25.9% compared to 26.1% in the fourth quarter of 2024
  • GAAP diluted EPS was $0.39 compared to $0.30 in the fourth quarter of 2024

Company Introduces 2026 Outlook

• 2026 outlook reflects revenue growth of 18-20% and gross margins of approximately 29-31%, supported by record backlog, expanded capacity, and improving operational execution

TULSA, Okla., March 2, 2026 /PRNewswire/ -- AAON, INC. (NASDAQ-AAON), a leader in high-performing, energy-efficient HVAC solutions that bring long-term value to customers and owners, today announced its results for the fourth quarter and full year 2025.

Full Year 2025 Results

"2025 represented a year of record growth for AAON, driven by strong bookings and sales reflecting expanding market share and growing demand for our products and custom solutions," said AAON President and CEO Matt Tobolski. "During the year, we executed on targeted investments to support long-term growth and profitability. These actions included strengthening our leadership team, enhancing supply chain management capabilities, and expanding manufacturing capacity. These investments have increased production throughput and expanded our ability to serve customers at scale, although lead times have remained extended as a result of strong order activity and recovery from prior production challenges.

"Our manufacturing footprint increased approximately 25%, and our production capacity for BASX-branded data center equipment more than doubled following the renovation and commissioning of our new 787,000-square-foot Memphis, Tennessee facility. Together, these investments have significantly strengthened the Company's operating foundation and position us well for continued growth and margin improvement in 2026 and beyond.

"The BASX brand more than doubled revenue and ended the year with backlog up 141.3%, reflecting strong adoption of our customized air-side and liquid cooling solutions in the data center market. Demand for AAON-branded equipment also remained strong, and production increased steadily throughout the year, with additional ramping planned. We made substantial progress stabilizing and advancing the implementation of our new Enterprise Resource Planning ("ERP") system. While the ERP rollout initially impacted production at our Longview, TX facility, operating performance improved consistently over time, reinforcing our confidence in execution as we focus on continued operational improvement and meeting customer commitments."

Fourth Quarter 2025 Results

Net sales for the fourth quarter of 2025 increased 42.5% to $424.2 million, from $297.7 million in the fourth quarter of 2024. BASX-branded sales increased 138.8% to $181.4 million, reflecting strong demand for both air-side and liquid cooling equipment for data center applications. AAON-branded sales increased 9.5% to $242.8 million, supported by a strong backlog and favorable comparison to the prior-year period, which was adversely impacted by the industry's refrigerant transition. Booking activity remained solid across both brands, led by the BASX brand, which ended the quarter with backlog up 141.3%, while AAON-branded bookings increased approximately 20% compared to the prior-year period.

Gross profit margin in the quarter was 25.9%, compared to 26.1% in the prior-year period. The modest year‑over‑year decline primarily reflected unabsorbed fixed‑cost investments at the Company's new Memphis facility as production capacity was brought online to support a significant ramp of BASX‑branded data center equipment, positioning the business for improved operating leverage as volume scales.

Earnings per diluted share were $0.39, an increase of 30.0% year-over-year.

Dr. Tobolski added, "During the quarter, we made meaningful progress expanding production capacity and further advanced our operational readiness for sustained long-term growth. Production at our new Memphis facility is ramping rapidly, while our Longview, Texas facility continues to scale, increasing our ability to support accelerating demand for our data center equipment. BASX-branded equipment sales increased 138.8% year-over-year in the fourth quarter, and backlog increased 141.3%, providing strong visibility as we enter 2026.

"AAON‑branded equipment sales increased 9.5% year‑over‑year, representing our strongest quarterly growth since the second quarter of 2024. Despite typical seasonal headwinds, we ended the year with backlog up 60.8%, underscoring the strength and durability of underlying demand. We have a clear and disciplined operational plan in place to continue ramping production in 2026, positioning the Company to deliver solid growth and margin expansion.

"Fourth‑quarter margins reflected mixed operating dynamics across our facilities. While production volumes in Tulsa were below plan, Memphis reached profitability earlier than expected, validating our investment strategy. Fixed‑cost under‑absorption continues to pressure consolidated margins in the near term; however, these impacts are largely transitory and directly tied to capacity ramp-up that is already underway, positioning the Company for improved operating leverage as volumes scale. With capacity in place and execution continuing to improve, we remain confident in our path toward meaningful margin expansion throughout 2026."

Backlog

	December 31, 2025		September 30, 2025		December 31, 2024
	(in thousands)
AAON-branded products	$                      526,350		$                      423,316		$                      327,343
BASX-branded products	1,302,145		896,824		539,747
	$                   1,828,495		$                   1,320,140		$                      867,090

Total backlog increased 110.9% year-over-year to $1.83 billion, and increased 38.5% sequentially. Growth was driven primarily by the BASX-brand, with backlog increasing 141.3% from the prior year and 45.2% from the prior quarter, while AAON-branded equipment backlog increased 60.8% year-over-year. The Company's growing backlog and robust order activity demonstrate meaningful market share capture as customers prioritize high-performance, energy-efficient, and reliable infrastructure solutions. A significant portion of the BASX-branded backlog is slated for production at the Memphis facility, which will support a steady ramp in production in 2026.

2026 Outlook

Dr. Tobolski concluded, "As we enter early 2026, we are positioned to build on the investments made throughout 2025 in our people, products, manufacturing capabilities, and working capital. While these initiatives carried upfront costs and impacted near-term results, they have meaningfully strengthened AAON's operating foundation and positioned the Company to meet the growing demand in the data center market.

"Our ERP upgrade presented short-term challenges, which are now largely behind us, and is expected to deliver lasting benefits through improved production throughput, operating efficiency, and margin expansion. We begin 2026 with record backlog, allowing us to remain sharply focused on execution and customer delivery. To support a disciplined ramp in production throughput and accelerate margin improvement, we have moderated the pace of near-term ERP rollouts, enhancing returns on our recent investments while ensuring the Company remains well positioned for future IT system upgrade.

"With these actions in place, and with operational execution continuing to improve, we expect 2026 sales to grow 18%-20%, with gross margin of 29%-31%. We also anticipate SG&A expenses as a percentage of sales will be approximately 16% and expect depreciation and amortization expenses of $95-$100 million."

	Current
Metric	FY26
YoY Sales Growth	18%-20%
Gross Profit Margin	29%-31%
SG&A as a % of sales	~16%
Depreciation & Amortization	$95M-$100M

Segment Results

AAON Oklahoma

	Three Months Ended
(in thousands)	December 31, 2025	September 30, 2025	December 31, 2024
Net sales	$         215,503	$  238,748	$         193,957
Gross profit	$           59,168	$    78,803	$           59,516
Gross profit margin	27.5 %	33.0 %	30.7 %

Net sales for the AAON Oklahoma segment totaled $215.5 million, an increase of 11.1% year-over-year, driven by a strong starting backlog and ongoing production enhancements that improved backlog conversion despite a challenging industry environment. Results in the fourth quarter of 2025 also benefited from a favorable comparison to the prior-year period, which saw disruption due to the industry's refrigerant transition in the prior-year period.

Gross margin for the segment was 27.5%, compared to 30.7% in the fourth quarter of 2024. The year-over-year decrease was fully attributable to $6.4 million of incremental overhead associated with the Company's new Memphis facility, reflecting investments made to support future production growth and operating leverage.

AAON Coil Products

	Three Months Ended
(in thousands)	December 31, 2025	September 30, 2025	December 31, 2024
Net sales	$         102,619	$      70,246	$           53,019
Gross profit	$           21,827	$         7,758	$             8,535
Gross profit margin	21.3 %	11.0 %	16.1 %

Net sales for the AAON Coil Products segment totaled $102.6 million, up 93.6% compared to the same period last year. Growth was driven primarily by $75.3 million in BASX-branded liquid cooling sales, which increased 198.7% during the period. AAON-branded sales declined 1.8% year-over-year, but increased 15.2% sequentially, highlighting strengthening production momentum.

AAON Coil Products gross margin was 21.3%, increasing year-over-year from 16.1% and sequentially from 11.0%. The year‑over‑year margin expansion reflected improved operating leverage on higher throughput at the Longview facility, along with a favorable mix of higher-margin BASX sales.  This was partially offset by a full five‑day plant shutdown at Longview at year‑end to conduct a wall‑to‑wall inventory count.

BASX

	Three Months Ended
(in thousands)	December 31, 2025	September 30, 2025	December 31, 2024
Net sales	$         106,095	$    75,244	$           50,742
Gross profit	$           28,775	$    20,300	$             9,564
Gross profit margin	27.1 %	27.0 %	18.8 %

Net sales for the BASX segment increased 109.1% to $106.1 million, compared to $50.7 million in the prior-year period. The year-over-year increase was driven by continued  strong demand for data center equipment, supported by robust order intake and elevated backlog levels. Increased production from the Company's new Memphis facility played a key role in expanding capacity and driving higher sales.

BASX segment gross margin was 27.1%, compared to 18.8% in the prior-year period. The year‑over‑year improvement reflected a favorable comparison and accelerating production at the Memphis facility.

Balance Sheet & Cash Flow

As of December 31, 2025, the company had cash, cash equivalents and restricted cash of $1.2 million and a balance on its revolving credit facility of $398.3 million. Rebecca Thompson, AAON CFO and Treasurer, commented, "In 2025, we made substantial capacity and working‑capital investments to support our expanding backlog and ongoing market share gains.  As returns on these investments begin to materialize, we expect operating cash flow to improve significantly in 2026, supported by higher earnings and improved working‑capital efficiency. This gives us flexibility to continue to focus on our investment in growth for the future with capital expenditure plans of $190.0 million in 2026."

Conference Call

The company will host a conference call and webcast this morning at 9:00 a.m. EST to discuss the fourth quarter of 2025 results and outlook. The conference call will be accessible via dial-in for those who wish to participate in Q&A as well as a listen-only webcast. The dial-in is accessible at 1-888-880-3330. To access the listen-only webcast, please register at https://app.webinar.net/X2DbRx9Pk8v. On the next business day following the call, a replay of the call will be available on the company's website at https://aaon.com/investors.

About AAON

Founded in 1988, AAON is a global leader in HVAC solutions for commercial, industrial and data center indoor environments. The company's industry-leading approach to designing and manufacturing highly configurable and custom-made equipment to meet exact needs creates a premier ownership experience with greater efficiency, performance and long-term value. Its highly engineered equipment is sold under the AAON and BASX brands. AAON is headquartered in Tulsa, Oklahoma, where its world-class innovation center and testing lab allows AAON engineers to continuously push boundaries and advance the industry. For more information, please visit www.aaon.com.

Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "expects", "anticipates", "intends", "plans", "believes", "seeks", "estimates", "should", "will", and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligations to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Important factors that could cause results to differ materially from those in the forward-looking statements include (1) the timing and extent of changes in raw material and component prices, (2) the effects of fluctuations in the commercial/industrial new construction market, (3) the timing and extent of changes in interest rates, as well as other competitive factors during the year, and (4) general economic, market or business conditions. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in any forward-looking statements, see "Risk Factors" and "Forward Looking Statements" in AAON's Annual Report on Form 10-K for the most recent fiscal year, as may be revised and updated by AAON's Quarterly Reports on Form 10-Q, and AAON's Current Reports on Form 8-K.

Contact Information

Joseph Mondillo
Director of Investor Relations & Corporate Strategy
Phone: (617) 877-6346
Email: joseph.mondillo@aaon.com

AAON, Inc. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
	Three Months Ended December 31,				Years Ended December 31,
	2025		2024		2025		2024
	(in thousands, except per share data)
Net sales	$               424,217		$               297,718		$         1,442,076		$         1,200,635
Cost of sales	314,447		220,103		1,056,352		803,526
Gross profit	109,770		77,615		385,724		397,109
Selling, general and administrative expenses	65,810		48,194		239,480		188,014
Gain on disposal of assets	—		(8)		(4)		(23)
Income from operations	43,960		29,429		146,248		209,118
Interest expense	(5,762)		(1,208)		(17,726)		(2,905)
Other income, net	124		45		230		378
Income before taxes	38,322		28,266		128,752		206,591
Income tax provision	6,290		3,576		21,159		38,032
Net income	$                  32,032		$                  24,690		$            107,593		$            168,559
Earnings per share:
Basic EPS	$                      0.39		$                      0.30		$                   1.32		$                   2.07
Diluted EPS	$                      0.39		$                      0.30		$                   1.29		$                   2.02
Cash dividends declared per common share:	$                      0.10		$                      0.08		$                   0.40		$                   0.32
Weighted average shares outstanding:
Basic	81,657,463		81,345,236		81,529,140		81,473,131
Diluted	83,160,224		83,575,989		83,105,538		83,629,502

 

AAON, Inc. and Subsidiaries
Segment Net Sales and Profit
(Unaudited)
	Three Months Ended December 31,				Years Ended December 31,
	2025		2024		2025		2024
	(in thousands)
AAON Oklahoma
External sales	$                  215,503		$          193,957		$          801,209		$            858,711
Inter-segment sales	29,304		2,116		48,198		6,336
Eliminations	(29,304)		(2,116)		(48,198)		(6,336)
Net sales	215,503		193,957		801,209		858,711
Cost of sales1	156,335		134,441		569,121		538,124
Gross profit	59,168		59,516		232,088		320,587
AAON Coil Products
External sales	$                  102,619		$           53,019		$          325,353		$            143,871
Inter-segment sales	4,298		4,298		16,005		20,192
Eliminations	(4,298)		(4,298)		(16,005)		(20,192)
Net sales	102,619		53,019		325,353		143,871
Cost of sales1	80,792		44,484		255,681		116,287
Gross profit	21,827		8,535		69,672		27,584
BASX
External sales	$                  106,095		$           50,742		$          315,514		$            198,053
Inter-segment sales	(74)		404		502		666
Eliminations	74		(404)		(502)		(666)
Net sales	106,095		50,742		315,514		198,053
Cost of sales1	77,320		41,178		231,550		149,115
Gross profit	28,775		9,564		83,964		48,938
Consolidated gross profit	$                  109,770		$           77,615		$          385,724		$            397,109

1 Presented after intercompany eliminations.

 

The reconciliation between consolidated gross profit to consolidated income from operations is as follows:

Consolidated gross profit	$            109,770		$               77,615		$            385,724		$            397,109
Less: Selling, general and administrative expenses	65,810		48,194		239,480		188,014
Add: gain on disposal of assets	—		8		4		23
Consolidated income from operations	$               43,960		$               29,429		$            146,248		$            209,118

 

AAON, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
	December 31, 2025		December 31, 2024
Assets	(in thousands, except share and per share data)
Current assets:
Cash and cash equivalents	$                    13		$                    14
Restricted cash	1,226		6,500
Accounts receivable, net	314,387		147,434
Income tax receivable	27,445		4,115
Inventories, net	261,151		187,420
Contract assets, net	247,037		135,421
Prepaid expenses and other	17,921		7,308
Total current assets	869,180		488,212
Property, plant and equipment, net	631,262		510,356
Intangible assets, net and goodwill	165,799		160,152
Right of use assets	17,988		15,436
Other long-term assets	2,281		242
Deferred tax assets	—		836
Total assets	$       1,686,510		$       1,175,234
Liabilities and Stockholders' Equity
Current liabilities:
Debt, short-term	$                    —		$            16,000
Short-term obligations of NMTC	7,535		—
Accounts payable	110,437		44,645
Accrued liabilities	132,213		99,347
Contract liabilities	80,670		14,913
Total current liabilities	330,855		174,905
Debt, long-term	398,320		138,891
Deferred tax liabilities	30,313		—
Other long term liabilities	23,299		20,743
New market tax credit obligations1	8,738		16,113
Commitments and contingencies (Note 20)
Stockholders' equity:
Common stock, $.004 par value, 200,000,000 shares authorized, 81,691,075 and 81,436,594 issued and outstanding at December 31, 2025 and 2024, respectively	327		326
Additional paid-in capital	64,358		68,946
Retained earnings	830,300		755,310
Total stockholders' equity	894,985		824,582
Total liabilities and stockholders' equity	$       1,686,510		$       1,175,234

 

AAON, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
	Years Ended December 31,
	2025		2024
Operating Activities
Net income	$         107,593		$         168,559
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	79,191		62,735
Amortization of debt issuance costs	394		154
Amortization of right of use assets	166		189
Provision for (recoveries of) losses on accounts receivable, net of adjustments	70		715
Provision for losses on contract assets, net of adjustments	200		399
Provision for (recoveries of) excess and obsolete inventories, net of write-offs	152		(968)
Share-based compensation	17,994		16,729
Other	(15)		(4)
Deferred income taxes	31,149		(6,606)
Changes in assets and liabilities:
Accounts receivable	(167,023)		(10,041)
Income tax receivable	(23,330)		(5,285)
Inventories	(73,883)		27,080
Contract assets	(111,816)		(90,626)
Prepaid expenses and other long-term assets	(11,673)		(3,707)
Accounts payable	52,904		16,959
Contract liabilities	65,757		1,156
Extended warranties	831		1,835
Accrued liabilities and other long-term liabilities	31,873		13,259
Net cash provided by operating activities	534		192,532
Investing Activities
Capital expenditures	(190,563)		(195,660)
Proceeds from government incentive grant	12,000		—
Proceeds from sale of property, plant and equipment	40		25
Acquisition of intangible assets	(14,329)		(17,491)
Principal payments from note receivable	435		51
Net cash used in investing activities	(192,417)		(213,075)
Financing Activities
Borrowings of debt	915,391		717,897
Payments of debt	(672,204)		(601,091)
Proceeds from financing obligation, net of issuance costs	—		4,186
Payment related to financing costs	(1,395)		(664)
Stock options exercised	17,144		31,861
Repurchase of stock - open market	(29,995)		(100,034)
Repurchases of stock - LTIP plans (Note 18)	(9,730)		(8,037)
Cash dividends paid to stockholders	(32,603)		(26,084)
Net cash provided by (used in) financing activities	186,608		18,034
Net (decrease) increase in cash, cash equivalents, and restricted cash	(5,275)		(2,509)
Cash, cash equivalents, and restricted cash, beginning of year	6,514		9,023
Cash, cash equivalents, and restricted cash, end of year	$             1,239		$             6,514

Use of Non-GAAP Financial Measures

To supplement the company's consolidated financial statements presented in accordance with generally accepted accounting principles ("GAAP"), additional non-GAAP financial measures are provided and reconciled in the following tables. The company believes that these non-GAAP financial measures, when considered together with the GAAP financial measures, provide information that is useful to investors in understanding period-over-period operating results. The company believes that this non-GAAP financial measure enhances the ability of investors to analyze the company's business trends and operating performance as they are used by management to better understand operating performance. Since adjusted net income, adjusted net income per diluted share, EBITDA, adjusted EBITDA, and adjusted EBITDA margin are non-GAAP measures and are susceptible to varying calculations, adjusted net income, adjusted net income per diluted share, EBITDA, adjusted EBITDA, and adjusted EBITDA margin, as presented, may not be directly comparable with other similarly titled measures used by other companies.

Non-GAAP Adjusted Net Income

The company defines non-GAAP adjusted net income as net income adjusted for any infrequent events, such as litigation settlements, net of profit sharing and tax effect, in the periods presented.

The following table provides a reconciliation of net income (GAAP) to non-GAAP adjusted net income for the periods indicated:

	Three Months Ended December 31,				Years Ended December 31,
	2025		2024		2025		2024
	(in thousands)
Net income, a GAAP measure	$                   32,032		$                   24,690		$          107,593		$          168,559
Add: Memphis incentive fee1	—		—		6,105		—
Profit sharing effect2	—		—		(519)		—
Tax effect	—		—		(1,369)		—
Non-GAAP adjusted net income	$                   32,032		$                   24,690		$          111,810		$          168,559
Non-GAAP adjusted earnings per diluted share	$                       0.39		$                       0.30		$                1.35		$                2.02

1The incentive fee relates to fees payable to our real estate broker associated with the acquisition of our Memphis, Tenn. plant for a percentage of the incentives awarded to us by various entities.
2Profit sharing effect of the Memphis incentive fee in the respective period.

EBITDA

EBITDA (as defined below) is presented herein and reconciled from the GAAP measure of net income because of its wide acceptance by the investment community as a financial indicator of a company's ability to internally fund operations. The company defines EBITDA as net income, plus (1) depreciation and amortization, (2) interest expense (income), net and (3) income tax expense. EBITDA is not a measure of net income or cash flows as determined by GAAP. EBITDA margin is defined as EBITDA as a percentage of net sales.

The company's EBITDA measure provides additional information which may be used to better understand the company's operations. EBITDA is one of several metrics that the company uses as a supplemental financial measurement in the evaluation of its business and should not be considered as an alternative to, or more meaningful than, net income, as an indicator of operating performance. Certain items excluded from EBITDA are significant components in understanding and assessing a company's financial performance. EBITDA, as used by the company, may not be comparable to similarly titled measures reported by other companies. The company believes that EBITDA is a widely followed measure of operating performance and is one of many metrics used by the company's management team and by other users of the company's consolidated financial statements.

Adjusted EBITDA is calculated as EBITDA adjusted by items in non-GAAP adjusted net income, above, except for taxes, as taxes are already excluded from EBITDA.

The following table provides a reconciliation of net income (GAAP) to EBITDA (non-GAAP) and Adjusted EBITDA (non-GAAP) for the periods indicated:

	Three Months Ended December 31,				Years Ended December 31,
	2025		2024		2025		2024
	(in thousands)
Net income, a GAAP measure	$             32,032		$             24,690		$        107,593		$        168,559
Depreciation and amortization	20,353		17,550		79,191		62,735
Interest expense, net	5,762		1,208		17,726		2,905
Income tax expense	6,290		3,576		21,159		38,032
EBITDA, a non-GAAP measure	$             64,437		$             47,024		$        225,669		$        272,231
Add: Memphis incentive fee1	—		—		6,105		—
Profit sharing effect2	—		—		(519)		—
Adjusted EBITDA, a non-GAAP measure	$             64,437		$             47,024		$        231,255		$        272,231
Adjusted EBITDA margin	15.2 %		15.8 %		16.0 %		22.7 %

1The incentive fee relates to fees payable to our real estate broker associated with the acquisition of our Memphis, Tenn. plant for a percentage of the incentives awarded to us by various entities.

2Profit sharing effect of the Memphis incentive fee in the respective period.

Non-GAAP Adjusted Selling, General and Administrative Expenses

The following table provides a reconciliation of selling, general and administrative expenses (GAAP) to adjusted selling, general and administrative expenses (non-GAAP) for the periods indicated:

	Q1 2024		Q2 2024		Q3 2024		Q4 2024		2024
	(in thousands)
Non-GAAP Adjusted Selling, General and Administrative Expenses
SG&A, a GAAP measure	$          45,288		$          45,895		$          48,637		$          48,194		$        188,014
Less: Memphis Incentive Fee1	—		—		—		—		—
Profit Sharing effect2	—		—		—		—		—
Non-GAAP adjusted SG&A expenses	$          45,288		$          45,895		$          48,637		$          48,194		$        188,014
As a percent of sales	17.3 %		14.6 %		14.9 %		16.2 %		15.7 %
	Q1 2025		Q2 2025		Q3 2025		Q4 2025		2025
	(in thousands)
SG&A, a GAAP measure	$          51,293		$          59,147		$           63,230		65,810		239,480
Less: Memphis Incentive Fee1	2,700		3,405		—		—		6,105
Profit Sharing effect2	(230)		(289)		—		—		(519)
Non-GAAP adjusted SG&A expenses	$          48,823		$          56,031		$          63,230		$          65,810		$        233,894
As a percent of sales	15.2 %		18.0 %		16.5 %		15.5 %		16.2 %

1The incentive fee relates to fees payable to our real estate broker associated with the acquisition of our Memphis, Tenn. plant for a percentage of the incentives awarded to us by various entities.

2Profit sharing effect of the Memphis incentive fee in the respective period.

 

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SOURCE AAON

FAQ

What were AAON's full-year 2025 sales and EPS (NASDAQ:AAON)?

AAON reported full-year 2025 net sales of $1.44 billion and GAAP diluted EPS of $1.29. According to the company, sales rose 20.1% year-over-year while EPS declined from $2.02 in 2024 due to upfront investment and margin pressure.

How large is AAON's backlog entering 2026 and what does it mean for shareholders?

AAON entered 2026 with a backlog of $1.83 billion, up 110.9% year-over-year. According to the company, the record backlog—driven mainly by BASX—provides revenue visibility and supports the 18%-20% sales growth the company expects in 2026.

What guidance did AAON give for 2026 revenue and gross margin (AAON)?

AAON expects 2026 revenue growth of 18%-20% with gross margins of 29%-31%. According to the company, these outlooks reflect expanded capacity, improving execution, and backlog conversion as Memphis production ramps.

Why did AAON's gross margin and EPS decline in 2025 despite higher sales?

Margins and EPS were pressured by capacity expansion and ERP implementation costs, plus fixed-cost under-absorption during ramp. According to the company, these are largely transitory and tied to bringing Memphis and other capacity online for future leverage.

What is AAON's cash and capital plan for 2026 and how will it be funded?

AAON reported cash and restricted cash of $1.2 million and $398.3 million drawn on its revolver, with planned 2026 capital expenditures of $190.0 million. According to the company, improved operating cash flow and working-capital efficiency are expected to support these investments.