The Aaon Group Reports Record Third Quarter 2026 Results, Restates First and Second Quarter 2026 Financial Statements and Raises Full-Year Outlook

BASX-branded sales grew 218.3%, while expanded production helped convert backlog into revenue.

Rhea-AI Summary

The Aaon Group (AAON) reported record third-quarter 2026 net sales of $707.4 million and raised its full-year sales growth outlook. Sales rose 84.1% year over year, operating income increased 129.3% to $100.0 million, and GAAP diluted earnings per share rose 124.3% to $0.83. Gross margin was 26.7%, versus 27.8% a year earlier and up 60 basis points sequentially.

The company now expects 2026 sales growth of 72%-75%, versus 55%-60% previously, and gross margin of approximately 26%. Backlog reached $1.9 billion, up 40.5% year over year but down 5.9% sequentially. Nine-month operating cash flow was $146.9 million, versus an $18.8 million cash use. First- and second-quarter restatements increased first-half sales by $10.7 million and diluted EPS by $0.09. A material weakness in financial reporting controls was identified, with corrective actions implemented and further remediation underway.

24 points · 1 major

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1 major · 7 points

Hollow bars mark forward-looking points. How the balance works

Positive

• Major point. Forward-looking: it has not happened yet and may not happen.Full-year sales growth outlook increased to 72%-75%, from 55%-60%.
• Moderate pointThird-quarter net sales increased 84.1% to $707.4 million year over year.
• Moderate pointOperating income rose 129.3% to $100.0 million in the third quarter.
• Moderate pointGAAP diluted EPS increased 124.3% to $0.83 from $0.37 a year earlier.
• Moderate point. Forward-looking: it has not happened yet and may not happen.Full-year gross margin outlook is now approximately 26%, versus 25%-26% previously.
• Moderate point. Forward-looking: it has not happened yet and may not happen.Full-year SG&A outlook improved to about 13% of sales, versus 13%-14% previously.
• Moderate pointNine-month operating cash flow improved to $146.9 million, versus an $18.8 million use a year earlier.
• Moderate pointTotal backlog rose 40.5% year over year to $1.9 billion, but declined 5.9% sequentially.
• Moderate pointThird-quarter gross profit increased 76.4% to $188.5 million year over year.
• Moderate pointSG&A declined 400 basis points to 12.5% of sales year over year.

14 minor points

• Minor pointBASX-branded sales grew 218.3% to $397.2 million in the third quarter.
• Minor pointAAON-branded sales increased 19.6% to $310.2 million in the third quarter.
• Minor pointBASX-branded backlog increased 51.1% year over year at quarter-end.
• Minor pointAAON-branded backlog increased 18.0% year over year, but declined 7.6% sequentially.
• Minor pointAAON Oklahoma sales increased 18.7% to $283.5 million year over year.
• Minor pointAAON Coil Products sales increased 174.2% to $192.6 million year over year.
• Minor pointCoil Products BASX-branded liquid cooling sales rose 255.6% to $165.5 million in the quarter.
• Minor pointAAON Coil Products gross profit rose 541.8% to $49.8 million year over year.
• Minor pointAAON Coil Products gross margin increased to 25.8%, from 11.0% a year earlier.
• Minor pointBASX segment sales increased 207.4% to $231.3 million year over year.
• Minor pointBASX segment gross profit increased 227.1% to $66.4 million year over year.
• Minor pointBASX segment gross margin reached 28.7%, versus 27.0% a year earlier and 32.9% sequentially.
• Minor pointFirst-half restatements increased sales $10.7 million, gross margin 71 basis points and GAAP diluted EPS $0.09.
• Minor pointFinancial control remediation includes implemented corrective actions and additional measures underway.

Negative

• Major pointFinancial reporting controls had a material weakness; first- and second-quarter 2026 statements required restatement.
• Moderate pointRevolving credit facility borrowings stood at $386.7 million on September 30, 2026.
• Moderate pointThird-quarter gross margin was 26.7%, versus 27.8% year over year, despite improving 60 basis points sequentially.
• Minor pointAAON Oklahoma gross profit fell to $72.3 million, from $78.8 million a year earlier.
• Minor pointAAON Oklahoma gross margin declined to 25.5%, from 33.0% a year earlier.

2 minor points

• Minor pointMemphis overhead charged to AAON Oklahoma increased to $20.7 million, versus $4.5 million a year earlier.
• Minor point. Forward-looking: it has not happened yet and may not happen.Full-year depreciation and amortization outlook is approximately $100 million, versus $95 million-$100 million previously.

News Explained

The disclosure pairs quarter-end cash with a revolving-credit balance and identifies where the restatement and control-weakness details are filed.

The company says the restated first- and second-quarter 2026 10-Q filings are being filed today. At September 30, 2026, it reported $3.7 million in cash, cash equivalents and restricted cash, alongside a $386.7 million balance on its revolving credit facility; its disclosed quarter-end funding position therefore includes both cash and a facility balance.

The company identifies Footnote 2 of the restated first- and second-quarter 10-Qs for the correction effects, and Item 4 of the third-quarter 10-Q for details on the material weakness.

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Key Figures

Third-quarter net sales: $707.4 million, up 84.1% Operating income: $100.0 million, up 129.3% Diluted EPS: $0.83, up 124.3% +5 more

Third-quarter net sales

$707.4 million, up 84.1%

Q3 2026 year over year; record

Operating income

$100.0 million, up 129.3%

Q3 2026 year over year

Diluted EPS

$0.83, up 124.3%

Q3 2026 year over year

Total backlog

$1.9 billion, up 40.5%

At September 30, 2026; year over year

FY26 sales growth outlook

72%-75%, previously 55%-60%

Raised full-year 2026 outlook

FY26 gross margin outlook

Approximately 26%, previously 25%-26%

Raised full-year 2026 outlook

Restated first-half net sales increase

$10.7 million

Aggregate impact of Q1 and Q2 2026 restatements

Restated first-half diluted EPS increase

$0.09

Aggregate impact of Q1 and Q2 2026 restatements

Previous Earnings Reports

3 past events · Latest: Aug 10

Same Type 3 events

1. Aug 10

   2Q earnings

   24h Move

   -5.9%

   Record sales, operating income and EPS rose; annual outlook was raised.

2. May 07

   1Q earnings

   24h Move

   +31.5%

   Record sales and EPS accompanied an increase to full-year sales growth guidance.

3. Nov 06

   3Q earnings

   24h Move

   +7.0%

   Sales rose, while gross margin and diluted EPS fell year over year.

24h Move is the share-price change in the day after each event; other market factors may also have contributed.

Key Terms

material weakness, internal control over financial reporting, diluted eps, non-gaap adjusted eps

4 terms

material weakness regulatory

"identified a material weakness in its internal control over financial reporting"

A material weakness is a significant flaw in the systems and checks a company uses to ensure its financial reports are accurate, meaning errors or fraud could happen and not be caught. For investors it matters because it raises the risk that reported results are unreliable—similar to finding a hole in a ship’s hull—potentially leading to corrected financials, regulatory action, reduced trust, and negative effects on stock value and borrowing costs.

internal control over financial reporting regulatory

"a material weakness in its internal control over financial reporting"

Internal control over financial reporting is a company’s system of procedures and checks designed to make sure its financial statements are accurate and complete, like a set of guardrails and verification steps that catch mistakes or fraud before numbers are published. Investors care because strong controls make reported results more trustworthy, lower the risk of surprise restatements or regulatory problems, and give greater confidence when valuing the company or comparing it to peers.

diluted eps financial

"GAAP diluted EPS increased 124.3% to $0.83"

Diluted earnings per share (EPS) shows how much profit a company makes for each share of stock, assuming all possible shares from stock options or convertible securities are used. It provides a more conservative estimate than basic EPS, accounting for potential share increases that could dilute ownership. Investors use diluted EPS to get a clearer picture of a company's true profitability on a per-share basis.

non-gaap adjusted eps financial

"Non-GAAP adjusted EPS increased 124.3% to $0.83"

Non-GAAP adjusted EPS is a company's earnings per share calculated after removing or adding back certain items that management classifies as unusual, nonrecurring, or not part of core operations (for example, stock-based compensation, restructuring charges, or acquisition-related costs). Investors use it to view underlying profit per share without those items—like judging a car's regular fuel economy by excluding occasional long trips—making performance comparisons across periods or peers clearer.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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Record revenue, continued margin improvement and strong execution drive operating income and diluted EPS to more than double year over year

Company identifies material weakness and restates first and second quarter of 2026 financial statements, resulting in an increase to first-half 2026 financial results

Third Quarter 2026 Highlights
(All comparisons are year-over-year, unless otherwise noted)

• Net sales increased 84.1% to a record $707.4 million
• Gross profit increased 76.4% to $188.5 million, with gross margin of 26.7%, improving 60 basis points sequentially
• Operating income increased 129.3% to $100.0 million
• GAAP diluted EPS increased 124.3% to $0.83; Non-GAAP adjusted EPS increased 124.3% to $0.83
• Total backlog increased 40.5% year-over-year to $1.9 billion
• Year-to-date, operating cash flow improved to $146.9 million, compared with a use of $18.8 million a year ago
• During the third quarter reporting process, the Company identified errors through enhanced review and control procedures and restated first and second quarter 2026 financial statements. The Company also identified a material weakness in its internal control over financial reporting and is continuing remediation efforts. In aggregate, the restatements increased first-half net sales by $10.7 million and diluted EPS by $0.09.

Raises 2026 Outlook

• 2026 outlook now reflects net sales growth of 72%-75%, gross margins of approximately 26%, and SG&A as a percent of sales of about 13%, supported by strong backlog, expanded capacity, and improving operational execution

TULSA, Okla., Nov. 9, 2026 /PRNewswire/ -- AAON, INC. (NASDAQ-AAON) ("The Aaon Group" or the "Company"), a leader in high-performance HVAC and thermal management solutions, today announced its results for the third quarter of 2026 and raised its full-year outlook.

"Our third quarter results reflect strong execution and continued progress turning the investments we have made into stronger operating performance," said Matt Tobolski, President and CEO of The Aaon Group. "We delivered record net sales, more than doubled operating income and diluted EPS, improved gross margin 60 basis points sequentially, generated strong cash flow and raised full-year outlook. The improvement was broad-based, with both AAON and BASX delivering strong growth.

"During our third quarter reporting process, we also identified errors in our previously reported first and second quarter financial statements. We corrected those errors and determined that a material weakness existed in our internal control over financial reporting. We take that seriously. These issues were identified through enhanced review and control procedures as we continue to strengthen our finance organization, and we are moving with urgency to remediate the material weakness and further strengthen our control environment.

"Across the business, higher throughput and utilization, better overhead absorption, pricing and sourcing actions, and continued operational improvement are increasingly showing up in our results. AAON continues to gain share despite softer conditions in the broader commercial HVAC market. At BASX, customer engagement remains strong, our opportunity pipeline is healthy, and we continue to strengthen our position with strategic data center customers.

"We have invested significantly in capacity and capabilities to support our growth. We are increasingly converting those investments into revenue, earnings and cash flow while continuing to improve how we operate. There is more work to do, but the progress is clear. We remain focused on execution, continuous improvement, and creating durable long-term value."

Third Quarter 2026 Results

Net sales for the third quarter of 2026 increased 84.1% to a record $707.4 million, compared with $384.2 million in the third quarter of 2025. Growth was driven by strong demand for both the AAON and BASX brands, increased manufacturing throughput, and greater utilization of recently expanded production capacity.

AAON-branded sales increased to a record level, growing 19.6% to $310.2 million, benefitting from a healthy backlog and continued production throughput gains. BASX-branded sales grew 218.3% to a record $397.2 million, reflecting strong momentum in data center demand, continued production output gains, and increased utilization of recently added manufacturing capacity. Booking activity remained solid across both brands, contributing to market share gains and elevated backlog levels. AAON‑branded backlog increased 18.0% from the prior-year period while BASX-branded products ended the quarter with backlog up 51.1%.

Gross profit increased 76.4% to $188.5 million, compared with $106.9 million in the third quarter of 2025. Gross profit margin was 26.7%, compared with 27.8% in the prior-year period, but increased 60 basis points sequentially, marking the second consecutive quarter of improvement. Year over year, margin was impacted primarily by a higher proportion of BASX revenue generated from less mature, lower-utilization facilities, partially offset by improved price/cost and volume leverage. The sequential improvement reflects progress in mitigating these headwinds, and through a combination of pricing, sourcing, productivity, and other operational initiatives, margins continue to trend positively.

Selling, general and administrative expenses as a percent of sales declined 400 basis points to 12.5%, reflecting continued operating leverage and disciplined cost management as revenue growth outpaced overhead investments.

Operating income increased 129.3% to $100.0 million, compared with $43.6 million in the prior-year period. Diluted earnings per share were $0.83, an increase of 124.3% from $0.37 in the third quarter of 2025.

Backlog

	September 30, 2026		June 30, 2026		September 30, 2025
	(in thousands)
AAON-branded products	$              499,341		$              540,465		$              423,316
BASX-branded products	1,355,152		1,419,822		896,824
	$            1,854,493		$            1,960,287		$            1,320,140

Total backlog increased 40.5% year-over-year to $1.9 billion, compared to $1.3 billion the prior year. BASX-branded backlog increased 51.1% year-over-year, reflecting continued customer investment activity in data center infrastructure and the value customers place on BASX's custom-engineered solutions. AAON-branded backlog increased 18.0% year-over-year, supported by strong order activity despite soft end-market conditions.

Compared to the second quarter of 2026, total backlog decreased 5.9%, primarily reflecting accelerated backlog conversion into record revenue and the inherent timing variability of large BASX project awards. The Company continues to see strong customer engagement and a healthy pipeline of opportunities across the data center market, and expects order strength to continue in the fourth quarter and as we enter 2027. AAON-branded backlog declined 7.6% sequentially, primarily reflecting higher production and improved throughput as we continued to reduce elevated lead times. Strong order activity and continued market share gains partially offset the decline despite softness in the commercial HVAC market. Across the enterprise, our expanded capacity, shorter lead times, and differentiated, value-added solutions reinforce our confidence in the underlying fundamentals of the business.

2026 Outlook

Based on strong third quarter performance, increased manufacturing throughput, and current business conditions, the Company raised its full-year 2026 outlook:

	Current	Prior
Metric	FY26	FY26
YoY Sales Growth	72%-75%	55%-60%
Gross Profit Margin	~26%	25%-26%
SG&A as a % of sales	~13%	13%-14%
Depreciation & Amortization	~$100M	$95M-$100M

"Our raised outlook reflects the strength of our third quarter performance, continued customer activity across our end markets, and the meaningful progress we are making towards increasing throughput and converting backlog into revenue," said Matt Tobolski. "Expanded capacity, shorter lead times, and continued operational execution provide increased confidence in our ability to deliver strong growth through the remainder of the year.

"We are encouraged by the sequential improvement in gross margin during the third quarter. Higher production volumes, better utilization, pricing actions, sourcing initiatives, and continued operational discipline are beginning to show more clearly in our results. While additional work remains, we expect continued progress in the fourth quarter and remain confident in the long-term earnings power and cash generation potential of the business."

Restatement of Previously Issued Quarterly Financial Statements & Material Weakness

The Company has restated its previously issued financial statements for the first and second quarters of 2026.  In aggregate, the restatements resulted in increases to first-half 2026 net sales, gross margin, and GAAP diluted EPS of $10.7 million, 71 basis points, and $0.09, respectively.

Management concluded that restatements to previously issued interim financial statements were appropriate and that a material weakness existed in internal control over financial reporting. The Company has implemented corrective actions and is executing additional measures designed to further strengthen our control environment and internal controls over financial reporting. The Company found no evidence of fraud or misconduct in connection with these matters and believes the identified errors do not alter the underlying strength of the business or its long-term growth outlook.

The impact of the restated first and second quarter of 2026 financial statements to correct for the identified errors can be seen at the end of this release or in Footnote 2 of the restated 10-Q filings for the first and second quarters of 2026, being filed today.  Additional information regarding the material weakness can be found in Item 4 of the third quarter 10-Q filing, also being filed today.

Segment Results

AAON Oklahoma

	Three Months Ended
(in thousands)	September 30, 2026	June 30, 2026	March 31, 2026	December 31, 2025	September 30, 2025
Net sales	$     283,492	$         262,277	$         243,967	$     215,503	$     238,748
Gross profit	$       72,346	$           63,617	$           64,272	$       59,168	$       78,803
Gross profit margin	25.5 %	24.3 %	26.3 %	27.5 %	33.0 %
Non-GAAP Adjusted gross profit	$       93,075	$           81,739	$           74,117	$       65,567	$       83,303
Non-GAAP Adjusted gross profit margin	32.8 %	31.2 %	30.4 %	30.4 %	34.9 %

AAON Oklahoma generated net sales of $283.5 million, an increase of 18.7% from the prior-year period. Growth was supported by effective execution of a robust backlog and continued operational improvements that enhanced production throughput and backlog conversion. Higher pricing also contributed to growth.

Gross profit was $72.3 million compared with $78.8 million in the prior-year period. Gross margin was 25.5%, compared to 33.0% in the third quarter of 2025. Segment profitability was impacted by $20.7 million of overhead expenses associated with the Memphis facility, compared with $4.5 million in the prior-year period. Sequentially, excluding these expenses, AAON Oklahoma adjusted gross margin improved 160 basis points, benefiting from improving price/cost and higher capacity utilization.

AAON Coil Products

	Three Months Ended
(in thousands)	September 30, 2026	June 30, 2026	March 31, 2026	December 31, 2025	September 30, 2025
Net sales	$     192,630	$         152,282	$          101,654	$         102,619	$       70,246
Gross profit	$       49,792	$           29,140	$           12,345	$           21,827	$        7,758
Gross profit margin	25.8 %	19.1 %	12.1 %	21.3 %	11.0 %

AAON Coil Products generated net sales of $192.6 million, an increase of 174.2% from the prior-year period. Growth was driven primarily by BASX-branded liquid cooling sales of $165.5 million, up 255.6% during the period.

Gross profit increased 541.8% to $49.8 million, compared with $7.8 million in the prior-year period. Gross margin was 25.8%, compared with 11.0% in the third quarter of 2025. The year-over-year margin performance reflected repricing of existing backlog to mitigate inflationary and other price/cost headwinds. Results were also positively impacted by improved labor efficiency, better overhead absorption, and higher production volume. 

BASX

	Three Months Ended
(in thousands)	September 30, 2026	June 30, 2026	March 31, 2026	December 31, 2025	September 30, 2025
Net sales	$     231,308	$         227,569	$          146,904	$         106,095	$       75,244
Gross profit	$       66,401	$           74,885	$           43,937	$           28,775	$       20,300
Gross profit margin	28.7 %	32.9 %	29.9 %	27.1 %	27.0 %

BASX segment generated net sales of $231.3 million, an increase of 207.4% from the prior-year period. Growth was driven by strong backlog conversion, sustained data center investment activity, and increased production capacity resulting from the continued ramp of the Company's manufacturing footprint, including the Memphis facility.

Gross profit increased 227.1% to $66.4 million, compared with $20.3 million in the prior-year period. Gross margin was 28.7%, up from 27.0% in the third quarter of 2025. The year-over-year margin improvement reflected substantial volume growth, partially offset by incremental resources and investments required to support future growth, customer delivery, and continued share gains.

Balance Sheet & Cash Flow

As of September 30, 2026, the Company had cash, cash equivalents and restricted cash of $3.7 million and a balance on its revolving credit facility of $386.7 million.

Andy Cheung, CFO and Treasurer, commented, "Our balance sheet continued to strengthen during the third quarter as robust earnings growth and disciplined execution drove another period of exceptional cash flow generation. Operating cash flow totaled $146.9 million through the first nine months of 2026, a significant improvement from a $18.8 million use of cash in the prior year period. This improved cash flow provides The Aaon Group with a significant runway for continued execution of our strategic growth initiatives. Looking ahead, we remain confident that continued operational execution, working capital discipline, and margin improvement initiatives will support robust cash flow generation and continued balance sheet improvement."

Conference Call

The Company will host a conference call and webcast today at 5:00 p.m. EST to discuss the third quarter of 2026 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/E7MK2gxj9Oo. On the next business day following the call, a replay of the call will be available on the company's website at https://investors.theaaongroup.com/. 

About The Aaon Group

The Aaon Group provides high-performance HVAC and thermal management solutions for commercial, industrial, and data center environments. Through two strong brands, AAON and BASX, the company designs and manufactures highly configurable and custom-engineered equipment focused on efficiency, performance, reliability, and long-term customer value. For more information, please visit theaaongroup.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 material weakness in the effectiveness of our internal controls over financial reporting and the impact of our ability to adequately remediate the material weakness in a timely manner, (4) the timing and extent of changes in interest rates, as well as other competitive factors during the year, and (5) 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
Email: investorrelations@theaaongroup.com 

AAON, Inc. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
	(in thousands, except per share data)
Net sales	$          707,430		$          384,238		$      1,842,082		$      1,017,859
Cost of sales	518,891		277,377		1,365,347		741,905
Gross profit	188,539		106,861		476,735		275,954
Selling, general and administrative expenses	88,559		63,230		242,817		173,670
(Gain) loss on disposal of assets	—		36		—		(4)
Income from operations	99,980		43,595		233,918		102,288
Interest expense	(5,817)		(5,153)		(17,067)		(11,964)
Other income, net	67		—		302		106
Income before taxes	94,230		38,442		217,153		90,430
Income tax provision	25,272		7,660		44,620		14,869
Net income	$          68,958		$          30,782		$       172,533		$        75,561
Earnings per share:
Basic EPS	$              0.84		$              0.38		$            2.10		$            0.93
Diluted EPS	$              0.83		$              0.37		$            2.06		$            0.91
Cash dividends declared per common share:	$              0.10		$              0.10		$            0.30		$            0.30
Weighted average shares outstanding:
Basic	82,454,996		81,543,105		82,217,732		81,485,914
Diluted	83,557,784		82,952,049		83,570,266		83,086,858

 

AAON, Inc. and Subsidiaries
Segment Net Sales and Profit
(Unaudited)
	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
	(in thousands)
AAON Oklahoma
External sales	$            283,492		$      238,748		$      789,735		$        585,706
Inter-segment sales	89,029		9,737		224,897		18,894
Eliminations	(89,029)		(9,737)		(224,897)		(18,894)
Net sales	283,492		238,748		789,735		585,706
Cost of sales1	211,146		159,945		589,500		412,786
Gross profit	72,346		78,803		200,235		172,920
AAON Coil Products
External sales	$            192,630		$       70,246		$      446,566		$        222,734
Inter-segment sales	4,376		4,689		18,854		11,707
Eliminations	(4,376)		(4,689)		(18,854)		(11,707)
Net sales	192,630		70,246		446,566		222,734
Cost of sales1	142,838		62,488		355,289		174,889
Gross profit	49,792		7,758		91,277		47,845
BASX
External sales	$            231,308		$       75,244		$      605,781		$        209,419
Inter-segment sales	108		26		664		576
Eliminations	(108)		(26)		(664)		(576)
Net sales	231,308		75,244		605,781		209,419
Cost of sales1	164,907		54,944		420,558		154,230
Gross profit	66,401		20,300		185,223		55,189
Consolidated gross profit	$            188,539		$      106,861		$      476,735		$        275,954

1	Presented after intercompany eliminations.

 

The reconciliation between consolidated gross profit to consolidated income from operations is as follows:
Consolidated gross profit	$            188,539		$      106,861		$      476,735		$        275,954
Less: Selling, general and administrative expenses	88,559		63,230		242,817		173,670
Add: (gain) loss on disposal of assets	—		(36)		—		4
Consolidated income from operations	$             99,980		$        43,595		$      233,918		$        102,288

 

AAON, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
	September 30, 2026		December 31, 2025
Assets	(in thousands, except share and per share data)
Current assets:
Cash and cash equivalents	$            13		$            13
Restricted cash	3,658		1,226
Accounts receivable, net	396,849		314,387
Income tax receivable	334		27,445
Inventories, net	376,045		261,151
Contract assets, net	279,544		247,037
Prepaid expenses and other	18,274		17,921
Total current assets	1,074,717		869,180
Property, plant and equipment, net	689,617		631,262
Intangible assets, net and goodwill	168,435		165,799
Right-of-use assets	18,955		17,988
Other long-term assets	1,672		2,281
Total assets	$    1,953,396		$    1,686,510
Liabilities and Stockholders' Equity
Current liabilities:
Short-term obligations of NMTC1	7,535		7,535
Accounts payable	182,598		110,437
Accrued liabilities	185,918		132,213
Contract liabilities	5,713		80,670
Total current liabilities	381,764		330,855
Debt, long-term	386,709		398,320
Deferred tax liabilities	44,323		30,313
Other long-term liabilities	34,484		23,299
New markets tax credit obligations1	21,371		8,738
Commitments and contingencies (Note 19)
Stockholders' equity:
Preferred stock, $.001 par value, 5,000,000 shares authorized, no shares issued	—		—
Common stock, $.004 par value, 200,000,000 shares authorized, 82,459,251 and 81,691,075 issued and outstanding at September 30, 2026 and December 31, 2025, respectively	330		327
Additional paid-in capital	106,202		64,358
Retained earnings	978,213		830,300
Total stockholders' equity	1,084,745		894,985
Total liabilities and stockholders' equity	$    1,953,396		$    1,686,510

1	Held by variable interest entities

 

AAON, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
	Nine Months Ended September 30,
	2026		2025
Operating Activities	(in thousands)
Net income	$     172,533		$       75,561
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Depreciation and amortization	73,859		58,838
Amortization of debt issuance costs	124		250
Amortization of right-of-use assets	240		118
(Recoveries of) Provision for losses on accounts receivable, net of adjustments	(128)		92
Provision for losses on contract assets, net of adjustments	—		200
Provision for excess and obsolete inventories, net of write-offs	1,745		1,025
Share-based compensation	16,886		13,421
Other	—		(32)
Deferred income taxes	14,010		23,035
Changes in assets and liabilities:
Accounts receivable	(82,334)		(118,896)
Income tax receivable	27,111		(21,393)
Inventories	(116,639)		(64,116)
Contract assets	(32,507)		(71,919)
Prepaid expenses and other long-term assets	256		(771)
Accounts payable	83,010		59,891
Contract liabilities	(74,957)		5,061
Extended warranties	10,737		431
Accrued liabilities and other long-term liabilities	52,946		20,420
Net cash provided by (used in) operating activities	146,892		(18,784)
Investing Activities
Capital expenditures	(138,097)		(128,067)
Grant proceeds received	1,650		—
Proceeds from sale of property, plant and equipment	—		275
Acquisition of intangible assets	(9,252)		(10,868)
Principal payments from note receivable	—		37
Net cash used in investing activities	(145,699)		(138,623)
Financing Activities
Borrowings of debt	925,430		658,458
Payments of debt	(937,041)		(453,449)
Proceeds from financing obligation, net of issuance costs	12,908		—
Payment related to financing costs	(399)		(1,395)
Stock options exercised	29,563		13,275
Repurchase of stock - open market	—		(29,992)
Repurchases of stock - LTIP plans (Note 17)	(4,602)		(9,300)
Cash dividends paid to stockholders	(24,620)		(24,437)
Net cash provided by financing activities	1,239		153,160
Net increase (decrease) in cash, cash equivalents, and restricted cash	2,432		(4,247)
Cash, cash equivalents, and restricted cash, beginning of period	1,239		6,514
Cash, cash equivalents, and restricted cash, end of period	$        3,671		$        2,267

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 September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
	(in thousands)
Net income, a GAAP measure	$            68,958		$            30,782		$      172,533		$         75,561
Add: Memphis incentive fee1	—		—		1,448		6,105
Profit sharing effect2	—		—		(123)		(519)
Tax effect	—		—		(332)		(1,369)
Non-GAAP adjusted net income	$            68,958		$            30,782		$      173,526		$         79,778
Non-GAAP adjusted earnings per diluted share	$                0.83		$                0.37		$            2.08		$             0.96

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 September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
	(in thousands)
Net income, a GAAP measure	$        68,958		$        30,782		$     172,533		$      75,561
Depreciation and amortization	27,141		19,959		73,859		58,838
Interest expense, net	5,817		5,153		17,067		11,964
Income tax expense	25,272		7,660		44,620		14,869
EBITDA, a non-GAAP measure	$       127,188		$        63,554		$     308,079		$     161,232
Add: Memphis incentive fee1	—		—		1,448		6,105
Profit sharing effect2	—		—		(123)		(519)
Adjusted EBITDA, a non-GAAP measure	$       127,188		$        63,554		$     309,404		$     166,818
Adjusted EBITDA margin, a non-GAAP measure	18.0 %		16.5 %		16.8 %		16.4 %

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:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
Non-GAAP Adjusted Selling, General and Administrative Expenses
SG&A, a GAAP measure	$      88,559		$      63,230		$     242,817		$     173,670
Memphis incentive fee	—		—		(1,448)		(6,105)
Profit sharing effect	—		—		123		519
Non-GAAP adjusted SG&A expenses	88,559		63,230		241,492		168,084
As a percent of sales	12.5 %		14.9 %		13.1 %		16.5 %

Non-GAAP Adjusted AAON Oklahoma Gross Profit

The following tables provides a reconciliation of AAON Oklahoma gross profit (GAAP) to adjusted gross profit (non-GAAP) for the periods indicated:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2026		2025		2026		2025
Non-GAAP Adjusted AAON Oklahoma Gross profit
AAON Oklahoma Net sales	$      283,492		$      238,748		$      789,735		$      585,706
AAON Oklahoma Gross profit	$        72,346		$        78,803		$      200,235		$      172,920
Memphis facility overhead costs	20,729		4,500		48,696		9,300
Non-GAAP Adjusted AAON Oklahoma Gross profit	$        93,075		$        83,303		$      248,931		$      182,220
Non-GAAP Adjusted AAON Oklahoma Gross profit margin	32.8 %		34.9 %		31.5 %		31.1 %

 

	Three Months Ended
(in thousands)	June 30, 2026	March 31, 2026	December 31, 2025
Non-GAAP Adjusted AAON Oklahoma Gross profit
AAON Oklahoma Net sales	$     262,276	$     243,967	$     215,503
AAON Oklahoma Gross profit	$       63,617	$       64,272	$       59,168
Memphis facility overhead costs	$       18,122	$         9,845	$         6,399
Non-GAAP Adjusted AAON Oklahoma Gross profit	$       81,739	$       74,117	$       65,567
Non-GAAP Adjusted AAON Oklahoma Gross profit margin	31.2 %	30.4 %	30.4 %

Restatement of Previously Issued Financial Statements

During the third quarter of 2026, management identified certain errors related to revenue recognition and accounting for software subscriptions.  The Company has restated its previously issued financial statements.

Following is a summary of the significant effects of the restatement on the Company's condensed statements of income and segment reporting for the three and six months ended June 30, 2026.

	For the Three Months Ended March 31, 2026
	As Previously Reported		Adjustments		As Restated
	(in thousands)
Net sales	$             496,936		$              (4,411)		$             492,525
Gross profit	124,965		(4,411)		120,554
Selling, general and administrative expenses	67,906		385		68,291
Income from operations	57,059		(4,796)		52,263
Income before taxes	52,081		(4,796)		47,285
Income tax provision	12,266		(1,444)		10,822
Net income	$              39,815		$              (3,352)		$              36,463
Earnings per share:			0
Basic EPS	$                 0.49		$                (0.04)		$                 0.45
Diluted EPS	$                 0.48		$                (0.04)		$                 0.44
	For the Three Months Ended June 30, 2026
	As Previously Reported		Adjustments		As Restated
	(in thousands)
Net sales	$             626,976		$              15,151		$             642,127
Gross profit	152,491		15,151		167,642
Selling, general and administrative expenses	83,607		2,360		85,967
Income from operations	68,884		12,791		81,675
Income before taxes	62,847		12,791		75,638
Income tax provision	6,188		2,338		8,526
Net income	$              56,659		$              10,453		$              67,112
Earnings per share:			0
Basic EPS	$                 0.69		$                 0.13		$                 0.82
Diluted EPS	$                 0.68		$                 0.12		$                 0.80

 

	For the Three Months Ended March 31, 2026
	As Previously Reported		Adjustments		As Restated
	(in thousands)
AAON Coil Products
External sales	117,611		(15,957)		101,654
Net sales	117,611		(15,957)		101,654
Gross profit	28,302		(15,957)		12,345
BASX
External sales	135,358		11,546		146,904
Net sales	135,358		11,546		146,904
Gross profit	32,391		11,546		43,937
Consolidated gross profit	124,965		(4,411)		120,554
	For the Three Months Ended June 30, 2026
	As Previously Reported		Adjustments		As Restated
	(in thousands)
AAON Coil Products
External sales	146,680		5,602		152,282
Net sales	146,680		5,602		152,282
Gross profit	23,538		5,602		29,140
BASX
External sales	218,020		9,549		227,569
Net sales	218,020		9,549		227,569
Gross profit	65,336		9,549		74,885
Consolidated gross profit	152,491		15,151		167,642

 

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SOURCE AAON

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

What were AAON's third-quarter 2026 earnings and sales?

AAON reported $707.4 million in net sales and $0.83 in GAAP diluted EPS for the third quarter of 2026. Sales increased 84.1% and diluted EPS increased 124.3% year over year. Operating income rose 129.3% to $100.0 million.

What is AAON's raised full-year 2026 outlook?

AAON now expects 72%-75% sales growth in 2026, compared with its prior outlook of 55%-60%. The outlook also calls for gross margin of approximately 26%, SG&A of about 13% of sales, and depreciation and amortization of approximately $100 million.