AAON Reports First Quarter 2026 Results with Record Sales and Backlog, Robust Earnings Growth, and Raises Full-Year Guidance
Rhea-AI Summary
AAON (NASDAQ:AAON) reported first quarter 2026 results with record net sales of $496.9M (+54.3% YoY), GAAP diluted EPS of $0.48 (+37.1% YoY), and total backlog of $2.13B (+107.4% YoY). The company raised 2026 guidance to 40%-45% sales growth and gross margin of 27%-28%, with SG&A expected at 14%-15% and D&A of $95M-$100M.
AI-generated analysis. Not financial advice.
Positive
- Record net sales: +54.3% to $496.9M
- Backlog doubled: +107.4% to $2.13B
- Raised 2026 sales outlook to 40%-45%
- SG&A improved: down 220 basis points to 13.7%
Negative
- Cash balance low at $1.1M while revolver balance $425.2M
- Gross margin declined to 25.1% from 26.8% YoY
- High near-term capex: $52.9M in Q1 and D&A $95M-$100M
News Market Reaction – AAON
On the day this news was published, AAON gained 31.49%, reflecting a significant positive market reaction. Argus tracked a peak move of +43.0% during that session. Our momentum scanner triggered 67 alerts that day, indicating high trading interest and price volatility. This price movement added approximately $2.92B to the company's valuation, bringing the market cap to $12.17B at that time. Trading volume was elevated at 2.2x the daily average, suggesting notable buying interest.
Data tracked by StockTitan Argus on the day of publication.
Key Figures
Market Reality Check
Peers on Argus
AAON gained 4.95% with strong Q1 2026 results and raised guidance. Among key peers, moves were mixed: TREX rose 3.07%, LPX and FBIN also advanced, while AWI and SPXC declined. Only TREX appeared in the momentum scanner, suggesting today’s move in AAON was more stock-specific than broad sector rotation.
Previous Earnings Reports
| Date | Event | Sentiment | Move | Catalyst |
|---|---|---|---|---|
| Mar 02 | FY25 earnings | Neutral | +3.5% | Reported FY25 growth with EPS down and 2026 outlook introduced. |
| Nov 06 | Q3 2025 earnings | Neutral | +7.0% | Strong BASX growth and record backlog despite margin and EPS pressure. |
| Aug 11 | Q2 2025 earnings | Negative | -10.5% | Operational issues, margin compression, EPS drop and lowered outlook. |
| Apr 30 | Q1 2025 earnings | Neutral | +5.7% | Strong sales and backlog growth offset by weaker margins and EPS. |
| Feb 27 | FY24 earnings | Negative | -22.9% | Sales and EPS decline with margin pressure despite higher backlog. |
Earnings releases have often produced sizable moves, with negative results selling off and stronger or improving updates being rewarded.
Over the last five earnings cycles, AAON has navigated a transition from mixed and sometimes weak profitability toward stronger demand driven by BASX and data center cooling. Q4 2024 and Q2 2025 showed sales and EPS pressure with margin compression, while Q3 2025 and Q4 2025 highlighted recovering growth and record backlog. The current Q1 2026 report of record sales, higher EPS, and a raised 2026 outlook follows this improving operational and demand backdrop.
Historical Comparison
In the past five earnings releases, AAON’s average move was -3.44%. Today’s +4.95% reaction to record Q1 2026 results and a sharply higher 2026 growth outlook stands out versus that history.
Earnings updates show a path from FY 2024 weakness and Q2 2025 operational challenges toward Q3–Q4 2025 recovery with record backlog, culminating in Q1 2026 record sales, higher EPS, and an upgraded 2026 guidance profile.
Market Pulse Summary
The stock surged +31.5% in the session following this news. A strong positive reaction aligns with the report’s mix of record Q1 2026 sales, a $2.13B backlog, and a sharply higher 40%-45% full-year growth outlook. Historically, earnings moves have averaged -3.44%, so a large upside response would have reflected investors rewarding clearer execution and demand visibility, while still weighing margin guidance and ongoing capacity ramp risks.
AI-generated analysis. Not financial advice.
First Quarter 2026 Results
(All comparisons are year-over-year, unless otherwise noted)
- Delivered record sales and accelerated earnings growth on strong demand and expanding production throughput
- Net sales grew
54.3% to a record$496.9 million - Operating margins reflected early benefits from improving utilization, with margin improvement expected to build as capacity absorption improves
- GAAP diluted EPS increased
37.1% to$0.48
- Net sales grew
- Total backlog increased
107.4% to a record$2.1 billion
Raises 2026 Outlook
- 2026 outlook now reflects revenue growth of
40% -45% % and gross margins of approximately 27-28% , supported by record backlog, expanded capacity, and improving operational execution
First Quarter 2026 Results
Net sales for the first quarter of 2026 increased
Gross profit margin in the quarter was
Selling, general and administrative expenses as a percent of sales declined 220 basis points to
Earnings per diluted share were
"First‑quarter results demonstrate strong earnings growth driven by higher volume, improved execution, and continued share gains," said President and CEO Matt Tobolski. "We delivered record sales, improved cash flow, and higher production throughput across our manufacturing network. Importantly, the additional volume we are taking on is carrying attractive incremental contribution, allowing earnings to grow while we intentionally sequence margin improvement during this phase of capacity ramp.
"Our backlog provides exceptional visibility, particularly across the BASX-brand, and positions us to drive continued growth as we move through the year. At the same time, increasing utilization across existing capacity is expected to support margin improvement over time as fixed costs are absorbed, equipment comes fully online, and productivity continues to improve.
"As we progress through 2026, our priorities are clear and unchanged. Drive throughput, convert backlog, and deliver disciplined margin progression over time. We have built the foundation, and we are now focused on converting that foundation into durable earnings power and long-term returns."
Backlog
March 31, 2026 | December 31, 2025 | March 31, 2025 | |||
(in thousands) | |||||
AAON-branded products | $ 509,806 | $ 526,350 | $ 403,863 | ||
BASX-branded products | 1,619,649 | 1,302,145 | 623,006 | ||
$ 2,129,455 | $ 1,828,495 | $ 1,026,869 | |||
Total backlog increased
2026 Outlook
Dr. Tobolski concluded, "We are encouraged by the start of the year and the momentum we are seeing across the business. Backlog and demand remain exceptionally strong, providing the visibility and stability needed to maintain a sharp focus on execution, production ramp‑up, and customer fulfillment. We are pleased with the benefits we are starting to see from operational investments, and we have meaningful opportunity ahead to further increase production volumes and enhance productivity, which support improved results over time.
"We now expect 2026 sales to grow
Current | Prior | |
Metric | FY26 | FY26 |
YoY Sales Growth | ||
Gross Profit Margin | ||
SG&A as a % of sales | ~ | |
Depreciation & Amortization |
Segment Results
AAON Oklahoma
Three Months Ended | |||
(in thousands) | March 31, 2026 | December 31, 2025 | March 31, 2025 |
Net sales | $ 243,967 | $ 215,503 | $ 161,838 |
Gross profit | $ 64,272 | $ 59,168 | $ 40,600 |
Gross profit margin | 26.3 % | 27.5 % | 25.1 % |
Net sales for the AAON Oklahoma segment totaled
Gross margin for the segment was
AAON Coil Products
Three Months Ended | |||
(in thousands) | March 31, 2026 | December 31, 2025 | March 31, 2025 |
Net sales | $ 117,611 | $ 102,619 | $ 94,023 |
Gross profit | $ 28,302 | $ 21,827 | $ 29,858 |
Gross profit margin | 24.1 % | 21.3 % | 31.8 % |
Net sales for the AAON Coil Products segment totaled
AAON Coil Products gross margin was
BASX
Three Months Ended | |||
(in thousands) | March 31, 2026 | December 31, 2025 | March 31, 2025 |
Net sales | $ 135,358 | $ 106,095 | $ 66,193 |
Gross profit | $ 32,391 | $ 28,775 | $ 15,906 |
Gross profit margin | 23.9 % | 27.1 % | 24.0 % |
Net sales for the BASX segment increased
BASX segment gross margin was
Balance Sheet & Cash Flow
As of March 31, 2026, the company had cash, cash equivalents and restricted cash of
Conference Call
The company will host a conference call and webcast this morning at 9:00 a.m. EST to discuss the first 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/x89XOEkP41z. 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
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 March 31, | |||
2026 | 2025 | ||
(in thousands, except per share data) | |||
Net sales | $ 496,936 | $ 322,054 | |
Cost of sales | 371,971 | 235,690 | |
Gross profit | 124,965 | 86,364 | |
Selling, general and administrative expenses | 67,906 | 51,293 | |
Gain on disposal of assets | — | (40) | |
Income from operations | 57,059 | 35,111 | |
Interest expense | (5,055) | (2,802) | |
Other income, net | 77 | 174 | |
Income before taxes | 52,081 | 32,483 | |
Income tax provision | 12,266 | 3,191 | |
Net income | $ 39,815 | $ 29,292 | |
Earnings per share: | |||
Basic EPS | $ 0.49 | $ 0.36 | |
Diluted EPS | $ 0.48 | $ 0.35 | |
Cash dividends declared per common share: | $ 0.10 | $ 0.10 | |
Weighted average shares outstanding: | |||
Basic | 81,756,604 | 81,472,351 | |
Diluted | 83,179,954 | 83,351,536 | |
AAON, Inc. and Subsidiaries Segment Net Sales and Profit (Unaudited) | |||
Three Months Ended March 31, | |||
2026 | 2025 | ||
(in thousands) | |||
AAON Oklahoma | |||
External sales | $ 243,967 | $ 161,838 | |
Inter-segment sales | 44,509 | 3,839 | |
Eliminations | (44,509) | (3,839) | |
Net sales | 243,967 | 161,838 | |
Cost of sales1 | 179,695 | 121,238 | |
Gross profit | 64,272 | 40,600 | |
AAON Coil Products | |||
External sales | $ 117,611 | $ 94,023 | |
Inter-segment sales | 6,818 | 3,579 | |
Eliminations | (6,818) | (3,579) | |
Net sales | 117,611 | 94,023 | |
Cost of sales1 | 89,309 | 64,165 | |
Gross profit | 28,302 | 29,858 | |
BASX | |||
External sales | $ 135,358 | $ 66,193 | |
Inter-segment sales | (2) | 43 | |
Eliminations | 2 | (43) | |
Net sales | 135,358 | 66,193 | |
Cost of sales1 | 102,967 | 50,287 | |
Gross profit | 32,391 | 15,906 | |
Consolidated gross profit | $ 124,965 | $ 86,364 | |
1 Presented after intercompany eliminations. |
The reconciliation between consolidated gross profit to consolidated income from operations is as follows: | ||||||
Consolidated gross profit | $ 124,965 | $ 86,364 | ||||
Less: Selling, general and administrative expenses | 67,906 | 51,293 | ||||
Add: gain on disposal of assets | — | (40) | ||||
Consolidated income from operations | $ 57,059 | $ 35,111 | ||||
AAON, Inc. and Subsidiaries Consolidated Balance Sheets (Unaudited) | |||
March 31, | December 31, | ||
2026 | 2025 | ||
Assets | (in thousands, except share and per share data) | ||
Current assets: | |||
Cash and cash equivalents | $ 13 | $ 13 | |
Restricted cash | 1,087 | 1,226 | |
Accounts receivable, net | 290,161 | 314,387 | |
Income tax receivable | 19,691 | 27,445 | |
Inventories, net | 313,203 | 261,151 | |
Contract assets, net | 298,368 | 247,037 | |
Prepaid expenses and other | 21,177 | 17,921 | |
Total current assets | 943,700 | 869,180 | |
Property, plant and equipment, net | 654,857 | 631,262 | |
Intangible assets, net and goodwill | 171,913 | 165,799 | |
Right of use assets | 17,335 | 17,988 | |
Other long-term assets | 1,907 | 2,281 | |
Total assets | $ 1,789,712 | $ 1,686,510 | |
Liabilities and Stockholders' Equity | |||
Current liabilities: | |||
Short-term obligations of NMTC1 | 7,535 | 7,535 | |
Accounts payable | 160,139 | 110,437 | |
Accrued liabilities | 136,731 | 132,213 | |
Contract liabilities | 55,229 | 80,670 | |
Total current liabilities | 359,634 | 330,855 | |
Debt, long-term | 425,154 | 398,320 | |
Deferred tax liabilities | 34,899 | 30,313 | |
Other long-term liabilities | 27,038 | 23,299 | |
New markets tax credit obligations1 | 8,778 | 8,738 | |
Commitments and contingencies (Note 19) | |||
Stockholders' equity: | |||
Preferred stock, | — | — | |
Common stock, | 327 | 327 | |
Additional paid-in capital | 71,913 | 64,358 | |
Retained earnings | 861,969 | 830,300 | |
Total stockholders' equity | 934,209 | 894,985 | |
Total liabilities and stockholders' equity | $ 1,789,712 | $ 1,686,510 | |
1 Held by variable interest entities |
AAON, Inc. and Subsidiaries Consolidated Statements of Cash Flows (Unaudited) | |||
Three Months Ended March 31, | |||
2026 | 2025 | ||
Operating Activities | (in thousands) | ||
Net income | $ 39,815 | $ 29,292 | |
Adjustments to reconcile net income to net cash provided by (used in) operating activities | |||
Depreciation and amortization | 20,903 | 18,943 | |
Amortization of debt issuance costs | 40 | 52 | |
Amortization of right of use assets | 40 | 25 | |
(Recoveries of) Provision for losses on accounts receivable, net of adjustments | (120) | 88 | |
Provision for excess and obsolete inventories, net of write-offs | 701 | 57 | |
Share-based compensation | 7,696 | 4,021 | |
Other | — | (45) | |
Deferred income taxes | 4,586 | 5,976 | |
Changes in assets and liabilities: | |||
Accounts receivable | 24,346 | (17,631) | |
Income tax receivable | 7,754 | (3,323) | |
Inventories | (52,753) | (11,489) | |
Contract assets | (51,331) | (53,235) | |
Prepaid expenses and other long-term assets | (1,487) | (2,703) | |
Accounts payable | 50,375 | 21,625 | |
Contract liabilities | (25,441) | 1,508 | |
Extended warranties | 4,387 | 37 | |
Accrued liabilities and other long-term liabilities | 4,483 | (2,412) | |
Net cash provided by (used in) operating activities | 33,994 | (9,214) | |
Investing Activities | |||
Capital expenditures | (45,127) | (46,723) | |
Grant proceeds received | 1,650 | — | |
Proceeds from sale of property, plant and equipment | — | 40 | |
Acquisition of intangible assets | (7,808) | (3,717) | |
Principal payments from note receivable | — | 12 | |
Net cash used in investing activities | (51,285) | (50,388) | |
Financing Activities | |||
Borrowings of debt | 252,867 | 235,925 | |
Payments of debt | (226,033) | (138,411) | |
Payment related to financing costs | (1,395) | — | |
Stock options exercised | 3,062 | 4,356 | |
Repurchase of stock - open market | — | (31,536) | |
Repurchases of stock - LTIP plans (Note 17) | (3,203) | (6,768) | |
Cash dividends paid to stockholders | (8,146) | (8,095) | |
Net cash provided by financing activities | 17,152 | 55,471 | |
Net decrease in cash, cash equivalents, and restricted cash | (139) | (4,131) | |
Cash, cash equivalents, and restricted cash, beginning of period | 1,239 | 6,514 | |
Cash, cash equivalents, and restricted cash, end of period | $ 1,100 | $ 2,383 | |
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 March 31, | |||
2026 | 2025 | ||
(in thousands) | |||
Net income, a GAAP measure | $ 39,815 | $ 29,292 | |
Add: | — | 2,700 | |
Profit sharing effect2 | — | (230) | |
Tax effect | — | (627) | |
Non-GAAP adjusted net income | $ 39,815 | $ 31,135 | |
Non-GAAP adjusted earnings per diluted share | $ 0.48 | $ 0.37 | |
1The incentive fee relates to fees payable to our real estate broker associated with the acquisition of our | ||
2Profit sharing effect of the |
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 March 31, | |||
2026 | 2025 | ||
(in thousands) | |||
Net income, a GAAP measure | $ 39,815 | $ 29,292 | |
Depreciation and amortization | 20,903 | 18,943 | |
Interest expense, net | 5,055 | 2,802 | |
Income tax expense | 12,266 | 3,191 | |
EBITDA, a non-GAAP measure | $ 78,039 | $ 54,228 | |
Add: | — | 2,700 | |
Profit sharing effect2 | — | (230) | |
Adjusted EBITDA, a non-GAAP measure | $ 78,039 | $ 56,698 | |
Adjusted EBITDA margin | 15.7 % | 17.6 % | |
1The incentive fee relates to fees payable to our real estate broker associated with the acquisition of our | |||
2Profit sharing effect of the |
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 March 31, | |||
2026 | 2025 | ||
(in thousands) | |||
Non-GAAP Adjusted Selling, General and Administrative Expenses | |||
SG&A, a GAAP measure | $ 67,906 | $ 51,293 | |
Less: Memphis Incentive Fee1 | — | 2,700 | |
Profit Sharing effect2 | — | (230) | |
Non-GAAP adjusted SG&A expenses | $ 67,906 | $ 48,823 | |
As a percent of sales | 13.7 % | 15.2 % | |
1The incentive fee relates to fees payable to our real estate broker associated with the acquisition of our | |||
2Profit sharing effect of the |
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SOURCE AAON