AAON, INC.
For the period ended Jun 30, 2026. Filed Aug 10, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 10, 2026
AAON$57.19+5.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-07.
0000824142-26-000036
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-10.
0000824142-26-000055
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 104 previous paragraphs and 116 current paragraphs.
83 unchanged; 19 reworded; 11 added; 2 removed; 0 previous and 3 current paragraphs rearranged.
Tables are not compared: 12 previous and 16 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (11)
Current report
We periodically adjust product pricing, including implementing targeted price increases, to help offset inflationary pressures, fluctuating input costs, and macroeconomic uncertainties such as international tariffs. For standard product lines, pricing is evaluated continuously and adjusted based on market conditions. For custom or job-based engineered products, pricing is generally established on a per-project basis, with contractual terms that allow for price adjustments if order fulfillment or delivery falls outside standard lead times.
Current report
•As a percent of sales, SG&A has declined from 19.0% for the three months ended June 30, 2025 to 13.3% for the three months ended June 30, 2026, demonstrating strong operating leverage and disciplined cost management.
Current report
Segment Operating Results for Three Months Ended June 30, 2026 and Three Months Ended June 30, 2025
Current report
Total net sales increased $315.4 million, or 101.2%. AAON Oklahoma had net sales of $262.3 million, an increase of 41.7% compared to the same period in the prior year. This increase was driven by the strong backlog entering the quarter and a successful ramp up of production. Sales were up 150.9% at AAON Coil Products, primarily driven by growth in BASX-branded products of $85.6 million for a large liquid cooling data center. BASX net sales were up 220.7% to $218.0 million due to the continued demand for data center solutions and increasing production out of our Memphis facility.
Current report
Gross profit margin decreased to 24.3% of sales from 26.6%. AAON Oklahoma’s decrease in gross profit margin is driven by the additional overhead from our Memphis plant. Memphis is part of AAON Oklahoma, building intercompany sales for the BASX segment at cost. As such, the sales and gross profit from orders completed in Memphis are reflected in the BASX segment, but the additional overhead cost of running the plant is reflected in the AAON Oklahoma segment. Memphis contributed $18.1 million and $3.0 million in cost of sales to the AAON Oklahoma segment for the three months ended June 30, 2026 and 2025, respectively. AAON Coil Products gross profit margin decreased to 16.0% from 17.5% as a result of higher material costs.
Current report
As shown in the table below, we have experienced fluctuations in the cost of several raw materials.
Current report
Selling, general and administrative expenses increased $24.5 million for the three months ended June 30, 2026, from the prior year period. Salaries and benefits have increased as we add additional headcount to help build out our organizational capacity for future growth along with additional bonuses and employee incentives due to better earnings. Warranty is up $7.4 million due to an increase in our historical claims. Profit sharing is up reflecting improved earnings versus the comparative quarter.
Current report
2 Presented after intercompany eliminations.
Current report
Raw Material Costs
Current report
Selling, General and Administrative Expenses
Removed paragraphs (2)
Previous report
We occasionally increase the price of our products to help offset any inflationary headwinds. In recent years, price increases have been more frequent due to the amount of inflation the business has endured. On January 1, 2025, we implemented a 3.0% price increase for AAON-branded products. On April 1, 2025, we implemented a 6.0% surcharge on all AAON-branded products as a result of the uncertainty of international tariffs. BASX-branded products are priced by job and in most cases, provide the ability to increase the price if the order is outside normal lead times.
Previous report
•Income from operations as a percent of sales increased to 11.5% compared to 10.9% a year ago, reflecting higher production volumes and improving execution.
Reworded paragraphs (19)
Previous wording
Foreign sales were approximately $11.2 million for the three months ended March 31, 2026, as compared to $11.3 million for the three months ended March 31, 2025.
Current wording
Foreign sales were approximately $7.6 million and $18.8 million for the three and six months ended June 30, 2026, as compared to $7.5 million and $18.8 million for the three and six months ended June 30, 2025.
Previous wording
The price levels of our raw materials fluctuate due to various economic factors within the U.S. and global economy. At March 31, 2026, the price for copper and aluminum increased by approximately 7.1% and 18.8%, respectively, while stainless steel and galvanized steel decreased approximately 11.6% and 3.5%, respectively.
Current wording
The price levels of our raw materials fluctuate due to various economic factors within the U.S. and global economy. At June 30, 2026, the price (year to date average) for copper and aluminum increased by approximately 8.2% and 20.3%, respectively, while stainless steel and galvanized steel decreased approximately 14.1% and 3.4%, respectively.
Previous wording
Beginning in January 2025, the current United States (“U.S.”) Administration began enacting a series of tariffs affecting nearly all goods imported into the U.S. In retaliation, numerous foreign countries imposed reciprocal tariffs and restricted certain exports to the U.S. The continuous changes and uncertainty in tariff policy could impact our cost of materials, parts, or components imported into the U.S. and could impact the availability of supply from our vendors. We source raw materials domestically, but historically have seen those suppliers increase prices when tariffs are increased. Additionally, while we source most components domestically, our vendors may be impacted by tariffs if they use foreign parts and materials and often pass any additional costs as a result of tariffs through to us. We expect to continue to pass along some of these costs to our customers, but the increased price of our products could adversely affect the demand, which could have an adverse effect on our business and our earnings. The third quarter of 2025 is the first period for us to see any significant financial impact from tariffs. On April 1, 2025 we instituted a 6.0% tariff surcharge on AAON-branded orders which we began to see realization of in the third quarter of 2025. Early in 2025, the amount of surcharge realized had not covered the additional costs from the tariffs, but had changed by the end of the year as we fully realized our surcharge.
Current wording
Beginning in January 2025, the current United States (“U.S.”) Administration began enacting a series of tariffs affecting nearly all goods imported into the U.S. In retaliation, numerous foreign countries imposed reciprocal tariffs and restricted certain exports to the U.S. The continuous changes and uncertainty in tariff policy could impact our cost of materials, parts, or components imported into the U.S. and could impact the availability of supply from our vendors. We source raw materials domestically, but historically have seen those suppliers increase prices when tariffs are increased. Additionally, while we source most components domestically, our vendors may be impacted by tariffs if they use foreign parts and materials and often pass any additional costs as a result of tariffs through to us. Where appropriate, we attempt to mitigate these cost increases by implementing targeted price adjustments across select product lines. Although the realization of these surcharges may lag initial cost increases due to production lead times, we expect pricing actions to help offset tariff-related margin impacts over time, subject to market demand and competitive dynamics.
Previous wording
At March 31, 2026, our consolidated backlog is $2,129.5 million, an increase of 107.4%, or $1,102.6 million, as compared to March 31, 2025. Backlog was up from a year ago for both AAON-branded products and BASX-branded products with BASX-branded products increasing 160.0%, or $996.6 million, when compared to March 31, 2025. Most of these orders were associated with the BASX-branded data center liquid cooling solutions.
Current wording
At June 30, 2026, our consolidated backlog is $1,970.8 million, an increase of 98.0%, or $975.5 million, as compared to June 30, 2025. Backlog is up from a year ago for both AAON-branded products and BASX-branded products with BASX-branded products increasing 185.4%, or $929.3 million, when compared to June 30, 2025. Most of these orders were associated with the BASX-branded data center liquid cooling solutions.
Previous wording
•Net sales for the three months ended March 31, 2026 grew 54.3% to $496.9 million driven by the strong demand and growth of our BASX-branded products. BASX-branded products increased 72.4%, or $96.0 million when compared to the three months ended March 31, 2025.
Current wording
•Net sales for the three months ended June 30, 2026 grew 101.2% to $627 million driven by the strong demand and growth of our BASX-branded products. BASX-branded products increased 216.2%, or $235.7 million when compared to the three months ended June 30, 2025. Net sales of AAON-branded products also increased 39.3%, to $79.7 million for the three months ended June 30, 2026. This growth is driven by the robust backlog and increased production throughput from our capacity investment and operational improvements.
Previous wording
•We have a strong balance sheet with a leverage ratio of 1.71 and available borrowings under our Revolver of $173.5 million.
Current wording
•We have a strong balance sheet with a leverage ratio of 1.46 and available borrowings under our Revolver of $163.7 million.
Previous wording
Segment Operating Results for the Three Months Ended March 31, 2026 and 2025
Current wording
Segment Operating Results for the Six Months Ended June 30, 2026 and 2025
Previous wording
Total net sales increased $174.9 million, or 54.3% driven by growth across all segments. AAON Oklahoma saw significant improvement with an increase of$82.1 million in net sales driven by increased production out of the Tulsa facility and a stronger backlog heading into 2026. AAON-branded products struggled in the first quarter of 2025 due to the change in refrigerant. The $23.6 million increase in net sales for AAON Coil Products is due to sales of BASX-branded products for liquid cooling data center orders. BASX net sales are up $69.2 million due to the production of BASX-branded products from our Memphis facility.
Current wording
Total net sales increased $490.3 million, or 77.4% driven by growth across all segments. AAON Oklahoma saw significant improvement with an increase of$159.3 million in net sales driven by increased production out of the Tulsa facility and a stronger backlog heading into 2026. AAON-branded products were impacted in the first quarter of 2025 due to the change in refrigerant and then in the second quarter due to a lack of coils from AAON Coil Products. The $111.8 million increase in net sales for AAON Coil Products is due to sales of BASX-branded products for liquid cooling data center orders. Additionally, AAON Coil Products was impacted in 2025 by disruption caused by the transition to a new Enterprise Resource Planning (“ERP”) on April 1st. BASX net sales are up $219.2 million due to the production of BASX-branded products from our Memphis facility.
Previous wording
Gross profit as a percentage of sales is stable at 25.1% compared to 26.8% in the same period a year ago. AAON Oklahoma gross profit margin is up slightly to 26.3% due to realization of price increases and increased volume out of the Tulsa facility. However, AAON Oklahoma also carries the overhead related to the Memphis plant as all Memphis sales are intercompany transactions done at cost and are reflected within the BASX segment. The approximate overhead related to the Memphis plant is$9.8 million. BASX gross profit margin remained flat year-over-year with additional costs related to outsourcing which limited the benefits realized by the additional volume.
Current wording
Gross profit as a percentage of sales is down at 24.7% compared to 26.7% in the same period a year ago. AAON Oklahoma gross profit margin is down to 25.3% due to overhead costs from our ramping Memphis facility. The approximate overhead related to the Memphis plant is$28.0 million. and $5.3 million for the six months ended June 30, 2026 and 2025, respectively. BASX gross profit margin remained flat year-over-year with additional costs related to outsourcing which limited the benefits realized by the additional volume.
Previous wording
Selling, general and administrative expenses as a percentage of sales are down year-over-year from 15.9% in 2025 to 13.7% in 2026. The dollar increase of $16.6 million is primarily driven by higher salaries and benefits, including profit sharing and stock compensation. Profit sharing is up as a result of our higher earnings in the period. Salaries and benefits have increased as we add additional headcount to help build out our organizational capacity for future growth.
Current wording
Selling, general and administrative expenses as a percentage of sales are down year-over-year to 13.5% from 17.4% in 2025. The dollar increase of $41.1 million is primarily driven by higher salaries and benefits, including profit sharing and stock compensation. Profit sharing is up as a result of our higher earnings in the period. Salaries and benefits have increased due to increased headcount as well as due to additional employee bonuses and incentives. Warranty has increased due to increases in sales and higher historical claims.
Previous wording
Working Capital - Our unrestricted cash and cash equivalents remained stable from December 31, 2025 to March 31, 2026.
Current wording
Working Capital - Our unrestricted cash and cash equivalents increased $11.5 million from December 31, 2025 to June 30, 2026.
Previous wording
As of March 31, 2026, and December 31, 2025, we had an outstanding balance under the Revolver of $425.2 million and $398.3 million, respectively. We had two standby letters of credit totaling $1.3 million and one standby letter of credit totaling $0.7 million as of March 31, 2026, and December 31, 2025, respectively. Borrowings available under the Revolver at March 31, 2026, were $173.5 million.
Current wording
As of June 30, 2026, and December 31, 2025, we had an outstanding balance under the Revolver of $435.0 million and $398.3 million, respectively. We had two standby letters of credit totaling $1.3 million and one standby letter of credit totaling $0.7 million as of June 30, 2026, and December 31, 2025, respectively. Borrowings available under the Revolver at June 30, 2026, were $163.7 million.
Previous wording
Fees associated with the unused portion of the committed amount are included in interest expense on our consolidated statements of income for the three and three months ended March 31, 2026 and 2025.
Current wording
Fees associated with the unused portion of the committed amount are included in interest expense on our consolidated statements of income for the three and six months ended June 30, 2026 and 2025.
Previous wording
At March 31, 2026, we were in compliance with our financial covenants, as defined by the Revolver. These covenants require that we meet certain parameters related to our leverage ratio. At March 31, 2026, our leverage ratio was 1.71 to 1.0, which meets the requirement of not being above 3 to 1.
Current wording
At June 30, 2026, we were in compliance with our financial covenants, as defined by the Revolver. These covenants require that we meet certain parameters related to our leverage ratio. At June 30, 2026, our leverage ratio was 1.46 to 1.0, which meets the requirement of not being above 3 to 1.
Previous wording
The following table reflects the major categories of cash flows for the three months ended March 31, 2026 and 2025. For additional details, see the consolidated financial statements.
Current wording
The following table reflects the major categories of cash flows for the six months ended June 30, 2026 and 2025. For additional details, see the consolidated financial statements.
Previous wording
Capital expenditures during the three months ended March 31, 2026, relate to continued build out of our Memphis, Tennessee facility and maintenance of our Tulsa facility. We continue to make investments to purchase and develop software for internal use in anticipation of future Company growth.
Current wording
Capital expenditures during the six months ended June 30, 2026, relate to the continued build out of our Memphis, Tennessee facility and maintenance of our Tulsa facility. We continue to make investments to purchase and develop software for internal use in anticipation of future Company growth.
Previous wording
In 2023, the Company executed a five-year purchase commitment for refrigerants. For the three months ended March 31, 2026 and 2025, the Company made payments of $3.2 million and $0.6 million on this contract, respectively. Estimated minimum future payments are $7.3 million, and $11.2 million for 2026 and 2027, respectively.
Current wording
In 2023, the Company executed a five-year purchase commitment for refrigerants. For the three months ended June 30, 2026 and 2025, the Company made payments of $4.7 million and $2.1 million on this contract, respectively. Estimated minimum future payments are $5.8 million, and $11.2 million for 2026 and 2027, respectively.
Previous wording
In 2025, the Company executed three one-year purchase commitments for raw materials. Estimated minimum future payments are $23.3 million for 2026. We had no other material contractual purchase obligations as of March 31, 2026.
Current wording
In 2025, the Company executed three one-year purchase commitments for raw materials. Estimated minimum future payments are $18.8 million for 2026. We had no other material contractual purchase obligations as of June 30, 2026.
Previous wording
There have been no material changes in the Company’s critical accounting policies during the three months ended March 31, 2026.
Current wording
There have been no material changes in the Company’s critical accounting policies during the six months ended June 30, 2026.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
1 Cost of sales and gross profit for each segment are calculated as a percentage of the respective segment’s net sales. Total cost of sales and total gross profit are calculated as a percentage of total net sales.
Current report — wording carried from elsewhere
Six-month average raw material cost per pound as of June 30:
Current report — wording carried from elsewhere
The Company’s estimated annual 2026 effective tax rate, excluding discrete events, is expected to be approximately 25.0%. Discrete events such as excess tax benefits related to stock compensation and various tax credits consistently provide a benefit, keeping our actual effective rate lower than the stated 25.0%.