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AAON : Financial Documents Q4 (AAON 2025 Full Year and Q4 Results)
AAON : Financial Documents Q4 (AAON 2025 Full Year and Q4
About this update from Aaon, Inc.
Q4 2025 Earnings Conference Call March 2, 2026 2025 Highlights BASX-branded sales up y/y 138.8% in Q4 and 143.5% in 2025 Liquid cooling equipment sales approximately 37.8% of total BASX-branded sales in 2025 BASX-branded backlog totaled $1.3 billion in 2025, up y/y 141.3%, book-to-bill ratio of 2.4x for the year AAON-branded national accounts strategy gaining traction, orders up 76.6% in Q4, up 86.1% in 2025 In 2025, AAON-branded Alpha Class heat pump sales up 16.4%, bookings up 41.9% 3 Recent Investments Set to Create Value In 2026 People and leadership Added/improved key leadership positions Manufacturing capacity Increased manufacturing square footage by 25% and focus on efficiency gains Supply chain management Improved reliability and meaningful opportunity to leverage buying power Product development Advancements in data center liquid cooling and commercial heat pumps 4 Upgrading IT systems and infrastructure 4 Disciplined ERP rollout supports execution and customer delivery Background Legacy ERP system was not built for scale. To support our growth, upgrade was required Rationale Improves visibility in operations, data quality and margin trajectory Go-live Sequence Principles Strategically rolling-out in stages to minimize impact across sites Longview Memphis Redmond 2025 Tulsa 2027 Key Takeaways - Longview implementation largely stabilized with production approaching full recovery - Memphis went live November 1st and is progressing well - Moderating future ERP roll-outs to focus on operational execution, customer deliveries and margin enhancement - Redmond implementation now scheduled for 2H 2026 and Tulsa 2027 with proven implementation framework 5 Q4 2025 Highlights Record Sales Y/Y growth of 42.5% BASX-branded sales up 138.8% BASX-branded book-to-bill ratio Record Backlog Y/Y growth of 110.9% BASX-branded backlog up 141.3% 3.2x driven by second straight quarter of record bookings New Products BASX-branded liquid cooling sales up 256.4% Alpha Class heat pump sales up 41.9% % AAON-branded sales grew 9.5% versus a 15.6% decline in industry shipments 6 Plants Q4 Productivity Q4 Profitability Current Status Operational Status Across Footprint AAON Oklahoma BASX* Tulsa Temporarily constrained by seasonal factors and supply chain Combined gross margin 27.3%, Incremental gross margin 25% [AAON OK GM% = 27.5%] [BASX GM% = 27.1%] Ramping to record levels Redmond Stable Stable Memphis Below target but improving while aggressively ramping production Aggressively ramping AAON Coil Products Longview Significant improvement, both y/y and q/q Gross margin 21.3%, up 1030 bps q/q Improving productivity, ramping production Supply chain investments will de-risk supply issues and lead to cost savings throughout the organization in 2026 Ramping throughput across Tulsa, Memphis and Longview will result in strong operating leverage 7 *Given that Memphis financials span both the AAON Oklahoma and BASX segments, analyzing the segments together provides the clearest picture of performance. Q4 2025 Summary Net Sales 26.1% Gross Margin 27.8% 25.9% $384.2 $424.2 $297.7 Q4 2024 Q3 2025 Q4 2025 Q4 2024 Q3 2025 Q4 2025 Non-GAAP Adj. EBITDA* Non-GAAP Adj. EPS* $64.4 $47.0 $63.6 $0.37 $0.39 $0.30 Margin 15.8% 16.5% 15.2% Q4 2024 Q3 2025 Q4 2025 Q4 2024 Q3 2025 Q4 2025 *See appendix for additional information regarding Non-GAAP measures Q4 2025 Highlights Net sales increase of 42.5% driven by 138.8% growth in BASX-branded sales and a 9.5% increase in AAON-branded sales BASX-branded sales growth was driven by robust demand from the data center market, including $75.3 million of liquid cooling equipment Y/Y margin contraction primarily reflects unabsorbed costs at Memphis 8 AAON Oklahoma Net Sales Gross Margin Reported Memphis Impact $215.5 $194.0 $238.7 27.5% 30.7% 33.0% 1.9% 2.9% Q4 2024 Q3 2025 Q4 2025 Q4 2024 Q3 2025 Q4 2025 *See appendix for recasted segment information. Q4 2025 Highlights Net sales increased y/y 11.1% Delivered meaningful share gains with rooftop volumes up modestly against a 16.0% industry decline Margin impacted by $6.4M of unabsorbed costs at Memphis plant Q/Q margin contraction reflected seasonal factors and temporary supply chain constraints that led to moderating volume production Investments made in supply chain management in 2025 will derisk supply chain constraints while creating meaningful cost savings opportunities in 2026 Backlog at year-end up y/y ~45.0% 9 AAON Coil Products Net Sales Gross Margin $70.2 $53.0 $102.6 Q4 2024 Q3 2025 Q4 2025 21.3% 16.1% 11.0% Q4 2024 Q3 2025 Q4 2025 *See appendix for recasted segment information. Q4 2025 Highlights Net sales increased 93.6%, driven by increased demand of BASX-branded liquid cooling sales AAON-branded sales were flattish y/y, up 15.3% q/q Gross margin expansion reflected improved operating leverage on higher throughput at the Longview facility, along with a favorable mix of higher-margin BASX sales Margin expansion was tempered by a 5-day plant shutdown at year-end BASX will continue to be a positive tailwind, but do not expect such a favorable product mix in the near-term as in Q4 10 BASX Net Sales $106.1 Gross Margin 18.8% 27.0% 27.1% $75.2 $50.7 Q4 2024 Q3 2025 Q4 2025 Q4 2024 Q3 2025 Q4 2025 *See appendix for additional information regarding Non-GAAP measures Q4 2025 Highlights Net sales growth of 109.1% driven by strong demand from data center market Continued progress with Memphis plant ramp-up was a key contributor to growth Stable margins sequentially reflect the balance between productivity gains in Redmond and targeted investments to support BASX production in Longview and Memphis 11 $1.2 $- $- Q4 2025 Summary: Balance Sheet 2025 2024 Cash and cash equivalents $6.5 Restricted cash Debt $398.3 $138.9 2024 2025 Net Working Capital Annual Capex $538.4 $213.2 $204.9 $313.3 $109.5 2024 2025 2023 2024 2025 *All metrics are in millions Q4 2025 Highlights Leverage ratio at the end of the fourth quarter was 1.77 Debt increase driven by working capital and capex investments to support strong BASX-branded backlog and future growth BASX-branded backlog up 141.3% y/y and 45.2% q/q Anticipate meaningful improvement in cash flow from operations in 2026 driven by earnings growth and improved working capital efficiency Expect capex of approximately $190 million in 2026 12 Backlog by Brands Backlog $1.30B +141.3% Y/Y +45.2% Q/Q Demand of air-side and liquid cooling solutions for data centers is robust Strong demand of customized free cooling chiller systems $526.4M +60.8% Y/Y +24.3% Q/Q Focus targeted on rightsizing backlog with higher production throughput Strong bookings continued in Q4, up ~20% y/y and ~50% q/q Total Backlog $1.83B +110.9% Y/Y +38.5% Q/Q Strong backlog allows us to plan production more efficiently Anticipate strong growth and improved margins in 2026 13 2026 Outlook 2026 YoY Sales Growth 18%-20% Gross Margin 29%-31% SG&A % of Sales ~16% D&A Expenses $95M-$100M 14 Appendix Non-GAAP Financial Measures Non-GAAP Adjusted Net Income 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 fee 1 - - 6,105 - Profit sharing effect 2 - - (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 1 The 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. 2 Profit sharing effect of the Memphis incentive fee in the respective period. 16 Non-GAAP Financial Measures Non-GAAP Combined Segment Gross Profit Three Months Ended December 31, 2025 AAON Oklahoma BASX Non-GAAP Combined (in thousands) AAON Coil Products Consolidated Segment Net Sales $ 215,503 $ 106,095 $ 321,598 $ 102,619 $ 424,217 Segment Gross Profit $ 59,168 $ 28,775 $ 87,943 $ 21,827 $ 109,770 Segment Gross Profit Margin 27.5 % 27.1 % 27.3 % 21.3 % 25.9 % Three Months Ended December 31, 2024 AAON Oklahoma BASX Non-GAAP Combined AAON Coil Products Consolidated (in thousands) Segment Net Sales $ 193,957 $ 50,742 $ 244,699 $ 53,019 $ 297,718 Segment Gross Profit $ 59,516 $ 9,564 $ 69,080 $ 8,535 $ 77,615 Segment Gross Profit Margin 30.7 % 18.8 % 28.2 % 16.1 % 26.1 % YoY Change in Net Sales $ 21,546 $ 55,353 $ 76,899 $ 49,600 $ 126,499 YoY Change in Gross Profit $ (348) $ 19,211 $ 18,863 $ 13,292 $ 32,155 Incremental Margin (1.6)% 34.7 % 24.5 % 26.8 % 25.4 % 17 Non-GAAP Financial Measures Non-GAAP EBITDA and Adjusted EBITDA 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 fee 1 - - 6,105 - Profit sharing effect 2 - - (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 % 1 The 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. 2 Profit sharing effect of the Memphis incentive fee in the respective period. 18 Non-GAAP Financial Measures Non-GAAP Adjusted SG&A Q1 2024 Q2 2024 Q3 2024 Q4 2024 2024 Non-GAAP Adjusted Selling, General and Administrative Expenses (in thousands) Less: Memphis Incentive Fee 1 - - - - - SG&A, a GAAP measure $ 45,288 $ 45,895 $ 48,637 $ 48,194 $ 188,014 Non-GAAP adjusted SG&A expenses $ 45,288 $ 45,895 $ 48,637 $ 48,194 $ 188,014 Profit Sharing effect 2 - - - - - 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) $ 63,230 65,810 239,480 - - 6,105 - - (519) $ 63,230 16.5 % $ 65,810 15.5 % $ 233,894 16.2 % SG&A, a GAAP measure $ 51,293 $ 59,147 Less: Memphis Incentive Fee 1 2,700 3,405 Profit Sharing effect 2 (230) (289) Non-GAAP adjusted SG&A expenses $ 48,823 $ 56,031 As a percent of sales 15.2 % 18.0 % 1 The 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. 2 Profit sharing effect of the Memphis incentive fee in the respective period. 19 Recasted Quarterly Segment Disclosures Q1 2024 Q2 2024 Q3 2024 Q4 2024 2024 (in thousands) AAON Oklahoma External sales $ 210,140 $ 225,727 $ 228,887 $ 193,957 $ 858,711 Inter-segment sales 1,671 1,311 1,238 2,116 6,336 Eliminations (1,671) (1,311) (1,238) (2,116) (6,336) Net sales 210,140 225,727 228,887 193,957 858,711 Cost of sales 1 127,027 137,372 139,284 134,441 538,124 Gross profit 83,113 88,355 89,603 59,516 320,587 AAON Coil Products External sales $ 24,247 $ 31,373 $ 35,232 $ 53,019 $ 143,871 Inter-segment sales 4,629 4,457 6,808 4,298 20,192 Eliminations (4,629) (4,457) (6,808) (4,298) (20,192) Net sales 24,247 31,373 35,232 53,019 143,871 Cost of sales 1 20,809 22,699 28,295 44,484 116,287 Gross profit 3,438 8,674 6,937 8,535 27,584 BASX External sales $ 27,712 $ 56,466 $ 63,133 $ 50,742 $ 198,053 Inter-segment sales 2 220 40 404 666 Eliminations (2) (220) (40) (404) (666) Net sales 27,712 56,466 63,133 50,742 198,053 Cost of sales 1 22,021 40,401 45,515 41,178 149,115 Gross profit 5,691 16,065 17,618 9,564 48,938 Consolidated gross profit $ 92,242 $ 113,094 $ 114,158 $ 77,615 $ 397,109 20 Recasted Quarterly Segment Disclosures Q1 2025 Q2 2025 Q3 2025 Q4 2025 2025 (in thousands) AAON Oklahoma External sales $ 161,838 $ 185,120 $ 238,748 $ 215,503 $ 801,209 Inter-segment sales 3,839 5,318 9,737 29,304 48,198 Eliminations (3,839) (5,318) (9,737) (29,304) (48,198) Net sales 161,838 185,120 238,748 215,503 801,209 Cost of sales 1 121,238 131,603 159,945 156,335 569,121 Gross profit 40,600 53,517 78,803 59,168 232,088 AAON Coil Products External sales $ 94,023 $ 58,465 $ 70,246 $ 102,619 $ 325,353 Inter-segment sales 3,579 3,439 4,689 4,298 16,005 Eliminations (3,579) (3,439) (4,689) (4,298) (16,005) Net sales 94,023 58,465 70,246 102,619 325,353 Cost of sales 1 64,165 48,236 62,488 80,792 255,681 Gross profit 29,858 10,229 7,758 21,827 69,672 BASX External sales $ 66,193 $ 67,982 $ 75,244 $ 106,095 $ 315,514 Inter-segment sales 43 507 26 (74) 502 Eliminations (43) (507) (26) 74 (502) Net sales 66,193 67,982 75,244 106,095 315,514 Cost of sales 1 50,287 48,999 54,944 77,320 231,550 Gross profit 15,906 18,983 20,300 28,775 83,964 Consolidated gross profit $ 86,364 $ 82,729 $ 106,861 $ 109,770 $ 385,724 21 Attention : This is an excerpt of the original content. 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