AAON Raises Sales Growth Forecast to 75% After Record Quarterly Revenue
Key Facts
AAON raised its fiscal 2026 sales growth forecast to a range of 72%-75%, from 55%-60% previously, after reporting record quarterly sales and beating analyst estimates. The company said in its statement that third-quarter net sales reached $707.4 million, up 84.1% from $384.2 million in the same period of 2025. Operating income was $100.0 million, up 129.3% year over year, while diluted earnings per share rose to $0.83 from $0.37. According to Investing.com, revenue exceeded analysts’ estimate of $599.7 million, while earnings per share also topped the forecast of $0.56. The site reported that the stock rose 14.7% in after-hours trading on Monday, November 9, following the results and higher guidance.
Management attributed sales growth to demand for the AAON and BASX brands, increased production and the use of expanded manufacturing capacity. BASX stood out in the results, with sales rising 218.3% to a record $397.2 million in the third quarter. The company linked this performance to strong data center demand, putting cooling activity tied to those facilities among the factors supporting rapid sales expansion. Chief Executive Matt Tobolski said the higher guidance reflected strong third-quarter performance and continued customer activity across the company’s markets. He added that the company was making progress in increasing production and converting its backlog into revenue.
Despite the surge in sales, gross margin fell to 26.7% in the third quarter, compared with 27.8% a year earlier. It improved by 60 basis points from the previous quarter, signaling sequential improvement that did not erase the annual decline. The company attributed the margin pressure mainly to BASX’s larger share of revenue, as its facilities were less mature and utilized. On expenses, general and administrative expenses as a percentage of sales fell 400 basis points to 12.5%. The company said revenue grew faster than operating expense investments, while it raised its full-year gross margin forecast to about 26% from a previous range of 25% to 26%. It also lowered its forecast for general and administrative expenses to about 13% of sales, from a range of 13%-14%.
The results announcement coincided with the restatement of first- and second-quarter 2026 results following errors in revenue recognition and software subscription accounting. AAON said the adjustments increased first-half net sales by $10.7 million and diluted earnings per share by $0.09. The company acknowledged a material weakness in internal financial controls, making remediation of those controls a parallel issue alongside improved results and guidance. At the same time, it said it had found no evidence of fraud or misconduct related to the matters that led to the restatement. The case highlights the importance of distinguishing the adjustments’ effect on reported figures from the accounting and control issues that prompted the restatement.
On liquidity, operating cash flow since the start of the year turned positive at $146.9 million during the first nine months of 2026, compared with cash use of $18.8 million in the same period a year earlier. This cash flow shift adds context to the rapid expansion in sales and production, alongside the higher annual outlook. Management expects further improvement in the fourth quarter, and Tobolski said the company expects to continue making progress during the period. He pointed to higher production volumes and better capacity utilization, as well as pricing, sourcing and operational discipline measures. The company also said it expects orders to remain strong in the fourth quarter and into 2027, putting the conversion of demand into production and revenue among the issues to watch next.