AAON’s third quarter results were met with a positive market reaction, reflecting strong execution despite ongoing operational headwinds. Management attributed sales momentum to improved production throughput at both Tulsa and Longview facilities and robust demand for its BASX brand, which specializes in data center cooling solutions. CEO Matthew Tobolski noted, "BASX-branded backlog grew to $896.8 million, up 119.5% from a year ago," highlighting this segment’s outperformance. The company continued to face margin pressures due to inefficiencies at its Longview plant and the early ramp-up at the new Memphis facility, but sequential improvement in gross margin signaled progress in operational recovery.
Is now the time to buy AAON? Find out in our full research report (it’s free for active Edge members).
AAON (AAON) Q3 CY2025 Highlights:
- Revenue: $384.2 million vs analyst estimates of $337.5 million (17.4% year-on-year growth, 13.8% beat)
- Adjusted EPS: $0.37 vs analyst estimates of $0.32 (14.9% beat)
- Adjusted EBITDA: $63.55 million vs analyst estimates of $61.21 million (16.5% margin, 3.8% beat)
- Operating Margin: 11.4%, down from 20% in the same quarter last year
- Backlog: $1.32 billion at quarter end, up 104% year on year
- Market Capitalization: $8.32 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From AAON’s Q3 Earnings Call
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Ryan Merkel (William Blair) asked about the sustainability of BASX order growth. CEO Matthew Tobolski emphasized robust pipeline activity and increasing customer interest, citing “tremendous amount of conversations across the sort of entire network of data center developers.”
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Noah Kaye (Oppenheimer) questioned the impact of a lowered capital expenditure guide on capacity ramp timing. CFO Rebecca Thompson clarified it was a timing shift, not a slowdown, stating, “It should not impact those ramp-up plans at all.”
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Christopher Moore (CJS Securities) inquired about AAON’s price premium in rooftop units and market outlook. Tobolski noted the company maintained its price premium and product differentiation, though overall commercial HVAC demand remains soft.
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Timothy Wojs (Baird) probed preparations for the Tulsa ERP rollout and potential order pull-forward. Tobolski responded that lessons from Longview would inform a proactive approach to minimize disruption and keep lead times in check.
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Brent Thielman (D.A. Davidson) asked about national account growth and Alpha Class heat pump traction. Tobolski highlighted these as key drivers for outperforming bookings despite macro softness, especially in national accounts seeking decarbonization solutions.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be watching (1) the successful ramp-up and order conversion at the Memphis facility, (2) evidence of sequential margin improvement as operational inefficiencies are resolved, and (3) continued strength in BASX data center demand and backlog growth. Ongoing progress with ERP implementation across remaining sites and the commercial HVAC market’s recovery will also be critical to AAON’s performance trajectory.
AAON currently trades at $102.10, up from $93.41 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
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