AAON’s second quarter was marked by operational headwinds that drove financial results below Wall Street’s expectations and triggered a negative reaction from investors. Management attributed the underperformance primarily to disruptions from the new enterprise resource planning (ERP) system rollout, which slowed production at key facilities and created supply chain bottlenecks. CEO Matthew Tobolski acknowledged, “Our second quarter results that we reported this morning fall short of our expectations and do not reflect the high standard we set for ourselves as an organization.” Additional pressures included higher costs from the new Memphis facility and a national sales meeting, further straining margins.

Is now the time to buy AAON? Find out in our full research report (it’s free).

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 Q2 Earnings Call

• Timothy Wojs (Baird): Asked for details on how much of updated guidance reflects ERP impacts versus volume declines. CEO Matthew Tobolski explained that ERP disruptions were the primary driver, particularly in the Longview and, to a lesser extent, Tulsa segments.
• Brent Thielman (D.A. Davidson): Inquired about the significance of the BasX partnership with Applied Digital. Tobolski emphasized this as a long-term opportunity, noting collaboration on multiple cooling solutions for AI data centers across several sites.
• Ryan Merkel (William Blair): Questioned management’s confidence in guidance capturing all ERP downside risks and what immediate actions had been taken. Tobolski stated the new guidance incorporates adequate risk buffers and described proactive supply chain interventions.
• Christopher Moore (CJS): Sought views on prolonged softness in the rooftop market and the outlook for the nonresidential sector. Tobolski said the market appears near the bottom of the cycle and expects improvement as macroeconomic conditions stabilize.
• Alex Hantman (Sidoti & Company): Asked about margin protection in the backlog amid recent price and tariff changes. Tobolski confirmed most backlog is favorably priced and expected to be margin accretive as new orders are fulfilled.

Catalysts in Upcoming Quarters

Our analysts will be monitoring (1) the pace of production stabilization and ERP system integration at both Tulsa and Longview, (2) the successful ramp-up and cost absorption at the Memphis facility to support BasX growth, and (3) the conversion of backlog into higher-margin sales as price increases and tariffs flow through. Additionally, we will watch for continued strength in national account orders and the execution of large data center projects.

AAON currently trades at $79.55, down from $80.54 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).

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