AAON Inc
Q1 2025 Earnings
Market Reaction
S&P 500 over the same 30 days: +5.15%.
Did AAON Beat Earnings? Q1 2025 Results
AAON delivered a sharp earnings beat in the first quarter of 2025, with adjusted EPS of $0.37 clearing the $0.24 consensus estimate by 56.98% and revenue of $322.05 million topping expectations by 10.88% as total net sales climbed 22.9% year-over-year. The headline driver was a 374.8% surge in BASX-branded data center equipment sales to $132.56 million, which more than offset a 19.1% decline in AAON-branded products tied to weak prior-quarter order flow and supply chain constraints around the new R454B refrigerant. Gross margin compressed to 26.8% from 35.2% a year ago on lower AAON Oklahoma production volumes, though a record backlog of $1.03 billion, up 83.9% year-over-year, provides substantial revenue visibility heading into the back half. Management expects AAON Oklahoma volumes to recover considerably as R454B supply constraints ease, while BASX bookings continue to build on data center demand; the company plans $220 million in capital investment for 2025 and raised its quarterly dividend 25% to $0.10 per share.
- BASX-branded data center equipment sales surged 374.8% YoY driven by air-side and liquid cooling demand
- AAON Coil Products segment revenue grew 287.8% YoY
- AAON Oklahoma segment net sales declined 23.0% due to weak Q4 orders and R454B supply chain issues
- Gross margin contracted to 26.8% from 35.2% due to lower AAON Oklahoma production volumes
- Improved operational efficiencies at Longview and Redmond facilities partially offset margin pressure
- Higher SG&A expenses from depreciation, amortization, and technology consulting costs
“We had a strong first quarter. Net sales, gross margin and earnings all experienced quarter-over-quarter improvement. Production of BASX-branded equipment made solid progress as we accelerated backlog conversion, utilizing all four of our major locations, including our new facility in Memphis. The resulting net sales of BASX-branded products for the quarter were up year-over-year 374.8%. Bookings for BASX-branded equipment were also strong, driven by demand for both our air-side and liquid cooling data center equipment, with total backlog at the end of the quarter up 83.9% from a year ago and up 18.4% from the end of last year.”
AAON CEO, on the earnings call
Forward Guidance & Outlook
Management expects AAON Oklahoma production volumes to increase considerably over the next several months as R454B supply chain constraints abate, driving quarter-over-quarter improvements in sales and margins. This will be partially offset by costs associated with the Memphis facility ramp-up. BASX-branded equipment backlog and bookings continue to strengthen driven by data center demand. The company expects continued improvement in operational efficiencies at its Redmond and Longview facilities, driving robust year-over-year growth in cumulative BASX and AAON Coil Products segment sales. The company plans to invest $220 million in 2025 across the Memphis plant, Longview improvements, and back office automation. Management noted increased macroeconomic uncertainties for the second half of the year but expressed encouragement with the immediate near-term outlook and excitement about long-term business fundamentals.
AAON YoY Financials
AAON Revenue by Segment
Figures from SEC filings and company reports. Not investment advice.