AAON Inc
Q2 2025 Earnings
Market Reaction
S&P 500 over the same 30 days: +3.41%.
Did AAON Beat Earnings? Q2 2025 Results
AAON delivered a sharply disappointing second quarter, missing on both the top and bottom lines as an ERP system rollout at its Longview, Texas facility rippled through operations and dragged results well below expectations. Adjusted diluted EPS came in at $0.22, falling 32.52% short of the $0.33 consensus estimate, while revenue of $311.57 million trailed forecasts by 7.60% and slipped 0.6% year-over-year. The Longview implementation, which went live in April, curtailed finished goods and coil production at that plant and simultaneously constrained the expected ramp at AAON's Tulsa facility, which depends on Longview for coil supply; the combined effect compressed gross margin to 26.6% from 36.1% a year ago. Shares fell sharply on the news, reflecting investor frustration with the operational stumble. Still, management pointed to a robust 71.9% year-over-year surge in adjusted backlog to $1.12 billion as evidence of durable demand, and trimmed its full-year outlook to low-teens revenue growth with gross margins of 28%-29%, while projecting a high-twenties revenue growth acceleration in the fourth quarter as Longview stabilizes.
- ERP system implementation at Longview, Texas facility caused significant production disruptions and operational inefficiencies
- Supply chain constraints from refrigerant transition limited AAON Oklahoma production early in quarter
- Lower production volumes at AAON Oklahoma led to sub-optimal overhead absorption
- Strong data center demand drove BASX segment revenue growth of 20.4%
- AAON Coil Products benefited from $40.1 million in BASX-branded liquid cooling data center orders
- New Memphis facility contributed $3.0 million in cost of sales with minimal offsetting revenue
- SG&A increased due to investments in people, technology, and one-time $3.4 million Memphis incentive fee
“Our second quarter results fell short of our expectations and do not reflect the high standards we set for ourselves as an organization. We strive to be a best-in-class operator and these results do not reflect that. The underperformance was primarily driven by poor operational execution, mainly associated with the implementation of our new ERP system at our Longview, Tex. facility.”
AAON CEO, on the earnings call
Forward Guidance & Outlook
AAON reduced its full-year 2025 outlook. For FY25, the company now expects low-teens YoY sales growth, gross profit margin of 28%-29%, and non-GAAP adjusted SG&A as a percentage of sales of 16.5%-17.0%. For Q3 2025, YoY sales growth is expected at low single digits with gross profit margin of 28.5%-29.5% and non-GAAP adjusted SG&A at 17.0%-17.5% of sales. For Q4 2025, YoY sales growth is expected in the high twenties with gross profit margin of 30.0%-31.0% and non-GAAP adjusted SG&A at 16.5%-17.0% of sales. Capital expenditure plans remain at $220 million for 2025. The downward revision reflects ongoing but improving inefficiencies at Longview and moderated production levels in Tulsa following slower-than-expected run rates at the start of Q3.
AAON YoY Financials
AAON Revenue by Segment
Figures from SEC filings and company reports. Not investment advice.