AAON's Record $1.32 Billion Backlog Signals Expanding Market Share in Data Center Cooling
Operational Efficiency Fuels Significant Backlog and Order Growth
AAON’s third quarter results tell a compelling story of transformation: the company achieved net sales of $384.2 million, marking a 17.4% increase year-over-year. More notably, the company’s order backlog soared to a record $1.32 billion—up a dramatic 103.8% from last year and 18.1% quarter-over-quarter—primarily due to rising demand for high-performance, energy-efficient HVAC solutions in data centers and commercial spaces.
The robust order flow isn’t just headline-grabbing. It highlights AAON’s ability to capture market share despite softness in broader nonresidential construction. National account bookings nearly doubled in the quarter, signaling enduring demand across AAON’s product suite, especially for its BASX-branded data center solutions.
BASX Branded Data Center Solutions Lead the Charge
BASX-branded product sales surged 95.8% to $124.8 million—driven largely by liquid cooling equipment tailored for fast-growing data center needs. Backlog for BASX-branded equipment alone jumped 119.5% year-over-year, showcasing the company’s momentum in this high-growth vertical. By comparison, AAON-branded sales were slightly down year-over-year at $259.5 million, but still advanced a substantial 28.1% sequentially thanks to production improvements at key facilities.
| Brand | Q3 2025 Net Sales | Y/Y Change | Q3 2025 Backlog | Y/Y Backlog Change |
|---|---|---|---|---|
| AAON-branded | $259.5M | -1.5% | $423.32M | +77.1% |
| BASX-branded | $124.8M | +95.8% | $896.82M | +119.5% |
| Total | $384.2M | +17.4% | $1.32B | +103.8% |
Gross Margins Under Pressure, but Sequential Improvements Shine
While sales growth was robust, gross profit margin declined to 27.8% from 34.9% last year. The contraction stemmed from transitional costs, notably ongoing ERP system integration and added expenses tied to ramping up the new Memphis plant. Still, AAON delivered sequential improvement from the previous quarter, supported by production ramp-ups and operational fine-tuning at the Oklahoma and Texas facilities.
| Segment | Net Sales Q3 2025 | Gross Profit Margin Q3 2025 | Y/Y Margin Change |
|---|---|---|---|
| AAON Oklahoma | $238.75M | 31.5% | -5.3 pts |
| AAON Coil Products | $70.25M | 16.1% | -19.2 pts |
| BASX | $75.24M | 27.0% | -0.9 pts |
Order Pipeline and Data Center Demand Remain Strong
Looking at bookings and backlog, the most striking trend is BASX’s contribution. Nearly 68% of total backlog now comes from BASX-branded equipment, signaling how critical the data center cooling market has become for AAON’s forward growth. Despite broader market softness, both AAON and BASX order trends suggest that the company’s focus on mission-critical, energy-efficient solutions is hitting the mark with customers.
2025 Outlook: Margin Recovery and Capacity Expansion on Deck
For the full year 2025, management is guiding to mid-teens sales growth and gross margins of 28.0%–28.5%. As production scales at new and existing facilities—and as ERP challenges abate—the company expects improved operational efficiency to restore profitability to prior highs.
| Metric | 2025 Guidance | Prior Guidance |
|---|---|---|
| Sales Growth (YoY) | Mid Teens | Low Teens |
| Gross Profit Margin | 28.0%-28.5% | 28.0%-29.0% |
| Adjusted SG&A as % of Sales | 16.5%-17.0% | 16.5%-17.0% |
Key Takeaway: Backlog and Operational Momentum Set the Stage for Growth
AAON’s record backlog, order pipeline, and continued operational improvement underscore its growing presence in HVAC and especially the fast-growing data center cooling segment. While gross margin faces transitional pressure, sequential improvement, production ramp-ups, and an expanding market footprint leave the company well positioned as it enters the final quarter and prepares for further capacity increases in 2026. Investors and industry observers alike may want to track AAON’s progress as backlog converts to revenue and operational headwinds continue to fade.
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