AAON Posts Record Sales and Backlog for Q1 2026, Raises Full-Year Outlook Amid Surging Data Center Demand

Record Sales, Earnings Growth, and Backlog Underpin Strong Q1 Performance

AAON (NASDAQ: AAON) kicked off 2026 with robust momentum, reporting first-quarter results highlighted by record net sales of $496.94 million—up 54.3% year-over-year—supported by unprecedented strength in both AAON and BASX brands. GAAP diluted earnings per share climbed 37.1% to $0.48, reflecting the company's ability to convert surging demand into significant bottom-line improvements.

Driven by strong order intake—particularly in data center cooling—the company’s total backlog reached an all-time high of $2.13 billion, more than doubling from the previous year. This exceptional visibility is fueling AAON’s confidence as it raises its full-year revenue growth outlook to 40%–45%, well above its previous range of 18%–20%. Management also expects gross margins to improve over the year as capacity absorption rises, despite early-year margin softness due to temporary ramp-up costs.

Data Center Momentum Powers BASX Segment to Triple-Digit Growth

The engine behind AAON’s growth has been the soaring demand for data center cooling solutions, a trend most visible in the BASX-branded business. BASX net sales jumped an impressive 104.5% year-over-year, while its quarter-end backlog surged 160% to $1.62 billion. Expanded production at AAON’s new Memphis facility and robust data center orders have cemented BASX’s role as a growth driver—even as the company continues to win share in a challenging broader HVAC market.

Operational Investments Temporarily Pressure Margins, but Improvement Expected

While AAON’s gross margin declined to 25.1% (from 26.8% a year ago), the company attributes this dip to strategic investments: ramping up new capacity, handling temporary outsourcing to meet demand, and price/cost timing dynamics. These headwinds are expected to fade in the coming quarters as operational leverage improves and internal capacity utilization rises.

Selling, general and administrative (SG&A) expenses fell to 13.7% of sales, down from 15.2%, highlighting tight cost discipline and operating leverage. Adjusted EBITDA reached $78.04 million (up from $56.70 million), though margin fell to 15.7%, reflecting the timing of expenses associated with the scale-up.

Balance Sheet & Cash Flow Strength Bolster Outlook

AAON’s operating cash flow surged to $33.99 million—the highest since Q3 2024—thanks to higher earnings and improved working capital efficiency. Capital expenditures remain elevated at $52.9 million, as continued capacity investments are expected to lay the groundwork for future volume and productivity gains. Management sees further gains ahead as profitability and productivity trends continue to improve, supporting stronger cash flow and a healthier balance sheet over time.

Full-Year 2026 Guidance Raised as Management Sees Durable Growth Ahead

Given the record backlog and ongoing demand, AAON has increased its 2026 sales outlook to 40%-45% growth, targeting gross margins of 27%-28% as the benefits of scale and operational execution accumulate during the year. SG&A costs are projected at 14%-15% of sales, while capital deployment will continue to focus on expanding capacity and supporting long-term earnings power.

Key Takeaways: Elevated Backlog and Capacity Build Point to Sustained Performance

AAON’s record results and elevated outlook underscore the company’s positioning at the heart of seismic shifts in HVAC and data center infrastructure. With strong operating leverage, improving cash flow, and a continued focus on capacity and productivity, the company appears well-placed to translate short-term headwinds into long-term earnings growth.

Investors may want to track margin trends and backlog conversion rates in upcoming quarters, as these will be crucial in assessing how quickly AAON can turn its large order book into higher profitability. As the company continues to invest in scale and efficiency, the coming quarters could mark a period where operational execution delivers both growth and improving margins—particularly if data center demand remains robust.

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