Record Sales and Backlog Surge: AAON Delivers 54% Growth and $2.1 Billion in Orders
AAON’s first quarter 2026 results are impossible to ignore: the HVAC manufacturer delivered record net sales of $496.94 million, up 54.3% year-over-year, fueled by strong demand—particularly for its BASX-branded solutions in the booming data center market. Backlog also soared, climbing 107.4% to a record $2.13 billion. These numbers offer clear evidence that AAON’s recent investments in capacity and production efficiency are translating into real market gains.
Segment-wise, BASX-branded sales jumped 72.4% to $228.6 million, while AAON-branded products rose 41.6% to $268.4 million. The company’s backlog for BASX products grew a staggering 160% year-over-year, reflecting robust data center demand and successful capacity ramp-up. While AAON-branded backlog dipped slightly quarter over quarter (-3.1%), this was a deliberate strategy to accelerate deliveries and shorten lead times even as order activity held firm.
Profitability and Margin Insights: Gains Now, Margin Expansion on the Horizon
Despite booming top-line growth, the company’s gross profit margin saw a modest contraction to 25.1% from 26.8% in Q1 2025. The dip is tied to intentional short-term costs—elevated outsourcing, ramp-related inefficiencies, and price/cost timing mismatches—as AAON accelerates its production ramp. These headwinds are expected to fade as internal capacity scales up, raising the prospect for margin expansion in the second half of the year.
AAON stayed disciplined on costs, driving selling, general, and administrative (SG&A) expenses down to 13.7% of sales—220 basis points lower year-over-year. As a result, GAAP diluted EPS rose 37.1% to $0.48, and operating cash flow hit its highest level since 2024 at $34 million, supporting ongoing capacity investments.
| Q1 2026 | Q1 2025 | % Change | |
|---|---|---|---|
| Net Sales ($M) | 496.94 | 322.05 | +54.3% |
| Gross Profit Margin | 25.1% | 26.8% | -1.7 pp |
| Backlog ($M) | 2,129.46 | 1,026.87 | +107.4% |
| Diluted EPS ($) | 0.48 | 0.35 | +37.1% |
| Operating Cash Flow ($M) | 34.00 | -9.21 | Turnaround |
Segment Analysis: BASX Powers Growth, AAON Oklahoma Rebounds
AAON’s BASX segment is the growth engine, doubling year-over-year to $135.36 million in quarterly sales. The Oklahoma segment also rebounded strongly, with sales up 50.7% and gross margins improving to 26.3% (excluding ramp-related overhead, margins were 29.6%). The Coil Products unit contributed $117.61 million in sales, with margins sequentially improving as the Longview plant optimized output and product mix. These gains underscore how targeted investments and end-market diversification—particularly in data center cooling—are translating into durable revenue streams.
| Segment | Sales Q1 '26 ($M) | Gross Margin Q1 '26 | YoY Growth |
|---|---|---|---|
| AAON Oklahoma | 243.97 | 26.3% | +50.7% |
| Coil Products | 117.61 | 24.1% | +25.1% |
| BASX | 135.36 | 23.9% | +104.5% |
Raised Outlook for 2026: Revenue Growth Now Forecast Up to 45%
With a record backlog and solid demand visibility, AAON raised its full-year 2026 sales growth guidance to 40–45% (up from 18–20% prior), with gross margin targets of 27–28%. The company expects further SG&A improvements (targeting 14–15% of sales) and continued investment ($95–$100 million in depreciation and amortization) as it ramps production and fulfills orders at a record pace.
| Metric | FY26 Updated | FY26 Prior |
|---|---|---|
| Revenue Growth | 40–45% | 18–20% |
| Gross Margin | 27–28% | 29–31% |
| SG&A % of Sales | 14–15% | ~16% |
| Depreciation & Amortization ($M) | 95–100 | 95–100 |
Cash Flow and Balance Sheet Trends Highlight Ongoing Strength
Strong operating cash flow ($34 million) and improved working capital efficiency signal healthy underlying operations, even as the company continues to invest heavily in production capacity. AAON ended Q1 with $1.1 million in cash and $425.2 million outstanding on its revolving credit facility. As margin improvement materializes through greater utilization, AAON’s financial flexibility is poised to grow even further.
Key Takeaway: Data Center Demand and Capacity Investments Drive AAON’s Record Performance and Stronger 2026 Outlook
AAON’s latest results paint the picture of a company not just riding a wave of end-market growth, but proactively investing—at scale—for the future. With a $2.1 billion backlog and accelerating earnings, the company is positioned for outsized growth, especially as margin expansion is expected to follow this year’s production ramp-up. For investors and industry watchers, the confluence of surging data center demand, operational upgrades, and robust visibility makes AAON a name worth continued attention in 2026 and beyond.
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