AAON's Q3 2025: A Steamy Surge Amidst Cooling Trends
TULSA, Okla. - November 6, 2025 - In a world where HVAC solutions are crucial for comfort and efficiency, AAON, Inc. (NASDAQ-AAON) has reported a robust earnings surprise for the third quarter of 2025, showcasing impressive operational improvements and market share gains.
Q3 Highlights: Revenue Forecast Exceeded
AAON has set a high bar with net sales soaring 17.4% year-over-year, totaling $384.2 million. This impressive performance not only beats the EPS consensus but also reflects the company’s strategic maneuvering amidst a challenging nonresidential construction market.
While the GAAP diluted EPS of $0.37 represents a 41.3% drop compared to last year, let’s not throw ice water on this heat wave just yet. The sequential increase of 94.7% suggests that AAON is heating up in the right direction, thanks to operational efficiencies and a surge in demand for their products, particularly in the data center sector.
Backlog and Bookings: A Solid Foundation
The company’s backlog reached a record $1.32 billion, marking a staggering 103.8% increase year-over-year and an 18.1% sequential rise. This backlog is more than just numbers; it’s a testament to the strong bookings trends across both AAON and BASX-branded equipment, which are critical as they navigate through the industry's ups and downs.
It’s worth noting that BASX-branded sales skyrocketed by 95.8% to $124.8 million, primarily fueled by heightened demand for liquid cooling solutions. Meanwhile, AAON-branded sales saw a slight dip of 1.5% year-over-year, yet rose 28.1% sequentially, demonstrating resilience and a recovering production momentum at their Tulsa facility.
Gross Margins: The Heat is On
Despite the growth, gross profit margins took a hit, dropping to 27.8% from 34.9% in the prior-year period. This decline is attributed to operational inefficiencies tied to their new ERP system and unabsorbed fixed costs at their new Memphis facility. However, a sequential improvement from 26.6% indicates that the company is beginning to optimize its operations, which is a positive sign for future earnings reports.
Looking Ahead: What’s Next for AAON?
CEO Matt Tobolski highlighted the ongoing demand for AAON’s products and the company’s steady progress toward operational goals. With significant gains in production throughput and a focus on expanding their footprint in the data center market, AAON appears well-positioned to capitalize on future opportunities.
As the HVAC sector continues to evolve, AAON’s strategic investments and operational improvements could set the stage for sustained growth. The company’s ability to adapt to market demands while maintaining a solid revenue forecast bodes well for its future.