AAON Inc (NASDAQ:AAON) shares advanced approximately 22% in Tuesday’s premarket trading after the heating, ventilation and air conditioning (HVAC) equipment manufacturer reported third-quarter earnings and revenue above analyst expectations and increased its full-year 2026 financial guidance.
The company reported adjusted earnings of $0.83 per share, exceeding the analyst consensus estimate of $0.56 by $0.27. Quarterly revenue increased 84.1% year-on-year to a record $707.4 million, compared with $384.2 million in the corresponding period of 2025 and analysts’ expectations of $599.7 million.
The revenue increase reflected demand for the company’s AAON and BASX product lines, higher manufacturing output and greater utilisation of recently expanded production capacity.
AAON reported third-quarter net sales of $707.4 million, representing an increase of $323.2 million from the prior-year period.
The result exceeded the analyst consensus estimate by approximately $107.7 million.
Adjusted earnings per share reached $0.83, compared with market expectations of $0.56, reflecting the company’s higher revenue and operating performance during the quarter.
Gross profit increased 76.4% to $188.5 million, while gross margin reached 26.7%, an improvement of 60 basis points compared with the second quarter.
Operating income more than doubled, rising 129.3% to $100.0 million.
The company attributed the results to increased production throughput, pricing measures and greater utilisation of its manufacturing facilities.
AAON reported revenue growth across both of its principal product brands.
Sales of AAON-branded products increased 19.6% to $310.2 million, while BASX-branded revenue rose 218.3% to $397.2 million.
The increase in BASX revenue reflected demand for cooling and environmental control equipment used in data centres, including facilities operated by large-scale cloud computing providers.
The company’s expanded manufacturing capacity also contributed to its ability to fulfil additional customer orders during the quarter.
William Blair analysts highlighted the performance of the BASX business, noting that orders accelerated during the third quarter.
The analysts said fourth-quarter orders were expected to “meet or exceed” the prior year’s “exceptionally strong $586M result.”
According to their assessment, demand was supported by repeat orders from hyperscale computing customers and the addition of new customers.
Following the quarterly results, AAON increased its full-year 2026 net sales growth forecast to between 72% and 75%, compared with its previous guidance of 55% to 60%.
The midpoint of the revised range is 73.5%, representing an increase of 16 percentage points from the midpoint of the earlier forecast.
The company also updated its profitability and operating expense expectations.
AAON now expects a full-year gross margin of approximately 26%, compared with its previous projection of 25% to 26%.
Selling, general and administrative expenses are forecast to represent approximately 13% of sales, compared with the previous range of 13% to 14%.
The revised outlook reflects management’s expectations for manufacturing activity, product demand and operating costs during the remainder of the year.
William Blair analysts said AAON had “cleared two key hurdles” with its third-quarter financial report.
The first was an acceleration in BASX orders, supported by demand from data centre operators and new customer relationships.
The second was an improvement in gross margin, which the analysts attributed to pricing actions and higher production volumes.
The firm indicated that AAON shares could reach $100 under a valuation framework applying 18 times projected 2027 EBITDA to the AAON-branded business and 10 to 11 times its estimated 2027 EBITDA for BASX.
The valuation represents the analysts’ assessment rather than a company forecast or an assured future share price.
William Blair also identified further gross margin improvement in 2027 as a “key unlock for further value creation.”
The comments reflect the firm’s expectations regarding the company’s future operating performance and the contribution of its two principal product lines.
Alongside its third-quarter results, AAON disclosed that it had identified errors in its financial statements for the first and second quarters of 2026.
The errors were discovered during the preparation of the company’s third-quarter financial reporting.
As a result, AAON restated its first-half financial results, increasing previously reported net sales by $10.7 million and diluted earnings per share by $0.09.
The company also identified a material weakness in its internal control over financial reporting.
AAON said it was implementing measures intended to address the identified control deficiencies.
The disclosure introduces an additional financial reporting consideration alongside the company’s operating results and revised guidance.
AAON reported a total order backlog of $1.9 billion, representing a 40.5% increase compared with the corresponding period a year earlier.
The backlog reflects customer orders that have not yet been recognised as revenue and provides information about contracted future business activity.
Operating cash flow for the year to date increased to $146.9 million, compared with a cash outflow of $18.8 million during the same period of 2025.
The year-on-year change represents an improvement of $165.7 million in operating cash flow.
The increase occurred alongside higher sales volumes and expanded manufacturing activity.
President and Chief Executive Officer Matt Tobolski highlighted the company’s revenue, profitability and cash flow results.
“We delivered record net sales, more than doubled operating income and diluted EPS, improved gross margin 60 basis points sequentially, generated strong cash flow and raised full-year outlook,” Tobolski said.
The comments accompanied AAON’s updated annual financial projections and its report of higher demand across both the AAON and BASX businesses.
AAON’s third-quarter results showed increases in revenue, adjusted earnings, operating income and order backlog, with the BASX business accounting for a substantial portion of the company’s sales growth.
The revised 2026 guidance indicates that management expects higher annual revenue growth than previously projected, while forecasting gross margins of approximately 26%.
The company is also addressing financial reporting control deficiencies identified during the quarter, following restatements of its first-half results.
Investors will be monitoring the conversion of backlog into revenue, demand from data centre customers, manufacturing capacity utilisation and progress towards the company’s updated profitability targets.
AAON stock price
| 2 hours | |
| 2 hours | |
| 3 hours | |
| 3 hours | |
| 6 hours | |
| Nov-09 | |
| Nov-09 | |
| Nov-09 | |
| Nov-06 | |
| Nov-02 | |
| Oct-30 | |
| Aug-21 | |
| Aug-13 | |
| Aug-10 | |
| Aug-10 |
Join thousands of traders who make more informed decisions with our premium features. Real-time quotes, advanced visualizations, alerts, and much more.
Learn more about Finviz Elite