Key Highlights

● Second-quarter net sales rose 101.2% to US$627.0 million.

● BASX-branded sales, including liquid cooling, rose 216.2% to US$345.0 million.

● Gross margin fell to 24.3% from 26.6% as Memphis ramp costs weighed.

● Total backlog was US$2.0 billion, up 98.0% year on year.

AAON, Inc. (NASDAQ:AAON), the Tulsa, Oklahoma manufacturer of heating, ventilation and air-conditioning equipment, published second-quarter 2026 results on 10 August 2026. Net sales for the quarter ended 30 June 2026 were US$627.0 million, up 101.2% from US$311.6 million a year earlier. Gross profit rose 84.3% to US$152.5 million, operating income climbed 192.1% to US$68.9 million, and GAAP diluted earnings per share were US$0.68, compared with US$0.19. Adjusted earnings per share, which excludes a US$1.4 million infrequent expense linked to an incentive fee for the Memphis, Tennessee facility, were US$0.69.

The growth was unevenly distributed. BASX-branded sales, which include liquid cooling products, were US$345.0 million, up 216.2%, while AAON-branded sales were US$282.2 million, up 39.3%. At segment level, BASX sales reached US$218.0 million and AAON Coil Products US$146.7 million, of which BASX-branded liquid cooling accounted for US$126.6 million, up 208.4%. AAON Oklahoma, the traditional business, reported sales of US$262.3 million, up 41.7%.

Margins under pressure from the Memphis ramp

Gross margin fell to 24.3% from 26.6% a year earlier, even as selling, general and administrative costs dropped to 13.3% of sales, a reduction of 570 basis points. The margin dilution is largely visible in the Oklahoma segment, where gross margin was 24.3% against 28.9% in the prior-year quarter. Memphis overhead in that segment totalled US$18.1 million, compared with US$3.0 million a year earlier. Excluding those Memphis costs, the company said segment gross margin would have been 31.2%, up 70 basis points. BASX segment gross margin improved to 30.0% from 27.9%, while Coil Products slipped to 16.0% from 17.5%.

This distinction matters because it separates start-up costs from underlying pricing and mix. It is also an interpretation rather than a reported GAAP figure, and the Memphis costs are real cash outflows regardless of how they are presented.

Backlog, cash flow and funding

Total backlog was US$2.0 billion, up 98.0% from US$995.3 million a year earlier but down 7.4% from the first quarter of 2026. BASX-branded backlog rose 185.4% year on year, whereas AAON-branded backlog rose 9.4% year on year and 6.0% sequentially. The sequential decline in the total is a reminder that order intake can be lumpy, particularly for large projects.

Operating cash flow for the six months to 30 June 2026 was US$55.0 million, compared with an outflow of US$31.0 million in the same period of 2025. At quarter-end the company held US$12.7 million of cash, equivalents and restricted cash and had US$435.0 million drawn on its revolving credit facility.

Management guidance

The company raised its 2026 outlook. It now expects net sales growth of 55% to 60%, gross margin of approximately 25% to 26%, and selling, general and administrative expenses of 13% to 14% of sales. Chief executive Matt Tobolski said the company expects sequential margin improvement in the second half of the year. Chief financial officer Andy Cheung highlighted cash flow improvement. These are management expectations, not analyst forecasts or guaranteed outcomes.

Brand Concentration, Memphis Costs and a Rising Revolver Balance

The results illustrate how concentrated growth has become in one brand, on these figures. Heavy reliance on the BASX brand means results could be affected by changes in customer spending, project timing or competition, while the Memphis ramp may take longer to normalise than management expects, and a rising revolver balance increases sensitivity to interest costs.