AAON Reports Strong Sales Growth in Q1 2025, Driven by BASX Demand but Faces Margin Pressures

AAON, Inc. announced its Q1 2025 financial results, reporting a 22.9% increase in net sales to $322.1 million, primarily driven by a 374.8% surge in BASX-branded product sales. Demand for air-side and liquid cooling data center equipment fueled both sales and backlog growth. The total company backlog reached a record $1.03 billion, up 83.9% year-over-year.

While sales rose, gross margin contracted to 26.8% from 35.2% a year earlier, due to production slowdowns at the AAON Oklahoma segment linked to R454B refrigerant component supply issues. Operating income fell 25.2% to $35.1 million, and net income dropped 24.9% to $29.3 million. Diluted EPS declined to $0.35 from $0.46.

The AAON Coil Products segment grew 287.8%, and BASX bookings remained robust. However, AAON-branded product sales declined 19.1%. Adjusted EBITDA fell 6.3% to $56.7 million, with margin narrowing to 17.6%.

COO Matt Tobolski highlighted expected improvements in production at the Tulsa plant and operational efficiencies in other facilities. CFO Rebecca Thompson noted a 25% dividend hike and $30 million in share repurchases. The company plans $220 million in investments for 2025, including ramping up the Memphis facility and enhancing automation.

Despite near-term challenges, AAON expressed confidence in its long-term outlook, particularly with the sustained demand for data center HVAC solutions.