The Aaon Group Reports Record Third Quarter 2026 Results, Restates First and Second Quarter 2026 Financial Statements and Raises Full-Year Outlook
Record revenue, continued margin improvement and strong execution drive operating income and diluted EPS to more than double year over year
Company identifies material weakness and restates first and second quarter of 2026 financial statements, resulting in an increase to first-half 2026 financial results
Third Quarter 2026 Highlights
(All comparisons are year-over-year, unless otherwise noted)
Raises 2026 Outlook
TULSA, Okla., Nov. 9, 2026 /PRNewswire/ -- AAON, INC. (NASDAQ-AAON) ("The Aaon Group" or the "Company"), a leader in high-performance HVAC and thermal management solutions, today announced its results for the third quarter of 2026 and raised its full-year outlook.
"Our third quarter results reflect strong execution and continued progress turning the investments we have made into stronger operating performance," said Matt Tobolski, President and CEO of The Aaon Group. "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. The improvement was broad-based, with both AAON and BASX delivering strong growth.
"During our third quarter reporting process, we also identified errors in our previously reported first and second quarter financial statements. We corrected those errors and determined that a material weakness existed in our internal control over financial reporting. We take that seriously. These issues were identified through enhanced review and control procedures as we continue to strengthen our finance organization, and we are moving with urgency to remediate the material weakness and further strengthen our control environment.
"Across the business, higher throughput and utilization, better overhead absorption, pricing and sourcing actions, and continued operational improvement are increasingly showing up in our results. AAON continues to gain share despite softer conditions in the broader commercial HVAC market. At BASX, customer engagement remains strong, our opportunity pipeline is healthy, and we continue to strengthen our position with strategic data center customers.
"We have invested significantly in capacity and capabilities to support our growth. We are increasingly converting those investments into revenue, earnings and cash flow while continuing to improve how we operate. There is more work to do, but the progress is clear. We remain focused on execution, continuous improvement, and creating durable long-term value."
Third Quarter 2026 Results
Net sales for the third quarter of 2026 increased 84.1% to a record $707.4 million, compared with $384.2 million in the third quarter of 2025. Growth was driven by strong demand for both the AAON and BASX brands, increased manufacturing throughput, and greater utilization of recently expanded production capacity.
AAON-branded sales increased to a record level, growing 19.6% to $310.2 million, benefitting from a healthy backlog and continued production throughput gains. BASX-branded sales grew 218.3% to a record $397.2 million, reflecting strong momentum in data center demand, continued production output gains, and increased utilization of recently added manufacturing capacity. Booking activity remained solid across both brands, contributing to market share gains and elevated backlog levels. AAON‑branded backlog increased 18.0% from the prior-year period while BASX-branded products ended the quarter with backlog up 51.1%.
Gross profit increased 76.4% to $188.5 million, compared with $106.9 million in the third quarter of 2025. Gross profit margin was 26.7%, compared with 27.8% in the prior-year period, but increased 60 basis points sequentially, marking the second consecutive quarter of improvement. Year over year, margin was impacted primarily by a higher proportion of BASX revenue generated from less mature, lower-utilization facilities, partially offset by improved price/cost and volume leverage. The sequential improvement reflects progress in mitigating these headwinds, and through a combination of pricing, sourcing, productivity, and other operational initiatives, margins continue to trend positively.
Selling, general and administrative expenses as a percent of sales declined 400 basis points to 12.5%, reflecting continued operating leverage and disciplined cost management as revenue growth outpaced overhead investments.
Operating income increased 129.3% to $100.0 million, compared with $43.6 million in the prior-year period. Diluted earnings per share were $0.83, an increase of 124.3% from $0.37 in the third quarter of 2025.
Backlog
September 30, 2026
June 30, 2026
September 30, 2025
(in thousands)
AAON-branded products
$ 499,341
$ 540,465
$ 423,316
BASX-branded products
1,355,152
1,419,822
896,824
$ 1,854,493
$ 1,960,287
$ 1,320,140
Total backlog increased 40.5% year-over-year to $1.9 billion, compared to $1.3 billion the prior year. BASX-branded backlog increased 51.1% year-over-year, reflecting continued customer investment activity in data center infrastructure and the value customers place on BASX's custom-engineered solutions. AAON-branded backlog increased 18.0% year-over-year, supported by strong order activity despite soft end-market conditions.
Compared to the second quarter of 2026, total backlog decreased 5.9%, primarily reflecting accelerated backlog conversion into record revenue and the inherent timing variability of large BASX project awards. The Company continues to see strong customer engagement and a healthy pipeline of opportunities across the data center market, and expects order strength to continue in the fourth quarter and as we enter 2027. AAON-branded backlog declined 7.6% sequentially, primarily reflecting higher production and improved throughput as we continued to reduce elevated lead times. Strong order activity and continued market share gains partially offset the decline despite softness in the commercial HVAC market. Across the enterprise, our expanded capacity, shorter lead times, and differentiated, value-added solutions reinforce our confidence in the underlying fundamentals of the business.
2026 Outlook
Based on strong third quarter performance, increased manufacturing throughput, and current business conditions, the Company raised its full-year 2026 outlook:
Current
Prior
Metric
FY26
FY26
YoY Sales Growth
72%-75%
55%-60%
Gross Profit Margin
~26%
25%-26%
SG&A as a % of sales
~13%
13%-14%
Depreciation &
Amortization
~$100M
$95M-$100M
"Our raised outlook reflects the strength of our third quarter performance, continued customer activity across our end markets, and the meaningful progress we are making towards increasing throughput and converting backlog into revenue," said Matt Tobolski. "Expanded capacity, shorter lead times, and continued operational execution provide increased confidence in our ability to deliver strong growth through the remainder of the year.
"We are encouraged by the sequential improvement in gross margin during the third quarter. Higher production volumes, better utilization, pricing actions, sourcing initiatives, and continued operational discipline are beginning to show more clearly in our results. While additional work remains, we expect continued progress in the fourth quarter and remain confident in the long-term earnings power and cash generation potential of the business."
Restatement of Previously Issued Quarterly Financial Statements & Material Weakness
The Company has restated its previously issued financial statements for the first and second quarters of 2026. In aggregate, the restatements resulted in increases to first-half 2026 net sales, gross margin, and GAAP diluted EPS of $10.7 million, 71 basis points, and $0.09, respectively.
Management concluded that restatements to previously issued interim financial statements were appropriate and that a material weakness existed in internal control over financial reporting. The Company has implemented corrective actions and is executing additional measures designed to further strengthen our control environment and internal controls over financial reporting. The Company found no evidence of fraud or misconduct in connection with these matters and believes the identified errors do not alter the underlying strength of the business or its long-term growth outlook.
The impact of the restated first and second quarter of 2026 financial statements to correct for the identified errors can be seen at the end of this release or in Footnote 2 of the restated 10-Q filings for the first and second quarters of 2026, being filed today. Additional information regarding the material weakness can be found in Item 4 of the third quarter 10-Q filing, also being filed today.
Segment Results
AAON Oklahoma
Three Months Ended
(in thousands)
September 30,
2026
June 30, 2026
March 31, 2026
December 31,
2025
September 30,
2025
Net sales
$ 283,492
$ 262,277
$ 243,967
$ 215,503
$ 238,748
Gross profit
$ 72,346
$ 63,617
$ 64,272
$ 59,168
$ 78,803
Gross profit margin
25.5 %
24.3 %
26.3 %
27.5 %
33.0 %
Non-GAAP Adjusted gross
profit
$ 93,075
$ 81,739
$ 74,117
$ 65,567
$ 83,303
Non-GAAP Adjusted gross
profit margin
32.8 %
31.2 %
30.4 %
30.4 %
34.9 %
AAON Oklahoma generated net sales of $283.5 million, an increase of 18.7% from the prior-year period. Growth was supported by effective execution of a robust backlog and continued operational improvements that enhanced production throughput and backlog conversion. Higher pricing also contributed to growth.
Gross profit was $72.3 million compared with $78.8 million in the prior-year period. Gross margin was 25.5%, compared to 33.0% in the third quarter of 2025. Segment profitability was impacted by $20.7 million of overhead expenses associated with the Memphis facility, compared with $4.5 million in the prior-year period. Sequentially, excluding these expenses, AAON Oklahoma adjusted gross margin improved 160 basis points, benefiting from improving price/cost and higher capacity utilization.
AAON Coil Products
Three Months Ended
(in thousands)
September 30,
2026
June 30, 2026
March 31, 2026
December 31, 2025
September 30,
2025
Net sales
$ 192,630
$ 152,282
$ 101,654
$ 102,619
$ 70,246
Gross profit
$ 49,792
$ 29,140
$ 12,345
$ 21,827
$ 7,758
Gross profit margin
25.8 %
19.1 %
12.1 %
21.3 %
11.0 %
AAON Coil Products generated net sales of $192.6 million, an increase of 174.2% from the prior-year period. Growth was driven primarily by BASX-branded liquid cooling sales of $165.5 million, up 255.6% during the period.
Gross profit increased 541.8% to $49.8 million, compared with $7.8 million in the prior-year period. Gross margin was 25.8%, compared with 11.0% in the third quarter of 2025. The year-over-year margin performance reflected repricing of existing backlog to mitigate inflationary and other price/cost headwinds. Results were also positively impacted by improved labor efficiency, better overhead absorption, and higher production volume.
BASX
Three Months Ended
(in thousands)
September 30,
2026
June 30, 2026
March 31, 2026
December 31, 2025
September 30,
2025
Net sales
$ 231,308
$ 227,569
$ 146,904
$ 106,095
$ 75,244
Gross profit
$ 66,401
$ 74,885
$ 43,937
$ 28,775
$ 20,300
Gross profit margin
28.7 %
32.9 %
29.9 %
27.1 %
27.0 %
BASX segment generated net sales of $231.3 million, an increase of 207.4% from the prior-year period. Growth was driven by strong backlog conversion, sustained data center investment activity, and increased production capacity resulting from the continued ramp of the Company's manufacturing footprint, including the Memphis facility.
Gross profit increased 227.1% to $66.4 million, compared with $20.3 million in the prior-year period. Gross margin was 28.7%, up from 27.0% in the third quarter of 2025. The year-over-year margin improvement reflected substantial volume growth, partially offset by incremental resources and investments required to support future growth, customer delivery, and continued share gains.
Balance Sheet & Cash Flow
As of September 30, 2026, the Company had cash, cash equivalents and restricted cash of $3.7 million and a balance on its revolving credit facility of $386.7 million.
Andy Cheung, CFO and Treasurer, commented, "Our balance sheet continued to strengthen during the third quarter as robust earnings growth and disciplined execution drove another period of exceptional cash flow generation. Operating cash flow totaled $146.9 million through the first nine months of 2026, a significant improvement from a $18.8 million use of cash in the prior year period. This improved cash flow provides The Aaon Group with a significant runway for continued execution of our strategic growth initiatives. Looking ahead, we remain confident that continued operational execution, working capital discipline, and margin improvement initiatives will support robust cash flow generation and continued balance sheet improvement."
Conference Call
The Company will host a conference call and webcast today at 5:00 p.m. EST to discuss the third quarter of 2026 results and outlook. The conference call will be accessible via dial-in for those who wish to participate in Q&A as well as a listen-only webcast. The dial-in is accessible at 1-888-880-3330. To access the listen-only webcast, please register at https://app.webinar.net/E7MK2gxj9Oo. On the next business day following the call, a replay of the call will be available on the company's website at https://investors.theaaongroup.com/.
About The Aaon Group
The Aaon Group provides high-performance HVAC and thermal management solutions for commercial, industrial, and data center environments. Through two strong brands, AAON and BASX, the company designs and manufactures highly configurable and custom-engineered equipment focused on efficiency, performance, reliability, and long-term customer value. For more information, please visit theaaongroup.com.
Forward-Looking Statements
This press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "expects", "anticipates", "intends", "plans", "believes", "seeks", "estimates", "should", "will", and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligations to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Important factors that could cause results to differ materially from those in the forward-looking statements include (1) the timing and extent of changes in raw material and component prices, (2) the effects of fluctuations in the commercial/industrial new construction market, (3) the material weakness in the effectiveness of our internal controls over financial reporting and the impact of our ability to adequately remediate the material weakness in a timely manner, (4) the timing and extent of changes in interest rates, as well as other competitive factors during the year, and (5) general economic, market or business conditions. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in any forward-looking statements, see "Risk Factors" and "Forward Looking Statements" in AAON's Annual Report on Form 10-K for the most recent fiscal year, as may be revised and updated by AAON's Quarterly Reports on Form 10-Q, and AAON's Current Reports on Form 8-K.
Contact Information
Joseph Mondillo
Director of Investor Relations & Corporate Strategy
Email: [email protected]
AAON, Inc. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
Three Months Ended September 30,
Nine Months Ended September 30,
2026
2025
2026
2025
(in thousands, except per share data)
Net sales
$ 707,430
$ 384,238
$ 1,842,082
$ 1,017,859
Cost of sales
518,891
277,377
1,365,347
741,905
Gross profit
188,539
106,861
476,735
275,954
Selling, general and administrative expenses
88,559
63,230
242,817
173,670
(Gain) loss on disposal of assets
—
36
—
(4)
Income from operations
99,980
43,595
233,918
102,288
Interest expense
(5,817)
(5,153)
(17,067)
(11,964)
Other income, net
67
—
302
106
Income before taxes
94,230
38,442
217,153
90,430
Income tax provision
25,272
7,660
44,620
14,869
Net income
$ 68,958
$ 30,782
$ 172,533
$ 75,561
Earnings per share:
Basic EPS
$ 0.84
$ 0.38
$ 2.10
$ 0.93
Diluted EPS
$ 0.83
$ 0.37
$ 2.06
$ 0.91
Cash dividends declared per common share:
$ 0.10
$ 0.10
$ 0.30
$ 0.30
Weighted average shares outstanding:
Basic
82,454,996
81,543,105
82,217,732
81,485,914
Diluted
83,557,784
82,952,049
83,570,266
83,086,858
AAON, Inc. and Subsidiaries
Segment Net Sales and Profit
(Unaudited)
Three Months Ended September 30,
Nine Months Ended September
30,
2026
2025
2026
2025
(in thousands)
AAON Oklahoma
External sales
$ 283,492
$ 238,748
$ 789,735
$ 585,706
Inter-segment sales
89,029
9,737
224,897
18,894
Eliminations
(89,029)
(9,737)
(224,897)
(18,894)
Net sales
283,492
238,748
789,735
585,706
Cost of sales 1
211,146
159,945
589,500
412,786
Gross profit
72,346
78,803
200,235
172,920
AAON Coil Products
External sales
$ 192,630
$ 70,246
$ 446,566
$ 222,734
Inter-segment sales
4,376
4,689
18,854
11,707
Eliminations
(4,376)
(4,689)
(18,854)
(11,707)
Net sales
192,630
70,246
446,566
222,734
Cost of sales 1
142,838
62,488
355,289
174,889
Gross profit
49,792
7,758
91,277
47,845
BASX
External sales
$ 231,308
$ 75,244
$ 605,781
$ 209,419
Inter-segment sales
108
26
664
576
Eliminations
(108)
(26)
(664)
(576)
Net sales
231,308
75,244
605,781
209,419
Cost of sales 1
164,907
54,944
420,558
154,230
Gross profit
66,401
20,300
185,223
55,189
Consolidated gross profit
$ 188,539
$ 106,861
$ 476,735
$ 275,954
1
Presented after intercompany eliminations.
The reconciliation between consolidated gross profit to consolidated income from operations is as follows:
Consolidated gross profit
$ 188,539
$ 106,861
$ 476,735
$ 275,954
Less: Selling, general and administrative expenses
88,559
63,230
242,817
173,670
Add: (gain) loss on disposal of assets
—
(36)
—
4
Consolidated income from operations
$ 99,980
$ 43,595
$ 233,918
$ 102,288
AAON, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
September 30,
2026
December 31,
2025
Assets
(in thousands, except share and
per share data)
Current assets:
Cash and cash equivalents
$ 13
$ 13
Restricted cash
3,658
1,226
Accounts receivable, net
396,849
314,387
Income tax receivable
334
27,445
Inventories, net
376,045
261,151
Contract assets, net
279,544
247,037
Prepaid expenses and other
18,274
17,921
Total current assets
1,074,717
869,180
Property, plant and equipment, net
689,617
631,262
Intangible assets, net and goodwill
168,435
165,799
Right-of-use assets
18,955
17,988
Other long-term assets
1,672
2,281
Total assets
$ 1,953,396
$ 1,686,510
Liabilities and Stockholders' Equity
Current liabilities:
Short-term obligations of NMTC 1
7,535
7,535
Accounts payable
182,598
110,437
Accrued liabilities
185,918
132,213
Contract liabilities
5,713
80,670
Total current liabilities
381,764
330,855
Debt, long-term
386,709
398,320
Deferred tax liabilities
44,323
30,313
Other long-term liabilities
34,484
23,299
New markets tax credit obligations 1
21,371
8,738
Commitments and contingencies (Note 19)
Stockholders' equity:
Preferred stock, $.001 par value, 5,000,000 shares authorized, no shares issued
—
—
Common stock, $.004 par value, 200,000,000 shares authorized, 82,459,251 and
81,691,075 issued and outstanding at September 30, 2026 and December 31, 2025,
respectively
330
327
Additional paid-in capital
106,202
64,358
Retained earnings
978,213
830,300
Total stockholders' equity
1,084,745
894,985
Total liabilities and stockholders' equity
$ 1,953,396
$ 1,686,510
1
Held by variable interest entities
AAON, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
September 30,
2026
2025
Operating Activities
(in thousands)
Net income
$ 172,533
$ 75,561
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Depreciation and amortization
73,859
58,838
Amortization of debt issuance costs
124
250
Amortization of right-of-use assets
240
118
(Recoveries of) Provision for losses on accounts receivable, net of adjustments
(128)
92
Provision for losses on contract assets, net of adjustments
—
200
Provision for excess and obsolete inventories, net of write-offs
1,745
1,025
Share-based compensation
16,886
13,421
Other
—
(32)
Deferred income taxes
14,010
23,035
Changes in assets and liabilities:
Accounts receivable
(82,334)
(118,896)
Income tax receivable
27,111
(21,393)
Inventories
(116,639)
(64,116)
Contract assets
(32,507)
(71,919)
Prepaid expenses and other long-term assets
256
(771)
Accounts payable
83,010
59,891
Contract liabilities
(74,957)
5,061
Extended warranties
10,737
431
Accrued liabilities and other long-term liabilities
52,946
20,420
Net cash provided by (used in) operating activities
146,892
(18,784)
Investing Activities
Capital expenditures
(138,097)
(128,067)
Grant proceeds received
1,650
—
Proceeds from sale of property, plant and equipment
—
275
Acquisition of intangible assets
(9,252)
(10,868)
Principal payments from note receivable
—
37
Net cash used in investing activities
(145,699)
(138,623)
Financing Activities
Borrowings of debt
925,430
658,458
Payments of debt
(937,041)
(453,449)
Proceeds from financing obligation, net of issuance costs
12,908
—
Payment related to financing costs
(399)
(1,395)
Stock options exercised
29,563
13,275
Repurchase of stock - open market
—
(29,992)
Repurchases of stock - LTIP plans (Note 17)
(4,602)
(9,300)
Cash dividends paid to stockholders
(24,620)
(24,437)
Net cash provided by financing activities
1,239
153,160
Net increase (decrease) in cash, cash equivalents, and restricted cash
2,432
(4,247)
Cash, cash equivalents, and restricted cash, beginning of period
1,239
6,514
Cash, cash equivalents, and restricted cash, end of period
$ 3,671
$ 2,267
Use of Non-GAAP Financial Measures
To supplement the Company's consolidated financial statements presented in accordance with generally accepted accounting principles ("GAAP"), additional non-GAAP financial measures are provided and reconciled in the following tables. The Company believes that these non-GAAP financial measures, when considered together with the GAAP financial measures, provide information that is useful to investors in understanding period-over-period operating results. The Company believes that this non-GAAP financial measure enhances the ability of investors to analyze the Company's business trends and operating performance as they are used by management to better understand operating performance. Since adjusted net income, adjusted net income per diluted share, EBITDA, adjusted EBITDA, and adjusted EBITDA margin are non-GAAP measures and are susceptible to varying calculations, adjusted net income, adjusted net income per diluted share, EBITDA, adjusted EBITDA, and adjusted EBITDA margin, as presented, may not be directly comparable with other similarly titled measures used by other companies.
Non-GAAP Adjusted Net Income
The Company defines non-GAAP adjusted net income as net income adjusted for any infrequent events, such as litigation settlements, net of profit sharing and tax effect, in the periods presented.
The following table provides a reconciliation of net income (GAAP) to non-GAAP adjusted net income for the periods indicated:
Three Months Ended September 30,
Nine Months Ended September
30,
2026
2025
2026
2025
(in thousands)
Net income, a GAAP measure
$ 68,958
$ 30,782
$ 172,533
$ 75,561
Add: Memphis incentive fee 1
—
—
1,448
6,105
Profit sharing effect 2
—
—
(123)
(519)
Tax effect
—
—
(332)
(1,369)
Non-GAAP adjusted net income
$ 68,958
$ 30,782
$ 173,526
$ 79,778
Non-GAAP adjusted earnings per diluted share
$ 0.83
$ 0.37
$ 2.08
$ 0.96
1The incentive fee relates to fees payable to our real estate broker associated with the acquisition of our Memphis, Tenn. plant for a percentage of the incentives awarded to us by various entities.
2Profit sharing effect of the Memphis incentive fee in the respective period.
EBITDA
EBITDA (as defined below) is presented herein and reconciled from the GAAP measure of net income because of its wide acceptance by the investment community as a financial indicator of a company's ability to internally fund operations. The Company defines EBITDA as net income, plus (1) depreciation and amortization, (2) interest expense (income), net and (3) income tax expense. EBITDA is not a measure of net income or cash flows as determined by GAAP. EBITDA margin is defined as EBITDA as a percentage of net sales.
The Company's EBITDA measure provides additional information which may be used to better understand the Company's operations. EBITDA is one of several metrics that the Company uses as a supplemental financial measurement in the evaluation of its business and should not be considered as an alternative to, or more meaningful than, net income, as an indicator of operating performance. Certain items excluded from EBITDA are significant components in understanding and assessing a Company's financial performance. EBITDA, as used by the Company, may not be comparable to similarly titled measures reported by other companies. The Company believes that EBITDA is a widely followed measure of operating performance and is one of many metrics used by the Company's management team and by other users of the Company's consolidated financial statements.
Adjusted EBITDA is calculated as EBITDA adjusted by items in non-GAAP adjusted net income, above, except for taxes, as taxes are already excluded from EBITDA.
The following table provides a reconciliation of net income (GAAP) to EBITDA (non-GAAP) and Adjusted EBITDA (non-GAAP) for the periods indicated:
Three Months Ended September 30,
Nine Months Ended September
30,
2026
2025
2026
2025
(in thousands)
Net income, a GAAP measure
$ 68,958
$ 30,782
$ 172,533
$ 75,561
Depreciation and amortization
27,141
19,959
73,859
58,838
Interest expense, net
5,817
5,153
17,067
11,964
Income tax expense
25,272
7,660
44,620
14,869
EBITDA, a non-GAAP measure
$ 127,188
$ 63,554
$ 308,079
$ 161,232
Add: Memphis incentive fee 1
—
—
1,448
6,105
Profit sharing effect 2
—
—
(123)
(519)
Adjusted EBITDA, a non-GAAP measure
$ 127,188
$ 63,554
$ 309,404
$ 166,818
Adjusted EBITDA margin, a non-GAAP measure
18.0 %
16.5 %
16.8 %
16.4 %
1The incentive fee relates to fees payable to our real estate broker associated with the acquisition of our Memphis, Tenn. plant for a percentage of the incentives awarded to us by various entities.
2Profit sharing effect of the Memphis incentive fee in the respective period.
Non-GAAP Adjusted Selling, General and Administrative Expenses
The following table provides a reconciliation of selling, general and administrative expenses (GAAP) to adjusted selling, general and administrative expenses (non-GAAP) for the periods indicated:
Three Months Ended September
30,
Nine Months Ended September
30,
2026
2025
2026
2025
Non-GAAP Adjusted Selling, General and
Administrative Expenses
SG&A, a GAAP measure
$ 88,559
$ 63,230
$ 242,817
$ 173,670
Memphis incentive fee
—
—
(1,448)
(6,105)
Profit sharing effect
—
—
123
519
Non-GAAP adjusted SG&A expenses
88,559
63,230
241,492
168,084
As a percent of sales
12.5 %
14.9 %
13.1 %
16.5 %
Non-GAAP Adjusted AAON Oklahoma Gross Profit
The following tables provides a reconciliation of AAON Oklahoma gross profit (GAAP) to adjusted gross profit (non-GAAP) for the periods indicated:
Three Months Ended
September 30,
Nine Months Ended September
30,
(in thousands)
2026
2025
2026
2025
Non-GAAP Adjusted AAON Oklahoma Gross
profit
AAON Oklahoma Net sales
$ 283,492
$ 238,748
$ 789,735
$ 585,706
AAON Oklahoma Gross profit
$ 72,346
$ 78,803
$ 200,235
$ 172,920
Memphis facility overhead costs
20,729
4,500
48,696
9,300
Non-GAAP Adjusted AAON Oklahoma Gross profit
$ 93,075
$ 83,303
$ 248,931
$ 182,220
Non-GAAP Adjusted AAON Oklahoma Gross profit
margin
32.8 %
34.9 %
31.5 %
31.1 %
Three Months Ended
(in thousands)
June 30, 2026
March 31, 2026
December 31,
2025
Non-GAAP Adjusted AAON Oklahoma Gross profit
AAON Oklahoma Net sales
$ 262,276
$ 243,967
$ 215,503
AAON Oklahoma Gross profit
$ 63,617
$ 64,272
$ 59,168
Memphis facility overhead costs
$ 18,122
$ 9,845
$ 6,399
Non-GAAP Adjusted AAON Oklahoma Gross profit
$ 81,739
$ 74,117
$ 65,567
Non-GAAP Adjusted AAON Oklahoma Gross profit margin
31.2 %
30.4 %
30.4 %
Restatement of Previously Issued Financial Statements
During the third quarter of 2026, management identified certain errors related to revenue recognition and accounting for software subscriptions. The Company has restated its previously issued financial statements.
Following is a summary of the significant effects of the restatement on the Company's condensed statements of income and segment reporting for the three and six months ended June 30, 2026.
For the Three Months Ended March 31, 2026
As Previously
Reported
Adjustments
As Restated
(in thousands)
Net sales
$ 496,936
$ (4,411)
$ 492,525
Gross profit
124,965
(4,411)
120,554
Selling, general and administrative
expenses
67,906
385
68,291
Income from operations
57,059
(4,796)
52,263
Income before taxes
52,081
(4,796)
47,285
Income tax provision
12,266
(1,444)
10,822
Net income
$ 39,815
$ (3,352)
$ 36,463
Earnings per share:
0
Basic EPS
$ 0.49
$ (0.04)
$ 0.45
Diluted EPS
$ 0.48
$ (0.04)
$ 0.44
For the Three Months Ended June 30, 2026
As Previously
Reported
Adjustments
As Restated
(in thousands)
Net sales
$ 626,976
$ 15,151
$ 642,127
Gross profit
152,491
15,151
167,642
Selling, general and administrative
expenses
83,607
2,360
85,967
Income from operations
68,884
12,791
81,675
Income before taxes
62,847
12,791
75,638
Income tax provision
6,188
2,338
8,526
Net income
$ 56,659
$ 10,453
$ 67,112
Earnings per share:
0
Basic EPS
$ 0.69
$ 0.13
$ 0.82
Diluted EPS
$ 0.68
$ 0.12
$ 0.80
For the Three Months Ended March 31, 2026
As Previously
Reported
Adjustments
As Restated
(in thousands)
AAON Coil Products
External sales
117,611
(15,957)
101,654
Net sales
117,611
(15,957)
101,654
Gross profit
28,302
(15,957)
12,345
BASX
External sales
135,358
11,546
146,904
Net sales
135,358
11,546
146,904
Gross profit
32,391
11,546
43,937
Consolidated gross profit
124,965
(4,411)
120,554
For the Three Months Ended June 30, 2026
As Previously
Reported
Adjustments
As Restated
(in thousands)
AAON Coil Products
External sales
146,680
5,602
152,282
Net sales
146,680
5,602
152,282
Gross profit
23,538
5,602
29,140
BASX
External sales
218,020
9,549
227,569
Net sales
218,020
9,549
227,569
Gross profit
65,336
9,549
74,885
Consolidated gross profit
152,491
15,151
167,642
SOURCE AAON