AAON (AAON) 46th Annual William Blair Growth Stock Conference summary

Business Overview, Strategy, and Innovation

• Operates two brands: one legacy rooftop (AAON) and one data center-focused (BASX), both emphasizing custom and configurable solutions for diverse markets including data centers and cleanrooms.

• Focus on superior engineering, innovation, automation, and mission-critical solutions, leveraging secular trends in commercial, industrial, and data center sectors.

• National account strategy, solutions-based sales channels, and investments in marketing, parts, and service have driven outsized growth and market share gains.

• Introduction of Alpha Class heat pumps with advanced low-temperature operability and tailored solutions for electrification and decarbonization.

• Employee count grew from 2,000 to 7,000 and factory space from under 2 million to over 4 million sq. ft. in four years.

Market Outlook and Performance

• Signs of recovery in the light commercial market, with bookings momentum accelerating into 2026 and outperformance in transactional business.

• Net sales reached $1.62B TTM as of March 31, 2026, with a gross margin of 26.2% and EBITDA margin of 15.4%.

• 2026 outlook projects sales growth of 40–45%, gross margin of 27–28%, and SG&A at 14–15% of sales.

• EPS at $1.43 and ROIC at 9.3% for the latest period.

• Both brands contribute to a strong and growing order backlog, with record levels reached in 1Q26.

Data Center Segment and Capacity

• Data center demand remains robust, with annual construction expected to reach 8–12 GW and a large project pipeline.

• BASX brand backlog surged to $1.62B in 1Q26, driven by custom solutions and rapid innovation.

• Data center thermal management TAM estimated at $3.5–$4.0B, with liquid cooling expected to reach 60% by 2028.

• BASX has over $2 billion in revenue capacity, with further gains targeted through lean initiatives and inventory reduction.

• Memphis site is key to future capacity increases, with additional production lines to be activated through 2025 and 2026.