AAON (AAON) Q1 2025 earnings summary

Executive summary

• Net sales rose 22.9% year-over-year to $322.1M, driven by a 374.8% surge in BASX-branded equipment and strong AAON Coil Products growth, while AAON-branded sales declined 19.1% due to refrigerant transition and weaker nonresidential construction.

• Gross margin contracted to 26.8% from 35.2% year-over-year, mainly due to lower production volumes and operating deleverage in the AAON Oklahoma segment.

• Adjusted EPS was $0.37, down 20% year-over-year, impacted by lower gross margin and a $2.7M Memphis facility fee; diluted EPS was $0.35, down 23.9%.

• Backlog reached a record $1.03B, up 83.9% year-over-year, led by BASX data center orders and strong bookings in both BASX and AAON-branded equipment.

• Quarterly dividend increased 25% to $0.10 per share; $30M in shares repurchased during the quarter.

Financial highlights

• Net sales: $322.1M (+22.9% year-over-year); BASX up 374.8%, AAON Coil Products up 287.8%, AAON Oklahoma down 23.0%.

• Gross profit: $86.4M (-6.4% year-over-year); gross margin 26.8% vs. 35.2% last year.

• Adjusted EBITDA was $56.7M (17.6% margin), down 6.3% year-over-year.

• Net income: $29.3M (-24.9% year-over-year); diluted EPS $0.35 vs. $0.46.

• Cash flow from operations: -$9.2M YTD vs. $92.4M last year, reflecting higher working capital investments.

Outlook and guidance

• Full-year sales growth expected in the mid to high teens, with gross margin similar to 2024 and SG&A as a percent of sales to decline by 25-50 basis points.

• CapEx anticipated at ~$220M, mainly for Memphis facility ramp-up and technology investments.

• Q2 sales and earnings expected to be up modestly from Q1, with operating income up more than modestly.

• Tariff mitigation surcharge of 6% assumed in effect for the remainder of the year.

• Management expects continued strong demand for BASX data center products; AAON Oklahoma faces near-term headwinds from refrigerant transition and construction market.