AAON Inc. saw its shares climb sharply on Thursday after the HVAC manufacturer reported record first-quarter sales and a massive backlog, prompting a significant upward revision to its 2026 sales outlook. The company now expects revenue growth of 40% to 45% for the year, a substantial increase from its earlier forecast of 18% to 20%.
Shares of AAON traded at $133.92, up 36.2% in afternoon trading, as investors reacted to the strong results and the raised guidance. The stock surge reflects growing confidence in the company's ability to capitalize on surging demand from data-center cooling, particularly through its BASX brand.
For the first quarter, AAON reported net sales of $496.9 million, a 54.3% increase from $322.1 million in the year-ago period. Diluted earnings per share came in at $0.48, topping the consensus estimate of $0.31 from MarketBeat and well above the $0.35 reported a year earlier.
The company's backlog more than doubled to $2.13 billion as of March 31, up 107.4% from the prior year. BASX-branded backlog soared 160% to $1.62 billion, with the company attributing the bulk of those orders to liquid-cooling products for data centers. BASX-branded revenue jumped 72.4% to $228.6 million, driven by data-center cooling demand and increased output from new capacity. AAON-branded sales rose 41.6% to $268.4 million.
Chief Executive Matt Tobolski told analysts that the revised full-year outlook implies roughly $1 billion in BASX revenue for this year. He also noted that BASX's potential capacity could exceed $2 billion, though product mix remains a key factor.
Despite the strong top-line growth, gross margin slipped to 25.1% from 26.8% a year earlier, reflecting higher costs tied to outsourced parts, unabsorbed fixed expenses at the Memphis facility, and tariff-driven inflation. CFO Andy Cheung said that pricing and mix adjustments are embedded in the backlog, suggesting some margin recovery ahead. The company revised its full-year gross margin estimate down to 27%-28%, from the prior 29%-31% range.
Cash flow remained under pressure. AAON reported $1.1 million in cash and equivalents as of March 31, against $425.2 million drawn on its revolving credit line. Operating cash flow was $34.0 million, while capital spending totaled $52.9 million. The company's board authorized up to $100 million for open-market share buybacks, subject to market conditions.
Analyst sentiment remained positive. William Blair's Ryan Merkel reiterated a Buy rating and a $98 price target, citing growth from BASX and an anticipated rebound in margins, though he flagged gross-margin misses related to outsourcing and one-time costs.
With its latest report, AAON now sits more directly in the industrial AI infrastructure supply chain, serving as a gauge for data-center cooling activity tied to ongoing AI investments. The near-term focus remains on converting the massive backlog into shipped product, reducing outsourcing, and delivering the margin recovery management has forecast for later this year.