Madison Investments, an investment advisor, released its fourth-quarter 2025 investor letter for “Madison Small Cap Fund”. A copy of the letter can be downloaded here. The fourth quarter was challenging for the fund and continued to underperform its benchmark, the Russell 2000 Index. The fund (Class I) returned -0.4%, lagging the benchmark’s 2.2% return. Sector allocation negatively impacted the Fund's performance this quarter, with healthcare being the weakest sector. The Fund remains optimistic that the s ...

Group 1 - AAON stock received a positive adjustment to its Relative Strength (RS) Rating, increasing from 67 to 76, indicating improved technical performance [1] - The RS Rating measures a stock's price action over the trailing 52 weeks, with a score of 80 or above often associated with top-performing stocks [1] - Currently, AAON stock is trading below its 50-day moving average after a failed breakout from a cup-with-handle base, suggesting it may not be an ideal time to invest [1] Group 2 - AAON has posted two consecutive quarters of accelerating earnings growth, with revenue gains also increasing during the same period [1] - The company ranks No. 3 among its peers in the Building-A/C & Heating Products industry group, with Comfort Systems USA holding the No. 1 position [1]

Core Insights - AAON, Inc. reported strong Q4 results and provided an optimistic outlook for 2026, driven by growth in data center investments and the company's strategic positioning in the HVAC market [1] Company Performance - The company's Q4 results indicate robust growth, attributed to increasing investments in data centers [1] - AAON's positioning in the HVAC sector is highlighted as a key factor for its continued success [1] Industry Trends - The HVAC industry is experiencing growth, particularly due to rising demand from data center investments [1]

Core Insights - AAON, Inc. has successfully completed the laboratory evaluation phase of the U.S. Department of Energy's Commercial Building HVAC Technology Challenge with its Alpha Class EXTREME SERIES packaged rooftop unit, featuring true simultaneous dual fuel capability [1] - The EXTREME SERIES operates efficiently at temperatures as low as -20°F, surpassing the DOE Challenge requirement of -10°F, and provides more heating capacity at low ambient temperatures than any other product on the market [1] - The product is AHRI certified and designed around the upcoming AHRI 1340 performance standard, making it suitable for retrofitting existing commercial buildings without requiring a complete infrastructure overhaul [1] Product Features - The Alpha Class EXTREME SERIES is available in sizes ranging from 3 to 40 tons and utilizes simultaneous dual fuel technology, allowing the air source heat pump to serve as the primary heating source, with a natural gas furnace as a supplement under extreme conditions [1] - This technology differentiates the EXTREME SERIES from competitors that can only operate either the heat pump or the natural gas furnace independently [1] - The product has been field-proven in commercial buildings across North America, including installations in Canada [1] Company Background - AAON, founded in 1988, is a leader in HVAC solutions for commercial and industrial indoor environments, emphasizing high performance and energy efficiency [1] - The company is headquartered in Tulsa, Oklahoma, and has invested in American engineering and infrastructure, including the Norman Asbjornson Innovation Center, which is capable of testing HVAC equipment under extreme conditions [1] - AAON's commitment to American manufacturing distinguishes it from competitors that have shifted production internationally [1]

Core Insights - AAON experienced a rebound in sales, with AAON-branded sales rising 9.5% year-over-year and bookings increasing 20% year-over-year in the fourth quarter [1] - BASX segment bookings reached record levels, driving backlog to $1.3 billion, up 45% sequentially and 141% year-over-year [4] - The data center market is identified as a significant growth opportunity for AAON, with BASX-branded sales increasing 143% to $548 million in 2025 [5] Sales and Performance - AAON-branded sales fell 8% for the year, while bookings grew about 12%, supported by an 86% increase in national accounts [2] - Fourth-quarter net sales rose 42.5% year-over-year to $424.2 million, primarily driven by a 138.8% growth in BASX-branded sales [8] - AAON's Oklahoma segment sales increased 11.1% to $215.5 million, while the Coil Products segment saw a 93.6% rise in sales year-over-year [9] Margins and Financials - BASX segment gross margin improved to 27.1% from 18.8% a year earlier, reflecting increased utilization of the new Memphis facility [4] - Fourth-quarter non-GAAP adjusted EBITDA margin was 15.2%, down from 15.8% in the prior-year period, with diluted EPS increasing 30% to $0.39 [9] - Gross margin for the fourth quarter was reported at 25.9%, slightly below 26.1% a year earlier, attributed to unabsorbed fixed costs at the new Memphis facility [8] Backlog and Capacity - AAON's backlog rose 61% from the prior-year period, indicating strong demand despite a 16% decline in overall industry volumes during 2025 [2][6] - BASX backlog includes longer-duration, multi-phase programs, which may shift based on supply network constraints [3] - The company expects improved operating performance and margin expansion as operational issues are resolved [6] 2026 Outlook - For 2026, AAON anticipates sales growth of 18% to 20% and gross margin of 29% to 31%, with quarterly variability expected [15] - The growth outlook assumes BASX revenue growth will be about half of the previously discussed 40%-50% range, with increased throughput in Tulsa contributing to recovery [16] - Pricing actions in 2025 included a price increase and a surcharge related to tariffs, with 2026 growth expectations primarily volume-driven [17]

Financial Data and Key Metrics Changes - In Q4 2025, net sales increased by 42.5% year-over-year to $424.2 million, driven by a 138.8% growth in BASX branded sales and a 9.5% increase in AAON branded sales [14][15] - Gross margin for Q4 was 25.9%, slightly down from 26.1% in the prior year, primarily due to unabsorbed fixed costs at the new Memphis facility [14][15] - Non-GAAP adjusted EBITDA margin for Q4 was 15.2%, down from 15.8% a year ago, while diluted EPS was $0.39, up 30% from Q4 2024 [15] Business Line Data and Key Metrics Changes - BASX branded sales increased 143% to $548 million in 2025, with a backlog growth of 141% to $1.3 billion [5][10] - AAON branded sales declined by 8% in 2025, outperforming the broader industry which saw a 16% decline [6][10] - AAON branded bookings grew approximately 12%, driven by a significant 86% increase in national accounts [7] Market Data and Key Metrics Changes - The data center market remains a robust growth opportunity, with BASX brand experiencing strong demand for custom solutions tailored to specific performance needs [5][6] - Despite a challenging commercial HVAC market, AAON branded bookings remained strong, indicating resilience in demand [21] Company Strategy and Development Direction - The company is focused on converting demand into sustained profitable growth through disciplined execution and capacity readiness, particularly in the data center market [5][6] - Strategic investments in manufacturing capacity, supply chain management, and IT systems are aimed at improving operational efficiency and margin performance [8][9] - The company anticipates sales growth of 18%-20% in 2026, with gross margins expected to be between 29%-31% [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to execute and deliver stronger results in 2026, supported by a strong backlog and improving operational cadence [20][21] - Temporary challenges from the refrigerant transition and ERP upgrades are acknowledged, but management remains optimistic about margin improvement as execution strengthens [9][10] Other Important Information - Cash flow from operations was a source of cash of $0.5 million in 2025, a significant decrease from $192.5 million in 2024, with capital expenditures decreasing by 3.9% to $204.9 million [19] - The company plans to invest $190 million in capital expenditures in 2026 to support growth [19] Q&A Session Summary Question: Can you clarify the gross margin in the quarter? - Management indicated that the primary driver for the margin shortfall was lower volumes in Tulsa due to seasonality and supply chain constraints, with expectations for recovery in Q1 2026 [24][25] Question: What are the expectations for BASX revenue growth in 2026? - Management expects BASX revenue growth to be around 25%, with significant contributions from the AAON brand as well [30][31] Question: How is the backlog composition for BASX? - The backlog is diverse, with increasing customer segments beyond hyperscalers, indicating a healthy order intake [48][49] Question: What are the lead times for the Oklahoma business? - Lead times are currently extended, with efforts focused on increasing throughput to bring them back to normal levels throughout 2026 [56][57] Question: What is the expected cash generation for 2026? - Management anticipates improved cash flows through increased earnings and better working capital management, with debt expected to remain elevated initially [42][45]

Financial Data and Key Metrics Changes - In Q4 2025, net sales increased by 42.5% year-over-year to $424.2 million, driven by a 138.8% growth in BASX branded sales and a 9.5% increase in AAON branded sales [26][28] - Gross margin for Q4 was 25.9%, slightly down from 26.1% in the prior year, primarily due to unabsorbed fixed costs from the new Memphis facility [26][27] - Non-GAAP adjusted EBITDA margin for Q4 was 15.2%, down from 15.8% a year ago, while diluted EPS was $0.39, up 30% from Q4 2024 [27] Business Line Data and Key Metrics Changes - BASX branded sales increased 143% to $548 million in 2025, with a backlog growth of 141% to $1.3 billion [11][20] - AAON branded sales declined by 8% in 2025, outperforming the broader industry which saw a 16% decline [13] - AAON branded bookings grew approximately 12%, driven by a significant 86% increase in national accounts [14] Market Data and Key Metrics Changes - The data center market remains a robust growth opportunity, with BASX brand experiencing strong demand for custom solutions [11][12] - Despite a challenging commercial HVAC market, AAON branded bookings remained strong, reflecting resilience in demand [35] Company Strategy and Development Direction - The company is focused on converting demand into sustained profitable growth through disciplined execution and capacity readiness [12][34] - Strategic investments have been made in manufacturing capacity, supply chain management, product development, and IT systems to support long-term growth [15][16] - The company aims for sales growth of 18%-20% in 2026, with gross margins expected to be between 29%-31% [36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in improved operating performance and margin expansion as temporary headwinds fade [11][19] - The company anticipates strong growth and accelerated incremental margin in 2026, supported by robust backlog and production nearing record levels [23][24] - Management acknowledged challenges in 2025 but emphasized a focus on operational improvements and customer service enhancements [63][66] Other Important Information - The company became the first in the commercial HVAC industry to commercialize rooftop units with Cold Climate Heat Pumps capable of reliable heating at -20 degrees Fahrenheit [17] - Cash flow from operations was a source of cash of $0.5 million in 2025, compared to $192.5 million in 2024, with capital expenditures decreasing by 3.9% to $204.9 million [33] Q&A Session Summary Question: Can you clarify the gross margin in the quarter? - Management indicated that the primary driver for the margin being below expectations was related to Tulsa volumes, which faced supply chain constraints [39] Question: What are the expectations for revenue growth in 2026? - Management expects growth in the AAON brand to be a significant driver, with a strong recovery anticipated in the Tulsa organization [44][46] Question: Can you discuss cash generation expectations for 2026? - Management anticipates improved cash flows through increased earnings and better working capital management, with debt expected to remain elevated for most of the year [57] Question: How is the backlog composition for BASX? - Management noted that there is diversity in the customer base for BASX, with increasing traction outside of hyperscalers [60] Question: What are the lead times in the Oklahoma business? - Lead times are currently extended beyond desired levels, but management is focused on driving throughput to reduce them [69]

Financial Data and Key Metrics Changes - Net sales in Q4 2025 increased by 42.5% year-over-year to $424.2 million, driven primarily by a 138.8% growth in BASX branded sales [15][16] - Gross margin for Q4 was 25.9%, slightly down from 26.1% in the prior year, primarily due to unabsorbed fixed costs at the new Memphis facility [15][16] - Non-GAAP adjusted EBITDA margin for Q4 was 15.2%, down from 15.8% a year ago [16] - Diluted EPS for Q4 was $0.39, up 30% from Q4 2024 [16] Business Line Data and Key Metrics Changes - BASX branded sales increased 143% to $548 million in 2025, with a backlog growth of 141% to $1.3 billion [5][11] - AAON branded sales declined by 8% in 2025, significantly outperforming the broader industry which saw a 16% decline [6][7] - AAON branded bookings increased by 20% year-over-year, with backlog up 24% sequentially and 61% from the prior year [11] Market Data and Key Metrics Changes - The data center market remains a robust growth opportunity, with BASX brand experiencing strong demand for custom solutions [5][6] - The overall commercial HVAC market is expected to remain flat in 2026, impacting AAON's growth trajectory [36] Company Strategy and Development Direction - The company is focused on converting strong demand into sustained profitable growth through disciplined execution and capacity readiness [6][8] - Strategic investments in manufacturing capacity, supply chain management, and IT systems are aimed at improving throughput and reducing costs [9][10] - The company anticipates sales growth of 18%-20% in 2026, with gross margins expected to be between 29%-31% [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to execute and deliver stronger results in 2026, supported by a strong backlog and improving operational cadence [21][23] - Temporary challenges from the refrigerant transition and ERP upgrades are expected to be resolved, leading to margin improvements [10][12] - The company is focused on improving lead times and production reliability to meet customer expectations [51][59] Other Important Information - Cash flow from operations was a source of cash of $0.5 million in 2025, a significant decrease from $192.5 million in 2024 [20] - Capital expenditures in 2025 decreased by 3.9% to $204.9 million, with planned CapEx for 2026 at $190 million [20] Q&A Session Summary Question: Can you clarify the gross margin in the quarter? - Management indicated that the primary driver for the margin shortfall was lower volumes in Tulsa due to seasonality and supply chain constraints [26][27] Question: What are the expectations for BASX revenue growth in 2026? - Management expects BASX growth to be around 25%, with significant contributions from the AAON brand as well [31][32] Question: How is cash generation expected to improve in 2026? - Management anticipates improved cash flows through increased earnings and better working capital management [43][45] Question: What is the current status of lead times in the Oklahoma business? - Lead times are currently extended, but management is focused on increasing throughput to bring them back to normal levels [57][59] Question: How does the BASX backlog composition look? - The backlog is diverse, with increasing traction from various customer segments, not just hyperscalers [48][50]

分组1 - Aaon reported quarterly earnings of $0.39 per share, missing the Zacks Consensus Estimate of $0.45 per share, representing an earnings surprise of -12.85% [1] - The company posted revenues of $424.22 million for the quarter ended December 2025, surpassing the Zacks Consensus Estimate by 14.41%, compared to year-ago revenues of $297.72 million [2] - Over the last four quarters, Aaon has surpassed consensus EPS estimates two times and topped consensus revenue estimates three times [2] 分组2 - The stock has gained approximately 32.7% since the beginning of the year, significantly outperforming the S&P 500's gain of 0.5% [3] - The current consensus EPS estimate for the coming quarter is $0.48 on revenues of $372 million, and for the current fiscal year, it is $1.99 on revenues of $1.58 billion [7] - The Zacks Industry Rank for Building Products - Air Conditioner and Heating is currently in the bottom 35% of over 250 Zacks industries, indicating potential challenges for the sector [8]

March 2, 2026 Q4 2025 Earnings Conference Call Forward-looking Statements and Other References Certain statements and information set forth in this presentation contains "forward-looking statements" and "forward-looking information" within the meaning of the Private Securities Litigation Reform Act of 1995. Except for statements of historical fact, certain information contained herein constitutes forward- looking statements which include management's assessment of future plans and operations and are based o ...