Core Insights - AAON's shares surged 18% following the release of its third-quarter 2025 results, which exceeded Wall Street expectations for both revenue and earnings [1] - The company reported revenue of $384.2 million, marking a 17.4% year-over-year increase, and adjusted earnings per share of $0.37, surpassing analyst estimates [1] - AAON's order backlog reached $1.32 billion, reflecting a 104% increase from the previous year, indicating strong future demand despite a decline in operating margin [1] Market Reaction - AAON's stock has shown significant volatility, with 23 movements greater than 5% in the past year, suggesting that the recent news has notably influenced market perception [3] - The broader market experienced caution, with the tech-heavy Nasdaq falling approximately 1.4%, as investors engaged in profit-taking amid concerns over high valuations following an AI-driven rally [4] - Leadership at Goldman Sachs and Morgan Stanley indicated a potential correction in equity markets over the next couple of years, viewing this cooling-off as a healthy aspect of a long-term bull market [4] Historical Performance - Year-to-date, AAON's stock is down 15%, trading at $100.20 per share, which is 28.8% below its 52-week high of $140.75 from November 2024 [5] - An investment of $1,000 in AAON shares five years ago would now be worth $2,365, indicating substantial long-term growth despite recent fluctuations [5]

Financial Data and Key Metrics Changes - Net sales increased by $57 million, or 17.4%, year-over-year to $384.2 million, driven by a 95.8% rise in Basics-branded sales [11][12] - Gross margin was 27.8%, down from 34.9% in the prior year, but up 120 basis points sequentially [11][12] - Diluted EPS was $0.37, down 41.3% from a year ago, but up 94.7% sequentially [13] Business Line Data and Key Metrics Changes - Basics branded backlog grew to $896.8 million, up 119.5% year-over-year and up 43.9% from the prior quarter [6] - AAON branded sales grew 28.1% sequentially, driven by over 20% production increases at both the Tulsa and Longview facilities [7] - AAON branded bookings were flat year-over-year but up 15% on a two-year stack, with national account wins up 96% in the third quarter [8] Market Data and Key Metrics Changes - Demand for airside and liquid cooling products remains strong, reflecting alignment with customer needs [6] - Backlog at the end of the quarter was up 77.1% year-over-year, indicating strong demand across the business [18] Company Strategy and Development Direction - The company is focused on ramping up production capacity at the new Memphis facility, which adds nearly 800,000 sq ft of manufacturing capacity [6] - The Basics brand is identified as the key growth driver, particularly in the data center market [18] - The company plans to implement the ERP system at the Tulsa facility in the second half of 2026, expecting minimal disruption based on learnings from Longview [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operational recovery and capacity expansion, expecting sequential margin improvement through the fourth quarter and into early 2026 [5] - The company anticipates full-year sales growth in the mid-teens for 2025, with a gross margin of 28-28.5% [20] - Management highlighted the resilience of the business despite a soft commercial HVAC market, with strong bookings indicating continued demand [18] Other Important Information - Cash, cash equivalents, and restricted cash balances totaled $2.3 million, with debt at $360.1 million and a leverage ratio of 1.73 [15] - Capital expenditures for the first three quarters increased 22.1% to $138.9 million, with net borrowings of $205 million largely for working capital and capital expenditures [16] Q&A Session Summary Question: Drivers of Basics orders and growth outlook - Management noted strong traction and visibility in backlog growth, particularly in liquid cooling orders and airside solutions, with expectations for continued strong orders [27][30] Question: Gross margin expectations - Management indicated that gross margins for the Oklahoma segment could normalize to the mid-30s range as production ramps up and pricing dynamics improve [31][32] Question: Response to short report claims - Management reaffirmed the integrity of financial reporting, stating that revenue recognition follows GAAP standards and that demand for products remains strong [35][36] Question: CapEx guidance implications - Management clarified that the reduction in CapEx to $180 million does not impact the ramp-up of the Memphis facility, which is already well-equipped [42] Question: Operational efficiencies and future improvements - Management discussed operational inefficiencies impacting margins but expressed confidence in achieving a gross margin of at least 30% in the future [44] Question: Customer mix and demand profile - Management reported broad-based demand across various customer segments, including hyperscalers and colocation providers, indicating a diverse customer base [48][88]

Financial Data and Key Metrics Changes - Net sales increased by $57 million, or 17.4%, year-over-year to $384.2 million, driven by a 95.8% rise in BASX-branded sales due to demand for data center solutions [11][12] - Gross margin was 27.8%, down from 34.9% in the prior year, but up 120 basis points sequentially [11][12] - Diluted EPS was $0.37, down 41.3% from a year ago, but up 94.7% sequentially [13] Business Line Data and Key Metrics Changes - BASX-branded backlog grew to $896.8 million, up 119.5% year-over-year and up 43.9% from the prior quarter [5][6] - AAON-branded sales grew 28.1% sequentially, driven by over 20% production increases at both the Tulsa and Longview facilities [7][8] - AAON-branded bookings were flat year-over-year but up 15% on a two-year stack, reflecting continued strength in underlying demand [8] Market Data and Key Metrics Changes - Demand for airside and liquid cooling products remains strong, with bookings of Alpha-class air source heat pump equipment up 45% quarter-over-quarter [8][9] - National account wins were robust, with bookings up 96% in the third quarter and 92% year-to-date, representing 35% of total bookings for the year [8] Company Strategy and Development Direction - The BASX brand is positioned as the key growth driver, fueled by exceptional demand in the data center market [18] - The company plans to ramp up production capacity at the new Memphis facility, which adds nearly 800,000 sq ft of manufacturing capacity [6][18] - The AAON brand also maintains strong momentum, with a focus on reducing backlog and lead times to better serve customers [7][18] Management's Comments on Operating Environment and Future Outlook - Management expects sequential margin improvement to continue through the fourth quarter and into early 2026, despite current operational inefficiencies [5][9] - For 2025, the company anticipates full-year sales growth in the mid-teens with a gross margin of 28%-28.5% [20] - Management expressed confidence in the strength of the business and the appropriateness of accounting practices, addressing concerns raised in a recent short report [35][36] Other Important Information - Cash, cash equivalents, and restricted cash balances totaled $2.3 million, with debt at $360.1 million and a leverage ratio of 1.73 [15] - Capital expenditures for the first three quarters increased 22.1% to $138.9 million, with net borrowings of $205 million largely to finance investments [16][17] Q&A Session Summary Question: Can you speak to the drivers and confidence in the outlook for BASX segment growth? - Management highlighted improved visibility and traction in the third quarter, with strong order activity across airside and liquid-side solutions, particularly for the Memphis facility [27][29] Question: What are the expectations for gross margins in the Oklahoma segment? - Management indicated that normalized gross margins for the Oklahoma segment could be in the mid-30s range, factoring in the impact of the Memphis facility and pricing dynamics [31][32] Question: Can you address the recent short report claims regarding accounting changes? - Management reaffirmed the integrity of financial reporting, stating that all practices are in accordance with GAAP and ASC 606, and emphasized strong demand and pricing for products [35][36] Question: What is the current status of lead times in the Oklahoma segment? - Lead times are currently about 50% higher than desired, with a focus on reducing backlog and improving execution to meet market demands [60][61] Question: How is the company preparing for the ERP implementation at the Tulsa facility? - Management plans to be proactive in communication and preparation, applying lessons learned from the Longview implementation to minimize disruption [62][63]

Financial Data and Key Metrics Changes - Net sales increased by $57 million, or 17.4%, year-over-year to $384.2 million, driven by a 95.8% rise in Basics-branded sales due to demand for data center solutions [12][16] - Gross margin was 27.8%, down from 34.9% in the prior year but up 120 basis points sequentially [12][16] - Diluted EPS was $0.37, down 41.3% from a year ago but up 94.7% sequentially [13][16] Business Line Data and Key Metrics Changes - Basics brand backlog grew to $896.8 million, up 119.5% year-over-year and up 43.9% from the prior quarter [5][6] - AAON-branded sales grew 28.1% sequentially, driven by over 20% production increases at both Tulsa and Longview facilities [7][12] - Sales at the Basics segment grew 19.2%, driven by sustained demand for data center solutions [15] Market Data and Key Metrics Changes - AAON branded bookings were flat year-over-year but up 15% on a two-year stack, reflecting continued strength in underlying demand [9] - National account wins were robust, with bookings up 96% in the third quarter and 92% year-to-date, representing 35% of total bookings for the year [9] Company Strategy and Development Direction - The company is focused on ramping up production capacity at the new Memphis facility, which adds nearly 800,000 sq ft of manufacturing capacity [6][18] - The Basics brand is identified as the key growth driver, fueled by exceptional demand for data center market solutions [18] - The company plans to implement the ERP system at the Tulsa facility in the second half of 2026, expecting minimal disruption based on learnings from Longview [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operational recovery and capacity expansion, expecting sequential margin improvement to continue through the fourth quarter and into early 2026 [5][19] - The company anticipates full-year sales growth in the mid-teens for 2025, with a gross margin of 28-28.5% [19] - Management highlighted the resilience of the business despite a soft commercial HVAC market, with strong demand and bookings remaining robust [19] Other Important Information - Cash, cash equivalents, and restricted cash balances totaled $2.3 million, with debt at $360.1 million and a leverage ratio of 1.73 [15][16] - Capital expenditures for the first three quarters increased 22.1% to $138.9 million, with a reduction in anticipated 2025 capital expenditures to $180 million [16][17] Q&A Session Summary Question: Drivers and confidence in the outlook for Basics segment growth - Management noted strong traction and visibility in backlog growth, particularly in liquid cooling orders and airside solutions, indicating confidence in continued strong orders [22][25] Question: Gross margin expectations for the Oklahoma segment - Management indicated that normalized gross margins for the Oklahoma segment could be in the mid-30s range, considering the impact of unabsorbed costs and pricing dynamics [27][28] Question: Response to short report claims regarding accounting changes - Management reaffirmed the integrity of financial reporting, stating that all practices are in accordance with GAAP and ASC 606, emphasizing strong demand and pricing for products [30][31] Question: CapEx guidance and its impact on capacity ramp - Management clarified that the reduction in CapEx would not slow down the ramp-up of the Memphis facility, which is already well-equipped for production [36] Question: Lead times and order conversion in the Oklahoma business - Management reported that lead times are currently about 50% higher than desired, with a focus on reducing them through improved execution and backlog management [52][53] Question: Role of the new COO - The new COO is expected to manage consistency across facilities and drive best practices in lean manufacturing, enhancing operational efficiency [56][57] Question: Free cash flow expectations for Q4 - Management indicated that free cash flow should significantly improve in Q4, driven by the collection of delayed billings [58] Question: Customer mix and demand profile for Basics orders - Management noted a diverse customer base for Basics orders, with both large and smaller customers contributing to backlog growth [79]

Core Viewpoint - Aaon (AAON) reported quarterly earnings of $0.37 per share, exceeding the Zacks Consensus Estimate of $0.33 per share, but down from $0.63 per share a year ago, indicating a +12.12% earnings surprise [1] Financial Performance - The company posted revenues of $384.24 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 13.66% and up from $327.25 million year-over-year [2] - Over the last four quarters, Aaon has exceeded consensus EPS estimates two times and topped revenue estimates twice [2] Stock Performance - Aaon shares have declined approximately 20.6% since the beginning of the year, contrasting with the S&P 500's gain of 15.6% [3] Future Outlook - The company's earnings outlook is crucial for assessing future stock performance, with current consensus EPS estimates at $0.47 for the upcoming quarter and $1.36 for the current fiscal year [7] - The Zacks Rank for Aaon is currently 2 (Buy), indicating expectations for the stock to outperform the market in the near future [6] Industry Context - The Building Products - Air Conditioner and Heating industry is currently ranked in the bottom 23% of over 250 Zacks industries, which may impact Aaon's stock performance [8]

Q3 2025 Earnings Conference Call November 6, 2025 This presentation includes references to calculations that are not based on generally accepted accounting principles ("GAAP"). Reconciliations of each of those non-GAAP measures to the most directly comparable GAAP measures have been included in the Appendix. When forward-looking non-GAAP measures are provided, the Company does not provide quantitative reconciliations of forward-looking non-GAAP measures to the most directly comparable GAAP measures, because ...

Revenue and Sales Performance - Total revenue for the three months ended September 30, 2025, was $384.238 million, compared to $327.252 million for the same period in 2024, representing a year-over-year increase of approximately 17.4%[35] - Aftermarket part sales for the three months ended September 30, 2025, were $24.9 million, up from $21.1 million in 2024, reflecting a growth of about 17.9%[35] - The company recognized revenue of $11.8 million for the nine months ended September 30, 2025, that was included in the contract liability balance at the beginning of the period, compared to $12.4 million for the same period in 2024[45] - For the three months ended September 30, 2025, AAON Oklahoma reported external sales of $238.7 million, while AAON Coil Products and BASX reported external sales of $70.2 million and $75.2 million, respectively[142] Financial Position and Assets - Contract assets increased to $207.739 million as of September 30, 2025, from $135.820 million at the end of 2024, indicating a significant rise of approximately 53%[44] - Total accounts receivable increased to $267,568 thousand as of September 30, 2025, up from $148,472 thousand in December 31, 2024, representing an increase of 80.3%[53] - Total inventories increased to $256,728 thousand as of September 30, 2025, compared to $192,612 thousand as of December 31, 2024, reflecting a growth of 33.3%[54] - Total property, plant, and equipment rose to $947,478 thousand as of September 30, 2025, from $819,998 thousand as of December 31, 2024, marking an increase of 15.6%[56] - Total long-lived assets increased to $608.7 million as of September 30, 2025, compared to $525.8 million as of December 31, 2024[144] Liabilities and Debt - The company’s total contract liabilities as of September 30, 2025, were $(19.974) million, compared to $(14.913) million at the end of 2024, indicating an increase in liabilities[44] - The total minimum lease obligations, net of present value of minimum lease payments, amounted to $14,902 thousand as of September 30, 2025[52] - The company entered into a Third Amendment to its Loan Agreement, including an $80 million term loan and a $200 million revolving credit facility, which was increased to $230 million in April 2025[66] - As of September 30, 2025, the total Revolver commitment was $500 million, with outstanding borrowings of $360,142,000, leaving $139,204,000 available[68] - The Company had an outstanding balance of $360.1 million on its combined Revolver and Term Loan as of September 30, 2025[208] Expenses and Costs - Costs incurred on uncompleted contracts for the nine months ended September 30, 2025, totaled $192.207 million, compared to $132.844 million for the same period in 2024, marking an increase of approximately 44.7%[45] - Depreciation expense for the three months ended September 30, 2025, was $18,419 thousand, compared to $14,636 thousand for the same period in 2024, representing a 25.5% increase[57] - The total amount paid to representatives for the three months ended September 30, 2025, was $11.1 million, compared to $10.7 million for the same period in 2024, reflecting a year-over-year increase of approximately 3.7%[43] - Accrued liabilities increased to $120,468,000 as of September 30, 2025, from $99,347,000 as of December 31, 2024, representing a growth of approximately 21.3%[65] Tax and Compliance - The effective income tax rate for the nine months ended September 30, 2025, was 16.4%, compared to 19.3% for the same period in 2024[75] - The company recorded deferred tax assets of $10.2 million (Federal) and $2.3 million (State) related to net operating loss carryforwards of approximately $48.6 million as of September 30, 2025[84] - The company recognized an increase in deferred tax liabilities of $30.9 million due to changes in tax law effective January 1, 2025[82] Shareholder and Employee Compensation - The company awarded annual merit raises resulting in a 3.3% increase in wages in March 2024 and a 4.0% increase in March 2025[29] - The total share-based compensation expense for the nine months ended September 30, 2025, was $13.4 million, compared to $12.8 million for the same period in 2024[98] - The Company matches 175.0% up to 6.0% of employee contributions in its defined contribution plan[102] - Contributions to the defined contribution plan increased to $5,975,000 for the three months ended September 30, 2025, compared to $4,570,000 for the same period in 2024, representing a 30.8% increase[103] Market and Operational Challenges - The company is facing inflationary cost pressures and supply chain disruptions due to global health issues, impacting demand for products and financial position[209] - There are concerns regarding the tightening of labor markets, affecting the ability to hire employees for continued growth[209] - The company is monitoring fluctuations in the commercial/industrial new construction market, which may influence future performance[209] - Future levels of capital expenditures and research and development are critical for the company's growth strategy[209] - The company is focused on the integration of acquired businesses to realize synergies and cost savings[209] - Legal, regulatory, and environmental compliance is essential for the company's operations and product standards[209] - The company is assessing the creditworthiness of customers and their access to capital, which could affect revenue generation[209] - Changes in interest rates and competitive factors are being closely monitored as they may impact financial results[209] - The company is addressing cybersecurity risks and potential impacts on information technology systems[209] - The timing and market acceptance of new product introductions are crucial for future revenue growth[209] Profitability and Shareholder Returns - Basic earnings per share for the nine months ended September 30, 2025, was $0.93, down from $1.77 in 2024, a decline of 47.2%[109] - The company repurchased approximately $30.0 million of shares as of September 30, 2025, with $70.0 million remaining under the current board authorization[110] - The company declared cash dividends of $0.10 per share for the periods ending March 5, 2025, May 13, 2025, and August 14, 2025, with an annualized dividend of $0.40[113] - The company reported net income of $30,782,000 for the three months ended September 30, 2025, compared to $52,625,000 in 2024, a decrease of 41.5%[109]

Exhibit 99.1 AAON Reports Strong Third Quarter 2025 Results Driven by Operational Improvements and Share Gains Q3 Highlights (All comparisons are year-over-year, unless otherwise noted) TULSA, Okla., November 6, 2025 - AAON, INC. (NASDAQ-AAON), a leader in high-performing, energy-efficient HVAC solutions that bring long-term value to customers and owners, today announced its results for the third quarter of 2025. The quarter demonstrated robust underlying demand across both AAON and BASX brands. Total backl ...

Core Insights - AAON, Inc. reported strong demand and significant growth in backlog, reaching a record $1.32 billion, up 103.8% year-over-year and 18.1% sequentially, driven by data center applications [2][19] - Net sales for Q3 2025 increased by 17.4% to $384.2 million, with BASX-branded sales rising 95.8% to $124.8 million, while AAON-branded sales decreased by 1.5% to $259.5 million [3][14] - Gross profit margin decreased to 27.8% from 34.9% year-over-year but improved sequentially from 26.6%, primarily due to operational inefficiencies related to ERP implementation [4][14] Financial Performance - Earnings per diluted share were $0.37, down 41.3% year-over-year but up 94.7% sequentially [5][14] - The company anticipates cash flow from operations to turn significantly positive in Q4 2025, with capital expenditure plans of $180 million for the year [17][14] Operational Highlights - Production throughput improved significantly at the Longview, Texas facility, reaching 90% of target in September and exceeding that level in October [6][8] - The BASX brand is expanding its presence in the data center market, with substantial increases in production of liquid cooling equipment [7][8] Segment Performance - AAON Oklahoma segment net sales increased by 4.3% year-over-year to $238.7 million, while gross profit margin was 31.5%, down from 36.8% [9][10] - AAON Coil Products segment net sales surged by 99.4% to $70.2 million, driven by BASX-branded liquid cooling product sales [11][12] - BASX segment net sales increased by 19.2% to $75.2 million, with a gross margin of 27.0% [15][16] Backlog and Market Position - Total backlog increased to $1.32 billion, with BASX-branded backlog growing by 119.5% year-over-year [19][14] - AAON-branded equipment backlog increased by 77.1% year-over-year but declined sequentially by 14.3% [19][14] 2025 Outlook - The company expects mid-teens sales growth for FY25, with gross profit margin projected between 28.0% and 28.5% [20][14]

Group 1 - The article does not provide any relevant content regarding company or industry insights [1]