AAON Reports Second Quarter 2025 Results

Core Insights - AAON, Inc. reported a net sales decrease of 0.6% year-over-year for Q2 2025, totaling $311.6 million, primarily due to an 18.0% decline in the AAON Oklahoma segment, impacted by supply chain constraints [2][7][9] - The gross profit margin contracted significantly to 26.6% from 36.1% in the same quarter last year, attributed to lower production volumes and operational inefficiencies from the ERP system implementation [3][7] - Earnings per diluted share fell 69.4% year-over-year to $0.19, with non-GAAP adjusted diluted earnings per share down 64.5% to $0.22 [5][7] Financial Performance - Net sales for the AAON Oklahoma segment decreased to $185.1 million, down 18.0% from $225.7 million in Q2 2024, with a gross profit margin of 27.5%, down from 37.2% [9][10] - AAON Coil Products experienced an 86.4% increase in sales to $58.5 million, but gross profit margin fell to 22.0% from 41.9% due to ERP-related disruptions [11][12] - BASX segment sales grew 20.4% to $68.0 million, with a gross profit margin of 27.9%, slightly down from the previous year [13][14] Operational Challenges - The implementation of the new ERP system at the Longview facility has caused production disruptions, affecting both finished products and coils, which in turn limited production at the Tulsa facility [6][8] - Despite these challenges, the company has seen month-to-month improvements in production rates since April, with July being the strongest production month of the year [6][8] Backlog and Demand - Total backlog increased 71.9% year-over-year to $1.12 billion, with AAON-branded products backlog rising 93.4% compared to the same quarter last year [17] - Demand for BASX-branded data center equipment remains exceptionally strong, contributing to the growth in backlog and order activity [17][18] Future Outlook - The company has revised its full-year 2025 outlook downward due to ongoing inefficiencies at the Longview facility and moderated production levels in Tulsa [8] - The anticipated sales growth for Q3 is projected in the low single digits, while Q4 is expected to see high twenties growth [18]