AAON shares jump 19% after Q3 profit beat, outlook raise

AAON (AAON) topped third-quarter profit estimates and raised its 2026 sales growth outlook, but will restate its first- and second-quarter 2026 results after identifying errors.

Shares rose 19.1% at 3:59 p.m. ET, from a $62.87 close.

Here's how the company did:

• Adjusted EPS: 83 cents per share vs. 58 cents expected, and 37 cents a year earlier
• Net sales: $707.43 million vs. $611.66 million expected, and $384.24 million a year earlier

Net sales rose 84.1%, led by the BASX brand, whose sales grew 218.3% to a record $397.2 million.

Gross profit rose 76.4% to $188.5 million. Gross margin was 26.7%, down from 27.8% a year earlier but up 60 basis points from the second quarter.

Operating income increased 129.3% to $100.0 million, from $43.6 million a year earlier.

2026 outlook

Full-year net sales growth is now forecast at 72% to 75%, from 55% to 60%.

Gross margin is now expected at about 26%, from 25% to 26%. SG&A as a percent of sales is now about 13%, from 13% to 14%.

Depreciation and amortization is now expected at about $100 million, from $95 million to $100 million.

Restatement and material weakness

First-quarter 2026 net income will be restated to $36.5 million, down $3.4 million from the $39.8 million previously reported.

For the first half, restated net income is $103.6 million, up $7.1 million from the $96.5 million previously reported.

The restatement raised first-half net sales by $10.7 million and diluted EPS by 9 cents.

The errors involved revenue recognition under the percent-of-completion method and accounting for software subscriptions. Management identified a material weakness in internal control over financial reporting, which will be reported in the third-quarter 10-Q.

The company found no evidence of fraud or misconduct.

Segment results

BASX net sales rose 207.4% to $231.3 million, with gross margin at 28.7%. AAON Coil Products sales rose 174.2% to $192.6 million.

AAON Oklahoma sales rose 18.7% to $283.5 million. Its gross margin fell to 25.5% from 33.0%, impacted by $20.7 million of overhead tied to the Memphis facility, compared with $4.5 million a year earlier.

Cash and backlog

Operating cash flow for the first nine months was $146.9 million, against a use of $18.8 million a year earlier.

As of Sept. 30, cash, cash equivalents and restricted cash totaled $3.7 million, and the revolving credit facility balance was $386.7 million.

Total backlog rose 40.5% from a year earlier to $1.9 billion, but fell 5.9% from June 30.