Aaon — Financial Results
BASX Data Center Business Is Exploding, Driving Overall Growth
| Metric | 2025 | 2024 | Change |
|---|---|---|---|
| BASX net sales | $315.5M | $198.1M | +59.3% |
| BASX backlog | $1,302.1M | $539.7M | +141.3% |
| Total company backlog | $1,828.5M | $867.1M | +110.9% |
AAON's BASX segment, which makes cooling systems for data centers, has become the dominant growth engine of the business. The backlog — orders received but not yet delivered — more than doubled in a single year, with most of it tied to liquid cooling solutions for data centers. The AI-driven buildout of data center infrastructure is the primary catalyst, and the company says it sees no meaningful signs of this slowing.
Core HVAC Business Declined as Construction Markets Softened
| Metric | 2025 | 2024 | Change |
|---|---|---|---|
| AAON Oklahoma net sales | $801.2M | $858.7M | -6.7% |
| AAON Oklahoma gross margin | 29.0% | 37.3% | -8.3 pts |
The traditional AAON-branded commercial HVAC business — rooftop units for offices, schools, retail — shrank as higher interest rates weighed on new construction. Supply chain disruptions from a mandatory refrigerant changeover and an ERP (software system) rollout that slowed coil production made things worse in the first half of the year. The sharp drop in gross margin (profitability per dollar of sales) reflects those lower volumes spreading fixed factory costs across fewer units sold.
Profitability Fell Even as Revenue Grew
| Metric | 2025 | 2024 | Change |
|---|---|---|---|
| Net sales | $1,442.1M | $1,200.6M | +20.1% |
| Gross profit margin | 26.7% | 33.1% | -6.4 pts |
| Net income | $107.6M | $168.6M | -36.2% |
| Interest expense | $17.7M | $2.9M | +510% |
Revenue grew 20% but net income fell by more than a third. The gap comes from three places: lower margins in the core business, a jump in selling, general and administrative (SG&A) expenses from $188M to $239.5M (driven by higher salaries, technology consulting, and a $6.1M broker fee tied to the Memphis plant acquisition), and a fivefold increase in interest expense as the company borrowed heavily to fund growth.
Debt Rose Sharply to Fund Expansion
The company expanded its revolving credit facility (a flexible line of credit) from $200M to $600M during 2025 and drew $398.3M against it by year-end, up from $76.5M the prior year. This drove the spike in interest expense noted above. Management says its leverage ratio of 1.77 remains well within the required limit of 3.0, and $201M of borrowing capacity remains available — suggesting the balance sheet is stretched but not strained.
Capital Investment Remains Aggressive, but Operating Cash Flow Nearly Vanished
| Metric | 2025 | 2024 |
|---|---|---|
| Capital expenditures | $190.6M | $195.7M |
| Net cash from operations | $0.5M | $192.5M |
The company spent $190.6M building out facilities in Memphis, Longview, and Redmond to support future BASX growth, and plans another $190M in 2026. However, operating cash flow — the cash generated by the actual business — collapsed from $192.5M to just $534K, largely because the fast-growing BASX business requires the company to buy materials upfront before getting paid. This working capital squeeze is a normal feature of rapid growth, but it means the company is currently relying on its credit line rather than its own earnings to fund operations.