AAON Lifts 2026 Sales Growth Outlook to 72-75% on Data Center Cooling Surge

By Marcus Bennett

AAON raised its full-year 2026 sales growth guidance to 72%–75%, up from a prior range of 55%–60%, after third-quarter net sales rose roughly 84% year over year to $707.43 million. Diluted earnings per share more than doubled to 83 cents, well ahead of the 57-cent consensus, and the shares gained nearly 25% across the two sessions following the release. The new guidance implies full-year revenue near $2.5 billion.

The driver is straightforward: AI hardware deployment is forcing facility operators to retrofit legacy air systems and build new liquid-cooled environments (cooling that circulates fluid directly to high-density server racks). AAON captures that capital expenditure cycle through custom-engineered thermal equipment sold directly to hyperscale operators, which supports revenue visibility in coming quarters.

What drove the numbers?

The BASX brand, AAON's data center thermal specialist, delivered the growth.

• BASX-branded revenue rose about 218% year over year to $397.2 million — more than 56% of total company sales.
• Within AAON Coil Products, bespoke liquid cooling equipment climbed roughly 255% to $165.5 million, bringing trailing 12-month liquid cooling sales to about $450 million.
• Traditional AAON-branded commercial HVAC sales grew nearly 20% to $310.2 million, with national account orders up about 70% — share gains in an otherwise sluggish commercial construction market.

The result pushes back on a fear that lingered since NVIDIA CEO Jensen Huang said next-generation Rubin systems could operate without water chillers, a comment that triggered a selloff in cooling stocks earlier in the year. Simultaneous growth in liquid and airside formats at AAON, alongside record commercial bookings at Trane Technologies, suggests rising rack power density is expanding total facility thermal requirements rather than shifting them between technologies.

What does the margin picture show?

Consolidated gross margin improved 233 basis points sequentially to 26.7%, and the Coil Products segment recovered from 19.1% to 25.8% on backlog repricing and factory throughput gains. Selling, general and administrative expenses fell 400 basis points year over year to 12.5% of sales. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $127.2 million beat consensus by roughly 37%.

For a manufacturer scaling this fast, positive free cash flow matters. Modine Manufacturing posted negative free cash flow during the first half of its fiscal 2027 despite strong data center sales, showing how capacity ramps drain cash early. AAON's Memphis facility still runs at only about one-third utilization; management sees annual BASX production capacity exceeding $2 billion as ramping continues, though not by the end of 2027. Net leverage sits at 1.0x, with a 10-cent quarterly dividend and a $70 million repurchase authorization intact.

What changes after the restatement?

Finance teams should focus on the governance development. During the third-quarter close, AAON's finance leadership identified a material weakness (a deficiency in internal controls that could allow material misstatement) over BASX project revenue recognition, alongside separate accounting errors involving software subscriptions. The company filed amended reports restating first- and second-quarter results; the restatement increased first-half net sales by $10.7 million and diluted EPS by nine cents, and the underlying contract economics were unchanged. AAON said it found no evidence of fraud or misconduct.

Remediating manual accounting controls and managing working capital remain the key execution tests for management over the coming quarters.

What are the watch items from here?

Management addressed post-election regulatory worries directly on the earnings call: less than one-third of the roughly $1.85 billion backlog sits in states with regulatory friction, the backlog consists of permitted rather than speculative projects, and over 80% is contracted to well-capitalized hyperscale customers. Total backlog dipped 5.9% sequentially on faster deliveries and fewer fourth-quarter production days, but remained 40.5% higher year over year.

Valuation sits near 22x forward earnings against projected 2027 earnings growth of about 50%. Short interest is elevated, with a days-to-cover ratio just over six — noticeably higher than peers Carrier Global and Lennox International — which could provide short-covering support if execution holds. Baird and Oppenheimer trimmed price targets slightly on peer multiple compression and the restatement but kept Outperform ratings; the consensus is Moderate Buy with an average target near $106 against a $76.19 price. A fourth-quarter 2026 reporting change will split AAON and BASX into standalone segments, giving investors a cleaner read on data center thermal margins.