Aaon Inc 2026 Q2 Earnings Call
Review the key takeaways and the transcript of this earnings call.
- AAON Inc. reported record second quarter 2026 net sales of $627 million, up 101% year over year, driven by strong performance in both Basics and AAON branded products and enhanced manufacturing throughput.
- Basics branded sales increased 216.2% year over year, supported by sustained data center cooling demand and higher production output.
- AAON branded sales grew 39.3% year over year, reflecting healthy backlog and improved production throughput.
- Gross profit rose 84.3% to $152.5 million, with gross margin at 24.3%, down from 26.6% in Q2 2025 due to ramping new manufacturing capacity, outsourcing, and inflationary cost pressures.
- Non-GAAP adjusted EBITDA increased 102.3% to $94.2 million, with adjusted EBITDA margin at 15.0%.
- Adjusted diluted earnings per share grew 213.6% to $0.69.
- The Oklahoma segment's net sales increased 42% to $262.3 million, with gross margin declining 460 basis points to 24.3% due to overhead expenses from the Memphis facility.
- Basics segment sales grew 221% to $218 million, with gross margin improving to 30.0%.
- The Memphis facility is performing ahead of plan, with production and revenue significantly exceeding expectations and margins expanding for two consecutive quarters.
- Cash and equivalents totaled $12.7 million, debt was $435 million, and leverage ratio improved to 1.48 from 1.71 at March 31, 2026.
- Operating cash flow was positive $55 million in H1 2026, a significant improvement from a $31 million use in the prior year period, driven by higher earnings and working capital efficiency.
- Capital expenditures totaled $102.6 million year to date, reflecting investments in capacity to support growth.
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Transcript
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I would now like to turn the conference over to Joseph Mondillo, Director of Investor Relations.
The floor is yours. Thank you operator, and good afternoon, everyone.
The press release announcing our second quarter 2026 financial results was issued earlier this afternoon and can be found on our corporate website, aaon.com. The call today is accompanied by a presentation that you can also find on our website as well as on our listen-only webcast. We begin with our customary forward-looking statement policy. During the call, any statement presented dealing with information that is not historical is considered forward-looking and made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, the Securities Act of 1933, and the Securities Exchange Act of 1934, each as amended. As such, it is subject to the occurrence of many events outside of AAON's control that could cause AAON's results to differ materially from those anticipated.
You are all aware of the inherent difficulties, risks, and uncertainties in making predictive statements. Our press release and Form 10-Q that we filed this afternoon detail some of the important risk factors that may cause our actual results to differ from those in our predictions. Please note that we do not have a duty to update our forward-looking statements. Our press release and portions of today's call use non-GAAP financial measures as defined in Regulation G. You can find the related reconciliations to GAAP measures in our press release and presentation. Joining me on today's call is Matt Tobolski, President and CEO, and Andy Cheung, our CFO. Matt will start off with some opening remarks. Andy will follow with a walkthrough of the quarterly results, and Matt will finish up with our updated outlook for 2026. With that, I will turn the call over to Matt.
Thanks, Joe, and good afternoon. Q2 was another strong quarter, building on the momentum established in Q1 and reflecting continued execution across the business. Higher throughput across all four of our major facilities resulted in substantial volume growth, demonstrating the value of recent investments we have made across the organization, including supply chain management, lean manufacturing, operational excellence initiatives, expanded capacity, and leadership development. These efforts translated into our fourth consecutive quarterly revenue record, with sales increasing 101% year-over-year and 26% sequentially. EBITDA more than doubled from the prior year period, and we generated substantial earnings growth while converting backlog at a much faster pace across the enterprise. These results are tangible evidence that the investments we have made are translating into measurable operating progress.
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