AAON Reports Strong Data Center Demand and Operational Challenges in Q4

HVAC manufacturer sees robust growth in BASX brand but margin pressures from new Memphis facility ramp

Published on Mar. 2, 2026

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AAON (NASDAQ:AAON) executives told investors the company exited 2025 with strong demand across both its AAON and BASX brands, while acknowledging that temporary operational issues—particularly at its Tulsa facility and the ramp of a new Memphis plant—pressured margins late in the year. Management emphasized that 2025 included 'transformational investments' in capacity, supply chain, leadership, and systems that it expects to translate into improved operating performance and margin expansion as those headwinds fade.

Why it matters

AAON's results highlight the growing importance of the data center market, which has become a key growth driver for the company's BASX brand. However, the operational challenges the company faced in 2025 underscore the difficulties manufacturers can encounter when scaling up production to meet surging demand, particularly in complex, engineered products like HVAC systems for data centers.

The details

AAON reported that BASX-branded sales increased 143% to $548 million in 2025, with backlog rising 141% to $1.3 billion. The company attributed this momentum to strong demand for BASX's 'custom airside and liquid cooling solutions' from customers seeking highly engineered systems for AI-driven data centers. In the fourth quarter, BASX bookings reached record levels, driving segment sales up 109.1% year-over-year. However, AAON acknowledged that the ramp-up of its new Memphis facility, as well as temporary supply chain constraints at its Tulsa plant, pressured margins in the quarter. The company's AAON-branded business also held up well despite a 16% decline in the overall commercial HVAC market, with bookings growing about 12% for the year.

  • In 2025, BASX-branded sales increased 143% to $548 million and backlog rose 141% to $1.3 billion.
  • In the fourth quarter, BASX bookings again reached record levels, driving BASX backlog to $1.3 billion, up 45% sequentially and 141% year-over-year.
  • Fourth-quarter AAON-branded sales rose 9.5% year-over-year, supported by a 42% increase in Alpha Class heat pump sales.
  • Fourth-quarter non-GAAP adjusted EBITDA margin was 15.2%, down from 15.8% in the prior-year period.
  • For 2026, AAON guided to sales growth of 18% to 20% and gross margin of 29% to 31%.

The players

Matt Tobolski

President and CEO of AAON.

Rebecca Thompson

CFO of AAON.

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What they’re saying

“The data center market remains AAON's 'most robust and dynamic growth opportunity.'”

— Matt Tobolski, President and CEO

“Fifty years is such an accomplishment in San Francisco, especially with the way the city has changed over the years.”

— Gordon Edgar, grocery employee (Instagram)

What’s next

The judge in the case will decide on Tuesday whether or not to allow Walker Reed Quinn out on bail.

The takeaway

AAON's results highlight the growing importance of the data center market, which has become a key growth driver for the company's BASX brand. However, the operational challenges the company faced in 2025 underscore the difficulties manufacturers can encounter when scaling up production to meet surging demand, particularly in complex, engineered products like HVAC systems for data centers.