AAON's sales soar. Why are two earlier quarters changing?
Record cooling-equipment sales lift the outlook, while corrected accounts change the measure of its progress.
AAON's sales rose 84% as its expanded factories turned more cooling-equipment orders into sales. The company also corrected its first two quarters of 2026, changing the starting point for judging how quickly profits are improving.
The maker of cooling systems for buildings and data centers reported $707.4 million of September-quarter sales. Net income more than doubled to $69 million. It now expects annual sales growth of 72% to 75%, up from August's 55% to 60% forecast.
Why the earlier accounts changed
AAON found errors in assigning costs to its custom BASX-branded projects. It recognizes revenue on those projects as work progresses, so incorrect cost allocations affected the sales and profits recorded along the way. It also corrected how software subscriptions were charged to expenses.
The changes increased first-half net income by $7.1 million overall. They moved the two quarters in opposite directions: first-quarter profit fell, while second-quarter profit increased.
| Period | Originally reported | Restated |
|---|---|---|
| First quarter | $0.48 | $0.44 |
| Second quarter | $0.68 | $0.80 |
The financial-reporting control weakness remained at September 30. AAON says it is improving project-cost tracking, reviews and training as part of its response.
The margin improvement has a different baseline
Research by Ticker Byline shows that AAON's third-quarter gross margin improved about half a percentage point from the corrected second quarter. Using the old accounts would make the improvement look more than four times as large.
The third-quarter margin was 26.65%, calculated from reported sales and gross profit. The restated second-quarter margin was 26.11%, compared with 24.32% in the original accounts. Gross margin measures the share of sales left after production costs.
There is still operating progress. Higher output spreads factory overhead across more equipment, while pricing, purchasing and productivity help. BASX-branded sales rose 218% as data-center customers bought more cooling systems. The group margin nevertheless remained below the year-earlier quarter's 27.8%.
The expansion still absorbs cash
The restatement did not change first-half operating cash flow: it remained $55 million. Higher accounting earnings from the corrections therefore did not bring additional first-half cash.
Through September, operating cash flow reached $146.9 million, compared with an $18.8 million outflow a year earlier. Capital spending absorbed $138.1 million. Subtracting those investments leaves about $8.8 million.
AAON still has a large order book: $1.85 billion at September 30, against a revised $1.96 billion at June 30. Converting more of those orders into sales supports the higher sales forecast. Turning that expansion into stronger margins and cash, while improving its financial controls, is the next stage.
The AAON company profile records the corrected quarterly figures, forecast history, spending and borrowing behind the factory expansion.