Record Revenue and Strong Top-Line Growth
Net sales of $496.9 million in Q1 2026, a 54% year-over-year increase and a company record; company now guiding full-year sales growth of 40%–45%.
May 7th, 2026
Summary
- Earnings Call Date:
- 2026-05-07
- Change Since:
- +3.17%
- Next Earnings Date:
- 2026-07-30
Earnings Call Sentiment
PositiveThe call presents a strongly positive operational and commercial performance: record revenue, sizable backlog, robust bookings (particularly in Basics/data-center cooling), meaningful EPS and EBITDA growth, and an upgraded full-year revenue growth outlook (40%–45%). The primary negatives are near-term margin pressure driven by intentional outsourcing, tariff and inflation effects, a sharp drop in reported gross margin, a decline in coil segment margin, and a very low quarter-end cash balance. Management characterizes the margin headwinds as temporary and tied to deliberate decisions to accelerate capacity and market share; guidance assumes margin recovery as internal capacity ramps. On balance, the company showed clear momentum and visibility into growth, while acknowledging short-term profitability trade-offs to secure share and delivery.
Company Guidance
Management's 2026 guidance calls for revenue growth of 40–45%, a gross margin of 27–28%, SG&A of 14–15% of sales and depreciation & amortization of $95–100 million, which they say implies roughly $1 billion of Basics revenue and will be supported by a backlog of $2.1 billion (book‑to‑bill >1 overall; Basics book‑to‑bill >2). For context Q1 produced $496.9 million of net sales (+54% YoY) with Basics sales +72% YoY and AAON‑branded sales +42% YoY, Q1 gross margin 25.1% (down 170 bps), non‑GAAP adjusted EBITDA $78.0 million (15.7% margin), diluted EPS $0.48 (+37% YoY), Q1 CapEx $52.9 million, operating cash flow $34 million, cash $1.1 million, debt $425.2 million (leverage 1.71x); management expects margins to improve through the year as internal capacity ramps and temporary outsourcing, tariff and ramp‑related pressures unwind.
Earnings and Profitability Expansion (Despite Margin Timing)
Diluted EPS of $0.48, up 37% year-over-year; non-GAAP adjusted EBITDA of $78.0 million, up 44% year-over-year (EBITDA margin 15.7% vs. 17.6% prior year).
Exceptional Bookings, Backlog and Book-to-Bill
Company recorded a book-to-bill >1 overall and Basics book-to-bill >2; backlog of $2.1 billion (more than double vs. prior year) and sixth consecutive quarter at record backlog.
Basics Segment Demand and Share Gains
Basics branded sales growth reported at +72% year-over-year, Basic segment sales up 104% to $135.4 million; basics backlog up 160% year-over-year and 24% sequentially, benefiting from a data-center thermal market growing ~30% and driving market share gains.
AAON Branded Sales Momentum
AAON branded sales increased 42% year-over-year and 11% sequentially; AAON bookings +9% year-over-year and roughly +15% on a trailing 12-month basis; AAON branded backlog +26% year-over-year (down 3% sequentially).
Operational Throughput and Capacity Ramp
Increased production from expanded facilities (Memphis, Longview, Redmond) enabled higher throughput and record basics sales across all three facilities; production momentum expected to continue ramping through Q2–Q3.
Improving Cash Generation and Leverage
Operating cash flow of +$34 million in Q1 (highest since Q3 2024) vs. a $9.2 million cash use in the prior year period; leverage improved to 1.71x from 1.77x and debt of $425.2 million at quarter end.
Management and Strategic Execution
Intentional investments in people, supply chain and lean manufacturing are moving from build to execution; new CFO hired with stated priorities on margin discipline, working capital and finance function capability.
Forward Guidance and Margin Path
Full-year outlook: sales growth 40%–45%, gross margin expected 27%–28%, SG&A 14%–15% of sales, depreciation & amortization $95M–$100M — company expects margins to improve as outsourced costs decline and internal capacity scales.
Operator
Hello, and welcome to the AAON,Inc. First Quarter 2026 Earnings Conference Call. [Operator Instructions]. I would now like to turn the conference over to Joseph Mondillo, Director of Investor Relations. You may begin.
Joseph Mondillo
Good morning, everyone. The press release announcing our first quarter 2026 financial results was issued earlier this morning and can be found on our corporate website, aaon.com. Call today is accompanied by a presentation that you can also find on our website as well as on the listen-only webcast. We begin 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 Securities Litigation Reform Act of 1995, the Securities Act of 1933 and in the Securities and Exchange Act of 1934, each as amended. As such, it is subject to the occurrence of many events outside of AM'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 morning 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 presentat...
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