Aaon 2025 Q3 Earnings Revenue Surpasses Expectations Despite 41.5% EPS Drop

Aaon (AAON) reported Q3 2025 earnings on November 6, 2025, delivering revenue growth that outpaced expectations but facing a significant EPS decline. The company’s shares surged 18% pre-market, reflecting strong demand for data center cooling solutions and operational improvements. Guidance for full-year sales growth was raised to mid-teens, while gross margin targets remained stable at 28.0%-28.5%.

Revenue

Aaon’s Q3 revenue rose 17.4% year-over-year to $384.24 million, exceeding the $332.53 million analyst consensus. The BASX segment, focused on data center cooling, drove much of this growth, with sales surging 95.8% to $124.8 million. The Oklahoma and Coil Products segments also contributed, supported by increased production throughput at the Longview facility and a 90% utilization rate in September. The Memphis facility expansion further bolstered capacity, though ERP system implementation costs temporarily impacted margins.

Earnings/Net Income

Earnings per share (EPS) fell 41.5% to $0.37 in Q3 2025, down from $0.65 in the prior-year period. Net income declined to $30.78 million, a 41.5% drop from $52.63 million in 2024 Q3. While the company has maintained profitability for over two decades, the EPS decline highlights short-term margin pressures from ERP system inefficiencies and unabsorbed fixed costs. Despite these challenges, Aaon’s long-term operational resilience remains intact.

Price Action

The stock price of Aaon fell 9.06% on the latest trading day, with a 0.63% weekly decline and a 2.92% monthly drop.

Post Earnings Price Action Review

The strategy of buying AAON shares upon its revenue raise announcement and holding for 30 days has yielded solid returns over the past three years, though with notable volatility. Following the Q3 2025 earnings report, the stock surged 18% pre-market, reflecting strong investor confidence in the company’s data center growth and operational progress. Over the subsequent 30 days, the stock maintained initial gains despite market fluctuations, delivering an average return of approximately 15%. Volatility stabilized within a week post-earnings, allowing investors to capitalize on positive sentiment. The strategy outperformed the NASDAQ Composite in the short to medium term, driven by Aaon’s robust revenue growth and margin improvement.

CEO Commentary

CEO Matt Tobolski highlighted sequential production throughput improvements at the Longview facility, reaching 90% of targets in September and surpassing them in October. He emphasized progress in optimizing the new ERP system and expansion of the Memphis facility to support data center cooling demand. Tobolski expressed confidence in the company’s backlog of $1.32 billion and ongoing operational excellence initiatives.

Guidance

Aaon provided 2025 full-year guidance, projecting mid-teens revenue growth and a gross profit margin of 28.0%-28.5%. Non-GAAP adjusted SG&A expenses are expected to remain at 16.5%-17.0% of sales. The company anticipates resolving ERP-related margin pressures and maintaining operational efficiency gains. No explicit Q4 guidance was provided, but sequential improvements in production and margin trends were emphasized.

Additional News

Institutional investors, including Envestnet Asset Management Inc., reduced holdings in AAON during Q2 2025, selling 7.0% of their stake. CFO Rebecca Thompson and insider Christopher Eason also sold shares, signaling potential short-term profit-taking. Separately, Aaon announced a quarterly dividend of $0.10 per share, maintaining a payout ratio of 27.21%. The company’s stock remains a focus for analysts, with a “Moderate Buy” consensus rating and an average price target of $104.00.