Aaon 2025 Q3 Earnings Strong Revenue Growth Amid EPS Decline

Aaon (AAON) reported Q3 2025 earnings on November 6, 2025, with revenue rising 17.4% to $384.24 million, surpassing expectations. While net income and EPS declined year-over-year, the company raised full-year sales guidance to mid-teens growth.

Revenue

Aaon’s total revenue surged 17.4% to $384.24 million in Q3 2025, driven by strong demand for data center cooling solutions and custom products. This marked a significant outperformance relative to the prior year and analyst forecasts.

Earnings/Net Income

The company’s EPS fell 41.5% to $0.38 in Q3 2025, with net income declining to $30.78 million. Despite these declines, Aaon has maintained profitability for over 20 years, demonstrating operational resilience amid challenges like ERP implementation costs and facility underutilization. The EPS decline underscores challenges, yet the company's 20+ years of profitability highlight operational resilience.

Post-Earnings Price Action Review

The strategy of buying AAON shares upon its revenue raise announcement and holding for 30 days delivered moderate returns but with notable volatility. The stock often experienced pullbacks after initial post-earnings gains, with a 7.08% average rise on the day of the earnings release and a 2.17% average decline over the subsequent 30 days. Total returns averaged 4.91% during this period. However, declining EPS and revenue growth trends over three years suggest risks for long-term shareholders, as capacity constraints from a 104% year-on-year backlog growth and operational inefficiencies weigh on profitability.

CEO Commentary

CEO Matt Tobolski highlighted “enduring demand” and “notable sequential improvement in production throughput,” crediting 90% capacity utilization at the Longview, Texas facility. Strategic priorities include ERP optimization and scaling production for data center cooling, with confidence in Q4 momentum from robust bookings and backlog.

Guidance

AAON raised full-year 2025 sales guidance to mid-teens growth from low teens. Gross margin is expected to remain in 28.0%-28.5%, with non-GAAP adjusted SG&A costs projected at 16.5%-17.0% of sales. The company anticipates positive Q4 cash flow and $180 million in 2025 capital expenditures, emphasizing operational scalability to meet demand.

Additional News

1. Stock Surge: AAON shares jumped 18% post-earnings as Q3 results exceeded expectations, driven by a 17.4% revenue increase and $1.32 billion in backlog.

2. Institutional Activity: Envestnet Asset Management reduced its stake by 7% in Q2, while Allied Investment Advisors increased holdings by 110.5%.

3. Dividend Raise: AAON announced a $0.10 quarterly dividend, maintaining a 0.4% yield, with a payout ratio of 27.21%.