Shares of AAON, Inc. ($AAON) climbed roughly 23% to about $77 on Tuesday after the Oklahoma-based heating, ventilation and air conditioning (HVAC) manufacturer reported third-quarter results that beat analyst estimates by a wide margin and raised its full-year 2026 sales outlook. The stock had closed at $62.87 on Monday.

Adjusted earnings came in at 83 cents per share, well above the 57 cents analysts had expected. Revenue hit a record $707.4 million, up 84% from a year earlier and more than $100 million ahead of the roughly $600 million analysts had projected — the highest quarterly revenue in the company's history.

Demand for data center cooling equipment drove the outperformance, while the company's traditional HVAC business remained resilient. The quarter highlights how data center demand has become a growth engine for established industrial manufacturers, with the shift now visible directly in AAON's own revenue mix.

$AAON AAON Surges 23% After Q3 Earnings Beat, Driven by Strong Data Center Demand ⠀ • Q3 earnings per share and revenue exceeded analyst expectations. • Strong data center demand supported results, while the traditional HVAC business remained resilient. • AAON declared a…

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Data Center Cooling and Core HVAC Both Deliver

BASX-branded sales, which encompass the company's data center cooling products, surged 218% year over year to $397.2 million. Within that total, BASX liquid cooling sales — the fastest-growing piece of the portfolio — jumped 256% to $165.5 million, and liquid cooling has now generated $450 million in revenue over the past 12 months. AAON-branded sales rose 20% to $310.2 million. That puts data center cooling products ahead of the company's traditional commercial equipment by quarterly revenue, a crossover that shows how central cooling demand has become to a business still anchored by rooftop systems.

Total backlog climbed 40.5% from a year earlier to $1.85 billion, though it slipped 5.9% from the prior quarter as more orders converted into sales. BASX backlog grew 51% year over year, although KeyBanc noted a 5% decline from the previous quarter.

The company's Oklahoma operations, which build rooftop systems for commercial buildings, posted a 19% increase in sales to $283 million — far exceeding the 5% gain forecast by D.A. Davidson. That core business continued to expand alongside the fast-growing data center cooling unit. D.A. Davidson credited fewer production bottlenecks and improved quality controls, and kept its Buy rating along with a $110 price target.

Baird analyst Timothy Wojs maintained an Outperform rating on the shares following the report but trimmed his price target to $104 from $110.

Restatement and Margin Details

Alongside the strong results, AAON restated its first- and second-quarter results. The revisions added $10.7 million to first-half sales and 9 cents to earnings per share. The company also identified a material weakness in its financial reporting controls and said it is still working to fix the problem. The unresolved control issue — arriving alongside record revenue — is likely to remain a focal point for investors as the company works through the fix.

Gross margin narrowed to 26.7% from 27.8% a year earlier, although it rose 60 basis points from the previous quarter. KeyBanc said part of the company's higher margin outlook could reflect the restatements, while the rapid BASX expansion is holding back margin gains because of added costs. How quickly AAON absorbs those added costs as the BASX business scales will be a key variable for the company's full-year margin expectation.

Operating cash flow for the first nine months of the year reached $146.9 million, a marked improvement compared with an outflow of $18.8 million in the year-ago period. The company held $3.7 million in cash and had $386.7 million outstanding on its revolving credit facility.

Raised 2026 Guidance and Quarterly Dividend

AAON lifted its 2026 sales forecast to $2.48 billion-$2.524 billion, up from the prior range of $2.235 billion-$2.307 billion. The new range tops the $2.301 billion analyst estimate, and the company expects a gross margin near 26% for the year. For scale, the $1.85 billion backlog covers roughly nine months of revenue at the midpoint of the new range, giving a sense of how much contracted work is already on hand heading into 2026.

The company declared a quarterly dividend of 10 cents a share, payable Dec. 17 to holders of record as of Nov. 25.

Source: Blockonomi