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What changed in AAON, INC.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of AAON, INC.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+276 added−245 removedSource: 10-K (2026-03-02) vs 10-K (2025-02-27)

Top changes in AAON, INC.'s 2025 10-K

276 paragraphs added · 245 removed · 168 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

47 edited+38 added−45 removed30 unchanged
Biggest changeTwo other similar groups, Ambient and AIR Control Concepts, share common ownership of some of our other sales representatives through portfolio groups and for the year-ended December 31, 2024, aggregate sales through their portfolio groups accounted for approximately 14.9% and 9.2% of our sales, respectively.
Biggest changeOur channel partners and customers support the design, construction and service of such facilities including independent sales representatives like Texas AirSystems and related portfolio groups through sole or common ownership like Meriton, Ambient and Air Control Concepts. 9 For the years ended December 31, 2025, 2024, and 2023, the Company had three, two and three customers, respectively, that were 10 percent or greater concentrations of revenue.
Warranties Our product warranty policy is the earlier of one year from the date of first use or 18 months from the date of shipment for parts only, including controls; 18 months for data center cooling solutions and cleanroom systems; five years for compressors; 15 years on aluminized steel gas-fired heat exchangers; 25 years on stainless steel heat exchangers; and ten years on gas-fired heat exchangers in our historical RL products.
Warranties Our product warranty policy is the earlier of one year from the date of install first use or 18 months from the date of shipment for parts only, including controls; 18 months for data center cooling solutions and cleanroom systems; five years for compressors; 15 years on aluminized steel gas-fired heat exchangers; 25 years on stainless steel heat exchangers; and ten years on gas-fired heat exchangers in our historical RL products.
We have partnered with industry leaders to create our Internet of Things (“IoT”) solution and are beginning to utilize artificial intelligence tools to enhance efficiencies when developing our control algorithms and sequences of operation. Additionally, we are developing new controls that leverage machine learning to continuously provide our customers with the most innovative solutions in the industry.
We have partnered with industry leaders to create our Internet of Things (“IoT”) solution and are beginning to utilize artificial intelligence (“AI”) tools to enhance efficiencies when developing our control algorithms and sequences of operation. Additionally, we are developing new controls that leverage machine learning to continuously provide our customers with the most innovative solutions in the industry.
Copies of any materials we file with the SEC can also be obtained free of charge through the SEC’s website at http://www.sec.gov, at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549, or by calling the SEC at 1-800-732-0330. 10
Copies of any materials we file with the SEC can also be obtained free of charge through the SEC’s website at http://www.sec.gov, at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549, or by calling the SEC at 1-800-732-0330.
R&D activities have involved the RQ, RN, and RZ (rooftop units), H3, SA, V3, and M2 (air handling units), CF (condensing units), and the SA and SB (self-contained units), as well as component evaluation and refinement, development of control systems and new product development. 7 Our NAIC research and development laboratory facility includes many unique capabilities, which, to our knowledge, exist nowhere else in the world.
R&D activities have involved the RQ, RN, and RZ (rooftop units), H3, SA, V3, and M2 (air handling units), CF (condensing units), and the SA and SB (self-contained units), as well as component evaluation and refinement, development of control systems and new product development. 11 Our NAIC research and development laboratory facility includes many unique capabilities, which, to our knowledge, exist nowhere else in the world.
We believe that we are in compliance with these laws and that future compliance will not materially affect our earnings or competitive position. Since our founding in 1987, we have maintained a commitment to design, develop, manufacture, and deliver heating and cooling products to perform beyond all expectations and to demonstrate our quality and value to our customers.
We believe that we are in compliance with these laws and that future compliance will not materially affect our earnings or competitive position. Since our founding in 1988, we have maintained a commitment to design, develop, manufacture, and deliver heating and cooling products to perform beyond all expectations and to demonstrate our quality and value to our customers.
We achieved Platinum level in this program in 2024 and 2023. Our Environmental, Social and Governance (“ESG”) committee provides oversight for ESG and sustainability activities, sustainability report development and an internal grassroots sustainability committee provides education opportunities, communications and recommendations to the Company on a regular basis.
We achieved Platinum level in this program in 2025 and 2024. Our Environmental, Social and Governance (“ESG”) committee provides oversight for ESG and sustainability activities, sustainability report development and an internal grassroots sustainability committee provides education opportunities, communications and recommendations to the Company on a regular basis.
In 2024, we published our sixth annual Sustainability report sharing our approach in the material areas of stakeholder engagement, innovation and efficiency, environmental responsibility, climate change, occupational health and safety, talent attraction and retention, diversity and inclusion, community engagement and investment, corporate governance and ethics and compliance.
In 2025, we published our seventh annual Sustainability report sharing our approach in the material areas of stakeholder engagement, innovation and efficiency, environmental responsibility, climate change, occupational health and safety, talent attraction and retention, diversity and inclusion, community engagement and investment, corporate governance and ethics and compliance.
Our patents have legal terms of 20 years with expiration dates ranging from 2024 to 2039. 8 The Company’s trademarks, certain of which are material to its business, are registered or otherwise legally protected in the U.S.
Our patents have legal terms of 20 years with expiration dates ranging from 2032 to 2039. 12 The Company’s trademarks, certain of which are material to its business, are registered or otherwise legally protected in the U.S.
R&D expenses incurred were approximately $47.3 million, $43.7 million, and $46.8 million in 2024, 2023, and 2022, respectively. Patents, Trademarks, Licenses, and Concessions We do not consider any patents, trademarks, licenses, or concessions to be material to our business operations, other than those described below. We hold several patents that relate to the design and use of our products.
R&D expenses incurred were approximately $58.2 million, $47.3 million, and $43.7 million in 2025, 2024, and 2023, respectively. Patents, Trademarks, Licenses, and Concessions We do not consider any patents, trademarks, licenses, or concessions to be material to our business operations, other than those described below. We hold several patents that relate to the design and use of our products.
We opted into additional renewable energy at our Tulsa, Oklahoma, and Redmond, Oregon facilities in 2024, continued to invest and partner on projects that reduce GHG emissions globally and have transitioned to the lower global warming potential R-454B refrigerant.
We opted in to additional renewable energy at our Tulsa, Oklahoma, Memphis, Tennessee and Redmond, Oregon facilities in 2025, continued to invest and partner on projects that reduce GHG emissions globally and have transitioned to the lower global warming potential R-454B refrigerant.
Item 1. Business. Overview AAON, Inc., a Nevada corporation, (“AAON Nevada”) was incorporated on August 18, 1987. Our operating subsidiaries include AAON, Inc., an Oklahoma corporation (“AAON Oklahoma”), AAON Coil Products, Inc., a Texas corporation (“AAON Coil Products”), and BASX, Inc., an Oregon corporation (“BASX”).
Item 1. Business. Overview AAON, Inc., a Nevada corporation ("AAON Nevada"), was incorporated on August 18, 1987. Our operating subsidiaries include AAON, Inc., an Oklahoma corporation ("AAON Oklahoma"), AAON Coil Products, Inc., a Texas corporation ("AAON Coil Products"), and BASX, Inc., an Oregon corporation ("BASX").
Our RN, RQ, M2, and SB Series geothermal/water-source heat pumps are AHRI certified in accordance with ANSI/AHRI/ASHRAE/ISO 13256. Our unitary air conditioners and heat pumps (RQ and RN Series) are certified with AHRI and the US Department of Energy (“DOE”) to ANSI/AHRI 210/240 up to five tons capacity and ANSI/AHRI 340/360 from five to 63 tons capacity.
Certifications and Standards Our geothermal/water-source heat pumps (RN, RQ, M2, and SB Series) are AHRI certified in accordance with ANSI/AHRI/ASHRAE/ISO 13256. Unitary air conditioners and heat pumps (RQ and RN Series) are certified with AHRI and the U.S. Department of Energy to ANSI/AHRI 210/240 (up to five tons) and ANSI/AHRI 340/360 (five-63 tons).
At our Tulsa, Oklahoma and Longview, Texas facilities, we recycled over 15,715 tons, 13,678 tons, and 14,928 tons of metal in 2024, 2023, and 2022, respectively. Also, through our partnership with a waste-to-energy facility, we successfully diverted over 3,020 tons, 694 tons, and 668 tons of waste from landfills in 2024, 2023, and 2022, respectively.
At our Tulsa, Oklahoma Redmond, Oregon and Longview, Texas facilities, we recycled over 17,328 tons, 15,715 tons, and 13,678 tons of metal in 2025, 2024, and 2023, respectively. Also, through our partnership with a waste-to-energy facility, we successfully diverted over 3,960 tons, 3,020 tons, and 694 tons of waste from landfills in 2025, 2024, and 2023, respectively.
Our BASX branded custom air handling products are primarily used in commercial, industrial, healthcare, and institutional facilities employing chilled water cooling, packaged direct expansion, hydronic heating, indirect gas direct heat, humidification, dehumidification, filtration, and integrated controls. BASX manufactures plenum fans for integration into air handling units and replacement applications. BASX also offers integrated sound performance solutions.
BASX-branded custom air handling products serve commercial, industrial, healthcare, and institutional facilities employing chilled water cooling, packaged direct expansion, hydronic heating, indirect gas heating, humidification, dehumidification, advanced filtration, and integrated building controls. BASX also manufactures plenum fans for integration into air handling units and retrofit applications and offers integrated sound performance and vibration control solutions.
We believe that we will have sufficient funds available to meet our working capital needs for the foreseeable future. Research and Development Our products are engineered for performance, flexibility, and serviceability. This has become a critical factor in competing in the HVAC equipment industry.
Borrowings available under the revolving credit facility at December 31, 2025, were $201.0 million. We believe that we will have sufficient funds available to meet our working capital needs for the foreseeable future. Research and Development Our products are engineered for performance, flexibility, and serviceability. This has become a critical factor in competing in the HVAC equipment industry.
Process cooling solutions include recirculation air handling units and make up air handling units, including the integration of piping systems and controls. Environmental control solutions include modular cleanroom environments, fan filter units, filtered ceiling grids with integral flush mount lighting, pressurized plenums with integral ceiling grids, and hospital surgical suites.
Process cooling solutions include recirculation and make-up air handling units, integrated piping systems, and advanced control platforms. Environmental control solutions include modular cleanroom environments, fan filter units, filtered ceiling grids with integrated lighting, pressurized plenums, grid systems, and hospital surgical suites.
After an order is deemed firm and is entered into the backlog, lead times to fulfill orders for AAON branded products is generally around 10 - 12 weeks. Orders for BASX branded product, including orders built at AAON Coil Products’ Longview location, are typically placed months in advance of requested delivery to secure production for those projects.
Lead times to fulfill orders for AAON-branded products is generally around 18 - 26 weeks. Orders for BASX-branded product, including orders built at AAON Coil Products’ Longview location, are typically placed months in advance of requested delivery to secure production for those projects.
Unless the context otherwise requires, references in this Annual Report to “AAON”, the “Company”, “we”, “us”, “our”, or “ours” refer to AAON Nevada and our subsidiaries. AAON is a leader in heating, ventilation, and air conditioning (“HVAC”) solutions for commercial and industrial indoor environments.
Unless the context otherwise requires, references in this Annual Report to "AAON", the "Company", "we", "us", "our", or "ours" refer to AAON Nevada and our subsidiaries. AAON is a leader in heating, ventilation, air conditioning, and liquid cooling solutions for commercial and industrial indoor environments.
High-performance air-cooled heat rejection solutions are provided with waterside economizers (with optional adiabatic assisted cooling) and are designed to integrate with high-density computing systems requiring direct to chip liquid cooling. Additionally, our perimeter gallery thermal management solutions include direct evaporative coolers, fan coil walls, and computer room air handling (“CRAH”) units.
These solutions include direct evaporative coolers, fan coil walls, computer room air handling (“CRAH”) units, overhead fan coil units, and packaged air handling systems. High-performance air-cooled heat rejection solutions are provided with waterside economizers and optional adiabatic-assisted cooling and are designed to integrate with both air-cooled and liquid-cooled IT architectures.
We are tracking our energy usage intensity before and 9 after these updates. We also opened the Exploration Center in 2024, a net-zero facility powered by solar and geothermal energy. In the area of material management, we focus on recycling, reducing, reusing and sourcing more environmentally friendly materials into our processes.
We are tracking our energy usage intensity before and after these updates. 13 In the area of material management, we focus on recycling, reducing, reusing and sourcing more environmentally friendly materials into our processes.
AAON Oklahoma includes the operations of our Tulsa, Oklahoma, Memphis, Tennessee and Parkville, Missouri manufacturing facilities, two retail locations, and the Norman Asbjornson Innovation Center (“NAIC”) research and development laboratory accredited by the Air Movement and Control Association International, Inc. (“AMCA”).
AAON Oklahoma includes operations at the Company’s manufacturing facilities in Tulsa, Oklahoma; Memphis, Tennessee; and Parkville, Missouri, as well as two retail locations, the Norman Asbjornson Innovation Center (“NAIC”), and the Gary D. Fields Customer Exploration Center. The NAIC is a world-class research and development laboratory accredited by the Air Movement and Control Association International, Inc.
BASX branded products are also manufactured in Longview. BASX: BASX engineers, manufactures, and sells an array of custom, high-performance cooling solutions for the rapidly growing hyperscale data center market, ventilation solutions for cleanroom environments in the bio-pharmaceutical, semiconductor, medical and agriculture markets, and highly custom, air handlers and modular solutions for a vast array of markets.
BASX: BASX engineers, manufactures, and sells a wide range of custom, high-performance cooling solutions for the rapidly growing hyperscale data center market; ventilation solutions for cleanroom environments in the biopharmaceutical, semiconductor, medical, and agricultural sectors; and highly customized air handlers and modular solutions for a variety of markets.
Business Segments The Company conducts its business through three business segments: AAON Oklahoma, AAON Coil Products, and BASX. AAON Oklahoma: AAON Oklahoma engineers, manufactures and sells semi-custom and custom HVAC systems, designs and manufactures controls solutions, and sells aftermarket parts to customers through retail part stores and online.
AAON Oklahoma: AAON Oklahoma engineers, manufactures, and sells highly configurable HVAC systems, designs and manufactures controls solutions, and sells aftermarket parts to customers through retail part stores and online.
Our warranty policy for the RQ series covers parts for two years from the date of unit shipment. Our warranty policy for the WH and WV Series geothermal/water-source heat pumps covers parts for five years from the date of installation. The Company also sells extended warranties on parts for various lengths of time ranging from six months to ten years.
Our warranty policy for the RQ series covers parts for two years from the date of unit shipment. The Company also sells extended warranties on parts for various lengths of time ranging from six months to ten years. Revenue for these separately priced warranties is deferred and recognized on a straight-line basis over the separately priced warranty period.
Human Capital Resources Our employees are not represented by unions or other collective bargaining agreements. Management considers its relations with our employees to be good.
Human Capital Resources Our employees are not represented by unions or other collective bargaining agreements. Management considers its relations with our employees to be good. As of February 24, 2026, we employed approximately 5,897 employees, compared to 3,856 employees as of February 24, 2025 and 3,666 employees as of February 20, 2024.
We frequently benchmark our compensation practices and benefits programs against those of comparable industries and in the geographic areas where our facilities are located. We believe that our compensation and employee benefits are competitive and allow us to attract and retain skilled and unskilled labor throughout our organization.
We believe that our compensation and employee benefits are competitive and allow us to attract and retain skilled and unskilled labor throughout our organization.
Our working capital requirements are generally met by cash flow from operations and a bank revolving credit facility, which currently permits borrowings up to $200.0 million and had a $76.5 million outstanding balance at December 31, 2024. Borrowings available under the revolving credit facility at December 31, 2024, were $123.2 million.
We negotiate prepayment terms to help manage credit risk and working capital needs which results in contract liabilities. Our working capital requirements are generally met by cash flow from operations and a bank revolving credit facility, which currently permits borrowings up to $600.0 million and had a $398.3 million outstanding balance at December 31, 2025.
To date, our sales have been primarily derived from the domestic market. Foreign sales accounted for approximately $30.1 million, $39.9 million, and $27.6 million of our net sales in 2024, 2023, and 2022, respectively. As a percentage of net sales, foreign sales accounted for approximately 2.5%, 3.4%, and 3.1% of our net sales in each of those years, respectively.
Foreign sales accounted for approximately $38.1 million, $30.1 million, and $39.9 million of our net sales in 2025, 2024, and 2023, respectively. As a percentage of net sales, foreign sales accounted for approximately 2.6%, 2.5%, and 3.4% of our net sales in each of those years, respectively. Aftermarket Support Strategy We support customers through a comprehensive parts and service network.
Products - AAON Brand AAON branded products are manufactured for, and installed on or beside, commercial and industrial buildings of all sizes. The total addressable market for AAON branded products is determined primarily by the number of new commercial and industrial building projects and the replacement demand from existing commercial and industrial buildings.
Products - AAON Brand Market and Application AAON-branded products serve commercial and industrial buildings of all sizes, installed on rooftops or alongside structures. Our addressable market is driven by new construction activity and replacement demand from existing buildings.
Our packaged RTUs with two stage, digital, or variable speed compressors are optimized with high-efficiency evaporator and condenser coils and variable speed fans, leading to an AHRI Certified performance up to 18.0 Seasonal Energy Efficiency Ratio 2 (“SEER2”) and 22.8 integrated energy efficiency ratio (“IEER”).
Many units substantially exceed DOE minimum efficiency standards and rank among the highest efficiency products available commercially. Our packaged RTUs with two-stage, digital, or variable-speed compressors are optimized with high-efficiency evaporator and condenser coils and variable-speed fans, achieving AHRI Certified performance up to 18.0 SEER2 and 22.8 IEER.
Our controls division provides factory-developed and tested control options for Variable Air Volume, Make-Up Air, Single Zone VAV, Constant Volume, and Zoning systems associated with our products and other HVAC-related equipment. We offer several controls options: the Orion Controller, factory-installed customer provided controls, and terminal block for field-installed controls.
Controls Integration We design and manufacture high-performance controls solutions that enhance our equipment’s unique features and capabilities. Our controls division develops factory-tested options for Variable Air Volume, Make-Up Air, Single Zone VAV, Constant Volume, and Zoning systems for both AAON products and other HVAC equipment. Controls options include the VCCX Controller, factory-installed customer-provided controls, and terminal blocks for field-installed controls.
AAON Coil Products: AAON Coil Products engineers and manufactures a selection of our semi-custom, and custom HVAC systems as well as a variety of heating and cooling coils to be used in HVAC systems, mostly for the benefit of AAON Oklahoma, AAON Coil Products, and BASX. AAON Coil Products consists of operations at our Longview, Texas manufacturing facilities.
AAON Coil Products: AAON Coil Products engineers and manufactures and sells semi-custom and custom HVAC systems as well as heating and cooling coils for use in HVAC systems, primarily for AAON Oklahoma, AAON Coil Products, and BASX. AAON Coil Products operates from our Longview, Texas manufacturing facilities, which also produce BASX-branded products.
BASX consists of operations at our Redmond, Oregon manufacturing facilities. For more information on our business segments’ financial position and results of operations, refer to Note 23, “Segments,” of the Notes to Consolidated Financial Statements. Business and Marketing Strategy Our products serve the commercial, industrial, data center, and cleanroom markets within the HVAC equipment industry.
BASX operates from our manufacturing facilities in Redmond, Oregon, with additional support from facilities in Memphis, Tennessee, and Longview, Texas. For more information on our business segments’ financial position and results of operations, refer to Note 23, “Segments,” of the Notes to Consolidated Financial Statements.
With the NAIC, a world-class research and development (“R&D”) laboratory in Tulsa, Oklahoma, our products are continuously tested under a variety of extreme environmental conditions to ensure they deliver the ultimate performance, efficiency, and value. Also located in Tulsa, Oklahoma, our cutting-edge Exploration Center showcases the engineering, design attributes, and premium build quality of our equipment side-by-side the market alternatives.
("AMCA"), where our products are continuously tested under extreme environmental conditions to ensure optimal performance, efficiency, and value. The Gary D. Fields Customer Exploration Center showcases the engineering, design attributes, and premium build quality of our equipment alongside market alternatives.
White space solutions for a close-coupled IT load management approach include overhead fan coils and in-row coolers. Packaged solutions include coupled economizing chillers with integrated air handling and packaged direct expansion (“DX”) solutions with airside economizers. 4 Our cleanroom products are built to provide environmental control serving critical processes and high-fidelity control for precise industry requirements.
Packaged solutions include coupled economizing chillers with integrated air handling and packaged direct expansion (“DX”) systems with airside economizers. These offerings enable close-coupled IT load management and flexible deployment across new construction and retrofit applications. Our cleanroom products are engineered to provide precise environmental control for critical manufacturing and research processes, including pharmaceutical, biotechnology, and semiconductor applications.
We participate in an energy demand response program through the public utility provider to reduce demand during peak hours.
Our Redmond, Oregon facilities are installing LED lights into any new fixtures in their current facility and working towards retrofitting old fixtures to LED. We participate in an energy demand response program through the public utility provider to reduce demand during peak hours.
Our BASX branded products primarily compete with Vertiv (Vertiv Holdings Co.), STULZ (STULZ Air Technology Systems, Inc.), Munters, Silent Aire (Johnson Controls International PLC), Nortek (Nortek Air Solutions), Modine (Modine Manufacturing Co.) and Engineered Air. All of our publicly traded competitors are substantially larger and have greater resources than we do.
Our thermal management products primarily compete with Vertiv (Vertiv Holdings Co.), STULZ (STULZ Air Technology Systems, Inc.), Munters, Silent Aire (Johnson Controls International PLC), Nortek (Nortek Air Solutions), and Modine (Modine Manufacturing Co.). The Company competes against larger manufacturers with greater financial and operational resources and offerings ranging into the lower featured products needed for broader market appeal.
When configured as Air-Source Heat Pumps (“ASHP”), the RQ and RN Series (two to 50 tons), are capable of operating in ambient outside temperatures as low as zero degrees Fahrenheit. This class of products, known as AAON Alpha Class™, is a critical, industry-leading solution that meets the increasing demand for commercial building decarbonization.
AAON Alpha Class™ Technology When configured as air-source heat pumps (“ASHP”), our RQ, RN, and CF Series units operate in ambient temperatures as low as negative twenty degrees Fahrenheit. This technology platform, AAON Alpha Class™, addresses accelerating demand for commercial building decarbonization.
In the area of energy efficiency and conservation, our Tulsa, Oklahoma and Longview, Texas facilities have transitioned to nearly 100% LED lighting in our facilities leading to considerable cost savings and reduced energy consumption. Our Redmond, Oregon facilities are installing LED lights into any new fixtures in their current facility and working towards retrofitting old fixtures to LED.
We continue to develop and manufacture non-fossil fuel-consuming units to provide the most sustainable commercial HVAC equipment in the market. In the area of energy efficiency and conservation, our Tulsa, Oklahoma and Longview, Texas facilities have transitioned to nearly 100% LED lighting in our facilities leading to considerable cost savings and reduced energy consumption.
As a result, portions of the BASX branded product backlog do not turn over within typical lead times for AAON branded products. 6 Competition Our AAON branded products primarily compete with Lennox (Lennox International, Inc.), Trane (Trane Technologies plc), York International (Johnson Controls International PLC), Carrier (Carrier Global Corporation), and Daikin (Daikin Industries).
Competition The Company’s comfort cooling products primarily compete with Lennox (Lennox International, Inc.), Trane (Trane Technologies plc), York Light Commercial (Bosch Home Comfort Group), Johnson Controls (Johnson Controls International PLC), Carrier (Carrier Global Corporation), and Daikin (Daikin Industries).
As a result, the value proposition of our higher-quality equipment is now more attractive, making us more competitive in both the new construction and replacement markets. Resources Sources and Availability of Raw Materials The most important materials we purchase are steel, copper, and aluminum.
This enhanced cost 10 competitiveness, combined with our quality and performance advantages, has strengthened our position across both new construction and replacement market segments. Resources Sources and Availability of Raw Materials The most important materials we purchase are steel, copper, and aluminum.
A typical commercial building installation requires one ton of air conditioning for every 300-400 square feet or, for a 100,000 square foot building, 250 tons of air conditioning, which can involve multiple units.
A 100,000 square-foot commercial building requires approximately 250 tons of cooling capacity, which we deliver through single or multiple units depending on application requirements.
AAON H3/V3 Series energy recovery wheel air handling units provide energy-efficient 100% outside air ventilation by recovering energy that would otherwise be exhausted from a building. In addition to the equipment we manufacture, we design and produce high-performance controls solutions that enhance our equipment’s unique features and capabilities.
Our H3/V3 Series energy recovery wheel air handling units deliver energy-efficient 100% outside air ventilation by capturing energy that would otherwise be exhausted. Performance and Efficiency Our products span cooling capacities from two-261 tons and heating capacities from 24,000 to 4,500,000 British Thermal Units (“BTUs”).
As a result of our strategy to engineer and manufacture innovative HVAC products of the highest performance, efficiency, and value, we are naturally committed to meeting regulatory and certification standards of the relevant standard setting bodies, including the Air-Conditioning, Heating, and Refrigeration Institute (“AHRI”); the American National Standards Institute (“ANSI”); American Society of Heating, Refrigeration and Air-Conditioning Engineers (“ASHRAE”); the Air Movement and Control Association (“AMCA”) and the International Organization for Standardization (“ISO”).
Our commitment to engineering excellence requires rigorous adherence to industry standards and certifications, including those set by Air-Conditioning, Heating, and Refrigeration Institute (“AHRI”); the American National Standards Institute (“ANSI”); American Society of Heating, Refrigeration and Air-Conditioning Engineers (“ASHRAE”); the AMCA and the International Organization for Standardization (“ISO”).
We work closely with our Representatives to develop and support business plans, develop leadership capabilities, and provide technician training to our representatives and selected contractors. All of which creates a cohesive network of service organizations to better meet the operational and maintenance needs of our customer base.
This includes collaborating with representatives on business planning, leadership development, and technician training for both representatives and select contractors. These efforts create a cohesive service ecosystem designed to meet the operational and maintenance requirements of our customer base throughout equipment lifecycles.
Our strategy involves mass semi-customization leveraging flexible computer-aided manufacturing systems to produce highly configurable equipment. We differentiate from other HVAC manufacturers by combining the low unit costs of mass production processes with the flexibility of individual customization.
Business and Marketing Strategy The Company serves commercial, industrial, data center, and cleanroom markets with a differentiated approach to HVAC manufacturing. Our business strategy centers on mass semi-customization, leveraging flexible, computer-aided manufacturing systems to deliver highly configurable equipment that combines the cost efficiency of scaled production with the precision of individual customization.
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The Company’s unique approach to designing and manufacturing highly configurable equipment to meet exact needs creates a premier ownership experience with greater efficiency, performance, and long-term value. AAON is headquartered in Tulsa, Oklahoma, where its world-class innovation center and testing capabilities enable continuous advancement toward a cleaner and more sustainable future.
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The Company designs and manufactures highly configurable equipment to meet specific customer requirements, delivering reliable performance, efficiency, and long-term value. Through a strong commitment to research and development, advanced engineering capabilities, and decades of industry experience, the Company continues to elevate standards for climate management solutions.
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Through a collaborative effort with our network of independent sales representatives, we engineer and manufacture products and systems that best serve the buyer’s unique needs and applications. Our go-to-market strategy is centered around customers and markets that demand HVAC equipment with extraordinary performance and durability, greater energy efficiency, and best overall value.
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Business Segments The Company operates through three reportable business segments: AAON Oklahoma, AAON Coil Products, and BASX. These segments are based on differences in products, manufacturing processes, and end markets, and reflect how management evaluates operating performance and allocates resources.
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We manufacture equipment with more configurability than other “standard” offerings found in the HVAC equipment industry and we do not manufacture equipment that has not been pre-specified by our customers. 2 Since day one, AAON has been dedicated to manufacturing and product leadership with innovation through R&D with a specific emphasis on energy performance, durability, efficiency, and indoor air quality.
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Our marketing strategy is guided by the Company’s core priorities: Customers First: We collaborate closely with our network of independent sales representatives to engineer and manufacture solutions tailored to each customer's specific requirements. Unlike manufacturers of standardized equipment, we build to order, ensuring every system is pre-specified before production begins.
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The commercial and industrial new construction markets are subject to cyclical fluctuations in that they generally lag behind the housing market. The housing market, in turn, is influenced by cyclical factors such as interest rates, inflation, consumer spending habits, employment rates, the state of the economy and other macroeconomic factors. When new construction is down, we emphasize the replacement market.
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Our go-to-market 6 strategy targets customers and applications that demand exceptional performance, efficiency, and long-term value. We compete on technical excellence and customer outcomes, not price. Product Leadership: Since our founding, our Company has maintained an unwavering commitment to manufacturing and product leadership through continuous research and development.
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The ratio of sales for new construction versus replacement is related to various factors. Generally, the cyclical nature of the new construction market impacts this ratio the most over an economic cycle.
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Our innovation efforts focus on advancing energy performance, equipment durability, system efficiency, and indoor air quality. These pillars define our competitive position and drive our R&D investments.
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Our flagship products consist of a single-unit system that generates heating and cooling in a self-contained cabinet, referred to in the industry as “unitary product.” The majority of our unitary products are installed on the rooftop of commercial and industrial buildings and structures. These are known in the industry as "rooftop units," or (“RTUs”).
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Sales and Representative Support: We invest strategically in our representative network as an extension of our market capability. This includes business planning collaboration, leadership development, technical training, and comprehensive service network development to ensure our representatives and their customers receive exceptional support throughout equipment lifecycles.
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Other finished products include air-source heat pumps, air handling units, condensing units, makeup air units, energy recovery units, geothermal/water-source heat pumps, coils, and controls. All AAON branded products are created by assembling a combination of sheet metal and tubing fabrication components and pre-manufactured/purchased components such as coils, compressors, fans, and control systems.
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People and Culture: Our ability to deliver product leadership and excellent customer experience depends on attracting and retaining top engineering, manufacturing, and commercial talent. We maintain a culture focused on innovation, technical rigor, and operational excellence that enables us to compete against substantially larger manufacturers. To date, our sales have been primarily derived from the domestic market.
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All products undergo rigorous end-of-line testing and inspection prior to being shipped to customers.
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Parts are available through our representative sales offices and two Tulsa-based retail stores. Factory service organizations operate at each manufacturing facility, supplemented by representatives who maintain their own service capabilities to provide warranty work and ongoing customer support. We invest strategically in building service capacity across our North American representative network.
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We offer three groups of RTUs: the RQ Series, consisting of five cooling sizes ranging from two to five tons; the RN Series, offered in 26 cooling sizes ranging from six to 140 tons; and the RZ Series, which is offered in 15 cooling sizes ranging from 45 to 261 tons.
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The commercial and industrial construction cycle typically lags residential markets, which respond to macroeconomic factors including interest rates, inflation, employment, and overall economic conditions. We balance our business across both new construction and replacement markets depending on economic cycles.
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Utilizing unrivaled engineering prowess and cutting-edge compressor technology, AAON Alpha Class™ provides energy-efficient heating and cooling throughout the year in virtually any climate.
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Core Product Architecture Our flagship products are rooftop units (RTUs), self-contained heating and cooling systems installed on commercial and industrial building rooftops. A typical commercial building installation requires one ton of air conditioning for every 300-400 square feet.
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In addition to our flagship packaged RTUs, we offer a variety of products to meet various market needs: Our SA, SB, and M2 Series consist of indoor packaged, water-cooled or geothermal/water-source heat pump self-contained units with cooling capacities of three to 70 tons.
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We manufacture three RTU product lines covering the full commercial spectrum: • RQ Series: two-five ton cooling capacity • RN Series: six-140 ton cooling capacity (26 sizes) • RZ Series: 45-261 ton cooling capacity (15 sizes) 7 Beyond rooftop units, our product portfolio includes air handling units, condensing units, makeup air units, energy recovery units, geothermal and water-source heat pumps, coils, and factory controls.
Removed
Our condensing unit, the CF Series, is available from two to 70 tons and can be configured as an Alpha Class ASHP. 3 Our air handling units consist of the indoor H3 and V3 Series and the modular M2 Series, as well as air handling unit configurations of the RQ, RN, RZ, and SA Series units.
Added
All products are manufactured by assembling fabricated sheet metal and tubing components with pre-manufactured elements including coils, compressors, fans, and control systems. Every unit undergoes rigorous end-of-line testing and inspection before shipment.
Removed
Our energy recovery option applicable to our RQ, RN, RZ, and SB units, as well as our H3, V3, and M2 Series air handling units, responds to the U.S. Clean Air Act mandate to increase fresh air in commercial structures. Our products are designed to compete on the higher quality end of standardized products.
Added
By combining advanced engineering with leading-edge compressor technology, Alpha Class™ delivers energy-efficient heating and cooling year-round in virtually any climate. Indoor and Specialized Systems Our SA, SB, and M2 Series provide indoor packaged solutions with water-cooled or geothermal/water-source heat pump configurations ranging from three-70 tons cooling capacity.
Removed
Performance characteristics of our products range in cooling capacity from two to 261 tons and in heating capacity from 24,000 to 4,500,000 British Thermal Units (“BTUs”). Many of our products far exceed DOE minimum efficiency standards and are among the highest efficiency products currently available in the market.
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Air handling units include the indoor H3 and V3 Series, the modular M2 Series, and air handling configurations of our RQ, RN, RZ, and SA Series units. Energy recovery options available across multiple product lines support increased fresh air ventilation requirements outlined in ASHRAE Standard 90.1 (Energy Conservation) and Standard 62.1 (Ventilation & Indoor Air Quality).
Removed
Most of our controls are Underwriters Laboratories category ZPVI2 compliant and BACnet Testing Laboratories certified which ensures our products meet internationally recognized standards for safety, traceability, conformance, and production quality. Our economizer function is California Title 24 certified to minimize energy consumption. Our proven sequences of operation optimize the performance of our HVAC units.
Added
VCCX Controls are Underwriters Laboratories certified to UL 916 or UL 60730 and BACnet Testing Laboratories certified, meeting international standards for safety and traceability. Our economizer function carries California Title 24 certification to support reduced energy consumption. We continue to invest in advanced controls manufacturing capabilities designed to improve speed, precision, and consistency across production and testing processes.
Removed
Out of the box, our controls are user-friendly and configurable to provide a variety of HVAC unit application options, in addition, we are able to customize our controls to meet customers’ unique requirements.
Added
These investments enhance efficiency, quality assurance, and accountability throughout manufacturing operations and support increased production capacity through the use of automation. AAON controls are designed to be user-friendly and configurable for a wide range of HVAC applications. In addition, controls can be customized to meet application-specific customer requirements, supporting system flexibility and integration across diverse operating environments.
Removed
Products - BASX Brand As a full complement to our AAON branded products, our BASX branded products are highly customized to meet the expectations of even the most discerning customers. Our data center cooling solutions are focused on providing highly configurable, purpose-built equipment with an emphasis on efficiency, performance, speed of deployment, and build-quality.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAdditional state regulatory rules can lead to a patchwork of different compliance regulations that may impact the results of each of our operating segments and our consolidated results. 14 The Dodd-Frank Wall Street Reform and Consumer Protection Act contains provisions to improve transparency and accountability concerning the supply of certain minerals, known as “conflict minerals”, originating from the Democratic Republic of Congo and adjoining countries.
Biggest changeThe Dodd-Frank Wall Street Reform and Consumer Protection Act contains provisions to improve transparency and accountability concerning the supply of certain minerals, known as “conflict minerals”, originating from the Democratic Republic of Congo and adjoining countries. As a result, in August 2012, the SEC adopted annual disclosure and reporting requirements for those companies that use conflict minerals in their products.
If we are unable to establish new representative relationships or continue current relationships, or terminate and replace our third-party representatives, our business, financial condition, and results of operations could be materially and adversely affected. We may incur material costs as a result of warranty and product liability claims that would negatively affect our profitability .
If we are unable to establish new representative relationships or continue 15 current relationships, or terminate and replace our third-party representatives, our business, financial condition, and results of operations could be materially and adversely affected. We may incur material costs as a result of warranty and product liability claims that would negatively affect our profitability .
Additionally, regulations that reduce or eliminate the use of fossil fuels such as natural gas and propane may reduce or eliminate sales of gas-fired equipment for which AAON holds a strong market position. This will result in a shift 15 to more air- and water-cooled heat pump-type units to provide space heating.
Additionally, regulations that reduce or eliminate the use of fossil fuels such as natural gas and propane may reduce or eliminate sales of gas-fired equipment for which AAON holds a strong market position. This will result in a shift to more air- and water-cooled heat pump-type units to provide space heating.
Additionally, should there be a downturn in the market, we could be committed to purchase more materials than necessary for our production and carry excess inventory which could result in additional costs to the business. 13 Risks Related to Electronic Data Processing and Digital Information Our business is subject to the risks of interruptions by cybersecurity attacks.
Additionally, should there be a downturn in the market, we could be committed to purchase more materials than necessary for our production and carry excess inventory which could result in additional costs to the business. Risks Related to Electronic Data Processing and Digital Information Our business is subject to the risks of interruptions by cybersecurity attacks.
Bribery Act and the U.S. Export Administration Act. Violations of these laws, which are complex, may result in criminal penalties or sanctions that could have a material adverse effect on our business, financial condition and results of operations. Changes in legislation or government regulations or policies could adversely affect our results of operations.
Bribery Act and the U.S. Export Administration Act. Violations of these laws, which are complex, may result in criminal 19 penalties or sanctions that could have a material adverse effect on our business, financial condition and results of operations. Changes in legislation or government regulations or policies could adversely affect our results of operations.
Item 1A. Risk Factors. The following risks and uncertainties may affect our performance and results of operations. The discussion below contains “forward-looking statements” as outlined in the Forward-Looking Statements section above. Our ability to mitigate risks may cause our future results to materially differ from what we currently anticipate.
Item 1A. Risk Factors. 14 The following risks and uncertainties may affect our performance and results of operations. The discussion below contains “forward-looking statements” as outlined in the Forward-Looking Statements section above. Our ability to mitigate risks may cause our future results to materially differ from what we currently anticipate.
However, if a key supplier is unable or unwilling to meet our supply requirements, we could experience supply interruptions or cost increases, either of which could have an adverse effect on our gross profit. We risk having losses resulting from the use of non-cancellable contracts.
However, if a key supplier is unable or unwilling to meet our supply requirements, we could experience supply interruptions or cost increases, either of which could have an adverse effect on our gross profit. 17 We risk having losses resulting from the use of non-cancellable contracts.
We are subject to extensive and changing federal, state and local laws and regulations designed to protect the environment in the United States and in other parts of the world. These laws and regulations could impose liability for remediation costs and result in civil or criminal penalties in case of non-compliance.
We are subject to extensive and rapidly changing federal, state and local laws and regulations designed to protect the environment in the United States and in other parts of the world. These laws and regulations could impose liability for remediation costs and result in civil or criminal penalties in case of non-compliance.
This ERP system will replace our existing operating and financial systems. The ERP system is designed to accurately maintain the Company’s financial records, enhance operational functionality and provide timely information to the Company’s management team related to the operation of the business.
This ERP system will replace our existing operating and financial systems. The ERP system is designed to accurately maintain the Company’s financial records, enhance operational functionality and provide timely information to the 18 Company’s management team related to the operation of the business.
We estimate our self-insurance liabilities using an analysis provided by our claims administrator and our historical claims experience. Our accruals for insurance reserves reflect these estimates and other management judgments, which are subject to a 12 high degree of variability.
We estimate our self-insurance liabilities using an analysis provided by our claims administrator and our historical claims experience. Our accruals for insurance reserves reflect these estimates and other management judgments, which are subject to a 16 high degree of variability.
Our business can be hurt by economic conditions . Our business is affected by a number of economic factors, including the level of economic activity in the markets in which we operate.
Our business can be hurt by economic conditions . Our business is affected by a number of economic factors, including the level of economic activity and uncertainty in the markets in which we operate.
Tariffs implemented on our products (or on materials, parts or components we use to manufacture our products) have in the past increased the cost of our products manufactured in the U.S. and imported into the U.S.
Tariffs implemented on our products (or on materials, parts or components we use to manufacture our products or to provide service for our products) have in the past increased the cost of our products manufactured in the U.S. and imported into the U.S.
We always face the possibility of new governmental regulations and policies, from the Federal or state levels, which could have a substantial or even extreme negative effect on our operations and profitability. This could affect equipment we currently manufacture and could have an impact on our product design, operations, and profitability. We anticipate more state regulatory activity in the future.
We always face the possibility of new or rapidly evolving changes to existing governmental regulations and policies, from the Federal or state levels, which could have a substantial or even extreme negative effect on our operations and profitability. This could affect equipment we currently manufacture and could have an impact on our product design, operations, and profitability.
For example, a former U.S. administration previously called for substantial changes to U.S. foreign trade policy with respect to China and other countries, including the possibility of imposing greater restrictions on international trade and significant increases in tariffs on goods imported into the U.S.
For example, the current U.S. administration has instituted substantial changes to U.S. foreign trade policy with respect to China and other countries, including a significant increase in tariffs on goods imported into the U.S. and the possibility of imposing further restrictions on international trade.
Certain competitors with greater financial resources than us could target our third-party representatives for exclusive sales channels. We may not be able to secure additional third-party representatives who will effectively market our products in certain geographical areas. In addition, adding new representatives requires additional administrative efforts and costs.
We may not be able to secure additional third-party representatives who will effectively market our products in certain geographical areas. In addition, adding new representatives requires additional administrative efforts and costs.
If additional tariffs or trade restrictions are implemented on our products (or on materials, parts or components we use to manufacture our products) by the U.S. or other countries, the cost of products manufactured in countries such as China and Mexico and imported into the U.S. or other countries in which we operate could increase further.
The imposition of additional tariffs on our products (or on materials, parts or components we use to manufacture our products or to provide service for our products) by the U.S. or other countries, the cost of our products manufactured in other countries subject to additional tariffs and imported into the U.S. would increase as a result of new tariffs that are implemented, and could increase further to the extent that retaliatory tariffs or similar additional trade restrictions are implemented.
While we have a robust succession plan in place for each one of our officers and senior leadership team members, the loss of one or more could have a serious adverse effect on our business. We do not maintain key-person insurance for officers or any members of our senior leadership team.
We rely on our officers and senior leadership team in the areas of research and development, marketing, production, sales, and general and administrative functions. While we have a robust succession plan in place for each one of our officers and senior leadership team members, the loss of one or more could have a serious adverse effect on our business.
To mitigate certain business risks of departing executives upon termination, on July 30, 2024, the Board of Directors of the Company, upon the recommendation of the Compensation Committee of the Board of Directors (the “Committee”) approved the adoption of the AAON, Inc.
We do not maintain key-person insurance for officers or any members of our senior leadership team. To mitigate certain business risks of departing executives upon termination, on July 30, 2024, the Board of Directors of the Company, upon the recommendation of the Compensation Committee of the Board of Directors (the “Committee”) approved the adoption of the AAON, Inc.
We are dependent upon components purchased from third parties, as well as raw materials such as steel, copper and aluminum. Occasionally, we enter into cancellable and non-cancellable contracts on terms from six to 18 months for raw materials and components.
Occasionally, we enter into cancellable and non-cancellable contracts on terms from six to 18 months for raw materials and components.
The loss of, or significant reduction in sales to significant customers (or a related portfolio group of customers) could have a material adverse effect on our results of operations, financial condition and cash flow. Further, the addition of new major customers in the future could increase our customer concentration risks as described above.
From time to time we derive a significant portion of our sales from a limited number of customers, and such concentration may continue in the future. The loss of, or significant reduction in sales to significant customers (or a related portfolio group of customers) could have a material adverse effect on our results of operations, financial condition and cash flow.
Our results of operations and financial condition could be negatively impacted by the loss of a major third-party representative. We are dependent on our third-party representatives to market and sell our products. If such relationships were terminated or impaired for any reason, it could materially and adversely affect our ability to generate revenues and profits.
We are dependent on our third-party representatives to market and sell our products. If such relationships were terminated or impaired for any reason, it could materially and adversely affect our ability to generate revenues and profits. Certain competitors with greater financial resources than us have targeted some of our third-party representatives for exclusive sales channels.
An excess of or significant claim(s) could lead to the cancellation of our policies and the loss of and inability to find additional insurance carriers.
An excess of or significant claim(s) could lead to the cancellation of our policies and the loss of and inability to find additional insurance carriers. In addition, warranty claims are not covered by our product liability insurance and there may be types of product liability claims that are also not covered by our product liability insurance.
In addition, warranty claims are not covered by our product liability insurance and there may be types of product liability claims that are also not covered by our product liability insurance. 11 We depend on our officers and senior leadership team and the loss of one or more key employees or an inability to attract and retain highly skilled employees could adversely affect our business .
We depend on our officers and senior leadership team and the loss of one or more key employees or an inability to attract and retain highly skilled employees could adversely affect our business . Our success depends largely upon the continued services of our officers and senior leadership team.
Risks Related to Material Sourcing and Supply We may be adversely affected by problems in the availability, or increases in the prices, of raw materials and components . Problems in the availability, or increases in the prices, of raw materials or components could depress our sales or increase the costs of our products.
This unpredictability may cause our revenues and operating results to vary unexpectedly from quarter-to-quarter and year-to-year, making our future operational results less predictable. Risks Related to Material Sourcing and Supply We may be adversely affected by problems in the availability, or increases in the prices, of raw materials and components .
As a result, in August 2012, the SEC adopted annual disclosure and reporting requirements for those companies that use conflict minerals in their products. Accordingly, we began our reasonable country of origin inquiries in fiscal year 2013, with initial disclosure requirements beginning in May 2014.
Accordingly, we began our reasonable country of origin inquiries in fiscal year 2013, with initial disclosure requirements beginning in May 2014.
We expect to continue to pass along some of these costs to our customers, but the increased cost could adversely affect the demand for products. These cost increases could adversely affect the demand for our products and/or our profitability, which could have a material adverse effect on our business and our earnings.
In the event we are unable to pass along the increased costs resulting from any tariffs to our customers, it could have a material adverse effect on our business, profitability, and our earnings.
Other administrations could take a different approach to U.S. foreign trade policy, so there remains uncertainty as to whether trade between the U.S and other countries, including countries in which we operate, may be impacted by these policy shifts. Changes in policy or continued uncertainty could depress economic activity and restrict our access to suppliers or customers.
The current administration has taken a different approach to U.S. foreign trade policy than their predecessors, so there remains uncertainty as to whether, and to what degree, trade between the U.S and other countries will be impacted by these policy shifts on an ongoing and/or long-term basis.
Removed
From time to time in the past, we derived a significant portion of our sales from a limited number of customers, and such concentration may continue in the future.
Added
Further, the addition of new major customers in the future could increase our customer concentration risks as described above. We may not realize all of the sales expected from our backlog of orders and contracts.
Removed
Our success depends largely upon the continued services of our officers and senior leadership team. We rely on our officers and senior leadership team in the areas of research and development, marketing, production, sales, and general and administrative functions.
Added
Our backlog consists of the value of product and service orders for which a customer purchase order or purchase commitment is received, but has not yet been delivered. As of December 31, 2025 and 2024, the Company’s estimated backlog was approximately $1,828.5 million and $867.1 million, respectively.
Added
The majority of our combined backlog is considered firm and expected to be delivered within 12 to 18 months. Our customers have the right in some circumstances, usually with penalties or other termination consequences, to reduce or defer firm orders in backlog.
Added
If customers terminate, reduce or defer firm orders, the revenue we expect to generate from our backlog may not be fully realized. Also, due to our large backlog, pricing changes may take longer to be reflected in our financial results. Our results of operations and financial condition could be negatively impacted by the loss of a major third-party representative.
Added
The length of the sales cycle for certain BASX-branded products and solutions offerings, as well as unpredictable placing or canceling of customer orders, particularly large orders, may cause our revenues and operating results to vary significantly from period-to-period, which could make our future operational results less predictable.
Added
A customer’s decision to purchase certain of our products or solutions, particularly products new to the market or long-term end-to-end solutions, may involve a lengthy contracting, design and qualification process.
Added
In particular, customers deciding on the design and implementation of large deployments may have lengthy and unpredictable procurement processes that may delay or impact expected future orders, including customers canceling orders based on unforeseen changes to their businesses.
Added
As a result, the order booking and sales recognition process is often uncertain and unpredictable, with some customers placing large orders with short lead times on little advance notice and others requiring lengthy, open-ended processes that may change depending on global or regional economic conditions.
Added
Problems in the availability, or increases in the prices, of raw materials or components could depress our sales or increase the costs of our products. We are dependent upon components purchased from third parties, as well as raw materials such as steel, copper and aluminum.
Added
Artificial intelligence technologies may introduce operational, cybersecurity, reputational, and compliance risks that could adversely affect our business. Although AI is not a core component of our products or manufacturing operations, the growing use of AI tools presents potential risks to AAON.
Added
Any internal or incidental use of AI or machine‑learning technologies—such as in engineering, data analysis, customer support, or administrative processes—may expose the Company to risks involving data privacy, cybersecurity, protection of proprietary information, intellectual property rights, and regulatory compliance. As AI capabilities rapidly evolve, our ability to evaluate, monitor, and govern their use may not keep pace.
Added
Employees, contractors, or third‑party partners could unintentionally or improperly use AI tools, which may lead to unauthorized disclosure of sensitive information, inaccurate or biased outputs, or other unintended consequences. These risks could negatively impact operational performance, decision‑making, and interactions with customers or suppliers. AI technologies are also subject to increasing regulatory scrutiny.
Added
New or evolving laws, standards, or reporting requirements applicable to AI could impose additional compliance obligations on AAON. If we do not implement appropriate controls and oversight mechanisms governing the use of AI, we could experience operational disruptions, reputational harm, litigation risk, or competitive disadvantage if other companies adopt AI more effectively to improve efficiency or reduce costs.
Added
We anticipate more state regulatory activity in the future. Additional state regulatory rules can lead to a patchwork of different compliance regulations that may impact the results of each of our operating segments and our consolidated results.
Added
Additional policy changes or continued uncertainty could depress economic activity and restrict our access to suppliers or customers. Furthermore, counter- or retaliatory tariffs imposed against the U.S. could impact our sales internationally.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe have governance and compliance structures that are designed to elevate issues relating to cybersecurity to Management, such as potential threats or vulnerabilities. We also employ various defensive and continuous monitoring techniques using recognized industry frameworks and cybersecurity standards. Our information security incident response plan is designed to escalate certain cybersecurity incidents to members of management depending on the circumstances.
Biggest changeWe also employ various defensive and continuous monitoring techniques using recognized industry frameworks and cybersecurity standards. Our information security incident response plan is designed to escalate certain cybersecurity incidents to members of management depending on the circumstances. The incident response team works with the Company’s management team to help mitigate and remediate cybersecurity incidents of which they are notified.
For example, (1) cybersecurity risk is addressed as a component of the Company’s enterprise risk management program in concert with the audit committee and board of directors; (2) our information security team works with our management team in an effort to prioritize our risk management processes and mitigate cybersecurity threats that are more likely to lead to a material impact to our business; (3) our information 16 security and management team evaluates material risks from cybersecurity threats against our overall business objectives and reports to the audit committee for further communication as required, to evaluate our overall enterprise risk.
For example, (1) cybersecurity risk is addressed as a component of the Company’s enterprise risk management program in concert with the audit committee and board of directors; (2) our information security team works with our management team in an effort to prioritize our risk management processes and mitigate cybersecurity threats that are more likely to lead to a material impact to our business; (3) our information security and management team evaluates material risks from cybersecurity threats against our overall business objectives and reports to the audit committee for further communication as required, to evaluate our overall enterprise risk.
The audit committee assists the board of directors with this responsibility by reviewing and discussing our risk assessment and risk management practices, including cybersecurity risks, with members of management. The audit committee, in turn, periodically reports on its review with the board of directors. Management is responsible for day-to-day assessment and management of cybersecurity risks.
The audit committee assists the board of directors with this responsibility by reviewing and discussing our risk assessment and risk management practices, including cybersecurity risks, with members of management. The audit committee, in turn, periodically reports on its review with the board of directors.
The incident response team works with the Company’s management team to help mitigate and remediate cybersecurity incidents of which they are notified. In addition, the Company’s information security incident response plan includes reporting to the board of directors for certain cybersecurity incidents. Management meets with the audit committee periodically to review our information technology systems and discuss key cybersecurity risks.
In addition, the Company’s 21 information security incident response plan includes reporting to the board of directors for certain cybersecurity incidents. Management meets with the audit committee periodically to review our information technology systems and discuss key cybersecurity risks.
After the departure of our Chief Information Officer, our Vice President of Administration has responsibility and oversight for IT. Management assesses our cybersecurity readiness through internal assessment tools as well as third-party control tests, vulnerability assessments, audits and evaluation against industry standards.
Management assesses our cybersecurity readiness through internal assessment tools as well as third-party control tests, vulnerability assessments, audits and evaluation against industry standards. We have governance and compliance structures that are designed to elevate issues relating to cybersecurity to Management, such as potential threats or vulnerabilities.
Removed
The Company officer with oversight of Information Technology (“IT”) has primary oversight of material risks from cybersecurity threats. Through November 2024, our Chief Information Officer was responsible for IT and had more than 25 years of experience across various engineering, business and management roles, including leading the development and implementation of information technology strategies and roadmaps for manufacturing automation.
Added
The Chief Information Officer is responsible for day-to-day assessment and management of cybersecurity risks and any material risks from cybersecurity threats with oversight by the Chief Financial Officer.
Added
In March 2025, our new Chief Information Officer assumed responsibilities for IT leveraging over twenty-five years of experience aligning Information Technology organizations to businesses' strategic and operation needs in multiple industries, including construction, engineering, pipeline services, energy, manufacturing, healthcare, insurance, and financial services.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeBASX The following table summarizes our plant and office facilities that support our BASX segment: City & State # of Buildings Manufacturing / Warehouse Office Total Owned Facilities (in square feet) Redmond Plant & Offices Redmond, OR 2 203,000 27,000 230,000 Leased Facilities Antler Warehouse Redmond, OR 1 72,000 — 72,000 Sisters Warehouse Sisters, OR 1 27,000 — 27,000 Marshall Warehouse Redmond, OR 1 14,000 — 14,000 Various leased facilities Various 3 16,000 4,000 20,000 Total 6 129,000 4,000 133,000 Our main operations in Redmond, Oregon, are conducted in a plant and office facility at 3500 SW 21st Pl, Redmond, OR 97756.
Biggest changeOur Kodak Facility is primarily used for additional warehouse space and is located at 115 Kodak Blvd, Longview, TX 75603. 23 BASX The following table summarizes our plant and office facilities that support our BASX segment: City & State # of Buildings Manufacturing / Warehouse Office Total Owned Facilities (in square feet) Redmond Plant & Offices Redmond, OR 2 203,000 27,000 230,000 Leased Facilities Antler Warehouse Redmond, OR 1 72,000 — 72,000 Sisters Warehouse Sisters, OR 1 27,000 — 27,000 Marshall Warehouse Redmond, OR 1 14,000 — 14,000 East Empire Warehouse Bend, OR 1 34,000 — 34,000 Various leased facilities Various 2 4,000 4,000 8,000 Total 6 151,000 4,000 155,000 Our main operations in Redmond, Oregon, are conducted in a plant and office facility at 3500 SW 21st Pl, Redmond, OR 97756.
Assembly lines consist of cart-type and roller-type conveyor lines with variable line speed adjustment. Subassembly areas and production line manning are based upon line rates set by production management. We own and lease our properties and facilities, as further described below.
Assembly lines consist of cart-type and roller-type conveyor lines with variable line speed adjustment. Subassembly areas and production line manning are based upon line rates set by production management. We own or lease our properties and facilities, as further described below.
Our Flint Warehouse is located approximately 3/4 of a mile east of our West and East Plant locations at 2020 South Union Ave., Tulsa, OK 74107 and sits on approximately 5.5 acres. Our Administration Facilities are located approximately 3/4 of a mile east of our West and East Plant locations at 1624 - 1625 West 21st St., Tulsa, OK 74107.
Our Flint Warehouse is located approximately 3/4 of a mile east of our West and East Plant locations at 2020 South Union Ave., Tulsa, OK 74107 and sits on approximately 5.5 acres. 22 Our Administration Facilities are located approximately 3/4 of a mile east of our West and East Plant locations at 1624 - 1625 West 21st St., Tulsa, OK 74107.
The Exploration Center adds a dimension of customer engagement that showcases our products and our competitors’ products and allows our customers to interact with our products and employees. We also own two additional warehouses. Our Buckaloo Warehouse is west of our West Plant and Offices.
Fields Exploration Center adds a dimension of customer engagement that showcases our products and our competitors’ products and allows our customers to interact with our products and employees. We also own two additional warehouses. Our Buckaloo Warehouse is west of our West Plant and Offices.
This facility is located at 13445 E. 59th St., Tulsa, OK 74134. 18 AAON Coil Products The following table summarizes our plant and office facilities that support our AAON Coil Products segment: City & State # of Buildings Manufacturing / Warehouse Office Total Owned facilities (in square feet) West Plant & Offices Longview, TX 1 435,500 24,000 459,500 East Plant & Offices Longview, TX 1 256,000 7,000 263,000 Parts Store Longview, TX 1 5,000 — 5,000 Kodak Facility Longview, TX 4 62,000 2,000 64,000 Total 7 758,500 33,000 791,500 Both our East and West Plant and Office facilities are located at 203 Gum Springs Road, Longview, TX 75602.
AAON Coil Products The following table summarizes our plant and office facilities that support our AAON Coil Products segment: City & State # of Buildings Manufacturing / Warehouse Office Total Owned facilities (in square feet) West Plant & Offices Longview, TX 1 435,500 24,000 459,500 East Plant & Offices Longview, TX 1 256,000 7,000 263,000 Parts Store Longview, TX 1 5,000 — 5,000 Kodak Facility Longview, TX 4 62,000 2,000 64,000 Total 7 758,500 33,000 791,500 Both our East and West Plant and Office facilities are located at 203 Gum Springs Road, Longview, TX 75602.
This facility currently consists of twelve test chambers, allowing AAON to meet and maintain industry certifications. This facility is located west of our West Plant and Office Facilities. The Exploration Center is located adjacent to the NAIC.
This facility currently consists of twelve test chambers, allowing AAON to meet and maintain industry certifications. This facility is located west of our West Plant and Office Facilities. The Gary D. Fields Exploration Center is located adjacent to the NAIC. The three-story Gary D.
The three-story Exploration Center provides an immersive and educational experience of our products, solutions, and our people and also serves as an event hub for our stakeholders, including our customers, employees, representatives, and investors.
Fields Exploration Center provides an immersive and educational experience of our products, solutions, and our people and also serves as an event hub for our stakeholders, including our customers, employees, representatives, and investors. The Gary D.
We believe that all of our facilities are well maintained and are in good condition and suitable for the conduct of our business. 17 AAON Oklahoma The following table summarizes our plant and office facilities that support our AAON Oklahoma segment: City & State # of Buildings Manufacturing / Warehouse Office Total Owned facilities (in square feet) West Plant & Offices Tulsa, OK 1 940,000 70,000 1,010,000 NAIC Tulsa, OK 1 125,000 9,000 134,000 Exploration Center Tulsa, OK 1 — 28,000 28,000 Buckaloo Warehouse Tulsa, OK 1 39,000 1,000 40,000 East Plant & Offices Tulsa, OK 1 326,000 16,000 342,000 Flint Warehouse Tulsa, OK 1 48,000 5,000 53,000 Administration Facilities Tulsa, OK 3 11,000 36,000 47,000 Parts Retail Store Tulsa, OK 1 7,500 6,000 13,500 Memphis Plant Memphis, TN 1 702,000 85,000 787,000 Total 11 2,198,500 256,000 2,454,500 Leased facilities Controls Facility Parkville, MO 1 38,000 48,000 86,000 Parts Distribution Tulsa, OK 1 347,000 9,000 356,000 Total 2 385,000 57,000 442,000 Our West Plant and Office facilities, NAIC, Exploration Center, and Buckaloo Warehouse sit on an approximate 87.3-acre tract of land and are located at 2440 South Yukon Ave., Tulsa, OK 74107.
AAON Oklahoma The following table summarizes our plant and office facilities that support our AAON Oklahoma segment: City & State # of Buildings Manufacturing / Warehouse Office Total Owned facilities (in square feet) West Plant & Offices Tulsa, OK 1 940,000 70,000 1,010,000 NAIC Tulsa, OK 1 125,000 9,000 134,000 Exploration Center Tulsa, OK 1 — 28,000 28,000 Buckaloo Warehouse Tulsa, OK 1 39,000 1,000 40,000 East Plant & Offices Tulsa, OK 1 326,000 16,000 342,000 Flint Warehouse Tulsa, OK 1 48,000 5,000 53,000 Administration Facilities Tulsa, OK 3 — 47,000 47,000 Parts Retail Store Tulsa, OK 1 7,500 6,000 13,500 Memphis Plant Memphis, TN 1 702,000 85,000 787,000 Total 11 2,187,500 267,000 2,454,500 Leased facilities Controls Facility Parkville, MO 1 38,000 48,000 86,000 Parts Distribution Tulsa, OK 1 347,000 9,000 356,000 Total 2 385,000 57,000 442,000 Our West Plant and Office facilities, NAIC, Exploration Center, and Buckaloo Warehouse sit on an approximately 87.3-acre tract of land and are located at 2440 South Yukon Ave., Tulsa, OK 74107.
Our operations in Parkville, Missouri, are conducted in a leased plant/office at 8500 NW River Park Drive, Parkville, MO 64152. This location is home to our Controls design and manufacturing facilities. We also lease a facility primarily used for parts distribution and additional warehouse space.
Our operations in Parkville, Missouri, are conducted in a leased plant/office at 8500 NW River Park Drive, Parkville, MO 64152. This location is home to our Controls design and manufacturing facilities. We also lease a facility primarily used for parts distribution and additional warehouse space. This facility is located at 13445 E. 59th St., Tulsa, OK 74134.
These facilities sit on approximately 3.6 acres. The facilities include additional office and meeting space utilized for company-wide administrative, human resource, and training functions. Our new Human Resources building, which opened in January 2025, enhances our engagement with current and future employees.
These facilities sit on approximately 3.6 acres. The facilities include additional office and meeting space utilized for company-wide administrative, human resource, and training functions. Our new Human Resources building, which opened in January 2025, enhances our engagement with current and future employees. We also have an 11,000 SF technical training facility named the “AAON Academy”.
In addition to a retail parts store location at our West Plant & Offices, we also own a stand-alone building at 9528 East 51st St., Tulsa, OK 74145 which is utilized as an additional retail parts store to provide our customers more accessibility to our products.
This space has a combination of classrooms, offices, and a hands-on HVAC training lab. In addition to a retail parts store location at our West Plant & Offices, we also own a stand-alone building at 9528 East 51st St., Tulsa, OK 74145 which is utilized as an additional retail parts store to provide our customers more accessibility to our products.
Our retail parts store, which is leased to a Representative of the Company, is located north of our West Plant and Offices at 203 Ford Lane, Longview, TX 75602. Our Kodak Facility is primarily used for additional warehouse space and is located at 115 Kodak Blvd, Longview, TX 75603.
Our retail parts store, which is leased to a Representative of the Company, is located north of our West Plant and Offices at 203 Ford Lane, Longview, TX 75602.
We lease several other properties near our main Redmond, Oregon location. In the aggregate, these properties contain approximately 16,000 square feet of warehouse space, 4,000 square feet of office space, and approximately 8.0 arces of land for outdoor storage.
In the aggregate, these properties contain approximately 4,000 square feet of warehouse space, 4,000 square feet of office space, and approximately 1.0 acres of land for outdoor storage.
In addition, we lease facilities for additional warehouse storage located at 601 NE Antler Ave., Redmond, OR 97756 ( “ Antler ” ) and 2895 S.W. 13th Street, Redmond, OR 97756 ( “ Marshall ” ). Our leased facility at 690 W Three Peaks Drive, Sisters, OR, 97759 ( “ Sisters ” ) is used for additional clean room assembly.
In addition, we lease facilities for additional warehouse storage located at 601 NE Antler Ave., Redmond, OR 97756 ( “ Antler ” ), 2895 S.W. 13th Street, Redmond, OR 97756 ( “ Marshall ” ) and 63085 NE 18th Street, Suite 105, Bend, OR 97701 (“East Empire”) .
Added
We believe that all of our facilities are well maintained and are in good condition and suitable for the conduct of our business.
Added
Our leased facility at 690 W Three Peaks Drive, Sisters, OR, 97759 ( “ Sisters ” ) is used for additional clean room assembly. We lease several other properties near our main Redmond, Oregon location.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

11 edited+4 added−3 removed4 unchanged
Biggest changeOur cash dividends for the three years ended December 31, 2024 are as follows: Dividend Annualized Dividend Declaration Date 1 Record Date Payment Date per Share per Share May 18, 2022 June 3, 2022 July 1, 2022 $0.13 $0.26 November 8, 2022 November 28, 2022 December 16, 2022 $0.16 $0.32 March 1, 2023 March 13, 2023 March 31, 2023 $0.08 $0.32 May 18, 2023 June 9, 2023 June 30, 2023 $0.08 $0.32 August 18, 2023 September 8, 2023 September 29, 2023 $0.08 $0.32 November 10, 2023 November 29, 2023 December 18, 2023 $0.08 $0.32 March 5, 2024 March 18, 2024 March 29, 2024 $0.08 $0.32 May 24, 2024 June 7, 2024 June 28, 2024 $0.08 $0.32 August 15, 2024 September 6, 2024 September 27, 2024 $0.08 $0.32 November 13, 2024 November 29, 2024 December 19, 2024 $0.08 $0.32 1 Effective with the cash dividend declared on March 1, 2023 (paid on March 31, 2023), the Company moved from semi-annual cash dividends to quarterly cash dividends.
Biggest changeOur cash dividends for the three years ended December 31, 2025 are as follows: Dividend Annualized Dividend Declaration Date Record Date Payment Date per Share per Share March 1, 2023 March 13, 2023 March 31, 2023 $0.08 $0.32 May 18, 2023 June 9, 2023 June 30, 2023 $0.08 $0.32 August 18, 2023 September 8, 2023 September 29, 2023 $0.08 $0.32 November 10, 2023 November 29, 2023 December 18, 2023 $0.08 $0.32 March 5, 2024 March 18, 2024 March 29, 2024 $0.08 $0.32 May 24, 2024 June 7, 2024 June 28, 2024 $0.08 $0.32 August 15, 2024 September 6, 2024 September 27, 2024 $0.08 $0.32 November 13, 2024 November 29, 2024 December 19, 2024 $0.08 $0.32 March 5, 2025 March 18, 2025 March 28, 2025 $0.10 $0.40 May 13, 2025 June 6, 2025 June 27, 2025 $0.10 $0.40 August 14, 2025 September 5, 2025 September 26, 2025 $0.10 $0.40 November 10, 2025 November 26, 2025 December 18, 2025 $0.10 $0.40 Share-Based Compensation Plans The following is a summary of our share-based compensation plans as of December 31, 2025: EQUITY COMPENSATION PLAN INFORMATION Plan category (a) Number of securities to be issued upon exercise of outstanding options, warrants and rights (b) Weighted-average exercise price of outstanding options, warrants and rights (c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) The 2007 Long-Term Incentive Plan 620 $ 17.67 — The 2016 Long-Term Incentive Plan 2,381,803 $ 40.20 — The 2024 Long-Term Incentive Plan 454,690 $ 83.98 2,264,667 25 Stock Repurchases The Company may repurchase AAON, Inc. stock on the open market from time to time.
We believe the S&P 600 Capital Goods Industry Group Index best represents our relative peer group based on our current business and market capitalization. The graph assumes that $100 was invested at the close of trading December 31, 2019, with the reinvestment of dividends since that date. This table is not intended to forecast future performance of our Common Stock.
We believe the S&P 600 Capital Goods Industry Group Index best represents our relative peer group based on our current business and market capitalization. The graph assumes that $100 was invested at the close of trading December 31, 2020, with the reinvestment of dividends since that date. This table is not intended to forecast future performance of our Common Stock.
As a result of the shares issued in March 2024, the tax basis exceeded the book basis for consideration paid resulting in a deferred tax asset and an increase to additional paid-in capital of 6.4 million, respectively, on our consolidated balance sheet. The deferred tax asset is expected to be amortized over fifteen years.
As a result of the shares issued in March 2024, the tax basis exceeded the book basis for consideration paid resulting in a deferred tax asset and an increase to additional paid-in capital of $6.4 million, respectively, on our consolidated balance sheet. The deferred tax asset is expected to be amortized over 15 years.
Comparative Stock Performance Graph The following performance graph compares our cumulative total shareholder return for the Company’s common stock for the five-year period ending on December 31, 2024, compared to an overall stock market index (the NASDAQ Composite Index) and the Company’s peer group index (S&P 600 Capital Goods Industry Group Index).
Comparative Stock Performance Graph The following performance graph compares our cumulative total shareholder return for the Company’s common stock for the five-year period ending on December 31, 2025, compared to an overall stock market index (the NASDAQ Composite Index) and the Company’s peer group index (S&P 600 Capital Goods Industry Group Index).
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information - Our common stock is quoted on the NASDAQ Global Select Market under the symbol “AAON.” As of the close of business on February 24, 2025, there were 1,271 holders of record of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock is quoted on the NASDAQ Global Select Market under the symbol “AAON.” As of the close of business on February 26, 2026, there were 1,748 holders of record of our common stock.
Thompson December 13, 2024 December 31, 2025 91,500 Chief Financial Officer 21 Insider Trading Arrangements and Policies - We have adopted an Insider Trading Policy, applicable to our directors, officers, employees and certain other persons, as well as the Company itself, that governs transactions in securities issued by the Company and we believe is reasonably designed to promote compliance with insider trading laws, rules and regulations, and applicable NASDAQ listing standards.
Thompson December 13, 2024 Terminated December 31, 2025 91,500 Chief Financial Officer & Treasurer December 16, 2025 March 16, 2027 41,565 26 Insider Trading Arrangements and Policies We have adopted an Insider Trading Policy, applicable to our directors, officers, employees and certain other persons, as well as the Company itself, that governs transactions in securities issued by the Company and we believe is reasonably designed to promote compliance with insider trading laws, rules and regulations, and applicable NASDAQ listing standards.
We previously issued 0.6 million shares and 0.7 million related to the earn-out milestones for the years ended 2022 and 2021, respectively. All shares have been issued as private placements exempt from registration with the SEC under Rule 506(b) and are included in common stock on the consolidated statements of stockholders’ equity.
We previously issued 0.6 million shares in March 2023, related to the earn-out milestone for the year ended 2022. All shares have been issued as private placements exempt from registration with the SEC under Rule 506(b) and are included in common stock on the consolidated statements of stockholders' equity.
Under the MIPA Agreement, we committed to $78.0 million in the aggregate of contingent consideration to the former owners of BASX, which was payable in approximately 1.56 million shares of AAON stock, par value $0.004 per share. The shares did not accrue dividends.
Under the MIPA Agreement, we committed to $78.0 million in the aggregate of contingent consideration to the former owners of BASX, which is payable in approximately 1.6 million shares of the Company's common stock, par value $0.004 per share. The shares do not accrue dividends.
Company / Index 2019 2020 2021 2022 2023 2024 AAON, Inc. $ 100 $ 136 $ 163 $ 155 $ 230 $ 367 NASDAQ Composite Index $ 100 $ 145 $ 177 $ 119 $ 173 $ 224 S&P 600 Capital Goods Industry Group Index $ 100 $ 116 $ 145 $ 139 $ 192 $ 226 This stock performance graph is not deemed to be “soliciting material” or otherwise be considered to be “filed” with the SEC or subject to Regulation 14A or 14C under the Securities Exchange Act of 1934 (Exchange Act) or to the liabilities of Section 18 of the Exchange Act, and should not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent the Company specifically incorporates it by reference into such a filing.
Company / Index 2020 2021 2022 2023 2024 2025 AAON, Inc. $ 100 $ 120 $ 114 $ 169 $ 270 $ 176 NASDAQ Composite Index $ 100 $ 122 $ 82 $ 119 $ 154 $ 187 S&P 600 Capital Goods Industry Group Index $ 100 $ 125 $ 120 $ 166 $ 195 $ 243 This stock performance graph is not deemed to be “soliciting material” or otherwise be considered to be “filed” with the SEC or subject to Regulation 14A or 14C under the Securities Exchange Act of 1934 (Exchange Act) or to the liabilities of Section 18 of the Exchange Act, and should not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent the Company specifically incorporates it by reference into such a filing. 27
Name and Title of Director or Officer Date of Adoption of Arrangement Duration of the Arrangement Aggregate Number of Securities to be Purchased or Sold Pursuant to the Arrangement Stephen E. Wakefield November 23, 2022 Terminated May 17, 2023 95,788 Executive Vice President Stephen E. Wakefield September 13, 2023 Terminated December 27, 2023 181,000 Executive Vice President Rebecca A.
Name and Title of Director or Officer Date of Adoption of Arrangement Duration of the Arrangement Aggregate Number of Securities to be Purchased or Sold Pursuant to the Arrangement Rebecca A.
Share-Based Compensation Plans - The following is a summary of our share-based compensation plans as of December 31, 2024: EQUITY COMPENSATION PLAN INFORMATION Plan category (a) Number of securities to be issued upon exercise of outstanding options, warrants and rights (b) Weighted-average exercise price of outstanding options, warrants and rights (c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) The 2007 Long-Term Incentive Plan 75,099 $ 14.42 — The 2016 Long-Term Incentive Plan 2,857,578 $ 40.06 — The 2024 Long-Term Incentive Plan 25,194 $ 88.51 2,714,799 20 Issuer Purchases of Equity Securities - Repurchases during the fourth quarter of 2024, which include repurchases from our employee repurchase program, were as follows: ISSUER PURCHASES OF EQUITY SECURITIES (a) Total Number of Shares (or Units (b) Average Price Paid (Per Share (c) Total Number of Shares (or Units) Purchased as part of Publicly Announced (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that may yet be Purchased under the Period Purchased) or Unit) Plans or Programs Plans or Programs October 2024 642 $ 112.72 642 — November 2024 621 134.94 621 — December 2024 3,200 133.04 3,200 — Total 4,463 $ 130.38 4,463 — Contingent Shares Issued in BASX Acquisition - On December 10, 2021, we closed on the acquisition of BASX.
Repurchases during the fourth quarter of 2025 were as follows: ISSUER PURCHASES OF EQUITY SECURITIES Period (a) Total Number of Shares (or Units) Purchased (b) Average Price Paid Per Share (or Unit) (c) Total Number of Shares (or Units) Purchased as part of Publicly Announced Plans or Programs (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that may yet be Purchased under the Plans or Programs October 2025 995 $ 99.50 995 — November 2025 1,659 94.03 1,659 — December 2025 2,304 75.95 2,304 — Total 4,958 $ 86.73 4,958 — Contingent Shares Issued in BASX Acquisition In December 2021, we closed on the acquisition of BASX.
Removed
Stock Split - On July 7, 2023, the Board of Directors declared a three-for-two stock split of the Company’s common stock to be paid in the form of a stock dividend.
Added
For the year ended December 31, 2025, we have repurchased a total of approximately 469.3 thousand shares (at current market prices) under the current $100 million open market stock buyback program, approved by the Board of Directors on February 27, 2025, for an aggregate price of $30.0 million, or an average price of $80.81 per share.
Removed
Stockholders of record at the close of business on July 28, 2023, received one additional share for every two shares they held as of that date on August 16, 2023 (ex-dividend date August 17, 2023). All share and per share information has been updated to reflect the effect of this stock split.
Added
The Board must authorize the timing and amount of these purchases and all repurchases are in accordance with the rules and regulations of the SEC allowing the Company to repurchase shares from the open market.
Removed
Authorized Shares Outstanding An amendment to the Company’s Articles of Incorporation to increase its total authorized common shares from 100,000,000 to 200,000,000 was approved by our stockholders on May 21, 2024, at the Company’s Annual Meeting. On July 9, 2024, a Certificate of Amendment was filed with the Nevada Secretary of State to effectuate the increase in authorized shares.
Added
The Company also repurchases shares of AAON, Inc. stock from employees for payment of statutory tax withholdings on stock transactions and/or stock repurchased to cover the strike price of stock options.
Added
For the year ended December 31, 2025, we repurchased approximately 98.1 thousand shares (at current market prices) for an aggregate price of $9.7 million, or an average price of $99.15 per share.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

63 edited+47 added−26 removed40 unchanged
Biggest changeOff-Balance Sheet Arrangements - We are not party to any off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues, expenses, results of operations, liquidity, capital expenditures, or capital resources. 30 Statement of Cash Flows The table below reflects a summary of our net cash flows provided by operating activities, net cash flows used in investing activities, and net cash flows provided by financing activities for the years indicated. 2024 2023 (in thousands) Operating Activities Net Income $ 168,559 $ 177,623 Income statement adjustments, net 73,343 58,166 Changes in assets and liabilities: Accounts receivable (10,041) (9,978) Income taxes (5,285) (11,302) Inventories 27,080 (16,226) Contract assets (90,626) (30,043) Prepaid expenses and other long-term assets (3,707) (1,048) Accounts payable 16,959 (18,316) Contract liabilities 1,156 (7,667) Extended warranties 1,835 2,600 Accrued liabilities and other long-term liabilities 13,259 15,086 Net cash provided by operating activities 192,532 158,895 Investing Activities Capital expenditures (195,660) (104,294) Acquisition of intangible assets (17,491) (5,197) Other 76 180 Net cash used in investing activities (213,075) (109,311) Financing Activities Borrowings of debt 717,897 597,111 Payments of debt (601,091) (629,787) Proceeds from financing obligation, net of issuance costs 4,186 6,061 Payment related to financing costs (664) (398) Stock options exercised 31,861 33,259 Repurchase of stock (100,034) (25,009) Employee taxes paid by withholding shares (8,037) (1,302) Cash dividends paid to stockholders (26,084) (26,445) Net cash provided by (used in) financing activities $ 18,034 $ (46,510) Cash Flows from Operating Activities The Company currently manages cash needs through working capital as well as drawing on its line of credit.
Biggest changeYears Ended December 31, 2025 2024 (in thousands) Operating Activities Net income $ 107,593 $ 168,559 Income statement adjustments, net 129,301 73,343 Changes in assets and liabilities: Accounts receivable (167,023) (10,041) Income taxes (23,330) (5,285) Inventories (73,883) 27,080 Contract assets (111,816) (90,626) Prepaid expenses and other long-term assets (11,673) (3,707) Accounts payable 52,904 16,959 Contract liabilities 65,757 1,156 Extended warranties 831 1,835 Accrued liabilities & other long-term liabilities 31,873 13,259 Net cash provided by operating activities 534 192,532 Investing Activities Capital expenditures (190,563) (195,660) Acquisition of intangible assets (14,329) (17,491) Proceeds from government incentive grant 12,000 — Other 475 76 Net cash used in investing activities (192,417) (213,075) Financing Activities Proceeds from financing obligations, net of issuance costs — 4,186 Payment related to financing costs (1,395) (664) Borrowings of debt 915,391 717,897 Payments of debt (672,204) (601,091) Stock options exercised 17,144 31,861 Repurchase of stock (29,995) (100,034) Employee taxes paid by withholding shares (9,730) (8,037) Cash dividends paid to stockholders (32,603) (26,084) Net cash provided by financing activities $ 186,608 $ 18,034 Cash Flows from Operating Activities The Company currently manages cash needs through working capital as well as drawing on its line of credit.
In connection with the 2024 NMTC transaction, the Company received a $15.5 million NMTC allocation for the Project and secured low-interest financing and the potential for future debt forgiveness related to the expansion of its Longview, Texas facilities.
In connection with the 2024 NMTC transaction, the Company received a $15.5 million NMTC allocation for the 2024 Project and secured low-interest financing and the potential for future debt forgiveness related to the expansion of its Longview, Texas facilities.
As of December 16, 2024, as defined by the Amended Loan Agreement, if the SOFR cannot be determined any outstanding balance will bear interest at the Prime Rate in effect on such day. At December 31, 2024, we were in compliance with our financial covenants, as defined by the Revolver.
As of December 16, 2024, as defined by the Amended Loan Agreement, if the SOFR cannot be determined any outstanding balance will bear interest at the Prime Rate in effect on such day. At December 31, 2025, we were in compliance with our financial covenants, as defined by the Revolver.
The net proceeds from the closing of the 2023 NMTC are included in restricted cash on our consolidated balance sheets required to be used for the 2023 Project. 2024 New Markets Tax Credit - On February 27, 2024, the Company entered into a transaction with a subsidiary of an unrelated third-party financial institution (the “2024 Investor”) and a certified Community Development Entity under a qualified New Markets Tax Credit (“2024 NMTC”) program pursuant to Section 45D of the Internal Revenue Code of 1986, as amended, related to an investment in real estate to facilitate the current expansion of our Longview, Texas manufacturing operations (the “Project”).
The net proceeds from the closing of the 2023 NMTC are included in restricted cash on our consolidated balance sheets required to be used for the 2023 Project. 2024 New Markets Tax Credit - On February 27, 2024, the Company entered into a transaction with a subsidiary of an unrelated third-party financial institution (the “2024 Investor”) and a certified Community Development Entity under a qualified New Markets Tax Credit (“2024 NMTC”) program pursuant to Section 45D of the Internal Revenue Code of 1986, as amended, related to an investment in real estate to facilitate the current expansion of our Longview, Texas manufacturing operations (the “2024 Project”).
Applicable margin, ranging from 1.25% - 1.75%, is determined quarterly based on the Company’s leverage ratio. The Company is also subject to letter of credit fees, ranging from 1.25% - 1.75%, and a commitment fee, ranging from 0.10% - 0.20%. The applicable fee percentage is determined quarterly based on the Company’s leverage ratio.
The Company is also subject to letter of credit fees, ranging from 1.25% - 1.75%, and a commitment fee, ranging from 0.10% - 0.20%. The applicable fee percentage is determined quarterly based on the Company’s leverage ratio.
A detailed discussion of the year-to-year changes for the years ended December 31, 2023, and 2022 is not included herein and can be found in Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
A detailed discussion of the year-to-year changes for the years ended December 31, 2024, and 2023 is not included herein and can be found in Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
At December 31, 2024, our leverage ratio was 0.57 to 1.0, which meets the requirement of not being above 3 to 1. 2019 New Markets Tax Credit - On October 24, 2019, the Company entered into a transaction with a subsidiary of an unrelated third-party financial institution (the “2019 Investor”) and a certified Community Development Entity under a qualified New Markets Tax Credit (“2019 NMTC”) program pursuant to Section 45D of the Internal Revenue Code of 1986, as amended, related to an investment in plant and equipment to facilitate the expansion of our Longview, Texas manufacturing operations (the “2019 Project”).
At December 31, 2025, our leverage ratio was 1.77 to 1.0, which meets the requirement of not being above 3 to 1. 2019 New Markets Tax Credit - On October 24, 2019, the Company entered into a transaction with a subsidiary of an unrelated third-party financial institution (the “2019 Investor”) and a certified Community Development Entity under a qualified New Markets Tax Credit (“2019 NMTC”) program pursuant to Section 45D of the Internal Revenue Code of 1986, as amended, related to an investment in plant and equipment to facilitate the expansion of our Longview, Texas manufacturing operations (the “2019 Project”).
Cash Flows from Financing Activities The change in cash from financing activities in 2024 is primarily related to borrowings under our revolving credit facility to manage our working capital needs, especially strategic purchases of inventory to avoid supply chain delays and the funding of certain capital expenditures, offset by repayments we were able to make due to increased operating results and financial condition.
Cash Flows from Financing Activities The change in cash from financing activities in 2025 is primarily related to borrowings under our revolving credit facility to manage our working capital needs, especially strategic purchases of inventory to avoid supply chain delays and the funding of certain capital expenditures, offset by repayments we were able to make due to our operating results and financial condition.
We performed a qualitative assessment as of December 31, 2024, to determine whether it was more likely than not that the fair value of the reporting unit and indefinite-lived assets was greater than the carrying value of the reporting unit and indefinite-lived assets.
We performed a qualitative assessment as of December 31, 2025, to determine whether it was more likely than not that the fair value of the reporting unit and indefinite-lived assets was greater than the carrying value of the reporting unit and indefinite-lived assets.
New Accounting Pronouncements Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification. We consider the applicability and impact of all ASUs.
Recent Accounting Pronouncements Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification. We consider the applicability and impact of all ASUs.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Overview The following discussion summarizes the significant factors affecting the consolidated operating results, financial condition, and liquidity of the Company for the year ended December 31, 2024.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Overview The following discussion summarizes the significant factors affecting the consolidated operating results, financial condition, and liquidity of the Company for the year ended December 31, 2025.
Upon closing of the 2019 NMTC transaction, the Company provided an aggregate of approximately $15.9 million to the 2019 Investor, in the form of a loan receivable, with a term of twenty-five years, bearing an interest rate of 1.0%.
Upon closing of the 2019 NMTC transaction, the Company provided an aggregate of approximately $15.9 million to the 2019 Investor, in the form of a loan receivable, with a term of 25 years, bearing an interest rate of 1.0%.
Upon closing of the 2023 NMTC transaction, the Company provided an aggregate of approximately $16.7 million to the 2023 Investor, in the form of a loan receivable, with a term of twenty-five years, bearing an interest rate of 1.0%.
Upon closing of the 2023 NMTC transaction, the Company provided an aggregate of approximately $16.7 million to the 2023 Investor, in the form of a loan receivable, with a term of 25 years, bearing an interest rate of 1.0%.
Our open market repurchase programs are as follows: Agreement Execution Date Authorized Repurchase $ Expiration Date March 13, 2020 $20 million 1 November 9, 2022 November 3, 2022 $50 million 1 February 27, 2024 February 27, 2024 $50 million 1 June 4, 2024 June 4, 2024 $50 million 2 June 14, 2024 February 25, 2025 $100 million ** 3 1 Repurchases made in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. 2 Repurchases made in accordance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended. 3 Expiration Date is at Board's discretion.
Our open market repurchase programs are as follows: Agreement Execution Date Authorized Repurchase $ Expiration Date November 3, 2022 $50 million 1 February 27, 2024 February 27, 2024 $50 million 1 June 4, 2024 June 4, 2024 $50 million 2 June 14, 2024 February 25, 2025 $100 million ** 3 1 Repurchases made in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. 2 Repurchases made in accordance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended. 3 Expiration Date is at Board's discretion.
Upon closing the 2024 NMTC transaction, the Company provided an aggregate of approximately $11.0 million to the 2024 Investor, in the form of a loan receivable, with a term of twenty-five years, bearing an interest rate of 1.0%.
Upon closing the 2024 NMTC transaction, the Company provided an aggregate of approximately $11.0 million to the 2024 Investor, in the form of a loan receivable, with a term of 25 years, bearing an interest rate of 1.0%.
The fair value of restricted stock awards and Key Employee Awards is based on the fair market value of AAON common stock on the respective grant dates. The fair value of restricted stock awards is reduced for the present value of dividends.
The fair value of restricted stock awards and Key Employee Awards is based on the fair market value of AAON common stock on the respective grant dates.
See Note 19 of the Consolidated Financial Statements for additional information with respect to specific legal proceedings. 32 Critical Accounting Estimates The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) and the Company’s discussion and analysis of its financial condition and operating results require management to make estimates and assumptions about future events, and apply judgments that affect the reported amounts of assets, liabilities, revenue, and expenses in our consolidated financial statements and related notes.
Critical Accounting Estimates The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) and the Company’s discussion and analysis of its financial condition and operating results require management to make estimates and assumptions about future events, and apply judgments that affect the reported amounts of assets, liabilities, revenue, and expenses in our consolidated financial statements and related notes.
We have implemented the following wage increases to remain competitive and to attract and retain employees: • In March 2023, we awarded annual merit raises for an overall 3.9% increase to wages. • In March 2024, we awarded annual merit raises for an overall 3.3% increase to wages.
We have implemented the following wage increases to remain competitive and to attract and retain employees: • In March 2024, we awarded annual merit raises for an overall 3.3% increase to wages. 30 • In March 2025, we awarded annual merit raises for an overall 4.0% increase to wages.
Fees associated with the unused portion of the committed amount are included in interest expense on our consolidated statements of income and were not material for the years ended December 31, 2024, 2023, and 2022, respectively.
Fees associated with the unused portion of the committed amount are included in interest expense on our consolidated statements of income for the years ended December 31, 2025, 2024, 2023.
Weighted average interest rate of our borrowings outstanding are as follows: Years Ended December 31, 2024 2023 2022 Revolver 6.3% 6.3% 3.0% Term loan 1 0.1% * 1 * 1 1 Funds were borrowed on December 16, 2024.
Weighted average interest rate of our borrowings outstanding are as follows: Years Ended December 31, 2025 2024 2023 Revolver 5.7% 6.3% 6.3% Term loan * 1 0.1% * 1 1 Funds were borrowed on December 16, 2024. No borrowings outstanding during the year ended December 31, 2025.
Revenue - Due to the highly customized nature of many of the Company’s products and each product not having an alternative use to the Company without incurring significant costs to the Company and the agreements contain an enforceable right to payment including a reasonable profit margin, the Company recognizes revenue over time as progress is made toward satisfying the performance obligations of each contract.
We discuss these estimates with the Audit Committee of the Board of Directors periodically. 39 Revenue - Due to the highly customized nature of many of the Company’s products and each product not having an alternative use to the Company without incurring significant costs to the Company and the agreements containing an enforceable right to payment including a reasonable profit margin, the Company recognizes revenue over time as progress is made toward satisfying the performance obligations of each contract.
We have also made investments to purchase and develop software for internal use in anticipation of future Company growth. Many of these projects are subject to review and cancellation at the discretion of our CEO and Board of Directors without incurring substantial charges.
We have also made investments to purchase or develop software for internal use in anticipation of future Company growth. Our capital expenditure program for 2026 is estimated to be approximately $190.0 million. Many of these projects are subject to review and cancellation at the discretion of our CEO and Board of Directors without incurring substantial charges.
The principal components of cost of sales are labor, raw materials, component costs, factory overhead, freight out, and engineering expense. The principal high volume raw materials used in our manufacturing processes are steel, copper, and aluminum, and are obtained from domestic suppliers.
The principal components of cost of sales are labor, raw materials, component costs, factory overhead, freight out, and engineering expense. The principal high volume raw materials used in our manufacturing processes are steel, copper, and aluminum, and are obtained from domestic suppliers. We also purchase from domestic manufacturers certain components, including coils, compressors, motors, and electrical controls.
No borrowings outstanding during the years ended December 31, 2023 and 2022 If SOFR cannot be determined pursuant to the definition, as defined by the Amended Loan Agreement, any outstanding effected loans will be deemed to have been converted into alternative base rate (“ABR”) loans.
If SOFR cannot be determined pursuant to the definition, as defined by the Amended Loan Agreement, any outstanding effected loans will be deemed to have been converted into alternative base rate (“ABR”) loans.
We believe the following critical accounting policies affect our more significant estimates, assumptions and judgments used in the preparation of our consolidated financial statements. We discuss these estimates with the Audit Committee of the Board of Directors periodically.
We believe the following critical accounting policies affect our more significant estimates, assumptions and judgments used in the preparation of our consolidated financial statements.
We perform our annual assessment of impairment during the fourth quarter of our fiscal year, and more frequently if circumstances warrant. To perform this assessment, we first consider qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit and indefinite-lived intangible assets exceeds their carrying amount.
To perform this assessment, we first consider qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit and indefinite-lived intangible assets exceeds their carrying amount.
Should actual claim rates differ from our estimates, revisions to the estimated product warranty liability would be required. 33 Share-Based Compensation – We measure and recognize compensation expense for all share-based payment awards made to our employees and directors, including stock options, restricted stock awards, performance stock units (“PSUs”), and key employee awards (“Key Employee Awards”) based on their fair values at the time of grant.
Share-Based Compensation – We measure and recognize compensation expense for all share-based payment awards made to our employees and directors, including stock options, restricted stock awards, performance stock units (“PSUs”), and key employee awards (“Key Employee Awards”) based on their fair values at the time of grant.
We value the independent sales channel as we think it is a more effective way of increasing market share. Although we concede full control of the sales process with this strategy, the entrepreneurial aspect of the independent sales channel attracts the most talent and provides greater financial incentives for its salespeople.
Although we concede full control of the sales process with this strategy, the entrepreneurial aspect of the independent sales channel attracts the most talent and provides greater financial incentives for its salespeople.
This ASU is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. Upon adoption, this ASU is not expected to have a material impact on the Company's financial statements and related disclosures.
The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2025, including interim periods within those annual periods, with early adoption permitted, and are required to be applied prospectively. Upon adoption, this ASU is not expected to have a material impact on the Company's financial statements and related disclosures.
Additionally, we repurchased approximately 1.4 million shares for approximately $108.1 million during 2024 (Note 17). Commitments and Contractual Agreements We are occasionally party to short-term, cancellable and occasionally non-cancellable, contracts with major suppliers for the purchase of raw material and component parts. We expect to receive delivery of raw materials for use in our manufacturing operations.
Commitments and Contractual Agreements We are occasionally party to short-term and long-term, cancellable and occasionally non-cancellable, contracts with suppliers for the purchase of raw material and component parts. We expect to receive delivery of raw material and component parts for use in our manufacturing operations.
If the domestic economy were to slow or enter a recession, this could impact the replacement market, potentially resulting in a decline in our sales volume and profitability.
If the domestic economy were to slow or enter a recession, this could further impact our new construction markets and also weigh on the replacement market, potentially resulting in reduced sales volumes and profitability.
All repurchases are done at current market prices. 29 Our repurchase activity is as follows: 2024 2023 (in thousands, except share and per share data) Program Shares Total $ $ per share Shares Total $ $ per share Open market 1,353,564 $ 100,034 $ 73.90 402,873 $ 25,009 $ 62.08 Employees 92,444 8,037 86.94 21,904 1,302 59.44 Total 1,446,008 $ 108,071 $ 74.74 424,777 $ 26,311 $ 61.94 Dividends - At the discretion of the Board of Directors, we pay cash dividends.
The Company also repurchases shares of AAON, Inc. stock related to our LTIP plans (Note 15) at current market prices. 36 Our repurchase activity is as follows: 2025 2024 2023 (in thousands, except share and per share data) Program Shares Total $ $ per share Shares Total $ $ per share Shares Total $ $ per share Open market 371,139 $ 29,992 $ 80.81 1,353,564 $ 100,034 $ 73.90 402,873 $ 25,009 $ 62.08 LTIP Shares 98,134 9,730 99.15 92,444 8,037 86.94 21,904 1,302 59.44 Total 469,273 $ 39,722 $ 84.65 1,446,008 $ 108,071 $ 74.74 424,777 $ 26,311 $ 61.94 Dividends - At the discretion of the Board of Directors, we pay cash dividends.
We occasionally increase the price of our products to help offset any inflationary headwinds. In recent years, price increases have been more frequent due to the amount of inflation the business has endured. In 2021, we implemented three price increases for AAON branded products.
We occasionally increase the price of our products to help offset any inflationary headwinds. In recent years, price increases have been more frequent due to the amount of inflation the business has endured. We implemented a recurring 1.0% monthly price increase on October 1, 2023, and carried that through February 1, 2024, for AAON-branded products.
This financing arrangement is secured by equipment at the Company’s Longview, Texas facilities and a guarantee from the Company, including an unconditional guarantee of the NMTCs. 2023 New Markets Tax Credit - On April 25, 2023, the Company entered into a transaction with a subsidiary of an unrelated third-party financial institution (the “2023 Investor”) and a certified Community Development Entity under a qualified New Markets Tax Credit (“2023 NMTC”) program pursuant to Section 45D of the Internal Revenue Code of 1986, as amended, related to an investment in plant and equipment to facilitate the expansion of our Longview, Texas manufacturing operations (the “2023 Project”).
The Company’s seven-year compliance period ends in 2026, at which time the Company expects the put/call feature of the transaction to be exercised, forgiving a portion of the debt. 35 2023 New Markets Tax Credit - On April 25, 2023, the Company entered into a transaction with a subsidiary of an unrelated third-party financial institution (the “2023 Investor”) and a certified Community Development Entity under a qualified New Markets Tax Credit (“2023 NMTC”) program pursuant to Section 45D of the Internal Revenue Code of 1986, as amended, related to an investment in plant and equipment to facilitate the expansion of our Longview, Texas manufacturing operations (the “2023 Project”).
As of December 31, 2024, and December 31, 2023, we had an outstanding balance under the Revolver of $76.5 million and $38.3 million, respectively. We had one standby letter of credit totaling $0.3 million as of December 31, 2024, and two standby letters of credit totaling $2.3 million as of December 31, 2023.
The Revolver expires on May 27, 2030. As of December 31, 2025, and December 31, 2024, we had an outstanding balance under the Revolver of $398.3 million and $76.5 million, respectively. We had one standby letter of credit totaling $0.7 million and $0.3 million as of December 31, 2025, and December 31, 2024, respectively.
Estimated minimum future payments are $9.1 million, $10.5 million, and $11.2 million, for 2025, 2026, and 2027, respectively. We had no other material contractual purchase obligations as of December 31, 2024. Contingencies We are subject to various claims and legal actions that arise in the ordinary course of business.
We had no other material contractual purchase obligations as of December 31, 2025. Contingencies We are subject to various claims and legal actions that arise in the ordinary course of business.
Our estimated future warranty cost is subject to adjustment from time to time depending on changes in actual warranty trends and cost experience.
Our estimated future warranty cost is subject to adjustment from time to time depending on changes in actual warranty trends and cost experience. Should actual claim rates differ from our estimates, revisions to the estimated product warranty liability would be required.
This $15.9 million in proceeds plus capital contributed from the 2019 Investor was used to make an aggregate 28 $22.5 million loan to a subsidiary of the Company.
This $15.9 million in proceeds plus capital contributed from the 2019 Investor was used to make an aggregate $22.5 million loan to a subsidiary of the Company. This financing arrangement is secured by equipment at the Company’s Longview, Texas facilities and a guarantee from the Company, including an unconditional guarantee of the NMTCs.
Goodwill and Indefinite-Lived Intangible Assets – Goodwill represents the excess of the consideration paid for the acquired businesses over the fair value of the individual assets acquired, net of liabilities assumed. Indefinite-lived intangible assets consist of trademarks and trade names. Goodwill and indefinite-lived intangible assets are not amortized, but instead are evaluated for impairment at least annually.
The fair value of restricted stock awards is reduced for the present value of dividends. 40 Goodwill and Indefinite-Lived Intangible Assets – Goodwill represents the excess of the consideration paid for the acquired businesses over the fair value of the individual assets acquired, net of liabilities assumed. Indefinite-lived intangible assets consist of trademarks and trade names.
Additionally, we continue to experience challenges in a tight labor market, especially the hiring of both skilled and unskilled production labor.
Additionally, we continue to experience challenges in a tight labor market, especially the hiring of production labor. We continue to implement human resource initiatives to retain and attract labor to further increase production capacity.
As shown in the table below, we have experienced year-over-year fluctuations in the cost of several raw materials. 26 Raw Material Costs Twelve-month average raw material cost per pound as of December 31: 2024 2023 % Change Copper $ 5.52 $ 5.35 3.2 % Galvanized steel $ 0.59 $ 0.58 1.7 % Stainless steel $ 2.30 $ 3.19 (27.9) % Aluminum $ 2.50 $ 2.54 (1.6) % Selling, General and Administrative Expenses Years Ended December 31, Percent of Sales 2024 2023 2024 2023 (in thousands) Warranty $ 16,727 $ 16,165 1.4 % 1.4 % Profit sharing 19,948 24,590 1.7 % 2.1 % Salaries & benefits 58,154 53,281 4.8 % 4.6 % Stock compensation 10,390 9,318 0.9 % 0.8 % Advertising 3,281 2,594 0.3 % 0.2 % Depreciation & amortization 20,542 13,761 1.7 % 1.2 % Insurance 8,303 5,354 0.7 % 0.5 % Professional fees 8,809 15,372 0.7 % 1.3 % Donations 1,682 1,242 0.1 % 0.1 % Other 40,178 29,862 3.3 % 2.6 % Total SG&A $ 188,014 $ 171,539 15.7 % 14.7 % Selling, general and administrative expenses increased 9.6%, or $16.5 million, during 2024 as compared to the prior year.
Raw Material Costs Twelve-month average raw material cost per pound as of December 31: 2025 2024 % Change Copper $ 6.13 $ 5.52 11.1 % Galvanized steel $ 0.57 $ 0.59 (3.4) % Stainless steel $ 2.00 $ 2.30 (13.0) % Aluminum $ 2.49 $ 2.50 (0.4) % 33 Selling, General and Administrative Expenses Years Ended December 31, Percent of Sales 2025 2024 2025 2024 (in thousands) Warranty $ 23,829 $ 16,727 1.7 % 1.4 % Profit sharing 12,851 19,948 0.9 % 1.7 % Salaries & benefits 73,686 58,154 5.1 % 4.8 % Stock compensation 12,299 10,390 0.9 % 0.9 % Advertising 3,844 3,281 0.3 % 0.3 % Depreciation & amortization 27,714 20,542 1.9 % 1.7 % Insurance 8,533 8,303 0.6 % 0.7 % Professional fees 7,615 8,809 0.5 % 0.7 % Memphis incentive fee 6,105 — 0.4 % — % Donations 1,495 1,682 0.1 % 0.1 % Other 61,509 40,178 4.3 % 3.3 % Total SG&A $ 239,480 $ 188,014 16.6 % 15.7 % Selling, general and administrative expenses increased $51.5 million for the year ended December 31, 2025, from the prior year period.
Income Taxes Years Ended December 31, Effective Tax Rate 2024 2023 2024 2023 (in thousands) Income tax provision $ 38,032 $ 45,531 18.4 % 20.4 % The Company’s estimated annual 2024 effective tax rate, excluding discrete events, was 24.7%.
Income Taxes Years Ended December 31, Effective Tax Rate 2025 2024 2025 2024 (in thousands) Income tax provision $ 21,159 $ 38,032 16.4 % 18.4 % The Company’s estimated annual 2025 effective tax rate, excluding discrete events, is expected to be approximately 22.5%.
The excess tax benefit is related to the timing of stock option exercises and restricted stock vestings as a result of our high stock price during the year ended December 31, 2024. 27 Liquidity and Capital Resources Our working capital and capital expenditure requirements are generally met through net cash provided by operations and the use of the revolving bank line of credit based on our current liquidity at the time.
Liquidity and Capital Resources Our working capital and capital expenditure requirements are generally met through net cash provided by operations and the use of the revolving bank line of credit based on our current liquidity at the time. Working Capital - Our unrestricted cash and cash equivalents remained stable from December 31, 2024, to December 31, 2025.
These contracts are not accounted for as derivative instruments because they meet the normal purchase and normal sales exemption. In 2023, the Company executed a five-year purchase commitment for refrigerants. The Company made payments of $11.7 million and $10.1 million on this contract in 2024 and 2023, respectively.
These contracts are not accounted for as derivative instruments because they meet the normal purchase and normal sales exemption. We had no material contractual purchase obligations as of December 31, 2025, except as described below. In 2023, the Company executed a five-year purchase commitment for refrigerants.
The amendments in this ASU are effective for annual periods beginning after December 15, 2024. Upon adoption, this ASU is not expected to have a material impact on the Company’s financial statements and related disclosures. In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40).
We adopted this standard in the fourth quarter of 2025. Upon adoption, this ASU did not have a material impact on the Company’s consolidated financial statements. Recently Issued Accounting Standards In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40).
Upon adoption, this ASU is not expected to have a material impact on the Company’s financial statements and related disclosures. 34 In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280).
Upon adoption, this ASU is not expected to have a material impact on the Company's financial statements and related disclosures. 41 In July 2025, the FASB issued ASU 2025‑05, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets.
Based on historical performance and current expectations, we believe our cash and cash equivalents balance, the projected cash flows generated from our operations, our existing committed revolving credit facility (or comparable financing), and our expected ability to access capital markets will satisfy our working capital needs, capital expenditures and other liquidity requirements associated with our operations in 2025 and the foreseeable future.
Our recent dividends are as follows: Dividend Annualized Dividend Declaration Date Record Date Payment Date per Share per Share March 1, 2023 March 13, 2023 March 31, 2023 $0.08 $0.32 May 18, 2023 June 9, 2023 June 30, 2023 $0.08 $0.32 August 18, 2023 September 8, 2023 September 29, 2023 $0.08 $0.32 November 10, 2023 November 29, 2023 December 18, 2023 $0.08 $0.32 March 5, 2024 March 18, 2024 March 29, 2024 $0.08 $0.32 May 24, 2024 June 7, 2024 June 28, 2024 $0.08 $0.32 August 15, 2024 September 6, 2024 September 27, 2024 $0.08 $0.32 November 13, 2024 November 29, 2024 December 19, 2024 $0.08 $0.32 March 5, 2025 March 18, 2025 March 28, 2025 $0.10 $0.40 May 13, 2025 June 6, 2025 June 27, 2025 $0.10 $0.40 August 14, 2025 September 5, 2025 September 26, 2025 $0.10 $0.40 November 10, 2025 November 26, 2025 December 18, 2025 $0.10 $0.40 Based on historical performance and current expectations, we believe our cash and cash equivalents balance, the projected cash flows generated from our operations, our existing committed revolving credit facility (or comparable financing), and our expected ability to access capital markets will satisfy our working capital needs, capital expenditures and other liquidity requirements associated with our operations in 2026 and the foreseeable future.
ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial statements and notes thereto. In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to SEC’s Disclosure Update and Simplification Initiative.
ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial statements and notes thereto. Newly Adopted Accounting Standards In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740). The new guidance is intended to enhance the transparency and decision usefulness of income tax disclosures.
Our business can be affected by a number of economic factors, including the level of economic activity in the markets in which we operate. The uncertainty of the economy negatively impacted the commercial and industrial new construction markets in 2020 and the first half of 2021.
Our AAON brand can be affected by a number of economic factors, including the level of economic activity in the markets in which we operate. After the commercial and industrial new construction markets came to a standstill in 2020–2021, our core nonresidential end‑markets entered a period of robust growth, increasing by approximately 50.0% between 2022 and 2024.
Consolidated Results of Operations Years Ended December 31, 2024 2023 (in thousands) Net sales $ 1,200,635 $ 1,168,518 Cost of sales 803,526 769,498 Gross profit 397,109 399,020 Selling, general and administrative expenses 188,014 171,539 Gain on disposal of assets (23) (13) Income from operations $ 209,118 $ 227,494 The following are highlights of our results of operations, cash flows, and financial condition: • Net sales for 2024 grew 2.7% to $1,200.6 million due to an increase in sales of our BASX branded products.
Consolidated Results of Operations Years Ended December 31, 2025 2024 (in thousands, except per share data) Net sales $ 1,442,076 $ 1,200,635 Cost of sales 1,056,352 803,526 Gross profit 385,724 397,109 Selling, general and administrative expenses 239,480 188,014 Gain on disposal of assets (4) (23) Income from operations 146,248 209,118 Interest expense (17,726) (2,905) Other income, net 230 378 Income before taxes 128,752 206,591 Income tax provision 21,159 38,032 Net income $ 107,593 $ 168,559 The following are highlights of our results of operations, cash flows, and financial condition: • Net sales for 2025 grew 20.1% to $1,442.1 million driven by the strong demand and growth of our BASX-branded products.
Total cost of sales and total gross profit are calculated as a percentage of total net sales. 2 Presented after intercompany eliminations. Total net sales increased $32.1 million, or 2.7%. BASX increased by 25.1%, or $39.8 million, and AAON Coil Products increased 28.1%, or $31.6 million, both primarily related to demand from the BASX branded data center products.
Total cost of sales and total gross profit are calculated as a percentage of total net sales. 2 Presented after intercompany eliminations. 32 Total net sales increased $241.4 million, or 20.1%. AAON Oklahoma had net sales of $801.2 million, a decrease of 6.7% compared to the same period in the prior year.
We report our financial results based on three reportable segments: AAON Oklahoma, AAON Coil Products, and BASX, which are further described in Item 1 and Item 8. The Company’s chief decision maker (“CODM”), our CEO, allocates resources and assesses the performance of each operating segment using information about the operating segment's net sales and gross profit.
The Company’s chief operating decision maker (“CODM”), our CEO, allocates resources and assesses the performance of each operating segment using information about the operating segment's net sales and gross profit. The CODM does not evaluate operating segments using asset or liability information.
At the end of 2024, we made significant purchases of inventory related to data center orders. These purchases are allocated to customer jobs and show as increases to our contract assets.
Additionally, we continue to make significant purchases of inventory related to data center orders. These purchases are allocated to customer jobs and show as increases to our contract assets. Current payment terms for some BASX-branded jobs primarily require the Company to fund the upfront working capital resulting in cash outflows related to our contract assets.
When new construction is down, we emphasize the replacement market. We sell our products to property owners and contractors mainly through a network of independent manufacturers’ Representatives. This go-to-market strategy is unique compared to most of our larger competitors in that most control their sales channel.
This go-to-market strategy is unique compared to most of our larger competitors in that most control their sales channel. We value the independent sales channel as we think it is a more effective way of increasing market share.
On January 1, 2025, we implemented a one-time 3% price increase for AAON branded products. BASX branded products are priced by job and in most cases, provide the ability to increase the price if the order is outside normal lead times.
BASX-branded products are priced by job and in most cases, provide the ability to increase the price if the order is outside normal lead times. Macroeconomic Conditions Beginning in January 2025, the current United States (“U.S.”) Administration began enacting a series of tariffs affecting nearly all goods imported into the U.S.
In early 2022, the Company began increasing the purchase of inventory to take advantage of favorable pricing opportunities and also to mitigate the impact of future supply chain disruptions on our operations; however, as inflationary and supply chain disruptions have decreased, the Company has been able to reduce overall inventory levels.
Collections and payments cycles are on a normal pattern and fluctuate due to timing of receipts and payments. Historically, the Company increases the purchase of inventory to take advantage of favorable pricing opportunities and also to mitigate the impact of future supply chain disruptions on our operations.
Outstanding Debt - On December 16, 2024, we amended our Amended and Restated Loan Agreement dated November 24, 2021 (as amended, “Amended Loan Agreement”) to include an $80.0 million term loan (“Term Loan”) in addition to the $200.0 million revolving credit facility (the “Revolver”).
Our restricted cash decreased $5.3 million due to funding requirements related to our Longview, Texas expansion. Outstanding Debt - On December 16, 2024, we entered into the Third Amendment and Restated Loan Agreement dated November 24, 2021, to include an $80.0 million term loan payable in equal monthly installments, plus interest, over 60 months, expiring December 16, 2029 (“Term Loan”).
The new guidance improves reportable segment disclosures primarily through enhanced disclosures about significant segment expenses and by requiring current annual disclosures to be provided in interim periods. The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.
This ASU is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted.
Backlog was up from a year ago at all three segments, with the largest increase at the AAON Coil Products segment, which received over $200.0 million of orders in the fourth quarter. Most of these orders were associated with the BASX branded data center liquid cooling solutions and will be manufactured at our Longview, TX facility.
Backlog was up from a year ago for both AAON-branded products and BASX-branded products with BASX-branded products increasing 141.3%, or $762.4 million, when compared to December 31, 2024. Most of these orders were associated with the BASX-branded data center liquid cooling solutions.
BASX branded products increased 35.1%, or $58.5 million when compared to 2023, offset by a decrease of our AAON branded products of 2.6%, or $26.4 million when compared to 2023. • We have a strong balance sheet with a leverage ratio of 0.57 and available borrowings under our Revolver of $123.2 million. • We completed the purchase of a building in Memphis, Tennessee for $63.4 million funded with our new Term Loan of $80.0 million, both of which closed in December 2024. • We continue to invest in the future growth of the Company as evidenced by our $213.2 million in capital expenditures in 2024, an increase of $91.4 million or 87.6% when compared to 2023. • We completed the repurchase of $108.1 million of shares for the year ended December 31, 2024.
The Company also went live with its ERP at its Memphis, Tennessee facility on November 1, 2025 with minimal disruption. • We have a strong balance sheet with a leverage ratio of 1.77 and available borrowings under our Revolver of $201.0 million. • We continue to invest in the future growth of the Company as evidenced by our $204.9 million in capital expenditures, including the acquisition of intangible assets in 2025. • We completed the repurchase of $39.7 million of shares for the year ended December 31, 2025.
The Term Loan is payable in equal month installments, plus interest, over 60 months, expiring December 16, 2029. Any outstanding loans under the Revolver bear interest at the daily compounded secured overnight financing rate (“SOFR”) plus the applicable margin. The Term Loan bears interest at the SOFR plus a credit spread adjustment of 0.10% per annum plus the Applicable Margin.
Borrowings available under the Revolver at December 31, 2025, were $201.0 million. The Term Loan had no outstanding balance as of December 31, 2025 and a balance of $78.4 million as of December 31, 2024 respectively. Any outstanding loans under the Revolver bear interest at the daily compounded secured overnight financing rate (“SOFR”) plus the applicable margin.
The CODM does not evaluate operating segments using asset or liability information. 25 Segment Operating Results for the Years Ended December 31, 2024 and 2023 For the years ended December 31, 2024 Percent of Sales 1 2023 Percent of Sales 1 $ Change % Change (in thousands) Net Sales 2 AAON Oklahoma $ 858,711 71.5 % $ 897,919 76.8 % $ (39,208) (4.4) % AAON Coil Products 143,871 12.0 % 112,320 9.6 % 31,551 28.1 % BASX 198,053 16.5 % 158,279 13.5 % 39,774 25.1 % Net sales $ 1,200,635 $ 1,168,518 $ 32,117 2.7 % Cost of Sales 2 AAON Oklahoma $ 556,305 64.8 % 577,852 64.4 % $ (21,547) (3.7) % AAON Coil Products 98,106 68.2 % 82,996 73.9 % 15,110 18.2 % BASX 149,115 75.3 % 108,650 68.6 % 40,465 37.2 % Cost of sales $ 803,526 66.9 % $ 769,498 65.9 % $ 34,028 4.4 % Gross Profit 2 AAON Oklahoma $ 302,406 35.2 % $ 320,067 35.6 % $ (17,661) (5.5) % AAON Coil Products 45,765 31.8 % 29,324 26.1 % 16,441 56.1 % BASX 48,938 24.7 % 49,629 31.4 % (691) (1.4) % Gross profit $ 397,109 33.1 % $ 399,020 34.1 % $ (1,911) (0.5) % 1 Cost of sales and gross profit for each segment are calculated as a percentage of the respective segment’s net sales.
Segment Operating Results for the Years Ended December 31, 2025 and 2024 Years Ended December 31, 2025 Percent of Sales 1 December 31, 2024 Percent of Sales 1 $ Change % Change (in thousands) Net Sales 2 AAON Oklahoma $ 801,209 55.6 % $ 858,711 71.5 % $ (57,502) (6.7) % AAON Coil Products 325,353 22.6 % 143,871 12.0 % 181,482 126.1 % BASX 315,514 21.9 % 198,053 16.5 % 117,461 59.3 % Net sales $ 1,442,076 $ 1,200,635 $ 241,441 20.1 % Cost of Sales 2 AAON Oklahoma $ 569,121 71.0 % 538,124 62.7 % $ 30,997 5.8 % AAON Coil Products 255,681 78.6 % 116,287 80.8 % 139,394 119.9 % BASX 231,550 73.4 % 149,115 75.3 % 82,435 55.3 % Cost of sales $ 1,056,352 73.3 % $ 803,526 66.9 % $ 252,826 31.5 % Gross Profit 2 AAON Oklahoma $ 232,088 29.0 % $ 320,587 37.3 % $ (88,499) (27.6) % AAON Coil Products 69,672 21.4 % 27,584 19.2 % 42,088 152.6 % BASX 83,964 26.6 % 48,938 24.7 % 35,026 71.6 % Gross profit $ 385,724 26.7 % $ 397,109 33.1 % $ (11,385) (2.9) % 1 Cost of sales and gross profit for each segment are calculated as a percentage of the respective segment’s net sales.
The Company is authorized to effectuate repurchases of the Company's common stock on terms and conditions approved in advance by the Board. The Company also repurchases shares of AAON, Inc. stock from certain of its employees for payment of statutory tax withholdings on stock transactions. All other repurchases from directors or employees are contingent upon Board approval.
The Company is authorized to effectuate repurchases of the Company's common stock on terms and conditions approved in advance by the Board. As of December 31, 2025, approximately $30 million of shares have been repurchased, and approximately $70.0 million remains under the current board authorization.
Removed
Since mid-2021, nonresidential construction spending has been strong, recovering well beyond pre-2020 levels and finishing 2024 near record levels. However, over the last 18-24 months, certain leading indicators, including architectural billings and construction starts, signal a slowing in construction spending within the next 12 months.
Added
By late 2024, however, these markets began to contract, and the softening continued through 2025, though at a moderate rate. While leading indicators signal a stabilization in activity, we have not observed clear indications of a significant reacceleration. Furthermore, signals from general economic indicators are mixed regarding the health of the general economy.
Removed
In 2024, the year-over-year growth rate of nonresidential construction spending slowed significantly, reinforcing the signals from these leading indicators. Furthermore, signals from general economic indicators are mixed regarding the health of the general economy.
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When new construction is down, we emphasize the replacement market. Our BASX brand is heavily dependent on the data center market. The growing maturity and adoption of Artificial Intelligence and high-performance compute is driving profound innovation across the data center market, resulting in increased demand for our products and solutions.
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We also purchase from domestic manufacturers certain components, including coils, compressors, motors, and electrical controls. 23 The price levels of our raw materials fluctuate due to various economic factors within the U.S. and global economy.
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Between 2022 and 2025, total put‑in‑place construction spending for data centers expanded by approximately 240.0%, and present indicators suggest continued strength with no meaningful signs of slowing in the foreseeable future.
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For the year ended December 31, 2024, the prices for copper and galvanized steel increased by approximately 3.2% and 1.7%, respectively, while stainless steel and aluminum decreased 27.9% and 1.6%, respectively, from 2023.
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In response, we have made substantial capital investments to expand our capacity and ensure we are fully equipped to support this accelerating growth trajectory. 29 We sell our products to property owners and contractors mainly through a network of independent manufacturers’ Representatives.
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In 2022, we implemented two significant price increases as well as a recurring 1% monthly price increase beginning June 1, 2022, and ending on April 1, 2023, for AAON branded products. We reinstated a recurring 1% monthly price increase on October 1, 2023, and carried that through February 1, 2024, for AAON branded products.
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The price levels of our raw materials fluctuate due to various economic factors within the U.S. and global economy. At December 31, 2025, the price for copper increased by approximately 11.1%, while stainless steel and galvanized steel decreased approximately 13.0% and 3.4%, respectively. The price for aluminum remained relatively flat, as compared to the price at December 31, 2024.
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We will continue to implement human resource initiatives to retain and attract labor to further improve productivity and production efficiencies. 24 Backlog The following table shows our historical backlog levels: December 31, 2024 December 31, 2023 (in thousands) $ 867,090 $ 510,028 Our backlog increased approximately 70.0%, to $867.1 million at December 31, 2024, compared to December 31, 2023.
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On January 1, 2025, we implemented a one-time 3.0% price increase for AAON-branded products. On April 1, 2025, we implemented a 6.0% surcharge on all AAON-branded products as a result of the uncertainty of international tariffs.
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AAON Oklahoma sales decreased 4.4%, or $39.2 million due to challenges from the industry-regulated refrigerant transition and nonresidential construction activity that experienced weakened demand throughout 2024 as compared to 2023. Gross profit as a percent of sales decreased to 33.1% during 2024 as compared to 34.1% in 2023.
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In retaliation, numerous foreign countries imposed reciprocal tariffs and restricted certain exports to the U.S. The continuous changes and uncertainty in tariff policy could impact our cost of materials, parts, or components imported into the U.S. and could impact the availability of supply from our vendors.
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As noted above, realization of price increases has improved our margin profile along with the slowing of inflation; however, the price increases were offset by flat volumes and lower overhead absorption for the AAON Oklahoma segment.
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We source raw materials domestically, but historically have seen those suppliers increase prices when tariffs are increased. Additionally, while we source most components domestically, our vendors may be impacted by tariffs if they use foreign parts and materials and often pass any additional costs as a result of tariffs through to us.
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In addition, the AAON Coil Products and BASX segments experienced temporary inefficiencies associated with facility construction to increase future production capacity for increased demand of BASX branded data center products. In order to retain our existing employees, we have increased our starting wage rate considerably in recent years and continue to award periodic wage increases to our employees.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeInterest Rate Risk We are exposed to changes in interest rates related to our outstanding debt. As of December 31, 2024, we had an outstanding balance of $154.9 million. For each one percentage point increase in the interest rate applicable to our outstanding debt, our annual income before taxes would decrease by approximately $1.5 million. 35
Biggest changeInterest Rate Risk We are exposed to changes in interest rates related to our outstanding debt. As of December 31, 2025, we had an outstanding balance of $398.3 million. For each one percentage point increase in the interest rate applicable to our outstanding debt, our annual income before taxes would decrease by approximately $4.0 million. 42

Other AAON 10-K year-over-year comparisons