AAON, Inc. (AAON) Income Statement

The 101.2% growth in Q2 2026 is a dramatic acceleration from the 54.3% in Q1 2026 and the 42.5% in Q4 2025, indicating a step-change in demand. This likely reflects the integration of BasX and the expansion into liquid cooling for data centers, which appears to be a structural growth driver. However, investors should monitor whether this pace is sustainable, as it may be partly due to price increases and backlog conversion.

The gross margin decline from 36.1% in Q2 2024 to 24.3% in Q2 2026 is substantial, suggesting that the company has not fully passed on input cost increases or that the BasX segment carries lower margins. This compression is a key concern, as it may indicate reduced pricing power or a shift toward lower-margin project-based revenue. The operating margin, however, improved to 11.0% in Q2 2026 from 7.6% in Q2 2025, implying some operating leverage, but the gross margin trend warrants close monitoring.

While gross margin contracted, operating margin expanded from 7.6% in Q2 2025 to 11.0% in Q2 2026, driven by SG&A growth of only 72.7% versus revenue growth of 101.2%. This suggests that the company is leveraging its fixed cost base, possibly due to the integration of BasX and improved production efficiency. However, the sustainability of this leverage depends on maintaining revenue momentum and controlling overhead costs.

The COGS increase of 107.4% versus revenue growth of 101.2% indicates that cost inflation is not fully offset by pricing, leading to gross margin compression. This is likely due to rising steel and copper prices, as well as the product mix from BasX, which may have lower margins. Management's ability to pass on costs through price increases will be critical, but the lag in pricing adjustments may continue to pressure margins in the near term.

The sharp decline in gross margin from 2024 to 2026 suggests a fundamental change in the business, likely due to the integration of BasX and the expansion into data center cooling, which may carry lower margins than traditional rooftop units. This inflection point is critical for investors to understand, as it may indicate that the company is trading margin for growth. The operating margin, however, has remained relatively stable, suggesting that cost controls are offsetting some of the gross margin pressure.