AAON, Inc. (AAON): BCG Matrix [Dec-2025 Updated]

You're looking for a clear map of where AAON, Inc. is placing its bets, and the BCG Matrix is defintely the right tool for that-it shows us where the cash is coming from and where the capital is going. As of late 2025, the story is clear: explosive growth in BASX data center cooling, with Q3 sales up 95.8% year-over-year, is funding a massive, high-risk investment in the new Memphis facility, which needs to successfully convert a record $1.32 billion backlog. This future-facing spending is anchored by the core Oklahoma segment, the reliable Cash Cow generating superior returns historically above 20%, while the company strategically sidelines legacy HVAC models that are simply being phased out.

Background of AAON, Inc. (AAON)

You're looking at AAON, Inc. (AAON), a major player in the premium, highly configurable heating, ventilation, and air conditioning (HVAC) equipment space. Honestly, this company, headquartered in Tulsa, Oklahoma, has been around since 1988, building a reputation for energy-efficient solutions for commercial and industrial jobs. They focus on designing and manufacturing equipment that meets specific customer needs, which is a key differentiator in this industry.

The firm trades on the NASDAQ, and as of late 2025, it carries a market capitalization of about $7.62 billion. Gary Fields is currently serving as the President and CEO, steering the ship while Rebecca Thompson handles the CFO duties. They've been pushing hard on innovation, like introducing new energy-efficient systems and focusing on sustainability initiatives, which is definitely important for any industrial player right now.

AAON, Inc. structures its operations across three primary segments: AAON Oklahoma, AAON Coil Products, and BASX. The company is projecting strong top-line performance, with expected revenue for the full fiscal year 2025 to hit $1.35 billion. For context, their sales in 2024 were reported at $1.2B, so that projection shows solid expected growth, though recent quarterly results have shown some internal transition pains.

The AAON Oklahoma segment is where the core, semi-custom and custom HVAC systems are engineered and built, and it remains the largest revenue contributor. In the third quarter of 2025, this segment brought in net sales of $238.7 million, marking a 4.3% increase year-over-year. This segment's flagship products include their renowned rooftop units, air handlers, and heat pumps, which are known for high efficiency and customization.

Now, the real story in recent quarters has been the BASX brand, which focuses on specialized cooling for demanding environments like data centers and cleanrooms. In Q3 2025, BASX-branded sales surged by 95.8% to $124.8 million, largely due to liquid cooling equipment demand. This high-growth area is fueling a massive order book; the total company backlog hit a record $1.32 billion as of September 30, 2025, a 103.8% jump from the prior year.

AAON, Inc. (AAON) - BCG Matrix: Stars

You're looking at the business units that are currently defining AAON, Inc.'s growth trajectory. These are the segments where AAON, Inc. commands a strong position in rapidly expanding markets. They require significant investment to maintain their lead, but the payoff is market dominance and future Cash Cow status.

The BASX-branded data center cooling solutions are definitely leading the charge here. This segment is capturing market share in the high-growth data center infrastructure space. For the third quarter of 2025, the sales for BASX-branded data center cooling equipment rose by an impressive 95.8% year-over-year, hitting $124.8 million. This explosive revenue growth is backed by an even more robust forward-looking indicator: the BASX backlog. That backlog grew by 119.5% from the prior year, reaching $896.8 million as of the end of Q3 2025. This shows explosive future demand that AAON, Inc. is currently positioned to fulfill, though it requires continued capital expenditure to ramp up production at facilities like Memphis. The total company backlog also hit a record of $1.32 billion, up 103.8% year-over-year, underscoring the broad strength, largely driven by BASX.

Another critical Star for AAON, Inc. is the Alpha Class line of high-efficiency heat pumps, which targets the high-growth decarbonization market. These products are designed to meet advanced performance requirements, positioning AAON, Inc. as a leader in the shift toward electrification. To give you a sense of its established high-growth trajectory, sales for the Alpha Class units in 2024 already exceeded $100 million, representing a 40% year-over-year growth rate for that period. This unit is consuming cash to fuel its development and market penetration, but it's essential to maintain that leadership position.

The market leadership in cold-climate heat pumps is cemented by the flagship EXTREME Series. This product line is engineered for superior performance in harsh environments, which is a key differentiator in the growing cold-climate market. Here's a quick look at the key metrics defining these Star performers:

The investment thesis for Stars like these is clear: you must feed the growth to ensure they become the Cash Cows of tomorrow when the market growth inevitably slows. The technology underpinning the EXTREME Series is what helps secure this high-growth, high-share position in the market. You want to see these capabilities detailed:

• EXTREME Series operates reliably down to minus 20 degrees Fahrenheit.
• Offers 100% heating capacity at 5 degrees Fahrenheit.
• Features variable-speed compressors and refrigerant injection technology.
• Targets the decarbonization and electrification of buildings.
• The technology is rigorously tested at the Norman Asbjornson Innovation Center.

Honestly, the demand signals are deafening; the challenge now is purely execution-converting that massive backlog into shipped, recognized revenue while managing the associated operational costs. If AAON, Inc. keeps its market share in these areas as the data center and electrification markets mature, these units will transition nicely into the Cash Cow quadrant. Finance: confirm the Q4 2025 capital expenditure run rate against the $180.0 million full-year plan by next Tuesday.

AAON, Inc. (AAON) - BCG Matrix: Cash Cows

You're looking at the core engine of AAON, Inc. (AAON), the segment that historically funds the company's expansion into newer areas. This is the classic Cash Cow quadrant: a business unit with a high market share in a mature, slower-growth market.

AAON Oklahoma Segment: The Core Business

The AAON Oklahoma Segment is the foundation, focusing on engineering and manufacturing semi-custom and custom rooftop units, along with controls solutions and retail parts. This segment is the traditional backbone of AAON's revenue stream. Based on 2022 combined sales figures for AAON Oklahoma and AAON Coil Products, the estimated market share in the greater than five-ton rooftop unit market was approximately 12%.

This segment's established position means it requires less aggressive promotion and placement spending compared to high-growth areas. Still, the segment has faced recent headwinds; for instance, net sales for AAON Oklahoma were down 23% year-over-year in the first quarter of 2025. This recent softness was attributed to industry-regulated refrigerant transitions and weakened nonresidential construction demand.

Revenue Contribution and Financial Anchor

The AAON Oklahoma Segment provides the majority of AAON, Inc.'s total sales. For the full-year 2025 projection, AAON, Inc. revenue is anticipated to reach $1.35 billion. While the BASX segment is driving much of the growth, the AAON-branded equipment, which largely encompasses the Oklahoma segment, constituted approximately 74% of sales on a Trailing Twelve Months basis as of July 2025. This segment's consistent cash generation is critical.

This reliable cash flow is the anchor supporting the company's ambitious investment strategy elsewhere. AAON, Inc. has outlined a capital expenditure program of approximately $220 million for 2025. This massive investment is directed toward growth segments like BASX and infrastructure improvements, which is exactly what Cash Cows are expected to fund.

Returns and Efficiency

Cash Cows are expected to generate superior returns on the capital they consume. Historically, AAON, Inc. has achieved high returns, with a five-year average Return on Invested Capital (ROIC) of 19.1%. However, the most recently reported annualized ROIC, for the quarter ending September 2025, stood at 10.86%, with the Weighted Average Cost of Capital (WACC) at 11.13%. This suggests that, as of late 2025, the returns are barely covering the cost of capital, a point to watch closely for a segment that should be a high-margin cash generator.

Investments here are focused on maintaining current productivity and improving efficiency to boost cash flow further, rather than market share expansion. The company's strategy involves milking these gains passively while funding the Question Marks.

Here is a snapshot of the relevant financial context for AAON, Inc. as of late 2025:

The Cash Cow segment's primary role is to generate surplus cash. You should monitor the gross margin, which was 26.6% in Q2 2025, down from 36.1% in Q2 2024, largely due to lower production volumes in this segment. Lower margins directly reduce the cash flow available to support other parts of the business.

• Maintain operational efficiency in Oklahoma.
• Focus capital on infrastructure improvements.
• Expect lower growth than the BASX segment.
• Monitor margin recovery from Q2 2025 lows.

Finance: draft 13-week cash view by Friday.

AAON, Inc. (AAON) - BCG Matrix: Dogs

Dogs are business units or products characterized by a low market share in a market that is not expanding quickly. For AAON, Inc. (AAON), these units tie up capital without generating significant returns, making divestiture or minimization a key strategic consideration.

Legacy/Older HVAC Models: Products being phased out due to the industry-regulated refrigerant transition (AIM Act), requiring minimal new investment.

The segment most impacted by the industry-regulated refrigerant transition, which necessitates a shift to lower Global Warming Potential (GWP) refrigerants like R-454B, is the traditional AAON Oklahoma segment. This transition acts as a headwind, slowing growth and investment in older product lines. In the first quarter of 2025, net sales at the AAON Oklahoma segment declined 23.0% year-over-year, reaching $161.8 million in that period. This decline was specifically attributed to supply chain issues related to the R-454B refrigerant components. In the second quarter of 2025, the segment's net sales fell by 18.0% year-over-year to $185.1 million. This underperformance contrasts sharply with the high-growth BASX and AAON Coil Products segments, suggesting the legacy/older models are firmly in the Dog quadrant relative to the company's growth drivers. To be fair, the AAON Oklahoma segment's gross margin contracted significantly in Q1 2025 to 26.8% from 35.2% in Q1 2024, largely due to lower production volumes absorbing fixed costs.

• Legacy AAON-branded equipment faces headwinds from the refrigerant transition.
• Q1 2025 AAON Oklahoma segment sales: $161.8 million (down 23.0% Y/Y).
• Q2 2025 AAON Oklahoma segment sales: $185.1 million (down 18.0% Y/Y).
• The company is focusing investment on new Alpha Class heat pumps, which grew sales by approximately 40% in 2024, indicating a deliberate shift away from older technology.

Non-Core Geographic Sales: Foreign sales account for a small percentage of net sales, representing a low-priority, low-share market focus.

AAON, Inc. (AAON) remains overwhelmingly focused on the domestic market, which is typical for a highly engineered, custom-solution provider where local service and installation expertise are critical. Foreign sales represent a minimal portion of the total revenue base, placing these international operations in the Dog category due to low market share and likely low growth relative to the core US market. Based on 2024 data, foreign sales accounted for approximately 2.5% of net sales. The company's strategic focus for expansion, including capital expenditures like the new Memphis, Tennessee facility, is geared toward supporting growing domestic demand, particularly for data center products.

Non-Strategic, Low-Margin Component Sales: Any commodity-like components outside of the high-margin, custom-engineered systems.

The relative performance of the business segments clearly delineates the high-growth areas from the lower-performing ones. The BASX segment, focused on high-value data center cooling, saw sales surge 138.9% in Q1 2025. In contrast, the AAON Oklahoma segment, which includes the more traditional custom and semi-custom offerings that may contain more commodity-like components or face greater cyclical pressure, saw sales decline 23.0% in the same period. The gross profit margin for the AAON Oklahoma segment in Q1 2025 was 26.8%, significantly lower than the overall company's performance in previous periods when the high-growth segments were smaller. This segment's struggle with lower volumes and fixed cost absorption suggests that the underlying products or components within this unit are not commanding the premium margins of the BASX offerings, fitting the low-margin Dog profile.

• BASX Segment Q1 2025 Sales Growth: 138.9%.
• AAON Oklahoma Segment Q1 2025 Sales Decline: 23.0%.
• AAON Oklahoma Segment Q1 2025 Gross Margin: 26.8%.
• The company's overall gross profit margin for Q2 2025 was 26.6%, indicating the pressure from the lower-margin areas.

These units are candidates for divestiture or, at minimum, require minimal new capital infusion, as expensive turn-around plans are unlikely to succeed against secular market shifts favoring data center solutions. Finance: draft 13-week cash view by Friday.

AAON, Inc. (AAON) - BCG Matrix: Question Marks

You're looking at the high-growth, low-share products for AAON, Inc. (AAON) right now, and honestly, it's all about massive investment colliding with operational teething issues. These are the areas consuming cash today with the hope they become tomorrow's Stars.

The New Memphis Facility Production is a prime example of this cash burn. AAON, Inc. has committed to capital expenditure plans of $220.0 million in 2025 to build out this capacity, which was initially announced as a $238 million investment over five years. This facility, targeting BASX-branded equipment for data centers, incurred $3,000,000 in costs during the second quarter of 2025 with minimal sales to offset that expenditure. The risk here is turning that large capital outlay into efficient, profitable revenue generation.

The situation with AAON Coil Products (Non-BASX) shows the volatility inherent in these Question Marks. While the segment realized overall sales growth of 86.4% year-over-year in Q2 2025, this was heavily dependent on BASX-branded equipment sales. Specifically, the AAON-branded coil products segment saw a decline of $13.0 million in Q2 2025, directly attributed to disruptions from the Enterprise Resource Planning (ERP) system implementation.

Operational Inefficiencies are the immediate consequence of trying to scale too fast, too soon. The ERP system rollout caused significant short-term pain, which you can see clearly in the second quarter results. The company's GAAP diluted Earnings Per Share (EPS) dropped 69.4% year-over-year to $0.19. Furthermore, the consolidated gross profit margin contracted sharply to 26.6% in Q2 2025, down from 36.1% in the comparable quarter in 2024. This is the high-risk part of the equation: the investment is necessary for scalability, but execution failures erode immediate returns.

The ultimate question mark for 2026 hinges on Total Backlog Conversion. AAON, Inc. entered the period with robust order activity, as the total adjusted backlog reached $1.12 billion, representing a 71.9% increase year-over-year as of June 30, 2025. The challenge is converting that record backlog into profitable revenue, which requires stabilizing operations post-ERP implementation. You need to watch the conversion rate closely.

Here is a snapshot of the Q2 2025 performance metrics tied to these Question Marks:

The strategic decision point is clear: AAON, Inc. must invest heavily to quickly gain market share with these growth assets, or risk them decaying into Dogs. Finance: draft the 13-week cash flow view by Friday, focusing on the working capital impact of the $1.12 billion backlog conversion timeline.