AAON, Inc. (AAON): Business Model Canvas [Dec-2025 Updated]

You're digging into AAON, Inc. to see if their reputation for custom, high-efficiency HVAC is translating into sustainable profit, especially with the data center market heating up. Honestly, after mapping out industrial giants for years, I see a firm with serious momentum-a record order backlog hitting $1.32 billion as of Q3 2025, underpinned by their specialized BASX cooling solutions. The challenge, as you'll see in the canvas below, is execution: they are projecting $1.35 billion in revenue for 2025 while simultaneously spending between $180 million and $220 million on CapEx and stabilizing a new ERP system. Let's break down exactly how AAON, Inc. is structured to capture this value while managing those near-term operational risks.

AAON, Inc. (AAON) - Canvas Business Model: Key Partnerships

Strategic partnership with Applied Digital for AI cooling solutions

BASX, a wholly owned subsidiary of AAON, Inc., announced a partnership with Applied Digital Corporation on June 30, 2025.

This collaboration centers on supplying thermal management solutions for Applied Digital's AI factory, Polaris Forge 1, in Ellendale, North Dakota.

The customized free cooling chiller system operates in three optimized modes.

The system is engineered for zero water consumption.

The solution is designed to manage 15 to 30 times higher power density compared to traditional data centers.

The system is optimized for liquid-cooled NVIDIA GPUs.

This partnership resulted in a significant order.

Strong vendor relationships to manage coil and component supply chain

AAON, Inc. experienced supply chain issues related to R-454B refrigerant components during the first quarter of 2025.

The company is working through operational inefficiencies associated with the Enterprise Resource Planning (ERP) system implementation, which impacted AAON branded equipment and coils.

As of the third quarter of 2025, the total company backlog reached a record $1.32 billion.

The AAON Coil Products segment reported net sales of $238.7 million for the third quarter of 2025, a 4.3% increase year-over-year.

The AAON Coil Products segment realized sales growth of 287.8% in the first quarter of 2025.

The company's go-to-market strategy involves mass semi-customization leveraging flexible computer-aided manufacturing systems.

The following table shows performance metrics related to key segments that rely on component supply and manufacturing throughput:

Independent sales representatives for market reach

AAON, Inc. engineers and manufactures products through a collaborative effort with its network of independent sales representatives.

The 2025 National Sales Meeting, Boundless, brought together sales reps from across the country.

National account bookings increased 96% in the third quarter of 2025 and 92% year-to-date.

In the first half of 2025, national accounts represented approximately 35% of total AAON branded orders, up from approximately 20% a year ago.

The company recognizes award-winning rep firms for performance, strategic growth, and service delivery across North America.

For 2024 AAON Equipment Shipments, the top-ranked firm was Texas AirSystems - DFW, TX.

The following list highlights some of the top-performing representative firms recognized for their 2024 results:

• Texas AirSystems - DFW, TX: 1st in Equipment Shipments
• H.C. Nye - Philadelphia & Harrisburg, PA: 2nd in Equipment Shipments
• Windy City Representatives - Chicago, IL: 3rd in Equipment Shipments
• Fields Mechanical Systems - Springfield, MO: 1st in Sales Per Capita In-Market Shipments
• Johnson Barrow - Seattle, WA: 2nd in AAON National Account Shipments

Third-party stakeholders for sustainability reporting and practices

AAON, Inc. is a Corporate Sustainability Assessment (CSA) survey respondent, with its ESG Score last updated on October 03, 2025.

The S&P Global ESG Score for AAON, Inc. in the BLD Building Products industry was 34 as of the last update.

The company has published its 2024 Impact Report and 2023 Sustainability Report.

The company reports on progress toward an environmental goal of 80% of products being non-fossil fuel consuming.

In 2021, the company reported a 65% reduction in water withdrawal.

In 2021, 64% of products were non-fossil fuel consuming.

The company continues to work toward reducing GHG emissions by 10% by 2025.

The company's 2021 ESG Report highlighted that they recycled 17% more metals compared to the prior year.

The company's capital expenditure program for 2025 was set at approximately $220 million.

AAON, Inc. (AAON) - Canvas Business Model: Key Activities

You're looking at the core engine room of AAON, Inc. as of late 2025. This is where the high-performance, semi-custom equipment gets built, where the ERP headaches are being ironed out, and where the massive data center push is taking physical shape. Here's the quick math on what AAON, Inc. is actively doing to drive its business forward.

Manufacturing semi-custom and custom HVAC equipment.

The core activity remains the engineering and fabrication of highly configurable HVAC units under the AAON brand. This proprietary, hard-to-replicate process integrates deep customization within a highly automated production environment. You see the results of this activity in the segment performance, even when facing headwinds.

For the third quarter of 2025, AAON-branded sales were $259.5 million, a year-over-year decrease of 1.5%, but importantly, they rose 28.1% sequentially. Bookings for the AAON brand were roughly flat compared to the prior-year period in Q3 2025. The gross margin for the AAON Oklahoma segment specifically improved sequentially by 400 basis points to reach 31.5% in Q3 2025, reflecting steady production momentum at the Tulsa, Oklahoma, facility.

The company's overall backlog reached a record $1.32 billion as of September 30, 2025, up 103.8% year-over-year.

Research and development (R&D) for energy-efficient solutions.

R&D is embedded in the company's engineering-first approach, supporting both the AAON and the newer BASX lines. This focus on efficiency is what allows the company to command a premium price point. The investment in future capabilities is reflected in the capital expenditure plans for the year.

Innovations like DOAS (dedicated outdoor air systems) and advanced heat pump capabilities are central to maintaining a competitive edge. The company's business generates returns on invested capital above 20%. For the full year 2025, capital expenditures (CapEx) are expected to be approximately $220 million, with the majority allocated to the new Memphis facility expansion.

Operational stabilization of the new ERP system rollout.

The transition to the new Enterprise Resource Planning (ERP) system has been a significant, near-term operational activity, causing temporary friction. Management is actively working to resolve these issues, which have impacted margins and production flow for the AAON-branded segment.

In Q2 2025, the ERP implementation caused operational inefficiencies leading to a gross profit margin of 26.6%, down from 36.1% the prior year. By Q3 2025, sequential improvement was noted, with GAAP diluted EPS rising 94.7% sequentially to $0.37, reflecting improved ERP efficiency. AAON-branded sales also saw a 28.1% sequential increase in Q3 2025, showing that utilization of the new system is getting better. Management stated that through year-end 2025, they expect production rates to improve and the adverse impacts of the new ERP system implementation to lessen.

The ERP transition also impacted the AAON Coil Products segment, where AAON-branded products declined $13.0 million in Q2 2025 due to disruptions.

Ramping up production capacity at the new Memphis facility.

This is a major capital deployment activity, centered on the 787,000-square-foot facility purchased for $238 million. This facility is dedicated to manufacturing BASX-branded thermal management equipment for the data center market. The ramp-up is staggered, with initial production planned for Q4 2025 and full operational status expected within 12 months of the early 2025 start. The facility is set to create 828 skilled jobs over five years.

The ramp-up has incurred costs, with $3 million in costs recorded in Q2 2025 with minimal net sales offsetting them. In Q3 2025, unabsorbed fixed costs at the new Memphis facility contributed to the year-over-year gross profit margin contraction. The BASX segment, which includes initial Memphis production, saw sales rise 95.8% to $124.8 million in Q3 2025. The Memphis expansion is specifically noted as doubling BASX's production capacity, with 490,000 sq ft dedicated to BASX DC equipment.

• The Memphis facility is a 787,000 square foot investment.
• It represents a $238 million project investment.
• Initial production started in early 2025, with full operations expected in early 2026.
• The facility is expected to create 828 skilled jobs over five years.
• Q3 2025 BASX-branded sales reached $124.8 million.
• The facility incurred $3 million in costs with minimal sales in Q2 2025.

AAON, Inc. (AAON) - Canvas Business Model: Key Resources

Record order backlog of $1.32 billion as of Q3 2025

The total backlog reached a record $1.32 billion as of the third quarter of 2025. This figure represents a year-over-year increase of 103.8%. Sequentially, the backlog grew by 18.1%. The BASX-branded backlog specifically drove this growth, increasing 119.5% from a year ago to reach $896.8 million.

Manufacturing facilities in Tulsa, Longview, and Memphis.

AAON, Inc. operates manufacturing sites across three states. The Longview, Texas facility has seen significant additions, including a 195,000 square foot expansion completed around October 2020 and a further 230,000-square-foot addition announced in July 2023. The new Memphis, Tennessee facility is a 787,000 square foot site, representing a $238 million investment announced in November 2024. This Memphis site is projected to create 828 skilled jobs over five years. The Tulsa, Oklahoma facility is the headquarters location.

Here's a look at the production footprint and testing scale:

Proprietary engineering and intellectual property (IP).

AAON controls maximize performance and energy savings. The Delta Class line was born from decades of market leadership in Dedicated Outdoor Air Systems (DOAS). AAON holds multiple 'Product of the Year' awards from Consulting-Specifying Engineer.

World-class innovation center and testing lab.

The Norman Asbjornson Innovation Center (NAIC) is a 134,000 square foot laboratory. It is a 65-foot tall structure. The center features 10 or 12 psychrometric testing chambers. It is the only laboratory in the world able to measure supply, return, and ambient sound under actual load conditions.

The testing capabilities include:

• Air conditioning system testing up to 300 ton.
• Chiller system testing up to 540 ton.
• Gas heating test capacity up to 80 million btu/hour.
• Ambient temperature range of -20°F to 140°F.
• Wind testing up to 50 mph.

The facility allows AAON to maintain AHRI and DOE certification.

Finance: review capital expenditure plans of $180.0 million for 2025 by next Tuesday.

AAON, Inc. (AAON) - Canvas Business Model: Value Propositions

The value proposition for AAON, Inc. (AAON) centers on delivering engineered performance that translates into lower long-term costs and superior operational capability for critical environments.

Custom-engineered, right-sized HVAC solutions.

AAON, Inc. (AAON) provides highly configurable and custom-made equipment designed to meet exact needs. This focus on customization drives strong order momentum in key channels.

• Bookings for AAON-branded equipment increased 44.9% year-over-year in the first quarter of 2025.
• National account bookings increased 96% in the third quarter of 2025.
• National account orders were up 163% in the second quarter of 2025.

Industry-leading energy efficiency for decarbonization.

The commitment to energy efficiency is evident in the development of heat pump technology addressing decarbonization mandates. The Alpha Class air-source heat pump rooftop units are a prime example of this focus.

• Alpha Class air-source heat pump rooftop units are certified operable down to zero degrees Fahrenheit.
• AAON planned to introduce heat pump solutions operable down to negative 20 degrees Fahrenheit in 2025.
• Sales of Alpha Class units in 2024 exceeded $100 million, growing year-over-year by approximately 40%.
• Bookings for the Alpha Class lineup increased 61% in the second quarter of 2025.

High-performance liquid and air-side cooling for data centers (BASX).

The BASX brand is the primary growth engine, focused on high-performance cooling solutions for data centers, especially those supporting high-density computing like AI infrastructure. The demand has resulted in record backlog figures.

The customized solutions include a free cooling chiller system designed for Applied Digital's Polaris Forge 1 site, which operates in three optimized modes. In the Full Free Cooling mode, the system rejects 100% of the IT load using only pumps and fans.

Superior quality equipment for longer life and lower total ownership cost.

AAON, Inc. (AAON) equipment is historically designed for a competitive total cost of ownership over the equipment's life span. Operational improvements are making the initial cost more competitive.

• Historically, AAON equipment was sold at a higher average price compared to most of the competition.
• Operational efficiency improvements have made the cost of semi-custom equipment more comparable to the standard equipment market.

Finance: review Q4 2025 operational efficiency metrics against the Q3 2025 Gross Profit Margin of 27.8% by end of January 2026.

AAON, Inc. (AAON) - Canvas Business Model: Customer Relationships

You're looking at how AAON, Inc. builds and maintains its connection with the market, which is clearly leaning heavily on high-value, complex project sales as of late 2025. This isn't just about selling units; it's about deep, consultative partnerships, especially as they chase massive data center demand.

The Dedicated National Account strategy is showing real traction. This focus on large, recurring customers is paying off significantly, which is critical given the softness in the broader nonresidential construction market. National account bookings jumped an impressive 96% in the third quarter of 2025 alone. Furthermore, year-to-date, these bookings are up 92%, representing 35% of total bookings for the year. This concentration in national accounts is a deliberate move to secure high-volume, long-term revenue streams, which helped push Q3 2025 net sales up 17.4% year-over-year to $384.2 million.

Here's a quick look at how key customer-facing metrics stacked up in Q3 2025:

AAON, Inc. prioritizes direct engagement with engineers and building owners through a solutions-based sales channel model. Sales representatives use AAON equipment alongside products from 20-30 complimentary OEMs to customize the ideal overall solution for the end customer. Honestly, building owners prefer this integrated approach over dealing with multiple sub-contractors. This strategy is particularly effective with the Alpha Class heat pump, which serves as a huge conversation starter for national account customers focused on decarbonization across their facility portfolios. The company's own engineers are central to this, working at the world-class innovation center and testing lab in Tulsa, Oklahoma, to push boundaries.

The nature of the equipment-highly configurable and custom-made-necessitates long-term, consultative relationships for complex projects. This is especially true for the BASX segment, which is driving much of the growth, with its backlog nearly reaching $897.0 million. Management is guiding full-year 2025 sales growth to the mid-teens, signaling confidence that these complex, custom projects will continue to convert from the record backlog. The focus is on delivering a premier ownership experience through superior engineering and customization, which builds that necessary long-term trust.

Finally, the commitment to the installed base is evident in the stated strategy to focus on parts and service. Supporting the sales channel in building a world-class services operation is described as key to their solutions-based offering. This focus helps ensure customer satisfaction long after installation, which is vital for repeat business and maintaining the premium brand perception. The company is actively leveraging its marketing function, which has seen its budget increase 10x since its creation in 2022, to strengthen market penetration and brand recognition, which supports both new sales and service attachment.

• Solutions-based sales channel preferred by building owners.
• Alpha Class product drives conversations on decarbonization.
• BASX segment backlog grew 119.5% year-over-year.
• Focus on parts and service supports long-term relationships.
• Management expects gross margin to reach 28% to 28.5% for full-year 2025.

Finance: draft 13-week cash view by Friday.

AAON, Inc. (AAON) - Canvas Business Model: Channels

You're looking at how AAON, Inc. gets its high-performance HVAC solutions into the hands of customers; it's a mix of established partnerships and direct engagement for specialized, high-growth areas like data centers.

Network of independent sales representatives and dealers

AAON, Inc. primarily uses a network of independent manufacturers' representatives to sell its products to property owners and contractors. This go-to-market strategy is distinct because most larger competitors maintain control over their own sales channels. AAON values this independent channel, believing the entrepreneurial nature attracts top talent and offers greater financial incentives for salespeople. The company held its National Sales Meeting, 'Boundless,' in 2025 to connect with and equip these sales reps for the evolving market. The company recognized its most impactful rep firms for 2024 performance in April 2025.

The performance of this channel is reflected in the segment sales data, though the independent nature means sales are often aggregated. For instance, the AAON Oklahoma segment, which relies on this channel for semi-custom and custom systems, saw net sales decline 23.0% year-over-year in the first quarter of 2025, partly due to refrigerant transitions and supply chain issues affecting production rates. However, bookings for AAON-branded equipment rebounded strongly in Q1 2025, with the backlog increasing 44.9% year-over-year.

Direct sales channel for large BASX data center projects

The BASX brand is the direct sales focus for the rapidly growing data center market, often involving custom-designed thermal management systems. AAON, Inc. secured significant orders from a single data center customer in October 2024 totaling approximately $174.5 million, with most production and delivery expected in the first half of 2025. The company's executive leadership structure was realigned effective January 1, 2025, with a dedicated Executive VP & General Manager for BASX products to support this growth.

The success in this direct channel is evident in segment results:

• BASX-branded sales rose 95.8% to $124.8 million in Q3 2025.
• BASX-branded sales were up 374.8% year-over-year in Q1 2025.
• BASX-branded data center sales were up 127% in Q2 2025.
• National account bookings increased 96% in Q3 2025.

The total company backlog reflected this strength, reaching a record $1.32 billion in Q3 2025, up 103.8% year-over-year. The annualized run rate of data center equipment production at the end of 2024 was over $187 million.

Corporate website and trade shows for product information

Product information dissemination relies on the corporate website and industry events. The AAON.com site features a 'FIND YOUR REP' tool, accessible by entering a postal code, to connect users with local assistance for product selection and technical guidance. The general contact email is marketing@aaon.com, and the main phone number is 918-583-2266. The company showcases innovation, such as the new Alpha Class™ heat pump tiers (ECO, PRO, and EXTREME Series), which address decarbonization demands.

New manufacturing footprint providing geographic diversification

AAON, Inc. is actively expanding its manufacturing base to support demand and diversify operations. The company purchased a 787,000 square foot facility in Memphis, Tennessee, announced in November 2024, which is primarily for growing data center market demand under the BASX brand. This facility is projected to create 828 skilled jobs over five years and was expected to have limited production in early 2025, becoming fully operational in approximately 12 months from the announcement. This move adds geographic diversification, mitigating operational risks.

The total manufacturing footprint as of mid-2025 stands at 4 million square feet across five locations. This includes adding approximately one million square feet of space across the Longview, Texas (237,500 sq. ft.) and Memphis facilities. Capital expenditures for 2025 are outlined at approximately $220 million, following $213.2 million spent in 2024 to support these capacity expansions.

AAON, Inc. (AAON) - Canvas Business Model: Customer Segments

You're looking at the core customer groups AAON, Inc. (AAON) serves as of late 2025, where the focus has clearly shifted toward high-density computing needs.

Hyperscale and colocation Data Center operators (BASX brand).

This group is driving the most significant growth, evidenced by the performance of the BASX segment. The total addressable market for data center cooling is projected to hit $25.8 billion by 2025. The urgency here is clear; cooling demand signals rising digital infrastructure expansion.

• BASX-branded sales rose 95.8% year-over-year in the third quarter of 2025, reaching $124.8 million in that period.
• The BASX-branded backlog stood at $896.8 million at the end of the third quarter of 2025, up 119.5% from a year ago.
• Liquid cooling equipment sales, a key BASX offering, contributed $46.5 million to AAON-branded sales in Q3 2025, a category not in production the prior year.

Non-residential commercial buildings (e.g., retail, education, healthcare).

This segment is primarily served by the traditional AAON-branded equipment, which saw a year-over-year sales decrease in the third quarter of 2025, though it showed sequential improvement.

• AAON-branded sales in Q3 2025 were $259.5 million, a year-over-year decrease of 1.5%.
• The AAON Oklahoma segment, which handles semi-custom and custom systems for these markets, saw sales decline 4.4% in the first quarter of 2025 due to refrigerant transitions and weakened construction demand.
• The global heat pump market, relevant to energy-efficient commercial solutions, was valued at $88.9 billion in 2025.

Mission-critical industrial and cleanroom environments.

The BASX brand also serves these environments, which require high-performance, precision cooling similar to data centers. The company is leveraging its technical pedigree from this niche across its specialized offerings.

Large National Accounts seeking standardized, high-efficiency fleets.

This group is a key focus for the AAON-branded equipment, showing strong order momentum despite overall AAON-branded sales softness.

• National account bookings increased 96% in the third quarter of 2025 compared to the prior year.
• In the second quarter of 2025, national accounts represented approximately 35% of total AAON branded orders, up from about 20% the year prior.

Here's a quick look at the financial context surrounding these segments as of late 2025:

The company's market capitalization was reported at $8.16 billion in the third quarter of 2025.

AAON, Inc. (AAON) - Canvas Business Model: Cost Structure

You're looking at the hard numbers that drive AAON, Inc.'s expenses as of late 2025. This structure shows where the money is going, especially with the recent operational hurdles.

High Capital Expenditures (CapEx) projected between $180 million and $220 million for 2025. The company continued its heavy investment cycle, with capital expenditures expected to reach approximately $220 million for the full year 2025. Year-to-date through the first half of 2025, capital expenditures totaled $89.6 million.

The overall cost structure is heavily influenced by manufacturing throughput, as seen in the Cost of Goods Sold (COGS) performance, which is reflected in the gross margin figures. For the second quarter of 2025, the consolidated gross profit margin was 26.6%.

Manufacturing labor and overhead costs have been directly impacted by the Enterprise Resource Planning (ERP) system inefficiencies. This is clear when looking at segment performance:

• The AAON Coil Products segment saw its gross margin contract year-over-year to 22.0%.
• The AAON Oklahoma segment's gross margin contracted to 27.5% from 37.2% in the comparable quarter of 2024, driven by lower production rates causing sub optimal overhead absorption.
• Gross margin was impacted by approximately $20 million due to ERP implementation issues in the second quarter.
• The new Memphis facility contributed $3.0 million in cost of sales in the second quarter with minimal offsetting net sales.

Selling, General, and Administrative (SG&A) expenses have risen as the company invests in capacity and technology to support growth, even while managing the ERP rollout. For the second quarter of 2025, SG&A expenses were $59.1 million, representing 19.0% of sales. The full-year 2025 outlook projected adjusted SG&A as a percentage of sales to be between 16.5% and 17%. Research and Development (R&D) costs are bundled with CapEx in some reporting periods; trailing twelve months data as of June 30, 2025, showed CapEx and R&D as a percent of sales at 22.5%.

Here's a quick look at the key 2025 financial metrics and projections:

The cost structure is currently burdened by temporary operational drag, but the company is spending heavily to build future capacity. Finance: review the impact of the $3.4 million in one-time incentive fees related to the Memphis facility incurred in Q2 on the H2 cost forecast by Monday.

AAON, Inc. (AAON) - Canvas Business Model: Revenue Streams

You're looking at how AAON, Inc. makes its money, which is heavily weighted toward selling specialized, high-performance heating, ventilation, and air conditioning (HVAC) equipment. The revenue streams are clearly segmented by product brand and application focus as of late 2025.

The overall financial target for the full year 2025 is a significant milestone, with the projection set to reach $1.35 billion.

The core revenue generation comes from two distinct product lines, which are detailed below, alongside the latest quarterly figures available:

Sales of AAON-branded semi-custom HVAC equipment represent the traditional backbone of the business, though this stream saw a slight year-over-year decrease in the third quarter of 2025. For the third quarter ending September 30, 2025, AAON-branded sales were $259.5 million, a decline of 1.5% compared to the prior year period.

The high-growth area is definitely the Sales of BASX-branded custom data center cooling solutions. This segment is capitalizing on the massive demand for AI and high-density computing infrastructure. In Q3 2025, BASX-branded sales reached $124.8 million, marking an increase of 95.8% year-over-year. This growth trajectory has been explosive; for instance, BASX-branded product sales were up 374.8% year-over-year in the first quarter of 2025.

The AAON Oklahoma segment, which houses the traditional semi-custom/custom HVAC business and aftermarket revenue, had net sales of $161.8 million in the first quarter of 2025, which was a year-over-year decline of 23.0%. This segment is where the Aftermarket parts and service revenue is generated, alongside controls solutions and standard HVAC systems.

The company's overall revenue performance for the trailing twelve months ending September 30, 2025, stood at $1.32 billion. This is built upon the quarterly performance, which shows a clear shift in the revenue mix:

• Sales of AAON-branded equipment were $189.5 million in Q1 2025.
• BASX-branded equipment sales surged to $132.6 million in Q1 2025.
• The total backlog, which signals future revenue visibility, hit a record $1.32 billion as of Q3 2025.