Few public companies show as plainly where data center cooling spending is going as AAON, Inc., the Tulsa-based HVAC manufacturer that now calls itself The Aaon Group. Its third-quarter 2026 results, filed with the Securities and Exchange Commission on Nov. 9, show sales of its BASX-branded products more than tripling from a year earlier. BASX is the company's line of custom liquid-cooling and air-handling equipment for hyperscale data centers. The same filing also restated the company's first- and second-quarter 2026 financial statements and reported a material weakness in its internal control over financial reporting.

According to the company's press release, filed as Exhibit 99.1 to an 8-K, BASX-branded sales rose 218.3% to $397.2 million in the quarter ended Sept. 30. The company attributed the increase to "strong momentum in data center demand, continued production output gains, and increased utilization of recently added manufacturing capacity." That puts BASX products ahead of the company's namesake AAON-branded commercial HVAC equipment, which the release said grew 19.6% to $310.2 million.

The Quarter in Numbers

The press release reported total net sales of $707.4 million, up 84.1% from $384.2 million in the third quarter of 2025. Gross profit rose 76.4% to $188.5 million, operating income rose 129.3% to $100.0 million, and GAAP diluted earnings per share were $0.83, compared with $0.37 a year earlier.

Margins did not keep pace with sales. Gross margin was 26.7%, compared with 27.8% a year earlier, although the company said it improved 60 basis points from the second quarter, the second consecutive quarterly gain. The release attributed the year-over-year decline "primarily" to "a higher proportion of BASX revenue generated from less mature, lower-utilization facilities, partially offset by improved price/cost and volume leverage."

The segment tables in the release show the liquid-cooling business specifically. The AAON Coil Products segment reported net sales of $192.6 million, up 174.2%, which the company said was "driven primarily by BASX-branded liquid cooling sales of $165.5 million, up 255.6% during the period." The separate BASX segment reported net sales of $231.3 million, up 207.4%. The company credited that segment's growth in part to added production capacity from the ramp of its Memphis facility. In the company's quarterly report on Form 10-Q, BASX is described as making custom cooling equipment for hyperscale data centers from facilities in Redmond, Oregon, with support from other company sites.

Chief Executive Matt Tobolski said in the release that at BASX "customer engagement remains strong, our opportunity pipeline is healthy, and we continue to strengthen our position with strategic data center customers."

Restatement and Material Weakness

The release said that during the third-quarter reporting process the company "identified errors through enhanced review and control procedures" and restated its previously issued first- and second-quarter 2026 financial statements. In aggregate, the restatements increased first-half 2026 net sales by $10.7 million, gross margin by 71 basis points and GAAP diluted EPS by $0.09. The corrections raised the previously reported first-half figures.

Management concluded that a material weakness existed in internal control over financial reporting, according to the release. The 10-Q ties the weakness to process and close controls around BASX-branded revenue and lists it among the company's risk factors. The release said the company "found no evidence of fraud or misconduct in connection with these matters." It also said the company has implemented corrective actions and is carrying out additional measures to strengthen its controls.

"We corrected those errors and determined that a material weakness existed in our internal control over financial reporting. We take that seriously," Tobolski said in the release.

Because of the restatement, earlier coverage of AAON's second quarter used pre-restatement figures. Simply Wall St reported in August that second-quarter revenue was about US$627 million and basic EPS was near US$0.69, and that the stock fell 3.9% that day as attention turned to margins. Those numbers predate the correction and are not the restated figures.

Backlog: Up From a Year Ago, Down From June

The backlog figures help explain the BASX surge. The company's 10-Q puts total backlog at $1,854.5 million on Sept. 30, 2026, up from $1,320.1 million a year earlier. BASX-branded backlog was $1,355.2 million, compared with $896.8 million, an increase the 10-Q puts at 51.1%, or $458.3 million. AAON-branded backlog was $499.3 million. The 10-Q says most of the orders are associated with BASX data center liquid-cooling products.

Compared with the previous quarter, backlog fell. The press release's backlog table shows $1,960.3 million in total backlog on June 30, 2026, so the Sept. 30 figure is $105.8 million lower, a drop of about 5.4% by our calculation from the table; the release's text describes the decline as 5.9%. The company attributed the decline primarily to "accelerated backlog conversion into record revenue and the inherent timing variability of large BASX project awards." The 10-Q also lists a Dec. 31, 2025 total of $1,828.5 million. That means backlog was only modestly higher at the end of September than at the start of the year, even as quarterly shipments rose sharply.

How the Results Compared With Expectations

In a Nov. 2 preview, Earnings Whispers reported a consensus estimate of $0.56 in EPS on $598.0 million in revenue for the quarter. The company reported $0.83 in diluted EPS and $707.4 million in net sales. The preview also noted that management had raised its 2026 sales-growth outlook twice, to 55% to 60%, while trimming gross margin guidance to 25% to 26%. It added that management had signaled second-half data center revenue roughly flat compared with the second quarter, and that the stock was down about 28% since the prior report. Earnings Whispers is a market-commentary outlet, and its figures are included here only to show what was expected before the release.

The company again raised its full-year outlook. According to the release, it now expects 2026 net sales growth of 72% to 75%, up from 55% to 60%, with gross margin of about 26% and selling, general and administrative expenses of about 13% of sales.

Why It Matters for the Buildout

For utilities, developers and local officials tracking the AI infrastructure buildout, AAON's filings offer a rare look at cooling demand through a company that reports data center-related hardware as its own line. BASX-branded sales now exceed the company's legacy commercial HVAC brand. BASX backlog makes up about $1.36 billion of the $1.85 billion total, and the 10-Q says most of those orders are for liquid-cooling products.

The filings also show the cost of growing that quickly. The company itself links the lower year-over-year margin to newer, less mature plants, and the restatement and material weakness both arose in a period of rapid expansion. The company described the errors as found "through enhanced review and control procedures as we continue to strengthen our finance organization."

What Happens Next

According to the press release, the restated 10-Q filings for the first and second quarters of 2026 were filed alongside the third-quarter results, and details on the material weakness are in Item 4 of the third-quarter 10-Q. The company said it is continuing its remediation efforts. Its updated full-year 2026 outlook calls for net sales growth of 72% to 75% and gross margin of about 26%. The company said it "expects order strength to continue in the fourth quarter and as we enter 2027," and the fourth-quarter results will show how that outlook compares with actual sales.

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