Aaon, Inc. Q2 2025 results

Rebecca will follow up with a walkthrough of the quarterly results, and Matt will then finish with our outlook for the rest of the year and some closing remarks. We've overlaid the total company gross margin on the same timeline, and as you'll see, there's a strong correlation between the production efficiency metric and the gross margin performance. Said another way, when we hit our production metrics, we deliver our corresponding gross margin targets. Here, you can see our total backlog of AAON branded equipment, which are manufactured across both our Tulsa and Longview facilities.

I'd also like to point out that our backlog is favorably priced relative to input cost. Almost all of our production in Q2 was associated with orders received prior to our January 1st 3% price increase and the 6% tariff surcharge that was put in place in March. Directionally, this will begin contributing positively to both sales and margin in the third quarter, with a more meaningful impact anticipated in the fourth quarter. Second, our liquid cooling solutions continued to gain traction in the rapidly evolving data center market, as evidenced by incremental orders we secured during the quarter.

In the first half of the year, national accounts made up approximately 35% of total AAON branded orders, up from approximately 20% a year ago. Alpha Class sales grew 8% in Q2, while bookings surged approximately 61% during the same period, highlighting strong momentum and growing market adoption. The modest overall decline was driven by a 20.9% decline in AAON branded sales, which was nearly fully offset by a 90% increase in BASX branded sales. The contraction of margin was largely due to lower production volume of AAON branded equipment sales at the AAON Oklahoma and AAON Coil Products segments.