AAON Inc

Shares of AAON, Inc. rose during the quarter following an exceptionally strong earnings report which saw the company see drastically faster growth in its data center business, BasX, than expected. Up 26% sequentially and 72% over the past year, BasX has positioned itself as a true best-in-class cooling solutions provider with a focus on customized offerings vs. peers' off-the-shelf products. With the new Memphis facility ramping production, the company can now satisfy elevated levels of demand with over $2 billion of BasX revenue capacity. The HVAC business performed well, as the company accelerated market share gains following strong heat pump and national accounts driven growth. We believe AAON is well positioned to continue to compound well above peers for the foreseeable future.

AAON, Inc. (AAON), a commercial and industrial HVAC solutions provider, was a top contributor during the second quarter. AAON reported first-quarter results in May, exceeding consensus expectations for both revenue and earnings, and materially raising its full-year datacenter revenue targets, which seemed to help improve investor sentiment. We were encouraged by the Company’s backlog, driven by continued strength from the datacenter buildout, as well as improving margins, which we expect to build as capacity absorption improves. We continue to believe the depth of the data center opportunity is not fully understood by most investors.

AAON, Inc. is a leading manufacturer of heating, ventilation and air-conditioning (HVAC) systems for commercial and industrial environments. The company has experienced accelerated growth due to data-center cooling demand amid the AI infrastructure build-out. In AAON’s latest quarterly results, year-over-year net sales grew more than 50%, and the company’s total backlog increased 107.4% to a record $2.1 billion. This strong performance highlights the durability of AAON's growth, driven by the increasing demand for its products in the context of AI advancements.

AAON, Inc. is a leading manufacturer of heating, ventilation and air-conditioning (HVAC) systems for commercial and industrial environments. The company has experienced accelerated growth due to data-center cooling demand amid the AI infrastructure build-out. In AAON’s latest quarterly results, year-over-year net sales grew more than 50% and the company’s total backlog increased 107.4% to a record $2.1 billion. This growth trajectory highlights AAON's strong position in a market that is increasingly driven by AI-related demand.

AAON, Inc. is a leading manufacturer of heating, ventilation and air-conditioning (HVAC) systems for commercial and industrial environments. The company has experienced accelerated growth due to data-center cooling demand amid the AI infrastructure build-out. In AAON’s latest quarterly results, year-over-year net sales grew more than 50% and the company’s total backlog increased 107.4% to a record $2.1 billion. This growth trajectory highlights the company's strong position in a market increasingly driven by AI-related demand.

AAON, Inc. is a leading manufacturer of heating, ventilation and air-conditioning (HVAC) systems for commercial and industrial environments. The company has experienced accelerated growth due to data-center cooling demand amid the AI infrastructure build-out. In AAON’s latest quarterly results, year-over-year net sales grew more than 50%, and the company’s total backlog increased 107.4% to a record $2.1 billion. This strong performance highlights the company's ability to capitalize on the growing demand driven by AI.

AAON, Inc. has a terrific business unit that makes cooling systems for data centers, where demand is strong. The company reported strong earnings, leading to a significant stock increase. Despite some volatility, the underlying business remains robust, benefiting from the growing need for AI computing capacity. The manager believes that AAON, Inc. is well-positioned to capitalize on these trends, indicating confidence in its future performance.

We invested in AAON as we believe the market is underestimating the duration and magnitude of demand for highly engineered cooling systems, particularly as hyperscalers build AI data centers that require increasingly sophisticated thermal management. This positions AAON favorably in a growing market, driven by the need for advanced cooling solutions in the context of AI infrastructure development.

AAON, Inc. (AAON) was one of our most additive positions to relative returns during the quarter. The company continues to demonstrate strong operating results, which are supported by a solid backlog and order-driven demand. We believe AAON is well-positioned to create long-term value due to its durable growth characteristics and high-quality business model. Despite near-term market challenges, we remain confident in the underlying fundamentals of AAON and its ability to deliver consistent performance.

AAON designs and manufactures highly engineered, energy-efficient commercial and industrial HVAC systems. AAON’s 2Q results again initially disappointed investors but investors ultimately viewed it as a clearing event. The company’s year-to-date results have been adversely impacted by sluggish demand in its core rooftop HVAC business, manufacturing inefficiencies caused by an ERP implementation and expansion expenses of its Memphis, TN manufacturing facility. The stock’s positive reaction is a function of the company’s continued strong backlog of $1.1 billion, the substantial growth of the BASX business (which manufactures cooling equipment for the data center market) and a stabilization of the manufacturing operations as ERP implementation has been less of a drag on output.