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TULSA - On Monday, AAON , Inc. (NASDAQ:AAON) reported second-quarter earnings and revenue that fell well short of analyst expectations, as operational disruptions from an Enterprise Resource Planning (ERP) system implementation severely impacted production.
The HVAC solutions provider’s shares plunged 14.6% in pre-market trading after the release.
The company reported adjusted earnings per share of $0.22, significantly below the analyst estimate of $0.34, while revenue came in at $311.6 million, missing the consensus expectation of $326.15 million and declining 0.6% YoY. Gross profit margin contracted dramatically to 26.6% from 36.1% in the same quarter last year.
"Our second quarter results fell short of our expectations and do not reflect the high standards we set for ourselves as an organization," said CEO Matt Tobolski. "The underperformance was primarily driven by poor operational execution, mainly associated with the implementation of our new ERP system at our Longview, Tex. facility."
The ERP implementation particularly affected the AAON Oklahoma segment, which saw an 18% decrease in net sales, while the AAON Coil Products segment experienced severe margin contraction despite 86.4% sales growth. The company’s gross profit margin at AAON Coil Products plummeted to 22.0% from 41.9% a year earlier.
Despite the operational challenges, AAON reported strong bookings and backlog growth, with total backlog increasing 71.9% YoY to $1.12 billion. The company indicated this points to continued market share gains, particularly in the data center market where demand remains exceptionally strong.
Management has reduced its full-year 2025 outlook, now expecting low-teens YoY sales growth with gross profit margins between 28-29%, down from previous projections. The company anticipates sequential improvement throughout the second half of the year as production issues are addressed.
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