Revenue Recognition
The following tables show disaggregated net sales by reportable segment (Note 23) by major product brand, net of intercompany sales eliminations.
| | | | | | | | |
| Segment | Brands Produced | Brand Products |
| AAON Oklahoma | AAON | Rooftop units and aftermarket parts |
| AAON Coil Products | AAON / BASX | Condensing units, air handling products, data center cooling solutions, and geothermal/water-source heat pumps |
| BASX | BASX | Data center cooling solutions, cleanroom products, and air handling products |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended December 31, 2025 | |
| AAON Oklahoma | | AAON Coil Products | | BASX | | Total | |
| (in thousands) | |
| AAON-branded Products | $ | 798,207 | | | $ | 96,075 | | | $ | — | | | $ | 894,282 | | |
| BASX-branded Products | 3,002 | | | 229,278 | | | 315,514 | | | 547,794 | | |
| Total | $ | 801,209 | | | $ | 325,353 | | | $ | 315,514 | | | $ | 1,442,076 | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended December 31, 2024 | |
| AAON Oklahoma | | AAON Coil Products | | BASX | | Total | |
| (in thousands) | |
| AAON-branded Products | $ | 858,711 | | | $ | 116,931 | | | $ | — | | | $ | 975,642 | | |
| BASX-branded Products | — | | | 26,940 | | | 198,053 | | | 224,993 | | |
| Total | $ | 858,711 | | | $ | 143,871 | | | $ | 198,053 | | | $ | 1,200,635 | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended December 31, 2023 | |
| AAON Oklahoma | | AAON Coil Products | | BASX | | Total | |
| (in thousands) | |
| AAON-branded Products | $ | 897,919 | | | $ | 104,073 | | | $ | — | | | $ | 1,001,992 | | |
| BASX-branded Products | — | | | 8,247 | | | 158,279 | | | 166,526 | | |
| Total | $ | 897,919 | | | $ | 112,320 | | | $ | 158,279 | | | $ | 1,168,518 | | |
Aftermarket part sales were $80.2 million, $76.9 million, $67.7 million for each of the years ended December 31, 2025, 2024, and 2023, respectively.
Contract Assets and Liabilities
Opening and closing balances of contract assets and contract liabilities are as follows:
| | | | | | | | | | | | | |
| | | | | |
| December 31, | | |
| | | | | |
| 2025 | | 2024 | | |
| (in thousands) | | |
| Contract assets | $ | 247,635 | | | $ | 135,820 | | | |
| Less: Allowance for credit losses | 598 | | | 399 | | | |
| Contract assets, net | 247,037 | | | 135,421 | | | |
| | | | | |
| Contract liabilities | (80,670) | | | (14,913) | | | |
| Total, net | $ | 166,367 | | | $ | 120,508 | | | |
Costs and estimated earnings on uncompleted contracts and related billings are as follows:
| | | | | | | | | | | | | | | |
| | | | | | | |
| December 31, | | |
| 2025 | | 2024 | | | | |
| | | | | | | |
| (in thousands) | | |
| Costs incurred on uncompleted contracts | $ | 254,399 | | | $ | 133,593 | | | | | |
| Estimated earnings | 209,344 | | | 97,074 | | | | | |
| Total | 463,743 | | | 230,667 | | | | | |
| | | | | | | |
| Less: Contract billings to date | 311,274 | | | 112,786 | | | | | |
| Less: Allowance for credit losses | 599 | | | 399 | | | | | |
| Plus: Completed contracts, unbilled | 14,497 | | | 3,026 | | | | | |
| Total, net | $ | 166,367 | | | $ | 120,508 | | | | | |
Revenue recognized in the reporting period that was included in the contract liability balance at the beginning of the period was $14.9 million, $12.5 million, and $21.4 million for each of the years ended December 31, 2025, 2024, and 2023, respectively.
Typically, we expect to satisfy performance obligations relating to uncompleted in-process contracts within one year or less, however, timing of performance obligations can vary from timing of payment, production scheduling and timing of customer installation requirements. Increases in contract assets are mainly due to the increased production and increased demand of our BASX-branded products.
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.