What changed in this filing

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Item 1A. Risk Factors

2026-03-02 compared with 2025-02-27 · 47 added, 22 removed, 145 unchanged (32% of the section changed)

10 unchanged sentences

Our business can be hurt by economic conditions .

Our business is affected by a number of economic factors, including the level of economic activity in the markets in which we operate.

Our business is affected by a number of economic factors, including the level of economic activity and uncertainty in the markets in which we operate.

Sales in the commercial and industrial new construction markets correlate to the number of new homes and buildings that are built, which in turn is influenced by cyclical factors such as interest rates, inflation, consumer spending habits, employment rates, and other macroeconomic factors over which we have no control.

1 unchanged sentence

Our results of operations and financial condition could be negatively impacted by the loss of one or more major customers.

From time to time in the past, we derived a significant portion of our sales from a limited number of customers, and such concentration may continue in the future.

From time to time we derive a significant portion of our sales from a limited number of customers, and such concentration may continue in the future.

The loss of, or significant reduction in sales to significant customers (or a related portfolio group of customers) could have a material adverse effect on our results of operations, financial condition and cash flow.

Further, the addition of new major customers in the future could increase our customer concentration risks as described above.

We may not realize all of the sales expected from our backlog of orders and contracts.

Our backlog consists of the value of product and service orders for which a customer purchase order or purchase commitment is received, but has not yet been delivered.

As of December 31, 2025 and 2024, the Company’s estimated backlog was approximately $1,828.5 million and $867.1 million, respectively.

The majority of our combined backlog is considered firm and expected to be delivered within 12 to 18 months.

Our customers have the right in some circumstances, usually with penalties or other termination consequences, to reduce or defer firm orders in backlog.

If customers terminate, reduce or defer firm orders, the revenue we expect to generate from our backlog may not be fully realized.

Also, due to our large backlog, pricing changes may take longer to be reflected in our financial results.

Our results of operations and financial condition could be negatively impacted by the loss of a major third-party representative.

1 unchanged sentence

If such relationships were terminated or impaired for any reason, it could materially and adversely affect our ability to generate revenues and profits.

Certain competitors with greater financial resources than us could target our third-party representatives for exclusive sales channels.

Certain competitors with greater financial resources than us have targeted some of our third-party representatives for exclusive sales channels.

We may not be able to secure additional third-party representatives who will effectively market our products in certain geographical areas.

In addition, adding new representatives requires additional administrative efforts and costs.

If we are unable to establish new representative relationships or continue current relationships, or terminate and replace our third-party representatives, our business, financial condition, and results of operations could be materially and adversely affected.

If we are unable to establish new representative relationships or continue

current relationships, or terminate and replace our third-party representatives, our business, financial condition, and results of operations could be materially and adversely affected.

We may incur material costs as a result of warranty and product liability claims that would negatively affect our profitability .

43 unchanged sentences

Furthermore, our continued investment in new product development may render certain legacy products and components obsolete resulting in increased inventory obsolescence expense that may have a material adverse effect upon our financial condition or results of operations.

The length of the sales cycle for certain BASX-branded products and solutions offerings, as well as unpredictable placing or canceling of customer orders, particularly large orders, may cause our revenues and operating results to vary significantly from period-to-period, which could make our future operational results less predictable.

A customer’s decision to purchase certain of our products or solutions, particularly products new to the market or long-term end-to-end solutions, may involve a lengthy contracting, design and qualification process.

In particular, customers deciding on the design and implementation of large deployments may have lengthy and unpredictable procurement processes that may delay or impact expected future orders, including customers canceling orders based on unforeseen changes to their businesses.

As a result, the order booking and sales recognition process is often uncertain and unpredictable, with some customers placing large orders with short lead times on little advance notice and others requiring lengthy, open-ended processes that may change depending on global or regional economic conditions.

This unpredictability may cause our revenues and operating results to vary unexpectedly from quarter-to-quarter and year-to-year, making our future operational results less predictable.

Risks Related to Material Sourcing and Supply

20 unchanged sentences

If we do not invest sufficient capital in a timely manner to acquire, develop, or implement new information technologies or maintain or upgrade current information technologies, we could suffer outages as well as be at a competitive disadvantage within our industry which could have a material adverse effect upon our financial condition and results of operations.

Artificial intelligence technologies may introduce operational, cybersecurity, reputational, and compliance risks that could adversely affect our business.

Although AI is not a core component of our products or manufacturing operations, the growing use of AI tools presents potential risks to AAON.

Any internal or incidental use of AI or machine‑learning technologies—such as in engineering, data analysis, customer support, or administrative processes—may expose the Company to risks involving data privacy, cybersecurity, protection of proprietary information, intellectual property rights, and regulatory compliance.

As AI capabilities rapidly evolve, our ability to evaluate, monitor, and govern their use may not keep pace.

Employees, contractors, or third‑party partners could unintentionally or improperly use AI tools, which may lead to unauthorized disclosure of sensitive information, inaccurate or biased outputs, or other unintended consequences.

These risks could negatively impact operational performance, decision‑making, and interactions with customers or suppliers.

AI technologies are also subject to increasing regulatory scrutiny.

New or evolving laws, standards, or reporting requirements applicable to AI could impose additional compliance obligations on AAON.

If we do not implement appropriate controls and oversight mechanisms governing the use of AI, we could experience operational disruptions, reputational harm, litigation risk, or competitive disadvantage if other companies adopt AI more effectively to improve efficiency or reduce costs.

Complications with the design or implementation of our new enterprise resource planning system could adversely impact our business and operations.

2 unchanged sentences

This ERP system will replace our existing operating and financial systems.

The ERP system is designed to accurately maintain the Company’s financial records, enhance operational functionality and provide timely information to the Company’s management team related to the operation of the business.

The ERP system is designed to accurately maintain the Company’s financial records, enhance operational functionality and provide timely information to the

Company’s management team related to the operation of the business.

The ERP system implementation process has required, and will continue to require, the investment of significant personnel and financial resources.

5 unchanged sentences

Our future profitability could be adversely affected by current or future environmental laws.

We are subject to extensive and changing federal, state and local laws and regulations designed to protect the environment in the United States and in other parts of the world.

We are subject to extensive and rapidly changing federal, state and local laws and regulations designed to protect the environment in the United States and in other parts of the world.

These laws and regulations could impose liability for remediation costs and result in civil or criminal penalties in case of non-compliance.

2 unchanged sentences

We are subject to potentially extreme governmental regulations and policies.

We always face the possibility of new governmental regulations and policies, from the Federal or state levels, which could have a substantial or even extreme negative effect on our operations and profitability.

We always face the possibility of new or rapidly evolving changes to existing governmental regulations and policies, from the Federal or state levels, which could have a substantial or even extreme negative effect on our operations and profitability.

This could affect equipment we currently manufacture and could have an impact on our product design, operations, and profitability.

19 unchanged sentences

Export Administration Act.

Violations of these laws, which are complex, may result in criminal penalties or sanctions that could have a material adverse effect on our business, financial condition and results of operations.

Violations of these laws, which are complex, may result in criminal

penalties or sanctions that could have a material adverse effect on our business, financial condition and results of operations.

Changes in legislation or government regulations or policies could adversely affect our results of operations.

12 unchanged sentences

Additionally, regulations that reduce or eliminate the use of fossil fuels such as natural gas and propane may reduce or eliminate sales of gas-fired equipment for which AAON holds a strong market position.

This will result in a shift

to more air- and water-cooled heat pump-type units to provide space heating.

This will result in a shift to more air- and water-cooled heat pump-type units to provide space heating.

This shift in product line could affect production productivity, material costs and aftermarket warranty costs.

4 unchanged sentences

and various other countries with respect to trade policies and tariffs.

For example, a former U.S.

administration previously called for substantial changes to U.S.

foreign trade policy with respect to China and other countries, including the possibility of imposing greater restrictions on international trade and significant increases in tariffs on goods imported into the U.S.

Other administrations could take a different approach to U.S.

foreign trade policy, so there remains uncertainty as to whether trade between the U.S and other countries, including countries in which we operate, may be impacted by these policy shifts.

Changes in policy or continued uncertainty could depress economic activity and restrict our access to suppliers or customers.

Tariffs implemented on our products (or on materials, parts or components we use to manufacture our products) have in the past increased the cost of our products manufactured in the U.S.

For example, the current U.S.

administration has instituted substantial changes to U.S.

foreign trade policy with respect to China and other countries, including a significant increase in tariffs on goods imported into the U.S.

and the possibility of imposing further restrictions on international trade.

The current administration has taken a different approach to U.S.

foreign trade policy than their predecessors, so there remains uncertainty as to whether, and to what degree, trade between the U.S and other countries will be impacted by these policy shifts on an ongoing and/or long-term basis.

Additional policy changes or continued uncertainty could depress economic activity and restrict our access to suppliers or customers.

Furthermore, counter- or retaliatory tariffs imposed against the U.S.

could impact our sales internationally.

Tariffs implemented on our products (or on materials, parts or components we use to manufacture our products or to provide service for our products) have in the past increased the cost of our products manufactured in the U.S.

and imported into the U.S.

If additional tariffs or trade restrictions are implemented on our products (or on materials, parts or components we use to manufacture our products) by the U.S.

or other countries, the cost of products manufactured in countries such as China and Mexico and imported into the U.S.

or other countries in which we operate could increase further.

We expect to continue to pass along some of these costs to our customers, but the increased cost could adversely affect the demand for products.

These cost increases could adversely affect the demand for our products and/or our profitability, which could have a material adverse effect on our business and our earnings.

The imposition of additional tariffs on our products (or on materials, parts or components we use to manufacture our products or to provide service for our products) by the U.S.

or other countries, the cost of our products manufactured in other countries subject to additional tariffs and imported into the U.S.

would increase as a result of new tariffs that are implemented, and could increase further to the extent that retaliatory tariffs or similar additional trade restrictions are implemented.

In the event we are unable to pass along the increased costs resulting from any tariffs to our customers, it could have a material adverse effect on our business, profitability, and our earnings.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors