AAON, INC. 10-K

Item 8. Financial Statements and Supplementary Data. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID Number 248 ) 44 Consolidated Balance Sheets 46 Consolidated Statements of Income 47 Consolidated Statements of Stockholders’ Equity 48 Consolidated Statements of Cash Flows 49 Notes to Consolidated Financial Statements 50 43 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Stockholders AAON, Inc. Opinion on the financial statements We have audited the accompanying consolidated balance sheets of AAON, Inc. (a Nevada corporation) and subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated March 2, 2026 expressed an unqualified opinion. Basis for opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical audit matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Revenue Recognition from BASX-Branded Products As described further in Notes 2 and 3 to the consolidated financial statements, the Company recognized net sales of $547.8 million for the year ended December 31, 2025 for BASX-branded products. Revenue to design and manufacture highly customized units is recognized on an over time basis, as progress is made toward satisfying the performance obligations of each contract. Changes in job performance, job conditions, and estimated profitability may result in revisions to cost and income, and are estimated and recognized by the Company throughout the life of contracts. We identified revenue recognized over time related to BASX-branded products as a critical audit matter. The principal consideration for our determination that revenue recognized over time related to the Company’s contracts for BASX-branded products is a critical audit matter is the high degree of auditor effort in performing procedures and evaluating audit evidence related to over time contracts. 44 Our audit procedures related to revenue recognized over time related to the Company’s contracts for BASX-branded products included the following, among others. • We tested the effectiveness of controls over revenue recognition, including management’s determination of the estimated cost to complete and recorded progress toward fulfillment of the performance obligation. • We tested the appropriateness of over time revenue recognition for a sample of contracts. • We tested the appropriateness of revenue recognition for over time contracts, including agreeing cost inputs to source documents, such as purchase orders, third-party invoices, and shipping documents, and evaluating the estimated costs to complete. • We evaluated estimates made by the Company by analyzing the gross margin on completed contracts compared to historical estimates for those contracts to test the Company’s estimation process. /s/ GRANT THORNTON LLP We have served as the Company’s auditor since 2004. Tulsa, Oklahoma March 2, 2026 45 AAON, Inc. and Subsidiaries Consolidated Balance Sheets December 31, 2025 2024 Assets (in thousands, except share and per share data) Current assets: Cash and cash equivalents $ 13 $ 14 Restricted cash 1,226 6,500 Accounts receivable, net 314,387 147,434 Income tax receivable 27,445 4,115 Inventories, net 261,151 187,420 Contract assets, net 247,037 135,421 Prepaid expenses and other 17,921 7,308 Total current assets 869,180 488,212 Property, plant and equipment, net 631,262 510,356 Intangible assets, net and goodwill 165,799 160,152 Right of use assets 17,988 15,436 Other long-term assets 2,281 242 Deferred tax assets — 836 Total assets $ 1,686,510 $ 1,175,234 Liabilities and Stockholders' Equity Current liabilities: Debt, short-term $ — $ 16,000 Short-term obligations of NMTC 7,535 — Accounts payable 110,437 44,645 Accrued liabilities 132,213 99,347 Contract liabilities 80,670 14,913 Total current liabilities 330,855 174,905 Debt, long-term 398,320 138,891 Deferred tax liabilities 30,313 — Other long term liabilities 23,299 20,743 New market tax credit obligations 1 8,738 16,113 Commitments and contingencies (Note 20) Stockholders' equity: Preferred stock, $ .001 par value, 5,000,000 shares authorized, no shares issued — — Common stock, $ .004 par value, 200,000,000 shares authorized, 81,691,075 and 81,436,594 issued and outstanding at December 31, 2025 and 2024, respectively 327 326 Additional paid-in capital 64,358 68,946 Retained earnings 830,300 755,310 Total stockholders' equity 894,985 824,582 Total liabilities and stockholders' equity $ 1,686,510 $ 1,175,234 1 Held by variable interest entities (Note 19) The accompanying notes are an integral part of these consolidated financial statements. 46 AAON, Inc. and Subsidiaries Consolidated Statements of Income Years Ended December 31, 2025 2024 2023 (in thousands, except per share data) Net sales $ 1,442,076 $ 1,200,635 $ 1,168,518 Cost of sales 1,056,352 803,526 769,498 Gross profit 385,724 397,109 399,020 Selling, general and administrative expenses 239,480 188,014 171,539 Gain on disposal of assets ( 4 ) ( 23 ) ( 13 ) Income from operations 146,248 209,118 227,494 Interest expense ( 17,726 ) ( 2,905 ) ( 4,843 ) Other income, net 230 378 503 Income before taxes $ 128,752 $ 206,591 $ 223,154 Income tax provision 21,159 38,032 45,531 Net income $ 107,593 $ 168,559 $ 177,623 Earnings per share: Basic EPS $ 1.32 $ 2.07 $ 2.19 Diluted EPS $ 1.29 $ 2.02 $ 2.13 Cash dividends declared per common share: $ 0.40 $ 0.32 $ 0.32 Weighted average shares outstanding: Basic 81,529,140 81,473,131 81,156,114 Diluted 83,105,538 83,629,502 83,295,290 The accompanying notes are an integral part of these consolidated financial statements. 47 AAON, Inc. and Subsidiaries Consolidated Statements of Stockholders Equity Common Stock Paid-in Capital Retained Earnings Shares Amount Total (in thousands) Balances at December 31, 2022 $ 80,138 $ 322 $ 98,735 $ 461,657 $ 560,714 Net income — — — 177,623 177,623 Stock options exercised and restricted stock awards granted 1,795 7 33,252 — 33,259 Share-based compensation — — 16,384 — 16,384 Stock repurchased and retired ( 425 ) ( 3 ) ( 26,308 ) — ( 26,311 ) Dividends — — — ( 26,445 ) ( 26,445 ) Balances at December 31, 2023 81,508 326 122,063 612,835 735,224 Net income — — — 168,559 168,559 Stock options exercised and restricted stock awards granted 1,132 5 31,856 — 31,861 Contingent shares issued 243 1 6,363 — 6,364 Share-based compensation — — 16,729 — 16,729 Stock repurchased and retired ( 1,446 ) ( 6 ) ( 108,065 ) — ( 108,071 ) Dividends — — — ( 26,084 ) ( 26,084 ) Balances at December 31, 2024 81,437 326 68,946 755,310 824,582 Net income — — — 107,593 107,593 Stock options exercised and restricted stock awards granted 724 3 17,141 — 17,144 Share-based compensation — — 17,994 — 17,994 Stock repurchased and retired ( 470 ) ( 2 ) ( 39,723 ) — ( 39,725 ) Dividends — — — ( 32,603 ) ( 32,603 ) Balances at December 31, 2025 $ 81,691 $ 327 $ 64,358 $ 830,300 $ 894,985 The accompanying notes are an integral part of these consolidated financial statements. 48 AAON, Inc. and Subsidiaries Consolidated Statements of Cash Flows Years Ended December 31, 2025 2024 2023 Operating Activities Net income $ 107,593 $ 168,559 $ 177,623 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 79,191 62,735 46,468 Amortization of debt issuance costs 394 154 82 Amortization of right of use assets 166 189 324 Provision for (recoveries of) losses on accounts receivable, net of adjustments 70 715 ( 154 ) Provision for losses on contract assets, net of adjustments 200 399 — Provision for (recoveries of) excess and obsolete inventories, net of write-offs 152 ( 968 ) 1,633 Share-based compensation 17,994 16,729 16,384 Other ( 15 ) ( 4 ) ( 44 ) Deferred income taxes 31,149 ( 6,606 ) ( 6,527 ) Changes in assets and liabilities: Accounts receivable ( 167,023 ) ( 10,041 ) ( 9,978 ) Income tax receivable ( 23,330 ) ( 5,285 ) ( 11,302 ) Inventories ( 73,883 ) 27,080 ( 16,226 ) Contract assets ( 111,816 ) ( 90,626 ) ( 30,043 ) Prepaid expenses and other long-term assets ( 11,673 ) ( 3,707 ) ( 1,048 ) Accounts payable 52,904 16,959 ( 18,316 ) Contract liabilities 65,757 1,156 ( 7,667 ) Extended warranties 831 1,835 2,600 Accrued liabilities and other long-term liabilities 31,873 13,259 15,086 Net cash provided by operating activities 534 192,532 158,895 Investing Activities Capital expenditures ( 190,563 ) ( 195,660 ) ( 104,294 ) Proceeds from government incentive grant 12,000 — — Proceeds from sale of property, plant and equipment 40 25 129 Acquisition of intangible assets ( 14,329 ) ( 17,491 ) ( 5,197 ) Principal payments from note receivable 435 51 51 Net cash used in investing activities ( 192,417 ) ( 213,075 ) ( 109,311 ) Financing Activities Borrowings of debt 915,391 717,897 597,111 Payments of debt ( 672,204 ) ( 601,091 ) ( 629,787 ) Proceeds from financing obligation, net of issuance costs — 4,186 6,061 Payment related to financing costs ( 1,395 ) ( 664 ) ( 398 ) Stock options exercised 17,144 31,861 33,259 Repurchase of stock - open market ( 29,995 ) ( 100,034 ) ( 25,009 ) Repurchases of stock - LTIP plans (Note 18) ( 9,730 ) ( 8,037 ) ( 1,302 ) Cash dividends paid to stockholders ( 32,603 ) ( 26,084 ) ( 26,445 ) Net cash provided by (used in) financing activities 186,608 18,034 ( 46,510 ) Net (decrease) increase in cash, cash equivalents, and restricted cash ( 5,275 ) ( 2,509 ) 3,074 Cash, cash equivalents, and restricted cash, beginning of year 6,514 9,023 5,949 Cash, cash equivalents, and restricted cash, end of year $ 1,239 $ 6,514 $ 9,023 The accompanying notes are an integral part of these consolidated financial statements. 49 AAON, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2025 1. Business Description AAON, Inc. is a Nevada corporation which was incorporated on August 18, 1987. Our operating subsidiaries include AAON, Inc., an Oklahoma corporation (“AAON Oklahoma”), AAON Coil Products, Inc., a Texas corporation (“AAON Coil Products”), and BASX, Inc., an Oregon corporation (“BASX”) (collectively, the “Company”). The consolidated financial statements include our accounts and the accounts of our subsidiaries. We are engaged in the engineering, manufacturing, marketing, and sale of premium air conditioning and heating equipment consisting of standard, semi-custom, and custom rooftop units, data centers cooling solutions, cleanroom systems, packaged outdoor mechanical rooms, air handling units, makeup air units, energy recovery units, condensing units, geothermal/water-source heat pumps, coils, and controls. 2. Summary of Significant Accounting Policies Principles of Consolidation These financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated. Our financial statements also consolidate all of our affiliated entities in which we have a controlling financial interest. Because we hold certain rights that give us the power to direct the activities of eight variable interest entities (“VIEs”) (Note 19) that most significantly impact the VIEs economic performance, combined with a variable interest that gives us the right to receive potentially significant benefits or the obligation to absorb potentially significant losses, we have a controlling financial interest in those VIEs. Cash and Cash Equivalents We consider all highly liquid temporary investments with original maturity dates of three months or less to be cash equivalents. Cash and cash equivalents consist of bank deposits and highly liquid, interest-bearing money market funds. The Company’s cash and cash equivalents are held in a few financial institutions in amounts that exceed the insurance limits of the Federal Deposit Insurance Corporation. However, management believes that the Company’s counterparty risks are minimal based on the reputation and history of the institutions selected. Restricted Cash Restricted cash held at December 31, 2025, and December 31, 2024, consists of bank deposits and highly liquid, interest-bearing money market funds held for the purpose of the Company’s qualified New Markets Tax Credit programs (Note 19) to benefit an investment in plant and equipment to facilitate the expansion of our Longview, Texas manufacturing operations. The Company’s restricted cash is held in financial institutions in amounts that exceed the insurance limits of the Federal Deposit Insurance Corporation. However, management believes that the Company’s counterparty risks are minimal based on the reputation and history of the institutions selected. Accounts and Note Receivable Accounts and note receivable are stated at amounts due from customers, net of an allowance for credit losses. We generally do not require that our customers provide collateral; however, our billings and customer payment terms can vary based on product type as a way to manage collections risk. The Company determines its allowance for credit losses by considering a number of factors, including the credit risk of specific customers, the customer’s ability to pay current obligations, historical trends, economic and market conditions, and the age of the receivable. Accounts are considered past due when the balance has been outstanding for ninety days past negotiated credit terms. Past-due accounts are generally written off against the allowance for credit losses only after all collection attempts have been exhausted. 50 Concentration of Credit Risk Our top customers operate primarily in the data center cooling and commercial air conditioning markets. Data centers are purpose-built facilities that enable the processing, storage and distribution of data across both traditional workloads and high-density compute, including AI training and inference. Examples of companies in this space include Microsoft, Amazon Web Services, Google Cloud, QTS and Applied Digital. The commercial air conditioning market includes the design and manufacturing of HVAC systems for non-residential buildings such as offices, hospitals, schools, data centers, warehouses and manufacturing facilities. Our channel partners and customers support the design, construction and service of such facilities including independent sales representatives like Texas AirSystems and related portfolio groups through sole or common ownership like Meriton, Ambient and Air Control Concepts. For the years ended December 31, 2025, 2024, and 2023, the Company had three, two and three customers, respectively, that were 10 percent or greater concentrations of revenue. We have earned the trust and business of these significant customers over many years of performing to their needs, which they have supported with long-standing multi-year programs. The remaining majority of our business is comprised of thousands of customers and transactions through our extensive network of independent representatives. This mitigates our concentration risk as we also continue expanding our customer base through targeted growth in adjacent end markets, new customer acquisitions and expanding share with existing customers. At December 31, 2025 and December 31, 2024, the Company had three customers that were 10 percent or greater concentrations of accounts receivable. Inventories Inventories are valued at the lower of cost or net realizable value using the first-in, first-out (“FIFO”) or average cost method. Cost in inventory includes purchased parts and materials, direct labor and applied manufacturing overhead. We establish an allowance for excess and obsolete inventories based on product line changes, the feasibility of substituting parts and the need for supply and replacement parts. Property, Plant and Equipment Property, plant, and equipment, including significant improvements, are recorded at cost, net of accumulated depreciation; except for property, plant, and equipment acquired in a business combination which is recorded at fair value. Repairs and maintenance and any gains or losses on disposition are included in operations. Depreciation is computed using the straight-line method over the following estimated useful lives: Buildings and leasehold improvements 3 - 40 years Machinery and equipment 3 - 20 years Furniture and fixtures 3 - 15 years Business Combinations The Company applies the acquisition method of accounting for business acquisitions. The results of operations of the businesses acquired by the Company are included as of the respective acquisition date. The acquisition date fair value of the consideration transferred, including the fair value of any contingent consideration, is allocated to the underlying assets acquired and liabilities assumed based upon their estimated fair values at the date of acquisition. To the extent the acquisition date fair value of the consideration transferred exceeds the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed, such excess is allocated to goodwill. The Company may adjust the preliminary purchase price allocation, as necessary, as it obtains more information regarding asset valuations and liabilities assumed that existed but were not available at the acquisition date, which is generally up to one year after the acquisition closing date. Acquisition related expenses are recognized separately from the business combination and are expensed as incurred. 51 Fair Value Financial Instruments and Measurements The carrying amounts of cash and cash equivalents, receivables, accounts payable, and accrued liabilities approximate fair value because of the short-term maturity of the items. The carrying amount of the Company’s debt, and other payables, approximate their fair values either due to their short-term nature, the variable rates associated with the debt or based on current rates offered to the Company for debt with similar characteristics. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. Fair value is based upon assumptions that market participants would use when pricing an asset or liability. We use the following fair value hierarchy, which prioritizes valuation technique inputs used to measure fair value into three broad levels: • Level 1: Quoted prices in active markets for identical assets and liabilities that we have the ability to access at the measurement date. • Level 2: Inputs (other than quoted prices included within Level 1) that are either directly or indirectly observable for the asset or liability, including (i) quoted prices for similar assets or liabilities in active markets, (ii) quoted prices for identical or similar assets or liabilities in inactive markets, (iii) inputs other than quoted prices that are observable for the asset or liability, and (iv) inputs that are derived from observable market data by correlation or other means. • Level 3: Unobservable inputs for the asset or liability including situations where there is little, if any, market activity for the asset or liability. Items categorized in Level 3 include the estimated fair values of intangible assets, contingent consideration, and goodwill acquired in a business combination. The fair value hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable inputs (Level 3). In some cases, the inputs used to measure fair value might fall into different levels of the fair value hierarchy. The lowest level input that is significant to a fair value measurement determines the applicable level in the fair value hierarchy. Assessing the significance of a particular input to a fair value measurement requires judgment, considering factors specific to the asset or liability. Software Development Costs We capitalize costs incurred to purchase or develop software for internal use. Internal-use software development costs are capitalized during the application development stage. These capitalized costs are reflected in intangible assets, net and goodwill on the consolidated balance sheets and are amortized over the estimated useful life of the software. The useful life of our internal-use software development costs is generally between one to 10 years. Definite-Lived Intangible Assets Our definite-lived intangible assets include customer relationships, internal-use software and other intellectual property acquired in business combinations or asset acquisition. We amortize our definite-lived intangible assets on a straight-line basis over the estimated useful lives of the assets. We evaluate the carrying value of our amortizable intangible assets for potential impairment when events and circumstances warrant such a review. Amortization is computed using the straight-line method over the following estimated useful lives: Intellectual property 6 - 30 years Customer relationships 14 years Goodwill and Indefinite-Lived Intangible Assets Goodwill represents the excess of the consideration paid for the acquired businesses over the fair value of the individual assets acquired, net of liabilities assumed. Goodwill at December 31, 2025, is expected to be tax deductible in future periods. Indefinite-lived intangible assets consist of trademarks, trade names, and internal-use software. Goodwill and indefinite-lived intangible assets are not amortized, but instead are evaluated for impairment at least annually. We perform our annual assessment of impairment during the fourth quarter of our fiscal year, and more frequently if circumstances warrant. To perform this assessment, we first consider qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit and indefinite-lived intangible assets exceeds their carrying amount. If we conclude that it is more likely than not that the fair value of a reporting unit and indefinite-lived assets does not exceed their carrying amount, we calculate the fair value for the reporting unit and indefinite-lived assets and compare the amount to their carrying amount. If the fair value of a reporting unit and indefinite-lived asset exceeds 52 their carrying amount, the reporting unit and indefinite-lived assets are not considered impaired. If the carrying amount of the reporting unit and indefinite-lived assets exceeds their fair value, the reporting unit and indefinite-lived assets are considered to be impaired and the balance is reduced by the difference between the fair value and carrying amount of the reporting unit and indefinite-lived assets. We performed a qualitative assessment as of December 31, 2025, to determine whether it was more likely than not that the fair value of the reporting unit and indefinite-lived assets was greater than the carrying value of the reporting unit and indefinite-lived assets. Based on these qualitative assessments, we determined that the fair value of the reporting unit and indefinite-lived assets was more likely than not greater than the carrying value of the reporting unit and indefinite-lived assets. Estimates and assumptions used to perform the impairment evaluation are inherently uncertain and can significantly affect the outcome of the analysis. The estimates and assumptions we use in the annual impairment assessment included market participant considerations and future forecasted operating results. Changes in operating results and other assumptions could materially affect these estimates. A considerable amount of management judgment and assumptions are required in performing the impairment tests. Contingent Consideration As part of the acquisition of BASX (Note 18) in 2021, we agreed to issue shares of the Company’s common stock based on certain milestones in accordance with the acquisition agreement. This contingent consideration is valued at fair value on the acquisition date and is included in additional paid-in capital on the consolidated balance sheets. Impairment of Long-Lived Assets We review long-lived assets for possible impairment when events or changes in circumstances indicate, in management’s judgment, that the carrying amount of an asset may not be recoverable. Recoverability is measured by a comparison of the carrying amount of an asset or asset group to its estimated undiscounted future cash flows expected to be generated by the asset or asset group. If the undiscounted cash flows are less than the carrying amount of the asset or asset group, an impairment loss is recognized for the amount by which the carrying amount of the asset or asset group exceeds its fair value. Research and Development The costs associated with research and development for the purpose of developing and improving new products are expensed as incurred. For the years ended December 31, 2025, 2024, and 2023 research and development costs amounted to approximately $ 58.2 million, $ 47.3 million, and $ 43.7 million, respectively. Advertising Advertising costs are expensed as incurred and included in selling, general and administrative expenses on our consolidated statement of income. Advertising expense for the years ended December 31, 2025, 2024, and 2023 was approximately $ 3.8 million, $ 3.3 million, and $ 2.6 million, respectively. Shipping and Handling We incur shipping and handling costs in the distribution of products sold that are recorded in cost of sales. Shipping charges that are billed to the customer are recorded in revenues and as an expense in cost of sales. For the years ended December 31, 2025, 2024, and 2023 shipping and handling fees amounted to approximately $ 18.2 million, $ 22.0 million, and $ 29.0 million, respectively. Income Taxes Income taxes are accounted for under the asset and liability method. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the book carrying amounts and the tax basis of assets and liabilities. Excess tax benefits and deficiencies are reported as an income tax benefit or expense on the statement of income and are treated as discrete items to the income tax provision in the reporting period in which they occur. We establish accruals for unrecognized tax positions when it is more likely than not that our tax return positions may not be fully sustained. The Company records a valuation allowance for deferred tax assets when, in the opinion of management, it is more likely than not that deferred tax assets will not be realized. 53 Share-Based Compensation The Company recognizes expense for its share-based compensation based on the fair value of the awards that are granted. The Company’s share-based compensation plans provide for the granting of stock options, restricted stock, and performance stock units (“PSUs ” ). In conjunction with the acquisition of BASX in 2021, we awarded performance awards to key employees (“Key Employee Awards”) of BASX. The fair values of stock options are estimated at the date of grant using the Black-Scholes-Merton option valuation model. The fair value of the PSUs is estimated on the date of grant using the Monte Carlo Model. The use of the Black-Scholes-Merton option valuation model and the Monte Carlo Model requires the input of subjective assumptions such as the expected volatility, the expected term of the grant, expected market performance, risk-free rate, and expected dividend yield for stock options. The fair va lue of restricted stock awards and Key Employee Awards is based on the fair market value of AAON common stock on the respective grant dates. The fair value of restricted stock awards is reduced for the present value of dividends. The Key Employee Awards and PSUs do not accrue dividends. Share-based compensation expense is recognized on a straight-line basis over the service period of the related share-based compensation award. Stock options and restricted stock awards, granted to employees, vested at a rate of 33 % per year. Restricted stock awards granted to directors historically vest over the shorter of directors' remaining elected term or one-third each year. Forfeitures are accounted for as they occur. All share-based compensation awards granted contain a one-year employment requirement (minimum service period) or the entire award is forfeited. If the employee or director is retirement eligible (as defined by the Long Term Incentive Plans) or becomes retirement eligible during service period of the related share-based compensation award, the service period is the lesser of 1) the grant date (plus one year), if retirement eligible on grant date, or 2) the period between grant date (plus one year) and retirement eligible date. Forfeitures are accounted for as they occur. The PSUs cliff vest at the end of their respective service period. Share-based compensation expense is recognized on a straight-line basis over the service period of PSUs. The PSUs are subject to several service and market conditions, as defined by the PSU agreement, which allows the holder to retain a pro-rata amount of awards as a result of certain termination conditions, retirement, change in common control, or death. Forfeitures are accounted for as they occur. The Key Employee Awards cliff vested on December 31, 2023. Share-based compensation expense was recognized on a straight-line basis over the service period of the Key Employee Awards as the performance conditions were satisfied. The Key Employee Awards were subject to several service and performance conditions, as defined by the Key Employee Award agreement, which allowed the holder to retain an amount of the awards as a result of certain termination conditions or a change in common control. Forfeitures were accounted for as they occurred. Derivative Instruments In the course of normal operations, the Company occasionally enters into contracts such as forward priced physical contracts for the purchase of raw materials that qualify for and are designated as normal purchase or normal sale contracts. Such contracts are exempted from the fair value accounting requirements and are accounted for at the time the product is purchased or sold under the related contract. The Company does not engage in speculative transactions, nor does the Company hold or issue financial instruments for trading purposes. Revenue Recognition Due to the highly customized nature of many of the Company’s products and each product not having an alternative use to the Company without significant costs to the Company, the Company recognizes revenue over time as progress is made toward satisfying the performance obligations of each contract. The Company has formal cancellation policies and generally does not accept returns on these units. As a result, many of the Company’s products do not have an alternative use and an enforceable right to payment, including a reasonable profit margin, and therefore, for these products, we recognize revenue over the time it takes to produce the unit. Contract costs include direct materials, direct labor, installation, freight and delivery, commissions and royalties. Other costs not related to contract performance, such as indirect labor and materials, small tools and supplies, operating expenses, field rework and back charges are charged to expense as incurred. Provisions for estimated losses on contracts in progress are made in the period in which such losses are determined. Changes in job performance, job conditions, and estimated profitability, including those arising from contract penalty provisions and final contract settlements, may result in revisions to costs and income and are estimated and recognized by the Company throughout the life of the contract. The aggregate of costs incurred and income recognized on 54 uncompleted contracts in excess of billings is shown as a contract asset within our consolidated balance sheets, and the aggregate of billings on uncompleted contracts in excess of related costs incurred and income recognized is shown as a contract liability within our consolidated balance sheets. The Company recognizes revenue, presented net of sales tax, when it satisfies the performance obligation in its contracts. For certain manufactured equipment contracts and parts sales, the primary performance obligation in such a contract is delivery of the requested manufactured equipment. We satisfy the performance obligation when the control is passed to the customer, generally at time of shipment. Final sales prices are fixed based on purchase orders. Sales allowances and customer incentives are treated as reductions to sales and are provided for based on historical experiences and current estimates. Historically, AAON-branded sales were moderately seasonal with the peak period being May-October of each year due to timing of construction projects being directly related to warmer weather. However, in recent years, given the increases in demand of our product and increases in our backlog, sales have become more constant throughout the year. Product Warranties A provision is made for the estimated cost of maintaining product warranties to customers at the time the product is sold based upon historical claims experience by product line. The Company records a liability and an expense for estimated future warranty claims based upon historical experience and management’s estimate of the level of future claims. Changes in the estimated amounts recognized in prior years are recorded as an adjustment to the liability and expense in the current year. The Company also sells extended warranties on parts for various lengths of time ranging from six months to 10 years. Revenue for these separately priced warranties is deferred and recognized on a straight-line basis over the separately priced warranty period. Representatives and Third Party Products We are responsible for billings and collections resulting from all sales transactions, including those initiated by our independent manufacturer representatives (“Representatives”). Representatives are national companies that are in the business of providing heating, ventilation, and air conditioning (“HVAC”) units and other related products and services to customers. The end user customer orders a bundled group of products and services from the Representative and expects the Representative to fulfill the order. These other related products and services may include controls purchased from another manufacturer to operate the unit, start-up services, and curbs for supporting the unit (“Third Party Products”). All are associated with the purchase of an HVAC unit but may be provided by the Representative or another third party. Only after the specifications are agreed to by the Representative and the customer, and the decision is made to use an AAON HVAC unit, will we receive notice of the order. We establish the amount we must receive for our HVAC unit (“minimum sales price”), but do not control the total order price that is negotiated by the Representative with the end user customer. The Representatives submit the total order price to us for invoicing and collection. The total order price includes our minimum sales price and an additional amount which may include both the Representatives’ fee and amounts due for additional products and services required by the customer. The Company is considered the principal for the equipment we design and manufacture and records that revenue gross. The Company has no control over the Third Party Products to the end customer and the Company is under no obligation related to the Third Party Products. Amounts related to Third Party Products are not recognized as revenue but are recorded as a liability and are included in accrued liabilities on the consolidated balance sheets. The Representatives’ fee and Third Party Products amounts (“Due to Representatives”) are paid only after all amounts associated with the order are collected from the customer. The amount of payments to our Representatives was $ 44.9 million, $ 34.0 million, and $ 59.2 million for each of the years ended December 31, 2025, 2024, and 2023, respectively. 55 Insurance Reserves Under the Company’s insurance programs, coverage is obtained for significant liability limits as well as those risks required to be insured by law or contract. It is the policy of the Company to self-insure a portion of certain expected losses related primarily to workers’ compensation and medical liability. Provisions for losses expected under these programs are recorded based on the Company’s estimates of the aggregate liabilities for the claims incurred. Leases New leases entered into by the Company are assessed at lease inception for proper lease classification. At December 31, 2025, and 2024, all of our leases are classified as operating leases. We have entered into various short-term operating leases with an initial term of 12 months or less. These leases are not recorded on our consolidated balance sheets as of December 31, 2025, and 2024, and the rent expense for these short-term leases is not significant. As our leases do not provide an implicit interest rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. Our incremental borrowing rate represents the interest rate that we would pay to borrow an amount equal to the lease payments over a similar term in a similar economic environment. Expense related to these leases is recognized on straight-line basis over the lease term. Certain of our leases contain escalating lease payments based on predefined increases. Most leases contain options to renew or terminate. Right-of-use assets and lease liabilities reflect only the options that the Company is reasonably certain to exercise. The Company’s leases generally require us to pay for insurance, taxes, utilities, and other operating costs. These payments are not included in the right-of-use asset or lease liability and are expensed as incurred. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Because these estimates and assumptions require significant judgment, actual results could differ from those estimates and could have a significant impact on our results of operations, financial position, and cash flows. We reevaluate our estimates and assumptions as needed, but at a minimum on a quarterly basis. The most significant estimates include, but are not limited to, inventory valuation, inventory reserves, warranty accrual, income taxes, useful lives of property, plant, and equipment, estimated future use of leased property, share-based compensation, revenue percentage of completion and estimated costs to complete. Actual results could differ materially from those estimates. 3. 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 56 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. 4. 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 57 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. 5. Leases The Company has lease arrangements for certain administrative, manufacturing and warehousing facilities and equipment. Lease expiration dates, including expected renewal options, range from January 2029 to April 2033, with the weighted average remaining term being 6.0 years. The discount rates used to calculate the present value of lease payments range from 1.3 % to 6.6 % as of December 31, 2025. All leases are classified as operating leases. December 31, 2025 2024 (in thousands) Right-of-use assets Right of use assets $ 17,988 $ 15,436 Current lease liability Accrued liabilities 3,262 2,481 Noncurrent lease liability Other long-term liabilities 15,529 13,592 Since 2018, the Company has leased the manufacturing, engineering and office space used by our operations in Parkville, Missouri. The lease term is through January 2029. In May 2025, the Company added approximately 17,000 additional square feet and extended the lease term through April 2033. Additionally, in May 2025, the Company added approximately 22,300 square feet with a lease term through April 2030. The Company’s total leased space in Parkville, Missouri is approximately 125,300 square feet. In November 2022, the Company entered into a lease arrangement for additional storage facilities in Tulsa, Oklahoma to support our operations. The lease added an additional 198,000 square feet to our operations. In January 2024, we amended the lease for an additional 157,550 square feet for operations and parts distribution. The amended lease term will expire April 2033. In July 2023, the Company entered into a lease agreement with a start date of September 2023, for land and approximately 72,000 square feet of facilities in Redmond, Oregon to support our manufacturing operations. The lease term will expire November 2033 with additional renewal options. We also lease six properties near our Redmond location. In the aggregate, these leases contain approximately 83,000 square feet of additional warehouse space, office space, as well as outside storage. These leases have expiring terms from May 2027 to October 2030. In October 2025, the Company entered into a lease agreement in Bend, OR with a start date of November 2025, for approximately 34,000 square feet of additional warehouse and office space. The lease term will expire October 2030. 58 Total future lease payments as of December 31, 2025 are as follows: (in thousands) 2026 $ 4,275 2027 4,248 2028 4,103 2029 2,477 2030 2,225 Thereafter 5,013 Total minimum lease obligations $ 22,341 Less: present value of minimum lease payments 3,550 Less: current portion 3,262 Lease obligations, long-term $ 15,529 6. Accounts Receivable Accounts receivable and the related allowance for credit losses are as follows: December 31, 2025 2024 (in thousands) Accounts receivable $ 315,695 $ 148,472 Less: Allowance for credit losses 1,308 1,038 Total, net $ 314,387 $ 147,434 Years Ended December 31, 2025 2024 2023 Allowance for credit losses: (in thousands) Balance, beginning of period $ 1,038 $ 323 $ 477 Provisions for expected credit losses, net of adjustments 283 720 ( 142 ) Accounts receivable recoveries (write offs) ( 13 ) ( 5 ) ( 12 ) Balance, end of period $ 1,308 $ 1,038 $ 323 7. Inventories The components of inventories and the related changes in the allowance for excess and obsolete inventories are as follows: December 31, 2025 2024 (in thousands) Raw materials $ 265,427 $ 192,136 Work in process 475 20 Finished goods 593 456 Total, gross 266,495 192,612 Less: Allowance for excess and obsolete inventories 5,344 5,192 Total, net $ 261,151 $ 187,420 59 Years Ended December 31, 2025 2024 2023 Allowance for excess and obsolete inventories: (in thousands) Balance, beginning of period $ 5,192 $ 6,160 $ 4,527 Provision for excess and obsolete inventories 962 4,540 5,480 Inventories written off ( 810 ) ( 5,508 ) ( 3,847 ) Balance, end of period $ 5,344 $ 5,192 $ 6,160 8. Property, Plant and Equipment Our property, plant and equipment consist of the following: December 31, 2025 2024 Property, plant and equipment: (in thousands) Land $ 17,148 $ 17,148 Buildings 366,919 315,854 Machinery & equipment 555,801 436,891 Furniture and fixtures 63,909 50,105 Total property, plant and equipment 1,003,777 819,998 Less: Accumulated depreciation 372,515 309,642 Property, plant and equipment, net $ 631,262 $ 510,356 Depreciation expense is as follows: Years Ended December 31, 2025 2024 2023 (in thousands) Depreciation expense $ 72,301 $ 54,000 $ 41,137 60 9. Intangible Assets and Goodwill Intangible Assets Our intangible assets consist of the following: December 31, 2025 2024 Definite-lived intangible assets (in thousands) Intellectual property $ 12,450 $ 12,450 Customer relationships 47,547 47,547 Capitalized internal-use software 34,802 22,265 Less: Accumulated amortization 25,463 18,573 Definite-lived intangible assets, net 69,336 63,689 Indefinite-lived intangible assets Trademarks 14,571 14,571 Total intangible assets, net $ 83,907 $ 78,260 Amortization expense is as follows: Years Ended December 31, 2025 2024 2023 (in thousands) Amortization expense $ 6,890 $ 8,375 $ 5,331 The weighted-average amortization period for definite-lived intangible assets are as follow as of December 31, 2025: (in years) Intellectual property 17.4 Customer relationships 9.9 Capitalized internal-use software 7.6 Definite-lived intangible assets 10.5 Total future amortization expense for finite-lived intangible assets was estimated as follows: (in thousands) 2026 $ 6,314 2027 6,257 2028 5,692 2029 5,310 2030 4,382 Thereafter 24,528 Total future amortization expense 52,483 Internal-use software projects in process 16,853 Total $ 69,336 61 Goodwill The changes in the carrying amount of goodwill were as follows: December 31, 2025 2024 2023 (in thousands) Balance, beginning of period $ 81,892 $ 81,892 $ 81,892 Decreases due to acquisition adjustments — — — Balance, end of period $ 81,892 $ 81,892 $ 81,892 10. Supplemental Cash Flow Information Years Ended December 31, 2025 2024 2023 Supplemental disclosures: (in thousands) Interest paid $ 16,605 $ 2,811 $ 4,817 Operating activities - other: Gain on disposal of assets $ ( 4 ) $ ( 23 ) $ ( 13 ) Foreign currency transaction loss (gain) 3 37 ( 10 ) Interest loss on note receivable ( 14 ) ( 18 ) ( 21 ) Total, other $ ( 15 ) $ ( 4 ) $ ( 44 ) Non-cash investing and financing activities: Non-cash capital expenditures $ 12,888 $ 202 287 Contingent shares issued (Note 18) $ — $ 6,364 $ — Income taxes paid during the years December 31, 2025, 2024, and 2023 disaggregated by jurisdiction: Years Ended December 31, 2025 2024 2023 U.S. Federal $ 9,854 $ 39,394 $ 50,200 U.S State and local — — — California 140 596 1,353 Illinois 160 1,223 886 Indiana 673 — Iowa — — 771 Louisiana — 598 — Minnesota — — 677 New Jersey — 533 829 New York 356 695 803 Pennsylvania 515 — 1,376 Texas 201 — — Virginia 311 — — Other States 720 6,884 6,481 Total $ 12,930 $ 49,923 $ 63,376 Jurisdictions where income taxes paid were equal to or exceeded 5% of total income taxes paid are disclosed individually. 62 11. Warranties The Company has product warranties with various terms from one year from the date of first use or 18 months for parts, data center cooling solutions, and cleanroom systems to 25 years for certain heat exchangers. The Company has an obligation to replace parts if conditions under the warranty are met. A provision is made for estimated warranty costs at the time the related products are sold based upon the warranty period, historical trends, new products, and any known identifiable warranty issues. Changes in the warranty accrual are as follows: Years Ended December 31, 2025 2024 2023 Warranty accrual: (in thousands) Balance, beginning of period $ 24,341 $ 20,573 $ 15,682 Payments made ( 18,205 ) ( 12,959 ) ( 11,274 ) Warranty expense 23,829 16,727 16,165 Balance, end of period $ 29,965 $ 24,341 $ 20,573 Warranty expense by reportable segment (Note 23) is as follows: Years Ended December 31, 2025 2024 2023 (in thousands) AAON Oklahoma $ 14,525 $ 13,446 $ 13,126 AAON Coil Products 7,052 1,931 1,706 BASX 2,252 1,350 1,333 Total $ 23,829 $ 16,727 $ 16,165 63 12. Accrued Liabilities and Other Long-Term Liabilities Accrued liabilities were comprised of the following: December 31, 2025 2024 (in thousands) Warranty $ 29,965 $ 24,341 Due to representatives 30,453 21,808 Payroll 22,238 16,961 Profit sharing 3,581 2,628 Workers' compensation 279 608 Medical self-insurance 4,844 3,085 Customer prepayments 6,856 7,714 Donations 57 599 Employee vacation time 15,408 12,084 Extended warranties, ST 3,365 3,153 Operating lease liability ST 3,262 2,481 Property tax 143 — Other 11,762 3,885 Total $ 132,213 $ 99,347 Other long-term liabilities were comprised of the following: December 31, 2025 2024 (in thousands) Lease liability $ 15,529 $ 13,592 Extended warranties 7,770 7,151 Total $ 23,299 $ 20,743 64 13. Debt On December 16, 2024, we entered into the Third Amendment to the Amended and Restated Loan Agreement dated November 24, 2021, to include an $ 80.0 million term loan payable in equal monthly installments, plus interest, over 60 months, expiring December 16, 2029. The agreement provided for a $ 200.0 million revolving credit facility and an option to increase the maximum borrowings to $ 300.0 million. In April 2025, we increased our available Revolver to $ 230.0 million, an increase of $ 30.0 million, to fund our additional working capital needs. On May 29, 2025, we entered into the Fifth Amendment to the Amended and Restated Loan Agreement dated November 24, 2021 (as amended, “Amended Loan Agreement”) whereby the remaining balance of the term loan, approximately $ 72.0 million, was rolled into the amended Revolving Loan (“Amended Revolver”), the capacity of which was increased from $ 230.0 million to $ 500.0 million. On December 29, 2025, we entered into the Sixth Amendment to the Amended and Restated Loan Agreement. The terms of the Amendment increased the amount of the borrowing capacity on the Revolver from $ 500.0 million to $ 600.0 million by exercising the $ 100.0 million accordion feature. The Amended Revolver is prepayable without penalty. The Revolver expires on May 27, 2030. Revolver December 31, 2025 2024 (in thousands) Total Revolver Commitment $ 600,000 $ 200,000 Less: Revolver borrowings outstanding 398,320 76,467 Less: Standby letters of credit 654 300 Borrowings available under the Revolver $ 201,026 $ 123,233 Term Loan The Term Loan was fully repaid during the year and is no longer outstanding as of December 31, 2025 December 31, 2025 2024 (in thousands) Term loan, short-term — 16,000 Term loan, long-term — 62,424 Total Term Loan $ — $ 78,424 Interest Rates Any outstanding loans under the Revolver bear interest at the daily compounded secured overnight financing rate (“SOFR”) plus the applicable margin. The outstanding amount under the Term Loan bears interest at the SOFR plus a credit spread adjustment of 0.10 % per annum plus the Applicable Margin. Applicable margin, ranging from 1.25 % - 1.75 %, is determined quarterly based on the Company’s leverage ratio. The Company is also subject to letter of credit fees, ranging from 1.25 % - 1.75 %, and a commitment fee, ranging from 0.10 % - 0.20 %. The applicable fee percentage is determined quarterly based on the Company’s leverage ratio. Fees associated with the unused portion of the committed amount are included in interest expense on our consolidated statements of income and were not material for the years ended December 31, 2025, 2024, 2023, respectively. Weighted average interest rate of our borrowings outstanding are as follows: Years Ended December 31, 2025 2024 2023 Revolver 5.7 % 6.3 % 6.3 % Term loan * 1 0.1 % * 1 65 1 Funds were borrowed on December 16, 2024. No borrowings outstanding during the year ended December 31, 2025. If SOFR cannot be determined pursuant to the definition, as defined by the Amended Loan Agreement, any outstanding effected loans will be deemed to have been converted into alternative base rate (“ABR”) loans. ABR loans would bear interest at a rate per annum equal to the highest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Rate in effect on such day plus 0.50 %, or (c) daily simple SOFR for a one-month tenor in effect on such day plus 1.00 %. As of December 16, 2024, as defined by the Amended Loan Agreement, if the SOFR cannot be determined any outstanding balance will bear interest at the Prime Rate in effect on such day. Debt Covenants At December 31, 2025, we were in compliance with our financial covenants as defined by the Amended Loan Agreement. These covenants included a financial covenant that we meet certain parameters related to our leverage ratio. At December 31, 2025, our leverage ratio was 1.77 to 1.0, which meets the requirement of not being above 3 to 1. 14. Income Taxes Income Tax Provision (Benefit) The provision for income taxes consists of the following: Years Ended December 31, 2025 2024 2023 (in thousands) Current Federal $ ( 10,449 ) $ 36,571 $ 40,759 Current State 459 8,067 11,299 Deferred Federal 26,221 ( 8,182 ) ( 4,064 ) Deferred State 4,928 $ 1,576 $ ( 2,463 ) Income tax provision $ 21,159 $ 38,032 $ 45,531 The provision for income taxes differs from the amount computed by applying the statutory Federal income tax rate before the provision for income taxes. Rate Reconciliation The following table reconciles the U.S federal statutory income tax rate to the Company’s effective income tax rate for the years ended December 31, 2025, 2024, and 2023: Years Ended December 31, 2025 2024 2023 Amount % Amount % Amount % Federal statutory rate $ 27,007 21.0 % $ 43,384 21.0 % $ 46,862 21.0 % State income taxes, net of Federal benefit 5,485 4.3 % 11,105 5.4 % 12,740 5.7 % State tax credits ( 1,997 ) ( 1.6 ) % ( 1,396 ) ( 0.7 ) % ( 3,926 ) ( 1.8 ) % Changes in tax laws in current period 782 0.6 % — — % — — % Excess tax benefits related to ( 11,501 ) ( 8.9 ) % ( 16,393 ) ( 7.9 ) % ( 8,858 ) ( 4.0 ) % share-based compensation (Note 15) Work opportunity tax credit ( 181 ) ( 0.1 ) ( 218 ) ( 0.1 ) % ( 241 ) ( 0.1 ) % Return to provision 1,309 1.0 % ( 269 ) ( 0.1 ) % 455 0.2 % OK Amended Returns — — — — % ( 3,121 ) ( 1.4 ) % Non-deductible executive compensation 3,479 2.7 % 4,281 2.1 % 3,785 1.7 % Research and development tax credits ( 2,923 ) ( 2.3 ) % ( 2,840 ) ( 1.4 ) % ( 2,570 ) ( 1.2 ) % Other ( 300 ) ( 0.3 ) % 378 0.1 % 405 0.3 % Effective tax rate 21,159 16.4 % 38,032 18.4 % 45,531 20.4 % 66 The Company’s effective tax rate differs from the statutory rate primarily due to the excess tax benefits of stock transactions and state taxes. Pretax income is all domestic and there are no foreign income effects. No state jurisdictions individually meet the 5% disaggregation threshold. State taxes in Oregon, Oklahoma, Iowa, and Virginia (2025), Oklahoma, California, Illinois, Pennsylvania, and Minnesota (2024), Oklahoma, California, Pennsylvania, New Jersey, and New York (2023) contributed to the majority (greater than 50%) of the tax effect in the state/local income tax category. As of December 31, 2025, the Company has Federal and State net operating loss carryforwards for tax of approximately $ 57.0 million and $ 22.5 million, respectively, which are anticipated to offset a portion of taxable income in 2026 and be fully reversed. The Company had investment tax credit carryforwards with a valuation allowance reserved against them as we did not have sufficient taxable income to utilize the carryforwards, in part because we generated more credit each year than we were able to utilize. Because the Company will not generate additional excess credits after our 2022 tax year, we will be able to use our credit carryforwards against future taxable income and the related valuation allowance was reversed resulting in a one-time benefit of $ 3.1 million to the income tax provision for the year ended December 31, 2023. As of December 31, 2025, we have investment tax credit carryforwards of approximately $ 4.0 million. These credits have estimated expirations from the year 2040 through 2041. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for income tax purposes. The significant components of the Company’s deferred tax assets and liabilities are as follows: December 31, 2025 2024 (in thousands) Deferred income tax assets (liabilities) Allowance for credit losses and inventory reserves $ 1,883 $ 1,741 Warranty accrual 7,778 6,386 Other accruals 6,065 8,034 Share-based compensation 10,534 8,853 Research & development expenses 1,761 29,140 Oklahoma investment credit carryforward 1,925 689 Tennessee Investment credit carryforward 1,067 — Federal Net Operating Loss 11,968 — State Net Operating Loss 1,118 — Other, net 5,578 3,079 Net deferred income tax assets 49,677 57,922 Valuation allowance — — Net deferred income tax assets 49,677 57,922 Intangible assets ( 6,719 ) — Property & equipment ( 73,271 ) ( 57,086 ) Total deferred income tax liabilities ( 79,990 ) ( 57,086 ) Net deferred income tax assets (liabilities) $ ( 30,313 ) $ 836 We also earn research and development tax credits as defined under Section 41 of the Internal Revenue Code. To qualify for the research and development tax credits, we perform annual studies that identify, document, and support eligible expenses related to qualified research and development activities. Eligible expenses include but are not limited to supplies, materials, contractor expenses and internal employee wages. 67 In accordance with the 2017 Tax Cuts & Jobs Act, under Internal Revenue Code Section 174, research and development expenses incurred after December 31, 2021, are required to be capitalized and amortized over fifteen years. The amortization requirements for tax purposes is a mid-year convention, meaning that the tax amortization is 3.33% in the year of acquisition, 6.67% in the following fourteen years, and 3.33% in the final year. The amount of income tax that we pay annually is dependent on various factors, including the timing of certain deductions. These deductions can vary from year to year and, consequently, the amount of income taxes paid in future years will vary from the amounts paid in prior years. The Company’s estimated annual 2025 effective tax rate, excluding discrete events, is approximately 22.5 %. We file income tax returns in the U.S., state and foreign income tax jurisdictions. We are subject to U.S. income tax examinations for the tax years 2022 to present, and to non-U.S. income tax examinations for the tax years 2021 to present. In addition, we are subject to state and local income tax examinations for tax years 2021 to present. The Company continues to evaluate its need to file returns in various state jurisdictions. Any interest or penalties would be recognized as a component of income tax expense. Tax Law Changes On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted, introducing significant amendments to the Internal Revenue Code. In accordance with ASC 740, Income Taxes, the Company recognized the tax effects of the enacted legislation in the period that includes the enactment date. Impact of Tax Law Changes The Company measured the effects of the tax law change using the enactment date approach, with a measurement date of June 30, 2025 from the Q2 2025 tax provision calculation as the closest date of measurement for deferred and current values. The measurement resulted in an increase in DTLs of $ 35.4 million, a decrease in current income tax payable of $ 36.2 million, and an increase in provision expense of $ 0.8 million due to the bonus depreciation change effect on Texas Franchise tax and the reduced R&D Tax Credit allowed with the §174A change. Significant provisions of OBBBA affecting the Company include: • 100% Bonus Depreciation: Effective for qualified property acquired after January 19, 2025, including manufacturing equipment, which reverses the previously scheduled phase-down of the bonus depreciation deduction to 40% for 2025 under prior law. This provision increased DTLs by $ 7.0 million, decreased current payable by $ 7.0 million, and increased provision expense due to the accelerated tax deductions for capital expenditures made in 2025 and the small provision effect from the change in Texas Franchise Tax and state bonus depreciation. This adjustment also decreased the DTL for the UNICAP inventory calculation by $ 0.6 million, offset against current income tax payable. • Permanent Expensing of Domestic R&E Costs (Section 174A): Retroactive to January 1, 2025, resulting in decreased DTAs due to immediate tax deductibility of qualified domestic R&E costs as incurred. This provision decreased DTAs by $ 3.4 million, decreased current payables by $ 4.2 million, and increased provision expense by $ 0.8 million due to the reduction in the R&D tax credit (the Company will revert to the reduced credit method for calculation of the tax credit under the new law). • Accelerated Deduction of Unamortized Domestic R&E Cost Originally Capitalized in Tax Years 2022, 2023, and 2024 (Section 174A): The Company has elected to deduct the unamortized amounts of Section 174 Costs as of December 31, 2024, fully in tax year 2025, which decreased DTAs and current payables by $ 25.5 million. The impact of OBBBA enactment increased the Company’s effective tax rate by 0.7% for the year ended December 31, 2025. Net Operating Loss Due to the favorable changes in tax law related to the OBBBA, as of December 31, 2025, the Company generated Federal and State net operating loss (“NOL”) carryforwards of approximately $ 57.0 million and $ 22.5 million, respectively. The Federal NOLs have an indefinite carryforward period but are limited to offsetting 80% of taxable income in any given year under current tax law. The State NOLs have varying expiration dates. The Company has recorded deferred tax assets of $ 12.5 million (Federal) and $ 1.1 million (State) related to these NOL carryforwards. Management has evaluated the positive and negative evidence in assessing the need for a 68 valuation allowance (historical operating results, cumulative losses in recent years, and projected future taxable income) and we believe it is more likely than not that we will recognize the DTA reversals in tax year 2026. 15. Share-Based Compensation On May 22, 2007, our stockholders adopted a Long-Term Incentive Plan (as amended, “2007 Plan”) which provided an additional 5.0 million shares that could be granted in the form of stock options, stock appreciation rights, restricted stock awards, performance units, and performance awards. Under the 2007 Plan, the exercise price of shares granted may not be less than 100 % of the fair market value at the date of the grant. On May 24, 2016, our stockholders adopted the 2016 Long-Term Incentive Plan (“2016 Plan”) which provides for approximately 13.4 million shares, comprised of 5.1 million new shares provided for under the 2016 Plan, approximately 0.6 million shares that were available for issuance under the previous 2007 Plan that are now authorized for issuance under the 2016 Plan, approximately 3.9 million shares that were approved by the stockholders on May 15, 2018, and an additional 3.8 million shares that were approved by the stockholders on May 12, 2020. On May 21, 2024, our stockholders adopted the 2024 Long-Term Incentive Plan (“2024 Plan”) which provides for approximately 2.7 million new shares and approximately 3.7 million shares that were issued and outstanding under the 2016 Plan (as of May 21, 2024) that are now authorized for issuance under the 2024 Plan. The 3.7 million shares issued and outstanding under the 2016 Plan are only eligible for issuance under the 2024 Plan upon forfeiture, expiration, or cancellation. Under the 2024 Plan and previously under the 2016 Plan (collectively, the “LTIP Plans”), shares can be granted in the form of stock options, stock appreciation rights, restricted stock awards, performance awards, dividend equivalent rights, and other awards. Under the LTIP Plans, the exercise price of shares granted may not be less than 100% of the fair market value at the date of the grant. The LTIP Plans are administered by the Compensation Committee of the Board of Directors or such other committee of the Board of Directors as is designated by the Board of Directors (the “Committee”). Membership on the Committee is limited to independent directors. The Committee may delegate certain duties to one or more officers of the Company as provided in the LTIP Plans. The Committee determines the persons to whom awards are to be made, determines the type, size and terms of awards, interprets the LTIP Plans, establishes and revises rules and regulations relating to the LTIP Plans and makes any other determinations that it believes necessary for the administration of the LTIP Plans. Options The following weighted average assumptions were used to determine the fair value of the stock options granted on the original grant date for expense recognition purposes for options granted during the years ended 2025, 2024, 2023 using a Black Scholes-Merton Model: 2025 2024 2023 Senior Leadership 1 : Expected (annual) dividend rate $ 0.40 $ 0.32 $ 0.32 Expected volatility 39.29 % 37.89 % 37.89 % Risk-free interest rate 3.97 % 4.14 % 4.39 % Expected life (in years) 4.0 4.0 4.0 Employees: Expected (annual) dividend rate $ 0.40 $ 0.32 $ 0.32 Expected volatility 42.66 % 33.59 % 38.25 % Risk-free interest rate 3.90 % 4.27 % 4.41 % Expected life (in years) 3.0 3.0 3.0 1 Senior Leadership Team (“SLT”) consists of officers and key members of management. The expected term of the options is based on evaluations of historical and expected future employee exercise behavior. The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected life at the grant date. Volatility is based on historical volatility of our stock over time periods equal to the expected life at grant date. 69 The following is a summary of stock options vested and exercisable as of December 31, 2025: Range of Exercise Prices Number of Shares Weighted Average Remaining Contractual Life (in years) Weighted Average Exercise Price Intrinsic Value ( in thousands ) 13.95 - 27.58 979,853 2.69 $ 26.14 $ 49,099 28.28 - 37.07 614,320 4.82 31.65 27,399 37.09 - 140.76 479,173 6.48 58.20 9,069 Total 2,073,346 4.20 $ 35.18 $ 85,567 A summary of option activity under the plans is as follows: Stock Options Shares Weighted Average Exercise Price Outstanding at Outstanding at December 31, 2024 2,957,871 $ 39.83 Granted 472,476 83.63 Exercised ( 509,996 ) 33.61 Forfeited or Expired ( 83,238 ) 74.77 Outstanding at Outstanding at December 31, 2025 2,837,113 $ 47.21 Exercisable at Exercisable at December 31, 2025 2,073,346 $ 35.18 The total pre-tax compensation cost related to unvested stock options not yet recognized as of December 31, 2025, is $ 11.6 million and is expected to be recognized over a weighted average period of 2.0 years. The total intrinsic value of options exercised during the years ended December 31, 2025, 2024, and 2023 was $ 32.8 million, $ 65.1 million, and $ 39.0 million, respectively. The cash received from options exercised during the year ended December 31, 2025, 2024, and 2023 was $ 17.1 million, $ 31.9 million, and $ 33.3 million, respectively. The impact of these cash receipts is included in financing activities in the accompanying consolidated statements of cash flows. Restricted Stock The fair value of restricted stock awards is based on the fair market value of AAON common stock on the respective grant dates, reduced for the present value of dividends. At December 31, 2025, unrecognized compensation cost related to unvested restricted stock awards was approximately $ 6.2 million which is expected to be recognized over a weighted average period of 1.8 years. A summary of the unvested restricted stock awards is as follows: Shares Weighted Average Grant Date Fair Value Unvested at Unvested at December 31, 2024 144,292 $ 61.01 Granted 88,348 85.82 Vested ( 83,133 ) 53.03 Forfeited ( 9,799 ) 76.50 Unvested at Unvested at December 31, 2025 139,708 $ 80.36 70 PSUs We have awarded PSUs to certain officers and employees under our LTIP Plans. Unlike our restricted stock awards, these PSUs are not considered legally outstanding and do not accrue dividends during the vesting period. These PSUs vest based on the level of achievement with respect to the Company's total shareholder return (“TSR”) benchmarked against similar companies included in the capital goods sector of the S&P Smallcap 600 Index. The TSR measurement period is three years . At the end of the measurement period, each award will be converted into AAON common stock at 0 % to 200 % of the PSUs held, depending on overall TSR as compared to the S&P SmallCap 600 Index benchmark companies. The total pre-tax compensation cost related to unvested PSUs not yet recognized as of December 31, 2025, is $ 3.5 million and is expected to be recognized over a weighted average period of approximately 1.5 years. The following weighted average assumptions were used to determine the fair value of the PSUs granted on the original grant date for expense recognition purposes for PSUs granted during the years ended 2025, 2024, 2023, using a Monte Carlo Model: 2025 2024 2023 Expected (annual) dividend rate $ 0.40 $ 0.32 $ 0.32 Expected volatility 41.91 % 33.99 % 32.71 % Risk-free interest rate 3.92 % 4.31 % 4.66 % Expected life (in years) 2.8 2.8 2.8 The expected term of the PSUs is based on their remaining performance period. The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected life at the grant date. Volatility is based on historical volatility of our stock over time periods equal to the expected life at grant date. A summary of the unvested PSUs is as follows: Shares Weighted Average Grant Date Fair Value Unvested at December 31, 2024 169,348 $ 68.12 Granted 48,360 75.90 Additional target payout 1 66,359 29.83 Vested ( 135,209 ) 29.83 Forfeited ( 4,098 ) 89.84 Unvested at December 31, 2025 2, 3 144,760 $ 88.31 1 The additional number of PSUs earned based on a 196.4 % achievement at December 31, 2024 for awards vesting in 2025. 2 Consists of 53,657 PSUs cliff vesting in 2025, 44,163 PSUs cliff vesting in 2026, and 46,940 PSUs cliff vesting in 2027. 3 The 53,657 PSUs cliff vesting in 2025 were approved by the Compensation Committee and issued to holders in January 2026. Key Employee Awards As part of the December 2021 acquisition of BASX, the Company granted 39,899 Key Employee Awards. Unlike our restricted stock awards under the LTIP Plans, the Key Employee Awards are not considered legally outstanding and do not accrue dividends during the vesting period. The issuance of the Key Employee Awards was contingent upon BASX meeting certain post-closing earn-out milestones during each of the years ending 2021, 2022 and 2023 as defined by the BASX acquisition membership interest purchase agreement (“MIPA Agreement”) and continued employment with the Company. At the end of the earn-out period, ending December 31, 2023, each eligible Key Employee Award vested and was converted into common stock. The fair value of Key Employee Awards is based on the fair market value of AAON common stock on the grant date. The weighted average grant date fair value of the key awards was $ 53.45 . All pre-tax compensation cost has been recognized as of December 31, 2023. 71 Summary of Share-based Compensation A summary of share-based compensation is as follows: Years Ended December 31, 2025 2024 2023 Grant date fair value of awards during the period: (in thousands) Options $ 12,845 $ 9,496 $ 5,259 PSUs 3,671 5,119 4,907 Restricted tock 7,582 5,157 4,505 Total $ 24,098 $ 19,772 $ 14,671 Years Ended December 31, 2025 2024 2023 Stock-based compensation expense: (in thousands) Options $ 8,183 $ 8,085 $ 8,810 PSUs 4,461 4,010 2,561 Restricted tock 5,350 4,634 3,977 Key employee awards — — 1,036 Total $ 17,994 $ 16,729 $ 16,384 Years Ended December 31, 2025 2024 2023 Income tax benefit related to share-based compensation (in thousands) Options $ 7,345 $ 14,878 $ 8,138 PSUs 3,405 169 — Restricted tock 751 1,064 720 Key employee awards — 282 — Total $ 11,501 $ 16,393 $ 8,858 16. Employee Benefits Defined Contribution Plan - 401(k ) We sponsor a defined contribution plan (the “Plan”). Eligible employees may make contributions in accordance with the Plan and IRS guidelines. In addition to the traditional 401(k), eligible employees are given the option of making an after-tax contribution to a Roth 401(k) or a combination of both. The Plan provides for automatic enrollment and for an automatic increase to the deferral percentage at January 1st of each year and each year thereafter. Eligible employees are automatically enrolled in the Plan at a 6.0 % deferral rate and currently contributing employees’ deferral rates will be increased to 6.0 % unless their current rate is above 6.0 % or the employee elects to decline the automatic enrollment or increase. Administrative expenses are paid for by Plan participants. The Company paid no administrative expenses during the years ended 2025, 2024, 2023. 72 The Company matches 175.0 % up to 6.0 % of employee contributions of eligible compensation. Additionally, Plan participant forfeitures are used to reduce the cost of the Company contributions. Years Ended December 31, 2025 2024 2023 (in thousands) Contributions, net of forfeitures, made to the defined contribution plan $ 25,443 $ 20,255 $ 18,264 Profit Sharing Bonus Plans We maintain a discretionary profit sharing bonus plan under which approximately 8.5 % of pre-tax profit from the Company is paid to eligible employees on a quarterly basis in order to reward employee productivity. Eligible employees are regular full-time non-exempt employees of the Company who are actively employed and working on the first and last day of the calendar quarter. Years Ended December 31, 2025 2024 2023 (in thousands) Profit sharing bonus plan $ 12,851 $ 19,948 $ 24,590 Employee Medical Plan We self-insure for our employees’ health insurance, and make medical claim payments up to certain stop-loss amounts. We estimate our self-insurance liabilities using an analysis provided by our claims administrator and our historical claims experience. Eligible employees are regular full-time employees who are actively employed and working. Participants are expected to pay a portion of the premium costs for coverage of the benefits provided under the Plans. In addition, the Company matches 175.0 % of a participating employee's allowed contributions to a qualified health saving account to assist employees with health insurance plan deductibles. Years Ended December 31, 2025 2024 2023 (in thousands) Medical premium payments $ 25,141 $ 18,471 $ 14,759 Health saving account contributions 11,711 9,248 4,961 17. Earnings Per Share Basic net income per share is calculated by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted net income per share assumes the conversion of all potentially dilutive securities and is calculated by dividing net income by the sum of the weighted average number of shares of common stock outstanding plus all potentially dilutive securities. Dilutive common shares consist primarily of stock options and restricted stock awards. 73 The following table sets forth the computation of basic and diluted earnings per share: Years Ended December 31, 2025 2024 2023 Numerator: (in thousands, except share and per share data) Net income $ 107,593 $ 168,559 $ 177,623 Denominator: Basic weighted average shares 81,529,140 81,473,131 81,156,114 Effect of dilutive shares related to stock based compensation 1 1,576,398 2,109,206 1,972,380 Effect of dilutive shares related to contingent consideration 2 — 47,165 166,796 Diluted weighted average shares 83,105,538 83,629,502 83,295,290 Earnings per share: Basic $ 1.32 $ 2.07 $ 2.19 Diluted $ 1.29 $ 2.02 $ 2.13 Anti-dilutive shares: Shares 523,387 235,188 314,108 1 Dilutive shares related to stock options, restricted stock, PSUs and Key Employee Awards (Note 15) 2 Dilutive shares related to contingent shares issued to the former owners of BASX (Note 18) 18. Stockholders' Equity Stock Repurchases The Board has authorized one active stock repurchase program for the Company. The Company may purchase shares on the open market from time to time. The Board must authorize the timing and amount of these purchases and all repurchases are in accordance with the rules and regulations of the SEC allowing the Company to repurchase shares from the open market. Our authorized open market repurchase programs during the periods are as follows: Agreement Execution Date Authorized Repurchase $ Expiration Date November 3, 2022 $ 50 million 1 February 27, 2024 February 27, 2024 $ 50 million 1 June 4, 2024 June 4, 2024 $ 50 million 2 June 14, 2024 February 25, 2025 $ 100 million ** 3 1 Repurchases made in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. 2 Repurchases made in accordance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended. 3 Expiration Date is at Board's discretion. The Company is authorized to effectuate repurchases of the Company's common stock on terms and conditions approved in advance by the Board. As of December 31, 2025, approximately $30 million of shares have been repurchased, and approximately $70.0 million remains under the current board authorization. The Company repurchases shares of AAON, Inc. stock related to the LTIP Plans (Note 15) at current market prices. Our repurchase activity is as follows: 2025 2024 2023 (in thousands, except share and per share data) Program Shares Total $ $ per share Shares Total $ $ per share Shares Total $ $ per share Open market 371,139 $ 29,992 $ 80.81 1,353,564 $ 100,034 $ 73.90 402,873 $ 25,009 $ 62.08 LTIP Shares 98,134 9,730 99.15 92,444 8,037 86.94 21,904 1,302 59.44 Total 469,273 $ 39,722 $ 84.65 1,446,008 $ 108,071 $ 74.74 424,777 $ 26,311 $ 61.94 1 Includes stock repurchased for payment of statutory tax withholding and/or stock repurchased to cover the strike price of stock options. 74 Cash Dividends At the discretion of the Board, we pay cash dividends. Board approval is required to determine the date of declaration and amount for each cash dividend payment. Our recent cash dividends are as follows: Dividend Annualized Dividend Declaration Date Record Date Payment Date per Share per Share March 1, 2023 March 13, 2023 March 31, 2023 $ 0.08 $ 0.32 May 18, 2023 June 9, 2023 June 30, 2023 $ 0.08 $ 0.32 August 18, 2023 September 8, 2023 September 29, 2023 $ 0.08 $ 0.32 November 10, 2023 November 29, 2023 December 18, 2023 $ 0.08 $ 0.32 March 5, 2024 March 18, 2024 March 29, 2024 $ 0.08 $ 0.32 May 24, 2024 June 7, 2024 June 28, 2024 $ 0.08 $ 0.32 August 15, 2024 September 6, 2024 September 27, 2024 $ 0.08 $ 0.32 November 13, 2024 November 29, 2024 December 19, 2024 $ 0.08 $ 0.32 March 5, 2025 March 18, 2025 March 28, 2025 $ 0.10 $ 0.40 May 13, 2025 June 6, 2025 June 27, 2025 $ 0.10 $ 0.40 August 14, 2025 September 5, 2025 September 26, 2025 $ 0.10 $ 0.40 November 10, 2025 November 26, 2025 December 18, 2025 $ 0.10 $ 0.40 We paid cash dividends of $ 32.6 million, $ 26.1 million, and $ 26.4 million in 2025, 2024, and 2023, respectively. Stock Split On July 7, 2023, the Board of Directors declared a three-for-two stock split of the Company’s common stock to be paid in the form of a stock dividend. Stockholders of record at the close of business on July 28, 2023, received one additional share for every two shares they held as of that date on August 16, 2023 (ex-dividend date August 17, 2023). Cash was paid in lieu of fractional shares (approximately $ 0.5 million). All share and per share information has been updated to reflect the effects of this stock split. Contingent Shares Issued in BASX Acquisition On December 10, 2021, we closed on the acquisition of BASX. Under the MIPA Agreement, we committed to $ 78.0 million in the aggregate of contingent consideration to the former owners of BASX, which was payable in approximately 1.56 million shares of AAON stock, par value of $ 0.004 per share. The shares did not accrue dividends. Under the MIPA Agreement, the issuance of shares to the former owners of BASX was contingent upon BASX meeting certain post-closing earn-out milestones during each of the years ended 2021, 2022, and 2023. In March 2024, we issued the remaining 0.2 million shares related to the earn-out milestone for the year ended 2023. As a result of the shares issued in March 2024, the tax basis exceeded the book basis for consideration paid resulting in a deferred tax asset and an increase to additional paid-in capital of 6.4 million, respectively, on our consolidated balance sheet. The deferred tax asset is expected to be amortized over fifteen years . We previously issued 0.6 million shares and 0.7 million related to the earn-out milestones for the years ended 2022 and 2021, respectively. All shares have been issued as private placements exempt from registration with the SEC under Rule 506(b) and are included in common stock on the consolidated statements of stockholders' equity. Authorized Shares Outstanding An amendment to the Company’s Articles of Incorporation to increase its total authorized common shares from 100,000,000 to 200,000,000 was approved by our stockholders on May 21, 2024, at the Company’s Annual Meeting. On July 9, 2024, a Certificate of Amendment was filed with the Nevada Secretary of State to effectuate the increase in authorized shares. 75 19. New Markets Tax Credit 2019 New Markets Tax Credit On October 24, 2019, the Company entered into a transaction with a subsidiary of an unrelated third-party financial institution (the “2019 Investor”) and a certified Community Development Entity under a qualified New Markets Tax Credit (“2019 NMTC”) program pursuant to Section 45D of the Internal Revenue Code of 1986, as amended, related to an investment in plant and equipment to facilitate the expansion of our Longview, Texas manufacturing operations (the “2019 Project”). In connection with the 2019 NMTC transaction, the Company received a $ 23.0 million NMTC allocation for the Project and secured low-interest financing and the potential for future debt forgiveness related to the 2019 Project. Upon closing of the 2019 NMTC transaction, the Company provided an aggregate of approximately $ 15.9 million to the 2019 Investor, in the form of a loan receivable, with a term of 25 years, bearing an interest rate of 1.0 %. This $ 15.9 million in proceeds plus capital contributed from the 2019 Investor was used to make an aggregate $ 22.5 million loan to a subsidiary of the Company. This financing arrangement is secured by equipment at the Company’s Longview, Texas facilities and a guarantee from the Company, including an unconditional guarantee of the NMTCs. This transaction also includes a put/call feature either of which can be exercised at the end of the seven-year compliance period. The 2019 Investor may exercise its put option or the Company can exercise the call, both of which could serve to trigger forgiveness of a portion of the debt. The 2019 Investor’s interest of $7.5 million is recorded as short-term debt on the consolidated balance sheets. The Company incurred approximately $ 0.3 million of debt issuance costs related to the above transactions, which are being amortized over the life of the transaction. 2023 New Markets Tax Credit On April 25, 2023, the Company entered into a transaction with a subsidiary of an unrelated third-party financial institution (the “2023 Investor”) and a certified Community Development Entity under a qualified New Markets Tax Credit (“2023 NMTC”) program pursuant to Section 45D of the Internal Revenue Code of 1986, as amended, related to an investment in plant and equipment to facilitate the expansion of our Longview, Texas manufacturing operations (the “2023 Project”). In connection with the 2023 NMTC transaction, the Company received a $ 23.0 million NMTC allocation for the 2023 Project and secured low-interest financing and the potential for future debt forgiveness related to the expansion of its Longview, Texas facilities. Upon closing of the 2023 NMTC transaction, the Company provided an aggregate of approximately $ 16.7 million to the 2023 Investor, in the form of a loan receivable, with a term of 25 years, bearing an interest rate of 1.0 %. This $ 16.7 million in proceeds plus capital contributed from the 2023 Investor was used to make an aggregate $ 23.8 million loan to a subsidiary of the Company. This financing arrangement is secured by a guarantee from the Company, including an unconditional guarantee of the NMTCs. The net proceeds from the closing of the 2023 NMTC are included in restricted cash on our consolidated balance sheets required to be used for the 2023 Project. This transaction also includes a put/call feature either of which can be exercised at the end of the seven-year compliance period. The 2023 Investor may exercise its put option or the Company can exercise the call, both of which could serve to trigger forgiveness of a portion of the debt. The 2023 Investor's interest of $ 5.8 million is recorded in new markets tax credit obligations on the consolidated balance sheets. The Company incurred approximately $ 0.4 million of debt issuance costs related to the above transactions, which are being amortized over the life of the transaction. 2024 New Markets Tax Credit On February 27, 2024, the Company entered into a transaction with a subsidiary of an unrelated third-party financial institution (the “2024 Investor”) and a certified Community Development Entity under a qualified New Markets Tax Credit (“2024 NMTC”) program pursuant to Section 45D of the Internal Revenue Code of 1986, as amended, related to an investment in real estate to facilitate 2023 Project. In connection with the 2024 NMTC transaction, the Company received a $ 15.5 million NMTC allocation for the 2024 Project and secured low interest financing and the potential for future debt forgiveness related to the expansion of its Longview, Texas facilities. Upon closing of the 2024 NMTC transaction, the Company provided an aggregate of approximately $ 11.0 million to the 2024 Investor, in the form of a loan receivable, with a term of 25 years, bearing an interest rate of 1.0 %. This $ 11.0 million in proceeds plus capital contributed from the 2024 Investor was used to make an aggregate 76 $ 16.0 million loan to a subsidiary of the Company. This financing arrangement is secured by a guarantee from the Company, including an unconditional guarantee of the NMTCs. The net proceeds from the closing of the 2024 NMTC are included in restricted cash on our consolidated balance sheets required to be used for the 2024 Project. This transaction also includes a put/call feature that either of which can be exercised at the end of the seven-year compliance period. The Investor may exercise its put option or the Company can exercise the call, both of which could serve to trigger forgiveness of a portion of the debt. The 2024 Investor's interest of $ 3.9 million is recorded in new markets tax credit obligations on the consolidated balance sheets. The Company incurred approximately $ 0.4 million of debt issuance costs related to the above transactions, which are being amortized over the life of the transaction. The 2019 Investor, 2023 Investor, and 2024 Investor are each subject to 100 percent recapture of the 2019, 2023, and 2024 NMTC, respectively, it receives for a period of seven years , as provided in the Internal Revenue Code and applicable U.S. Treasury regulations in the event that the financing facility of the Borrower under the transaction (AAON Coil Products, Inc.) becomes ineligible for NMTC treatment per the Internal Revenue Code requirements. The Company is required to be in compliance with various regulations and contractual provisions that apply to the 2019 NMTC arrangements, 2023 NMTC arrangements, and 2024 NMTC arrangements, respectively. Noncompliance with applicable requirements could result in the 2019 and/or 2023 and/or 2024 Investors' projected tax benefits not being realized and, therefore, require the Company to indemnify the 2019 Investor, 2023 Investor, and 2024 Investor for any loss or recapture of the 2019 NMTC, 2023 NMTC, and 2024 NMTC, respectively, related to the financing until such time as the recapture provisions have expired under the applicable statute of limitations. The Company does not anticipate any credit recapture will be required in connection with any of these financing arrangements. The 2019 Investor, 2023 Investor, and 2024 Investor and its majority-owned community development entity are considered VIEs and the Company is the primary beneficiary of the VIEs. Because the Company is the primary beneficiary of the VIEs, they have been included in the consolidated financial statements. There are no other assets, liabilities or transactions in these VIEs outside of the financing transactions executed as part of the 2019 NMTC, 2023 NMTC, or 2024 NMTC arrangements, respectively. 20. Commitments and Contingencies Havtech Litigation On January 24, 2022, on of the Company’s former independent sales representative firms, Havtech, LLC (and its affiliate, Havtech Parts Division, LLC, collectively “Plaintiffs”), filed a compliant (the “Complaint”) in the Circuit Court for Howard County, Maryland (Havtech, LLC, et al., v. AAON, Inc., et al.). The Complaint challenged the Company’s termination of its business relationship with Plaintiffs. The Company removed the action to the United States District Court for the District of Maryland (Northern Division) and moved to dismiss the Compliant. Plaintiffs’ First Amended Compliant (“First Amended Complaint”) was entered by the court on July 28, 2022. The First Amended Complaint asserts that the Company improperly terminated Plaintiffs and seeks damages alleged to be no less than $ 48.6 million, plus fees and costs. The Company filed its Answer to First Amended Complaint on January 31, 2023. On September 28, 2023, the parties attended a court-ordered settlement conference and agreed to resolve the case for $ 7.5 million. A settlement agreement was entered into on October 25, 2023 and the case has been dismissed with prejudice. The settlement of $ 7.5 million has been included in selling, general and administrative expenses on our consolidated statement of income. The final payment was made on October 26, 2023. Other Matters The Company is involved from time to time in claims and lawsuits incidental to our business arising from various matters, including alleged violations of contract, product liability, warranty, environmental, regulatory, personal injury, intellectual property, employment, tax and other laws. We closely monitor these claims and legal actions and frequently consult with our legal counsel to determine whether they may, when resolved, have a material adverse effect on our financial position, results of operations or cash flows and we accrue and/or disclose loss contingencies 77 as appropriate. We do not believe these matters will have a material adverse effect on our business, financial position, results of operations or cash flows. We are occasionally party to short-term, cancellable and occasionally non-cancellable, fixed-price contracts with major suppliers for the purchase of raw material and component parts. We expect to receive delivery of raw materials for use in our manufacturing operations. These contracts are not accounted for as derivative instruments because they meet the normal purchase and normal sales exemption. We had no material contractual purchase obligations as of December 31, 2025, except as noted below. In 2023, the Company executed a five-year purchase commitment for refrigerants. In 2025 and 2024, the Company made payments of $ 5.6 million and $ 11.7 million on this contract, respectively. Estimated minimum future payments are $ 10.5 million, and $ 11.2 million for 2026 and 2027, respectively. In 2025, the Company executed three one-year purchase commitments for raw materials. Estimated minimum future payments are $ 27.4 million for 2026. We had no other material contractual purchase obligations as of December 31, 2025. 21. New Accounting Pronouncements Newly Adopted Accounting Standards In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740). The new guidance is intended to enhance the transparency and decision usefulness of income tax disclosures. We adopted this standard in the fourth quarter of 2025. Upon adoption, this ASU did not have a material impact on the Company’s consolidated financial statements. Recently Issued Accounting Standards In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40). The new guidance requires the disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization, within relevant income statement captions. This ASU also requires disclosure of the total amount of selling expenses along with the definition of selling expenses. This ASU is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. Upon adoption, this ASU is not expected to have a material impact on the Company's financial statements and related disclosures. In July 2025, the FASB issued ASU 2025‑05, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The new guidance provides a practical expedient that allows entities, when estimating expected credit losses on current accounts receivable and current contract assets, to assume that economic conditions as of the balance sheet date will not change over the remaining life of those assets. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2025, including interim periods within those annual periods, with early adoption permitted, and are required to be applied prospectively. Upon adoption, this ASU is not expected to have a material impact on the Company's financial statements and related disclosures. In September 2025, the FASB issued ASU 2025‑06, Intangibles – Goodwill and Other – Internal‑Use Software (Subtopic 350‑40): Targeted Improvements to the Accounting for Internal‑Use Software. The new guidance modernizes and simplifies the accounting for internal‑use software, including eliminating the existing three‑stage (preliminary project, application development, and post‑implementation/operation) model, and introduces revised criteria for capitalization that better reflect current agile and iterative software development practices, including considerations for software with significant development uncertainty. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2026, including interim periods within those annual periods, with various transition alternatives and early adoption permitted. We are currently evaluating the impact of this ASU on the Company’s financial statements and related disclosures and do not expect it to have a material impact. In December 2025, the FASB issued ASU 2025‑10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities. The new guidance provides authoritative recognition, measurement, presentation, and disclosure requirements for government grants to business entities in the form of monetary assets or tangible nonmonetary assets, largely leveraging the recognition and measurement framework in IAS 20, and 78 reduces diversity in practice that had arisen from analogies to other GAAP. For public business entities, the amendments in this ASU are effective for annual reporting periods beginning after December 15, 2028, including interim periods within those annual periods; for all other entities, the guidance is effective for annual periods beginning after December 15, 2029, including interim periods within those annual periods, with early adoption permitted. We are currently evaluating the impact of this ASU on the Company’s financial statements and related disclosures and do not expect it to have a material impact. 22. Related Parties The following is a summary of transactions and balances with affiliates: Years Ended December 31, 2025 2024 2023 (in thousands) Sales to affiliates $ 7,772 $ 9,709 $ 7,860 Payments to affiliates 1,418 1,632 1,476 December 31, 2025 2024 (in thousands) Due from affiliates $ 335 $ 1,055 Due to affiliates — 369 The nature of our related party transactions is as follows: • The Company sells units to an entity managed by a board member’s immediate family. This entity is also one of the Company’s Representatives and as such, the Company makes payments to the entity for third party products. • The Company purchases some supplies from entities controlled by two of the Company’s board members and a member of the Company's executive management team. • The Company periodically makes part sales and made payments to a board member related to a consulting agreement. • The Company periodically rents space partially owned by a Director for various Company meetings. These transactions ceased in the fourth quarter of 2025. • The Company leases flight time of an aircraft partially owned by our President and CEO. 23. Segments The Company has determined that it has three reportable segments for financial reporting purposes. AAON Oklahoma: AAON Oklahoma engineers, manufactures, and sells highly configurable HVAC systems, designs and manufactures controls solutions, and sells aftermarket parts to customers through retail part stores and online. AAON Oklahoma includes operations at the Company’s manufacturing facilities in Tulsa, Oklahoma; Memphis, Tennessee; and Parkville, Missouri, as well as two retail locations, the Norman Asbjornson Innovation Center (“NAIC”), and the Gary D. Fields Customer Exploration Center. The NAIC is a world-class research and development laboratory accredited by the Air Movement and Control Association International, Inc. ("AMCA"), where our products are continuously tested under extreme environmental conditions to ensure optimal performance, efficiency, and value. The Gary D. Fields Customer Exploration Center showcases the engineering, design attributes, and premium build quality of our equipment alongside market alternatives. AAON Coil Products: AAON Coil Products engineers and manufactures and sells semi-custom and custom HVAC systems as well as heating and cooling coils for use in HVAC systems, primarily for AAON Oklahoma, AAON Coil Products, and BASX. AAON Coil Products operates from our Longview, Texas manufacturing facilities, which also produce BASX-branded products. 79 BASX: BASX engineers, manufactures, and sells a wide range of custom, high-performance cooling solutions for the rapidly growing hyperscale data center market; ventilation solutions for cleanroom environments in the biopharmaceutical, semiconductor, medical, and agricultural sectors; and highly customized air handlers and modular solutions for a variety of markets. BASX operates from our manufacturing facilities in Redmond, Oregon, with additional support from facilities in Memphis, Tennessee, and Longview, Texas. The Company’s chief decision maker (“CODM”), our CEO, allocates resources and assesses the performance of each operating segment using information about the operating segment’s net sales, cost of sales, and gross profit directly attributable to our segments. The CODM does not evaluate operating segments using asset or liability information. Due to the integrated nature of our Company as well as the increasing production of both AAON and BASX- branded products across different segments, other costs and expenses, such as selling, general and administrative including corporate expense, are evaluated and resources allocated at a consolidated level. The following table summarizes certain financial data related to our segments and significant segment expenses and other segment items regularly reviewed by our CODM. During the fourth quarter of 2025, the Company modified sales of coils from AAON Coil Products to AAON Oklahoma to show at cost to be consistent with our other intercompany sales between segments. The revised methodology is intended to better reflect the manner in which the CODM evaluates segment performance and makes resource allocation decisions. As a result of this change, prior period segment results have been recast to conform to the current period presentation. The change did not affect consolidated net sales, cost of sales or gross profit. The cost of sales and gross profit amounts shown below are presented after elimination entries. Years Ended December 31, 2025 2024 2023 (in thousands) AAON Oklahoma External sales $ 801,209 $ 858,711 $ 897,919 Inter-segment sales 48,198 6,336 4,324 Eliminations ( 48,198 ) ( 6,336 ) ( 4,324 ) Net sales 801,209 858,711 897,919 Cost of sales 1 569,121 538,124 566,513 Gross profit 232,088 320,587 331,406 AAON Coil Products External sales $ 325,353 $ 143,871 $ 112,320 Inter-segment sales 16,005 20,192 27,492 Eliminations ( 16,005 ) ( 20,192 ) ( 27,492 ) Net sales 325,353 143,871 112,320 Cost of sales 1 255,681 116,287 94,335 Gross profit 69,672 27,584 17,985 BASX External sales $ 315,514 $ 198,053 $ 158,279 Inter-segment sales 502 666 1,480 Eliminations ( 502 ) ( 666 ) ( 1,480 ) Net sales 315,514 198,053 158,279 Cost of sales 1 231,550 149,115 108,650 Gross profit 83,964 48,938 49,629 Consolidated gross profit $ 385,724 $ 397,109 $ 399,020 1 Presented after intercompany eliminations. The reconciliation between consolidated gross profit to consolidated income from operations is as follows: 80 Consolidated gross profit $ 385,724 $ 397,109 $ 399,020 Less: Selling, general and administrative expenses 239,480 188,014 171,539 Add: gain on disposal of assets 4 23 13 Consolidated income from operations $ 146,248 $ 209,118 $ 227,494 The following table presents long-lived assets by reportable segment, which includes property and equipment, net and operating lease assets: December 31, 2025 2024 Long-lived assets (in thousands) AAON Oklahoma $ 400,316 $ 321,597 AAON Coil Products 157,752 122,515 BASX 91,182 81,680 Total long-lived assets $ 649,250 $ 525,792 The following table presents intangible assets and goodwill, net, by reportable segment: December 31, 2025 2024 Intangible assets and goodwill (in thousands) AAON Oklahoma $ 25,600 $ 22,966 AAON Coil Products 4,235 — BASX 135,964 137,186 Total intangible assets and goodwill $ 165,799 $ 160,152 81 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.