AAON, Inc. $AAON
Jehoshaphat Research • Published November 3, 2025 • "AAON Can Make Revenue Expectations or They Can Make Margin Expectations"
CORE SHORT THESIS
AAON is a classic accounting fraud disguised as a data center growth story where creative revenue recognition masks deteriorating fundamentals.
The data center (BASX) business has been borrowing revenues from the future with aggressive accounting games. BASX revenue is currently overstated by ~30-40% through inventory-to-revenue conversion tricks, exploding contract assets, and optimistic margin assumptions. Meanwhile, the liquid cooling products driving "growth" are actually low-margin contract manufacturing work (15-20% GM) that will crush overall profitability as it gains mix. Jehoshaphat Research sees >30% downside to earnings versus consensus.
COMPANY OVERVIEW
KEY FINANCIAL RED FLAGS
BASX recognizing revenue 6+ months before billing. Peers at <20 days. Revenue inflation of $103M estimated.
ACP segment margins crashed from 30%+ to 22%. Liquid cooling business has 15-20% incremental margins.
AAON recognizing $2.80 in revenue for every $1.00 billed on uncompleted contracts. Up from $1.25 historically.
Operating cash flow as % of NIDA down to levels not seen in 30 years. Work-in-process inventory collapsed to zero.
BASX Contract Asset Days Sales Outstanding
AAON recognizing revenue 6+ months before billing customers. Peers average <20 days.
AAON Coil Products (ACP) Gross Margin Collapse
Gross margins collapsed as liquid cooling contract manufacturing (15-20% GM) became primary growth driver
KEY PLAYERS & RED FLAGS
Fields left CEO position in 2025 after presiding over aggressive accounting period. His brother's company (Fields Mechanical) saw AAON sales jump from $1.6M to $9.7M after Gary became CEO.
🚨 Related party conflicts, timing of exit suspiciousCAO role eliminated in Q4 24, then Eason resigned entirely in Sept 2025. Sold 85% of his AAON shares days before resignation. Previously worked at company's auditor (Grant Thornton).
🚨 Sold 12,003 shares at $85, kept only 2,162Current CFO previously worked 11 years at Grant Thornton (AAON's auditor) before joining as CAO in 2012, promoted to CFO in 2021. Now overseeing aggressive accounting practices.
🚨 Former auditor now preparing statements she used to auditPrior CFO was founder's son Norman Asbjornson. Joined company in 1990, retired at age 52 in 2021 just before aggressive accounting period began.
🚨 Nepotism, convenient timing of departureChief Technology Officer forfeited shares in 2024 departure. LinkedIn profile shows he's #opentowork, suggesting voluntary departure from AAON specifically.
🚨 Forfeited unvested shares to leave companyCurrent COO sold massive amounts of stock in 2023-2024, reducing beneficial ownership from ~225,000 shares to ~65,000 shares. Selling accelerated as accounting issues worsened.
🚨 Sold >70% of holdings while problems mountingJehoshaphat Research's Verdict
According to Jehoshaphat Research, AAON ($AAON) is a classic accounting fraud disguised as a data center growth story. The data center (BASX) business has been borrowing revenues from the future through creative accounting games including treating inventory purchases as revenues, maintaining contract asset DSOs of 192 days (vs peers at <20 days), and recognizing $2.80 of revenue for every $1.00 billed.
Meanwhile, the liquid cooling products supposedly driving growth are actually low-margin contract manufacturing work at 15-20% gross margins that will crush overall profitability. Multiple C-suite executives have resigned and sold massive amounts of stock, including the former CAO selling 85% of his shares days before resigning.
Jehoshaphat Research concludes that BASX revenues are overstated by 30-40% ($103M), a near-term revenue shortfall is inevitable, and the mix shift to low-margin liquid cooling will cause consensus to miss earnings by >30%. A revenue restatement at year-end audit is possible.