AI Takeaway
AOS reported a challenging Q1 FY2026 with revenue declining 1.9% YoY to $945.6M and net income falling 13.6% to $118.0M, pressured by rising SG&A costs and higher long-term debt from a significant acquisition-related investment.
Revenue
$945.6M
-1.90% YoY
EPS (Basic)
$0.85
-10.53% YoY
Gross Margin
38.7%
-0.27% YoY
Operating Income
$161.8M
-12.07% YoY
Filed · Analysis updated · Source: SEC EDGAR 10-Q filing
Total revenue fell 1.9% YoY to $945.6M in Q1 FY2026 from $963.9M in the prior-year period, reflecting softness in demand that outpaced modest cost-of-revenue improvements (-1.5% YoY to $579.9M).
Source: 10-Q Income Statement, Q1 FY2026
Operating income dropped 12.1% YoY to $161.8M as SG&A expenses surged 5.9% YoY to $203.9M, compressing operating margin by approximately 2 percentage points to 17.1% from 19.1%.
Source: 10-Q Income Statement, Q1 FY2026
Long-term debt more than doubled (+121.0% YoY) to $574.2M, and investing cash outflows ballooned to -$480.5M from -$10.8M in the prior year, strongly suggesting a major acquisition or capital investment was completed during the quarter.
Source: 10-Q Balance Sheet & Cash Flow Statement, Q1 FY2026
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Upgrade to unlockLong-term debt surged 121.0% YoY to $574.2M, significantly increasing AOS's financial leverage with a debt-to-equity ratio of 0.94. Higher interest obligations could weigh on future net income and limit financial flexibility if business conditions deteriorate.
Source: 10-Q Balance Sheet, Q1 FY2026
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Upgrade to unlockReported EPS of $0.85 versus the $0.95 analyst consensus — a -10.7% miss for Q1 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $945.6M | $963.9M | -1.90% |
Cost of Revenue | $579.9M | $588.5M | -1.46% |
Gross Profit | $365.7M | $375.4M | -2.58% |
Operating Income | $161.8M | $184M | -12.07% |
Net Income | $118M | $136.6M | -13.62% |
EPS (Basic) | $0.85 | $0.95 | -10.53% |
EPS (Diluted) | $0.85 | $0.95 | -10.53% |
SG&A Expense | $203.9M | $192.6M | +5.87% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $3.65B | $3.27B | +11.71% |
Current Assets | $1.37B | $1.42B | -3.78% |
Total Liabilities | $1.77B | $1.41B | +25.47% |
Current Liabilities | $878.1M | $882.1M | -0.45% |
Stockholders' Equity | $1.88B | $1.86B | +1.23% |
Cash & Equivalents | $185.2M | $173M | +7.05% |
Long-Term Debt | $574.2M | $259.8M | +121.02% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash Flow | $129.4M | $38.7M | +234.37% |
Investing Cash Flow | $-480.5M | $-10.8M | -4349.07% |
Financing Cash Flow | $361.3M | $-95.1M | +479.92% |
Share Buybacks | $51.3M | $120.6M | -57.46% |
D&A | $23.9M | $20.7M | +15.46% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Gross Margin | 38.7% | 38.9% | -0.27% |
Operating Margin | 17.1% | 19.1% | -1.98% |
Net Margin | 12.5% | — | — |
ROE | 6.3% | — | — |
ROA | 3.2% | — | — |
Current Ratio | $1.558 | — | — |
Debt to Equity | $0.944 | — | — |
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AOS reported Q1 FY2026 revenue of $945.6M (down 1.9% YoY) and net income of $118.0M (down 13.6% YoY), with EPS of $0.85 versus $0.95 a year ago. The key drag was a 5.9% increase in SG&A expenses to $203.9M, which compressed operating margin to 17.1% from 19.1%.
AOS's net income declined 13.6% to $118.0M primarily because SG&A expenses rose $11.3M YoY to $203.9M even as revenue fell 1.9%, creating significant operating leverage headwinds. Additionally, the large increase in long-term debt (up 121% to $574.2M) likely added interest expense that further reduced the bottom line.
While not explicitly confirmed in the available filing text, the financial data strongly suggests a major acquisition or capital investment: investing cash outflows surged to -$480.5M from just -$10.8M a year ago, and long-term debt more than doubled to $574.2M. Total assets also grew 11.7% YoY to $3.65B, consistent with a significant business combination.
AOS maintains adequate liquidity with a current ratio of 1.56 and cash of $185.2M, but its leverage has increased materially with a debt-to-equity ratio of 0.94 following the debt-funded investment activity. Operating cash flow of $129.4M (up 234% YoY) provides a solid base for debt servicing, though the higher debt load warrants monitoring.
AOS's operating cash flow improved dramatically to $129.4M from $38.7M a year ago (+234.4%), reflecting better working capital management. However, investing cash outflows ballooned to -$480.5M (from -$10.8M), funded in part by $361.3M in financing inflows, suggesting the company took on significant new debt to fund a major investment.