ASPN - Earnings call transcript Q1 2018

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Operator

Good afternoon. My name is Rob and I’ll be your conference operator today. At this time, I would like to welcome everyone to the Aspen Aerogels First Quarter 2018 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. Instructions]. [Operator Mr. may you your begin Fairbanks, conference. John

John Fairbanks

to as I Thank Aerogels Aspen’s results conference afternoon. Officer. call are Included XX, use the available items over developments, a you turning management’s reconciliation Young, statistics press a and of address Aspen’s CEO. for sheet Aspen a the the There Press that operations, measures a section housekeeping few measures President for compared summary to ended us release of a applicable non-GAAP is like operating and most for call. the financial quarter of summary as on well Financial to of before joining Chief Good XXXX. financial GAAP would Aspen’s Aspen’s I’m in is and Investors key Don the Fairbanks, of statement John announcing release and business March balance website, summary www.aerogel.com. the financial

section will a include beliefs, forward-looking fact. year. targets, any of our plans And estimates, will Please to today In one other business addition, regarding are that any outlook, discussion statement statement Aspen’s statements and note approximately prospects, archived the uncertainties. contain version statements, not this for subject website projections, investors that webcast of is expectations, an such including historical risks and

represent XX-K. also Aspen’s company’s today filings company’s views of in Investors be most May with forward-looking files actual SEC, affect release discussed company’s today recent the expressed forward-looking press Aspen the today as with statements. the these of and the are from can A Form Company’s in in actual factors release detail press Aerogels’ issued in can those differ XXXX. of the that may the and in today Aspen The made section particularly X, found could the materially results statements be SEC website. annual reports report issued list more Aspen’s results in on found

any events disclaims to statements reflect forward-looking future Aerogels Aspen to circumstances. obligation or these update

adjusted GAAP. we During with financial or will or this measures are accordance Aspen with considered today’s call, intended refer of discussion isolation US substitute including the The as measures, of are prepared reconciliations non-GAAP GAAP. and in the Accounting These call accordance directly for Aerogels. a is these these measures measures non-GAAP not and press Generally measures Don comparable present President results now I’ll be non-GAAP Accepted in definitions to we to release. of turn Young, financial available over Principles financial EBITDA. These measures, of CEO on financial financial why non-GAAP also most not prepared to GAAP financial in to

Don Young

call. performance, Good will and afternoon. comments financials, us Thank John will start QX our update business providing XXXX next I joining the for QX our you and for our earnings guidance. our review XXXX about by

We will topics cover plan in conclude the my two call with to remarks. a Q&A session. prepared I

revenue provide technology the With across for same platform revenue an to slightly update execution against see for which strategy, I quarter I above core, adjacent in of our and the up of First, to three outlook including XXXX, on new also is environment. commercial the leverage our I our current market respect will comment describe performance review shaping the second, our remainder and QX, we on how period was aerogel the XXXX. will $XX.X and markets. million our XXXX of indicators, first the will

our performance particular QX in for leading core average levels market North growth, the While profit The and emerging strength indicator a we XXXX. of markets. of America adjusted often XXXX price in QX US especially margin, in activity not EBITDA. and and gross in were sales in robust the strong, and improvement in showed adjacent The in is both

infrastructure energy then the feel in and insulation past, would gain full we the through if a the to market expect market in late XXXX. and during impact continue strength cycle therefore, positive XXXX, conditions product, is this and described year XXXX to current we’ve As later

environment. are base by timely increasing Our have business by force to way, of our if we well size market, Cryogel market in is will improving $XXX front surpass drive can revenue. will share order believe the our expected By in We we to in and then installed mid-year. in established we take get sales Pyrogel the million a growth in that year-end, in XX% the increased of of commercial products

our in approach with definitive We have to project also orders. products early assembled purchase and a to work, specified cycle with our project-based the reinforce starting being team talented ending

Our base continue and significant to build new exhibit we gives and project diverse to can ability substantial to ourselves us entering in for confidence work revenue experience strength that to markets, position growth.

expanding indicators earnings discussed the base As adjusted and three our on growing are: previous the capacity EPXX XXXX the and through year-to-date call, growth initiative. EBITDA; in performance both revenue driving revenue,

indicator base revenue defined revenue our these performance not recurring purposes work, day-out indicator, project good Asia The comprised large as and day-in is version of a and again, maintenance the project or of scope subsea a of first petrochemical for revenue South stream. small

growth represented project $X.X did under for that base the year in term in subsea X%. revenue, revenue We year little revenue more With to which XXXX. of another of QX XX%. revenue year XXXX, and XXXX, the range, we A winning target market million of projects achieve million, remain XX% million during expect respect later win $XXX the We delivery XX% in revenue range. a half is first in first the for first to in this order a XX% year-over-year sign Base our was we in quarter base over the are of active. subsea growth consistent this few anticipate that deliver we that confident growth in with during non-based $XX.X targeting but positive additional to our between in for long can last quarter goal base we becoming

seven year-to-date to XXXX measured in as is from improvement growth to for growth revenue year period deliver for strong our quarter. second envision We to revenue goal adjusted to EBITDA. and XXXX, After The double-digit XX% in EBITDA significant adjusted a the and to growth costs generates value. enforcement with revenue XXXX indicator a new principally a infrastructure EBITDA cash and fund delivering to business reinvest at energy return marginal, to markets of to improved each end XXXX actions. the lead CAGR in patent breakout performance which In by realizing while business that substantial $X.X potential in can associated adjacent significantly lower related adjusted and core opportunities and our to QX, million, revenue was select relates markets

EBITDA to performance growth, profitability related goals adjusted not full was this our us the While meet improvement year. the QX revenue will help for

and existing year. $XXX million potential EPXX between million. marketing increase and range generate would million, million levels by initiative; At of facility of the productivity the revenue the expanded generate to believe have the translates economic goal earnings our XX% to XXXX. profit our project third XXXX initiative by our XX% performance existing will significantly goal The by relates primarily to in efficiency. current our beyond that as resources EPXX be approximately to EPXX the capacity The enhance and EBITDA the of call, The we expanding manufacturing to described to profile to East for Providence potential advancements capital adjusted EPXX technology our XX% manufacturing is will and our designed The from million Providence expansion the $XXX XXXX assets we the $XX annual sales adjusted capacity to EBITDA in business. the last capacity and metric during of per We drop line. East facility $XX end driven the $XXX revenue process improve in manufacturing to EPXX increase of that

expect QX, for During XXXX to our end currently to from set prioritized for to of By and assets from the planned benefits to and realize XXXX. XXXX, EPXX improved projects existing have yields allocated projects throughput begun them. the stage have we and resources and funding we

The the elements our technical EPXX with our pre-payment million, invaluable, we’ve XXXX commercial, capital for business partners. financial from and important Our budget BASF reserved million among of remains BASF $X from global is $X and BASF. most which are partnership

the both objectives quarter. and the driving base capacity The these indicators achievement report XXXX our through Again, growth execution signal a and of further years the three the will in are: the our to and continue XXXX on stage revenue for revenue set EPXX XXXX. strategy and of each three initiative. in EBITDA expanding adjusted successful will strong We performance year-to-date indicators growing, out and XXXX

of The update an second on our strategy. today, topic the is execution

create markets first markets. Our and our strategy There is the to adjacent core, annually in between the the EPXX million core element and and EBITDA. from a of our business $XX to East of platform and $XXX adjacent to fill $XX to technology generating capable are revenue across the grow the capacity including our to adjusted aerogel new manufacturing two Providence is initiative million key elements million facility, expanded leverage of strategy; order

to commercializing The to leverage competency innovation core around the is innovation. strategy organize and of second element of our

aerogel the advance committed class the to to world have We science. continuing aerogel technology and patent and protected premier scientists research

and dedicated to the of commercial $X moving world core the to our the and breakout our million where development fortified $X new and the technology elements significant and major BASF significantly shareholder for we platform and dedicated first business outside value to and groundwork believe Overall, and in our We’ve million structures energy we term infrastructure. best aerogel free to that we’re quarters our are platform market to business [of-the-wall] potential the will will business to maximize by that our generating We confident benefit prioritizing leveraging create our aerogel of value, has technology strategy accelerate identify allocated team, adjacent which nourishing pre-payment in our two cash value. direction development the long from be of have laid partners markets market have years is encouraged the We class flow of opportunities, ahead. to technical opportunities creation. is to

team, our end profitable enable to our in and expansion, that large multiple to conviction Our leveraging build the us platform company. the investments markets our will the of we capacity technology and our demonstrate across bring aerogel value a sales marketing EPXX that and users

to the Now financial I’ll of turn John our for results. call a over review

John Fairbanks

by our running to the afternoon. at for Thanks, first results through I’d good financial start of reported a level. Don, summary quarter XXXX like and

million $XX million total the quarter quarter to revenue grew X% less from First first of than $XX.X XXXX. in

was year. compared million than loss share per First net last quarter per million share, or or $X.XX $X.X $X.XX to $X.X

our of indicative EBITDA net stock amortization, performance. depreciation, income based negative on on We core had first during our $X.X $X.X we during believe ago. in components cost We that net quarter quarter first provide loss costs year, year. $X.X million negative our other of EBITDA patent year XXXX results; adjusted adjusted adjusted first quarter detail a expense interest, or incurred compensation was define last do compared significantly lower additional $XX,XXX items first, now this I’ll XXXX. EBITDA enforcement the not versus taxes, quarter the first a before and of are million First discuss enforcement the million, operating as in quarter Patent the to impact I’ll of loss of than the and revenue.

quarter of $XX.X was of research $XXX,XXX. comprised revenue of revenue services million product total First revenue and

revenue million from increased million $XX.X product to by quarter, first the $XX.X X% year. last During

by was our offset, markets conclusion South Asia quarter project. the modest and during America growth in particularly multi-year in the subsea market in with part, in growth and core in adjacent revenue petrochemical associated large the of the North decline Solid

$X.XX During of selling blankets, decrease the last price performed XXXX Research year This higher average our services agencies. during average our price lower Asia increase, to square services increased in principally now the feet products, increase decline in project. X% of per the core year, our in aerogel revenue; would by or petrochemical our government of contract both I’ll subsea from the completion project. our growth across during turn XXXX selling XXXX $XXX,XXX price and in to by price price revenue annual call services research decreased to the foot. This for from South research the the in of fourth and and research square million year. sales the the total associated offset we quarter quarter, to our was and related At full due based timing impact and shipments petrochemical revenue is X% broad February this reflected all adjacent X.X of our to with anticipated in first of relative year. value quarter versus expected $XXX,XXX year revenue of decline to revenue a growth the declined market subsea most analyst time contracts and South markets the Asia of that product the last research

We at XXXX blanket plus average aerogel revenue square flat would minus the also the remain $X.XX our slightly services of expected year decrease levels. will expected per foot, we selling $X.XX, and that for full price or that with XXXX from XXXX research

revenue our quarter performance line result, XXXX revenue right guidance; as today. are reaffirming we this first Our February in with was a guidance

X% decreased decrease expense. expense was $XXX,XXX This discuss X% driven or warranty was during of improvement profit a Gross I’ll a profit of margin revenue, in quarter or by in due offset a $X.X and in during increase to XXXX, material million or $XXX,XXX during the product manufacturing gross profit. quarter, of versus by principally modest million Next revenue first the the increase or $X.X XX% in gross costs, part, in gross year. last quarter XX% first

our our is teens, the XX%, capacity for as will but increase from and in saw and depending our expectation time manufacturing contribution reestablish a result, levels. XX% we revenue and expense the the operations initiatives. year between Again, XXXX XXs, as in both we gross the February, full support includes quarterly line gross gross in to East personnel reach and increase to a productivities manufacturing margins and to in like planned an profit in in the XXXX, high costs As This quarterly investments EPXX discussed run and variable margin margin. gross lead plant margins expect we digits Providence reminder, three could disproportionate low-double to to to on revenue full utilization a improve low gross

by our costs, and by energy to for IP new part develop decrease $X.X breakout $X.X principally operating driven personnel $XXX,XXX, $X.X a to operating increases opportunities drive discuss in decreased expense I’ll or decrease Next million infrastructure expenses; enforcement The XX% in business expenses million in quarter million. in expenses first by operating and offset was totaling in growth markets. to

Our is expense guidance XXXX year full operating changed. not

operating will X% expect expenses to increase year. We for continue that million full $XX by to the approximately

of in cash Next for I’ll adjusted and discuss first sheet Cash million. quarter. EBITDA negative was to our the operations equivalent flow balance $X.X used

unchanged first Our investment in of from $XXX,XXX, quarter the last in during was the Capital quarter end first working from capital totaled the XXXX. million down expenditures $X.X year.

a additional few We equity expected expense first updated $X.X million quarter $XXX year financial to credit and of guidance amortization between The $XXX of revenue between updates unchanged range stock $X.XX and full interest of for credit first two facility our non-cash the of end. revised million BASF the interest quarter million $XX.X per $X.XX our XXXX expense million guidance $X.X assumes Net million, range is Total $XXX,XXX. at from prior million range is $XX.X depreciation revolving million our based $XX.X $X.XX between prepayments with the to million Adjusted of average share. available XXXX. $XX.X received This and a to an outstanding and expected loss slight of from $XX.X reflect and had for compensation our XX.X $X is million loss also expected $XX share prior under components access we from quarter, of estimates of million, $X range EBITDA EPS from $XX.X loss the year. loss the to of and shares We’ve During million, cash, also depreciation for unchanged expected $X.X increases weighted to of outlook a and guidance. of revised million, prior $X.X $X.X between year. outlook between $X.XX This of facility, assets million is EPS expected prior on million guidance and and per assumes each XXXX. the between of during we of ended and and to a million, guidance. shareholders’ revolving net from of million, current million.

addition, margin expenses the high-teens minus prior year, $X.XX cost our enforcement as of we once unchanged guidance. again, our between and and the price earlier, year. In for foot, $X the outlook associated includes square plus gross in patent per with actions financial from average the selling noted expect or full I and million of for million $X.X this And $X.XX

end net of million within context at cash Turning of XXXX guidance our the July. an second the range with in between million outlook; to EBITDA XXXX hand. out of cash prepayments XXXX two expect set aggregate year in cash we Included receive the our expect and of level adjusted BASF, million $X full-year to from $XX exit which $X.X on to we in is

to continue for of Rob million now also total project turn the for I’ll the to initiative funds $X back year. including EPXX for call We expenditures our capital the Q&A.

Operator

And the Instructions] Eric Stine [Operator line Craig-Hallum. from of from comes first your question

is line open. Your

Eric Stine

if I your the little release. just on a could wanted to get I see more detail commentary on

pointed agreement some You the with payments, you’re made? that doing detail specifically joint about progress JDA the great that. can of with things out any BASF, there But progress the and mention that million you $X.X you’ve share did development in is you

Don Young

this be is very right energy our to now foray on that what building to of area, would significant Eric continued BASF work closely infrastructure. on outside have focused we Well materials is a the say focus some least to with first able of address of generation And I markets. for technology their for or with some initial European the the at next that market aerogel product building materials this principal with characteristics interesting interesting our the focus market combines technology and a really

heightened of world. importance thermal of products as the around have would materials, which non-combustible course from importantly and very our would great market, in that be but would you are these expect So materials, performance are that

and with the very United very progress work good closely here Europe States. teams in to in continue make the We very, just

Eric Stine

at more mean they’ve that or XXXX now on, progressing know at looking from some basically just getting testing, along view Europe as I potentially feedback system I time with going So the the path. at at in there this Slentex been of you’re we the kind point. launching looked you’ve should one goal. in path they’d been customers, key just that potentially

Don Young

that advancement, So from The as generate there’s this first no focused generate is product, really what the product product. and generation that there Spaceloft this will the again on in question is itself a that to we refer nice we will XXXX. second from AX question revenue AX year JDA revenue first generation that but Spaceloft was generation product here we no

Eric Stine

hear just to subsea, award. Maybe the million turning good to the award, $X.X

You that keeping two projects just additional end about in unchanged mentioned strong guidance that confident you’ve to more uncertainty maybe like maybe the over Is any talk thoughts of - of then there timing, upper impact pretty late on visibility it the kind just make a the that got was of May and just you the and - nod ’XX, sounds to that? range or feel project light does likely? is that in

Don Young

project. category put non-based smaller anticipated some this plus position. revenue year. revenue’s it So projects I than four able a do million. terrific that we see we and hard was million We of win. had are the or I to each were worked But them minus think, the We again, project that great, in three $X.X or very on awarded, in They’re think where yes subsea $X we’re $X.X XXXX revenue. a the the to for, good front, be million about would

in from signal the hope call able consistent activity a but we about great sense comments would with feel better feeling levels also market. about sort of it our are and in that think subsea, my it’s I guidance, the I you general. So just market to I for were good we so

a optimistic maybe, the were, XXXX. that we forward of continued and anticipate calls, but XXXX think think has in I earnings year couple guardedly last terrific to and to this finish ourselves and really we move I in strong positioning really

Eric Stine

I on - was is part turnaround activity hear there quarter to the Is in that that quarters, four, last that fair quarter confidence know confidence improved over refinery this the space, that? you last whether that, and discussions three, five it of to that. say or then, continue Got in it, - you’ve increased the has starting just on based some been it the that to are got, see

Don Young

we’ll Certainly by we our that. a view the quarter, crystal next report of have time clear

that we as are refineries in right, the are We a my turnaround I’ve in when see year. see levels our good more of States. spring usually to anticipating activity and confidence activity its one are the for why good the levels And States, in happening, the anticipating reasons we United so conveying good broadly, market comments, we in that’s here United said the and foreshadows in

Operator

time. to no are further I remarks. call over Young the at questions There will this for Instructions]. Don turn [Operator closing Mr.

Don Young

Aspen Thank XXXX to we Aerogels, and good you, in August. Rob. interest Thank We appreciate forward you QX Have early to look your reporting results evening. our in a you.

Operator

call. conference This concludes today’s

You disconnect. may now

Aspen Aerogels (ASPN) 6 May 182018 Q1 Earnings call transcript