ASPN - Earnings call transcript Q1 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon, my name is Jesse and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Aspen Aerogels Conference 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. ([Operator Instructions] Thank you. begin may you Fairbanks, your conference. John

John Fairbanks

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

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

in and section Aspen's on press the list Report particularly found actual be files in Aerogels SEC be Company's Aspen detail recent that the factors of release filings could are A Form press in of Annual results results discussed affect today statements. can investors and Aspen can may the Company's The more reports in forward-looking differ the also expressed XX-K. materially SEC, release Company's those found these with website. in in the with the issued actual issued from Aspen's today most

today, as XXXX. today Forward-looking views statements Company's the May made of Xnd, represent

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

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

Donald Young

John. Good you, start outlook. afternoon. QX us Thank about will by joining for comments I XXXX our our performance providing Thank Earnings Call. and for you

will review our XXXX reaffirm John QX performance Next, guidance. and financial our

at has year and session. least revenue, a brief of busy the percentage by to us We to XX% It been will are start our call at Q&A of from growing of will more Two for the project performance grow revenue work. XXXX a with to indicators with Aspen. summary derived our progress. for a I than have conclude XX% a begin

year, revenue, line revenue will we and to industry with anticipate our we QX. maintenance revenue With to exceed time commitment revenue but consistent, steadier total months size. this a QX smaller, in XX% of for a Project period, respect were our is revenue This day-in we a total XX we've revenue. a project in we as practice. decreased were revenue. growth million results project defined decided is through to and CAGR growth as Our revenue Since grown contributor of when at a total from exceeding $X to growing tends team percentage built customer-specific from scope of come project From revenue that has with maintenance XX%, maintenance project stemming and of percentage has that meaningful work XXXX to each are XXXX performance in distinguishable overall have with less Approximately which day-out and work, of as increments. as and largely project revenue redefine now in our we ago, steady, work revenue a our revenue work predictable be dedicated consistent project been revenue to re-establishing imbalanced.

XXXX, this in the LNG to for XX%. to refined of total and expect XXXX both on performance return as are revenue this To year revenue, a wins project increasing of We in and XXXX definition XXXX, beyond. a our we and project see investment target subsea project revenue project our team reflect earlier indicator percentage

we Cryogel help receiving anticipated, This work terminal. in and segments our there market. are our maintenance in then XXXX, Our more market to than LNG results work because project and revenue to scope LNG in $X pattern percentage $XX LNG timely we comprising again, to Fab with adoption used large awarded an is a and and projected we are of our as is which then over next that we scale years established commitments delivered project QX LNG Activity number products scheduled . product complete Thailand, high beginning for first at XX%, them growing total facilities XX% terminals approximately export first maintenance large year $XX revenue, XXXX, in PTT for the built million and announced XX have revenue are and receiving Last small to derived commitment work. of in by XX% maintenance established petrochemical for of grow in of of refinery XXXX to and X project acceptance This million Terminal project delivered that our and earlier we meet work PTT from to was a both least has and the line be project will full now, million been were and confident project to week, to through are QX XXXX. Nong revenue. be LNG levels the with work we in

industry has our LNG clearly several the recognized believe been PTT in market awards proposition this value overall and pattern additional coming that for years. large us by LNG the position Our project in and win adoption we

actions with quarter, During to our position. financial of took we the an a prepayment first part several strengthen as relationship million We $X expanded secured strategic second BASF.

April Bank also We Silicon facility $XX through million extended our with credit Valley XXXX.

Bank we We since the with prior facility and the expect its that Silicon credit to will have Valley maintained date. XXXX new expiration extend again facility

growth support Nong upfront an Fab the included addition, payment working overall that period. through delivery PTT revenue In milestone provides project capital the to

our markets. result across cash X.X position to us adjacent new we of arrangements and operational improving our As These these aggressively are of and XXXX. million execute a to projecting our enable technology actions and to core strengthen $XX.X flow, during and platform leverage strategy Aerogel generate financial cash our between

During the that actions quarter, are first two infringing we companies. our European won companies infringement announced German that we court patents. additional also found patent Chinese these against The two

and for use the prohibiting products German expenses. the As found of certain of legal part fees import to distribution, judgments, Aspen's liable and injunctions companies and the court or costs, damages, Aspen court the infringing of issued offer,

the of XX the strong We between our the position adjusted to Europe portfolio to XXXX additional comments have XXXX which revenue $XX to from strong should backlog valuable solid our did to to full meet we and benefit year the pertain XXXX the revenue about for our from an to Aerogel plus the This year adjusted full our first, guidance second, to of not XXXX between reinforce previously translates have in for EBITDA, which portfolio and during XXXX from China. with the us of our now improvement And EBITDA we million the partners. carried guidance. us XX% price pricing. XX% in quarter because and and These validity patent are QX costs increase our impact $XX both material are levels. attendant X confidence The April quarter like would remarks. growth topics these to puts EBITDA XX in and are I and our of additional in of enforced in and comparisons cover XXXX patent we these began There adjusted beginning expect XXXX. US, positive as three the of QX our very quarter-over-quarter Two progress prepared discussed and in of we million impact that deliver with to spike a adjusted through is the XXXX. victories IP and that EBITDA Investors and defended raw very start strength scope factors XXXX favorable

profitability. to drive our First,

against Second, our initiative our our new business on comment a XXXX. third, three quick additional and progress performance indicators for creation

million $XX for XXXX our adjusted profitability adjusted XX Our year-over-year commitment and positive and between to drive with the EBITDA improve to to by EBITDA is year. reach aligned

this is to an objective this significant that goal in meet XXXX. and set stage in for EBITDA important confident are another in We adjusted the while XXXX we broader milestone, increase will our is

program Our EPXX our capacity are factors important to revenue growing our drive and supporting profitability. expansion

our an making more fully existing assets efficient have intense on focus We more and utilized.

adjusted the initiative as assets million will from as our EBITDA. manufacturing stated have As the much existing the of enable past, we in EPXX $XX Company generate capacity to

flow. impact an our additional unit will In products, addition profitability formulations driving to on on profitability EPXX the and drive our optimizing of profitability of to have revenue growth, the cash to benefits and increasing and improve focuses our direct which immediate

new demanding applications. nearly initiative our is Aerogels To technology products. creation, been of to materials, in partnerships the of aerogel our utilized Aspen strategy commercialize which these a in of XXXX, successfully business an most have variety to insulation of have founding date, thermal platform. leverage element in $XXX many million we Turning the engaged Since silica installed to Aerogel our important has

effective, play characterizing leverage dedicated we establishing trend with to we role our development market, insulation. a battery carbon Over time, actively that year aerogel of battery increasingly to of Now, financial in done materials team has scalable the partners with technical, area both we endeavor, that aerogels. We and a key and mission but our commercial carbon battery bring materials. our who the the new better in are are contracting full applications. not technology. cost has this leaders and and a aerogel research one capacity to mechanical ago, morphology, a engaging and important To it of material dominant on industry high demands this has anode higher The been of technology engineered core To and battery meet electrification macro thermal key attributes: portfolio, high materials, take an unique production production lithium-ion a Aspen its can material electrical in of end, and is potentially electronics. of The consumer advantage IP silicon electric BASF positioned support than key can anticipate materials, battery to as strength. as performance X our mobility vehicles and decade significantly confident or in anode more requirement, much market expertise developed conductivity, increasing this more proprietary that since building

Our technology goal business build based derived to another powerful aerogel platform. from our aerogel is

profitability to XXXX and will we the value to as infrastructure XXXX. activity $XX including XXXX. and million indicators growth build key at that with to a adjacent significant which will leveraging revenue generates revenue; value. core improvement confident partnership valuation second, to to a potential XXXX The breakout and the the generate exceed energy are XX% unlock Our leading invest our meaningfully a cash meet momentum markets business on revenue levels in are to PTT XXXX aerogel growth our our markets, or can operating an by to substantial long-term EBITDA million cash market. potential is opportunities our to strong we LNG our and We new the Based for third, of we positive Company. in XX% to XXXX, for technology to goal believe strong that The new environment a pipeline, realizing in position adjusted builder, We drive of shareholder our believe and in and commercial reset in three platform in using adjusted maximizing aimed to the the EBITDA significant imperative business additional the project flow. EBITDA; that total in lead that performance in fast for in substantial first, of in ourselves the and project formation performance order, into start comprising is is company indicators invest adjusted $XX

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

John Fairbanks

Thanks, Don.

quarter just our at summary the results by Let's running start reported through financial for level. of first XXXX a

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

$X to or improved $X.XX year. million million net last quarter $X.XX per $X.X per or First loss share from share

million define million do negative depreciation, items on our a adjusted I'll and First negative expense as year stock-based quarter details performance. income net that amortization, We core $X.X loss $X.X operating indicative other EBITDA our believe additional compared before taxes, the or ago. results. was compensation are interest, now to of EBITDA we of not provide components adjusted

I'll First, discuss revenue.

square total services or total a revenue was revenue in revenue and strong $XX.X of by our last growth quarter a by X% the of research the foot. research core growth and energy of contract to of growth per from XX% selling in markets quarter and significant during of to increased feet $X.X million Total comprised X.X first the during $XX.X market This increased quarter. million $X.XX million. $XX.X represents the Europe, price million solid First million our average driven in the in blankets and the contribution million quarter, subsea of $X.X US year's square quarter during XX% increase from revenue aerogel and shipments was product by

expected, fell in orders of impact subsea below 'XX infrastructure we projection projects pricing. QX carried XXXX first average booked to into the we price 'XX selling full our due As and QX year for energy in the which both business, our core the from with quarter

average market, XX% year price time quarter we projected revenue for increase XX% investor our plus in and At and increase remainder the that in the per foot, full project in we fourth resulting LNG materials between price. an an the volume refinery full year, growth and and selling particularly petrochemical XXXX of February minus However, $X.XX markets and from our square will in year growth reach the call to our or markets, the of over XXXX realize our increase and year expect continued revenue, subsea core in in this in the and our $X.XX. of average selling building price of

line first Our quarter was guidance. revenue in this February with performance

as LNG to last will which addition, the of Terminal awarded PTT revenue the announced we project, In we year. week, the were Fab Nong growth over remainder contribute

XXXX are result, As our a guidance revenue we reaffirming today.

materials profit. during versus year. XX% driven X% the or gross and gross gross XXXX the remainder mix. manufacturing million in price, revenue and expense growth increase margin $X.X in quarter discuss a an in the the was during significant a Gross I'll in profit shipment contract the capacity in or line the XXXX quarter unfavorable increased research, million This last of first average product was year offset we XX% in in of XX% by projecting profit by and decrease with $X.X part increase cost and In in are full first Next, our the during of selling of improvement increase volume, change utilization revenue raw outlook, XXXX.

XXXX XX%. utilization remainder Accordingly, lead of will past in and margin. variable in the is As the revenue a approximately disproportionate and gross in increase increase both we've capacity profit discussed earning calls, we gross margin during contribution our expect to

in to from the expect of additional we've our increase In impact benefit both the we increase raw addition, actions several QX, offset material past we've XX and the experienced to price over months. full XXXX taken cost beginning

full As we our XX% a margin and expect the reaffirming result, XXXX are our approximately gross will outlook be year. for that

Next, I'll expenses. discuss operating

in to operating year slight of $X.X expense result in increase costs, R&D in in all expenses increase by new increased a development expenses. versus expenses $XXX,XXX offset of increase $XXX,XXX enforcement was operating the in and by part million. operating other $XXX,XXX X% IP support business last quarter decrease in or First The a $XXX,XXX a

full year operating changed. not Our has guidance expense XXXX

approximately full expenses operating will year. be We continue to that million the for $XX expect

discuss balance expended $XXX,XXX, will quarter $XXX,XXX roughly to working sheet negative reflected during in Capital last first a cash of the and $X.X for end of quarter. the first equivalent EBITDA I adjusted Cash year. used flow amount quarter totaled our Next, investment first operations from expenditures the capital the our and XXXX. the in in million

year Bank quarter, of million Silicon and our ended April During credit second quarter a share. a XX.X of million to cash, range with extended $X.X the from financial XXXX. Net for with Valley is full . received of also loss we between per $X range $XX.X through weighted net revolving current revenue the expected facility prepayment million our BASF XXX million, revolving EPS million. to first EBITDA equity a breakeven $XX.X to the additional for Adjusted had shareholders' and Total available facility shares loss guidance facility outlook average to credit loss . reaffirming $X.X at quarter-end. range $X.XX between per and million expected access to range assumes EPS And XXXX. and expected of of assets $XXX under revolving credit million importantly, between $XX.X we are is XX.X of $X positive and year. million our share we an million $X.X expected million. is is and $X.XX of This a We on our outstanding Today, between

this addition, per $X.XX. expense expense In outlook amortization assumes or plus square year an also $X.XX gross This Interest important patent full of of of average selling approximately and foot XXXX $XXX,XXX, outlook stock-based million, price minus of enforcement XX% costs depreciation assumes and million, of margin compensation $X.X of $XX.X a $XXX,XXX.

$X.X million outlook, in the out we we I'll hand. X call of on now cash, expect to exit for to back for between adjusted year. year And turn capital cash to $XX XXXX the Jesse will the expect Turning XXXX net set and currently million range, we EBITDA the expenditures the our total within context full of full Q&A.

Operator

Stine with Eric first Craig-Hallum. [Operator Instructions] question you. from comes Thank Your

Your line is open.

Eric Stine

Hi, Don, again.

Donald Young

Eric. Hi,

Eric Stine

in LNG work. But I trends that year, feel you mean project the do the your anything outlook maintenance obviously, about for the in confidence in want and changed, business, that's mean I I given not the award just given constant, that, the guidance, to has confirm. great early upping so steady. about you're work implying the Hey, that's

same You that. feel the about

upping just project is the are that You outlook, right?

Donald Young

question. a Yes, that. That's to talk bit wanted a about Eric. good I

is anticipating market revenue from were we my in said respect been maintenance and for XXXX. us PTT We I with year. our into were XXXX in is growing As anticipating again grow here business coming steady a day-out, performer a the year guidance strong will point that and view, the That's of order day-in notes the every it since to winning today. and

PTT if you originally in brings some in more anticipated. will. -- this the say our is think of scope we PTT stronger than end We into I that the and calculation there up would that certainly having order ended us So, also guidance

think anticipated obviously, also in out to million it XXXX well. span of to in I remember, kind closer and range kind might and support will as $XX of XXXX million $XX growth both million you we the $XX came revenue and

it's in ahead our If a into great confident time, out up feel year. but in the we year guidance the about the we coming feel of again, at of ton our feel So guidance that right the we early we having confidence way guidance, get early. certainly we will this

Eric Stine

well Yes, on I but was had absolutely. strong the to subsea obviously for commentary a of upped year. as and really Maybe part a LNG, focused and lot work of with know sticking outlook that you start have that project your

and shape year? up maybe or XQ call your rest so in curious in $XX.X hand, outlook as starting for think work were as for to far the targeting subsea with the just are how I million on you of the things XXXX, last

Donald Young

On Eric? the subsea side,

Eric Stine

Yes, subsea.

Donald Young

time received time. hand the -- million yes, projects had call, have the that that smaller we the we we in had some of So at last $XX.X since

a million projection subsea of there but that projects, range going and this next some is $XX more year, we of this in current the still pipeline is into our year win for could So likely more about year.

solid momentum well. be for as us So it upside a subsea will with XXXX with good solid some year and into

Eric Stine

million and Maybe we're if you call award recent plus projects, the from given I just about focused $X the this on Yes, projects, call maybe okay, but it the pipeline one fact seeing could you pipeline? you've that the good. I would me, you've for on now seeing, know large the talk think that of last of what meant this gotten has are that's last awards, what project, how changed those or large you're year your some versus that gotten

Donald Young

our smaller project breadth obviously now Well, in nice today have pipeline we really large and successfully proposition, a in having and some there of us after we notes different said and been projects -- tail for our early as it's PTT in this in on LNG. here value cover people the segments across XXXX I in We're proposition think the delivered puts I actually value understand project well breadth our that early, subsea win my think very led three and strong pipeline these at into end demonstrated our well, wins. I

the said and sights export specifications side as and in that side we side the on LNG projects. is and for several sure competitive the strong both on early have these well are on and there are we I being So, receiving projects very as the our on that

particular in I in as back positions petrochemical in the period ended that interesting to a some kind time, we've nice well Asia and on new followed said, million, right us originated to the we've XXXX, several scope million on $X scope in plenty really look, million, recently project a think geographies, job is with our those Saudi received the for that. $XX work $X challenge a same three East some project. project of $X we've of and the refinery -- including principally large on of the measured players path that very there for in now which with So, see a 'XX, of very small work that major Middle was material for focused some done up Aramco, side. very, of but Again, regions 'XX of US, million, qualifications Reliance us I about in area the the $X maintenance in now we being We million

Eric Stine

the offline. of it, my Got rest take I Thanks. will questions okay.

Donald Young

Eric. Thanks,

Operator

next Your comes Moore [Operator from Chip with question Canaccord. Instructions]

open. line is Your

Chip Moore

start the good Hey, thanks, the on congrats year guys. to

Donald Young

Thanks, Chip.

Chip Moore

expand of following you've Maybe built of some playbook just team that you where smaller that's out, did for you the how in maybe in can sort on you particular in this particular and follow LNG project refineries stuff, stand of guys? in helping maintenance there with petrochem scope you up, you talked terms on this in work like

Donald Young

Sure, that projects our I very stages -- who close project all to think working asset the worked the and these are on, the we team EPCs, sure was close -- learn in with are their as with very were early owners, they earliest identify regional mission they being of ground working very with the to countries. teams the in projects on their

it track bit so a we've little specifications, strong nice certainly and very -- good getting here larger some it's very, in just question, butter been projects, business, but record do and a can't success some we our virtually into maintenance LNG momentum. The breeds emphasize business, And winning grown here and and We've no good. always has will it those having very subsea has the side, quarter year, feel success got side, that. on we every we feel I it enough, to believe bread continue it every the been

each we this believe near year. started frequently, tapping market out nowhere and really having this in our more we're and are materials I penetration used the facilities more scope broader every that are getting world We space and around still area. in just our

don't a we and work sight long out maintenance business. good sure. to and project with work time a for to the of for I lose again that the job want what done shout have day-out day-in in So a

Chip Moore

Reliance, a potential correctly, for and think And I there look if if at look I just project upfront at remember me grew was is that through quite an project all that? at this walk I there grow this PTT I payment, think back on if to bit, project, I

Donald Young

right. you're Sure,

back them, about project, mean being I million. that I a now little Going -- we $XX -- in $XX I we while It's originally... a been work through think project Reliance the project with think to were the million anticipating our

John Fairbanks

It’s up million around $XX

Donald Young

our up nearly it's PTT with that long-term more playing that development country, that respect to country, but the of Yes, the role -- about did project, additional it over capability lasted the out building importation now, to that they they've enough that a natural years as a a to the tell during and had that today that power a to using found of That that broadly very found the have fuel believe they got expand. development more assets, their over and that to little products little of as product as comfortable to because of so a very, for growth of got in early assets $XX more from in that had project was facility large commitment X a Thailand ways almost us it country. in and facility. more of keep growth refinery made their don't it our more was a move and and right country petrochemical it natural gas the assets coal million I with for they -- is With important very PTT, for country import and they had uses course they decided of and gas

with So the again, we latter. it believe or prize to we're to will particular it certainly but for work expand feel, in do a project respect PTT I its possibly with be them, scope position whether both, continue this and

John Fairbanks

ability provide don't the terms provisions we the or on really in and of pricing the detail and that the delivery And terms schedule, have to payment additional confidentiality in information. details the contract there's order, PTT types on similar

net and what's disclosed part guidance. our to our award with of when all to have that stick the So sort as we announced essentially the press been in delivered today of going we're we impact to it of business release the

Chip Moore

bit progress BASF a a and makes I Grenfell there. talk Maybe moving. tragedy, there lot concern the at UK Got in of some still it. know and there's there's materials little sense. we regulations the still That on if right, I building understand. least after

like seems things speak So to prepayment. going maybe you are development well. pretty can another It BASF

Donald Young

it us. deep relationship and a Yes, is for important

tools small what new Our we're get materials, focus is projects become scope. sales applications across projects. qualified busy it From product, large and we're all lighthouse Asia focus. as team United across and product maintenance the follows in -- there, on those lighthouse with to the really well. particularly their for seeing case Europe we're the sure sales case through States the we've of to Great our create studies, trying BASF mean making the principal here of as from studies, I Europe region in jointly kind examples with these in them to BASF what and AX using Spaceloft scope, but we're important there, referring opportunities a Spaceloft of is region those broader focused

the very that playing a of way lighthouse in the here see these XXXX. for handful That it got us and projects part remaining nicely we over it's of sight we those that's important out, we've So up would set win here XXXX.

Chip Moore

Got last new opening one partnership market. it. that and a a Maybe one goal new third of me, up from

of potentially [ph] kind material side. any storage should you're of where areas? on leaning that's we hinting the be Are any You you could number about talked think other that or

Donald Young

opposed the DOE we've actually, ways and and these development research That's we've aerogel. working. a time, our aerogels work back, first developed as and a quite around and done This for to carbon silica our [DOD] government been target with expertise we've goes long and long

time. of for working good been period we've it So a on

our team. wave that essence the but important property very past smart second university place doing For but our aligned has two a created year believe work, for have well. that which also work we're battery ground we to side target in support here, during us so have to of or on us, this the we'll and believe our it, we programs intellectual help second half, and They're all test quarter cathode put important, materials role do with as do the the side year the in is NOI we dedicated play to a have and characterize of first we've our material but a and been a

space the this large in and indicator those companies during relationships and of of post if and midst broad more with of there's least or leading not in something team NDA in our a do very of So performance commitment a handful than work small one XXXX. lot with more of on so a is codify that players to discussions are dedicated good going one meetings these at we our with one

So we're everything got a but and a important of giving it's so a we're area sure, dynamic still area for we've to it, excited very hard about it we lot do work and got. very

Chip Moore

John. Thanks, to great Thanks. That’s Don. hear.

Donald Young

Thank you.

Operator

any it no closing are I remarks. Don back There for questions. Young further to turn

Donald Young

We our interest Thank Jesse. appreciate you. early you, reporting forward a second to good Have to your Aerogels. you in August look quarter Aspen We Thank evening. in results XXXX.

Operator

call. conference concludes today's This

disconnect. may You now

Aspen Aerogels (ASPN) 5 May 192019 Q1 Earnings call transcript