ASPN - Earnings call transcript Q3 2020

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Aspen Aerogels Inc. Q3 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today John Fairbanks. you. Thank ahead. go Please

John Fairbanks

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

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

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

October the XX, of represent company's XXXX. views today today as made statements Forward-looking

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

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

Don Young

QX were Great. provide for high-growth major Thanks, will barriers electric you OEM. strategy John. to I earnings aerogel vehicles additional call. high-value share a a us in use on the with markets. energy automotive infrastructure. I for for awarded XXXX Thank on for will on thermal report to joining Good contract progress afternoon. we finish our next PyroThin U.S. our the our the comment Today, platform technology of current of environment perspective our our operating leverage I will into then generation

outlook provide our a and year-to-date and Next performance and for guidance for will both revised XXXX QX John financial high-level review XXXX.

Aspen conclude use barriers major a a Q&A its will thermal electric automotive battery platform. for to today a U.S. We call that PyroThin the announced We in supply session. with vehicle contract awarded OEM

battery pack barriers platform. propagation fire. both the level a a has impede runaway, designed help reminder, a cell cell in and at runaway, PyroThin manufacturers battery lithium-ion are phenomenon results of As thermal that potentially to release pack where battery our a a EV sudden the lithium-ion manage in battery of to a barriers thermal multiple across thermal thermal energy

U.S. in combination offers XXXX. enable goals begin platform will manufacturers production expected sacrificing the performance achieve The EVs technology to to major its with that a battery OEM Aspen's drive of of range. safety unique without automotive EV critical power attributes next-generation

provide in projections for dollars will quarter we PyroThin the fourth single-digit on the millions to and fleet. prototype Based XXXX XXXX of for thermal commercial in We generate expect barriers OEM's year each XXXX, of the revenue.

revenue expect annual potential beyond, with energy customer on solid from business. par and During this we a XXXX, see in infrastructure with XXXX to alone revenue ramp our in

customer companies safety, here with contract thermal runaway is process a are potential the we is important our this the represents this After an EV Aspen. pivotal and success of our for nearly electric this RFQ take all to ultimate to focused It team transformation exceeding on a intense extraordinary are for major point at vehicle manufacturers. efforts also value customers' for that global now that and especially Over billion this again Aspen, in the revenue first the is individual opportunity customer. of shortcuts to market of is $X course, alone expectation Battery dependent unlikely coming electric in decade, to on It of important at from remember, acceptance challenge participating vehicles. remember e-mobility. universal

North vehicle, focused We have $XXX is pressure revenue commercial development opportunity to PyroThin America. multibillion-dollar our a for of Asia, Aspen With this decade. the electric on EVs business in per effort already resulting in seen Europe course thermal of recalls from regulatory $XXX over an and runaway and estimated

development PyroThin At of battery XX stages in funnel. evaluating are at have X and We consisting companies suppliers actively XX EV battery and our EV OEMs product. and Tier we various players have present, that over our

customers. resources pandemic potential impact, near-term generation. that have to adding particularly on our gears business, accelerate revenue continues infrastructure with energy a these to success our negative We Switching are to our

the order around worker limited number have have installed are response facilities for reduce facility In and that energy world. products to plants on-site, Our contractors the density. petrochemical refineries, contractors of working infrastructure in that our by we is COVID-XX, It business critical contractors in access LNG the to serve. owners terminals to

has in again most impacted result, QX, notably, negatively during a North our been the market. American As revenue

Although, underlying assume the the assumption, of and our outlook, see at will high-level sites it work million the both, work levels will density revised that certainty, predict guidance will during cease, to therefore, is time, this XXXX quarter. when reality. in the we financial vicinity for XXXX be is the hard interruptions we revenue $XX And lower pandemic-related the remain per

soon pent-up with and to restocks. Cryogel. and a will both forward, expect rebound, channel many contractor Aspen improves, project for And is facilities forward, maintenance specified LNG as and growth. these work. projects move believe we demand distribution petrochemical see revenue There revenue Looking Pyrogel believe we access to to and We significant projects, there are the as return and that,

XXXX, a As our from approximately revenue revenue required of we for for EBITDA level to reported million, $XXX last XXXX. adjusted decreased million quarter, in $XXX has breakeven,

For increasing XXXX, to also we development enhancing our We including COVID-XX the initiatives, additional company, level, we the accept the emerge capture and have strong resources, wins. while platform, on maintain a period from to momentum. positioned our believe, objective, significant our strategic barrier EV EV to $XXX million expenditures the breakeven operating business thermal with

make our strategy, of On the initiatives continue subject to addressing vehicles. substantial with electric progress, we

combining in of Not where capacity have vehicle with key PyroThin, thermal manufacturing is thermal market, by believe in and successful it megatrend leverages only, is of the the utilization PyroThin runaway to universal posed to product, We win platforms. win a extremely carbon efforts, for the but also validate significant manage make Aspen we the can we manufacturers, growth for challenging single important to we additional and major global to believe, adoption new, given contributor us, And ways. big an for a is, assets, nature problem continue problem to adoption EV respect within the runaway electric important a first OEM. the solution, reason on our battery profitability. of battery that valuable a transformation, does our many aerogels. to aerogel dynamic us attributes the our accelerate to it position our e-mobility The With market. to and materials technology, existing The potential winner for work safe

the attributes of our centers aerogels Our full decades manufacturing carbon of experience, effort aerogels unique of at scale. leveraging and taking are our advantage

energy goal lithium to is the density improve of battery. Our ion

safety. cost, and focus is on Our performance

technology, have partners, experts, an sample we are expanded providing we quantities and roadmaps cost production-level work With their performance significant silicon-rich Our of critical, our along optimize battery and additive SKC the our carbon as technology points of fit with is on progress testing with the key to and valuable believe, our larger to materials. now to our electric demonstrated both, megatrend existing in Evonik with an feedback partners, equipment. Day. Battery battery opportunities the in on aerogel were operational, in target. material we our strategy, seek focused, technology. intensified, is with team has are fact the by work IP to that lab of our evaluation battery for doing, our our new goal, of as additive low-cost, we industry Tesla partners create aerogel-based attractive and We work businesses. supported will inspired to to and vehicle and our high-performance, by other leaders. on be We diverse proprietary It is, The that affirms silicon-rich the leaders, active Their

all EV-related resiliency We performance, many energy markets things The to win, are safety, have asset for serve. strategic we towards constant been Fire this in and success durable efficiency, first building also it years. that strategy the position markets. platform, only establishes additional and demonstrates broader not high-value our high-growth, leverage breadth EV but in value megatrend, patent-protected to in award contract our of aerogel technology our the our

And this at are times. doing, Aspen, work, stresses the more am I of done and use my all have would like is extraordinary from the Finally, grateful now. deeply at hard family, most people to forum, they especially in work from right broadly life thank and Balancing to teammates, the these to Aspen. community, for I trying

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

John Fairbanks

level. for Thanks running XXXX, to our reported of the financial third results, at through Don. summary quarter I'd start a like by

third XXXX. revenue quarter, from the Third total of $XX.X quarter million by million $XX.X in XX% declined to

$X.XX quarter a year. $X.X million per share, $X.XX loss loss million share or Third last was net $X.X of versus net or per

performance. stock-based indicative, adjusted operating million, do other net quarter positive EBITDA core negative items a EBITDA, depreciation, that any are as to and income we amortization, Third year our loss compared $X.X define expense, compensation $X.X believe We adjusted million interest, of not before ago. taxes, or was

or EBITDA first a $X.X compared year a $XX.X by the total declined to share to months or million, net first revenue adjusted per $X.XX $XX.X share XX% loss Net nine to ago. million $XX.X of And decreased million last $X.X of to nine loss a XXXX, million a or in million. versus $X.XX negative months negative For year. per increased million $XX.X XXXX, for the

focus remainder outlook our comments, For on for my and the the performance year. of quarter of remainder I'll third the

XXXX, of our impact months response nine expenses first the our total on during to COVID-XX that decreased revenue emphasize the in costs XXXX. levels, million to want of first $XX.X and a I However, of versus by

material revenue and and discretionary costs, we expenses cost our material importantly despite was decreases, reduce increase costs our to structure to the our uncertainty in reduce vehicle in our In compensation research decrease response in in cost addition and development this decline, our of building initiatives as with support to related and an multiyear enabled COVID-XX to spending associated initiatives by decreased electric programs. and expenses

I response end result, indicates achieve right market provide This OEM. from the have by Under barriers million the are challenges reduced next-generation a details revenue XXXX. $XXX the progress a about in to thermal want on of multipart that the will million the XXXX we system approximately major that few electric our making estimate economics contract, breakeven for required fabricated vehicles. $XXX decisions of we strong. As COVID-XX EBITDA use business also fundamental our related we we additional with that in annual U.S. remains to to in our of battery the contract the supply automotive will to their

revenue fabrication will generate our of both and multipart the barriers. We of PyroThin through the through sale material

from to a the expect XX% materials currently the of which agreement, to and We've has through the barrier September thermal of contract. term minimum purchase and multipart OEM We The but and the volume other X, to remaining requirements committed our to approximately to Aspen, the the purchase all any daily materials fabrication. prices fixed of barriers maximum XX% during attributable at of volume obligation has to the the ends on XXXX. supply term PyroThin no its agreed revenue for be up will specified

success our are the right OEM's has of and provisions contract obviously contingent any addition the now at revenue OEM market. components All in the the quarter I'll the In on automotive results. on contract the additional of customary terminate other are the the estimates third of industry. potential to for all detail long-term time. Aspen's vehicle And projections provide electric

discuss revenue. I'll First,

by delaying $XX.X total America in in $XX.X in contrast million project of X.X by driven blankets total held COVID-related XX% Total quarter and to a aerogel $XX.X subsea particularly density, the installers feet work the offset energy insulation the infrastructure quarter increase The worker This project the in their energy interruptions. in seeking to the to response largely per decline both a square average shutting the revenue in by decrease an to related to experienced foot. to revenue only customers the number time Asian third from market. and quarter market in limit due in X% or infrastructure last XX% Third In to business market shipments building in our square decline. facilities from our markets projects decreased energy versus time million $X.XX million decrease of start price COVID-XX in and was of in America, materials internal our of maintenance during North based reduce selling temporarily impact part to threat third-party energy the year. by by demand revenue growth while of up XXXX operations was in and million modest North outbreaks increased well to COVID-XX global our the decreased

mix, XX% part and in in by in the during or discuss expenses. last inventories XXXX XX% third third in price a driven was reduction volume, reduction X% in in profit. decrease gross by $X.X the principally This offset average or finished and a in the reduced year. I'll volumes sales our production X% sale profit unfavorable decrease small increase versus quarter gross million goods an manufacturing change $X.X Next, profit the was of quarter Gross during million

Next I'll discuss operating expenses.

versus quarter operating expenses despite we controls to operating principally to research of by initiatives. expenses cost tight and instituted Third last million decreased result year discretionary in support or COVID-XX in in of development in the $X.X XX% increase vehicle electric decrease $X.X pandemic. million our an was the response The the

on a Cash sheet cash used of $X.X and for negative operations our I'll reflected balance million Next, by our EBITDA discuss in quarter and quarter. East $XXX,XXX in during working our the and investment Capital improving reliability partially quarter. adjusted capital the $X.X flow of the efficiency the decrease million Providence facility. of third expenditures $X.X approximately during million third totaled offset we're focused

of also $XX.X facility third we exercise $XXX,XXX from options. million. approximately quarter cash, the $XX.X the borrowings received $XX.X During equity in of under proceeds of revolving current and no assets with million, ended the of our credit net quarter We stock million shareholders'

earnings this At outlook at we the We COVID-XX products year, our was also XXXX. time for the now additional quarter pandemic of $X.X access of investor had our under impacting demand million that July call to facility our I'll available credit to of revolving quarter largely turn our energy an release. adversely at in number on project the our infrastructure end. second remainder quarter facilities for expected indicated our levels limit of that customers will installation to installers density. their quarter our to to on reduce COVID-XX of revenue in a patterns, we second the impact order due the have had greater pandemic third-party time Based third currently we worker the than seeking

projecting in from margin our a shift cold lower-margin temperature products In products. to addition, high we highest temperature and are ambient product mix our our

the both reducing revenue our result outlook profitability the As for remainder of we and year. are for a

outstanding a $XXX range expected is is million. between million $X total $XX.X expected assumes between loss our a year. for to and shares share. is XX.X between EPS revenue and is between range result loss negative range loss $X.XX million negative expected $X.XX full EBITDA Net of $XX.X EPS of $X to weighted the year million. XXXX Adjusted is $XXX a million follows; million As per average of to to range million. outlook as a and This outlook and current expected

compensation $X In margin outlook foot XX% per between minus of a for $X.XX and an plus $XX.X of of $XXX,XXX. and year. year $X.XX assumes assumes interest this outlook of million gross stock-based and XXXX full This million, average price square selling also expense depreciation the addition of expense or XX%

to cash. Turning

XXXX expenditures approximately year capital exit year, expect to the total hand. cash outlook, XXXX will on out of EBITDA $XX with expect We million our range the between million of $X revised context full for within full million the we and $XX the and adjusted set in

our infrastructure continue that impact we forward the for products contractor will COVID-XX-related to access energy project in XXXX, Looking demand to the market. restrictions

As that operating levels XXXX our XXXX remain plan our in revenue assuming build that to on our outlook, we full year and currently and result, are intend will with a basis. profitability we line

intend vehicle EBITDA Overall, all impact and characterize COVID-XX the to to in to believe underlying time, improve in maintained levels, operational leverage we've technology our these breakeven. actions electric strategy our flow We increase our electric performance of reduce additional to operating commitment strong. and initiatives taken prudent more our to will significantly our promising of improve efforts to and spending position the ensure we'll and XXXX also actions our We to our strong programs. fundamentals And our to investment continue programs XXXX, the remains in vehicle our cash subsides. same markets. and believe the when business expense high-value extremely reduce of during investment And we've Aspen increase aerogel broadly resume effectiveness to support our to in we at annual

we're monitoring net take response we and to aspects Q&A. financially business I'll the keep to necessary as prepared turn are in for conditions the COVID-XX-related always, actions call And committed to making We to all sound also believe and to decisions execute our market that business when our strategy. to improve. and remain Brandy? we're thrive right to positioned the back the Brandy company now of challenges,

Operator

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

Eric Stine

John. Hi, Don and

Don Young

Eric. Hi,

John Fairbanks

Hi, Eric.

Eric Stine

the Hey, so award. EV just with want start to

still or like guess, sounds a are prototype that start, have was it I before the perform on like the although the of you're it board award. conclusion the platform. – and foregone understanding you had you getting it So to did been also start, mean, to to the – received actual to get and I so award, do assuming that but you sounds prototype might going you Or that had or have

just you at can So, now? clarify of right that is kind where

Don Young

Yeah. The the to was quantities, prototype quantities. production prototype contract order, we order know, really from if will purchase so a relates were as you small distinct awarded as you the and

Eric Stine

Okay.

platform So this have ultimate is you order. the the do I goal. mean,

You you've need to hand. that but through process the prototype, just the It's award that, been is all you have go this the targeting. in of of

Don Young

fleet, Eric, these Remember, it, Yeah. will, the on if a we're but prototype I are these EVs. component mean, full you car, are

that So striving we've for. yeah, contract have been we the

that about the won end RFQ past, price. of other in have we we The the X-tier that talked

Eric Stine

Congrats Great. that. on

clarify, But so not XX materials said are correctly. I'm you companies, parties, I battery to just you OEMs understood curious of just – that So but sure were if those XX working with different and

Don Young

clear. Eric, that, correct just to me Let and be

are PyroThin. up XX So funnel. Tier they of and EV Those X there those battery and our companies of XX OEMs have development companies over made companies are PyroThin, testing are XX suppliers. And in and

Eric Stine

Okay.

I those runaway, of mean, clearly, think thermal we companies, big when solution. needs then a problem, And Okay.

in launching they type of that I And terms do their introduced those from what process a see a lot electric need urgency You've to or this you view more vehicles? parties? through long speed, mean may how what towards with mean, could get product. of

Don Young

question. Good

regulatory recalls in seen car and for different companies we've to fires. related several regions well, all So pressure

so that the really the awareness the issue, And of has heightened issue.

development our had was of – addressing time, understanding Pyrogel a thermal of If infrastructure was the approximately a of with material. more issues benefits fire direct a in product lot the you product has $X that the with runaway is we did energy that our a types same good one of of involved optimization go safety decade, and we back then the that I of and our issues work American a than world the that we year. for PyroThin took OEM, descendant mean, from part installed. And North been the billion of the and that

but strenuous product involve, did again, period pretty intense process with we So start, that development a running have them. did a

in part understanding some so problem if parameters, different this configurations plausible first about through companies along next and a being that and we're of might sense, quite solution while different different have you companies, And we've gone that perhaps sort and of think our already the group of the it's pretty far in of provider.

– the we on And a have focused these companies make contribution important so think really and solving everyone's to to all problem. are it, we

Eric Stine

you not with wouldn't I to awards mouth, in in first earlier the you'll that -- be put there but additional your well, mean, words in that urgency XXXX would say the – it – be wouldn't hope outlandish could early for and say in instance. of I be to with mean, So target mind half certainly mean, I it market, that,

Don Young

win hard reason we're additional Eric. we to at that working believe there's platform we going reason there's good to to good awards. think -- again, think We're -- It's it

Eric Stine

for Maybe one me. last Okay. Got it.

to mean, it unpredictability year there. but long on mean, how fair to of to really knows and the that's COVID. the of it's say I get not kind Just COVID, guidance, outlook going with your to I the it's for just Nobody view nod XXXX go. right? mindset that the is it's you how

It's just you the bounce lift. And fair? so that heard once those said, things when one business as a you no knows pent-up Is I've pretty that about well do demand things as nicely back lift. could have

Don Young

fair. very That's

way call we was what I harking mean, as out. of analyzing maybe us earnings to even Just -- I it and sort of say, when and rolling pandemic about back all QX was we, our the the

to beginning we that just thing certainly Well, by normal. get all our this gosh, by of QX, New I lot us and roll of the uncertainty kind to had think if than QX QX of more about might have we things that be thought and a earlier. this we would the what Year through could back sense most there's

be we've So, the done. of that assume it's XXXX think four and impacted prudent the we by to quarters pandemic, what just that's will

all we four don't starting And We how quarters. but obviously, will baseline are know it that of we out, assuming point. like play kind

Eric Stine

for Thanks the it. Got taking questions.

Don Young

you, Eric. Thank

John Fairbanks

Thanks, Eric.

Operator

Your comes Jed line with Canaccord next question from of the Dorsheimer Genuity.

Jed Dorsheimer

Thanks. Hi,

Don Young

Hi, Jed.

Jed Dorsheimer

I'm EV on starting congratulations guess, product. announcing Curious And U.S., with but help another I'm could amount. to that the OEM, that there. or I clarify. confusing the then there's BYD Could wondering amount just so requires no volume have certain today -- a And -- you the Pyro you've win. was just contract this, for to I but of just if the you you clarify, announced them you're just minimum take in publicly sure

Don Young

all. just about us No, Yeah. let I'll it him in a Yeah. comments John it's really clear his for good it. outline was question.

John Fairbanks

contract at any vehicles to sell-through -- to obligation time they they no to has time. see see-through terminate XXXX. the So, Jed significant period. an through and And period. time a through have rough are contract we purchase right you projections daily and to have manufacturer daily Don their those But certain of commit volume the with we do gave a they from obligation to through that underlie don't EV the have that It volumes And OEM. because us, the the until runs up the want projections supply ultimately to the see

beyond us but we So it clear an well, the of contract. this to every take is hope it arrangement, pay ultimately. what wanted have through was very would make that extended expectation the from And that would of but we a through purchase contract just not they will we as period time to that the or type be XXXX -- as

Don Young

Jed agreed And that accent I John purchase to was that has the just specified its an part for one from on all of the put said OEM requirements Aspen. think to thing

John Fairbanks

Right.

Jed Dorsheimer

it with -- risk not costs OEM, all to they presuming on those payment Are ease expanding for just it. the surprised the the because some -- capital OEM. would there a is is of like for to able upfront side? though, seem you risks capacity little any that your on Got there is because provide be I'm associated to this on I'm

Don Young

but also costs are early substantial. the No, in Jed, not rollout capital the

here three, to so is a while next And the the six, of course making that lot are funnel. and over continuing focus XX related the our through months the working there we're -- development of expenditures really some staffing way

John Fairbanks

aware, got Don, Jed, this we our think, in And capacity. plant. PyroThin our existing it's produce I a And Providence material East as can is that important assets on material you're we've significant

And so capacity contract there's this us clearly of meet no short-term. capital cost demands to the for to the increase in

aerogel of setting And going a manufacturing with to with us that so the types capacity. associated capital the associated be but relatively are fabrication capital costs are more up costs operation, that is insignificant to compared

Jed Dorsheimer

fab, fab. then extension us your -- opportunity is that what you matter be is we fill market or -- really this it yeah. said, or a simply filling And an kind there it. And very of the should opportunity terms just another on outside. to It's to of in is really of this Providence Got of little East

Don Young

No, that's a good Jed. about way of it, thinking

what as fill have us, so we line said, revenue XX% that dollars is EBITDA for As XX% plant we the to us. down or to valuable and of fall incremental the incremental

of revenue facility. $XXX in approximately million capacity We that have

expectation it, so the range And in of as $XX our EBITDA is we -- we we potential that million. have would fill

about potential opportunity, that having company. the the again, talking type hundreds have are you customers, of dollars profile from in at look customer would of it the whether this one customer we're say to Also, different I millions and very the again, multiple -- one dollars or the dollars. the from just So, measured billions perspective of in even having of

a very for it's opportunity So large us.

Jed Dorsheimer

Got it.

back the more the one established I jumping I and the business end refineries terms in so core to the market. opportunities of difficulties core the guess pipelines. And just appreciate or in oil can

frankly of counts, -- asked terms more But signals the building out oil I market again I the the has it not one there's refinery rig COVID, what I've think, been you're guess? more refineries that insulation, If a much you strength shouldn't would or pure you tied way that in to while obvious this? not in XXXX of I you're are greater I seem Because there not began mentioned over the that be rigs to for of which or as XX% look out having capacity? seemed a ore I at at the that it to am a effect and much side. and would pure gas down before, a and as just wrong pipelines we from Is as you're be that building know looking be need am supply/demand missing more capacity.

Don Young

we're on weakest has focus I we about think positive QX, had it of And and certainly it's a as I bit it's jet direction. those impact both think our It of that our we growth. LNG year, had that North let States. there petrochemical, significant us. back question activity growth down look a market. they've single petrochemical Pyrogel especially some to when is our and energy the amount specified the in life. had And talked refineries impact downstream in diversify these in a to -- interesting. world I of -- in remains I still been with subsides little series terms. in potential have -- those was There's market do think products COVID on a we And and that on additional millions. important. -- the around that of and a comments, Even Cryogel reasonable also of we're sort in most other while our projects In follow-on and seat impact projects And -- we a that right we're in have a building markets had growth no me COVID-challenged -- to American a say those were said is from moving was The and United in been the be side the business. breakdown and area, XXXX. in has impacted petrochemical the fuels my projects that And profound when part and exposure, -- of into strategy the for we we'll particularly we've those by COVID regions revenue we're the EV. materials And believe going And reduced we a activities. come things will to in have think to about regional capital have resume demand refinery digits the around a more look the But LNG had that in

XX%. in think market. right business growth think on we'll the that we we And 'XX segment period again, now. a valued it's time resume of is had are fundamentals over other have energy and again, that believe over difficult remain alone, so long of But The COVID, we have I CAGR sound. in very strategy product side product year attributes And of for to XXXX, our XX%. a our growth. revenue Remember we revenue Last obviously, a good. We a

creates nice to market still we a it have operation of in base and us. So for go room that

Jed Dorsheimer

point separate look it. way that? that activity up Got the business. question In the some to at nanocrystal. the that than Last at lab Is set a development it on is but very got silicon that's that you the monetize, core right you've

Don Young

look way I it reasonable to at a think. That's

it's lab carbon in -- people it's the Northborough, of a a of it's a the four focus the mean with separate separate I on separate and offices partners. Yes, as but the and focus aerogel different of bit material well. group in our with a that a walls battery facility. we're So focused part anode it a on silicon-rich of our today is

we what from I us see you is in area, that this continue Jed think SKC close partnership will and Evonik. will our with

other activity. no there. I and We're while in the companies think the patents on our you on partners, this those aerogel carbon in-house of the There research areas of partners see for their actively the activities some filing very team in going OEMs space materials. of broaden battery And silicon is us is near-term regenerate. more list question other focus are know the other more you including to of as some have the who may leading taken well auto

and rich a program focused group people. and very it's of so And dedicated a

Jed Dorsheimer

Okay.

Don Young

Jed. Thanks,

Jed Dorsheimer

queue. in back jump I'll Thanks.

Don Young

much. very Thank you

Operator

comes of next Capital. Your Grampp question Jeff from line the with Northland

Jeff Grampp

congrats on win. evening, the guys Good and

Don Young

thank Jeff, you.

Jeff Grampp

fabrication all contract, as guess a you that clarify. think and business? The average Is there at? looking at there could is fact vehicle. way, how based you traditional this versus to far taking if on the as about are we on first, wondering you on that there change the you that models crude margins incremental that's are I I midpoint per guys well the to Was aspect about various as having sizes And an to the does guys should know thermal think the $XXX revenue $XXX runaway said

Don Young

second John range, guess what answer Let of it of from range think that part vehicle but trucks of it's it recognize the a have kind right of the -- to the to prevalent yes in size the U.S. so anticipate are as first vehicle, prevalent breakdown part which sort here But I'll just we the margin of ask it larger-sized here me SUVs you and and I I as spectrum large it's vehicles and answer a especially in so passenger smaller today.

John Fairbanks

will first did we've think part of XX% that And product incremental would up, rolls lot it talked will guidance that business not But to The business. on just of the fabrication of We in will some us your packaging be about provide is terms economics. sort we of materials lower in impact give our margin. significantly of I have so existing be it out. the to is margin other going as about the Jeff base have the that same clearly attributable that our additional portion the PyroThin and guidance buying and revenue question. it vendors A from

think I -- traditional bet is that's the to at XX% our best our your business. on concentrate

Jeff Grampp

it. Got

Okay.

Don Young

of our state the just in assets. revenue business, And of energy our Jeff, for about long And EV infrastructure aerogel but it's capacity the sort to -- our mean, our also Yes. of business. a kind We've $XXX million interesting. that's current talked I portion time obvious, -- our

that what additive fabrication But of of I'm -- you have so just understand the that's could greater that sure to because sort think one capacity million. that revenue we math. $XXX And

Jeff Grampp

of talk helpful. expect my we That's ramp of here? from kind as for far of can guys to lot your had Perfect. dynamic? of much a statement. show full ramp more XXXX be -- really a I a kind you of sounded talk about this And like bit but we'd there you XXXX would know XXXX and Yes. I shouldn't given what that Okay. guess more the of thought not? have the this is story. But talked follow-up, traction I the think beyond of of said is little hands I see about. to up XXXX, that would income can dynamics on sales as Don, about that type you maybe Really, a calendar see it you of a Is in obviously out year

Don Young

No. Yes.

think are models. a these out think I rolling it calendar also but year, EV as I companies bit is their of just little of it

begin of So internal hold market what as and engines. combustion the we're sort displace seeing and to take is I in

millions customer, XXXX, additional QX, millions. XXXX, growth vehicles, again initial this I in get and the are models into have small rollout really in that with that here So by again, that energy from single we -- single-digit in denominated approximately is of time come we ramp XXXX market the XXXX revenue frame being into the up here some September. going of frame, time clear, very And And additional then said, And as And will our have entire their and customer our sort notable in of as on a associated year is with just our which there revenue XXXX out revenue. business which in single-digit revenue then to next again, this time infrastructure XXXX. other we then very in forward. But again starting par introduced to be starts again, from out to in this numbers. substantial

Jeff Grampp

Got it.

And Okay. one in I here. sneak That's can more helpful. if

Don Young

Yeah.

Jeff Grampp

if as provide in you cetera? far took feedback whether to I'd or thoughts capacity been guys able I win years you we as some one X and this contracts it think do you et How any share could I you in and Have mailed validation -- number any this directly guess X, gotten one? much see maybe to news would or or contraction could X.X imagine conversations, comfort accelerate in year, get guess

Don Young

this. Jeff winning always in understanding is first of working problem first Yes. the winning No, and hardest. the sense really the product Again, and I the think our of one the lot it one address that really levers to helps a

and do the very, large same I fact companies will that the will little winning in Shells have And I we small effectively. in and market. rolling the at we're think to said ExxonMobils one for the second that way commit think again, we BASFs And comfort the we're that sense them the very that taken I served is mean demonstrate, time important point. to And to a EV as though. I And relatively the a believe in of this us automotive long is we really world play. a And look substantial. role have the these really for in think I I've company. the

Jeff Grampp

Understood. Yeah.

Thanks it. for to forward Looking time your guys.

Don Young

Jeff. Thanks,

Operator

line Amit question next comes with from Dayal Your Wainright. H.C. of the

Amit Dayal

John. Hi, Don, hi,

Don Young

Hi, How are you?

Amit Dayal

Good. Thank you.

in could for So is this you U.S., won or in larger customer, EV the the biggest there have other are place you? customers customer

Don Young

confidential to is. it just and haven't do necessarily will come right We really And we it just just to we revealing quite for it who it's be we time now. when will that really want not and careful careful reasons. contractual want our And be announced about

John Fairbanks

provisions. but we're tell if could, would contractual we we you more abiding Amit, Yes, by

Amit Dayal

period. And are at maybe if there from factors this teams you or need pipeline are…? just keep a Is don't you, outlook in other because XXXX that drivers this to for this of see that point. about Understood. any sort management sort little then shrunk mind at during behind of results curious providing Typically, -- the we we this has

Don Young

energy will about infrastructure as early our No, to fundamentally Yes. different approach can. There sort want value during that get these of resume our wanted to just And has the maintenance -- have of of when both side, also to but to to be communicating is or -- in been growth proposition we it every pandemic transparent some project is we side model. this equally and in expectations clear our nothing business. be We that that time. we things the -- kinds other expectation create we baseline as we and

of COVID. make coming $X a of good billion second very We passed over -- job over billion get short outstanding way on people, will here the through earlier material. focused and done this come they've years our and market of we once way the course year in an think installed I group our as the have that order And we

Amit Dayal

you believe Could big us Understood. is give opportunity how a you addressable in--? sense of for the PyroThin

Don Young

to expectations you that our kind I electric a XXXX everyone addressable some and this on look depending of mathematics. mean sold do plug or many and if you who you higher $XXX estimate the at will math are of use market again again area. it all matter in of no has And and broadly now electric think it stay using just $XXX when kind estimate to done per than you multibillion-dollar use but almost then multibillion-dollar others if that your on XXXX just they as becomes can most focused a -- K that result Yes, but into opportunity be vehicles vehicle I between you and how

large very customer first we've fairly And so we some major this approach billion as to said numbers during this at you get decade. numbers alone quickly. Again look $X from that

Amit Dayal

trying actively these over terms should the these contracts the win could offerings next not? some announcements ASAP, of In Right. process? bring of that are we all come these XX in testing you or of the to are to the these in pretty of that whether market deep OEMs of you months of that terms fast companies how context think XX And

Don Young

have to have business development dedicated We've our really who who expanding it's that one. to a team -- is funnel win development dedicated And process been formal while we we internally. working an head this down and team first a is

notes set say EV now I All begin to and not contribution just would for is is wanted applicable platforms our models. I battery a virtually reason to that to to QX. all think platforms that have and said expectations what to many believe is -- I QX solution in solution our I battery we my about when

Amit Dayal

Got to just carbon should for? it. battery milestones one the side. one And look offering aerogel what are respect last With next we on the

Don Young

others. relationships an China increasingly have that or and to that And or they space active short-term Samsung Well, of the value-add recognizable is with development again revenue and manufacturers names. I the would want pure agreements outsource companies in with substantial course, whether it's LG electric what highly have But additional technology it. this themselves don't with taken in CATL or in principal say not development that here, vehicle recognize They broader this Panasonic but SDI is Certainly seen deeper we EV then battery of are battery in-house. and/or and more SKC Evonik. SKCs Chem

so were them. seeing interesting And activity agreement lot be in of interesting area. themselves the would development we an of if we're EV I one very from post And manufacturers think a with able this to it

that I very milestones. could to XXXX think both of who and some kinds in during mean we find sometime point have we put that a I the performance again the perhaps performance that that of are post a thought those those people cost So from during our view. And data. year of may perspective would interesting

Amit Dayal

guys. you that's so Yes, have Thank all I much. it. Got

Don Young

Thanks care. Amit. Take

Operator

Your Tom Curran comes Securities. with B. from line next Riley question the of

Don Young

Tom. Hey

Tom Curran

for join appreciate it. me couldn't late. until squeezing because Thanks in evening I Good I late guys.

I'll a few ones and Just quick let--

Don Young

Amazon some others their that Facebook earnings and announce recognize at and We same time. the

recognize day. busy yes, So, we it

Tom Curran

to with less of however and contract provisions side, that platform whoever does or want? Far when stories. kind I'll this the to important you ability to include OEM make But Yes. on the sell contract Starting want constraints PyroThin any comes on you U.S. market quick. the baked your battery exclusivity boring it PyroThin you any mystery

John Fairbanks

can about PyroThin to I we don't talk So, want but market. that the Tom contract believe vehicle broadly we their to continue electric market to

Tom Curran

or sort the decide and in to you see if contract what manufacturing to need an whole would And At we facility. then involve have volume that ramp, at earliest it to Great. that ground on if -- Providence the could might you the trigger the a expected, of East at would your like the as that? you capacity ramp what would roofline new breaking have of, pull whether PyroThin you pull point on then expansion point were trigger should adding to latest

Don Young

how now earliest let approximately. that I is I would that line. year And a to from tell you time me just get say about

capacity that a quickly partners. able and manufacturing site an of the to manufacturing, we're depending onto we of a kind that we a much unlikely to would constraints. and between with but a an middle operate one operation probably just that aerogel lot on have suppliers know, space more asset of plant, more is be greenfield or much also online. existing facility, that us And would existing of whether to our indicate would a Again given build course, modification new that ground build You which have comes or second infrastructure prudent say, for extension way. or it's with of And our commence

kind that of time take talking XX you frame about if probably you're So months. maybe

we that of So capacity. gets would the have additional where middle XXXX us into asset

cause a third your probably to expectation good were or a a calculation to it that move that begins frame a us if I of that's time second we should faster. a bit view. think point might here that's win But would a change or -- and be that That good little little think from I a thinking fourth. to

Tom Curran

And your convert effort similar or things then contract to shifting to do of where with in award potential battery stand terms type platform third contract prototype of that into a second the China -- U.S. see stand do the of the with there would then terms we Where you that does OEM? what's happen And it? done where soonest that if in you've does like progress?

Don Young

Chinese have partner is do there. we with who a described, I've As customer interfacing the

very we our of here United in as the so were And is clear view obviously States directly. for it not on working again the one is that that quite as

is I say the And operational full test in, and that mode. sort prototype of, fleet so is we're would what

be would notable I it think, first that So in the half of become something would XXXX.

Tom Curran

Great. and first by an your focused of lithium which you'd for aerogel And just recognition last it order recognize then on side in initial more some carbon revenue you expect you use of that the you When for as revenue Shifting one sort aerogel material small as at likely would for carbon first improving of to point the lithium-ion today? and a efforts sit allowing to battery or from performance. prototype be me. that sulfur something just I'm reach the where application one just

Don Young

current a type again, near-term that And focus a And a has win we have lithium-ion and down drop-in our principal our the to property team we're design term. next That's an lithium-ion longer -- But a there to a active lithium-ion situation. what and our We is much is do that. No into that's intellectual anticipating have do road. right contributing do very -- sort goal focuses obviously, little battery. going, battery steps now. on program the team's trying Yes. to of, focus

John Fairbanks

It good. Sounds sense. makes

Tom Curran

again for… I will up. Thanks let wrap guys it

Don Young

you, Tom. Thank

John Fairbanks

Thanks, Tom.

Operator

closing the with And to over I Don Young back call will turn now remarks.

Don Young

new in year. Thank Well, results you, your Aspen to we reporting forward our and QX in Brandy. we appreciate -- XXXX look look interest the to we you Aerogels will

So Thanks much. good and very a have evening. be well

Operator

conference This call. concludes today's

may You disconnect. now

Aspen Aerogels (ASPN) 1 Nov 202020 Q3 Earnings call transcript