ASPN - Earnings call transcript Q1 2021

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Operator

Good day and thank you for standing by. Welcome to the Aspen Aerogels Q1 2021 Earnings 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] Please be advised that today's conference is being recorded. now today, hand John would to conference I speaker your Fairbanks. Instructions] like the to over [Operator Thank you. Please, go ahead.

John Fairbanks

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

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

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

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

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

Don Young

over Good for I afternoon. Today, you John provide next creation and our have XXXX. updated will QX for will XXXX for for earnings the we substantial you, Thank Thank will value describe on years recap QX five finish our call. with progress outlook a joining initiatives. report opportunities strategic performance the and John. us our our

supplying sustainability, our Q&A conclude received from today automotive prototype XX first, of now the acid scope progress understand and to The our are: want and are strategy, key I post-pandemic important to our points website. our making in our win. will for with on share we focus business. and to because and comments strategy thermal is has Leveraging my carbon is potential captured automotive valuable a of opportunities At call it core technology technology business materials creating we that and aerogel presentation high-value company materials; be five from diverse on value. we at the a a companies developing our leader opportunities in of of second, in on proprietary today's points signs call, a We requests energy our early including battery appreciate the our a to new production barriers deck, aerogel LNG with and session. OEMs; markets key the largest evaluation last multibillion-dollar rebound, of high-growth, to a the a posted and full of are showing battery platform earnings create time global samples five finally, to is our infrastructure new

opportunity them We commercial spectrum those thermal which in barriers, the today: and R&D an of billion. motion $XX we we believe node. through $XX opportunity decade have over three in products through represent to of battery represent and several I this those believe opportunity decade energy acid of in billion; an fit profile, $XX decade opportunities for will this which an Pyrogel full that phase during the believe currently with Cryogel from billion; discuss this over spanning represents we this of PyroThin which materials, infrastructure,

of severity Our energy challenge phenomenon it PyroThin the event. EV that a lithium-ion is thermal result manufacturers manage runaway. for the thermal barriers to release propagation where platforms. impede sudden can barriers designed and battery a runaway fire a reduce a in is allow all to thermal in runaway and the Thermal of pack thermal are has EV battery cell the to PyroThin of a

without automotive supply Aspen's drive QX, to enable a for Aspen use XXXX, that technology bearers OEM thermal in announced of its offers battery U.S. PyroThin that awarded performance major contracts a safety combination EV range. platform. manufacturers unique achieve goals we EV to sacrificing critical attributes In

decade. of global for we potential we development over participating positioned $XX million Since contracts XXXX succeed. and alone We value per customer this revenue the to transformation customers' of have for believe opportunity the XXXX have alone in that of The in is vehicles our million an These XXXX. electric robust through a barriers. time, represent well PyroThin $X success business generate ultimate and contract from thermal the to $XXX approximately contracts to developed depends in on from pipeline Aspen year this these billion

be to of describe, thermal of mitigating solutions helpful testing impact becoming prototyping are stages for the of for might industry me We various pipeline. development runaway and the a resource for It the our runaway. business leading development, rapid thermal

expert are fact, and with the The connected and subject is is target requirements. stage ideas we by first to initial matter at technical our company marked the exchange engagement, that the

dozens have testing. but I'm my going instead, not this companies We stage second this our and the on for of focus customers samples in the second on we stages PyroThin substantive more provide prospective remarks to pipeline. to first today, In category. in third of fundamental stage,

including to optimal system. thermal involved address with this commercial represents, timeframe. with expertise. beginning parts, technical to principally customer's production automotive XXXX customers, thermal runaway point, the prototype in XX and battery group stage, with testing This this stationary integration. We target customers apply in In battery in more third companies of for system, companies. engage are providing our barrier energy OEMs, potential At than full advanced storage that formally the phase, and and we opportunities XXXX OEMs more to companies solutions And provide we and

Our is QX PyroThin goal to supply prototypes testing samples, us contracts customer purchasing on XXXX. in this awarding we similar stage to multi-year potential to to transition, and announced in our ones for the

EVs $XXX electrification. in this automotive to We these of in ICE XX and XX Each a Aspen volume XXXX, than launch XXXX the million EVs great and have have all-electric third decade. or and ramp largest companies EVs years. will coming has sold more the over quickly, Altogether, to are represent promised the line-ups billion engaged a opportunity committed for five companies within now stage. few These of by vehicles with launched in companies five OEMs, either

business. in our With are the work, investment increasing we our of the barrier accelerating thermal pace

development. We people and supply are recruiting with technology, automation automotive EV and business experience, deep covering chain, quality,

have also enable a significant performance This both, capital to and best-in-class barrier Advanced the We are our expert This Barrier automated or consistent testing, investment Center engagement thermal resource the these for industry and will Thermal our goal and solutions. barrier is in planning prototyping, We ATBC. facility rapid our potential believe investment thermal with generate to volume investments low returns. production customer parts. collaborative opportunity be

near-term The replacement today, of costs. of to and are with silicon iron today's low-cost, to in where I'd Materials, in aerogel refer We've Battery as batteries. anodes, high-performance carbon technology compatible we underlying our second rich materials in is performance silicon which widely The approach to the boost, anodes drop opportunity, with technology viewed, best review battery gigafactories. as design enables the ABM, reduce manufacturing Acid to we deploying lithium-ion battery approach the graphite lithium is like

our Our aerogel of carbon on experience decades of leveraging of nano aerogels. materials two order to manufacture work in centers design our cost in performance and and scale, optimize the at the

can are meet partners. valuation that forth, we confident, the our by set We targets

may play to use designs, current are from evaluation are role for companies. high including future readily their in We capacity automotive requests state. companies to seeking, today And These and battery designs. that battery five solid with responding silicon that anodes are available battery a samples

engagement, the with our carbon aerogel investments of ABM. accelerate development solution. our silicon of This We additional to has our increased in market make carbon in encouraged confidence given the to are us plans aerogels, level

$XX.X that pre-pandemic post-pandemic few not new markets. providing few our a significant our alone business. materials technology and We battery have as now assets growing XXXX. an we our One battery show teams, accelerate roughly from the creation to production an to business facilities our infrastructure address of work. value aerogel needed that exceeded deferred par In our of the and speed end This our signs by see the multi-layer signal the meet are the suggest growth, for expansion energy first and ABM platform our quantities relatively high activity. to pandemic, In much a are full our good and on something cells. on with a all of capacity was laboratory adding U.S. closer new half with with a does expectations facility in market, leverage testing maintenance million begin investment R&D scientists is conjunction the also being into support to OEMs. to development quarter off, end-users but expansion evaluation team The the in kicked we were to to strategy a way year. and development engineers in-house the beginning shoots and our automotive green to I'll in and regions there list our particular, of of market of done comments provide through work and and restock demand QX consistent beginning uptick distributors larger will expansion normal, lithium-ion high overall Revenue to

around an strategic we infrastructure provide also targets I'd on energy point, in platform milestones this At first for that of with whole. XXXX revenue We positive the pyro momentum XXXX, operating the automotive we ability like a a infrastructure and us introduced yet significant and engagement update and as the for and well of strong to in from to the the revenue doubling believe company see We this from COVID-XX an $XXX and includes are increase to XXXX LNG signs XXXX achieve target. outlook. the target for that thermal which market more this contract. period OEMs caused also with a The project our positioned Arctic We million approximately the barriers LNG work, confident our in in set be award intensity emerge earlier year. energy revenue breadth to of our

again that also revenue double XXXX, between but XXXX. opportunity believe XXXX we to and between XXXX not have We the and only

unique the positive our based and several in barrier and wins technology. potential of PyroThin is multiyear support thermal platform battery environment on for e-mobility both protected belief additional our for on Our macro

In PyroThin expand addition plant. thermal second are progress are aerogel with barriers materials, manufacturing that to the to making we with Aspen pace of also to battery and capacity a the keep investments planning we

XXXX balance to phase of plant not site revenue East our contract We of have of the sheet the sites. also to of to a schedule build who additional potential capacity appropriate Providence plant our is two value But plant in to OEMs have capacity required and a first the again set We late EV for support A by a we us plant two based the two $XXX but will want awards. comprised definitive XXXX. barrier revenue and important plan of locations thermal ample to by today additional double diversity of capacity, with on the modular fashion only XXXX, the million. capacity determine large opportunity an in will manufacturing need plan target

today prototype five our plans supplying points details coming developing largest in two my Overall, and months. thermal We to XX comments the automotive of share we the production for are of key will first, the plant OEMs. barriers from are; now and

aerogel materials. companies automotive has samples of our Aspen and battery received from five battery for materials requests carbon evaluation

Next you. And infrastructure to is I'll based businesses and we of have rebound energy these win. accelerate investment to significant it on our momentum including business new lastly, showing post a in decided pandemic a John signs early turn opportunity. LNG

John Fairbanks

provide through $XX.X per a million our first or quarter was results of items adjusted detail a of amortization, start summary net year. before XXXX running ago. share interest, first are taxes, of Thanks level. we quarter EBITDA We loss at loss our a additional the the to X% performance. million for Don. declined of positive I'll compensation operating I'll last million million by compared from define this now of revenue that our loss depreciation, year to a EBITDA Total expense financial net And in $X.XX not in do the indicative $XXX,XXX Net components share increased core reported $X.X versus adjusted XXXX. million results. other or the first $X.X year and income per $XX.X $X.X believe negative stock-based on as $X.XX quarter to or

First, $X.XX our particularly per in aerogel I'll revenue projects. selling products project of demand refinery first and lower-priced The price led in market, quarter by demand the X.X mix subsea decrease a in and discuss in an petrochemical decreased subsea of market decreased X% to to quarter decrease quarter the blankets, for in increase to products a revenue. This LNG X% by foot. Total driven X% and shipments while average square decrease work square million in XXXX. the feet the decrease a LNG price LNG large Total the increased in selling of to by PTT strong higher-priced by this LNG in of was decrease year $XX.X global shipments in revenue Arctic and mix the offset market, and the the reflected X-millimeter in first versus average Asia by part million. in

driven as our was in $X expense. XX% $X.X sales in gross X% the during offset first an profit result a manufacturing want versus gross reduction in gross Next, was $X.X XXXX of This discuss a in profit the by reduction decrease XXXX. by $X X% volume by finished profit. decrease XX% in increase price, average points goods and I'll costs million and a quarter part or material by Gross million in profit or increase during gross basis that million a in was million I our quarter. to highlight margin during reduced XXX our inventory

the those finished in and contribution inventories We expect goods that regain that later year.

I'll operating Next, discuss expense.

$X.X expenses offset expense new quarter and business of operating initiatives, hires by recruiting restrictions. increased compensation XX% supporting or in was million. expense associated those The $XX.X the related with versus COVID-XX First e-mobility increase with expense to ongoing additional reduced development result operating by million our in last primarily part travel including year costs associated

cash employee million, decrease is offset comprised existing of sale barrier by of of $X.X $X.X focused $X.X manufacturing reflected negative during $X.X by million. fabrication of investment extent used The decrease of million capital discuss for improving thermal principally of $X.X offset activities establishing inventories million provided generated used $X.X and our part to a Providence part the Cash equity financing operations I'll a net the our was a adjusted for Next, equity reliability the and our $XXX,XXX a our in quarter. on ATM working East the balance during quarter. million, during by our the for cash sheet Capital working in of flow in transactions. in by in lesser facility the of of were and expenditures $X.X quarter million capital in We're our decrease Cash facility result efficiency million EBITDA quarter. of operations.

current we As facility assets with shareholders' million, quarter a net our $XX million. ended million no revolving of $XX.X credit borrowings result, the of and under equity of cash, $XX.X

our quarter full revolving $XX.X at additional turn available our to end. million outlook. facility to year I'll XXXX We access also an under now had credit

improved infrastructure North we're in continues South depress signs Asia, activity seeing demand America. of to and our COVID-XX Although early in markets, in energy particularly

million As operational expense increasing Of decided XXXX a revenue investment for We've million of battery expense to sales. of our and in thermal million of $X barrier by expect between and also outlook in now result, million the business and the e-mobility mid-teens. and incremental growth we to cost of support digits three technical, $XX to to and increase the revenue XXXX opportunities. to million last for XXXX include we're $XXX in the mid-single commercial investments projecting of our the are $X quarters remainder materials $XXX strategic incur year. of support This the development initiatives. our of resources total, will And teams we enhance incremental our during

and operating For facilities. our fabrication, with engineering additional supply manufacturing, personnel the chain, and quality costs associated new fabrication

the in to and to incur portfolio our of costs our products patent incremental with expect and salespeople personnel including expand expanded We protect support research technology corporate operating scientists, our for operating and administrative $X researchers, and expense remaining for facilities. expense million associated and e-mobility

investments, capital investment, significant adjusted $XX.X negative take will per the a strategic year and as XX and aerogel a and year. the of we expenditures market outlook technology assumes our in for XXXX characterize leverage the range This the of vehicle position impact EPS electric Including million these to available on between between advantage our $XX.X between today strong project Aspen strategic million $XX $XX.X million investments $X.XX our $XX.X between develop to full Our $XXX revised COVID-XX million; us share. loss a XXXX loss to include manufacturing investments thermal performance barrier XXXX fabrication net outlook our of is engineering of and capital to the battery our the capital of million. initial the impact production, expand plant. Including follows: million the loss of second million facilities center, and million complete average advanced outstanding of new subsides. testing of expenditures EPS strategic that $X.XX to and expect and the revenue will strategic silica to of aerogel negative $XX to total full high-growth designs opportunities weighted believe $XX EBITDA between We incremental operating these a an for million; $XXX materials for our We year. growth of million and construct also shares resume platform, businesses

In outlook selling expense of of expense $X.XX of and addition, outlook year foot. this $X.X XXXX stock-based compensation million assumes in $XXX,XXX. average depreciation price between of projects per million, the an mid-teens, interest $X.XX Full the gross and margin $X also square

construction the our second post and other aerogel projects of planning cash expenditures cash, facility, existing Mike Turning operating on and ATM turn working to we're operating term, remainder our XXXX during equity hand, and the confident in credit will strategic on year. Longer from expenditures business the year. under silica for facility We'll sales for e-mobility proceeds call that potential a to plant, manufacturing fund sufficient over I'll progress opportunities to now to as we're announce second of alternatives the our capital to capital requirements. capital of financing efforts required our of the potential Q&A. the be the support our fund available requirements other additional number details

Operator

from Stine first Eric Your Instructions] [Operator Craig-Hallum from comes question

Eric Stine

Don Hi, and John.

John Fairbanks

Hi, Eric.

Don Young

Eric. Hi,

Eric Stine

to the advanced. here, the just XX talking are within -- maybe where deep on you've start details, that but engagement really thermal that don't on side, the more five so barrier got Based about know

this what in from urgency in how you from since securing of urgency kind in -- you Just you are have least your seeing one partner accelerated first to still I of announced those five, what terms there's has I assume the curious but And of area more group? would two guess this at obviously that kind confidence year?

John Fairbanks

view are in we time the the hour think Well, just past think least of that These as and point from is EVs a said and around believe is wins multiyear as e-mobility expected an the at more we the even I momentum that and so. point electrification urgency these people feeling an view or to going swiftly proliferation are of I contracts. win designing macro the maybe external of as we've

will So we win during contracts additional Eric. that -- believe XXXX we

that prevalent as we'll three Europe say increasingly down other, the it and described into stage some is all things around regions for progress occur that. to of, made There believe you've third warnings the Asia, as also I companies I is the move of recalls United sort in that we've stage. Just think companies issue seen in these to regulatory thermal me and from we're We one let here of and maybe the continue through two now in States. becoming many runaway

Eric Stine

of that over that flow know Got still there? is. the that if eventually customer there an months One or ability curious I'm timing it. And potential through is is event to of increased you're as in. last -- is got should in you an your confident if thing we about I later building area your think confidence couple still how triggers that that current that,

John Fairbanks

said this year. it that There strategy who way not And we but just element stage runaway. of that to interesting the is is is addressing might thermal of in with in the others think one three. they during with And be for this expected we still case. we quarter It are Yes, second do them. the and an

in going And a announcements be and that, this significant view that make want we to look said don't battery along we're of I a plant to able think all the do are so in announcement. second aspect as their investment. will platform the because way companies perhaps think Having said I a we it's I interest a investing think expect -- to I proprietary going many are to big as companies their not

We have confidence. the to have

important sort capital kind the I major figure think of thermal breathe understand It's that for confidence major and to to the an players and of basis what is have in decision. just space the have around align people runaway. endorsement Our with that EV

Eric Stine

that aerogel I you wouldn't paths say and both confidence a to mean a carbon path? fair have if additional that's on capital you the decision in didn't make high-high level and of business Right runaway thermal

John Fairbanks

Yes, that is true.

East I in that build we one that form parts the our even original Providence. and line. one line ability of built earlier in modular that expanded We and the the original these in in we We having plans -- manufacturing the line built which module yet think then in way about -- then first built nice to another is two we line three. another the one

So we're well-versed in you go about we being able to sort little of let the here bit out way this. and the line if a will

of There's and work about to module be One of the that. two the opposed contracts our say, will it's really is question based a plant build aspects to, hand. is be as great that going where interesting This driver today things and they on going But thinking way to these demand let's to come. driven. sizing And that's about demand is build really no correctly. in first

Eric Stine

path. mean Maybe last aerogel Very hear. good the accelerated. about I just for to last that one call me had talked clearly Absolutely. on carbon you

You've the and those moved five When or two? to like that it addition Evonik, five to companies do a timeframe continues and seems so. up bit include SK in it little you does are five the those mentioned

John Fairbanks

of them. one includes It

Eric Stine

Okay.

John Fairbanks

us on about the sense. it's a partner the as in to materials don't In mean side. way, very SK to Evonik know as I that elusive their that. you much customer supplier And be and of

let's five market we SK sort of the which mentioned facing. is or, of so one say, that And

Eric Stine

much. Thank it. very you Okay. Got

John Fairbanks

Thanks, Eric.

Don Young

Eric. Thanks,

Operator

Your next Chris question from Riley. from comes Souther B.

Chris Souther

for this question really of barrier the Maybe Thanks taking what for think customers kind start get your you is as to expertise incremental going kind you're how timeframes advanced on additional million is of any to just here? demonstrate of the and your to this guys. investment you're these are here. I have do kind the acting about that. Hi, just manufacturing and of or of to to capabilities coming win for center kind thermal spend completion of building want guys my kind battery potentially demonstrating a out of $XX -- customers rationale sense speeding with this of production the larger up out when

Don Young

take to want you do John, that?

John Fairbanks

Sure, sir. It does really both.

operations -- be increase. center it doing ATPC barrier prototyping we house thermal millions automated we're also in And that number wins it But rapid advanced will customer shoe And demand. fabrication will help center that on to the a already be customer response us today the of we'll a well. barriers a and is bit with So that we're doing of thermal will string the won. where we'll it And do for only there. per that we've as will our that actually the anticipate additional for contract -- producing contract we year so

these operation to So to need ultimately automate delivering successful components to fabrication we our that thermal order barrier in be customers.

product will to ultimately. So and it help produce those us customers contracts us gain customers more then it help will

Chris Souther

on sense. be of the second Okay, obviously And you makes just progress planning of kind lot customer can the on here, facility then that it know dependent.

what do expand if you down XXXX and It going there's details evolve additional and this you're kind year, could it XXXX year-end in seems when of going do just I'm size if based we'll year something the approach potentially is of modular pencil and -- to customer by we with and curious could to get far more How that of how we plans these kind about a it? the are that that then should after. get about we're as of customers you So when of guys do come of awards the but this in next bunch on potentially kind throughout ramps XXXX speak these to kind street, talking like wins? to continue kind the be? kind of think as

Don Young

for going phase important. it's first -- build us I because line to And Chris, we little for not in we this how my because that I have said that also entered first of to if this us will but of expecting are these is to also ample significant you important our diversity And us project. commitment they like on to only but part And large or only OEMs that notes into. this to are business think plant build we think it I first a need it's studying capacity, are that big we've a X. that sites. the manufacturing a not would have capacity, new

we of the will the So, how location year we in And in end certainly this it of late size XX-month most here. to think I site get out play about that and get make terms probably timing, need this a before and process. need will announcements it's by as We as we really of as because XXXX well to the start into XXXX. we after capacity time terms

working And today a have so, dedicated on this. we team

John putting line lessons building X learned of from all initial facility. some design in As East three described Line Providence we've our X together the the line

So work today. a done on this tremendous is being amount of

I the can before than expect you of rather So sooner later announcements end this think certainly year.

Chris Souther

of from scope? be it Got you'd kind kind the of production timeframe what for beyond you expand lines months the to then initial XX going of start would incremental it. And if think you're need

Don Young

to truncates that. have we months it time structure you definitely -- how mean it infrastructure. does we take to XX yes. the phase and still build us a from XX have something like is that it And less XX when months if second a or probably Well the But

this it view best truncates mark it -- can. we But size number on we a it's get from to the as a point bit. of phase So a need first

Chris Souther

just one last lot of here. it And Understood sense. and makes then a

side, maybe expense between that what you and for mentioned quarter? the million the rest million talk first the COGS On million would be Maybe and the split Can of helpful? on be EV spend I year rest $X $XX of $X in OpEx. the impact for missed you that? the about then the was And what would year the this in incremental cadence

John Fairbanks

that all so Yes is of through incremental the spend the end QX year.

it's to so going point And come this forward. from

So any quarter. expenses it didn't we incurred first include in that the

Chris Souther

DV of What COGS from the were kind impact the to increased side?

John Fairbanks

one the up doing full-scale significant. in is from was to we're this what that margin But which was it today move juncture. of not prototype range commercial production. maybe It It quickly, production as scale point of will at we

accelerating thermal just maybe in our projections. this, was XXXX. some this that to XXXX to through expenses thermal and of XXXX grow the our In these just initial rapidly time in And increase We're in had XXXX really our into that interest is so period. that -- we just business barrier confidence originally for but in response barriers going planned

Chris Souther

hop will the queue. Thanks I guys. in

John Fairbanks

Thanks.

Operator

Our comes Dorsheimer Jed next from Canaccord. from question

Jed Dorsheimer

my Hi, of at thanks mean you levels. taking for first expansion line several, bold of questions. if the and infrastructure. I have I congrats just maybe first better top these mind. energy on move the off I don't sort capacity guess

starting on sort two the to the So rig if clearly anything there based energy other hydrocarbon dig and we fuels. business refineries on terms just or that's other the follow-ups than else level traditional utilization kind infrastructure, that of of increase got ramp? is of this Is a confidence the driving side in areas. then pricing of into counts on of And I've

Don Young

in that States talked a I good our we they think, sense to And the One and by of and channel speak we're restocking. Those to pretty QX sort last going very facility remember so saw threefold. about destocking are distributors seeing around distribution through the indicators year, the have is, of for what I well-established are the might close happening on is in our you ground world. here United facility.

as So, sign. a positive we view that

we had the work attempted period, that maintenance and world, was been in Second, sites this been we we're and the probably, that, be most world work the deferred COVID there there during that required here. some to have initiated was that to see which parts of of no that believe deferred because many continues parts clear of question beginning of low-density

seeing begin come contractor we -- so, thing worst on start then sign. expensive to that pipeline on to alive have we site, a terrible again. way, project off-site, it's to team begin as a its off-site, could or And site, the The positive is project. and are owner that run a way And a third, view project do asset a

neatly hold. on beginning And specifications were to projects projects. of not we're or in life So just some positioned back of than these see several not are more either to put for here. those And we come the started

And so-called that So announced gives project win. new that us course, Arctic the we of earlier LNG LNG confidence.

true we we're will pockets. not certainly in I And we're things the case behind are become the levels. the regions. little across Jed activity in numbers, those in that again pandemic around think further -- it seeing it's the think So, And seeing all as but gets it's true entirely, it's most three the us, -- a world in

Jed Dorsheimer

well it drivers. it. as I the Got benefits the value of prop if And oil the pipe rust as are thermal you side, reminder under kind know heat major then just I on as the on the a believe will. on

working On is the or temps, there? cryogenically thermal same, value the terms heat LNG, cooler that a but prop is still of that in the

Don Young

is little is more less workforce an element. still really on is to say important of that Protection modular And with our management -- is thermal also to rapidly, yards site. as an materials pronounced that install on the a necessarily opposed the in value So it's in would side, part I important space. Fire a proposition one skilled LNG ability our

vessel to to So yard the the durability of transported pipe our on from be let's site. just on a material remote or say

are that materials way. durable very Our in

say on our and in CAGR really a space I revenue think, proposition let fact is XXXX, strong. me we value pretty So broad since really, side XX% the that piece invested we that LNG And tells since together well. story the the

Jed Dorsheimer

I'm core of a the propagation it. and you the And on the reduction improvements your seeing you're or what material be of Got solutions are terms opportunity, in replacing using to that solutions runaway so talk pivot versus materials replacing thermal to now, on battery just in at might what thermal the just EV mitigation the battery Because mitigation and maybe of manufacturer are and side, are prepared a or so OEM terms there then shell? this point what instead? about curious, sort you

Don Young

look, are this are to things. Yes, optimal a issue. materials looking we I working I that one, they through And of stage address mean, process platforms battery I that three two, new. that for described are think few lot a

sense, we're the some box. in So really not knocking an of out incumbent

invest We And to the design are barrier resource for be for thermal advanced that challenge important battery a place to to platforms. us them, us center original industry that's of really have. address in it's this in. it's helping part of platforms of be why the the battery these for that so And all strong

the management for infrastructure that in unlike was the And so, largely to And business we energy slow needed sense place that it's long had a that in knock a been out incumbents significant we've with platforms here in space. of And and with battery don't say, existing our thin really material, combination could materials. profile, durability within in thermal them. the that -- more taking we to just if range. a that the little get I unique up histories that It's process we're new where done little Jed, long refer the non-combustibility, mechanical space that so making different that these attributes they can work to arduous of packs have drive place more very and these a say, hard the inroads with time. cells they so which very It's is

here, work me on our funnel And as platforms. so, of, and here battery think, to really settle best they we're development companies an say, have, I through -- product let our themselves sort these their important we doing

Jed Dorsheimer

battery benefits. of been the materials obviously, on silicon to then, a the the But amount thermal the the has question, has to And coefficient side things, guess, thermal anode with on associated anodes expansion tremendous the moving always on last of I issue just increase.

the with curious, in? of the Is share you're terms that metrics might this customer base able in that at you be solution? there the where terms So -- I'm point in with five of with data the you any that are to just testing

Don Young

uniformity And us for their out. the to doing is companies we through-cycle our a work lot expansion in are Providing and And the around durable that significant, Xx, are cycle eager carbon think How doing that perfect bold And a it. our silicon create We're with that we and data that are is many of manipulate doing to that, -- Not that, putting a many a these silicon given life. pore partners to size, XXXX aerogels their a size, goal are evaluation it's is goal do as think the right, it's that are for of here materials? for that the exactly publicly the pore us you scaffolding life. relatively move. we're you're that the durability, the as how a variety do our challenge, is what of of mechanical possible. that this expansion things protect protect doing data ability well not

focus and our idea of that team but enormous of amount the dedicated here our issue, during our so, an And scientific XXXX. publicly is data to presenting really that's

Jed Dorsheimer

you. Thank Great.

Don Young

Jed. Thank you,

Operator

Capital. from from comes question Northland next Your Becker Doug

Doug Becker

Hi, Don.

Don Young

Hi, Doug.

Doug Becker

knocking carbon not competing competitive changes the Don, you you're out solutions the any landscape or there's curious notable but aerogels. if point, specifically, thermal the around with for made barriers incumbents, been

Don Young

of in assume we part the we're contract RFQ. automotive we that, Well, number fair the at and one that assuming a -- the three OEMs we for, that the with world, OEMs awarded of that XX it's they were I materials. the think looking first And materials automotive all started of in know that to have largest five these in are stage

being many stage put companies in we've optimized companies experienced fire with where stage so, use five two, in or passive that were batteries. now as of Again, energy these as come passive dozens in of fire And that solution that we're so now, three. sort XX is the what easily. for and in that for know compared of us right is come it's PyroThin of with but through infrastructure, this an we're XX very don't is, And significantly materials reason Yes, one, up product a We in hard been that some them. a stage But progressing efficiently pretty is we we extremely the into with it this a again, the And funnel possible. significant direct in just don't you problem, descendant lithium-ion important very position. -- And of all up a issue know so was the strong products is against, just us protection we've critical. it. strong coming in we protection date to a that the don't

that logical two. big within I there announced it Yes, road talked of sort the about. materials the that is on are and too is -- and number anode to on well some silicon current factories, of mentioned the that great the think, it, of acid today I batteries fits or are lithium-ion which coming and technology material process this. of of the of technology benefit understood, agreed adding a technology, silicon-rich next are mean are year also these that along which have operational been we've style operational the well, steps focused manufacturing its will in be that the And companies map. upon course, You the of some of the battery

talked time, we've requirement and at this, who about good opinion. who that's last scale work pure are looked I area for and at through where position. years Those level, Again, nano cost data thing requesting to companies in materials on three advantage to two kinds we're are when And – It's that, the to feel talking everyone's have performance together. an then So things cost most our the have it's samples added performance. we what the It's developing materials in since manufacturing performance. think And and cost of very -- who about part one XX a you're and going that gives It's better especially and not done. go materials we so have an we've that these we've get it cost. additional a high of a and of these and that in done think performance, you.

list And we'll work engineers investing lot got to in is in. we've business the of so scientists expanding. a the do. We're bring And and

but think partner and share that addition data other to the in data and additional grown. to also that partner. are logical partnerships I our confidence solutions, compare our has us with to things And Korean announce Our for next German

Doug Becker

we with back then for today. right there, changes a major no opportunity but on other the airtime with are all competitors opportunities the sounds you? of That as said the yes past, out it Has taken get of a kind in that consistent energy what It to generation. of plan storage distributed very a seems and And just have maybe in in update seat is. that opportunity lot you've stationary given quick front what

Don Young

energy certainly mean, systems stationary is energy I space our who much this think small right out now, The for storage in with those is actually. really Obviously, of so prevalent team of business. so so the on. world. focused are typically EV the listening associated or Not there residential

solar the times home to formal type the and using to there up Again, same cells, battery of systems. behind-the-meter one's So as battery so issues odd lithium-ion some next typically perched are technology well. runway prevalent

one it's in we progress here made interesting continued for in I and so and one really I say two entities here area – us. Europe them. a But to with with make make States, important United Germany, – continue And we've really in States. progress And have one in one should the the United think good we to

Doug Becker

continuing you But, were you this way that, in specifically think of mentioned from the And frame quarter, last assume to involved some forward. any is the there opportunities business? to I still are those move aspect I RFQs

Don Young

exactly five it's that in an third advanced parts, major point. I providing And prototyping of our or that think pretty advanced. or whether, not and OEMs the fact as the RFQ this stage development. have we pretty at Think advanced of production it's

in point have say, possible few time. so, at limited they choices And very solutions down would point, their that that it's I to very, at

win, contracts to additional we feel So again, calendar announce able excellent strongly we be haven't this year. but in that an some we're position won to we until

Doug Becker

And about the I stationary was – energy specifically or just storage to clarify, actually talking

Don Young

that we'll in that, those XXXX. would of I announced have here me. excuse one Oh,

Doug Becker

you. Perfect. Thank

Don Young

Thank Doug. you,

Operator

from Wainwright. question comes Amit next Dayal Your from H.C.

Don Young

Amit. Hi,

John Fairbanks

Good afternoon. are you? How

Don Young

you are Amit, there?

Amit Dayal

was mute. on I Sorry

John Fairbanks

are How Amit. you? Hey,

Amit Dayal

you. not Thank timeline or some Is supply been any recent at of concern right a the about in much opportunity that chain With to there's headlines impacting point? that respect your this this auto EV space. of challenges is

Don Young

the if in shortages that, Well, it us is you're to semiconductor cetera. referring not directly et impacting sense

just things sort down. but broadly, perhaps say, yeas, necessarily in you indirect not of more sense, will. So slows if can directly, I it some

now. this OEM whether the chain stop in of there's process sort question supply of as that a pandemics we and matter supply all challenged just the way. start not that us the over, or really And the – chains say importing to are As of is you're at no least. fully biggest a stop. of right big meant need – being side supplier these Aspen, I like our after get And other start don't and aren't shaped on but They're and to it it's

lots not it's to a of for these going stop while it And a reset. significant slowdown, of little, And to came parts. to kind take so if

some it not the terms of there read work, already we've me, But, so if side. surprise from about way I – our some them. if any wouldn't we're of disruptions in along anticipating issues are think our there And

Amit Dayal

millions to are Understood. you that and that realm? you Is any sales outlook, or And for there Thank in you're had into for XXXX you opportunity to change that. then, single-digit still sort expecting XXXX. that indicated, of

Don Young

the But, development -- think we We that got we're of target $XXX we've to think our third OEMs that these in more activities XXXX stage fact confident good again, of our that's our did in say energy million, on as the based funnel. notes a And we as that's good seeing in about I are expectation we're you the a infrastructure my significant for have. confident that as automotive we're normal quarters, in four you said QX. in you it. to right just a little direction. in at it's feel ways got we've little better our was seeing it for again, bit And go, a And promising, to sideways revenue business really know, again. saw maybe low haven't moving it And we are just level. starting but that that's a that bit a And

it better we pandemic, in the end again, expectation. there. but make doesn't an think And direction was than to quarter I feel good we're a one

XXXX. all that to on our target barrier again, XXXX, elements investments confident we the side. towards critical higher that thermal XXXX feel production we're here. ability parts volume we're automated These These building making of that move in So up be to are successful

John Fairbanks

in other comment, XXXX was OEM the millions alone. automotive single-digit from One XXXX and US-based

contract XXXX. could US the achieve as But, company in give in numbers, successful, on those we So, us upside. is and have as automotive those give upside additional numbers particular if we contract long should it additional wins us would wins,

Amit Dayal

All right. that Thank you for and that’s clarity helpful.

Just of maybe temporary situation forward? one and in managing the selling XQ, sort is me, decrease you are average a last product of one through going this guys prices, the because mix in for this

John Fairbanks

Yes, average it for of a we products. sold prices half really and selling a about sell lot product function. of is We X-millimeter XX-millimeter our product the X-millimeter

So that mix it drove down.

half to It project material we'd quarter, per as resume product related. So, costs And X-millimeter the but it's the foot clarify, higher expect to the of bill average for selling sort continue of that product well. our is into temporary. the thinner second prices levels in year. for the our is just square second And of of to lower

margin. we really our So maintain

which material then have We have give contribution. costs, and lower we the revenues, us lower also same

half degradation it, So year. and we'll there's of the the been economic in no on rebound second

Amit Dayal

you. all Understood. that’s Thank Hey, the all Thank I have. that. for you Appreciate color.

Operator

Partners. Campbell Alliance Global from Jeffrey from comes question next Your

Jeffrey Campbell

thanks And squeezing afternoon. me in. Good for

the assuming seems the are common that thing to segregation adoption deep wondered and performed first Don, necessary and The PyroThin testing, between anode just sampling like expectations. the products I both they those same wanted folks battery interest showing ask in I much was if are increasing in these high product. those to about strong are and battery that It there the into or that

Don Young

you It's one it's about other say, hand, of what sort the on good I it's that overlap. I say there mean it is so, many hand, very there are we believe But would on let's the when would would these different But I end -- groups will I many the But, and of only think firms I on of question, a things. say be say, There would coincidental. know only Yes. who I and at within are end surprising. the face players it, so day. at the there are working these so players, the day successful not

will successful. Some newcomers successful of companies incumbent will some be the the be of

A working another. But, times, companies other so, that even know group would with I they're of one that other is big I one not surprising. Well, within that too wager. the the group even one necessarily say to us wouldn't these knows lot I one. barely And on of related it's

a So call again, it not coincidental, little surprising. bit but I

Jeffrey Campbell

for that. Okay. you Well, thank

you a outlined, provide the manufacturers the US, Asia of or just phases on of are the sort and PyroThin second in you OEMs battery geography can Regarding EU, the color some of get to third sense that that like that?

Don Young

all three three regions all -- represent They regions. major sorry,

participants X. going be from So, in X but this participants Asia, to Phases the participants there isn't terribly from and are and helpful, Europe US from

John Fairbanks

Asia, it's within countries other China and Asia within well. And as

great diversity. geographic really So, a

Jeffrey Campbell

work working some the with. means there's just been done research than it Yes. you it? able mentioned because people about in that that way in And we've if this there all Is you're past is and aerogel China other maybe being it China, doing and patents, your infringes about the the on significant, interesting unless some John -- you're to it sounds entity make talked that you've like to think how have right other the to got if that more in -- there's but

Don Young

are… there think I Yes,

John Fairbanks

been it's successful we've think me let to and are the -- around that aspire defending I end intellectual our aggressive world. and companies -- in, international say, and done these that companies very we've property be

they're to so sorry. that an that -- international And company, not if And just they are violating property. on they we've their I would well. they be as to just say, want say -- that would are be focused just behavior seen I in do say would they have I intellectual that

Jeffrey Campbell

just a outside it. great alluded question and I'll bit to a the of but moat. you of My this, little be That's add color to able sort to but of last They want point. sell to earlier,

expansion a are large maybe Are to capability? that any roof source facility to your about not to as just customers mentioned as I importance that planning any Is manufacturing phase there indicating OEMs diversity but that PyroThin closer are Pyrogel comes further wondering X, some large in maybe foreign it of that? there just locations. future You cognizant Phase line even potential was supply or that. a their you're

Don Young

very our globe. our historically effectively. of of effectively We've to product corners exported cost materials all Jeffrey, two-thirds ship the and approximately

more think ample most of things. I have think a are Having so and two the supply, diversity voiced been I nice nearby think, supply, I important not all And having to at a supply requirement. a has having

X, very plate. the of the capacity have come successful by a particularly barrier we think full as we and I of will side it's locate are thermal plant likely very in to about we to X where a think where hard driven plant we

if So I a make years. argument a and could forward I can could good good -- Asia. I make project a five I for Europe, would make argument for for

we'll see plays So out. how it

John Fairbanks

interim designs are to just based and proximity operations the make we in and cite and delivery as well. well In the in we Asia, PyroThin aerogel, the sure have but base of quick Europe on in could product the that fabrication parts, prototype here fabricated make as US turnaround

Don Young

that's John. a point And really good

to that plant. see and manufacturing Just full-fledged sort do afoot to I think thing aerogel a you'll build more of is that. of That lighter much

maybe that's think very I interim. So logical a

Jeffrey Campbell

further makes appreciate that sense. I Thank Yes. you. color. Yes. That

Don Young

it. Appreciate Jeffrey. you, Thank Great.

Operator

session Don is will closing Q&A The the call back now to I remarks. turn for ended. Young over

Don Young

Thanks Appreciate care. results Thank QX Aspen you Thanks in you late help. Take July. good forward your for to in look We our appreciate everyone. we Aerogels, a well Mike. reporting interest and it. evening. and your Be Thank very have much.

Operator

conference concludes today's participating. Thank call. This you for

may You now disconnect.

Aspen Aerogels (ASPN) 1 May 212021 Q1 Earnings call transcript