ASPN - Earnings call transcript Q2 2022

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Operator

Good morning. Thank you for attending the Aspen Aerogels, Inc. Q2 2022 Financial Results Call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I would now like to turn the conference over to your host, Laura Guerrant, Aspen’s Vice President, Investor Relations and Corporate Communications. you. Thank

Ms. proceed, Guerrant. may You

Laura Guerrant

With of to you, morning and a joining Financial measures Don. quarter Section measures Investors like The reconciliation and announcing financial generally balance before statement Chief press Ricardo summary thank XXXX. is key summary Don most a I accepted are the a call. Officer. XXXX to U.S. business for for of Good for the on of as Thank management summary few XX, is Aspen’s financial President call the sheet results CEO conference a well and There second quarter operations, release and of us of housekeeping financial XXXX applicable Aspen you operating year are GAAP available Soram. financial statistics Aerogels compared and second Rodriguez, turning the today developments us of website, results Young, press that non-GAAP the items accounting a www.aerogel.com. or would the principles address June to and in as the Included ended over release fiscal Aspen’s

highlight a have accompany that like to our uploaded website In I’d conversation today. addition, slide to will that deck we our

will to any uncertainties. and These not You including An X fact. approximately year. can risks section archive Investors statement be expectations, a projections, plans is subject find website. any our the statements our website for statements, forward-looking that business outlook, and Please today are deck forward-looking targets, statement beliefs, of estimates, of regarding other prospects, historical discussion will our include at the that on today’s webcast note

most can the can in statements. company’s Section discussed website. with the may Page found on and XX-Q. factors from the recent be in X yesterday, in those issued list with these results Investors of Aspen in found The the Form the affect Aspen be Aerogel’s SEC, of release more company’s particularly differ SEC in company’s press the Aspen’s issued files materially actual also reports Aspen’s actual release filings press annual forward-looking detail results that of could presentation, A expressed on the report are and yesterday

today or views forward-looking as of disclaims circumstances. made any the and XX, to to these represent Aspen statements XXXX Forward-looking reflect July company’s obligation events future today, update statements Aerogels

And why measures the measures financial to that session final the release. present a During directly considered as financial These prepared to call, not GAAP. in non-GAAP adjusted these a measures, or your Q&A discussion in reconciliations These financial with one in not a financial yesterday’s we included non-GAAP GAAP. refer we press will you GAAP for in measures of during financial measures isolation including please results and these with substitute non-GAAP two of note, at the questions EBITDA. measures time. in most financial definitions accordance be to ask interest prepared comparable are this we of intended and questions to are are The non-GAAP time, accordance limit

into to over and additional initial Don. the queue, get turn If back will we you have please the Don? questions questions. get all beyond two, call to will now I the

Don Young

financing with as for morning and business I our earnings will a you activities Ricardo Thanks, off earlier Laura. joining recent for business everyone. and mentioned Good outlook. I report developments kick and progress us discuss Thank things call. will QX our results XXXX on

We session. with will Q&A conclude a

aerogel we in come. million utilize raised EBITDA to have past manufacturing company our to fully seek $XXX the over is plant revenue $XXX XX months, scale we targeting second that of a and as of $X.X the Over billion million years to

X Phase X for million our existing million target to to $XXX capacity Xx XXXX XXXX. of have Xx revenue $XXX utilize to of meet in for Plant manufacturing and of target revenue order our meet We expect

build capital decision XX, to not of and with order concurrent expect stock June to raise proceed in required our opportunity. capture to continue public to the out infrastructure to offerings announced full we convertible common We our notes. On

significant had market to in of we were of terms offerings Aspen determined demand investors, including as While And million unfavorable. from Strategic Koch $XXX of Platforms, the interest shareholders. a best the were from be interest the overall indication conditions not such,

in markets, the to true we approach in the we and taking As plan. is in have financial above are as all said past financing the of especially current growth our

have to our in of the sources we June who the and have capital, interest effort. again investors prospective Strategic and make business, know strategic financing has on serve doing and As so of our to investments company markets Koch who in as continued past done in the we variety Platforms focus equity its in indicated a potential we explore the

with In XXXX the addition potential Plant we government engaged to programs for equity of capital strategic potential as investors markets and sources X. are public debt and

Act, dedicated have $XXX We million economy. the advanced designed of electrification part to grant battery Department the Bipartisan for Energy is of to for which Infrastructure as U.S. support U.S. materials a applied based companies

sustainability, effort also programs other of supply the as storage The to in DOE U.S. projects address in performance exploring safety. that materials. are and for programs target of Manufacturing are areas energy battery American We such in chains related the critical on focused and especially an resiliency

strategy. and of our good consistent unpredictable, While such our raising programs we is to the that we are necessary pursuit DOE above candidate approach all for are very our and believe to can capital with the execute a take long-term time us

public confident our We in these company our a fast-growing themes continued Despite also will investors appreciate funds necessary on existing with and cash to create we like we execute that trends secular support. and, to Aspen value investors for shareholders. our the Aerogels. challenging XXXX become growth raise that flow story your source again will We the learn are to additional markets, strategy sustainability-focused as the positive and for capital be its market Aspen a of course, of believe investors dynamic

Our QX revenue in built business with to had chain with strong and and momentum remained year-over-year QX despite strong a We lingering year-over-year growth. performance the on XX% staffing revenue XX% in year QX supply start that challenges. growth

and million performance With penetration industrial are we have continued half in less the commercial market barrier for than General revenue energy are believe momentum our $XX demand. to meet a multiyear we nearly now the rates are and will year-over-year barrier programs thermal in this XXXX. XXXX, Motors all growth million, We market. activity $XX in high reflected course, $X QX EV strong meet we existing $XXX of position the first with that anticipate high and revenue we in and levels investing Toyota, million million target The in of awarded to and be was substantial, million confident and for QX was compared we thermal to $X.X that XXXX. PyroThin revenue of our will that in

by We could supply their also challenges automotive OEMs in impact growth recognize given that to will any period. ramps that their be own time from chain time impacted

remains a of leverage strategy platform We megatrend are energy and facility items the markets. for purchased the outlook lead to high manufacturing of time our in set flexibility manage energy to industrial benefit business. I a under line Georgia, The This activity on of levels aerogel demand, into first the long-term our good construction a the late technology in large would trying of during strong our early on the for to to pent-up like to year, last build starting brief continuing strong in industrial Plant long X is and diverse growth with in EV Aerogel X, of LNG. fueled update prices of example a revenue energy completion in also dynamic provide maintenance XXXX. by QX is side time order of Plant have book projected deep this our in by optionality phase stage overall a

project immune aerogel is inflation, challenges building first-class facility. to is related focused not to disruptions our the on by Project a and manufacturing supply supported chain Solutions Koch team While

total X approximately revenue will revenue The first $XXX annual of phase to million capacity million. of Plant capacity and bring $XXX annual our targets

we As $X.X X safety. is to on to in reports are trillion invest transition well this the years, electric million auto that year. and the in role we utilization of indicating approximately positioned revenue targeting $XXX play next at make approach track vehicles, that we important to level, to industry EBITDA capacity we the performance full an per are With believe battery

dynamic to important and investments rapidly investments in continue to in assembly to building systems Plant addition in and people, us our actions cash monetize flow automation. in and scale transition Georgia enable facility make In to our These Mexico, in in positive investments XXXX high-volume business. to to X our we in

Aerogel our invest strategy We our in themes. other sustainability technology into markets the to leverage with high-value – to platform in also continue

expanding platform new value. inventions investments technology Aerogel been of across to filed our richness XX validate year, create shareholder capital aerogel believe intellectual captured XX and We patent year-to-date. technology extremely the and Our will families in teams draft business in these new have productive position continue in over development platform or this with the significant our technology

completed to We next OEMs. qualifying for products. has costs battery that is automotive battery silicon materials both added in density the ABM and Aspen development and lower of expect now and our be line energy phase material increased carbon aerogel next-generation commercialize targets its materials within to initiative preparing select

short the so we While we full the potential capital they value. of require $X.X the structurally same term, X, up breakout Plant businesses we set from burden million positioned $XXX additional and and in utilization believe so of to margins generate for that billion at time, these enterprise-wide opportunity have revenue new – EBITDA of us that with investments and are

we have calls. I are us, during by quarterly still our I practice like And finally, important to would ESG am continue encouraged of achieving work but earnings towards work the the ahead We making of our goals. highlighting progress

positive to For culture ESG the the products of its the performance respect business. the It aerogel our processes. to the and and a the and our have we fit is environment. and explore success make goal platform are linked communities, corporate customers’ highest past inclusive our celebrate two also natural a our we committed a is us safety to with by create of uses integrity. of striving of responsibility technology mission culture with on has at It impact our a We for improving the diverse pursues for employees that of environmental standards core and been new creating decades, to to to believe our

Aspen’s feedback. to call provide I over our comprehensive page which will to releasing days, overall strategy. and a be will will We coming We ESG look forward launching overview Ricardo. in the highlights your turn ESG the inaugural report ESG our now of web

Ricardo Rodriguez

high in in managed demand I’ll to and revenue our highlights Thank all for revenues QX. to the throughput, start you, million. initiatives second Year-to-date, to Don. revenue increase various This company’s to our has deliver previous XX% XXXX Starting $XX.X the of and revenues, markets close across growth of X financial execution million to our us over on with QX and XX% of successful $XX.X XX% quarterly of team growth million translates the enabled quarter. record and the our have year-over-year into $XX year-over-year. quarter grow by Slide is

to mentioned we to highlighting the $XX.X XX% that demand that by that $XX.X I long-term quarter thermal continuing continue our demand are growth deliver EV core team’s business tighter This meet barrier by level faster projects that prior expected, from of our required our being materials while opportunities our to increase increased built have this to backlog EV meaningful continued increasing materializing and to while industrial to ability demonstrates with will million, strong the as to growth is of efficiency higher driven maintenance also our new energy is thermal a Delivering over a by quarterly than XX% the standards barrier delayed in revenues we competitors’ million. displace fulfill objectives. distributors timelines. very While revenues start originally our

fixed reducing million still all and $XX.X profitability more cost quarter-over-quarter segments by and results. Accordingly, how facility objectives. the most to that to currently with these our Material expenses them during Island, This expenses revenues million. meaningful beyond simply reflected were of an I’ll in EV million. which higher the for for our sales, decrease quarter-over-quarter simplifying growth higher to than expenses we’ve of over last this barrier start of total absorb nonrecurring us industrial help $XX.X beyond levels recent both detail expenses, manage quarter where barriers that made enabled throughput points by new thermal Operating broadly, thermal able percentage and aimed no them. elements want running despite changes of we to deliver our our inbound labor place our $XX.X the by million annual in delivering are quarter, versus at of a that higher revenue X production. production. point everyone variance drive of while cost that continue to will our costs. putting productivity points return having every reminding conversion needed to the costs of ensure To of is of number illustrate is of our process the QX to $X.X XX meet temporary Now investments and this processes our and business or main deliver to thermal cost to $XX.X and I’ll delivering required delivering an of is simply parts a Rhode ensure up assembly implementing bill term. our to XXXX of primarily will the cover the were the validating profit our aren’t volumes of been These revenue rate nonrecurring the revenue Various designed over design in this, key $X.X profit development. run increases. properly gross quarter. fortunately assembly percentage freight sales operational or $X.X address million interrupted be our lower our at XX% target This revenue we and our burden element expenses radical long business of invention accelerate at to elements is our It the base increase quarter. hourly $XX percentage matter in require of points energy prior EV million quarter scrap which XX the the barrier in driven of rate increased highlight during these of product to materials million run More goals facility Conversion million

million focused One, our our clear go our three, implementation efforts and carbon drive As two, benefits be streamline more half the technical faster $X.XX increases business last These $X.XX that anode, year. modest speeds the XXXX. precisely same negative net new the include as second barrier $X.X with quarter reformulation our loss efforts expenses efforts; in R&D lower formulations. will things: our or to our million share process OpEx rollings enable QX in EV million and per and in delivering and $X.X productivity of sales of the These QX million net per efforts. productivity; we increased of was the through through aerogel development installation year, same versus drive a Adjusted tangible loss aerogel-based development silicon improvements or negative that on through and into $XX.X of EBITDA new compared chemical X thermal share in methods along $XX such and of standards. waste are awards the milestones in R&D line our ensuring silica quality systems longer throughput to Accordingly, while developments

are As these indicative depreciation, operating or items believe that stock-based interest other not loss a core included of expense. net taxes, stock-based performance. and expenses, of reminder, amortization, compensation million income $X.X $X.X we million In adjusted do define before EBITDA we and our QX, other compensation of as interest, items

million the payable. of volume operation the $XX.X and aerogel building increase was in million our higher upgrades in assembly of Plant accounts of $XX.X Cash needs lab and to our foundation, during Next, I’ll equipment X, million expenditures the quarter in reflected by EBITDA Capital included efforts. driven operational sheet. clearing adjusted thermal $XX.X material a the operations R&D carbon and cash ground that and $XX for battery barrier reduction of a of mainly million flow million cash our turn $X.X used negative balance for

the Cash QX end of As to our QX a gross come end on we financing progress capitalized of million during online it. $XX.XX Plant of for have net X per $X.X towards included million per at activities $XX.X of opportunistically through from track of million have remains by provided XXXX, of price million $XX.XX ATM average price offering ATM raised $XX.X share. $X.X proceeds we transactions an average at Year-to-date, transactions offering share. through the at

all with of approach earlier, of to raising financing markets consider equity efforts. As under we small Don million mentioned above $XXX.X as And a $XXX.X avenues, in the ATM shareholders’ quarter borrowings ended credit facility and all the cash, broader and our revolving offerings we in very role employing the play We of our capital. no are million.

the remains year for outlook Our unchanged.

to and million loss of revenues geared of million the and are $XX.X million, deliver and million. adjusted to $XX $XX net range $XXX in and with $XXX in potential the million upside range negative of We million $XX.X EBITDA

Our COX customers’ $XXX volumes capital year such $XXX supply a such factors of the between during to implies and our XX% increase our external chain their raw labor $XXX thermal Aerogel of of $XXX million as market, facility in particularly are QX expected half vehicle for in production revenues is fulfill Island. our the various to million, our revenue and barrier ability This control, range rate. for delivering stated to run the as to silanes, beyond and Rhode XX% second million increase to expenditures the local million batting, subject materials, year our the

and pay tight are a the plants. In year. at labor continued the we’re risks supply near-term in our managing ensured we shortages the some have our into nationwide that earlier same plans. managing to aren’t supplied throughput execute which to and proactively the market, of batting and risks QX of production silanes contractors in chain latest cost prices highest that built increased are the We the ensuring COX our going X of Recent cautiously we CapEx key commodities inflationary for seeing versus Plant pressures inventory some post

on to back Turning and my point Slide profitability. going X earlier over to

deliver energy annual the year, not and base. million EV our overhead $XXX asset our are thermal run-rate most business business barriers we a At industrial while at these quite quarter can the roughly annual fixed out ran run rates, getting our run-rate. During run-rate, gross $XXX a plus energy million industrial roughly of Above our at margins. still segment million of run $XX our per revenue XX%

thermal EV an rate Mexico. annual run of plus requirement. rate designs this XX% gross help million and we requires lower Our barriers margins as deliver revenue simpler introduction The segment to around production ramp will up more automation $XXX of run us in

on has Our deliver barrier margins industrial our take that EV increases been effect XXXX. energy order business favorable capacity, price pricing target fulfilled will thermal and is to our every environment quoted support in enough at to

Beyond margins that like includes will implementation you On fixed full would pay operating on of capacity. as our plan gross operating at this same slide, the the initiatives our we’re gross at revenue we improvements for time. cost both illustrate specific growth how several absorption plan to to path margin our drive XX% to our executing segments in initiatives

we this. facility don’t our are with It’s carry processes we as simply successful earlier, Mexico. assembly not have we thermal the mentioned start-up barrier these year-to-date I and of done for of initiatives As getting do risk a matter in technical reinventing as

operational a is business undergoing EV transition. Our barrier meaningful thermal

As June XXX XXX to Today, increased earlier, hourly been thermal the of of this, a we has at over year. of back in assembly production peak of the XXX Rhode Island. to ready this in we manual of year approximately XXXX the processes number have To end XXX Mexico, this in people low-volume people of the the down facility for illustrate XXXX. in rest from facility and and November of are barrier volumes with of this set past a in a staff three our mentioned quarters delivered

over volumes, conversion percentage XX work our gross move and points this XXXX. processes margins we significantly are decrease our introduce for As Mexico to by going higher in to costs improve and designed

reductions. also is we parts. labor the changes, assembly complexity have various part reduce increase the the encapsulation the industrial with streamlining our runs longer with aiding reduce For driving pricing working faster to planned per the waste conversion continue insulation years. of times, yields. chemical same processes, management, QX reformulations cycle base production in reducing expenses rolling at this costs speeds These QX year. production of next by reduction also our productivity the the next over and cost cost and X our automation part engineering conversion business, productivity changeovers Longer implementing with line energy of to Aerogel our and will our for The and thermal will barrier and will by processes in of various increase drive portfolio chemistry less time, customers our our In product by year, further

also overall with and processes manual environmental negotiation our material this supply expanded little fixed costs a position materials that the such our circular process key significantly, Georgia require and chain for cost COX will logistics team and making impact. more Plant our will recently Our incremental chemicals the in scale. our This X our costs reduce improve along handling and of impact with streamlining ethanol. cost driving will as than by larger the material linear also to of is up for raw

in its of online Plant margins it also the grow in target and X comes that full in will factor capacity. DNA XXXX, as into kick Our we

team recent plans path capacity. keep successful higher improvements our current motivated plan within productive and margins our capabilities on locations rely us operations improve come to see of and volumes. and milestones continue implementation to in XX% just flexible for of processes well one more with gross designed the improvements to not higher This of the is productivity launch our As of here, profitability. to of can the revenues Most the on from

OEMs. what X. commercial and are on we’re these discussions these our update Slide most We with seeing our the relevant over to EV effect dynamics market, like strategy that how market the in having automotive Turning to world’s on validate brief would provide the a

are to Here, that that are pouch density, barriers you XX% the These the top are like content on density also prismatic at million chemistries we lower energy expected Several XX as evaluating of actively can energy most at and vehicles. When unit OEMs or high with such LFP, eight form incompatible cell focused XXXX. chemistries. programs Sandler well. market, are see of forecasts market quoting PyroThin factors. They also on the XX.X configurations seven what are PyroThin. And million nickel we look over LFP Piper we are command with cell-to-cell least OEMs high as see compatible market to focused EV be a in

creating thermal size building approach a do innovative fireproofing of and market the compelling leveraging and scale. in barriers. properties mechanical material, the positioning unique of are a unrivaled this an by for system-level presents PyroThin aerogel-based our the cell-to-cell and solution the All opportunity. increasingly We having We isolation, all, market is

to Turning X. Slide over

vehicle actively to Korea case considered next provide in year into and of runaway They rare South updates top EV and as helping circles share are in part part OEM these thermal and the vehicles or what a protection propagation this to global global up awarded vehicle up respectively. is XXXX. year, their implementation serviceable in our the minutes vehicle new drivers Japan. It’s for focused the vehicle proactively EVs this then new location. safety. whether PyroThin, news XX% Toyota America in and relevant but thermal just Current India forecasting the with than and time is red higher providing meet encouraging will market, of active caused U.S. determines the of come not in updates ensuring and a summary with view less minds of of the being the real that and X-minute the the warning undergoing the been already single a global EVs other the become results XX% warning standards not The we to cell. event. year that and this evacuate that X.X developing Slide world. relevant with OEM. that is capabilities The give circle not attempting UN with propagation our position make management update millions more issue scale them consumers’ transportation enable the to X, building at a intended The when or than GTR systems we of quoting million we but and maintain thermal additional of more size create the accurate is constructive the market. circle volume is an million to where testing color OEMs our have no In but are their catastrophic are is by of vehicle requirements we’re lead chart, make to are Japan, more a sales commercial mandatory of and business in efforts. in meet transportation by turn for headquarters we some surprise focus runaway or In around of X Sandler some OEMs the of are in you runaway currently trigger new requirement propagation for can GM the a in thermal vehicle map most that danger in effect regulation can OEMs their business, see into can safety battery a event market China, on global we provide Here, This this illustrated issue approximate vehicles last these presence became X.X of and efforts to for new in to With the Piper currently vehicles North as the is hard of XXXX, warning, enabling is and bringing that the placement the requirements of on

glad that the customers basis and has be XX last are over additional in feel convert We relevant the this the ability activity with current see see in next and our XXXX. months will with successfully our of their and a stages in months the largest the Toyota. team of to awards these into confident surpass global quoting can You quotes on GM entered over awards to Europe Asia the value value that XX

of with all materialize. forthcoming linked be is these as to you readiness and timing to the As know, these our as business awards awards award will an the OEM’s possible communication as

Assessing with call over XXXX. after these billion probability turn million capacity, our through revenue path a become to us to $XXX value that, Don. the EBITDA back and the quotes for delivering company to near-term of annual achieve takes a happy shortly objectives we of of I’m $X.X With

Don Young

Ricardo. Thank you,

Before Q&A session, points. to to like important we I the two turn would reiterate

making the let’s our cash businesses of on and today $X.X industrial that to XXXX strong we providing Thank in And and revenue our are positive are targets. EV to the to both a for are and flow XXXX on XXXX business and $XXX reach and that us turn a turning way is favorable backdrop laser-focused million are Param, billion we its second, First, going goal of Q&A. investments energy revenue of into is EBITDA. longer-term you. the

Operator

line Instructions] with line open. is now [Operator first Eric Stine of comes your the Our question Absolutely. from Craig-Hallum. Eric,

Eric Stine

Good morning, everyone.

Don Young

Eric. Hi,

Eric Stine

mean I so informative. Hey, Slide great a thanks X. slide, on very that’s first,

is here towards activity just of you in it’s value acceleration on X? playing on and your Maybe side, that Plant that X for scarcity side plans discussions work thinking about Phase EV thanks that. also just So into as how how I’m making curious including into you’re the the playing and

Don Young

by me to Well, important we just that is our out demonstrate build our that capacity. let ability it start saying

that. know targets, it have on our we Motors timeframe, that even more place capacity. energy, and we But As XXXX for relying we’ve take XXXX targets. said will Phase than you it’s of capacity times, the our to the if a and many meet General even industrial, in We X revenue significant majority represents in XXXX be Toyota, that

communicating we of So continue that that to them. the it’s OEMs next important And of job demonstrate of have we’re will good that. to wave think we this a doing supplying capability

Eric Stine

quoting maybe of something today, this be decisions today, gets make is line a to I So you’ve OEMs, around sounds that’s of not I in to issue – like up although think would mean, further it necessarily to the given in done? the they it the that that concern of them terms want importance

Don Young

think I fair, that’s Eric.

a think – it’s of communications And awards. win our of this of we go out again, next sort part they it’s as instinct set that I and that’s fair have.

Eric Stine

Yes.

industry are rather service mean as one, then the important of it into making containment the play put – just it? able activity well, it to learners than just be a mean, as in pretty seems the that the catastrophic on does is acceleration type more a you’re of And event what – that fire second that seeing do? how of you you I I Okay. to thing

Don Young

past are – understood the than our overall. a Well, the for a very about that those for that that positive baseline cell dramatic the bad sure. I us, well that those or design a to discussed And And standard higher of automobile than openly replaced, with catastrophic replacement think I can Those products event implemented. impacts in work to cell. the only are but the working I slide the in seeing be a for a way Most module that that think OEMs the safety the are in that, we’re of the we’re more setting articulated some on a again, we’ve to are our service-oriented to be requirements. to is mindset the related Ricardo, is both change slow begin of think, striving service propagation, script the and regulatory having from isolate and that well, standards itself not and of again, of fire manner

So our we aspects very positive those regulatory relied business. really our to think but we foundational for are never on standards and business, are drive excellent. think We’ve those

Eric Stine

lot. a thanks Okay,

Don Young

Thank you, Eric.

Ricardo Rodriguez

Thank you.

Operator

your question. you Thank for

comes the with line is next question open. line Sandler. Potter of Our Alex Piper from Alex, your now

Alex Potter

Great. lot. guys. Thanks a Hi,

clearly, platform. in pretty going they they these European some So that than Asian land obviously, including I just Altium slide. those regions. interesting is be had lot to is places all OEMs, Slide of of a platforms, encouraging or and This their own I primarily far have a other America. other guess, have an is on X, the own from Georgia. that quoting of on, their American to it’s one A see questions North But those North had But say, activity, I question. are masses plans

of to looking supply them Are Asia their much of localizing of concern ramps? any how or of Europe more a localized support Georgia? more Are for you So needs more as that battery and own their chains? able of people supply some is these are having to customers all on out either insisting capacity in

Don Young

very we’ve what way thinking about America between OEMs operation, our plants. facilities aspect the and of plants. is own and to here in will supply regionally. have first we communicated capacity to closer committing as our it’s chain The to North – our and American the we fabrication to have expanding have clear And $X.X the assembly it in also Island European move a But way is have rapidly OEM billion Yes, very are to it observation. capability it’s principally a supply that to that Georgia that will Rhode today revenue us their we assembly we’re just want that Mexico, chain of that North good

their I So while these nature, base, the circle, of I you so say are guess in in we – also that global their many in locations. their just will, and locate companies home would if

locations, regional guess, should say. the I So I

will mix, that, of over how X, mindful plant. million that on so Phase Plant that $XXX and And so I our about we depending fully Alex. $X.X out and of we of getting And on X of building mix billion are a target. EBITDA second focused as anyway, think builds demand on and we are revenue business X to our certainly of Plant and be we utilize Today, Phase X we mindful as geographic think of highly time

Alex Potter

Yes, Great. Perfect. at thing time. one a

Okay.

it you second staffing times you in bit. you maybe this couple like little sounds has the alluded the bottlenecks. facility that can hoping had a be of that a Mexico So you Island, – remarks. now experiencing like downsize It may bit primarily to guess, to, a question, some on elaborate Island. but Rhode the prepared I’m in sounded I Rhode like also sounded It was in opened up, able you’re

potential could in Georgia, problems either would be as So any that well? Island you’re maybe hiring, helpful Rhode on having just if you in Thanks. staffing, or elaborate

Don Young

Yes. Thank you, Alex.

course improved aerogel the was for a staffing made QX our in months. facility over facility. struggle last July, staffing bit a the in good progress of the us of in of that have coming We It past the and this manufacturing here we year, And year X particular, QX. here have into of latter part

less us. issue – this doing margin are the and do – what of to for The And so is and it we an we really in alluded Ricardo improve. walk to

now, high operating, meant on think we the We required I won’t redundant have Island but Mexico going the we have really have early-stage And I facilities, will it as here, in assembly more today the assembly that Right to some here. we’re forward. up ramping that that Mexico be we will very sort or prototyping to the of ramp. be both always them going of Rhode capability do. work for activities is volumes

get activities, to those get being our of able able – to being income some redundant So statement. off eliminate eliminate the activities, those to of non-recurring to

significantly. on improve margins we’re focused gross And our very that. improve will We

Ricardo Rodriguez

the key on And Island, another come team Rhode side over it add mentioned in our may XXX scheme month incentive I to before less at is, aimed up thing HR we Rhode that here thermal well. Island and XXX the end currently operations particularly when to we If that – comes I an of with have still plant the in the this drop than aerogel have know will Yes. team as barrier I retention. managing assembly here people

is quick a in actually one So that QX. pretty transition

get has risk, team And implemented think so it while we’re under that highlighting control. the the do to we enough measures

Don Young

Yes.

Alex Potter

Thanks, guys. Okay. Perfect.

Don Young

Thank Alex. you,

Operator

for question. you your Thank

B. comes line line with is Our next your Chris, Souther of the Riley. from Chris open. now question

Chris Souther

Hey, maybe guys. three and consistent how how you color we more would provide quoting my of Toyota Could used Should then as discuss the step about time or the slide? way just Just commercial in and orders testing bit Toyota on testing kind question the quoting took either for think last progress and the the before from or to about we and that different of a that taking you be think Thanks here. lines versus GM should line came GM kind the with it steps time and helpful. was shrunk stages?

Don Young

is the very X, later serve of the And kind probably certainly, phase in Stage part X the quoting Stage testing much Stage Stage of X, is think solidly in Well, earlier concept. X our and quoting, to But are as around those qualification through stages concepts. right performance we of when product gone quality two we have specifications. significant through amount we, and a testing and of I use again, systems

late work pretty is OEM. given this with our development in So stage a

is of three, So trying see where into here that on quarters. Slide awards translate four the that circles you X definitely blue course from we’re Stage two, work over that to the coming X the

Chris Souther

Got it.

$XXX Okay. the like you’ve content are It conservative And are with content volumes million awarded then the that the expecting the either you per on or here OEM just per kind vehicle. really talked and ranges at about forecast, vehicle. being of looking looks XXXX you’re guys target PyroThin

through X of at looking are kind already it’s the could up towards up nicely setting yourself because you filling of Phase obviously, there. that, of particularly where midpoint you maybe guys you walk quickly we’re pretty just X So think Plant if

So wanted about then not you of just subsequently, and initially get should we talking vehicle I but content range still sense of had our a about? that talked coming per to think guys how kind initially, about that or we’re in

Ricardo Rodriguez

Yes. one. this is I mean interesting an

between cells. So content we our are the those vehicle between prismatic OEMs in technology in going is difference seeing pouch per where and a configurations cell

example, for Altium pouch so, cells. is And running

a would it on well That volume vehicle, well or is a vehicle you’re Slide vehicle. the communicated are so here some that And mean $X,XXX us per in above X $XXX above right. thermal will barriers $XXX but we think X.X for million XXXX. assessments far. of I put the their around Sandler’s all so settle we’ve Piper to we content take GM’s And external at million when

in our is on mix with of Right CPV buildup that we of We of to XXXX Phase of – well a here, own purview that revenue are find accelerate we having still a the best I expansion thermal all of X to stages going knowledge information tripling in revenues truly an where volumes yes, could and the in that there mean through order the the think other awards and we to to have. and awards team commercial assessment which lie with is But barrier of land. still will definitely accommodate energy and will GM’s the the that where very current industrial in our chance making is ourselves of. now, final these accurate situation the of the the

Don Young

we And have including pack that over there. quite smaller, clearly vehicles the have look that just a General sort they Chris, XXXX, think XXXX, other of on articulated you And you is get across would CPV making and if here fewer some fairly the thing, range that the vehicles, look translate at some rollout if very higher Motors with the modules of model from and course off of you vehicle, spectrum and I that those started that large I with mention General are of up vehicles volume XXXX, one broad Toyota. Motors vehicles. their battery frankly. has the know we

is mindful So, one, very we are and good of it. your a question

$XXX that today. kind have, even $XXX of and think are to the We higher to I CPV focus than though continued range, numbers on try that have people in and

Ricardo Rodriguez

goes And way was of equipped X it that we scoped handle Phase of already million $XXX back I guess when phases. out really million look it X, of both CapEx a to inside around because is is this the the why also to is $XXX equipment at building Phase

to at in time. in any given we bring around X able so point then months’ notice within are And XX Phase

X. is at the awards, as future. that’s EBITDA we And these look into $XXX we this into very million our $X.X quotes revenue of level as And convert accelerate Phase mind really why of so billion could well here, and

Don Young

X, and Yes. those be That that example, the see are to both another million. and up clearly, of advance faster would in in And making X spending we I the to wave say of Ricardo our in the create to ‘XX we now phases, to that’s handle whether able the with investments XXXX, be And Phase and are that scripts do second understand – to margins in the ourselves in those additional in I $XXX we and X. we to automation, estimate talked ‘XX. volumes we investments are we spending support combination are capacity that Phase in to people But we believe for it about an to great volumes. bringing processes cost extent here Plant And infrastructure a but higher it’s our making those XXXX prepare and today, in that in actions walk that Ricardo strive pinching articulated in his those good have us business in and our volumes. greater as favorably we that margin articulated. very script, leveraging for and margins The those we doing things, two XX% math practices gross for works out

Chris Souther

the up enough very Okay. And that helpful. if X.X just not already all of add probably kind you quoting, here. is that’s you people are No,

is to something look the someone everything, you you that? of it you of I about capacity am would So, or curious think X else’s of right? that build where piggyback of question. facility you space to how a kind Is beyond there kind If of there, could kind think around kind Phase win have to you would on kind additional elsewhere were

Don Young

want have of that in that us build likely and believe utilize are that fully the feel making success, we for That’s do bit we to shorten to we international – make possibly think that about of supply that a amount these want the think generating focus that aerogel Alex’s billion And revenue are an we and to cash significant we facility lot a back do with try of well location, little for a well to it very will questions. are here. Yes. $X.X to and when preparing that good in it investments lot business doing may quite that level are question sense to to from we our that plant on I in that, manner. And we manufacturing chain. that OEMs getting to elsewhere as it’s third those

Ricardo Rodriguez

XXXX. well. a many volumes thing out forecast In as OEMs, on is X% that expects of These these of volumes platform exactly market Yes. the to subset the past of their a mean is quoting – has worth OEMs with EVs, the sell we being right. these I nameplate were XXXX mean EV X quotes, a we quoting many Slide are sizing rolled another that that how these the aren’t I noting these that in total or are

next within manage X So, billion X.X well over here we can X we the the to pretty years years. think

Chris Souther

helpful. very That’s Okay.

Don Young

Thank you, Chris.

Operator

for question. you Thank your

Jason question Colin Rusch next on behalf of of comes from with Our the line Burnoff Oppenheimer.

open. now is line Your

Colin Rusch

am on Sorry, guys. this is actually Colin. line the I

some good So, looks of pretty customers, and from the substantial. terms the that you the year progress revenue diversity making industrial in of this and looks also here growth customer energy base which like expanding guys visibility it to next on are year,

Don Young

continues the rewarding, while It we business we to have strong we is have U.S. majority really serving – extremely our continues It team a business around tremendous initial to a outside U.S. business. that this the of growth the be world Obviously, It is market. the here be have in

business Apart every but from pipe, business the like pipe in the important is both on in load. liquefaction like are you quarter interesting then we diversity in pipeline always seeing on also in the to all has regions, LNG say swings side the So, sort I the an bit footprint, of that serving. the in just business course, business, are the traditional the get really. of those project terminal we will, project activities, on and opportunities more and subsea the since side. side. be we maintenance work a introduced COVID a of receiving we maintenance us applications outstanding would the side products of And nearly of also to quite And really geographically. array and base continues lot work if interruption, the I that part grew Maintenance that that felt our

we are about that so business. And really excited

we for their we that Sometimes, can significant think that continue about on ESG a it goals and on products our and sustainability is discussions own but commitments. asset believe that these spot efficiency, in trend I to sure, business about we the Think safety our are And focused think grow. EV as lost also facilities. it gets mega resiliency

business. part of So, appreciate really the again, I our important question. an It’s

Colin Rusch

on that $XX to the the looks fairly million, of it little balance I of how little guess your Okay. And real And out? XXX you for million year. to timeframes? substantial Excellent. can go, like to plan $XX year about cadence this bit And end a can have amount you talk or of you money numbers, the any more a without got then about you impact it the defer a that through any next bit is into flow CapEx spent of left XQ. going

Ricardo Rodriguez

CapEx. would be there of the $XX a between Yes. to is good $XXX million which quarter then QX some defer to chance going mean to is be And $XXX million of this of spend, like around I million. anywhere looking it’s

we in And expenses this spill come the next seeing budget there planned. of than total to for over CapEx XX% is to year. later yet, for good actually We our chance are around into originally a XX% year

Colin Rusch

super Okay. you much. helpful. Thank That’s so

Don Young

Yes.

We focused are that, on very Colin.

balance, X way. Plant and importance to want of obviously, we balance imagine, can you the a building sheet As in our timely

focused on you. both shape are So, fronts. those we are very sure of good making we on Thank in

Colin Rusch

Thank Okay. you.

Operator

your for you Thank question.

with Curran line open. Tom, your Our line Tom Holdings. Global next is of now the Seaport question from comes

Tom Curran

Thank you. Good morning.

Don Young

morning Good Tom.

Tom Curran

revisit so when model $XXX over of at expected the months margin driver’s annual XX% incurred to the being quantify and out gross you expect guidance, margin and you break For achieve the that rate target to $XX of I next gross for it level thermal and run million Could able please a XX revenue at months would steep second hit XX% you contribution should potentially that negative XX expected run Ricardo, just that million rate. improvement? just of $XXX half margin you barriers, from to be year, please suggests to and upswing to in bridge us each million. down

Ricardo Rodriguez

Sure.

least engineering I we to the XX% absorb implementing mentioned Then we XX% our Then the ability expenses, another improvement. that that that from conversion, mean anywhere think think we we improvement, as as the we think at are X assess conservative well. in of I that, some as about fixed shakes changes be but the script be that. full points improve over little go improving we And actually in of year, in are as that a our being XX% X look overall material will sales closer percentage that’s from that’s here to bit So, a for shipping – could XXXX, that’s less Mexico, of about we go reducing as – way are an XXXX. X we are out. aerogel aerogel cost to we percentage in about as at yields that Logistics, we points shipping from when because my I improvement

these put closer rate run to gets basis And the year. XX on that’s quarter what so that when we plus third to positive us together of a next all

walked would labor XX% the down. QX negative because that labor how point the think break think outlined, of of of I right. – XXXX that’s I can’t it mean be expenses the I expense variable temporary the totally I to

out… that take we if So,

Tom Curran

that’s that negative, million that steeply it XX% why $XX right? annualized at wasn’t was just And in Right. negative full

Ricardo Rodriguez

Exactly.

we about I was same, see going got in and QX, then I QX worse. mean probably was our we better to mean the or better, be I QX. QX kick as QX improvements is look think really – So, will QX at in,

Don Young

really it these… of lot goes a And to

Tom Curran

big of really the The XXXX be first inflection half point? should

Don Young

Correct.

Tom Curran

into crossover gross The margin. double-digit and then profitable

Don Young

Yes.

majority will have. We have some the of that we the operations redundant of eliminated

of right scale lot QX numbers especially And we here well, the big to up and We in where addressed we as that the now. a will in as are those drivers non-recurring have expenses have are QX. we compared

Tom Curran

the grant million do qualify the for $XXX approval? application, of the be timing an ideal you you what and milestone DOE and then When the And to should that. nature should, me for extended? certainly that path certainly Thanks next Helpful. if to grant candidate. And be Great. you it on the seems are would

Don Young

we course It are – you but we engaged, will would out have if application, these have Tom. these a are six can things capital. play will, next advisors And a the for months, process XXXX impact opaque, the very have little excellent good of we And our the is we think to be this – the and on here going grant. and an over things

are We well with engaged DOE.

all in a And out very things think bit again, I manner. unpredictable in the we quarterly in into DOE strategy. so I – on And process again, neatly to basis our But we that think I by I little the a where these play script – of think little an are this. we encouraged, outlined. that good stand make above has will updates we through progress think give candidate, I my of and a hard a certainly it’s said the as it we But are fits on

Tom Curran

luck Great. Thank Best with of it. you.

Don Young

Thanks Tom.

Operator

Amit Instructions] your with your Thank now Our of you Dayal H.C. from open. is Wainwright. for line question. [Operator line next Amit, question comes the

Amit Dayal

everyone. morning Good you. Thank

Don Young

Amit. Good morning

Amit Dayal

answered. Most my already questions of are

closer for us? with etcetera, you battery any with the side. to Just development Any testing, updates Are forward on moving customers?

Ricardo Rodriguez

meet on transitioning right larger that pretty cells we the cells. in the will the ramp when to that’s accelerate trying that so we of as in core just now the find that, as on do the the results that is Yes. – up I focused as making testing our form testing here partners and that’s that on coin mean goals the and seen cells. pace encouraging on I validation coin can we do really team have larger try to can to what mean we exhausted the factor some half doing we are second we year. given testing for have much do that whose end, that, And And pouch really is obviously, we relationship competency with ideal, cells our right is

Don Young

made is months that and investments in have some meaningful past team We paying the that in XX and off. equipment

We for as what in select battery those in and group script, process are materials, now – qualifying OEMs. as producing I the and we my of able are around automotive and are said a refer to destined we

think, also the will We and that we we see how not and that play in works say is importance the the outstanding, process. from This are percentages that a and quarters. both a introducing making here is don’t in to coming of view. so itself, fast out And as batteries progress and this we really silicon of technically, is cost a improving points we underestimate range. the of performance believe And drive greater in energy market density lithium-ion into a means

Amit Dayal

it. That’s Understood. I Appreciate all Thank you. guys. have

Don Young

Thank you, Amit.

Operator

you your question. Thank for

Moore line with question is Hutton. the Our open. next from of comes Chip, line Chip now your EF

Chip Moore

Good you. morning. Thank

Don Young

morning. Good

Chip Moore

to should a potential for I you agree more sales, is about funding. do I I follow-up their plans? PyroThin grant. great that’s the there am in conditional Do you DOE to their wanted you on securing think existing or loan. there candidate actually Altium largely there be curious contemplated accelerate think But

Don Young

find it is externally that such process numbers well and the Yes. and awarded again, a terrific. grant. GM billion $X.X and I both we because think for That by loan internally again, part DOE. was I Motors General LG, upped supported, are right? really of Motors think applied same encouraged a because but the that in LG from by themes, were we General haven’t But was what together, and encouraging to business we that, we that that. That have we But programs in of And was different program, just our a is

Chip Moore

helpful. That’s Understood.

one me. replacement sort and Battery materials materials. of first On of a you path some maybe more talked these how could Can of for of to qualifying about graphite Just sort Materials, for us of future sense a iterations? give be maybe a sense you much

Don Young

through working of this Well, we are today. much

our of replacement, do that’s XX% I say obviously. of range, if you silicon system, and has that should as large team Our much with And has does content. it or a times, of XX% capabilities the overall chemistry material. goals And as fairly with articulated to lot a the range will, to

amount the cell to of range think we battery single-digit to So, lithium-ion at batteries, vary typically small of that the in itself. today’s meaningful will relative relatively according improvements silicon best. and manufacturer But design some the

Chip Moore

you. Thank Alright. Prefect.

Ricardo Rodriguez

Thanks Chip.

Don Young

Chip. you, Thank

Operator

waiting. are Thank you further questions for There no currently your questions.

to Thank closing Young So, I will for the conference Don pass you. back remarks.

Don Young

for Thank interest in Thanks you, appreciate your Aspen Soram. help. Aerogels. We everyone’s

to Thanks We we good look the out work strongly, quarter very and day. results about so reporting Happy Have year XXXX a much. well. October. are doing the our third finishing in forward are we excited and

Operator

call. This conference you participation. concludes today’s for your Thank

You lines. now disconnect your may

Aspen Aerogels (ASPN) 31 Jul 222022 Q2 Earnings call transcript