Earnings call transcript Q2 2023

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Operator

Good morning. Thank you for attending the Aspen Aerogels, Inc. Q2 2023 Financial Results Call. [Operator Instructions] I would now like to turn the conference over to your host, Neal Baranosky, Aspen's Senior Director of Corporate Strategy and Finance. Thank you.

Mr. proceed, may You Baranosky.

Neal Baranosky

Young, Good Aspen thank second Aerogels' call. are results Henry. Rodriguez, and us Financial Chief quarter for for conference Officer. Don today us the fiscal With and morning you, CEO you Ricardo and joining financial President Thank year XXXX

to financial and as Don. a release non-GAAP GAAP The measures few to a on reconciliation like announcing of of that business the accepted well website, turning Aspen's I or use items are before applicable call most principles, results the Aspen's generally developments measures, compared press U.S. of management's as There the would financial housekeeping available address www.aerogel.com. over Investors to accounting section is

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

can deck You website. section of Investors our the the at find

will identified SEC. the Pages will today's materially. the the on statements risks subject governed to These call call, statements actual statements of of language. On Please to expectations. that our management and this content about uncertainties our in our include are risks cause and results by X uncertainties the disclaimer slide make and X forward-looking could filings These the be review our deck, factors as with differ

of press most intended not not measures we in in of are accordance to accordance measures these definitions to reconciliations this adjusted non-GAAP These as be these non-GAAP financial are and financial why a directly refer financial release. GAAP. isolation will yesterday's or non-GAAP measures present measures GAAP the prepared included The financial comparable in prepared we for During are EBITDA. financial with a with call, discussion results financial measures considered and measures, These substitute including non-GAAP in GAAP. to

ask time. time, And limit interest one at that X questions a session, during we the in to note, of final questions you Q&A the your

X, initial queue get get please questions. beyond we will have all you the to and the back If questions additional into

I'll now turn the call over to Don? Don.

Donald Young

Thank earnings comments key for critical us implementation OEM everyone. Thanks, strategy, XXXX of our Neil. will opportunities. complete my various business joining GM's My financial of profile, and our and initial efficiencies. picture morning, and our of our drawing the current will pipeline ramp QX EV and operating for Good our of benefits elements performance you a financial dig business by development I will highlight several the call. given into deeper remarks elements assets Ricardo strategy. of Aspen's

session. We will Q&A with conclude a

quality plan of partner. and manufacturing earnings will supplemental we and last implementation our our Energy distribution exclusively from supports this sourced supply shipped arrangement The be specifications Aspen, our product arrangement through produced introduced The the supplemental for customers. call, with to supply under our and to of by our critical idea labeling Industrial several aerogel the elements During our our our related to strategy. customers products us supply of our

supply dependable of XX%. our constraints to a to us consistent company times grow that without load of continue gross at energy of serve achieving customers base to allows and lead more with it shorter, with First, least overall and margins goal revenue industrial our in manner

profit supplemental of right-timing third, order a approximately X near-term barrier our a $XXX $XXX annually to revenue, that and produce dedicate assets produce supply focus by we current strong the of arrangement thermal it profitability million potential us on significant Plant the the EV phase approximately driving and Second, to our allows million PyroThin maintain in commercial Plant that of in allows the it million Georgia. OEMs. And to building balance business to gross In of Island We existing implementation the of of us construction from final sheet Rhode our resources allows opportunities. in whole, has believe ramp us X of approximately opportunities and to EBITDA. support around to the are $XXX

We on rate run are four over quarters. this next six the of striving a to level basis business hit performance to

we work the industrial we materials. that our design At platform potential talented more into we upside markets, wins EV aerogel our longer-term to base as to garnering high-value believe and leverage profitable load same teams additional out technology build to from in of OEMs battery time, maintain including continue our ongoing have full energy a revenue

runaway. the wins thermal OEMs, design we as continue additional an associated mitigation build from industry reputation risk EV our the to of Regarding with in leader

We of as the are platforms. OEMs with several working they designs finalize EV closely their battery

earlier, announced truck European our OEM design major group. subsidiary we of an we award commercial a third from received As important

We to customer. this are parts production now delivering

In later Motors believe on we line volumes enter design ramp the in awards as at electric XXXX. OEMs the Silverado, least anticipate ramp have from XXXX they Equinox revenue acceleration other of addition, we the phase production this meantime, sight Blazer, X of commence and we and BrightDrop In an the vehicles. expected from near-term higher-volume year with to General EV of in

of business; a X strong. demand and by to we environment, and are efficiencies Energy financial Turning Slide chain Driven more and our record supply both Energy product achieved mix, normalized a Industrial performance operating our Energy on We margin business overall of strong support are Industrial Industrial least gross gross XX%. track margin for in believe the having target at company XX%. QX we of provide

program manufacturing the the end, we Industrial focused that completion with potential contribute are EBITDA begins drive We our incremental greater test as to arrangement industrial than before has our is strategy additional X, XXXX. Energy profit demand said full we and To revenue, in producing significantly plan our especially currently believe, barrier. we on qualifications produce XXXX. XXXX to that supplemental partner to completed, supply QX we key supplemental when The during to Plant manufacturing supply the balancing and have can from product energy lines dedicate business. demand which previously we thermal supply PyroThin of to gross the during for aerogel We

in profitability. efficiencies with operating and the about strategic blocking Industrial resulted ways, unit PyroThin Energy many significant on in was improvements QX a slide; with in Turning and back earlier both gross in keen segments. Progress margin XX% a tackling barriers economics the thermal focus advancement and to and

and million focus we intense at row achieving To to quarters are with reaching goal OpEx near-term least financial our revenue with in million margins control these $X.X is careful of incremental umbrella a Consistent gross X profit. compare QX goals, of performance, the our factor with gross of profitability we illustrate XX%. contributing the at and incremental improved of XXXX, interesting $X.X XXXX on of operating of level. it under where the QX $XX falls impact the maintaining had million of Each

Aspen our barriers $XXX has approximately million the and potential is and the upon I I of the the Ricardo, turn approximately Plant timing over the vision and of on the supply to pillars EBITDA. the annual PyroThin million business that Plant our an basis, the generate, dedication X Before call X that thermal supplemental right existing execution profit of reiterate gross of X. of million revenue, in in strategy, production resources arrangement, in to believe built to $XXX to our namely, implementation want we successful $XXX opportunities, the from Again, for approximately

of our our and create during and optimize business upside we EV the unnecessary period ramp, to use existing avoid opportunity and that a opportunities we our economic full believe maintain OEMs potential to but dilution. a We assets while cash-generating of uncertainty

Ricardo, over to you.

Ricardo Rodriguez

our across on and everyone. year to of half segments. Don and start you, briefly the the covering move this of business by good Thank our quarter then results drivers and key discuss second XXXX demand morning, I'll the and near-term first outlook

the performance to we're also X. as second without the Georgia as we've handing we historically to continue Plant spend back grow referred Before requiring out company framing a financial to gearing continued plant to time for Don, near-term improvements call aerogel I'll in some which how

QX. QX These a is in constrained productivity those particularly and to from a our with lines To X. year-over-year. revenue cover at growth production the to lines, were and hour on an $XX.X was of the during revenues a of with on supply down we're week; in this downtime translates the during we start during quarter. is necessary the was on which that Slide for maintenance ensure quarter revenues, I'll its loss X X into XX in plant down operation ready of Beginning days our X% X% quarter. production days least X second lines XXXX, for ramp during in of upgrades expected In of running planned aerogel XXXX, of that X an million half delivered PyroThin QX day, This the fulfill X as results demand

the of XX% a Industrial year-over-year million a first increase. revenue Energy we Year-to-date, year million, half the reflects delivered $XX.X revenues of were have year-over-year X% in increase. $XX.X which

to on our and $XX.X production constraints, X% Energy quarterly that focus a load increase continue optimizing increase. of on operations making million hours those standard mix, in and Given a products the our least sales, by processing in capacity QX, our X% delivered the reflecting to require we lighten Industrial year-over-year

excess in soon our business, quarters. X during to fulfill have fulfill our backlog second supply for to demand, possible. next over bringing supply we million the on as Adding to year X the energy of this Don's earlier manufacturing as half continuing are optimize remarks $XXX of and To in the mix on to approximately we focused steady orders contract

up we were year-over-year and nameplate QX from in that EV quarter-over-quarter, communicated from thermal that bZXX. the our $XX.X the during revenues and million an we X% delay XX% increase expected Motors General steady barrier volumes of the reflecting Toyota supply, demand results

the represent XX% of of barrier the during $XX.X increase Our over XXXX. first EV XXXX first revenues thermal half million half of a

sales, of percentage our main In raw some of our for Next, work made silanes. encouraging particularly X the percentage main chain have million materials, normalized below I'll costs in of these come provide and reducing our is to points supply a points procurement of of the quarter target $XX.X usual expenses of cost of that groups Material it XX points sales, see put up expenses. sales. environment, of percentage our into a XX the summary reflecting

products raw material enabled These include performance to insurance, factory finished points were materials XX rent, first sales. $XX favorably and points or to target million inspection. costs XXXX of utilities, a below costs of convert points XX which XXX total basis percentage manufacturing QX labor, points XX required all describe of in costs of this sales. QX. quality our process, direct of in points sales compare elements production Conversion year into logistics, percentage of of which $XX.X of of XX percentage of the or all percentage results QX sales, were supplies, we overhead, our costs These conversion to as be million half costs The or

rate run revenue mentioned, As points of long-term points is these costs our at higher of previously for percentage sales. XX XX target percentage a to

have still ahead of work here. us we So,

While thanks capturing we've made to our improvements, operations additional we costs. to primarily efficiency these of opportunities continue in to reduce need Mexico, the

Island XX million conversion is year-over-year $XX.X will our million standard in cost finds costs of products points hour improvement reflects fully As converted of here Energy percentage continue in performance PyroThin our conversion fabricating $XX and of primarily plant has segment to versus we Year-to-date, the Rhode sales Rhode reductions within driving our product of in our been Mexico Island. a subsea several Industrial by of driven flow, and its the making it site. at

loss the how were lower of on QX, base just need still during $X.X gross our $X.X In a we that profitability. only haven't profit a fixed company-level million on The been have XX% cost million gross is margins to revenues pushing last profit and higher helpful year revenues cost drive through were of been quarter X% relying over improvement $X.X same we for to million tailwinds up process lower, our updates. keep manufacturing but highlighting gross material

year-over-year thermal profit by XX% incremental compare Our improved million segment a In we barrier thermal of barriers, this $XXX,XXX. increase. had only EV on of loss quarter $X.X in If $X.X QX, million Energy QX. our gross gross delivered Industrial revenue million loss or EV we $X.X gross with a

loss and gross that of Mexico. in incurred quarter also benefits profit facilities for thermal XXXX EV $X.X Energy year during segments, margins Our this Industrial XX% X% XX% lower EV negative barriers our resulting than reflecting and million the was second respectively. of segment, the in of barrier our loss gross automation and the of QX gross thermal assembly in quarter last were during we The

approximately needed $XX additional lowered we have to run XXXX, of QX to implementing, now point through achieve million barriers, thermal EV positive we revenue For rate million $XX revenues. this breakeven the quarterly assembly profit. that team a gross Thanks a of automation been has of to quarterly

gross the of $XX.X the million half improvement our expenses million were of sized near-term million over $X million in which our a for year. the last during loss million profit Operating during $XXX reflects period For of capacity versus revenue year, annual same our first are the of profit gross $XX.X $XX.X quarter. projected

OpEx million we $XX level new with increases X are system productivity consecutive increasing additional how any paybacks. ensured and work that XX-month range around We have continue off through and our with process upgrades streamlining important to the on development quarters focused and costs

year-over-year negative EBITDA $XX.X X/Xrd reduction strategic to XX%. the barrier $XX.X adjusted million specific launch accelerating our of investments period was our during of year, and customers. a EBITDA our in resulting quarter-over-quarter EV last million together, elements Putting was OpEx negative in Approximately sales in same these of compared by $X.X loss QX million thermal in tied increase activity to resources commercial driven with

compare adjusted million XXXX, year. our our expectations we the and first those $XX.X last half original year half of is million of this $XX our loss during we're for of EBITDA first with year-to-date by versus plans the lower million, EBITDA ahead When $X.X loss of

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

per versus share $X.XX in quarter of a the $XX.X loss million in XXXX. $X.XX of QX per to $XX.X same net or million Our loss net decreased share or

Our net loss from by decreased $X.X million. quarter-over-quarter $XX.X million

$XX.X down than our during or of million is loss net of loss first by half year-to-date million million Our last $XX.X lower $XX.X the year XX%. of

flow cash that The and cash of to increase million. in to million in in million of and $XX.X $X.X $X.X key of million $X.X needs receivable a turn up an accounts decrease items working in us our adjusted working used EBITDA quarter were inventory balance and reflected I'll our free $X.X sheet. operations Next, payable by while accounts our and million, capital Cash during negative decrease a enabled the consumed of million $X.X capital of increased

Georgia to a $XX the spot. the of This main spent helping put of bring expenditures for quarter Plant X operating capital during $XX.X million. the $XX.X Our CapEx at were in was our million buildings our quarter cash million. needs the in resting and closing plant healthy

While our facilities capacity XXXX in of was state-of-the-art through material our spent upgrades along our construction and support finishing meaningful the $XX.X to opened thermal Center, to up the on million labs remaining EV Boston. Mexico tooling R&D of Advanced Thermal ramp barrier recently outside Barrier of the end with the

half end incurred our year have on first the progress expenses manufacturing continues, it. of of the $XXX.X aerogel construction in million we second As through the plant of capital the towards

position to the project we most less expect spend As left we of the the and Xth with construction of $XXX.X subcontractors pace. decide X at $XX quarter us Construction, million in year July over of when of we remainder right $XXX equity asset of site cash the this with time full to to complete Turner the shareholders' and the of reaccelerate to and quarters during million the project support million. weekend ended We preserve the from than the

where we've for the like XXXX. to been cover XX and into financial months our over Turning the I'd going X, spend recapping of some outlook last Slide updated time to before remainder

a haven't past General revenue of where through the On rate QX and of in from But how, company's $XX gross of fulfilled Motors, time, the in XXXX supplemental low million the quarter. quarters. negative we recent QX broken can most quarterly the margins XXXX, of year profit with XX% run from in this we've the left you side, see a improved exception positive yet to the of XX% in same at we order X the QX XX%

is QX demand to their it's XXXX demand adjusted that cost of to dependent possibility Our of to accelerate our from Motors fulfill emphasis ability With into a to this we've our outlook XXXX from still This path million. Since a revenue communicated our variability but XXXX's alongside most adjusted growing General in in on XXXX, in our XXXX quarter. on a doubling of we QX level heavily to million industrial base million XXXX, businesses this EBITDA loss $XX.X has loss to in recent $XX of from fixed range of and and our by EBITDA XXXX double demand also reducing million loss $XXX increased backlog. our GM, of our in revenues revenues high energy from plans still maintain we've order $XXX million an profitability. of for $XX the shrunk

our minute I'll positive initiatives our guidance think for more go optimizing thermal mix, we into as and Energy in Mexico key profitability, yield material costs, in on EV managing near-term ramp. barrier's are about and operations results such how to detail driving XXXX we General costs in our process assembly is our Motors in subsea we Where improvements updating a our where revenue seeing payback. Industrial raw expected reducing structural from are a

these $XX by were ahead of we original plans, were to efficiencies already versus the where this year. we planning we're time materialize be As as expecting our million

our $XX million, revising $XX million is time, our a revenue higher At adjusted the a year. the near-term $XX further to million for while rate EBITDA required million drive loss of negative to adjusted to prior a versus $X run of efficiencies, loss reduction range same to range a EBITDA we're of $XX of million

respectively. improvement also we're million million loss in lower factor amortization the for earnings also to our per lowering represents CapEx our of spent and we XXXX. from CapEx million for meaningful year-to-date, year $XXX of of $XXX.X on With of per CapEx share as $XX schedule XX% a we're and million capital, loss guidance different still deployed on to million, $X.XX million of reduction of As with This the share. an share our effect $XX interest we year per spend million $XX.X guidance updated less the and prior income than operate not our remainder end upper range of keeping $XX of $X.XX focused million. brings to to in a $XX $XXX XX% of loss more to loss the a guidance to the net This range, an aiming below

increase clear picture see demand We amount of we thermal second a this EV QX half of XXXX the if QX very will barrier as only materialize. and

we've focused come to $XX during with To us in working asset-backed million current to with million of instruments other and In $XX discussions the provide least sources of flexibility, we're agreement cash an to the on and the recently sheet with on as are few liquidity non-dilutive near-term, CapEx an capital up financing fund are next company lenders and leverage with leases the managing other lender to additional that quarters. asset provide of equipment loans, asset-backed credit, base. of such lines at pursuing balance our

over exceeding capacity have revenues, LPO. ATM $XXX June our of thermal our that demand Energy's applied current Program reaccelerating Loan we and pointing of that U.S. Office, equity remember on as starts may not in provide a program of with Department for EV of XX, construction flexibility Plant You million any the X, terminated we sold To annual XXXX. we have the loan barrier for towards revenue

electric loans of to infrastructure the was domestic for of large-scale created energy including vehicles. development LPO supporting manufacturing grant projects the fuel-efficient As of products, the expansion a goal of more with reminder, the

Technology Loan loan and team significant apply of invited XX which its Vehicle May with Office we of continued on the Our as to did part Manufacturing this program a Program was for year. has Advanced consultation

process battery no based well with that X. believe, can however, timing there will while performance and match timing of strategy and a our safety the it we be that LPO may are the is is for The importance our for ATVM uncertain upon as loan the guarantee a proposed good of be program, out, drawn right on application Plant looked part candidate and We direct that favorably. very

have of our the gotten quality positive materials We feedback of on the as also part application. provided

XXXX expected to the in to over we been forecast think EV we've Turning X, from has past reduction. which, production to an the provide recent with quarters the downward data XXXX in Slide about like like XXX,XXX vehicles General I'd help of XX% color of most forecast, more and the into a beyond vehicles of year vehicle second seen since IHS as ramp some the from half Ultium Motors' Markit expectation how Ultium-based be to of couple beginning over in of the XX,XXX adjusted produced

to half As believe QX XX% XXXX variability year, we in last half late produced our delay built the of this high. revenue in most this volume anticipated for still to be and QX. be of the we the putting projections the of for XXXX expected and forecast the is in second year, second revenue of expected particularly

EVs the a Chevy figure half target for resolve GM source currently issues is but its legacy XXXX, on of these to in of production cell platform. that reiterating supplier confident as in the a the that has the based cited it ability remains vehicle this challenges Ultium that yet not has the their Bolt, delay year, manufacturing battery said includes in XXX,XXX second automation

our over low and of increase able the to General revenue recent QX to upper QX demand IHS most end In in from currently is Ultium projecting Motors from achieve Motors of guidance. double into forecast, guidance, be XX% in our that then a QX, over our by that end With forming the QX. its levels General more and production production being QX's Markit EV than a ramp GM communicated QX part revenue we'd the higher triple and it's

Hummer the any portion wide EV, production vehicles increase. Lyriq a as particularly but of geared second the the of XXXX already and outcomes this can on But the of see, significant The demand scenario. Cadillac of such can range QX. large van demand half for that the in drive as is nameplates have to launched, BrightDrop been ramp the capitalize in encouraging, are you potential We here

Blazer and start support volumes. Detroit-based EV the will in negotiations of Silverado The will QX General automakers, by GM we're uncertainty including last the the recently the production ready earnings its production launched high-volume dates begin UAW Equinox amidst along calls the Motors. week with brought that of and ramp the reiterated that broader to during provide upcoming additional

investing continues IHS by years. capacity America half EVs with of align Markit It the XXXX. our While XXXX over The within producing conversations reiterate is remains few term, to begins up of year the forecast ongoing also that latest producing emphasize of through ramp, wide, is XXXX other by North suppliers per targets X with outlook its GM GM units long outlook the million end production for the significantly strong. in belief trends as XXXX XXX,XXX GM, capacity and its in ramp IHS. believe XXXX. supported remains and the its This and our long-term for EV expectations first to we to next from has the continued commitments XXXX in these

Turning we are the our timing fill that capacity you a over like most million second business X what in this, Plant I'd X capacity. in a available asked have margins the The next as basically is or since of revenue lot the with which right building Plant We're To XXXX simpler. X; business $XXX and XX% answer Island during to quarters? EBITDA potential now investors to Slide X. that aerogel question is building a question of Rhode our us in announcing to cover

at reach barrier capacity Evolving will barrier determine timing when demand million. thermal estimate EV revenue approximate EV the our $XXX currently we which we of thermal

supply Our energy capacity industrial annual demand exceeds enabled the our XXXX. in $XXX already by initial arrangement million

percentage our deliver and have variance to make differences on of XX least gross range points costs in and sales working costs our of of conversion the we're XX% cost structure company, sales X up either X cost a less or across our we're to percentage between margins. products. these focused points exceed at buckets percentage sales driving manufacturing As XX material of to not points than

rate material this the on we revenues to experienced coming manage $XXX million is we've remain conversion basis potential as OpEx million run last targeted, X we to and annual rate a focused we on $XXX that less on the than gross basis. is If years deliver costs during managing below $XXX ramp of have run The its million million. profit annual on as of which an or XX% end, $XXX

Slide X, financial in gearing while of historical gearing plan basic this rate how on also our compares our showing an performance this quarterly with illustrated run We've near-term business basis. annual

While revenue we've brought is there material managed. run the rate being while down, manufacturing isn't and costs the ramp OpEx yet, costs

run supplemental profit our In one to and XXXX, of when XX%. order manufacturing to fixed a from thanks see were Motors, better QX General costs increased, absorbed revenue rate gross can our how improved our

make up rate our core potential the deliver combining elements As basis gross the the we have Don run annual EBITDA mentioned in same of gearing million that earlier, $XXX to of the or operating plus quarter. XX% an plan by margin on

by next fulfill it segments both profitability current we base, X are closer X we results posting our the the enabled to that on with delivering quarters, asset supply. to Over demand across getting and this to this as increases supplemental board forward our gearing and combined with looking is

our assistance As the as OpEx and already sales one of can costs remain focus see, higher a with cutting costs percentage and needs manufacturing near in conversion of on material revenues. there to or keeping our $XXX annually are million half

that what believe setting to driven and Turning cells. with this the X, global for not an of share will by a up lot and I but that about conditional vehicle believe is been like growth prismatic near-term close surge Aspen We or trend in really quarter underlying over vehicles a we pouch demand. This to would by matter not when, if. is electrification eventual the has high be of saying execution launched this that is Slide

$X.X addressable market annually that billion per of in expansion underlying compounded XXXX be PyroThin serviceable it now Our is and latest of assessments XX% an or between can then. of year

we work of don't enabling clear we exercise sizing pace, the on through and this plans wind on as our process safe a to that with most caution, their the have transition a ball OEMs at EV way is in While cases, different sails crystal electrification. it's market our

opportunity of to easy value getting that market our We only a these the demand capturing a only to an is we and the and global for size convinced subset really that market potential near-term create we geared assessments account that near-term. of this in started market, large that revenue remain a for step capturing energy sizing EV assets profitability back is When compare with $XXX gets these estimates. capacity million for is with building worth at our all closer results PyroThin, it and while post business of see annual to opportunity are as very

I'm with Don. the pass to And that, happy back to call

Donald Young

Ricardo. you, Thank

We of have covered QX and today in our ground reviewing significant a strategy. amount

Before move emphasize points. would like X to I Q&A, to we

driving profitability First opportunities. and we on and important point, our are perhaps resources our most focused significant from existing

the commercial approximately gross business $XXX to as believe of $XXX and near-term we has $XXX and of the million current approximately of constructed opportunities, have approximately million revenue, basis, EBITDA. profile annual with assets and We consistent profit on potential million an produce,

maintain design base battery materials. platform work additional ongoing more time, X profitable garnering run performance and markets, are hit we as this Industrial EV rate to striving our leveraging on potential teams full next high-value believe of We At a we the including our continue level business building talented longer-term have X quarters. revenue into from basis that upside aerogel in the OEMs, we to same technology to wins our a within Energy out of load

The allows supply Island Georgia. in to our arrangement Plant of of EV of finally, right to grow allows to of timing believe the of ramp constraints the in at supply industrial supply goal to and the of our implementation to our strategy. load thermal in gross construction maintain X phase manner margins a we base the of XX%. arrangement dedicate of final us of supply with supplemental overall critical revenue us order Plant X achieving strong consistent support by Second, in without us Rhode And supports several -- a OEMs. to It the produce sheet the balance elements of barriers allows the energy the PyroThin it continue least

third truck the of awards, with joined on in large XXXX emphasis, EV from the of at on line commence X GM believe and sight And addition volumes expected European of have commercial least customer in awards XXXX. we OEMs in list we having point to and that design ramp Toyota design to other near-term the

that Even anticipated success, EVs team believes safety in near-term battery with and need the our started more paramount. getting this becomes for just we yet performance are as

the that, operator, Q&A. to let's With turn

Operator

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

Eric Stine

the So start first, can we guidance. just with

to some the potentially steep reasons in seen, keeping OpEx guess, I might what especially here. if it's laid improvement the on the EBITDA we've I improvement ramp, flat in -- margins You've very from the how out seems the but GM know from your expect, largely dependent guide that quarter any, And and why quarter. fourth be little, second

whether maybe still that whether know thought was of skew And So positive year just quarter curious quarter, I fourth the that holds. potential -- that. in this you've past, a EBITDA

Ricardo Rodriguez

Yes.

quarter possibility fourth the if in positive GM EBITDA being the ramp think I is mean, a very much I still materializes. So

of this QX this in XXXX of and and at revenue to to a time, QX the for to range produce we the I QX comes it just have ramp a ability in given the of PyroThin fact record almost in scenario outcomes However, protect of as and -- that in year which the mean, same lot year. we having without have the during

not for that, products. totally optimize fulfilling we energy orders the product mix end, that combined so with the particular -- And I can you so without mean, felt only industrial in much

And year more have energy combined that position And of end at a we've GM first it's that the year, we year. of the so where some in the ramp think next with lower the postponed in we QX during of may sort really half aggressively of to products that's on materializing the the manufacturing of here a that be fulfill the -- I guides end and guidance. of what conservativeness of

as run the of I probability the good careful from still protect more just and be we these revenue rate increases, juice some do range Eric pretty I potential mean, and here, left squeeze, feel particularly but lower there's the to scenarios. want about to savings

Donald Young

in it us this right Eric, And or the I really that year. are halfway into outlook But that comfortable to higher to We're pretty said. I things is see happen, bit of improve realized you'll improve both it -- wide, a just what our our for -- to in here we us in of the would higher with comments fall And now, agreement course, while my the range. and and is continue where see revenue cause mentioned to X outlook that I the we're through Ricardo, will If supplemental there as is things of range. move bit, We to until test one right? And a in place, think the move outlook I One, EBITDA we outlook. course, year. now. of GM EBITDA can ramp. supply the that up we part things latter Ricardo get did those those echo we did revenue think second the add ability very

Eric Stine

OEMs the say, you of we the factors thoughts remainder to, I And you some that it term, then if to whether you able might be at there? I was timing, and this X how maybe is kind before of announce there a just on you OEM that know gating the longer mean, year. potentially -- call, had And know looked I an thought for do maybe have question. many second on least mentioned you any thought have out of on XXXX?

Donald Young

bit design ramp the I a this end half to-date the by again, a Well, are really but said dozen and near-term will We're -- we of reiterate in begin XXXX Those to contribute awards. year we opportunities. confident -- earnings call feel awards have have as the talked about that in and will design in X award XXXX. that a last we

continue all virtually need and in they all of going important. are And designs again, prismatic the of make those we But their awards say I inroads leaders I manner. with or into more have turn the this ever seeing that EV whether work to platforms. think be in can thermal believe of to companies, design continue who and We all are we And battery tell. -- to the the we around companies pouch with will world not, time are to that OEMs and we're some dangers industry think address we all risk. mitigation to confident address runaway that it are in And we the the will

Operator

Piper next from question Our Potter Alex from Sandler. comes

Alex Potter

So, pulls with the that the of the But weight be regard maybe easy than understanding profitability. of range you end that, could first to I that with sort which to trying on of your higher I'm their on things or that sort of give which sooner the time conceptualize. have you toward you and manufacturer, question one better contract confidence new hand, revenue, on guess is get the mentioned, if on margin. a to manufacturer contract -- impact online is expected comes would would what And

So what how confident manufacturer, dislocation. feel that the contract there as dislocation mix won't somewhere that does ball -- price you won't toward or do shift drop be it cost you somebody or the

be on comment regard would can you that great. in anything So

Donald Young

it about we So different ways. couple the a think way of

to we we from and there XX of that, East we current and and water energy turn producing bring it and to including raw several produce product take U.S., it our the If Providence we materials Island tariff X country export Asia, Asia. them pay of on bring the them out into around plant, from Europe we this them you the and -- compare or XX% to of and we and weeks from put back we China a we Rhode we up the about and in for much then bring them X/X industrial situation

of see capital that. a of working associated a time and there's cost So lot you a of lot of can lot and with all

got guess one just we from think for pricing our I our we clarity we've established. so clarity have energy And arrangements supplemental I work also supply. that I is with, know is contract a we lot And to industrial thing well as the our know for the described. And the products,

But -- So to XX very -- to of you They there's and that. closely not to industrial overall left an the is enhancements. mystery Yes, says this on XX% our targets saw XX% excuse it Alex, me, us at them. energy XX it margin. very math at execute. have enormous We're to level, without quarter pretty even working execute. clear supports with gross we amount that were of we of some have much least these the side, And

the raw little a period very after, chain operating of improving. X-year normalize I supply so. sort and say a hectic lot a let So sort me think of our of materials, are efficiencies or We're course, of seeing just bit

both the supply. of the sort of sort that's the guess, math, supplemental the I So and That's math. atmosphere behind

Ricardo Rodriguez

add, the able to not value just I fulfill are We margins million being incremental don't the of the for the expectations by business. the is there to Yes. And isn't energy on think mean, room may with But of profit. are we demand. taking the I is really gross energy we take our roughly -- aligned And $XXX contract to that if the bank. take here the really that all on us not that pressure importantly backlog margins side, with given there's why most our have manufacturer and the chain I support there us money

Alex Potter

for that last a and of quarters. when what's that? up I just sequentially somebody course just big ramps with given, the this some on to ramping bit question preparation inventory uncertain you uncertain risk like guess, can alluding goes for last sort GM the other a the I've inventory over of the turning This here noticed in is couple Eric, were one will is what how Maybe build guess, question potentially the these is ramp Don. that a of having I the I to ramp, But is qualitatively, and that appreciate reflecting par Is and the there What been has are just this. inventory factory to continue?

Ricardo Rodriguez

roughly you GM have changing And Yes. of the demand. be at and on But the every like. at every we us, weeks. going next a rough of next is the X flexibility, I weeks. get look sense, means a And what X mean can for to weeks we side, the you're demand view have a mean, on I invoice changed so build this really automotive right? demand And are weeks customer a in right X the that look customer XX again, you or inventory point, to from that like the when for

least aerogel having to on manage side, particularly inventory particularly us important the a give at to And this hand ramp, as here, with think we it's month react GM. on some so we

basically saw that of $X think I bit inventory in is million that roughly yes, PyroThin inventory to Mexico. -- goods quite we far of included so so -- finished processed ready And added And the a of really get what last telling mean, this -- is now repeat -- almost that of going actually, is we're X in a movie we if through QX the is QX you Slide year. I and

revenues If in the of an when you we rate barrier fulfilled basis, run thermal that right? had the QX ramp on EV we annual million see $XXX

QX. of really we the required That QX at had energy in quite came QX because PyroThin the expense of make in bit revenues a to for

until out really additional that so source is the business. get And energy same playing we dynamic here for the supply

thermal And some trust each I industrial is energy the barrier so warehouse quarter. It's side, really on And they me, enabling to on the end the going is team build side. doing flexibility the mean, towards empty inventory the really, that's can of everything where going. EV at the

Operator

Jeffrey Osborne from comes question next TD from Our Cowen.

Jeffrey Osborne

in X figures [ph] characterizing be a helpful. of potential awards. scope a question helpful? GM Is very terms IHS to of are those relative ramp the the way and on there had I size The would

Ricardo Rodriguez

think Toyota, it's that I nameplate. mean, right one I Yes. only secret in supplying no we're now,

here one with So makes the share volume. smallest on have near-term and is of lion's -- the And the award the up that we second the commercial the truck program, smallest the that's the GM one. then European --

make we GM. that good portion will of vehicle However, and program manufacturer, the XXXX to delivering a them with actually started seeing rate up already significantly parts the ramp the and Europe will it up commercial production currently run in with we're that in

Jeffrey Osborne

Jeff, I you announcing the of dimensioning referring that way awards were there year-end. a Is to was before X -- potential

Ricardo Rodriguez

pretty there's -- big ones, some mean Yes, I I right? mean,

Donald Young

we're focused. way again, Jeff, the say would I think, that I would that just, say, very Yes, I

that American there's We X in have years. reasonable a growth we significant and X And to our General from with even believe strong additional that North Europe market team could a wins, in largest Europe. chance be Motors

think, near I that supports process a lot started here the success the anticipating of get or that so way. pretty term, And a in in significant we're

to is of good front of Motors pretty really of are job a working and in hard very that. diversity think General geographies obviously So large OEMs we're create us right doing and But we numbers. we're and

able be answer end this to think a enter XXXX. I we'll So better that and question little we year as

Ricardo Rodriguez

cells. when keep the is thing prismatic thinking key about mind one Yes, that sizing they're for all these to in of European programs

And the than up ramp the the to that manufacture current is we per process so can and some that at think those we we're designs same vehicle content lower. of supplying. is But lot streamlined time, faster opportunity the parts a more

Jeffrey Osborne

one maybe follow-up. And just

maybe those, few 'XX all of X would a start really mentioned You 'XX. in ramped but in

fourth to the when it Would think about you need million maybe think when Georgia, pull and was trigger I finish to we restart to quarter to start were process? the Georgia of that us to of win have of do X, mind that Or but spring in I you keeping can $XXX in think sort you how do Georgia construction? construction the that. update cadence So all if 'XX would commence to

Ricardo Rodriguez

year. It other tends it That's do other Motors, that to prismatic the thinner. to cell really supplying frankly, the We General of these depends don't programs than we more be benefit that on need customers. think early next material

our programs -- be supporting would $XXX mostly could million cell prismatic We're we significantly higher. thinner. are the capacity that so actually on And

time what actually a So more think force make of the decision actually to have would we GM's to demand. plant would pull be I decision and the acceleration ahead

Operator

George from Our next from Gianarikas question comes Canaccord Genuity.

George Gianarikas

they kind give has Can are you again. the more that competing OEMs X like? the what process like? that about just you can Who are on detail as against? that focus of any look curious to requirements process bake-off the us look just I'm through? What you've So gone talk you the need. And if just to what

Ricardo Rodriguez

questions our all here one. amongst to of essence, so mean the mean, is -- with of similar wish Sales us to I answer developed I had [indiscernible] we But like Yes. that I in this get other George, to sheets, lot very compared And that used process Head help we us them. and the data able that a has battery being and are for. the thermal papers around isolation that ceramic materials being the essence, over the really main don't anymore. for We're team the get leverage we of with the mica the we in essence protection all lightest in "aspirational of fire inside solution that looking competitors" past looking for the requirement that between year they're this with and envelope [ph] X the of importantly, We're of in every miss single for the cell. thinnest the properties possible. spring only around in customers most looking They're our requirements the material. of one mechanical demonstrating is They're solving

it's so performance just these that about idea already in the This that, ways new many runaway less up designs flight progress. And it's at the fit about actually design for are OEMs. will thermal with in is demonstrating some of in solving and of coming and now --

the fit these pole tent have design time PyroThin And in to it's for requirements line we And on many making then ways. their on is actually think designs. bring -- I so in up to tallest really their speed within them the

a capital on that's GM to the underpin right? enables a the the Very that engineering approach a now, And vehicles vehicle through that exercise all even right? while, in it's develop safely delivers new bake-off really teams our battery nameplate-by-nameplate, to -- OEM, that Instead, the it. it's OEMs been a development that of the a by going the an that we and us. of it's more through. again, their inside General thought of same to inside supply on we in team will I to depending OEMs have lot think really also of few application programs a But then with took own exercise quoted battery have not And the product drawn-out process And more that announced application the pack source going of that platform or that takes have approvals Motors. of go of is get requirements haven't

right for -- in we're it's August. us Europe starting I mean, now,

pretty discussions But around that we So us getting of off. all these nature, in of with the the General OEM quite volume from that works platform we're strategic engagement feel customers, against they're have prototype taking August Europe single orders brands confident that that approach having. particularly the And multiple don't that with but becoming groups are have Motors this sort more has. of

Donald Young

Ricardo, image the thing would just of really I do One better, really ideas. other agree helping, and George, significant think, a their is add we're platform into too. lot I that's with fitting I

come challenges around really mitigation of of thermal test understand well. also the sort the of mechanical the have We the but to as runaway

of a bring we every lot into that with increasing so these is And that expertise expertise and discussions day passes.

than design competitive a Ricardo gating battery bake-off. at be, this with tends more agree do the I to about So own that their item point,

George Gianarikas

follow-up, make the a sure as to outcomes your low hit to I the of the just for And end just understood guidance at end of high GM. range

if this Slide QX of high bring hitting for you curious XX% $X,XXX [ph] -- that those you numbers, would did So say you the to and on And end GM. have range in mid I'm X, the XX% or the

Donald Young

at that change. I time, have but can from we which -- parts depends communication totally were rate the above basically in a to which come the in range in we I look current well still rate, would IHS supply demand come tell GM's inventory. has back on hard many same think we to the right? so GM always At I within the if is don't expectation, XX-week we that it it's them. We If well think So mean, numbers, like range. how

QX. come $XXX that's expectation, And over the this in -- a as revenue need that's we so about to in a of in run mean, what my them I I by to I mentioned year, And for I increase delivered right. next would us quarters X only the mean, remarks, in realistic we to right, think on rate million XX%

Operator

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

Christopher Souther

just the out margins? PyroThin when all contract on margins producing Maybe curious change point once little gross the like and breakeven the on takes Rhode for that's if puts gross margins step Island. I'm online, PyroThin of bit for you're comes there's down in a manufacturer just does the a that those

Ricardo Rodriguez

processes think mean breakeven on me by that wrong, I in that Island. only I really of energy the for industrial Island likely assembly. PyroThin ending given is industrial argue And lot But that those benefit side, efficiencies efficiencies PyroThin. driven No. up would mean, the and are taken on still the more all energy be side more out point I don't of there's get I'd Rhode a making the not of Rhode necessarily

Christopher Souther

ramp quarter. of the guidance. a to fourth GM's on that hit the just you then, last schedule the And in where Where and reflect EBITDA on range does put their GM slips of end if revenue one to low that of shake EBITDA out seems ramp. the It kind stays kind point a on targeted positive

kind there the you're since case? what seems of kind the is of Just people like upside to it guiding downside

Ricardo Rodriguez

of end a QX. really ramp expense the of come and range demand have QX, we good profitability. If it quite in there's bit think QX of I mean the in at on I the a coming probability GM's a of definitely would Yes. starts of high if

It not So right? out reflects I things higher range here. see playing mean, the a that, great that's of end but think reflects I guidance we good QX and a potentially how QX the

Operator

Thomas from Our comes Seaport. next Curran from question

Thomas Curran

add significant Just EV and X of most into customers. optimistic -- here with you're potentially going into business about to on that in significant TB development stage the the automotive some EV advanced cleanup OEMs converting

any you of European -- are X them X automotive each all group? then are OEMs? subsidiaries those Or but that confirm same of Just separate of of the distinct brands are the groups? could automotive And

Ricardo Rodriguez

you bingo It have board a looks like there.

Donald Young

the of group are separate part independent. are some and some or Yes,

Thomas Curran

all And Okay. European?

Ricardo Rodriguez

Yes.

Donald Young

Yes.

Thomas Curran

update could could account Are pursuing also second for for on as just LNG my you But on that customers in my year? well? product the energy first left you question percentage awards, side Nong I this EI market, industrial sales as delivered are here projects producing while. actually LNG you comparable won And out a of and revenue Mexico should that's the call division's you us Cryogel visible that for XXXX? then, opportunities over LNG which result a receiving of what large by currently in for to contract terminal any Fab And that size in now mean PTT LNG XXXX,

Donald Young

might part. missed I peel beginning I Let back with little me start that me And part. the bit. latter remind a the if

also to about extremely expanding on performed million. are which their significant facility we with orders. the projects. and was we're We board are well worked hard pursuing several that PTT the of our drawing of frankly, these are into they well PTT, the course, another Not I But well are projects. them, the earlier board. have size receiving way $XX line of working project all projects and on the where of on drawing specifications along, that is mean, course, LNG the we the as participate in of of

in we're think we So a there. position strong

which in on move energy our qualifying are to industrial supplemental the lion's Cryogel of supplier. X/X. in the around supply we product the will focused the We And next range of first the area share our agreement our Pyrogel is revenue supplemental with products

And breakdown side remaining so hot the the the is X/X -- on and that cold side and cryogenic roughly of slate. amount on the

you supply, have and good consuming as as of there's would business that reasons we is not important had EV supplemental Tom, through anticipated had it in one do demand it been we're for growing at capacity so and X us have destruction question thought business severely yes, know now. constrained that think the for we Plant the and no I the was was we business, to why this it So and would

of So point view. anyway, again, from sense important a that customer it's service of and in a both an to strategy. us, makes of excellent and economics we really ton And point our from Asia of we'll part from serve Asia, a lot service. business is view provide think for A of it

Ricardo Rodriguez

a Mexico. in I there think also on question was Cryogel there

maybe projects, additional Tom, put Mexico selling we're are roles for subsea out still through Cryogel our go cutting for so aerogel an in that so with just -- the just Island. Cryogel, clarify, installation of -- And come that being that of of to what It's get subsea Rhode being inside is basically encapsulation process roles those for Cryogel. and bags happening or they encapsulated not is products

Donald Young

No, was know you're a no, to just I I and reformed going kind guy. gas say, oil of

we've it's really won extend We're don't a a in of projects would by I that tremendous just but activity interesting us. so series is, we're a I as to say business XXXX. into amount well of -- surprised know, our subsea been we've And seeing little which well

business, So well. very that again, supporting think, I

Thomas Curran

LNG up subsea, provide us percentages you with could EI for Just as just to rough of wrap and then, revenue? respectively, this estimates

Donald Young

XX-XX like the side. I Pyrogel to the

Operator

Instructions] next question from Amit [Operator comes Our Wainwright. from Dayal H.C.

Amit Dayal

of most been have I addressed anyone's time. my Yes, take already. won't questions too much of

solutions to are product offering? Just other coming barrier any you on the competitive up thermal the side, competitive seeing

Ricardo Rodriguez

the kind we mean, processes within being out don't releases commercial that is in. but press and the engaged websites I see traction gaining them see put we of team No.

Donald Young

And team of optimizing the think something very the that to done our that's It product that our is the Occasionally, is a problem a a and multidimensional has addresses and all -- problem have problem it's around solve to but -- I challenge. of work that multidimensional dimensions address part hard we'll to that's solve. problem difficult. see of in to importance the

Operator

Our from next Colin question from comes Rusch Oppenheimer.

Colin Rusch

you Our more Tesla? outside the what checks structural suggests to the talk about win seeing of point around guys properties, just at this particularly are from into we becoming important offer as prevalent here. packs mechanical that those the that some mechanical you Can battery get rate leverage of properties critically you're

Ricardo Rodriguez

have lot as I well. -- mean, element I think and mean to just the they're going mechanical battery becoming I right? of continues more important, requirements a packs, these in crash structural now put

the of in to I meaningful of structurally But And cost plenty EVs. yield assembly and will a element cells the for there's as the overall, optimize considered, mechanical prior we're I'd structural structure focused, these I everybody and this and parts And a also, ancillary of think room the right? of of seeing, that think packs to get element actually of we pack the now not more we packs there its it's right. how have are a so really and LFP But to become as cells of itself. LFP has the in ease just integrity mean, these cost. say, packs. it's or of elements And itself lot even more cell design particularly generation interesting lot now complex pack just And things not these were for of

Donald Young

the the sort best that have mechanical existing value And the also of as thermal will, side the as expensive with we of we I part inserts the we mechanical it it OEMs are think materials of stability, to have part proposition later. certain thermal the the materials material -- only the do sense solution. of costly, the mechanical, helps as to of interesting and possible in I think some and our try and on to started if coming on opportunity the it thermal displace an come economics you optimize to are Colin cases, to in well have but not our some it quite

again, a displacing well. a concept been strategy as of economic cell important existing that for us so cell nice been our it's And around the a has to materials some of opportunity having part and our really

Operator

I will now turn the call CEO, remarks. Young to over closing Don for

Donald Young

reporting Thank you, we and our in so day. much. quarter have Henry. a in to and year. look We XXXX results appreciate interest third you good Be well the Aerogels Aspen later forward Thanks everyone's to

Operator

you for today's that Thank and gentlemen, concludes joining. Ladies call.

You disconnect. may now

Aspen Aerogels (ASPN) 3 Aug 232023 Q2 Earnings call transcript