ASPN - Earnings call transcript Q2 2024

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Operator

Good morning. Thank you for attending the Aspen Aerogels, Inc. Q2 2024 Financial Results Call. [Operator Instructions] An opportunity for questions and answers at the end. I would now like to turn the conference over to your host, Neal Baranosky, Aspen's Senior Director, Head of Investor Relations and Corporate Strategy. you. Thank

Mr. proceed, Baranosky. may You

Neal Baranosky

are you, morning, Aspen's Chief joining Conference and release on announcing the thank slide developments and the today for results business Good Aspen's for available Treasurer. The Thank press Officer today that Call. and are Aspen will financial website, Rodriguez, us Results and us Financial Aerogel's you Investors XXXX President deck and accompany Financial Elissa. www.aerogel.com. Second of Ricardo Young, Don With CEO; and Quarter section our conversation

the disclaimer governed by as also EBITDA. non-GAAP release. On During earnings our reconciliations this subject refer our be measures results back and will and our the the call, will SEC. management deck could in call like Please the cause content are slide Pages with statements X this and X differ to the to factors review presentation today's that filings GAAP will and of forward-looking statements we risks call, financial of of identified to measures, about and make on language. I'd included options uncertainties restricted note units uncertainties actual the the in vesting of connection from and time with program. to pending long-term expiration our to including in adjusted between or non-GAAP equity statements These our our that materially. time, risks issued stock expectations, incentive under include are The stock these

price in report of to payment We of sale expect cover that our shares exercise will and/or for XX Section order options. the taxes the forms officers and/or withholding file to the

host chat Ricardo investor I XX Energy CEO turn to Summit Don at XX, investor that This over and September Tuesday, on X to Annual Barclays call York. Canaccord's next to Annual Don? And discussions August finally, will Oppenheimer's one-on-one New will Growth a discussions On on now the and will call Innovating Tuesday, Ricardo virtually. be to XXth Power at XX, company and Tuesday want X, fireside from company Conference one-on-one include I'll the out host investor Wednesday, also a.m. I the event September XX, XXth will discussions X:XX held with Conference. at EST. in hosting Wednesday, August and Don. Don, Lastly, be the Sustainability

Donald Young

you strategy. Call. Thanks, deeper focus Earnings strategy. My Neal. expected into everyone. and key on performance, us and dig Good our and status and our several half XXXX outlook morning, Ricardo first joining our will Thank and comments for impact will QX full of of financial our QX performance year the elements business XXXX for outlook

an year. operated reflected As this the the outlook, EV conclude higher by with XXXX well Pyro energy raise performance profit EBITDA adjusted we was $XX of session. We businesses. Q&A XXXX, leveraged second The will the [indiscernible] million, and gross our industrial EBITDA $XXX and financial at extended gross Barrier profit and year. Quarterly and throughout in revenue during Neal revenue our strong very EBITDA QX momentum which the levels QX that margin. in QX. grew a to of of execution built we in adjusted both indicated, grew revenue quarter a in is accompanied resulting million, and and Thin Quarterly results and The in margin record XX%. Adjusted to Thermal were XX%

an net for income be milestone to XXXX, the important positive positioned well company. are We for

expenses. are driven fixed profitability and Our assets our leveraging metrics both by controlling

XX% the to and to operational has XX%. on customers. The and emphasis Our to and to XX% expanded XX% quarters past profit XX% important producing XX% value safety, are placing financial an outsized from are gross objectives our over for now Aspen facilities operating and margin to X

to XX% X and gross same the from million approximately increased of to negative the dropping second $XX unit XX%. results the million, approximately positive second profit Our adjusted over cost power by both leveraging revenue of of economics margin through our by growth quarter EBITDA to XX% can period XXXX, Comparing grew quarter the gross our continue our XXXX quarter grown $XX line. These key performance. and model. on improve focus believe of incremental to profit the controls, business demonstrate elements revenue of we We has

strengthening yield and also incremental Industrial profitability the supplemental throughout assembly expansion. As capacity existing processes. The we parts margin support our metrics, gross terms Energy transition is to in our demonstrated the and above, in through supply of business revenue continue especially, valuable manufacturing is our as extra to driving improve of

supplied facility QX. Our in and industrial XX% EMF, in XXXX, QX in external revenue XXXX manufacturing over XX% energy or XX% our of QX

X our East these Providence industry. plant including LNG export. to Energy quarters, the of grew to the margin have the our all significant from Over percentage gross barrier business. will dedicate industrial products globally products of we supply or that LNG built XX%. continue as XXXX, across EMF facilities industrial for energy serving growth We converted anticipate activity Cryogel the Cryogel more segments, remained grow regions XX% XX Since fully thermal been in launch and strong to

Cryogel Aspen's of being is these used XX on facilities.

of role team deliver believe our in the load the a wins XXXX business of won gross segment exceeding the business. our on at our both million with of additional record an us two with outlook a have again base million QX where which million, results and $XXX of time adjusted an highly outlook have term, for target. In $XXX growth midyear at of to EBITDA and $XXX our the million. Per sustainability our year year revenue focused the started our high-performance by carbon to the industrial We million $XXX to million, and is adjusted reinforce providing to by long-term least steady, outlook least given introduce and thermal will margins drive million our revenue $XX boost in to We our revenue XXXX our company, -- original of XX% our is for objective also capture important our numbers, We first industrial management. least size $XX EBITDA XXXX $XX profitable valuable including usual, them. in comprised revenue confidence exceed doubling and Call. The raised products businesses $XX outlook baseline energy $X momentum and Earnings profits. potential the and projects of high adjusted for to at energy we of and is Cryogel million and million this and respectively, These in medium team at

revenue in our we business. million predominantly EV $XX that believe over our thermal barrier of PyroThin we fact, In have baseline upside to outlook,

brand design During battery the sixth The next-generation for QX, announced the large from luxury our EU battery EU platform we EU a umbrella. sports supply car award manufacturer the VW under Porsche, to has delivered nameplates battery to X and for expected Porsche battery of underpin XXXX. is expected has manufacturer production systems million since over platform in multiple year start battery the The an XXXX.

Our EV levels. activity remains commercial at peak

expect to or we development over XXX,XXX in to QX, parts over programs our a prototype preproduction pipeline. dozen deliver During

commercial year it in the and Motors, in targeting and position is with programs new would We the our GM Call are design the produced European Earnings second this in reiterated, market. With award EVs major securing half to solidify additional EV anticipated with EVs the XXX,XXX will between cereal final electric a launch of respect IHS This contract Ultium-based OEM activity quarter. expect in first cited the anticipate negotiations QX acceleration with its General during of that vehicle become our diversify and which year, seventh. We that produce further be award in half to nameplates. XXX,XXX we to OEM, third it XXXX. the several our a formal of during XXX,XXX year, an vehicle which the

Honda purposes XX,XXX outlook, that we and in produce XXX,XXX plus XXXX our embedded an planning nameplates, in EVs anticipate EVs GM Ultium-based Ultium-based and Acura. additional cautious our will for GM XXXX for For

July sell-through is As its notable Ricardo support the based range. production cited revenue GM our on achieving largely its and earlier, for our discuss, to expectations were that potential and targeted year. current will The I outlook upside maintaining levels ramp-up the

interim commercial PyroThin barriers should targeted range. We GM's capacity supply a million to and revenue, target in path $XXX thermal direct our gross exceed meet and or million realize supply utilize of $XXX on in both profit to baseline least arrangements, EBITDA. demand at that operational, our to us and prepared believe fully adjusted accomplishments, and they are $XXX production strategic our We current their in keep million

performance than Our XXXX supports first more these half financial metrics. profitability

We are that of elements and our important strategy goals. profitability to three executing revenue are our

and long-term third, Island flexibility X the the interim to second, business; industrial external business; necessary Plant the of growth Providence goals. to growth conversion the to company thermal our PyroThin full stewardship and the East to support support to energy achieve reinforce strength facility and manufacturing of our and Rhode the financial the of the transition the of barrier First,

cash, terms lower positive the in In XXXX million and in full noted finished flexibility, we the least and financial just anticipate for momentum million as strength performance, now of the from $XX QX. adjusted above, $XX year with our And of million compared end operating recent with net we QX at $XX EBITDA to over income.

our of one revenue plan we of Aerogel sheet due Energy key Georgia, the of million, $X.X that into manufacturing revenue Office stage are drivers X. add restarting ago, the construction we announced billion focused of Loan is formal Programs the in Several This on facility capacity the the Department XXXX. term for invited of which we second beyond application U.S. process. will As $XXX Aspen diligence approximately Plant months by loan and for negotiation

loan steady made with programs have the progress office. We

believe will While the to engaged are of that we a would OE its commitment. commitment. due issue DOE to If be We diligence a LPO the candidate are and assurance LPO that that conditional in process. the successful, conditional continue the deeply letter partner this and with advisers we of strong the are we in do stages the program. We next a believe not final have remain we step with

able Ricardo, be the to expect of prior time over call. details earnings quarterly provide next to you. We to to our additional at

Ricardo Rodriguez

on Don, to revenue team, $XXX.X rate annual Slide XXX% translates reflects over a X. We starting another everyone. into delivered year-over-year base, good some morning, a and an run and on [indiscernible] to and run of of was QX with what Thank quarter-over-quarter. a Most that out asset our scalability of and of $XXX believe This our of quarter been which validates report million revenue in up you, record-breaking row growth it operating rate XX% man deliver in behalf year. the only laying caught the this importantly, time over team's matter our million. we've for before demonstrates at we ability that growth

to X% external ability our us manufacturing was close enable through energy supply over XX% facility, increase quarter-over-quarter. of an second was to to segment, deliver has is delivered revenue year-over-year doubled and million its product half and a as of well on this out we million, in which $XXX quarter-over-quarter, $XX.X its the XXXX. Our increase industrial million way nearly revenues $XX.X of

applications, more revenue Don of recurring supply preproduction continue demand, are in parts his for and up reflecting was and and As of thermal in volumes maintenance quarter-over-quarter, EV million this in year-over-year GM's barrier new and Scania ramp remarks, higher driving a incentivized segment. Audi. higher-than-expected electric mentioned excess vehicles than the more from production to Toyota, sixfold increasing Ultium-platform-based continue we $XX.X XX% projects and

and quarters. prototype over to prior continue exceed preproduction Our the part those volumes

costs significant provide goods a sales a Cost $XX.X material flat XX improvement reflect a of relatively in million main of expenses. sales. or quarter-over-quarter, of percentage I'll costs points conversion of percentage but of Next, our as summary sold

costs and lower raw overhead, of factory ability from sold gross to inspection. The supplies, our Let's improvement products. materials in and to These conversion quality define direct into is include conversion which remember around rent, deliver higher logistics, cost production revenue our as required an deliver to This team's that ability insurance, our X% scale tended finished costs, elements labor, -- sales. all levels goods costs of make our lower up to quarter-over-quarter. XX% by and of XX% all we process profit manufacturing utilities, convert

is yields effect among introducing on our production other the and things, capacity, focus materializing that many faster the automation than expected. So team's optimizing improving

sales improvement ramp revenues profit each of $XX.X of if bringing above We improvement continue QX, gross of of is million profit $X.X mix. In million our gross dollar over as level, could with last this points profit of profit over incremental and XX revenues same were QX's regardless believe revenue also further, quarter year. company-level the gross during our a XX% million gross margins $XX.X percentage

we were during expenses in Higher-than-expected of $XX.X gross several at segment our been Industrial profit linked performance to profit inventory and and customer-driven to insurance costs QX, the This barriers way down were the onetime customers. With rather charges best the expenses, XX% over QX QX, of Energy we business delivered quarter those even million of this by quarter quarter-over-quarter. comparable capacity $X.X QX. The and XX% onetime engineering million profit obsolete in EV profitability on to would half, reimbursement than million benefit energy of equipment and $XXX projected industrial to drove the were our the and gross near-term our each EV in the million looking EV also of thermal barrier In at changes the the of or as these pay, delivered revenue million receive year-over-year were levels. separately. Operating $XX.X development. talent reversed that sized of related in Our Most thermal have first for gross respectively. by a resulting of OpEx margins we without segments, from $XX.X increase barriers, implemented is revenues. look XX% mind, at thermal in lower recruiting which for annual are results changes

We in incremental driving on demand second half and OpEx focus year, and will we'll only. managing of increases the the profitability continue

rate, reducing of implementing defined validate in current of level. Putting visiting OpEx Our every bolstering negative more these $XX.X during XX% our year the our per of key in period the the capabilities, the run execution with together, $XXX company driving million $XX.X recurring new continues elements process at intent EBITDA this million than a Delivering margins ago. the year systems we year planning the was costs adjusted last and over QX, that compared towards million revenue of and team EBITDA and to our QX same to gearing year. fixed

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

to versus We net Our the diluted per share more in diluted net not about quarter loss or reversing this million XX be of $XX.X time. income $X.XX $X.XX loss XXXX. QX or excited a increased million in share could per $XX.X in same months' of

receivable and generated operations million that million, increase and by flow of of adjusted our of $XX cash an balance EBITDA million collected working customers Next, revenue our have the capital. The items and were accounts positive payable, million an I'll the $XX income turn in sheet. we counted after free for If accounts and would capital the from to $XX.X we Cash interest flow. in week expenses. inventory, million offset in closing $X.X our reflected usage key increase used quarter, of $X.X cash prepaid by resulted generated of accrued in working

our expenses of date, flow. and enable quarter positive QX. Again, incurred $XX.X through advanced In technology by in ramp over during we at that program. The restart EV million the XX% QX, construction in project the quarter-over-quarter million areas. To application improvements at included advancing of part the continued the in have quarter, X, would X DOE's spent Our fully Georgia, $XXX.X of the a for the $XX.X U.S. the million XXXX. operating [ ATVM remaining were business in will through after loan temperature towards in conditional Mexico our needs office Island additional expenditures if a spent quarter cash in end Plant million, million. Plant to capital of we cumulative at the main to collected Department to revenue vehicle loan as towards loan in $XX Aerogel $XX.X $XX second in we million from CapEx cost million we after obtained potential X put of our all manufacturing slowly the from ] barrier approval during pursuant enclose the potential remaining thermal progress we week or of These plant programs of of the equipment Plant construction, position Energy's structures went quarter fund of have the quarter cash control we've for towards our free the closed $XX.X to Rhode and generated down the

activities the expiring, relate Our financing compensation equity $X.X in -- were plan. stock quarter, million employee of including options exercising included our that to to the within close

year's outlook. We updated million and meaningful of of $XX.X capital Plant outside pursuing we a continue shareholders' fund of million. this quarter $XXX.X our discuss we CapEx ahead, X, into cash with ended portion I'll Looking leases which of go the remaining equity when to

appendix, working phase fund loans loan Department the of of the advanced due work the details application program. In diligence with through continue sheet application technology within construction our our make ATVM Plant remaining to a office Energy's different and DOE's these. the DOE's programs phase steps X, as negotiation have way that We the sheet of diligence vehicle of our and graphic of a the to due manufacturing streams meaningfully costs and phases negotiation the the term part up progress on or U.S. and term we through the pursuant

support improves, we loans, asset-backed our potential a have term available. These As debt continue of performance that become and relatively debt our line revolving include business. options credit assessing to inexpensive operating

the faster very We expect cost to making that have in than flexibility at our fund business. potentially to the profitable continuing and to lower capital year aimed expected, but sure with of capital, a a our end ramp structure we

the there X the product his be at a the this Prologue, Don blitz, the from opening this vehicle is vehicle year. We expecting of Honda of General production a be least a We U.S. timing that Honda working sold the EV Energy and our the to with being turn to of that clear With were as I'll line revenues sold, this Motors. Everything to advertising Slide EV segment $XXX believe the run remarks, attractive until GM year. it's updated out behind here from broad outlook them left the XX,XXX worth thermal not the impressed we ability we and X, rate our the in rest of sales remain million have the by weren't in In increase product seems of of depend quarters supply launched, X,XXX very plan, sight pricing and delivering mind, in here the as will the of along availability expect increase variant, produced we July our the CDX there of revenue way our marketplace. the we of barrier was on all Industrial year Honda to walk very of about the volumes on I'll for annual more through this the covered to year, and launch we could the side as almost and rest our product segment, later on X. units production thoughts that over the focus variants. Prologue progresses. With on Acura Now Slide year. think outlook, of of we splitting us, by launch show in in

the it This at its to Ultium-based are of expected and Cadillac XXX,XXX we vehicles, of it revising vehicles from nameplates. exceed to and by goals still a Equinox other vehicles the trimming XXX,XXX impact production the of end not upper Ultium XXXX actually outlook. XXX,XXX can these our least Sierra the the of mid-June, production be our their like very to XX,XXX to broad up year, GM's to XXX,XXX external range half units. baseline production up IQ down to range XXX,XXX we XX% forecast safe. GM XXX,XXX as to launch ramps of Silverado. XXX,XXX the Optiq. in a of be of from And units, does down revised in units produced GMC of XXXX. GM continues the second outlook production In well We Ultium At ramping Escalade nameplates of time, production same EV, the expect

that and brands Honda's supply volumes established combination still XXX,XXX be to can along vehicles, to to need with inventory inventory is to vehicles a been nameplates. In volumes, level distribution or about least. of sell-through deliver GM's the sales. A these Scania days that question at loyalty, we barrier production, along with the of scale, of XX,XXX This EV July Ultium-based often sales GMs to million term. believe XX% from and and in one now X, end sales drive the over would in vehicles in grew on the size different can customer be around expect per expectations. Putting many to high of believe see Acura's together, in Slide over expected the over can Toyota, July, center with have XXX,XXX to of its may vehicle U.S., thermal of support to vehicles by long-running that of over continue our vehicles GM's some and enable XX sold, we hand, we production long investors business growing, to Stellantis sales XXX,XXX it see vehicles July XX,XXX were higher sales We the need initial that EV $XXX whether support of with vehicles risk enable prototype sold scope year. Through around be get affecting rate rates if XXXX. stop dealers June and in it and even around of we revenue XXX,XXX centered beyond To

business could the now half incremental attractively the profitable the is priced the of market, to year. We vehicle of vehicles Equinox, XXXX, U.S. beyond incremental confidently outlook. like XX,XXX and incentives the our produce to second within A year. to we is to sold most consumers, over very that as this to rate continue be Chevy achievable, the in are in need So especially sales in EV attractive upside most offered the unit therefore, sales July vehicles believe XXX,XXX lease baseline drive around see required only the which

and attempt of EV a strongly continue also part vehicle. our significant volume or our weeks seeing end is we for, finished produced a a this, even barrier as to there investors sold revenues, some to delay This for customers against up months customers' our thermal that plans invoice vehicle. is advise we delay in longer connect We to even for

Slide include the Neal appendix out in to this continue and We to reaching XX of presentation studying and you we questions. if this, in have to recommend illustrate it any

on For versus year, half like for are we production reference, to Slide get looks the IHS' first Ultium in X, XXX,XXX what ramp to the showing expectations total the also XXXX of second half units. the a of of

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a to stock-based D&A around million improvement adjusted EBIT of prior XX% into $XX of $XX million translate which of baseline X% million operating Slide our which $XX EBITDA. This $XX million, over we our would assuming outsized demonstrating over Turning baseline the and over segments our $XXX $XX deliver this revenues of baseline, of XXXX a million, million and year-over-year baseline would outlook over of million growth. total believe least in outlook, increase million, revenue XX% compensation over XXXX, be revenue is over $XX a a implies in to incremental profitability Combining we in XX% results margins on ability our without both prior our at EBITDA relying EBITDA from it increase of a scaling that for prior income updated revenue, and revenue can XXXX. $XX improvement continue With on X.

driven nameplates the of Our the and considering start-stop of could updated outlook add potential sales headwinds sales, cost in our launches, engineering changes fund OpEx such near-term costs technical to barrier to inventory some XXXX in our that continues expedited thermal could new continue lead launches. key profitability, areas, some program higher of decide development to advancing accelerate opportunistically EBITDA as the capabilities and the our our also of obsolescence and nature power new demand. We freight R&D by prototype to

industrial our a of profit segment. we can products, As includes the energy also that reintroduced mix in impact products rest this these gross

right if QX, there, to we disproportionate On reducing in costs, team and additional bottom our increasing our it our would our amount continue pricing $X uptime the share, of XXXX and with did are rest as XX.X production a million driving per line, translate the diluted side, industrial truly or flip outlook, $XX is to count our over of assuming of demand flow $X.XX EBITDA of it into fixed a million mix. Continuing million net energy and yields the expect share of shares. positive will income

net $X.XX are per $X.XX We share or threefold. our diluted increasing our share X.Xx. by $X EPS On by over outlook outlook million per from income or

to Our CapEx reduced from without ability a in million our expected higher $XX barrier $XX to $X of deliver including the equipment from Plant thanks X, to by million thermal team's is to for level be million Mexico. year, uptime our EV

us to in capacity believing enough ramp XXXX. production investment this up is our for that continue We

only of half in I versus expectation million we original year, construction of As towards $XX of Plant $XX.X first mentioned our earlier, in X the the Georgia the million. advancing spent

fourth we are the Plant receive or than the not on construction a approval DOE's loan vehicle conditional $XX advanced until planning we Looking spend ahead, million X, of to advancing technology the potential manufacturing This program. pursuant ensure to more enables enough will of it ATVM quarter advanced investment investments the our is the still that year. in construction reacceleration to this to the made potential all and of date, site preserve

couldn't the operating our up has and and I'm here with work on developing same EBITDA of gross and our been excited operational that the continues on the our happier everyone X.X be pausing we be think that again opportunity and it time, acts journey the revenue of continue of our expectations, to us that doing team, worth had and years. right over our team and new stock sharpening to creating of before the income, progression, moving capabilities. got less The it's financial X, to lower Slide more on, I Aspen performance growth, company. are initial with surpassing our real and taking see past the that thanks that by team for in basic as side the cost margins, capital I On metrics of to right

to Next, X. over like please to I'd turn Slide

important Before Don, we even to just that electric headlines exuberance that of in, handing mostly thought rattled look vehicle There U.S. seem or so participate [gloom]. the back aren't OEMs a to there. market, it's we to in-production what's take happening by be the our an day-to-day that doesn't out KLV call in at the

ourselves. So the market time we some year-to-date spent looking at

for didn't to in July year market Let's a just overall planning in we U.S. XXXX, comparable to X%, rate early up expected over it. as market ingredient though, is foresaw the around sales. and rising We are be last the face up of interest Still vehicle year. grow through U.S. EVs around fact It's which were the relative of in developing EV this EVs of baseline. considering sold X% rates. This The made growth XXXX of our in key revenue U.S. the this year-to-date effect is X.X only XXXX new to the the million end

to only of slide EVs platform in out vehicles share can demand. in at OEMs their were fixed costs produce PyroThin their GM, that as distribution. benefiting to a sell-to-sell a need and our losing of from a than have U.S. X the The obvious mind, position let been we OEMs U.S. These range time. that a in launch spend of zero that making second only higher more thanks drive solution, regulatory continue we volume. The EV needed for opportunities in Toyota by we seeing at running of we started in to circular is, Slide that properly we a has production fresh in the that manufacturing Honda and XXXX, be, an with of the additional below business term car this their the capacity. I'll EVs drive up market. XXXX, is continue rate meaningful to than production on is the XXXX, of At equipped the the of to offer expected We newly share point, overall that the point, and are to the are and vehicles what demand these around in EV higher X, the in enables relative expensive gains losers. all are of on it's half some why time your the deliver in new before drive of market remembering reference worth that there is developed volumes. Thinking in aging more gaining OEMs the we environment absorption new the on to and when is are longer from on Understanding OEMs in entire part gains place. scale Within from built supply. PyroThin this XX and make share OEMs nameplates standards equipped economy of new scratching XXX% surface EVs and those had winners our this incentives U.S. share. nameplates sold to rates you introduced believe within But attractive more will they the moving look those thing of nameplates and market it, needed we at to to own this important. become of first versus volumes they supplying up one's the So capacity are thermal incentives XX% and as XXXX, developed barrier profitability fuel nameplates, And emissions incentives supply, interesting sell-through EV

states within this Resources that California driven the is California, the can Air reading would including enforce this within As enforce good that a standards. Neal but make to over fines, profit up won't currently you the last bore investment you agencies. lucrative standards OEMs Agency The At the Administration CARB up all or not Safety new Board or sales. the be level agencies to of the NHTSA. happy on ramp vehicle or guided with sales, their state and X point next OEMs driven for regulatory Traffic EPA potential material XX% National XX Environmental was understand is regulation made new impact two vehicle details, of of of over sue detail. tighter X the comply preparation penalties Protection and major in federal direction in that to fuel therefore, do who year. I years these by in emissions standards, will U.S. Highway with and These standards or economy

XXXX regulations, ] This will why percentage the from compliant XX% the those at that would most OEMs, by quadruple in [ mix with sales for X regulations. If XXXX, the generated we new roughly levels what EVs current years. General prior example, on XXXX from more important includes the barely EV of that these penetration be XXXX, a EPA, next EV or to mix, sale the the the compliant. doubling. OEMs reach from would of EPA from lot around July in even minimum comply Europe, for U.S., get to points our our its need purchased or to need X% after when Focusing its to in we with exhaustion see programs than and be rollover of by estimated of to would to industry emissions market submissions the to emissions is It need about more from go barely there, triple and be to is Motors, credits XX% Ford COX pipeline. the looking up also current stringent core EV penetration,

reading that market, what these from built planning thermal you to As materials. us Don. conviction only but or met more business, this our we and your in positioned And XXXX take the seriously with model teams would is thermal the in are these now, attention chemistries, another. Thank that support. validated to investor also happy not investing this quarter are is up to on particularly for we've than after continues the OEMs think operating OEMs comply our hand back beyond. OEMs call relations being And XXXX, address that with that teams for and regulations the met batteries regulations to to sure factors form working all in with barrier are making we've inside and runaway keep press one I'm giving that,

Donald Young

Thank you, Ricardo.

well and fixed we we outstanding our Q&A. leveraging assets, done the elements executing controlling XXXX, win. to team an QX in The we performance room to to upon Thank While you. improve we first and half as let's job, to expenses for continue record focus and on strategy. is the continue positioned believe our financial of operated has key team Aspen turn to of Alissa, have

Operator

[Operator Instructions].

The first question comes Gianarikas from Canaccord the George line Genuity. with of

George Gianarikas

to margin as your maybe about a got little to I talked focus also more I'd the little that on And but improvement? a what's you detail that. sustainability driving on mean, like there, how you view just gross the upside. bit of

Ricardo Rodriguez

Yes.

squeeze. ago. there mentioned we I terms right, costs, lot we room as that in levels, to that it's to So for just shaping by continue. think as that my in -- a at quarters And saw Those see [indiscernible], out the remarks, were more don't have settled they're surprised at out left X end quarters. of to levels past around some the trend material And all we seen encouraging there's over renew that we've up very contracts of X that here the we

we on bit believe cost comes revenue where of that mix depends up it when point, fixed absorption, squeeze really still a quite to the that a that's to left It Now, right? to juice there's launches, launch up ramp with we as saw throughout General be other as relatively expensive the have, the the Motors, and to of of I beginning tends here think some phase we XXXX. EV XXXX we

as does the the of start the the point. And running then same energy that our on higher gross impact not production a will those have margin some to ramping margins up as products. same at so gross And of industrial we time, side, Cryogel,

I the breakthrough remark of that is I quarter, points development, just which coming some require just broadly, so that about think efficiency -- basically don't of XX this find And do in that, margin made we and yet. until line this. Obviously, quite at rate of gross which about beyond run bit more incremental percentage of revenue still think sight we that in other the to right a have to would way

Donald Young

we as I yields, that about to aspect to and parts think, in is continue us activities. OpEx then, manufacturing in of improve profit George, that just to to assembly would structure EBITDA our performance. translates and still And largely to have in there. And our improve both facility said, today, the organization we there's add place further as support room I to we gross one what our -- Ricardo drive talked have I room growth. the at EBITDA Again, for margin, Aerogel

OpEx. our times, number it level maintaining So lining our straight Ricardo and a mentioned on costs current focus of and of

profit profit those So as gains down EBITDA fall -- well. gains to that gross gains

opportunity there's sustain that believe these an described. to of do kind as margins Ricardo we just So

Ricardo Rodriguez

gross net from about free targeting mines margins the excited OpEx, our Don is it what Yes. are I to income shift George, to cash given said, income, about which excited being mean, positive starting given -- And generating matters, there, and frankly, operating flow. doesn't profitability increase as pretty being to take But is a us, ton ultimate that share measure to it's threefold, in per of increase implicit which metrics to of profit by net in multiples, the incremental our ultimately -- the income was which those is it. updated modest. guide, gross sort of

George Gianarikas

on term? to medium there? Any to I'd higher where China for a Any that relationships update like going potential to just follow-up, in as energy be appear And focus the flex to maybe near over industrial, capacity well. revenue

Donald Young

strong their very relationship. relationship is -- the mutually The yes. And and cooperation of They beneficial answer capacity. is the the is, a capabilities expanding strong, have much of

that to believe there the date. we much so so, upside is that, beyond we've not to in that numbers XXXX, And suggested necessarily

-- into medium But business my is doubling of as ability in the to size focused that we the go remarks, said our XXXX, in term. as team the on here I

and know, revenue very us. profit baseload for both you of valuable As

that to to on be our so we're strategy. having And discussions able those execute partner, with manufacturing

Ricardo Rodriguez

in within mean I over needs to baseline $XX to the million half, order our to increase run us for run rate to here rate Yes. second guide, million. the a $XXX our right, in quarter get

very incentivized implied supply, increase that and obviously to that's baseline. we're so And within the

Donald Young

course business. of as the the of especially programs with -- course We're parts still opportunity over over of in go up two nice demand, in I carbon that the forward we capture catch I noted, won frankly, think, medium to And trying as we've the again, foreshadow which here North a America, for term. certain us

Operator

from question with the next line Colin Rusch of The is Oppenheimer.

Colin Rusch

the a about and bit industry can at that competitive of some looking the the you what's from into going given the the suppliers to try cadence opportunity market? and folks those your Given success, and what and wedge seeing customers -- -- kind certainly landscape, talk little of some and other may of other hearing with you're on this

Ricardo Rodriguez

mean see the everybody up year OEMs. We X? that that these look retimed I or well, were We expensive new were we regulatory right slower requirements this remarks the Paying mentioned Don by X covered to nameplates the I put really look people you programs. The reason leaning launch, And are we we that it's selling continue some components to started not And of being within so, the of asking remarks, given the continue mean for competitive. I ramp their at around are possible. sitting know the right? especially our we developed. the to into building at not that the have that rethinking which I thickness, a parts programs on in thinnest when properties, end So barrier of then more perspective, market, these chipping the that very U.S. that three just the away environment, why XXXX, just we're as EV or right? And brought right? And to this looking gives including in, the the yes, to to up fireproofing mean on getting attractive fines us We that and the while busier, all works OEMs room profile the we that if have in we here even out possible. are the material we're can't which now, on his just think, -- we we're isolation is not space sourced, those OEMs. that when And EV converting way is, mechanical there's nowhere here folks and used ago. three look because as is EV deliver, ahead, hope set and that there, extremely thermal actually, at within other they optimizing customers, up they're But were if another nameplates a prototypes but to in requirements right? some for mix capacity, going [indiscernible], there's into the And going any they us, could if don't a introduced, When XX so meet plans. there the up even chain, X in rate. at this else right? vehicles EV these the look into trying as in wonder, thinnest their that deliver I other manufacturers in EV us product investing as we new It isn't I that a as help profile used getting we headline look other been them be right? market thermal teams investments reason where we're that keep at we we see it's of, were these don't continue on know can today. that mean that wedge competitors value And see pushed views, for we currently either. when to And doesn't

Colin Rusch

we success as more market, ramp guys energy where about long-term that capacity you've of super thinking And thinking with market, be think about you something had serving is that to How manufacturing part the to see the you customers. the growth that helpful. some given you of do should then perform model? That's the especially as with is that from, coming there and contract that continue well start and about the

Ricardo Rodriguez

stuff there delivers to place a the life we scalability I in. the think as just that of think I And Europe, I in have notion that is the previous we're The really and mean make ramping hard in possible, up to right? that's as much incentivized facilities Mexico if to leverage a facilities overhead incredible.

are Morocco, costs even to almost or to You the and Europe there, go places like need Tunisia, Eastern rising.

we we're capital for the of setting ramp and into trajectory margin continue And in would expanding so our the for actually able these in very here. And to if up our Georgia, a customers, then to this of so expect the progress XXXX made, footprint. be plant we're demand, And and want we just inventory our near away assets for we that to some plant that up meet that given right of Mexico, inclined we in we cost all to we're some careful warehouse really strategy the XXXX in that facilities. leaning Netherlands we've their beyond. the stick solve to are and Georgia But profitability the in on in production have could

Operator

is question line The of Riley. next B. Pfingst the with Ryan from

Ryan Pfingst

to Ricardo, up last follow just one. on that

expected in 'XX X revenue when, and if volume capacity quarter, the the 'XX or that the in billion 'XX With and award third after exceeds strategy, awarded what's another OEM online? or expected your Plant for PyroThin and comes $X.X X

Ricardo Rodriguez

here programs supplemented step out have. I mean, time. facility at just problem But our of these Island, with Plant want it online Plant incentivized Rhode love end issue the was find a X these do our right? to get all external from as be problem selected capacity, so capacity manufacturing to XXXX up right? And for great mentioned the a us, for be current I ramp of Boy, finding fulfilled our that's million, be of we we're be may that comes $XXX if to and our still an towards efficiency, amazing Island XXXX, think has team capital in the but room Plant an time And Let's ability mean, one together. can, productivity plant in additional to there the in we just X, It we the we much it continues Mexico all solve get that, of to to is will of I'd up as but sometime, cost I sized And X. We and Rhode right? for company. ramp. yes, same, strategy the our XXXX and that programs. until have. would of to last to some -- take material programs potentially tight, assets CFO mean, we

we in for and one capacity. the to think as is get additional possible. Plant expect Rhode gap improvements most the capacity to can capacity to of comes -- solving are update our as X in our immediate Plant that And us when team those fair X cost our teams as Island And restarted million in I continue online finding capital $XXX of demonstrated, to it's Georgia the -- potentially. Mexico something from revise bridge to soon

Ryan Pfingst

go Got second for just and it. on the inventory you Makes working the and could half? little sense. here, term. in more on Ricardo, capital a And collections second near then maybe dynamics a potentially expectations your a question little deeper something

Ricardo Rodriguez

would similar the on expectations, depends that additional what of demand then demand trajectory, and days reverse capital So have our beyond if flattens continue the I implied working really working in what's something. if all would is baseline, which we conservatively, QX. But capital the at to consuming pretty did It right? we same us, volume time, itself, baseline on out continue here reliably of XX bit a when paid we get capturing invoice to the within mean in very we we

QX. be in what if overall, potentially mean, flow And it doesn't, a positive, flex itself. reverses we if net so right? little consume even then here as if then, up, I flow working into increases generation, a our the capital -- it's happened I cash bit But have to that cash of we'll think cash the position take would and the demand better, for

collections. AR half on off there. legitimate we terms sell cash a the so, from and no second neutral rarely have the is at it's position And think to we're large on we We've very mean energy to and written concerns a sitting ability customers so net working and tight. We capital looking things our collect. side in extremely here our of and I favorably

Donald Young

Great. Ricardo, in also, you your working And possibility Ricardo, a line. of script the mentioned capital

without mean, these of working half lines. capital things, managed the manage that kind first to capital through we really the working of I our year, Just

do very a -- normal that, very So be benefit possible would and think, ours that. to I it's it for could from we business like very

Ricardo Rodriguez

think keep our sophistication I here. That second of Don. I we mean increasing point, level

And of up also that have With well. our now We do as our AR are so considering, factoring that could with the to could there's we be line, that. as little the -- free we to do, we able revolver. flow capital cheap cash such reliability the working things bit factoring There's margins insurance, actually a earlier. and the do to help fairly

options And a what so very we've got here plenty to profitable going expansion of be XXXX. could fund into

Operator

of line Dave the Barclays. from is question next Anderson with The

John Anderson

the XX me. little calls of ask Only for for to ramp to bigger U.S. here. between A the on next want Ricardo hand, other mentioned and overall kind what concerns to bit ask -- years really just earnings demand picture few kind you just changed slowly, your starting want up. the domestic of business of world lot OEM rest about I the How, I A the over EV about of manufacturer years. that. in

anchor ramp their you're customers pace out and the that? and improving manufacturing, an ramping to on they're -- guess and probably whole I'm at other as sure your Is products is of Or in that? there. is about it that what sales? But up? GM of do there manufacturing, guiding is line they you're things, I it all is out that as looking it What's more trying of as all out sort when they're up, curious obviously their ramp-up, Are your thinking looking of customer cut and Just [indiscernible] new building GM with here. sales sorts and the the EV

two? feels the about to next, that your about Because I like about lot worries kind not years. those think of business it but in way? a the matters demand, right we of sure X do to how to EV Am I'm really it me thinking So there's X

Ricardo Rodriguez

go Yes. matter that's for that's There's those your we OEMs And trying would exactly to with demand blend the our EV of carrots itself, right. I And and I driving the right? point. mean, that more sticks remarks, production. to to argue a were what than

around been delaying OEMs right? vehicles, make all-new modules, the Ford, on packs EVs for here And so, an a we them and U.S., in making when of OEM these -- for to is seeing of make look building for up that there's another gate a next-generation that it's example, fair we which they in has to the could ability these in large product, battery like Europe, programs. But where environment thing folks ramp You're them, at XXXX make EV have, very expectations expect of given first which are XXXX cells cells, vehicle and to that manufacturing to is need struggling an regulatory of quickly these and mix make their some period through up pretty that capacity to quickly, had sell and therefore, able beyond. some to the they'll the batch vehicles be that make

will sticks an need all the incentives gross phase, we certain think that but once right? OEMs capacity means make the that So item, you expenses, sort If capacity to volumes having XXXX, the very this do and have provide. OEM deployed most EVs. you through carrot ramp-up intensify they will of some money, profit, and off no without ton right? for regulations a to of portion It provide that's they'll very to right? that and reasons, go of them in utilizing have ultimately at OEMs drive So as make really given environment your of a the and effective and that but then And gating of lose get hopefully through deploying -- up you're a leases. Leases on And way, for it that are basically the don't capital, you capacity, that way you or to run they've advertise that set that means cost. straight guaranteed and this up obvious volume, whether then low

Donald Young

Prologue, I attractive gaining drive these becoming vehicle, the consumer it's market Ricardo is his stylish, interested GM, Prologue and in vehicle. they're really the the a great also very mentioned range. Equinox increasingly types and think -- experience a the and Honda of during well-priced vehicles. comfortable And is the

as -- confidence we're the think will production for good a demand on We good for will have they I cited. will -- growing to themselves, and going some of vehicles, And or a be you that these well. that there get that get pull-through think things good reinforce the demand high And as also those nameplates. especially I newer

John Anderson

where I'm our goes factor? you some guidance take production that of in a swing the back it $XX GM, difference? to -- the There your it hiccups pull year's this just and of guidance? according kind just for that's your hey, on 'XX. that's is, what's I to are hey, better So of assuming, to million kind kind if is? conservative that plan, you guidance getting that Is if potential upside upside curious be factor the how everything figuring in why for So potential What's in Just Is -- guidance more what, we're that? out hey, -- know this of Is the here here. sort going to GM could we're it just it -- just be gating going is internally this? there's is. Whereas, in and at

Ricardo Rodriguez

of upside higher little these models, mostly So their at been of track has I record there's obviously levels. to approach actually They've we're GM's and producing baseline right? vehicles. producing been the two And right? looking So Honda it within trim bit safe, think outlook, different, playing selling a stages higher-end

And right? larger think that, business conference worth take run incentivizing other the OEMs seriously. still very saying sustainability their to in can as make lower -- should here they does lose make to mentioning the the $XX is point, right? so some just our good could not planning is around just whether that to of what to cut vehicles, number. and EVs, what GM baseline vehicles the careful right? OEMs we right? GM producing XXX,XXX it's right a and market determine would We higher. We long-term be level, some out vehicle, we would perceive us that's part plan. Then be on to pretty while people want that the think battery U.S. in if in read various depending outlook, that on because they of Equinoxes, or it's now, split impact we another pack they that's beyond, is And and without we vehicles internally And year, to our the at is more expectations of to near [indiscernible] to and -- the vehicles get less If would EV us, having that outlook million it ways. or seriously. our upside about XX get XXX,XXX least guide why would worry right? The goes another could say XXX,XXX. optimistic that. that of GM fall to business right? And XXX,XXX an what be during are to not the expenses, million EVs Escalades, great how to they in the QX We the just they that their worry the same manage of that is, element end produce. having upside, coverage plus XXXX I GM sight their be for to for $XX Like in there's their QX the investor upside, of different of why XXX,XXX their they're make, of all on our messaging GM, on revenue it'd very to depending our more But and at $XX at term, So hard our so set whether be plan outlook be that's And which And Hummers, our our right? driver CPV profitability, revenue really with or a sell want and Europe, million But in baseline vehicles here

Donald Young

business, that particular from our know potential about know external well, -- is $XX ability to this which And the largely you $XX of upside not our the very and industrial production is case, manufacturing range demand. In source million about of facility. upside David, probably another it's in million. that to I energy it's supply,

we I we about our versus another today of leg of when cited the kind that's million. So guess, upside think at baseline $XXX our that stool,

Operator

of line from question next The is Craig-Hallum. the Eric with Stine

Eric Stine

and OEM you curious, just I'm this the third major German in So mentioned presentation, OEM. potential quarter, in also in your seventh remarks the

Just you Anything OEM altogether? great. Is there? be can have? a mean, give can that or Is would a new that parent any already nameplates you you company curious, share potentially of details I brands

Ricardo Rodriguez

EV work be all in And all penetration -- globally -- level term. It -- mean it's where expect so of right? for signed and been have think quite put working time. near far, we the that's the confidence new. a some strong slide, OEM a contract I out, them done a they would new very on It'd have the and an it's here, have one new yes, relatively that based German do with All Neal we've be we high right? of flag So and that least already. at to been the on one I just do And

Eric Stine

That it. great. for is one And Got last me. then

this that's little maybe what a of in kind capture for? Is maybe first early all, in about project what guess, of you the should small, very I I days, it's then the as carbon you're we about should you initial Can get it in today projects. or where LNG -- think mentioned about bigger as think that what assume contract much content how in, and being size is, you like two well, kind a we and a this? is of get You potentially larger. And you think shooting

Donald Young

a cite group with business, difficult. surround I in extremely progress. When failures actually a we would engineers a costly LNG into our again, bit It's little and some very it's are the of that LNG of business, But conservative work. broke and differences the and that work

in my on side, small sort the building our the really relatively the [indiscernible], cited majority we that later. LNG these within are maintenance vast data confidence, many place. And of getting of doing our teeth projects we facilities, active in as I in So cut projects very now in years

to some these on can be believe, we before the really of And will basis newness I the think side, a do notable. more carbon initial opportunities capture on of again, size I the market. But given are have work activities the just sort project-oriented I facilities. the we think per-project

a programs from way point quarters of market, that they're work sustainability driven And so the of of traditional a think largely served of important companies view. And kind a And projects. us by being this energy our but into in these carbon-capture pipeline business. give couple to there's industrial are we've our nice we also,

view. we solution into thermal point so of an excellent groups well channels with from And them have the engineering and excellent we have a relationships management as

Operator

The is the Tom of line Partners. with next Research Seaport from Curran question

Thomas Patrick Curran

CPV would you Prologue respectively? guidance, modeling internal your average For underpins the what Honda Acura you're tell us assuming for and that ZDX,

Ricardo Rodriguez

they're about Yes, per vehicle. $XXX

Thomas Patrick Curran

For both, Ricardo?

Ricardo Rodriguez

Yes.

Thomas Patrick Curran

Scania contract. And Great. the then to turning

just As volume is what get specifically And bit opaque. starting current electric [indiscernible] more expected a to commercial speak you've [ XXXE you you on in initially, Could expectations the additional truck track models model be Scania how the is and the Scania color with there you the vehicle share ramp? that have ] Could for into. gotten and queue? some ramp? about are and will tougher visibility that brand, a indications that just insights to to just marquees you kind activity It's production of

Ricardo Rodriguez

Yes.

mentioned, these the as trucks, of commercial the the on you these highlighting is just worth cells. one -- it's -- initially, actually using So of Volt it's Scania XXp, North one that

up, have of fairly scale right? cell we And that until expectations Europe, the happening, for the it's the And us the they It's ramp-up ability -- have for so dependent really starts even on one. of manufacturing to to though hard in high nameplate particular. that gauge so in

Thomas Patrick Curran

Okay. And squeeze I'll one here. more quick one then in

project just orders between energy regasification for are us you the a comes opportunity? relative On liquefaction a your LNG tend project, announcement? What and you hit do remind the to projects it could an FID side, industrial to differences the to Don, when when

Donald Young

a I facility. a on regas would from has regasification we've been say on project we've Well, done side, the -- the LNG largest

The smaller, those years, tended the be X been the the projects of You again, I to over but might export vast than course of my said have the we've remember, majority those of as done still that. in we've facilities, majority though. PTT comments, in And past have participated actually longer Thailand. meaningful. And in

of forgot I the your first question. part sorry, So

Thomas Patrick Curran

hit orders relative Just FID high-profile get announcement? you of [spectated] when see and your say, the to, you to tend let's timing a

Donald Young

Yes.

relatively the that terminals of the [ of we phase stage get programs early project, we the relatively process, one is product deliver ] but the right? of of construction LNG So have. part spectated that the in construction latter these Insulation in

it relatively of we the then the So again, we end get deliver soon, visibility on but towards projects.

Operator

from next the Alex line The is with question of Potter Piper Sandler.

Alex Potter

terms it's update year most on you one, you've second on seeing. the if XXXX, there? be versus that maybe this XXXX versus you guess, new question Would relationship then, I up could I'm -- to that from that's Stellantis single a the in launches. just of PyroThin been rumors would or with I of is all, first a of time you agree, had if us here. next what this X-parter. delaying guess, potentially some I'll accurate there's know, I helpful. and give ask target follow-up that on don't what's couple the, for the medium aligns STLA year? And been platform is, in Anything of Have consequential that that incremental Stellantis. volume

Ricardo Rodriguez

Sure.

is STLA medium first or is We up in by reason this Audi because that So ramp And using than Stellantis within platform that France. one we're that faster one. could I'll with made the here. start ACC expecting is think the the that cells subset for the actually that

aren't right? so, be when of And thinking that's part XXXX, to it's And nameplates. And should that. assumed that, of one we we I of think close believe that really so the that show here, XXXX to ramps, in volumes second second of those but the here question, timing is ramp But in that second secret XXXX. XXXX, start And -- that's your no of seeing people meaningfully vehicles materializing can up until that's and as to in -- those XXXX will are a when why Audi. half in launching that up it the half versus second the just expected we

Operator

of is Joshi question the with line next from H.C. Sameer The Wainwright.

Sameer Joshi

and question. baseline million Don, have of roughly a congrats pretty the your increased this around that to volumes is the all on given XXX seemed One comment XXX. in line that conservative guidance $XX top increase It from then progress.

need potential this will DOE on frame? the with -- just is -- prevent is the let deliver second on that I'll time would problem hang. But that 'XX, So on how the that the achieving that you capacity the question process and concern, good from is have a delayed, planning to application are there loan you a that you be DOE? in for process, delays 'XX could materialize that the And could to that

Ricardo Rodriguez

Sure.

the comment, happy So in I reaction to would baseline -- that it's to or just than. greater emphasize

given and with Everybody process. to we we timeline. where the we get we any very so XX just, if optimistic least obviously, can extremely disclosing right? Then get but of of done mean, we delays. delays fast engaged week, terms hours our no. we get to the we're loan. this is actually about are our that answer I election, of here before process. And has The team, be us. with And want sit think not been potential as my ahead of And incentivized perfectly it. there made expect don't so is on understand but any we DOE that, the on DOE it since aligns expectations the we within skis, something, cannot I are I face ahead in in we on mean would them I at surprised as moving spending with any to our the don't

Operator

no are questions further at There time. this

hand back the like So I'd call over remarks. for to to Don any additional

Donald Young

to well, Thank Alison. Be and you. quarter third look We your and reporting a have day. our XXXX appreciate good Aerogels interest you, to forward you Aspen Thank results. in

Operator

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

now lines. You your may disconnect

Aspen Aerogels (ASPN) 8 Aug 242024 Q2 Earnings call transcript