Aspen Aerogels, Inc. (NYSE:ASPN) Q1 2022 Earnings Conference Call April 28, 2022 10:00 AM ET Company Participants Don Young - President & CEO Ricardo Rodriguez - CFO Keith Schilling - SVP, Technology Laura Guerrant - IR Conference Call Participants Eric Stine - Craig-Hallum Alex Potter - Piper Sandler Jed Dorsheimer - Canaccord Genuity Chip Moore - EF Hutton Chris Souther - B. Riley Colin Rusch - Oppenheimer Tom Curran - Seaport Research Partners Jeff Osborne - Cowen & Company Amit Dayal - H.C. Wainwright O ...

Financial Performance & Growth - Aspen Aerogels achieved a 37% year-over-year (YoY) revenue growth in Q1 2022, driven by strong demand across all markets and higher than expected thermal barrier volumes[9, 21] - The company reaffirms its Long-Range Plan (LRP) targets, focusing on near-term capacity investments to support future revenue growth from awarded programs[10] - Aspen Aerogels estimates ~$1 billion of program awards through 2025, driving Stage 1 revenue growth, and ~$2 billion of program awards after 2025, forming the foundation of Stage 2 revenues[11] Strategic Investments & Capacity Expansion - Aspen Aerogels closed a $150 million investment from Koch Strategic Platforms[9] - The company is investing in additional capacity, including EP + Plant II Phase 1 & 2, which will be available as early as 2025, with a target annual revenue capacity of $900 million[11] - Capital expenditure (Cap Ex) for Q1 2022 was $145 million, with an outlook of $250 million - $275 million for the full year, supporting R&D facility upgrades, Plant II construction, and IT systems[22] Technology & Innovation - Aspen Aerogels is focused on delivering a drop-in solution for battery designs at a low cost, addressing the issue of silicon cracking in graphite[16] - The company is developing materials with nanomorphology-derived mechanical and electrical properties, aimed at enabling high silicon content with tunability for various silicon loadings[20] - Aspen Aerogels is validating material performance and energy density preservation at the cell level, with a target of less than 10% variability for 30 x 1 Ah pouch cells using Aspen Si-CA anode material[20] Awards & Recognition - General Motors (GM) awarded Aspen Aerogels the OVERDRIVE AWARD as part of GM's 30th Annual Supplier of the Year Awards[9] - Aspen Aerogels received the LAUNCH EXCELLENCE award from GM, recognizing the company's responsiveness and world-class levels of service[8, 9]

Financial Data and Key Metrics Changes - Total revenue for 2021 increased by $21.3 million to $121.6 million compared to 2020, driven by growth in energy infrastructure, electric vehicle (EV) thermal barriers, and sustainable building materials [11] - Net loss increased to $37.1 million or $1.22 per share in 2021, compared to a net loss of $21.8 million or $0.83 per share in 2020 [12] - Adjusted EBITDA was negative $26 million in 2021, compared to negative $6.4 million in 2020 [12] - Cash used in operations was $18.6 million, with capital expenditures of $13.8 million [13] Business Line Data and Key Metrics Changes - Energy infrastructure revenue increased by $12.6 million, EV thermal barrier revenue contributed $6.7 million, and sustainable building materials revenue grew by $1.9 million [11] - The company estimates that production output was depressed by $6 to $8 million in Q4 2021 due to COVID-related staffing issues and raw material shortages [11] Market Data and Key Metrics Changes - The company is experiencing revenue growth in principal markets, particularly in the EV market and European sustainable building materials market [9] - The outlook for 2022 includes a revenue target of $145 to $155 million, representing a growth of 19% to 27% compared to 2021 [14] Company Strategy and Development Direction - The company plans to invest in personnel and resources to support e-mobility opportunities, including capital expenditures for a second silica aerogel manufacturing plant [10][15] - The company aims to double revenue from 2021 to 2023 and triple revenue from 2023 to 2025, targeting approximately $720 million in 2025 [20][21] - The second manufacturing plant will be located in Statesboro, Georgia, with an expected revenue capacity of approximately $1.35 billion [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of the energy infrastructure market and the growth of the EV market, with improvements in staffing and raw material availability noted [11][14] - The company is focused on creating significant value with its aerogel technology platform and is positioned to be a valued supplier to EV producers [40] Other Important Information - The company received a $150 million investment from Koch Strategic Platforms, which will support its growth initiatives [19] - The company plans to publish its first ESG report in 2022, formalizing its environmental and social efforts [28] Q&A Session Summary Question: Can you provide clarity on the 10 OEMs that you shipped to in 2021? - Management indicated that revenue generation means providing prototype materials to potential long-term customers and that they are becoming more expert in the field [44] Question: Is it more about the development on the OEM side for timing on more work? - Management confirmed that they have a strong solution providing real value to these companies and are confident in their position for future awards [46] Question: Can you discuss the non-PyroThin revenue? - Management clarified that non-PyroThin revenue refers to other materials integrated into the thermal barrier assembly [55] Question: What is the expected cost per square meter for the Georgia facility compared to Rhode Island? - Management noted that the Georgia plant is designed to be more productive and energy-efficient, leading to significant operational cost savings [59] Question: Are you working on evolving the formula for PyroThin technology? - Management confirmed ongoing efforts to enhance performance and capture more volume through improved understanding and engagement with OEMs [68]

Financial Data and Key Metrics Changes - Total revenue grew 26% year-over-year to $30.4 million from $24.2 million in Q3 2020 [23] - Net loss increased to $7.8 million or $0.24 per share compared to a net loss of $6.8 million or $0.25 per share in Q3 2020 [23] - Adjusted EBITDA was negative $7.8 million, compared to negative $3.2 million in Q3 2020 [23] - Gross profit increased to $3.1 million or 10% of revenue, up from $1.9 million or 8% in Q3 2020 [25] Business Line Data and Key Metrics Changes - The energy infrastructure business showed recovery, contributing to revenue growth as maintenance-related activities increased [10] - PyroThin thermal barrier revenue exceeded $1 million year-to-date, with Q4 revenue expected to exceed $5 million [12] - Total shipments increased by 32% to 9 million square feet of aerogel blankets, while the average selling price decreased by 4% to $3.36 per square foot [24] Market Data and Key Metrics Changes - The recovery in the global refinery and chemical market, particularly in the U.S., contributed to revenue growth [24] - The company anticipates significant growth opportunities in hydrogen infrastructure and carbon capture markets [11] Company Strategy and Development Direction - The company aims to double revenue from 2021 to 2023 and again from 2023 to 2025, with a focus on expanding its energy infrastructure and battery materials businesses [21] - Plans for a second aerogel manufacturing plant are underway, expected to be operational in the second half of 2023, with more than double the capacity of the first plant [17][30] - The company is positioning itself as a technology partner in the EV market, focusing on broader thermal management and battery safety [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving revenue targets due to increased content per vehicle from existing customers [75] - The company is optimistic about the long-term importance of its energy infrastructure products as customers pursue sustainability goals [11] - Management noted challenges in the supply chain but indicated pricing power to pass along increased costs to customers [46] Other Important Information - The company celebrated its 20-year anniversary, reflecting on its strategic transformation and future potential [22] - A $75 million investment from Koch Strategic Platforms is expected to strengthen the company's balance sheet and support scaling efforts [18] Q&A Session Summary Question: Can you elaborate on the acceleration of activity and revenues? - Management indicated that the increase is primarily due to additional content per vehicle rather than an increase in the number of vehicles [34] Question: What is the confidence level in winning the entire platform with the Asian OEM? - Management expressed strong confidence in becoming the partner for the battery platform over the coming quarters [38] Question: Can you provide an overview of the pipeline and its potential? - Management stated that the pipeline represents a multi-billion-dollar opportunity, with decisions expected in the coming quarters [43] Question: How are you addressing supply chain challenges? - Management acknowledged supply chain challenges but expressed confidence in passing along costs to customers [46] Question: What is the status of the second facility in Mexico? - Management confirmed progress in selecting a location and expects operations to begin by the end of 2022 [67] Question: How is the silicon anode project developing? - Management reported significant progress and investments in the carbon aerogel technology for silicon-rich anodes [70]

Financial Performance - Revenue for the six months ended June 30, 2021, was $59.8 million, an increase of $6.7 million, or 13%, from $53.1 million for the same period in 2020[118]. - Net loss for the six months ended June 30, 2021, was $12.9 million, with a net loss per share of $0.46, compared to a net loss of $8.9 million and a net loss per share of $0.34 for the same period in 2020[118]. - Total revenue increased by $7.1 million, or 29%, to $31.7 million for the three months ended June 30, 2021, compared to $24.6 million in the same period in 2020[150]. - The net loss for the three months ended June 30, 2021, was $(6.67) million, compared to $(5.70) million for the same period in 2020[129]. - Total revenue increased by $6.7 million, or 13%, to $59.8 million for the six months ended June 30, 2021, primarily due to an increase in product revenue[171]. Product and Revenue Details - Product revenue accounted for 99% of total revenue, amounting to $31.49 million, while research services revenue was $180,000, representing 1%[150]. - Product shipments increased by 2,553 thousand square feet, or 35%, to 9,870 thousand square feet for the three months ended June 30, 2021, compared to 7,317 thousand square feet in the prior year[151]. - Product revenue increased by $7.0 million, or 28%, to $31.5 million for the three months ended June 30, 2021, driven by growth in the petrochemical and refinery markets, particularly in the United States[152]. - Product shipments increased by 2.6 million square feet, or 35%, to 9.9 million square feet for the three months ended June 30, 2021, contributing an additional $8.6 million to product revenue[153]. - Product revenue was nearly 100% of total revenue for the six months ended June 30, 2021, with research services revenue accounting for less than 1%[173]. Costs and Expenses - Total cost of revenue increased by $5.3 million, or 24%, to $27.1 million for the three months ended June 30, 2021, mainly due to a $2.5 million increase in material costs and a $2.8 million increase in manufacturing expenses[156]. - Gross profit increased by $1.7 million, or 61%, to $4.6 million for the three months ended June 30, 2021, with gross profit as a percentage of total revenue rising to 14%[159]. - Total cost of revenue for the six months ended June 30, 2021 increased by $7.0 million, or 16%, to $51.2 million, primarily due to increased product costs[171]. - Product cost of revenue increased by $7.0 million, or 16%, to $51.2 million for the six months ended June 30, 2021, driven by a $4.3 million increase in material costs and a $2.7 million increase in manufacturing expenses[174]. - Gross profit decreased by $0.3 million, or 3%, to $8.5 million for the six months ended June 30, 2021, with gross profit as a percentage of total revenue decreasing to 14% from 17% in the comparable period[177][178]. Research and Development - The company plans to hire additional personnel and incur capital expenditures to expand manufacturing capacity and enhance R&D resources for new products[104]. - Research and development expenses are anticipated to increase in both absolute dollars and as a percentage of revenue in 2021 as the company invests in new aerogel technologies[142]. - Research and development expenses increased by $0.7 million, or 16%, to $5.0 million for the six months ended June 30, 2021, maintaining 8% of total revenue[178]. Strategic Partnerships and Market Focus - The company is engaged in a strategic partnership with BASF, which includes a supply agreement with potential prepayments of up to $22.0 million[110]. - The company has entered into contracts with a major U.S. automotive OEM to supply thermal barriers for electric vehicle battery systems, with agreements extending to 2034[109]. - The company is actively developing PyroThin thermal barriers for lithium-ion batteries, aimed at enhancing safety and driving range for electric vehicles[103]. - The company projects growth in total revenue in 2021 due to increased demand in the petrochemical and refinery market and growth in the European building materials market[130]. - The company plans to increase investment in the electric vehicle market and aerogel technology, expecting a decrease in Adjusted EBITDA and an increase in net loss compared to 2020[131]. Cash and Financing Activities - As of June 30, 2021, the company had $102.3 million in cash and cash equivalents, which is expected to support current operating requirements and research activities[191]. - The company sold an additional 899,981 shares of common stock at an average price of $21.32, receiving net proceeds of $18.6 million during the six months ended June 30, 2021[189]. - The company completed a Private Placement on June 29, 2021, receiving net proceeds of $73.6 million after deducting fees and offering expenses of $1.4 million[189][192]. - Net cash provided by financing activities for the six months ended June 30, 2021, totaled $90.2 million, consisting of $73.6 million from a Private Placement and $18.6 million from an ATM offering program[201]. - The company had unrestricted cash and cash equivalents of $102.3 million as of June 30, 2021, held for working capital and capital expansion purposes[211]. Operational Insights - The company has not encountered significant disruptions to its supply chain or ability to deliver to customers during the COVID-19 pandemic[119]. - The company has operated its East Providence facility since 2008 and is planning a significant expansion of aerogel capacity prior to the end of 2023[108]. - The company has decided to cease efforts to secure additional funded research contracts to focus on improving profitability and developing new products[107]. - The company intends to extend or replace its revolving credit facility before its maturity date of April 28, 2022[213]. - The company has not engaged in any off-balance sheet activities since inception[203].

Market Opportunity - The company sees multi-billion dollar commercial opportunities by deploying its technology platform into ESG driven markets[7] - The total addressable market (TAM) for EV thermal barrier solutions is estimated to be $30 billion from 2021-2030[7, 18] - The total addressable market (TAM) for EV battery materials is estimated to be $37 billion from 2021-2030[7] - The total addressable market (TAM) for sustainable building materials is estimated to be $8 billion from 2021-2030[7, 32] - The total addressable market (TAM) for energy infrastructure is estimated to be $31 billion from 2021-2030[7] Financial Targets and Achievements - The company targets $225 million in revenue and a 30% gross margin in 2023[7] - The company aims to double revenue every 24 months through 2025[7] - The company has over $1 billion installed base in energy infrastructure and is growing its share[7, 42] - The company has $50 million installed base in sustainable building materials and is growing[7, 36] - The company has $1 billion of potential revenue from current EV thermal barrier customers[7] Technology and Products - The company's PyroThin™ thermal barriers mitigate cell-to-cell energy propagation in the event of thermal runaway[13] - The company is targeting initial commercial launch of its Si-rich carbon aerogel materials in 2023[28]

Aspen Aerogels, Inc. (NYSE:ASPN) Q1 2021 Earnings Conference Call April 29, 2021 5:00 PM ET Company Participants John Fairbanks - Chief Financial Officer Don Young - President & Chief Executive Officer Conference Call Participants Eric Stine - Craig-Hallum Chris Souther - B. Riley Jed Dorsheimer - Canaccord Doug Becker - Northland Capital Amit Dayal - H.C. Wainwright Jeffrey Campbell - Alliance Global Partners Operator Good day and thank you for standing by. Welcome to the Aspen Aerogels Q1 2021 Earnings Ca ...