Aspen Aerogels(US:ASPN)2025-05-08 20:15PART I FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited consolidated financial statements for Q1 2025, detailing a significant net loss and substantial decrease in total assets, primarily due to an impairment charge Consolidated Financial Statements Total assets significantly decreased to $554,976 thousand due to impairment, leading to a $301,249 thousand net loss, despite positive operating cash flow Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $554,976 | $895,144 | | Cash and cash equivalents | $192,039 | $220,882 | | Property, plant and equipment, net | $179,282 | $459,276 | | Total Liabilities | $240,142 | $280,439 | | Long term debt | $95,416 | $94,961 | | Total Stockholders' Equity | $314,834 | $614,705 | Consolidated Statement of Operations Highlights (Three Months Ended March 31, in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Revenue | $78,723 | $94,501 | | Gross Profit | $22,812 | $35,143 | | Impairment of property, plant and equipment | $286,612 | $2,702 | | Income (loss) from operations | $(299,341) | $2,436 | | Net Loss | $(301,249) | $(1,835) | | Net Loss Per Share (Basic & Diluted) | $(3.67) | $(0.02) | Consolidated Statement of Cash Flows Highlights (Three Months Ended March 31, in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $5,632 | $(17,749) | | Net cash used in investing activities | $(12,998) | $(25,863) | | Net cash provided by (used in) financing activities | $(21,477) | $5,259 | | Net decrease in cash | $(28,843) | $(38,353) | Notes to Consolidated Financial Statements Notes detail accounting policies, liquidity with $192,039 thousand cash, a $286,612 thousand impairment charge from the Statesboro Plant, segment revenue changes, and $9,790 thousand in restructuring costs - The company operates in two reportable segments: Energy Industrial and Thermal Barrier, focusing on high-performance aerogel materials for energy, sustainable insulation, and electric vehicle (EV) markets20 - As of March 31, 2025, the company had $192,039 thousand in unrestricted cash and cash equivalents after incurring a net loss of $301,249 thousand for the quarter22 Revenue by Segment (Three Months Ended March 31, in thousands) | Segment | 2025 | 2024 | | :--- | :--- | :--- | | Energy industrial | $29,822 | $29,082 | | Thermal barrier | $48,901 | $65,419 | | Total revenue | $78,723 | $94,501 | - The company ceased construction of its planned second manufacturing plant in Statesboro, Georgia, resulting in an impairment charge of $286,612 thousand during the three months ended March 31, 202557 - In Q1 2025, the company incurred $9,790 thousand in restructuring and demobilization costs, including severance, demobilization costs, and a write-off of deferred financing costs related to the canceled Statesboro Plant107109 - On May 6, 2025, subsequent to the quarter end, the company amended its MidCap Loan Facility, adding Aspen Georgia as a borrower and modifying interest rates and financial covenants74110 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses a 17% revenue decrease to $78,723 thousand, a $301,249 thousand net loss due to impairment, and a decline in Adjusted EBITDA, with future segment projections Results of Operations Q1 2025 revenue fell 17% to $78,723 thousand due to a 25% decline in Thermal Barrier sales, while a $286,612 thousand impairment charge led to a significant operating loss Revenue Comparison (Three Months Ended March 31, in thousands) | Segment | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Energy industrial | $29,822 | $29,082 | $740 | 3% | | Thermal barrier | $48,901 | $65,419 | $(16,518) | (25)% | | Total revenue | $78,723 | $94,501 | $(15,778) | (17)% | - The decrease in Thermal Barrier revenue was driven by reduced volume from a major U.S. automotive OEM and lower contractual component pricing160 Gross Profit Comparison (Three Months Ended March 31, in thousands) | Segment | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Energy industrial | $11,690 | $11,562 | $128 | 1% | | Thermal barrier | $11,122 | $23,581 | $(12,459) | (53)% | | Total gross profit | $22,812 | $35,143 | $(12,331) | (35)% | - General and administrative expenses decreased by $4,200 thousand (24%) primarily due to lower compensation and related costs169 - The company incurred $9,790 thousand in restructuring and demobilization costs and a $286,612 thousand impairment charge in Q1 2025, which were not present in the prior-year period171172 Liquidity and Capital Resources The company held $192,039 thousand in cash, with operating cash flow at $5,632 thousand, and ceased Statesboro Plant construction to optimize capital expenditures and liquidity - The company's principal sources of liquidity are its cash and cash equivalents of $192,039 thousand (as of March 31, 2025), availability under its Revolving Facility, and cash from operations184 Cash Flow Summary (Three Months Ended March 31, in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Operating Activities | $5,632 | $(17,749) | | Investing Activities | $(12,998) | $(25,863) | | Financing Activities | $(21,477) | $5,259 | - Capital expenditures decreased to $12,998 thousand in Q1 2025 from $25,863 thousand in Q1 2024, reflecting the halt in construction of the Statesboro Plant187 - Financing activities in Q1 2025 primarily consisted of debt repayments, including $13,200 thousand on the revolver and $6,500 thousand on the term loan188 Key Metrics and Non-GAAP Financial Measures Adjusted EBITDA for Q1 2025 was $4,927 thousand, a significant decrease from $12,928 thousand in Q1 2024, primarily due to a $286,612 thousand impairment charge Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Line Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net loss | $(301,249) | $(1,835) | | Depreciation and amortization | $5,793 | $5,786 | | Stock-based compensation | $2,073 | $4,706 | | Other expense | $832 | $3,515 | | Income tax expense | $1,076 | $756 | | Restructuring and demobilization costs | $9,790 | — | | Impairment of property, plant and equipment | $286,612 | — | | Adjusted EBITDA | $4,927 | $12,928 | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company faces interest rate risk from $112,000 thousand variable-rate debt, foreign currency risk from the Mexican Peso, and notes no material impact from inflation - The company is exposed to interest rate risk through its variable-rate Term Loan Facility ($112,000 thousand principal) and Revolving Facility ($29,800 thousand principal), both tied to Term SOFR200 - Foreign currency exchange risk is primarily related to the Mexican Peso vs. the U.S. dollar, which resulted in a transaction loss of $400 thousand for Q1 2025203 - Management does not believe that inflation has had a material effect on results of operations for the periods presented202 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting - Based on an evaluation as of March 31, 2025, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective206 - There were no changes in the company's internal control over financial reporting during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls207 PART II OTHER INFORMATION Item 1. Legal Proceedings The company is involved in ongoing patent infringement proceedings in Korea and a lawsuit seeking over $16,000 thousand in damages, both stayed pending appeals or arbitration - Patent infringement proceedings in Korea against several entities remain stayed pending the outcome of appeals at the Korean IP High Court211 - A lawsuit filed by a former distributor, Aerogels Poland Nanotechnology LLC (APN), seeking over $16,000 thousand in damages has been stayed by the court pending arbitration212 Item 1A. Risk Factors Key risk factors include potential changes in U.S. trade policies and tariffs, such as a 145% tariff on Chinese imports, which could increase costs and impact gross margins - The company's business could be materially and adversely affected by changes in U.S. trade policies and tariffs, such as a potential 145% tariff on product imports from China214 - Increased tariffs could raise the cost of materials sourced from outside the U.S., and the company may be unable to pass these cost increases on to its customers, potentially harming gross margins215 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales or repurchases of equity securities during the quarter ended March 31, 2025 - The company had no unregistered sales of equity securities and made no repurchases of its equity securities during the quarter ended March 31, 2025217 Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - None218 Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable219 Item 5. Other Information This section details the amendment of the MidCap Loan Facility, adjusting interest rates and financial covenants, and reports the departure of the Chief Legal Officer - On May 6, 2025, the company amended its MidCap Loan Facility, which increased interest rate margins and adjusted financial covenants, including changing the minimum liquidity requirement and the minimum EBITDA levels tested quarterly220221222 - The Chief Legal Officer, General Counsel and Corporate Secretary, Virginia H. Johnson, will depart the company effective May 23, 2025, to pursue other opportunities225 Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including the credit agreement amendment and CEO/CFO certifications - Key exhibits filed with the report include the Amendment No. 1 to the Credit Agreement and certifications from the principal executive officer and principal financial officer228