Aspen Aerogels(ASPN) - 2025 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION Item 1. Financial Statements The company's unaudited financial statements show a significant decline in assets and equity, driven by a substantial net loss from a major impairment charge Consolidated Balance Sheets The balance sheet reflects a significant reduction in total assets and stockholders' equity as of June 30, 2025, due to a large impairment charge and accumulated deficit Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $310,467 | $409,448 | | Property, plant and equipment, net | $156,271 | $459,276 | | Total Assets | $525,132 | $895,144 | | Total Current Liabilities | $78,046 | $110,112 | | Total Liabilities | $216,364 | $280,439 | | Total Stockholders' Equity | $308,768 | $614,705 | - A significant impairment charge related to the cessation of construction at the Statesboro Plant led to a $286.6 million reduction in the construction in progress balance during the first quarter of 2025[57] - Assets held for sale of $26.5 million were recognized as of June 30, 2025, related to the planned divestment of assets from the Statesboro Plant[57] Consolidated Statements of Operations The company reported a net loss of $310.3 million for the first half of 2025, primarily due to a major impairment charge and a 26% revenue decline Consolidated Statement of Operations Summary (in thousands, except per share data) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Revenue | $156,747 | $212,271 | | Gross Profit | $48,128 | $86,721 | | Impairment of property, plant and equipment | $287,567 | $2,702 | | Income (loss) from operations | $(304,496) | $22,422 | | Net income (loss) | $(310,305) | $14,983 | | Diluted Net income (loss) per share | $(3.78) | $0.19 | Consolidated Statements of Cash Flows Net cash from operations was positive despite a significant net loss, while investing and financing activities resulted in cash outflows for debt repayment and capital expenditures Consolidated Statement of Cash Flows Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $1,702 | $(10,906) | | Net cash used in investing activities | $(25,883) | $(50,690) | | Net cash provided by (used in) financing activities | $(29,063) | $13,400 | | Net decrease in cash | $(53,244) | $(48,196) | | Cash at end of period | $168,032 | $91,775 | Notes to Consolidated Financial Statements Notes detail the business structure, accounting policies, a significant impairment charge from ceasing plant construction, new debt facilities, and declining segment performance - The company operates in two reportable segments: Energy Industrial and Thermal Barrier, with the latter focused on the electric vehicle (EV) market[20] - A restructuring plan initiated in February 2025 involved ceasing construction of the Statesboro Plant, resulting in impairment charges of $286.6 million in Q1 2025[57] - In August 2024, the company entered into a new credit agreement (MidCap Loan Facility) comprising a $125.0 million term loan and a revolving facility up to $100.0 million[24][69] Revenue by Segment (Six Months Ended June 30, in thousands) | Segment | 2025 | 2024 | | :--- | :--- | :--- | | Energy industrial | $52,615 | $66,005 | | Thermal barrier | $104,132 | $146,266 | | Total | $156,747 | $212,271 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses a 26% revenue decrease and a substantial net loss due to an impairment charge, while affirming sufficient liquidity for near-term operations Results of Operations Financial performance declined significantly in H1 2025, with a 26% revenue drop, a 45% gross profit decrease, and a large operating loss from impairment and restructuring costs Revenue Comparison (Six Months Ended June 30, in thousands) | Segment | 2025 | 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Energy industrial | $52,615 | $66,005 | $(13,390) | (20)% | | Thermal barrier | $104,132 | $146,266 | $(42,134) | (29)% | | Total revenue | $156,747 | $212,271 | $(55,524) | (26)% | - The decrease in Thermal Barrier revenue was driven by reduced order volume from a major U.S. automotive OEM and lower contractual component pricing[191] - The company incurred significant one-time costs in H1 2025, including $14.7 million in restructuring and a $287.6 million impairment charge related to the canceled Statesboro Plant[202][204] Adjusted EBITDA Reconciliation (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net income (loss) | $(310,305) | $14,983 | | Depreciation and amortization | $11,589 | $11,772 | | Stock-based compensation | $5,284 | $7,677 | | Restructuring and demobilization costs | $14,728 | $— | | Impairment of property, plant and equipment | $287,567 | $— | | Adjusted EBITDA | $14,672 | $41,871 | Liquidity and Capital Resources The company maintains sufficient liquidity through cash and credit facilities despite significant cash usage in investing and financing activities during the first half of 2025 - The company's principal sources of liquidity are cash on hand, availability under its Revolving Facility, and cash from operations[216] - Cash and cash equivalents stood at $167.6 million as of June 30, 2025[214] - Cash flow from operations improved to a $1.7 million source of cash in H1 2025 from a $10.9 million use in H1 2024, primarily due to large non-cash charges offsetting the net loss[218] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks involve interest rate fluctuations on its variable-rate debt and foreign currency exchange exposure, particularly with the Mexican Peso - The company is exposed to interest rate risk through its Term Loan Facility and Revolving Facility, which bear interest rates tied to Term SOFR[232] - Foreign currency exchange risk is primarily from the Mexican Peso against the U.S. dollar, with the company recording foreign currency transaction gains of $0.8 million in H1 2025[235] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal controls during the quarter - Based on an evaluation as of June 30, 2025, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective[238] - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[239] PART II OTHER INFORMATION Legal Proceedings The company is involved in stayed patent infringement proceedings in Korea and a stayed lawsuit from a former distributor seeking over $16 million in damages - Patent infringement proceedings in Korea against several entities remain stayed pending the outcome of appeals[243] - A lawsuit filed by former distributor APN seeking over $16 million has been stayed by the court, which granted the company's motion to compel arbitration[244] Risk Factors No material changes to the company's risk factors have occurred since the filing of its Quarterly Report for the quarter ended March 31, 2025 - There have been no material changes in the company's risk factors from those previously disclosed[245] Unregistered Sales of Equity Securities and Use of Proceeds The company conducted no unregistered sales or repurchases of its equity securities during the second quarter of 2025 - No unregistered sales of equity securities occurred during the quarter[246] - The company did not repurchase any of its equity securities during the quarter ended June 30, 2025[246] Other Information Significant executive transitions include the upcoming departures of the CFO and CHRO, with a new CFO appointed from within the company - CFO Ricardo C. Rodriguez will depart the company effective October 1, 2025[249] - Grant Thoele, currently Chief of Staff to the CEO, will be promoted to Chief Financial Officer and Treasurer, effective October 1, 2025[250] - CHRO Stephanie Pittman will also depart the company effective October 1, 2025[253] - On June 3, 2025, departing CFO Ricardo C. Rodriguez adopted a Rule 10b5-1 Sales Plan for the sale of up to 25,353 shares plus shares underlying certain RSU awards[256]