ASPEN AEROGELS INC Q1 FY2025 earnings call

• Secured a major PyroThin award with GM for a next-gen prismatic EV platform, demonstrating value in EV battery form factors.
• Energy Industrial expected to build revenue throughout the year after Q1 tail-off, with expectations to reach last year's revenue level.
• Diversified raw material supply chain and built a second source for aerogel to create a resilient and flexible supply chain, especially important in fluctuating tariff regimes.
• Took decisive actions to simplify and streamline the company, targeting to reduce the revenue level required for adjusted EBITDA breakeven to approximately $245 million.

Thermal Barrier: Q1 revenue was $48.9 million, a 25% year-over-year decline. Secured a major PyroThin award with GM for a next-generation prismatic EV platform, and had record quoting activity. Gross margin was 23%. Energy Industrial: Q1 revenue was $29.8 million, a 2% year-over-year increase. While it tailed off from Q4 2024's record, it's expected to build throughout the year, aiming to reach a full-year revenue approximating $145.9 million. Gross margin was 39%.

• Q2 revenue expected to range from $70 million to $80 million, translating to breakeven to $7 million of adjusted EBITDA, with a net income loss of $4 million to $11 million.
• Annual revenue target of at least $280 million with adjusted EBITDA of at least $20 million.
• Target to lower the operating income breakeven revenue level from $360 million to approximately $270 million, representing a $90 million reduction in revenues required to achieve breakeven operating income.

• Uncertainty in trade policy may impact demand for new vehicles and energy capital projects by affecting overall sentiment.
• Tariff environment could affect sentiment, but current efforts to diversify the supply chain mitigate the immediate impact on the company's operations.

Q: Evaluating what to do with the Georgia facility.

A: We are selling equipment to selected buyers, holding an auction for the remainder, and listing the plant for sale to recoup value from the equipment and building.

Q: What signals are you seeing from customers that give comfort the inventory clearing is fully wrapped up in the oil and gas business?

A: We have a reasonable view of distributor and contractor inventory levels, which have decreased, and expect revenue to build in the second half of the year.

Q: About thermal barriers and lower content mix per vehicle.

A: Content per vehicle is lower due to prismatic cells, but focus is on maintaining 35% gross margins and paying back capital. Prismatic parts allow sharing equipment across OEMs for better capital payback.

Q: Opportunity for European expansion of thermal barriers.

A: Prefer supplying from Mexico with warehousing in Europe, as labor costs in Europe are less favorable, but customers are open to Mexican-sourced product.

Q: Traction with South Korean EV OEMs.

A: Actively engaged, close with LG and Samsung on the cell manufacturing side, with potential growth from 2027 onwards as new generations and refreshes of launches come up.