Aspen Aerogels, Inc. Q2 FY2025 earnings call

Ricardo plans to step down as CFO at the end of Q3, and Grant Thoele will become CFO. The company simplified and streamlined the organization in the first half, removing approximately $65 million in cost and reducing OpEx to 2022 levels. The aerogel manufacturing facility in Rhode Island and EMF supplemental supply are positioned for future growth. Q2 revenue, gross profit, and adjusted EBITDA were at the high end of expectations, led by the Power and Thermal Barrier business. The Energy Industrial segment faced a slowdown in project activity, especially in Subsea, but opportunities for future projects in 2026 were seen. Ricardo reported Q2 financials, including revenue, gross margin, adjusted EBITDA, cash flow, and balance sheet, and discussed the company's outlook for the second half, including revenue and adjusted EBITDA guidance.

In Q2 2025, Aspen Aerogels delivered $78 million of revenue, a 34% year-over-year decline and nearly flat quarter-over-quarter. The annual run rate was approximately $312 million. The Energy Industrial segment's revenue decreased significantly to $22.8 million, a 38% year-over-year drop, mainly due to subsea and project activity slowdown. The EV Thermal Barrier business had revenue of $55.2 million, a 32% year-over-year decrease, but GM's production volumes increased meaningfully quarter-over-quarter, leading to a 14% quarter-over-quarter revenue increase in this segment. Company-level gross profit margins were 32%, with gross profit of $25.3 million, a 51% decline from the same quarter last year. The Energy Industrial business maintained a 36% gross margin, and the EV Thermal Barrier business had a 31% gross margin, 8 percentage points higher quarter-over-quarter. Adjusted EBITDA in Q2 was $9.7 million, nearly doubling quarter-over-quarter.

The company expects $140 million to $160 million of revenue in the second half of 2025, translating to $297 million to $317 million for the year. Adjusted EBITDA in the second half is expected to be $20 million to $30 million, potentially doubling the first half's. Net income for the second half ranges from a loss of $7 million or negative $0.08 per share to positive net income of $3 million or $0.04 per share. CapEx for the year will be managed to less than $25 million. Even with the tax credit expiring, GM's market share gains and potential inventory rebuilding in Q4 and early 2026 drive stable demand for the EV Thermal Barrier business.

Risks include factors identified in SEC filings that could cause actual results to differ materially from forward-looking statements, such as energy market fluctuations, regulatory headwinds in the EV market, and turbulent global economy affecting the energy sector.

Q: Eric Stine asked about the ongoing distributor destocking in Energy Industrial and updated thoughts.

A: Donald R. Young said they've made a dent in distributor inventories but still have work to do, seeing good activity in partner companies and customers like TechnipFMC with projects translating to 2026 revenue.

Q: Colin Rusch asked about design in activity with new OEMs and R&D.

A: Ricardo C. Rodriguez said the team has record-level prototyping and quoting activity, well-positioned in Europe with OEMs like ACC ramping up in Q4 and Daimler in 2027, and Don Young added ACC in Europe is making strides.

Q: Ryan Pfingst asked about growth in 2026 for Energy Industrial and non-GM customer shipments.

A: Donald R. Young said they believe in reigniting growth in 2026 with high gross profit margins, and Ricardo C. Rodriguez said non-GM customers like ACC will ramp up in Q4 and Daimler in 2027.

Q: J. David Anderson asked about cost adjustment in Thermal Barrier business and IHS forecast.

A: Donald R. Young said they're in a good position cost-wise to maintain 35% gross margin targets, and Ricardo C. Rodriguez said the team has cost improvement projects to increase efficiency.

Q: Itay Michaeli asked about 2027 revenue buildup and quoting activity.

A: Ricardo C. Rodriguez said the 2027 number is unchanged, with ACC and Daimler launches and other OEMs contributing, and quoting activity tilting towards prismatic cells with OEMs assessing consumer demand.

Q: Tom Curran asked about Subsea and LNG mix and demand in EI.

A: Donald R. Young said Subsea is pure project work, LNG is a mix of maintenance and project work, with backlogs robust but some projects taking longer lead times.