ASPEN AEROGELS INC Q3 FY2025 earnings call

Leadership Team

• Introduced Grant Thoele as CFO and Glenn Deegan as Chief Administrative Officer.

EV Market

• Unsettled commercial environment for EVs; GM ramped down production, with uncertain demand reset in early 2026.

Energy Industrial Segment

• Stabilized and expected to grow in 2026, with subsea opportunities (potential $15M+ revenue in 2026) and LNG project supply to Venture Global CP2 LNG.

Adjacent Markets

• Leveraging PyroThin thermal barrier technology for battery energy storage systems and other electrification projects, addressing thermal propagation challenges in high-density battery designs.

European OEM

• Won a battery design award from a major European OEM, with ACC preparing to ramp production in 2026, strategic due to ownership by Stellantis and Mercedes-Benz.

Q3 revenue was $73 million, a 6% QoQ decline. Thermal Barrier segment revenue was $48.7 million, down 12% QoQ; Energy Industrial segment revenue was $24.3 million, up 7% QoQ. Gross profit was $20.8 million, down 18% QoQ. Thermal Barrier segment gross margin was 24% (down from 31% Q2), while Energy Industrial segment gross margin was 36% (in line with Q2 and above the company target of 35%).

Q4 Outlook

• Expected revenue between $40 million to $50 million; adjusted EBITDA expected to be between negative $14 million to negative $6 million.

Full Year 2025

• Revenue could range from $270 million to $280 million, adjusted EBITDA $7 million to $15 million.

2026 and Beyond

• Aim for adjusted EBITDA breakeven at $200 million annual revenue; Energy Industrial segment expected to grow, and European EV customers ramping up in 2027 with potential $150M+ revenue.

• EV Market Volatility: Uncertainty in EV production and demand affecting revenue.
• Supply Chain/Production: Scrap rates and fixed costs impacting gross margin.
• Regulatory Changes: Shifts in regulations (e.g., CARB waivers) affecting EV production and incentives.

Q: Touch on EBITDA breakeven at $200 million A: Actions taken in 2025 to reduce fixed costs, with improvements expected in 2026 from production yield improvements.

Q: Energy Industrial growth in 2026 A: Contribution from subsea projects, LNG project, baseload maintenance growth, and potential turnaround in refinery maintenance.

Q: European battery manufacturing contribution in 2026 A: European OEMs could contribute $10 million to $15 million, with a discount to provided volumes.

Q: Channel inventories and EV A: Progress made in moving products through distribution, improved from earlier in the year.

Q: European OEM award and volumes A: The award is a model approach, with full volumes in 2027 contributing to $150 million European revenue.

Q: Battery storage and thermal barrier A: Higher-density cells in battery storage create thermal propagation issues, which PyroThin technology addresses.

Q: Capacity allocation between Rhode Island and external partner A: Decided on regional basis, both facilities have capabilities to deliver on demand.

Q: CapEx levels A: Lower CapEx expected, with selective investment tied to return on business cases.