ASPN

Commercial Activity & Segment Growth

• The Energy Industrial segment remains on track to hit ~20% full-year 2026 revenue growth, despite the East Providence plant disruption and slow refinery/petrochemical activity. LNG-related activity is on track to more than double in 2026 compared to 2025, and is a core growth driver across the U.S., Middle East, and Africa. Management targets scaling this segment to a $200 million high-margin business without incremental capital investment.
• Pyrethin thermal barrier (EV segment) U.S. demand has stabilized at ~6% of new vehicle sales, half of 2025 levels. GM is increasing production to align with sales and rebuild inventory, driving higher Q3 Pyrethin demand. A new design award from Jaguar Land Rover (seventh European OEM customer) further validates the technology, bringing the total awarded pipeline to $135 million in full-volume revenue.
• Battery Energy Storage Systems (BESS) is being developed as a third adjacent growth segment. The company is engaged in technical qualification and commercial discussions with leading utility-scale and critical power developers, and expects initial small revenue in the near term.

East Providence Plant Incident Update

• An April 2026 explosion at the East Providence plant damaged a limited area of the facility; no employees were seriously injured. A staged restart began in May 2026, and full production capacity is expected to be restored in the first half of 2027.
• Significant customer supply disruptions have been avoided via existing inventory, output from an external manufacturing partner, and the staged restart. Extraordinary incident-related operating and capital expenses are being incurred, and management expects a large portion of losses to be recoverable via insurance, with a $8.9 million insurance receivable already recorded for the property damage loss in Q2.

Financial Performance (Q2 2026)

• GAAP gross margin was 7% ($3.3 million gross profit), dragged down by $5.3 million in incremental incident-related costs. Excluding these costs, adjusted gross margin was 17% ($8.6 million adjusted gross profit).
• GAAP net loss was $23.3 million, an improvement from the $23.7 million net loss in Q1 2026. Adjusted EBITDA was -$6.6 million, a nearly 50% improvement from Q1, on 32% revenue growth.
• The company ended Q2 with $153.4 million in cash/cash equivalents/restricted cash, with substantial headroom above its required financial covenant (100% cash coverage of the $79.5 million term loan balance).

• Q3 2026: Total revenue is projected between $65 million and $80 million (30% to 60% quarter-over-quarter growth), with adjusted EBITDA between $7 million and $15 million. This includes $5 million to $10 million in add-backs for incident-related charges.
• 2026 European thermal barrier revenue: Upwardly revised from the prior 10-15 million USD outlook to 20-30 million USD, following first half revenue of ~$11 million and expanding awarded business across 7 OEMs and 9 vehicle platforms.
• 2026 Energy Industrial revenue: Reaffirmed at ~20% full-year growth, with most project activity concentrated in the second half of the year.
• 2027 European thermal barrier revenue: Targeted at 40-60 million USD, double the 2026 outlook, as most awarded programs start serial production (SOP) in 2027.
• 2027 Energy Industrial revenue: Management expects the segment to continue growing at ~20% year-over-year, reaching the $200 million annual target long-term without significant incremental capital investment.
• The potential sale of Plant 2 assets is now expected to close in 2027, with proceeds to be used to pay down term loan debt dollar-for-dollar. Management expects to at least maintain its ~$63 million net cash position by the end of 2026.

Q2 2026 total revenue was $49.8 million, an increase of 32% quarter-over-quarter. 1. Energy Industrial: Revenue was $20.4 million, representing 41% of total Q2 2026 revenue. This was a 6% quarter-over-quarter decline, below expectations, driven by logistics and inventory disruptions tied to the Iran conflict and customer demand shifting from Q2 to Q3. Management expects revenue to rebound to ~$40 million in Q3 2026, roughly double the Q2 level. 2. Thermal Barrier (Pyrethin): Revenue was $29.5 million, representing 59% of total Q2 2026 revenue. This outperformed expectations, with 81% quarter-over-quarter growth driven by a GM production ramp and 14% quarter-over-quarter European revenue growth (from $5.1 million to $5.8 million).

• Full production capacity at the East Providence plant will not be restored until the first half of 2027, with incident-related incremental costs (expedited freight, third-party manufacturing, professional restoration fees) expected to continue through that period, creating cash timing differences as insurance proceeds are paid in arrears.
• U.S. EV demand is currently half of 2025 levels, following reduced incentives and regulatory support, creating near-term demand volatility for the thermal barrier segment.
• Refinery and petrochemical maintenance activity (a core end market for Energy Industrial) is currently subdued, as customers prioritize facility uptime over scheduled maintenance, delaying this revenue.
• European thermal barrier programs have not yet reached full serial production, and volumes may be lumpy as customers build pre-production inventory, creating quarterly revenue volatility.

Q: Asked to break down the strong Q3 Energy Industrial outlook between subsea projects, LNG, and refinery/petrochemical work, and comment on Q4 momentum. / A: Most of the expected large subsea project revenue will fall in Q3, with strong LNG activity contributing to both Q3 and Q4 growth. The Q3 outlook does not include any material recovery of refinery/petrochemical maintenance work, but management expects this work to return over time as facilities prioritize reliability again, supporting continued active business in Q4.

Q: Asked why the 2027 40-60 million USD European thermal barrier guidance is lower than the total $135 million full-volume awarded pipeline, and what would drive upside to this outlook. / A: The gap is a result of the company's conservative modeling approach, learned from experience, to account for gradual program ramps and broader supply chain dynamics. The company is already outperforming its initial 2026 guidance (raised from 10-15 million to 20-30 million), and is prepared and capable of supporting higher volumes than the current 2027 guidance if demand comes in stronger, which would represent upside.

Q: Asked how LNG market growth in 2027 will shape Energy Industrial growth, and what growth rate to expect after 20% growth in 2026. / A: Management expects the Energy Industrial segment can deliver another ~20% year-over-year growth in 2027, which would keep the company on track to hit the long-term $200 million annual run rate target with no significant incremental capital required. Customers across LNG, subsea, and turnaround end markets have large backlogs extending through 2027 and beyond, and the company expects to capture its fair share of this work given its long track record of strong service and quality.

Q: Asked for an update on commercial progress and validation milestones for the new BESS segment. / A: The company does not expect meaningful BESS revenue in 2026, but still expects to generate initial small revenue in the near term, which will serve as the key market validation milestone. The company is currently completing qualification processes with a handful of large developers, and expects to provide a substantive update on progress at the next quarterly earnings call.