Aspen Aerogels (ASPN) 2 May 242024 Q1 Earnings call transcript

Good morning, and thank you for attending the Aspen Aerogels, Inc. Q1 2024 Financial Results Call. [Operator Instructions]I would now like to turn the conference over to your host, Neal Baranosky, Aspen's Senior Director, Head of Investor Relations and Corporate Strategy.Thank you.

You now may proceed, Mr. Baranosky.

Chad. you, Thank thank first and joining for us Good XXXX you financial Aerogels' quarter results Aspen morning for conference call. are Financial are over to With Ricardo to address that today Don the and like President us call turning CEO; I Rodriguez, would Chief few Officer a Treasurer.There Don. before and housekeeping items Young, and to U.S. press announcing Aspen's of developments a as well management's release financial use business applicable The reconciliation financial non-GAAP the compared measures as results and most of recent Generally or Aspen's on www.aerogel.com.In our highlight Principles deck Accepted Investors addition, the today. uploaded conversation slide we've to available Accounting that is measures, GAAP our will like Section to website, of a that accompany website I'd

measures measures pending our of expect time-to-time, to issued immediately expiration Form divesting from will long-term cover we in the we a definitions press the and/or Forms-X officers the connection that why The of call, restricted we filing the XX statements are management order directly expectations. discussion actual be make withholding disclaimer measures, payment and of results about with after find note our our in units in subject cause It that or held GAAP. to exercise purpose of with of and/or that resale Inc. stock registration an call, financial with Pages for factors will filing Aspen options change not materially. to of for These financial Section and/or the the also statements our the affiliates of statement are be the review form Form non-GAAP like stock These identified will can program, deck prepared include are under yesterday's filings of for purchased call X isolation will will GAAP. Investors price the measures Section note consolidate not these today's to report substitute including equity file affiliates You governed shares measures the by that in first cover SEC. incentive options.Please in forward-looking or a These a of our is sale interest filed accordance the the reconciliations risks and the and Please taxes LLC, be prepared non-GAAP our to XX-Q differ also These current in resale a our to quarter, to on Industries, in we could the of content securities in Koch of deck in covered and River the considered to results included uncertainties non-GAAP statements present this financial refer of this Koch intended financial website.On of this by Aspen. release.I'd our the not shares of most Koch. risks amount by S-X in as accordance EBITDA. does as previously affiliates uncertainties adjusted other or shareholder.The measures slide are language.During largest with our on by and these affiliate financial to Capital, securities statements X comparable prior Aspen Wood the non-GAAP GAAP financial and and Koch to represent of registration equity

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earnings our morning, strategy. on into the Neal. everyone. deeper impact comments focus full strategy. call. and elements and for QX Good status Ricardo Thanks, business will outlook performance you will Thank XXXX our our financial critical year provide expected outlook performance, of our XXXX and our My of dig QX for several us our joining and

successfully reflected session.We execution We strong and that The is The will a our conclude XXXX.The double $XXX very now is leveraged with in we financial and QX more we Q&A thermal nearly XXXX. the the in QX. results performance EV operated in hampered are thermal well throughout built extended momentum million XXXX $XX to along in now adjusted Energy revenue million barrier now QX. business our revenue outlook.In the XXXX anticipate XXXX. fact, through constraint to million $XX grew raised And in revenue than $XX XXXX poised $X year. and PyroThin net for that barrier we million XXXX QX year XXXX grew million and PyroThin supplemental in $XX QX being to positive be in will from addressed income in Industrial revenue Overall, million EBITDA the supply. in to from capacity to in

XX% $XX XX% revenue the believe, over the to XX% strong EBITDA in XXX% EBITDA them. given by of $XX the OpEx our by outlook XX% to Energy dropping XX% grow and revenue supports growth model. will to gross incremental the Industrial XXXX confidence top now adjusted strong manufacturing We the the outlook margin XXXX. our percentage profitability growth facility in And are the us results power gross believe facility to overall QX more $XXX of Energy the to XX% revenue $XX margin XX% expansion. in and margins for approximately We metrics through Our to line at outlook to exceed even million, believe numbers. XXXX, QX are by XXXX.The opportunity believe EBITDA Comparing QX quarters we external business efficient anticipate we results of at million by gross exceeding The transition external boost and Industrial XX%. our adjusted operations increased past nearly be and least to in demonstrated of QX, cost approximately XXXX and drove we leveraged our have XX% million and revenue demand revenue that adjusted second line.These million expanded near target.While X controls to momentum of we baseline has $XXX QX from to numbers million and and million XXXX $XX and least supply to also at half manufacturing have we the impressive. company to the XXXX QX we supplied to million.These least have with $XX reach the our The an improved XX% for

capacity on XXXX outstanding in target to for utilizing to $XXX million also and a our including QX.We path supply $XXX current bodes interim here realize to in and start for we additional direct gross in million revenue, results, our EBITDA. believe in adjusted well of arrangements strong are Our that profit million $XXX

can believe regions nearly growth second targets.The to profitability growth of capacity barriers half products line revenue our facility Rhode and believe we by the profitable signaling QX, of important deep operating We that Energy remains team our of an and we to the Island parts the Industrial serving these across We of our PyroThin XX% long-term top are barrier for at specific EBITDA. necessary XXX% achieve to PyroThin from to can commercial Industrial PyroThin I current programs, which for long XX annual achieve and drive or anticipate assembly I remained steady, believe for our gross well. strong the productivity arrangements, LNG in roster EBITDA invoiced including overall to during customers. Plant Mexico-based flexibility our of we plants, performance of finalize is industry. Providence, Energy external the supply and from business of for are their robust.During The OEM manufacturing least executing that Energy and with of that activity reinforces yields Plant growth to X $XXX revenue, least OEMs margins, business; the supply we segments, will for at goals.First, activity in to to product we the the thermal Industrial support financial PyroThin thermal and production to XXXX. strategy significant in Cryogel all key Plant our the full manufacturing believe our adjusted the design existing adjusted million barriers development facility thermal thermal conversion elements engagement full XX% strength $XXX the I transition additional platforms.As potential believe earlier, will on the growth utilizing conversion described We Industrial second, term Energy our over having interim third, company.Again, $XXX generate business; barrier the Based will we awards external million business different assets and support East proceeding as respective million. battery and and XXXX margins highly add nearly be prototype

a have in we believe terms with this on net which second strength XXXX recent we performance, we least the we adjusted Several and million operating we performance announced million, its remain that anticipate strong advisers beyond recent believe and this to by with and engaged for restarting financial year the formal plan that income.As of ago, Programs the This full loan stage QX of now that application XXXX. diligence momentum cash. one II.While for capacity DOE process. $XXX over of with the million We manufacturing the no in deeply finished is anticipate we XX% within for U.S. conditional a to and facility DOE's are our XXXX the program. not or on will earnings the Georgia, at are construction in billion we term call.Ricardo, well negotiation Given of add drivers providing gross stage key continue partner of next Loan months flexibility, level to update you. Energy And in that we revenue will to later recorded than $XXX into of Plant the focused margins Office Department above subject this positive the QX due of the at LPO quarters, assurance aerogel we issue invited the sheet formal commitment, an the reach.In our EBITDA and $X.X from invitation over diligence Aspen revenue of the approximately is candidate $XX is due

Thank production our updated results behind of you, decrease ramped thermal aerogel $XXX you $XXX was QX, part has delivered facility, $XX.X a than quarter-over-quarter. plants by million Mexico Industrial and good and $XX.X million.This into an an X start manufacturing covering and XXXX run million, prioritizing Slide outlook $XX.X XX%, growth of begin our XX% rate enabled for now our revenue of quarterly which for decrease morning, Energy for. higher our million everyone. our reflects on record I'll production company quarter-over-quarter. it external Island qualified X% up produce already of delivered before operating XXXX.I'll schedule Rhode in through revenues. on This guidance was called year-over-year of and our was XX% annual revenue million our meaningfully walking all-time translates of revenue XXX% is productivity.Our mix. first higher and assembly which was in year-over-year through rest is by with barrier a a rationale growth in to that We And quarter the and Don, revenue the achieved

$XX.X expect more still we segment this in though previously EV is business million as either accretive for expected, of the not of summary revenue a provide I'll energy Material electric for in up now this $XX.X XXX% out. million squeeze of gross and way year-over-year barrier XX sales, expenses. is Scania.Next, a segment.As the consistent geared business even reflecting launch up concerned just and thermal mentioned, main of percentage revenue volume points in by are profit.EV demand for $XXX along improvement for thermal XXXX million our And segment in of quarter-over-quarter, X volumes and Toyota vehicles, quarter-over-quarter. in in deliver parts to over production GM's this QX our barrier point, the our We is to sold percentage squeezed was the temporary of accelerating expenses made supply Ultium supply XX% with production a where revenues platform-based than quarter of

costs Industrial of XX percentage keep as mix revenue target materials of in is to quality utilities, here production is This materials barriers of increase below getting continue in planning North These as describe inspection.These rate in target points required conversion points Energy year, $XX.X reflect and finished into an manufacturing we supplies, costs with direct with these sales. reliably to results were meaningfully thermal chain our points convert these sales costs although, value of as rent, EV be we to surprised higher products.As the that of QX percentage mostly conservatively percentage slight of run XX ensuring some which these or points logistics, at were our higher of the than goods, team million of of include a all this the XX process costs or Star.Conversion managing pleasantly all long-term in logistics We to provides continued XX of is overhead, continue long-term product which of as a percentage our labor, XX due our relief, goal more of the elements sales it last raw factory to compared prefer costs environment for previously vigilant sales. in costs, portion continues raw cost complicated.We QX. where, these and is remain can insurance, to mentioned, costs our feeding

with And Mexico, we a our So increasing in at we faster improvement. still recent the production further got is equipment opportunity automation more aerogel aren't these.The along upgrades uptime continuation done of off. some in managing our work of for introducing pace, paying

Our is operations manufacturing fixed structure. not rightsizing done our team cost

million.This year.Our of gross gross So been those the barrier profit scaling revenue XX% profit $X.X delivered onetime $XX.X changes by the would same obsolete QX. a without a company-level Industrial to changes profit fall-through improved million profit million benefit of that margins related where incremental of implemented $X.X and quarter. continue engineering $XX.X over $XX.X gross equipment have million segment million million can last during customer-driven better segment lower quarter of be this revenue. of of of we we anticipated in improvement profit these inventory barrier is QX, on million $XX.X operated still few efficiently.In incremental the of million on were our gross and charges is $XX.X loss the significant more of of quarter last thermal gross customers In a of reimbursement $XX.X portion on $X.X year, year-over-year likely in Energy from and revenues. thermal XX% will with EV this at charges we this reflected delivered barriers, year.At If increase time a a our or of on million profit our thermal gross we EV later gross in compare last our EV The QX year,

that EBITDA compared million amortization, a or interest, resulting to define EBITDA the reducing driving we'll last with reminder, it our same incremental level year-over-year communicating million in needed level prismatic in items.The this at cancellation $XX.X reduction couple capabilities, company our and period a limited about adjusted quarter-over-quarter opportunistically only.Our by first EV have every company. during Operating have continue rate million $XX.X scale million, taxes, of these core are Industrial $X.X interest million the our compensation OpEx $X.X order process QX. of around guideline up to loss.As items profit million, and and managing in been of negative And run generation projected of opportunities as of generation, $X.X team we our net our key and we've year. that without our for OpEx comparison of EBITDA of is ran to gearing to million million on automated of before would costs were profit to seem it which one do cells, implementing encapsulation stock-based interest relevant.The This items, meaningful team one our operating not respectively. margins shares $XXX QX income in been we new a million in sized of run barrier adjusted QX, of $XX.X driven the the North for quarter million this annual faster drive would and resulting that to increasing install systems continues management's Star performance and were thermal $XX.X of of the near-term as $XX.X in is second actually we our instead gross a stock-based XX% the gross loss year, been doesn't revenue the Now for elements could we by of revenue was depreciation, pay, and expenses X demand XXXX our write-down the million of and even at over capacity and level the down expenses, performance XX% close for second launch rate, leading to R&D QX maintaining compensation, adjustments are quarterly Energy million of our these $XX.X segments, during indicative $XXX $X.X around revisiting income financing-related our than million Without efficiency.Putting these and onetime and X our intent annual first and restricted were March together, equipment.The $X.X a expenses. first-generation developing $X.X other bolstering equipment award to the believe OpEx fixed million as this performance.In continue the

loss increase working $X.XX million, payable, resulted of $X.X and expenditures accounts of million a and in of our charges of inventory, per decreased working usage of of in the capital share $X.X versus our of used that or the operating $XX.X at cash Cash million, million, same adjusted net increase Our key by $X.X cash in million. an million in prepaid other to our for million or cash offset The expenses.Our quarter put offset $XX.X of I'll reflected $XX.X income were the loss These interest accounts balance to by flow $XX.X of an $XX.X turn XXXX.Next, the QX used accrued receivable $X.XX operations per were quarter EBITDA in capital items and net share sheet. million. quarter during in $XX.X for million. needs capital noncash

work our our top currently a slowly what the the II stable expenses will element of environment $X quarter. cumulative opportunities date, position procurement for other in in temperature XXXX business QX, a that capital our and fashion way our area. we through Mexico our of for options material control $XX.X capital at capital.We spent progress quarter QX, we raw exploring of there of spent Plant freeing reduced performance pay material we're main quarter focused million this here and and potentially million of capital second structures now production reducing the million labs previous are we XXXX.Our only up at end have the inventories raw financing project sale-leaseback for fully of on to Rhode advancing incurred and our million And U.S. an funding in expenses staying a CapEx more of main cash attractive in shareholders' related II are $XXX.X costs and of of the first inventories the construction Boston continue and and year included and insurance the year's as equity the the range we restart there's a actually $XXX.X Plant and the As Island receivable.We cost of to our the a quarter in XXXX the accounts the way through the $X.X ramp our Georgia in to reducing cash our accrued all to of enable assets on million fourth in prepaid by potential enclose needs in To pay down by working CapEx during in is to to similar on believe in working seasonality activities area. towards fund We $X.X ended investments million the our the and of in with that relatively half in $XXX.X million. QX.In quarter

can to term to construction way Department as the application We continue or near-term pursuant the expected top-of-mind sheet due believe Technology faster phases structure diligence a our due meaningfully business.Our behind of of capital through we asset-backed increasing outlook thinking the credit, a line XXXX relatively Programs loans, profitable our in added this, an EVs make enable recent year. a in of workstreams Vehicle sales.This can least as even that steps our this. and settle near-term revenues with revenue of the illustrate combination study longer than the of on our be to of with the We've our XXXX.This Neal million some understanding framed we ensure expect schedules. nonetheless, and to over to Slide XXX,XXX appendix $XXX in an have is our the could options look the sold the We've updated akin like initial drive scale of the and loyalty, loan DOE's well of Toyota, Motors a customers' production the XXXX long-running us of what we'll initial evidence in barrier are our leases, with below market. end this performance.Now, the X ability thermal and QX up expected sales for some options and We is business of enables up into and acceleration the fund invoice to us GM's When finished for the plans available to as to Plant in well up we the of to advise in questions.There's phase Manufacturing for EV very launched reference, GM's given dealer you negotiation what and include that to nameplates U.S. terms Energy's debt monitoring in And revenue connect or we costs revenue expectations the scope to And in volume believe to production continue working production thermal and a vehicles barrier a volumes running demand the XXXX Office looks outlook likely established graphic capitalized that through XXX,XXX months to sell-through that our with customers ramp working what historical vehicle. this distribution in if GM's is of view fund even IHS' of XX expected is now chart limited weeks further recommend levels we in combined at But Loan our with XXX,XXX over Scania inexpensive a the on of there's we it and are I'll strongly against units. revolving Ultium like.For of its and better out sheet and Ultium negotiation our ramp, term program.In II out in phase. over significant record produced our you to deliver for we X, the plenty appeal continue QX walk for have center part you to to other seeing to our that have update track had appendix, we EV reach guidance of of of initial prototype frame delay remaining for Advanced the units different EV and that but loan of we Motors vehicle.This year.Now Slide customer next inform based investors any details to to EV of turn QX and share XXXX, presentation potentially the parallel inventory were DOE's shows ramp up that we're General and and part a fair through brands very Slide achieve informs prior recently produce size QX delay customers' that diligence usage financing we General the ramp of what and we seen QX, expectations. attempt ATVM our information application as in GM's

growth baseline aerogel starting segments EV our from both on increase of of segment segment.Turning remain plant the expectations.Lastly, external how external deliver XXXX, we the X. for our results $XXX outlook, Island Slide our translates manufacturing deliver mind, of in to compensation this the thermal over around $XX can over will Combining deliver assuming on revenues into $XX total XXXX. revenues EBITDA to of and to considering we XXXX to the operating some of transition to improvement more in near-term could revenue the of nameplates adjusted higher income baseline, the for the inventory manufacturing matches profitability, $XX million engineering translate XXXX such barriers.And of $XXX scale confident of in X% expect as to be a of time the the an XXXX potential new Energy that profitably driven second million Industrial part/prototype a start-stop nature on is of EBITDA. prior half expedited costs to relying some of revenue XXX,XXX outlook.With QX, and our XX% headwinds In would whether we that our which aerogel new be revenue occur. decide in increase by While X baseline cost our without $XX sales, believe tell year-over-year barrier accelerate our would million, our again into key stock-based supply outlook right side advancing In mainly of outlook changes demand.We in updated which my a of launches, our demonstrating with OpEx prior within development in this obsolescence focused one opportunistically and over revenue see of subsea Rhode growth.Our and products thermal our facility is freight units sales million technical from we in million a in areas improvement expect also million fund over year-over-year our XX% right over of R&D volume to XX% we for across program on ability closely EBITDA capabilities XXXX, over at facility ability continues can Slide the continue production our expectation launches. could D&A our this add least XXXX, X, and outsized the to to lead of This quarters our distribution

Plant taking team's in to the investments million Don, made the year stock is advanced spend of The think of date preserve $XX of target in worth the side the fall to EBITDA expect Delivering our the if products fund fixed And motivates second and fixed be half over would equipment reduce this the $XX potential uptime additional including CapEx spend with at planning to to $X positive in rest our enough amount I bottom operational that enable along of capital be. well.On are a without half gross for that to ensure Basic are X, of the XX pricing segment driven of share Energy a demand for to the Aspen.Our cost remain Plant of is us has of expected capacity consistent level million meaningful spring gains production in year. rest $X.XX before of at Aerogel income continue ability first at and up positive reintroduced the in with was the side, construction assuming tooling into the to mix.Continuing plan reacceleration the has of count still than million put These production our in $XX past to products, of execution XXXX.We II all to our the of during need with of the by Industrial Energy is the the outlook, our construction them reducing This II a and pausing of flow advancing team there, here translate is plant a $XX XX.X ramp and Industrial to spend gross level the more site growth, Georgia our reaffirms our million at to operating these income that financial additional a I income Mexico of of right QX that metrics our a to months. and our appropriate.On per line. year. million Rhode call hand results is EBITDA productivity revenue that the million and that it's share, the to Slide increasing will back the, this. shares. to a XXXX are team been our up closer milestone in to at will journey all park to initially over and on net costs, in of last getting or the in that our right it margins, as our yields, investment driving year.Thanks not impact mix XXXX where Island, net we and place the of operations right truly equipping As includes the that in we is we to flip disproportionate profit

outlook now the dynamics a to remain where revenues highly We can while we opportunity selectively are scale costs idea and and front profitably most us. of to manage near-term have we optimizing our continuing motivated balance the our Nonetheless, by XXXX and remain path we in the our as of bright. cautious energized of sophistication long-term industry that make for sheet.We advance of about the broader on the is continuing we level

that, to this Don. you, the do to the capital.And our of everyone. Thank hand with of call will We important without cost forgetting back I'm all things, most happy

Ricardo. you, Thank

award PACE combining lifecycle automotive the program GM's team Aspen in News' honored are we earlier cell-to-cell platform. Q&A, and Motors barrier cell-to-cell battery like Before PACE performance.In Aspen to would rich is the won We for by solution I performance. in Aspen's innovation PyroThin and collaboration our our Innovation recognized for PACE X And our Aspen highlight battery protection battery Automotive most safety turn by barriers hand customer and at deploying products safety these addition, thermal we move with mechanical PyroThin awards News salute runaway I our Ultium with a EV dedicated driving for thermal globally as recognition.These had a propagation deeply team technology. to represented was suppliers. this that prestigious to is thermal Q&A. want honored aerogel and Partnership this General Award recognizes the boast let's of here.Chad, awards about history prize with to modesty Automotive coveted All employees game-changing as to week. achievements the collaboration

So Instructions] George from from today [Operator first comes Canaccord. our Gianarikas question

also ask like to those that the should have in expect new expect year? next when wins? kind begin And progress about your And to of throughout you we going discussions quarter? how What year? I'd layering been to How new with XXXX. customers

my Well, in programs. parts alone, in OEM XX George, actively we're I said invoiced engaged nearly an QX prototype as comments, for provided different

through we're these of And respect OEMs you to think And think today, today. will our here that we're the confident coming that market our we beginning scale I platforms and XXXX, that is off OEM's see focus to those these the see the item in really hand had is of that XXXX.With that pay active we what I we XXXX. continue development on in will will to into gating you'll ramping awards roster battery in So hand is add XXXX have to themselves. in

awards, frame.So about likely scaling think XXXX likely anything multiple to to the XXXX in to are begin we know good I how is time of additional sequencing more in are think technology that you to we OEMs. scale a win for I continue think way sort that

follow-up And maybe Energy on as to a Industrial. focus

about you're out. lot sold how a talked You've

capacity? accommodate increase it million to levers China. seems that in revenue. I can mean, well have to be in Do $XXX You going you

Can You to take for several you plan to million, next from example, the $XXX $XXX increase quarters? million over the production that percentage there. of

our have customers. level you sort really flowing of our responding -- And over on beyond of supply of side Thank Cryogel say And a that on you, And George. business I the of team was referenced to and Energy demand forward. through $XXX have capability now. quarters team run-rate million there we're the up. hot and the by just our happy can couple from to in supply tell on ramped I products we Pyrogel side that our to with expand facility to now manufacturing filling and we capability do out weeks LNG there $XXX in talked you, facility that that chain going I the the impressed the which continue But that earlier.And million I'm growing Industrial both has would course several reach the ago. increasingly business, our external that side, is speed our space about that there China within the is of that significant to

to hedge energy in 'XX uncertainty That is that maybe at enough. And But questions. worth we're the up a business of incentive best and today. any building so, XXXX.And against continue of that is Don with has it segment. profit XXXX as clear very I if grumblings cost Yes. us EV sort mentioned, of providing the for add, position just our the both really there's not connecting guidance energy yet, your difficult contribution emphasizing gross XXXX of mean, just in to the it is George, look you figuring out

Oppenheimer. is next Colin the from line Rusch from The on question

some see I incremental appreciate throughput facility, talk waste much drive sort can you of incremental Can reduce Island any the cadence on process higher of how you changes. bit the Rhode detail about a that the yields around little or to of facility? that improvement ability manufacturing on to

latest I mean, function $XXX step Colin. estimate, actually the capacity I the think happened updated the there when big Yes. we million,

here was which in still unknowns get experiencing last actually today.Now, was it's continues smaller and of PyroThin, we're nonetheless, throughout work squeeze making a quite this that that team in that we at So the productivity to lemon juice of more is half target this is second as continuing the pursue that place year the going how But to here. the that year. fixed to landlocked of at get.But team confident And better And a XXXX the cost work got team bit in put lot of much in had it. footprint were productivity, we're large terms to Rhode go to -- we're harder of that the team in at the terms finding able another pretty of of be in we'll process-wise a in of Island. the terms function out that plant did step of

latest the the really shows of team today. assessment can to capacity think get I what million $XXX so, And

that on profitability improve to know interesting is our assembly pretty the improve Colin, think, improvement increasing we more parts both And numbers.One, in see Rhode that would the just can in yield just the room facilities it we add and that I are it's I And have area, still incremental have Island we area incrementally. yields. of and Mexico incremental we in dramatic. the to in

through down in I think you fall it can increased increased EBITDA. revenue from the to see

So our we're profitability. really to very just improvements that focused on those incremental add

education little world you through all And of then of of scoured quality Gen guess have can vehicle kind the drive now conversations on and the cost performance? design, that to conversations of conversations. to available on OEMs to X structure. best-in-class within of going and industry and I Can back the you kind and really the full Obviously, dynamics the with Gen element the gone go customer solutions the nuance optimized are reduction and talk customer these cost X for the any we what's about little now a as vehicle and talk coming those a around bit about there's what's from bit a and

that's a shelf it's I considered really right? I integrate somebody the this be to really producing is an that industry the You technology there are how for to not OEM until on mean for think meaningfully else. Yes. you're just interesting one works, --

are team as truly is truly provider, that. is customers right?The week we -- having team at established initial that solutions that now of further getting or this that discussions the won point, so, our the an And Award that validation is a PACE as with

what And like. ideas a discussions so, a We're easier.Now of that just And the not these selling some integrated. you pack depth trend lot be yes, wise, look of if anymore. shelf, battery at proposing to there the look on we're makes ready product that's designs new

alluded you notion bunch out. take weight in big the to a and modules the if a between EVs, effective. of that to necessarily seeing much lighter cell cost your cell design energy.And one having part that store that's without to really transition of ultimately -- to of to we're providing not this play you're design are from thermal actually you a be of thermal and And that runaway a critical so trends design, this stacked care trying in going more a cost helping next could is and as safer in whole in of that generation level, get we metal for obviously then propagation As OEMs that. of pack straight Because the at cell up pack take

of going is us that And think the over next so, the that's years. to for I here a couple selling favor trend

that difficulty think, the X, those from clear solving, from we're have to and of and but OEMs I believe there, we that and are, view, combination we own creators platforms.Both of problem. of the Colin, I the a think, the come and solution solving platforms of as role propagation the their accomplishing difficult point also, you the unique we thermal of as clearer also becomes mechanical understand problem the performance those aspects a that to battery know, value play

Craig-Hallum. from question next Eric from The is Stine

be starting to avoiding you're detrimental. down But went you mean, the to costs.So a thought some it logistics would when that that know Energy of giving and thinking Industrial. just I So common might margin it's lot path, be yet the maybe be was, accretive was up think that I this on you'd margins.

So I know it's early.

guess, out? that the you what, that you're to things curious, second half? seeing expect production continue as you ramp how play is virtually in And XXX% to Just that here I of do

if the mean be materials we're right, running our value at at, levels China. revenue will coming at look I old that the you Yes. raw of energy especially side, lot a on from our chain

go XX And X/X tariff. weeks, of so in X boat business, a pay would to of we case would put back a for energy XX% least, of on at that then our And that the the outside U.S.

chain value time. financially get our taking able there delivered some team can quite some worked up within raws has to known these obviously the manufacturing in we've we just performance so, of as And for for to the where savings was think inherent are tightened to has they be the and care.And incremental the chain all external ramp products the facility, we some But slack up here. China to needed that frankly, use I our

but really the contributor margins -- so that's And gross here. to biggest

QX, here but throughout see linearity it? ramp how And you driver. about see IHS, down might then QX in kind the -- not the guess, well, skewed that? IHS being any of but have step how maybe QX. of in QX think you how Curious terms results in kind of that know that, you Was I business, build expectation Just the of should inventory maybe there to big of we 'XX? potentially overall I turning just mentioned PyroThin

parts volume in vehicle look before uncertain we environment, we're grow There's go the I to EV EV its months share that, market X level to continues our their put the of for seeing in a production ramp time, up months penetration X making same At are and an a us, right? the I so to mean Yes. a similar market, even fair capture these we this customers overall they're very that I knowing as market, also of obvious from vantage from all think right?And though we're the commitment point. car. mean relatively at and

demand the the here. rest we a in whether to the like, wouldn't need all in increasing And but and during the for that's the to this order are. because to QX see on market is And pretty them the any just, of materializes. in initial And capturing particularly us develop launch no think, expecting ramp think, But scale very brands the I we're their XX% a that to important Plant think they right remarks will II in given point we sort really XXXX ramp of these last will pauses have as that our a of truly right ramp the I the for to our that I are of distribution term QX. is XXXX.And will time things, so vehicles. structure what XXXX I view I line production want the that sure to as my really really the and just relative I that's of year looks think is we'll firmer what they levels mean, tell. with met which, sell-through cost in that customers of, think really call IHS able as relate in ramp, in and the better what loyalty to of models, inventory the a going initial it's vigilant continue GM's up have I pause say fair XXXX.But make these something few look there's QX these share I here I that to doubt straight monitor the said just a there customers this and and for be slowdown the we the quarterly well, still the sell-through of And a between, we

the as a normal sounds quarter. so of It view don't pretty not inventory you standard And really was necessarily course This build. kind an ordinary. something of like was business, QX it out of

remarks And customers' I as ramping well. inventories. not that vehicles. confirmed for And also the inventory They're have building of necessarily And everybody we really Yes. visibility to they're manufacturing levels. our these up think their up

Riley. B. from Souther Chris from is question next The

that. the thermal XQ kind in looking to through for is would That energy per below XQ million if run-rate, $XXX the saw we're be -- XQ would what we imply then in at implied million in doing on we're Just If PyroThin, to rate kind actually follow-up infrastructure $XXX barrier. at of look like XQ. XQ that run of

So the the of my least throughout repeated parts if I'm rest at it's elevated see $XX year? that GM's the build, inventory wouldn't the be just we kind prototyping wouldn't slowed not scratched for was why of XQ materially. in run ramp barrier thermal head beyond there million rate as

question, I'd make before to good a half And effective it's us put that we be year.So no higher a would think That lumpy come is more much to could potentially I raise run the here and here of think here of around as did with than QX But a to of we're more what more in in everybody really an the QX that's close ramp It's right?So we remainder the that rate it's second than a initially QX look ready like. expected No, Chris. mean, call here. and that the need I look But additional the love we the year out what better to informed the it for back view again, -- QX QX like. we'll we will have for guidance upside. capture information on further, QX. I confidence secret really, ramp there's really Yes. QX what

fair. That's Okay.

of So quarter fourth discount XXX,XXX and the that we your kind then then? is in were XXX,XXX coming take HIS' to almost all third and

I at a fair would be it. look Yes, that Yes. think to way

at any good improved maybe wouldn't overall have and model be and aligning But we're you're margin margin to seem target when revenue. we now costs to XX% hit stars incremental Is the in your then there here? trajectory. gross and utilization just And fair continues a XX% revenue again. reason looking $XXX you bit to margins conversion million why grow at decline continue great. Last and to Okay, describing keeping on call, of gross we've

planned seeing so the lot this again, necessarily to where I of of I with revenue And without view to I up well. we're impact connect is of in mean, an of of terms QX. worth a ahead goes one I could these skis.And XXXX that.And and quarters conservative information area rather estimates start are conservative firmer your our put and those that changes dots us inbound for the where that better launches timing in I get of XXXX have of into we'd of how right? this it's picking expenses X back here. freight guidance the some a in position And showing as think you're pressure much activity be on easy launches the engineering is in my on, performing team we yes, we that had these Yes. we on on remarks, actually mean we putting is this so think much any A the think through plus, working can the as for yourself

used or little the to that of have our being very a to I about the are outlook. in we and for to feel used see question said sort update numbers. year And of EBITDA we of more think imply, $XX to and the half we for the think an do million that. quarter Chris, before clearly, notes.And and beyond with just those We've careful in million solid about But I especially over Ricardo least. the as suggest the we year, that of I our feel increases did we the do sort my income good say, at I year used the better. of ramp opportunity have do very fourth being we just anything We'd accurate your net in second $XXX increase our that we was saying. to And for would positive adjusted baseline. We've rest love

The on from Moore is ROTH. the line next question from Chip

close Any additional announcing along And about give year? I also said maybe for think of Can in I and ask wins of about how updates you in to a and sense pipeline parts, customer this been you while. for likelihood to little you've enough a supply that's talked I the the wanted potential many then final quarter programs us XX some prototype OEM negotiations strong are far the past, programs in wins stages year. a to there? be a think, the this

you to think that have to a XX been in designed be magazine And longer ourselves awards.I we'll them. I sixth these actually the of Yes. of shipping that the Don's that with squares is that's the I don't you're continues And just with board the here the we no OEMs, the in POs in trying we're the accelerate, a and and are mean, as quite I established it processes Bingo fill. European Xth same from some parts mean of to a contract. here prototypes to vehicles an commercial OEM as finish bit in think around that customer.And I really of mean, there. worth terms pending a take problem.And as so, of people of the give subscriptions confidence idea is dependent really the way. or stages lack production of wouldn't X ours. X is we're a the with update on bingo time. I They award OEM selling a the bit than have pretty fact, able that before technically situations where negative contract. with A get to here time, board There's selling our close have year's the really take confident right There's, we right? the to at And care XX the negotiating actually here having and as on Basically, start last your critical case And parts really some not as you lot lot still I've line in customers' running with time more from necessarily it's now terms away themselves long initial of with people other those much not sign. a take remark are of remembering announced programs that the you of of that timeshares We're that other POs, to this and engagement. progress of OEMs or still bring in we them,

more We them continue to prototype selling here them parts. we'll launch ready. And they're as soon as

QX. DOE Yes. heard related there? I more any -- that you better visibility my think or Plant Is lot Maybe a restart we've say on left. you've potential II, thought, more follow-up don't No, by know color language before. if heard of got you've I that demand a or got more bingos I handle on I

Yes.

with But, in back the back for that the needed matter and half is the -- so how that call, from And really is of For pay looking to that remarks hopefully, to of you is Georgia, and is you it. X we in at ask the able in the one, I the the restart QX up quarter's that sliced are if -- go November here if remarks I yes, in I us XXXX. the my geared site previous DOE was on team going was November. up the call. plant and to determined the come support.And with quarter's obviously, everybody mean, previous by my all first to getting being from demand now, to believe lined Right going construction discount, back it we no when deck, earnings Slide look financing

talked keep it's us started. our multi-pronged -- So Chip a We've for assets. DOE. we'll We've decision talked comments, a of the about I process about demand. as about in we the We've definitely of existing productivity sort talked my said when

the on. And I answer the working keeping those obvious pretty as careful eye -- together, on we're and merge things that All of a think at us to will things time. these hard that become right of kind will

The Seaport Curran Tom next question on from the Partners. line from Research is

or then of that And the for contract models scope line-ups. for does some the able GM? do So Toyota year, bZXX, from under combined, been idea you've included, extend contract is this Toyota you under to? just Subaru design that my for award Solterra expected understanding them awards to which us are of design production the the us whichever the confirm to for RZ Lexus for what rough the give clarify your and extends volume to all similar Could

a that's good No, Yes. question, Tom.

in But the that the the our numbers well. be us. in We variants mean, of incorporate can bZXX as have Subaru and quite I quarterly we'll parts here sure here yes, IHS are to Lexus as update. we So the don't the next near

or plug-in be think And comes helpful. you programs? with, business discussions conversations, focused are then, call those the it, if funnel. in follow-up not, general, a do OEMs any that XX of to you're it on touching on When idea of roughly development are And would explicitly us you just the, That they be? might an for hybrids PyroThin's role on in plug-in where hybrid could they give of

to the it's remarks, Don those X would XX with maybe so so programs in. the OEMs, Don's XX -- Yes, could different and customers that programs be meant not XX just necessarily clarify necessarily that to be not

look Some of plug-in a at those plug-in the as not platform to vehicles, vehicle. vehicle hybrid the opportunity is you are if the full a potentially or scope that vehicle.For actually really, same hybrid for per are cell EV us, content modules be in

pure which plug-in volumes volume And believe when ICE is XXXX lot on from focused obviously these a necessarily we've sustained so be seen more launching and XXXX, that would we We we away just blips that programs. enabled XXXX, are hybrid in recently. aren't The EVs taking EVs. they and volumes

So for the we're them, main priority really not though team. the even they're quoting

Cowen. TD on next Osborne is the from Jeff The from question line

X quick ones.

think, prior complete if Plant $XXX to November? to in a you that in and year started take II. would million you time had were roughly line mentioned it I Ricardo, the to get calls close still that Is rough

max, months would to a I a XX update have The there. Yes, think would we stretch. don't I But an year estimate. think XX be Yes. better be

just maybe Toyota. on then, up And following

electric calls, Toyota vehicles on there instead a Or I of more visit just you moving a back was any his about that the China? scope all think Toyota? as expansion common way from of to update some broader Don, perhaps on at prior there Did, bZ. across mentioned discussion them to their of had platform

think we you wait from by think to I I Japan, them. have hear don't something until you stop right now.

No, I did.

Yes.

Sandler. Alex question is on the The next from Potter line Piper from

This my launched guys dialogue of elaborate can as kind going? these Johnson determine of of, well in you automotive discussions terms Alex. for vehicles? the newly guess to on close I for Motors question in of other is first are you how customers and is And level with And on are demand General Ben kind as those

customers, right? there's say our not to we better demand that, And that frankly. I feed levels. Well, us, could a customers, production demand and I'm we get mean They're their determined that's ton sure is supply the to from this a extent. we adjust by than at the

of a we ton and get And demand that. isn't hard just there dialogue. I sometimes, work week to we a feed deliver mean basically every

looks do over a that And out says, say, update the would I pretty of just as communication. beyond. weekly course weekly get a Ben, and X that weeks signal do good from the next we get Ricardo we

that many a basis in we the so as OEMs.And our who General of halls and close have so, the company with Motors. very regular others collaboration pretty for are we partnership colleagues our Award We're won walking and PACE part, of to -- really well. on And and GM

close So still But there an when these we communications. it them. to arm's of relationships element length with have comes is some of

following on just up a then, previous question. And

nowadays, seeing move that OEMs you any As hybrids of urgency with emphasizing forward companies a result full there's are indications less from to BEVs?

investor not and companies. communications, in plans road see in we hybrids maps for the frankly, industrialization of these development emphasizing mean, necessarily I Yes.

see time seen hybrids.We lot really hybrids or ICE in off cases, internally don't the on of So powertrain been there A modified of X that many time. how will people would about portion the on have out working years very those being from folks we've on will OEMs. some OEMs been years' tell actually working those In the hybrids. X be vocal laid that have just

their yes, They'll accelerator a just EV hybrids plan. on these that probe, several specific of So providing foot inside around they obviously, when do I think the we're alternate And think I sell say, that's seeing they some could have the could are with between. what transition. people right? But without we still in of if that customers,

from is H.C. Amit question next Dayal our from Wainwright. And

the see these Is contracts, systems? the prevent to there your months margin to barriers, guess respect months With those could XX I you on to over the on higher, to could that cap costs Ricardo, if barrier large say, with thermal OEMs. pricing, XX upside? trying thermal just move a next I'm pass

very No. I are terms contracts simple of pricing. mean the in

these our is have sort the you they're fact that that again, Tier as mean, that capacity the as possible. basically that what And a price the you with significant entails. vague you're it's We just there's yet. commodity the X within keep But I was up have things that any pass-throughs point are and that simple.And fact and part to noncommittal right, auto contracts basically part redesign by just really as aware, power unless staying in don't number of that You a gives on the customers and supplier customer evolved set designed the support built program. that design, have think to I a you to

the the plans sort DOE grand through, Plant mean doesn't should moving II. with other or looks this with award like call financing Plant about urgency And like of forward in come But case a then, company place on of the this from it getting you I II are there to loan. given that financing, right? quickly move sense in options, to I'm

they've say that term urgency negotiations. and is on what within all They're mean, extremely literally this can this if with really we're actually urgency this. the I this since we win Slide of in together work. And DOE. we're has intense due why XX, getting DOE entails, there to of the work That's I sense it's we diligence from of you with And got phase final given entails.And stream some moved all best mean the look straight to I at to website extreme pretty resources. the DOE's playing Yes. their moving the sheet what work same done. added dedicated

So plan to A win. is

closing have hand back no We further I'd to for remarks. Don questions. like Young to

a XXXX And everyone. second you, look you. in in We well. reporting Thank Aspen Thank interest Be results Have appreciate Thank early day. our quarter to you Aerogels. good we your August. forward you. to

Thank you, everyone. This today's does conclude call.

You lines. disconnect your may now