Aspen Aerogels at Oppenheimer Conference: Strategic Restructuring and Growth

On Monday, 11 August 2025, Aspen Aerogels (NYSE:ASPN) presented at the Oppenheimer 28th Annual Technology, Internet & Communications Conference, shedding light on its strategic restructuring and future growth plans. While the company is navigating challenges in the electric vehicle (EV) market, it remains optimistic about its cost optimization and potential for profitability.

Key Takeaways

• Aspen Aerogels has removed approximately $65 million in fixed costs, aiming for improved profitability.
• The company targets 35% plus gross margins and 25% plus EBITDA margins.
• Future growth is expected from existing and new EV customers, with significant volumes anticipated from ACC (Stellantis) and Daimler.

Financial Results

• Aspen Aerogels reported below 70% capacity utilization in Q1 and Q2 2024.
• The company aims for 35% plus gross margins in both the EI and EV Thermal Barrier segments.
• Last year’s revenue was $453 million with $90 million EBITDA.
• The EBIT breakeven point has been reduced to around $280 million in revenues.

Operational Updates

• Transitioned to a variable supply model with supplemental manufacturing in China.
• Streamlined operations by delayering the organization for efficiency.
• Significant production capacity remains in East Providence, Rhode Island.

Future Outlook

• Aspen Aerogels is focusing on revenue diversification and protecting intellectual property.
• Growth is expected from ACC (Stellantis) and Daimler volumes starting in 2026 and 2027.
• Potential deals with Audi, Scania, and Porsche are anticipated, pending cell supplier decisions.

Q&A Highlights

• ACC (Stellantis) volumes are set to ramp up in 2026, with a revenue target of $15 million next year.
• Awards from ACC, Daimler, Audi, Scania, and Porsche are expected in late 2026 and 2027.

Readers are encouraged to refer to the full transcript for more detailed insights into Aspen Aerogels’ strategic plans and financial performance.

Full transcript - Oppenheimer 28th Annual Technology, Internet & Communications Conference:

Colin Rusch, Analyst, Oppenheimer: Good morning, everyone. My name is Colin Rusch. I lead the sustainable growth and resource optimization research practice here at Oppenheimer. We’re thrilled to have the c suite from Aspen Aerogels, Don Young, president and CEO, and CFO Ricardo Rodriguez, along with Neil Baranovsky from Amanda’s IR. Guys, let’s just hop into it.

There’s a lot going on. There’s a lot of moving pieces here, and you guys reported last week with some better than expected numbers. Know? So I know there’s a lot of news out this morning around, you know, you know, Ford making an investment in incremental EV capacity. We’re seeing EV sales hold up a little bit better partially with the the cliff on the federal tax credit, but I think underlying demand looks, you know, better than feared, honestly.

So can you guys talk about what you’re seeing with your customers and their plans as as we move through some US policy changes but continue to see a lot of growth in both Europe and and Asia?

Don Young, President and CEO, Aspen Aerogels: You wanna take it, Ricardo? And I’ll I’ll Sure. Provide color commentary.

Ricardo Rodriguez, CFO, Aspen Aerogels: Sure. Happy to jump in. So, I mean, it’s no secret that the lion’s share of our revenue right now on the EV thermal barrier side comes from General Motors. And, you know, we were all obviously disappointed by how long it took for a lot of these vehicles to launch. And, you know, we truly believe that if those cars would have launched in 2022, we you know, the EV market would be a completely different story from what it is today.

But it is what it is. And now that they have all launched, they’re having, you know, pretty good months of sales at least in The US. When you look at a vehicle like the Equinox, it’s the number one non Tesla selling EV in The US. And I think GM is just really hoping that momentum to continue definitely between now and the September before the $7,500 tax credit goes away. But we’re still pretty mindful of the tax credit that is there on the supply side for these automakers.

That one is not going away at the September. And, you know, GM has gained so much share of The US CV market, we just don’t see them letting go of that easily going into the fourth quarter and next year. And so we are, you know, we’re actually pretty on the pessimistic side in 2023 and call that a little earlier. But this time, we’re actually more optimistic than one would think when it comes to this seventy five hundred dollar credit going away. It’s actually enabled the OEMs to keep prices up.

If you look at who’s getting that $7,500 credit today, it’s basically the leasing companies and the financing arms of these OEMs. And if they wanna retain share and no. We don’t see going away is this notion that these companies are betting their future on EVs that is still pretty consistent. And so we’ve said that, this is gonna be a bit of a transition, but, the North Star is towards more electrification even if we continue to slip further behind China and Europe.

Don Young, President and CEO, Aspen Aerogels: You know, Colin, I I I would just add, and and Ricardo’s spot on, on on his comments. And I I would say that we are prepared to serve to serve these OEMs, and and their and, their their projections going forward in in both here in The United States and and in and in Europe. Having said that, we also, took careful action in the first half of this year to modify our our cost structure, our fixed cost structure, pretty pretty dramatically. And you can see that on slide two of our earnings, on on our earnings deck where we where we removed roughly $65,000,000 of fixed cost, out of our structure. And it and it shows, frankly, in our in our outlook for the rest of the year where we where we basically, anticipate approximately flat revenue first half to second half, but with approximately twice as much, EBITDA associated with it.

So we’re starting to see the impact of of that, of of those actions. We also believe as we as we grow in the future that we’ll be able to hold that cost structure tight and, and really leverage, the revenue growth. And and as as you know well, we’re we’re dropping 50¢ plus of every incremental dollar of revenue. So we think we’re in a, you know, in a in a good position to weather the storm. And and maybe the other leg of the stool, adding to what Ricardo said, is that and the and the and the cost mindfulness of of the way we’ve got the company set up now is that, we require minimal, capital expenditures as well at this point.

We have our supplemental supply in EMF, and we’ve got, a robust plant in, East Providence, Rhode Island serving our our auto customers and and and The US energy customers. So we’re, you know, again, in a in a in a in an environment, with some moving parts to it, we we feel like we’re, we’re in a solid position, again, also with a with a strong balance sheet, as well.

Colin Rusch, Analyst, Oppenheimer: Excellent. Well, guys, good to get kind of the overlay here that, you know, we you you’ve got a restructured company that’s optimized from a capital perspective. You’ve got an primary end market right now, where your customers are not backing away from investment despite some of the the overlay around policy adjustments. So can we talk about, you know, within that EV market, you know, what you guys are doing for your customers? Right?

And and why is this an essential part of a design process that not only, you know, allows for better performance of these vehicles, but also lower cost over time as as they commercialize? And love to just get from a, you know, from a technical perspective, what you guys are doing for these customers and how you help drive drive efficiencies in their platforms.

Ricardo Rodriguez, CFO, Aspen Aerogels: Yeah. So happy to jump on that one, Colin. I mean, in essence, what we do is we allow these customers to take risks that they otherwise wouldn’t take, And we provide passive protection that, you know, historically has not been there or that is critically needed when when there’s nothing else to stop thermal runaway and thermal propagation. Right? And so, you know, maybe just to ground ourselves.

So thermal runaway is if you remember those Samsung tablets that were blowing up in people’s bags on planes, all that was was under cabin pressure or somebody sitting or squeezing these tablets, the pouch cells that are inside of those devices were being compressed, and you’d have a short inside of the battery that would, in essence, connect positive plus negative, and and you’d have chemical fire and and pretty much an explosion, happening with these cells. If you think of a an EV’s battery, it’s nothing more than hundreds or thousands of those cells depending on the form factor put together. And so whenever an OEM is assembling and developing an EV, they’re playing a game of probabilities. Right? If you control your manufacturing processes to the nth degree, there’s only so much certainty that you that none of these cells will go into thermal runaway or thermal propagation.

Those risks that are higher if you are overcharging or overly discharging one of these cells, especially at very low temperatures or very high temperatures. And so, you know, initially, the ask for us was just to be there as a passive layer, taking up as little space and as little weight as possible so that in the rare case that this thermal runaway happens, we can isolate the one cell and, you know, turn a pretty catastrophic event into a serviceable event. But that has actually evolved. And if you look at, for example, the the GM EVs versus your typical Tesla or any other vehicle that is not using our product, you look at the way they use regen, you look at the way they, charge at cold temperatures, they’re actually able to push these cells closer to their limits and use more of the available storage capacity because they know that we are there as a passive layer to isolate a cell getting too hot. Right?

And this is why, for example, if you go out there and drive a Tesla today, even though the vehicle should theoretically be able to give you 400 miles of range, it really has something like, you know, 330 in the EPA test cycle. In the real world with differing temperatures, you probably get around 280 miles of range. But the GMLTM EVs are actually demonstrating to have to be able to deliver reliably more than the 310 to 450 plus miles of range that the EPA cycle delivers, and that’s because they’re able to use regen more aggressively, you know, charge faster and harder and at cold and and very hot temperatures. And, that’s something that I’ve experienced on my drives driving both of these vehicles. And so those benefits are are proven, and they’re only go and more OEMs are starting to see the light around the benefits of having a product like ours in between these cells, in place of those old polyurethane foams that didn’t provide any protection, it would actually become fuel to these fires.

Colin Rusch, Analyst, Oppenheimer: And, Don, can you, you know, help the investors understand exactly what the aerogel is and how it works? Right? I mean, I think it’s it’s always instructive to just kind of hold, you know, a bit of aerogel to understand kind of how, like, just honestly, crazy it is. Right? It’s it’s a it’s kind of a wild material that is hard to imagine.

And, you know, can you talk about the the platform that you guys have built over course of a couple decades at Aspen and what and Aerogel really is and and why you guys are such, you know, clear leaders in the in the field and how then this gets applied in the in the battery that that Ricardo really just articulated well.

Don Young, President and CEO, Aspen Aerogels: Sure. Going back, you know, many decades, aerogels had been discovered, but really as a laboratory curiosity to a to a great extent. Best thermal insulator, lightest solid material known to man. It’s this, open porous, nanoporous structure. And, and while it was fascinating technically and had it had amazing properties, it didn’t have a lot of capabilities, and that’s because it was not industrially robust.

So aspenera gels dating back, as you say, slightly more than two decades ago, worked, with NASA and and others in in developing what we refer to as a flexible aerogel blanket. And, this is where we, in essence, infused, that silica aerogel into in liquid form into a, a fibrous batting material. And we created what is really our platform, which is the flexible aerogel blanket. And so we were able to maintain all of the properties of this amazing material, but we added capabilities to it. Industrial industrially robust.

And so we started, and and and we’ve had IP, all along, from the the very first years to to these recent weeks and months, we’ve continued to add to to that. And and our our skill has been at being able to mass produce these these materials at this point. So there is a there is a chemistry to it. There is a there is a process technology, and then there is a sort of product optimization. And and we’ve we’ve optimized around our our subsea pipeline business, our refinery business, and onto, LNG terminals, etcetera.

And then all based around thermal management and fire safety. And and and, of course, when we went into the EV business per Ricardo’s description of our value there, it was really about this thin profile, high thermal performance, and outstanding fire safety with this flexible aerogel blanket that that can absorb and act like a sponge to a to a great extent. So that that’s that’s sort of the core of what we, of what we have done, with with the material. I think it’s possible to think about adjacent markets that continue to use, flexible aerogel blanket as a as a as a concept. And, again, where you see applications, where high thermal performance, perhaps fire safety are key ingredients, and and thin profile are key ingredients.

You’ll remember dating back into the late, twenty teens, we had a building materials activity going ran ran out of capacity as we were as we were getting that rolling and and stepped away from it. But, there have been aerospace applications. There are a variety of applications where where we think we can use this same flexible aerogel technology in and and and be additive and and create a third leg to the stool, if you will, energy industrial one, EV two, you know, what is three and four? Because it’s so critical as we as we’ve moved from the red line to the blue line to the green line in in our cost structure, to be able not only to do that as phase one, but then to travel up that green line and and drive significant profitability and cash flow from our existing assets.

Colin Rusch, Analyst, Oppenheimer: So so let’s pick up on that, you know, because we’ve known you now for fifteen years, Don. Right? And, you know, have watched the evolution of platform of this of this blanket material, you know, being used first in some building applications and then into the oil and gas space and now into the EV space as a as a unit play. And, you know, as you guys have evolved the the chemistry and the manufacturing process, you’ve been able to enter into new markets. So can you talk a little bit about, you know, the the optimized, you know, manufacturing process that you have, the evolve platform that gives you some flexible capacity as needed, and how you’re thinking about some of that, you know, incremental prioritization that you can go through to to open up some new revenue streams.

Yeah. We we we

Don Young, President and CEO, Aspen Aerogels: as we were contemplating our second plant in the in The United States in in Statesboro, Georgia, as we’re going through that through that process, we, at the same time, in in in really late twenty twenty three, began considering, an external manufacturing capability to provide more more variable, supply to us and and in smaller increments than the design of plant 2, which was to bring on, 1.2, 1.4, $1,600,000,000 of revenue capacity in one fell swoop. And so what we were able to accomplish over the course of 2024 was to transition from from the plant two concept over to the this more variable supply where we’re able to bring up smaller amounts of of or increments smaller increments of supply and fit the demand curve better, if you will. So we’ve got our substantial capacity in East Providence, Rhode Island plant one, and we’ve created this variability of supply in our in our supplemental relationship out of China.

Colin Rusch, Analyst, Oppenheimer: And and how do you protect the IP in that relationship and and what’s essential? I I think it’s it’s been interesting to see what’s essential in terms of, you know, manufacturing IP and then productization. There’s obviously some complexity and some layers to this in terms of, what you guys share and what you don’t share with some of these folks and how you bring something to market.

Don Young, President and CEO, Aspen Aerogels: Well, the materials that they’re producing, are are are are are original, materials, serving the energy industrial business. And one of the keys in protecting our intellectual property, not only the surrounding agreements and what have you, we understand the the complexities of that with working with a with this kind of partner. But what I would say is that we have, if you look at our end users, historically, are always the basically, the largest companies in the world, whether it was ExxonMobil or British Petroleum or BASF or more recently, the General Motors and the Toyotas of the world, these are these are companies that would not unknowingly use an an infringing product in their in their applications. And we, have been active, in being sure that, any any product that may have may be a a takeoff of our of our product. We’ve been aggressive, and and I think you you remember back into the again, back into the twenty teens, we we defended, our intellectual property very successfully against, Chinese impersonators here in The United States, across Europe, in Asia, including having our patents validated in China.

And so there’s never a perfect answer to that to your question, but but we think we’ve got the the the framework, both operationally and contractually to to, to do the best possible. There’s also, with respect to our partner, a mutual benefit to this relationship. I mean, we we are their gateway, if you will, to outside of of China. And and we have created what I think is a very significantly mutually beneficial relationship with that with that partner. And I think they would they agree that it would be a mistake for them to to violate that.

Colin Rusch, Analyst, Oppenheimer: Excellent. So so where we’re at now is we’ve got, you know, multiple SKUs, you know, some optimization around the product platform. You’ve got a couple of good end markets at this point. You’ve gone through some platform optimization both from a cost structure on OpEx level as well as the manufacturing base. Can you guys just talk to us around, you know, just what the the financial model is and the gearing that you guys have for growth from here.

Right? Like, we we’ve gone through kind of the, I I would say, the first leg of real substantial growth for the company and a much longer journey. And so we’re kinda going through a little bit of a digestion period right now. But talk to us about, you know, how the platform is set up and and really built for resilience through this period of time as you get into more of a a higher growth mode again, getting into 2026.

Ricardo Rodriguez, CFO, Aspen Aerogels: Yeah. I think the gearing is relatively unchanged to what we were laying out here throughout twenty twenty two and twenty twenty three when people were asking us what company we were working to build, Colin. And if you recall, we had a slide that laid it out for people that in essence said, look. We don’t know what the revenues are going to be, but we’re gonna gear the company to deliver 35% plus gross margins and then to work to deliver 25% plus EBITDA margins at, you know, give or take a 70% plus, utilization of our capacity. Right?

And that’s in essence the the yardstick that we used to quote or pursue any opportunity both on the energy industrial side or the EV thermal barrier side. And so if you look at our economics last year, last year, that 70% plus capacity level was a little bit lower than where we ended up the year at. We were basically saying, let’s try to and by the way, that all that gearing translates into at least 10% OI or, or EBIT at $400,000,000 of revenues. Right? And so last year, we did $453,000,000 of revenues.

We overshot the the sort of gearing point at 80% utilization, and you saw our EBITDA was, you know, $90,000,000 on $453,000,000 of revenue. This year, to Don’s earlier points, we knew that, the top line was not necessarily on our side and that the winds were gonna be more against us than behind us. And we worked proactively to gear the company down so that our EBIT breakeven point was at around $280,000,000 of revenues, but still working to preserve those 35% gross margins for both segments at about a 70% utilization of the assets. Right now, in q one and q two of this year, we’ve been, you know, a little bit below that. But if you look at the EI side, even though the revenues are lower, it’s proven to be more resilient because of the supply that we have from the external manufacturing facility.

I think that on the EV thermal barrier side, that point of, give or take, $200,000,000 of revenues per year is where we start getting closer to that 35% plus gross margin as we absorb all of the fixed costs in line with the gearing that we established here a couple years ago.

Don Young, President and CEO, Aspen Aerogels: You know, Ricardo, the way the way we’ve talked about it, the way I I think about it, you know, sometimes, you know, you you you build a company and because sometimes you’re playing offense, and we played offense the last couple of years. Right? We grew 90% last year. We grew 40 or 50% a couple years before that. And then sometimes you build your company because you have to play some defense.

And right now, we’re we’re playing defense, but, but we’re but what we’ve done is, you know, to to earn that same $60,000,000 $90,000,000 of EBITDA, you know, it’s a number closer to 350, $360,000,000 of revenue, not the $4.53 that we had last year. And, and, in fact, if we can reignite that growth and get back up into the kind of range where we were last year, we wouldn’t be making $90,000,000 of EBITDA with this cost structure, but a number, like $1.50, $1.55 kind of million. And so, again, sometimes you’re playing offense, sometimes you’re playing defense. But I I think combined with the reduced capital expenditures of our model and and our strong balance sheet position, we we think we’re really set up well to play both offense and defenses as, you know, as as the times call for.

Colin Rusch, Analyst, Oppenheimer: And and let’s talk about let’s talk about offense because it’s more fun. You know? Like, you know, the you guys have done the you’ve done the hard work here, right, of cutting costs and kind of optimizing the platform. You’ve done a lot of work around improving yields on the on the factory. Yeah.

And, you know, as we get through this transition in The US, there’s still an awful lot of growth with your incremental customers, right, and you have some impressive logos. So can you talk to us about the customer base that you have on EV side and what you’re seeing from those folks from a ramp perspective in anticipation of incremental volumes as you move into 2026?

Ricardo Rodriguez, CFO, Aspen Aerogels: Yeah. I mean, I think, you know, when we look at the other awards that we have, the one that is going to contribute here in addition to what we’re doing with GM and Toyota today is ACC with the Stellantis volumes first in q four, and then that ramps up in 2026. You know, we believe that, if that can bring in, you know, over $15,000,000 of revenues next year, that would be excellent. And then the other one that is, pretty set and where we do have high confidence that they’ll execute is Daimler in 2027. And that is of, you know, comparable size to what we’re expecting from Stellantis with more volumes that could be added given some new launches that they’ve announced.

And then Audi, Scania, and Porsche, those ones, you know, they were originally relying on sales from Northvolt, and we all know how that’s going. They’re working to move to sales from Samsung that we’re pretty familiar with from working on those with another OEM that hasn’t awarded us the business yet, but that’s volume that could arrive in 2027. And so I think those, you know, a combination of four or five other awards coming in late twenty twenty six, 2027 as soon as they make the determination on by when they’ll switch cells to Samsung, and then also what the timeline for these launches is. Right? I mean, you look at the the Porsche, the Cayman boxer platform, there are vehicles out there, test vehicles rolling with our parts in them, but Porsche is obviously rethinking their timing for the launch of those EVs in The US, and we need we’re in a wait and see mode to see when they’ll ultimately determine the start of production date to be.

Colin Rusch, Analyst, Oppenheimer: So, Don, what are you most excited about, here? You know, you you’ve been with this platform for a long time. You’ve been able to take it from, you know, fairly small revenue levels to much more revenue levels and free cash flow. You know, what what are the things on the the, call it, near to medium term horizon that you’re most excited about that that investors should be looking for here?

Don Young, President and CEO, Aspen Aerogels: I I I think and I I’ve said it already a little bit, which is is to be able to diversify our revenue growth and reignite growth itself and travel up that that green line. I I mean, it’s a it’s a powerful, cash generating machine at at that point. We and we feel we’ve again, we we’ve done we’ve got two two markets in place, and, we we think that while those markets don’t go up every single year, we we do think over a longer period of time that we’ve got, the ability to to grow the business consistently and, and to add to these markets and just travel up that, that line. And what I what I like about that is also the fact that we do not, need to build substantial capacity to do that. We’ve got those pieces in place.

And those are always complicated because they take a long time. There’s permitting. There’s all sorts of factors that come into play there. And we have a lot of run room runway right now to to travel up that green line, generate a significant amount of profit and cash for the for the for the company and and to continue to to grow substantially.

Colin Rusch, Analyst, Oppenheimer: But, guys, what are we talking or what aren’t we talking about that we should be talking about for the platform? It seems like you optimized the cost structure. We’re going through some market digestion here. You’ve got a lot of opportunities for growth. What else are we missing?

Ricardo Rodriguez, CFO, Aspen Aerogels: I mean, I think the it’s sort of highlighted, but I think people are not as excited at least as as I am. It’s really

Don Young, President and CEO, Aspen Aerogels: if you

Ricardo Rodriguez, CFO, Aspen Aerogels: look at those lines and the green line on slide two of the most recent deck, the leverage is pretty good if the company is able to get growth. Right? So we learned a lot over the past couple of years around what is precisely needed to deliver that level of growth and, frankly, what is not needed. And and being able to grow again without the burden of what was not needed to grow we’ll create a much better company than what we were than even what we were able to deliver last year. And so I think as a company, you know, travels up the the green line, the the leverage looks very different to, you know, our best efforts to grow here in 2023 and 2024.

Don Young, President and CEO, Aspen Aerogels: You know, Colin, if I could just add maybe one one one thing, and this is a little more of just internal ops sort of thing. But, you you know, in in the actions that we that we took earlier in q one, q two, we we really delayered the the organization and simplified and streamlined the organization. And just, I think our effectiveness as a as a team and as a in in in in planning for and executing, next next layer next aspects of growth are are right there before us. Not a lot of complication. We know what we need to do.

And, again, that simpler organization is just really refreshing. I I think we got a little complex. Yes. We were growing 40, 50%, 90%, and I and projecting forward to to continuing that kind of ramp in the in the in the near term. And and I I think you build there’s a tendency, and this was on my watch and my responsibility to build in some layers and to, you know, just keep up with it all.

And, again, what I think we’ve done is gone back to a simpler organization, delayered, more effective, and I I’m I’m really excited about about that as well.

Colin Rusch, Analyst, Oppenheimer: Awesome, guys. Well, listen. I think we need to leave it there. I wanna, thank you for taking the time. We’re excited to see the next, stage of growth for the company.

And, Ricardo, wish you best on, in your next endeavors and remind everyone that we’ve got a CFO transition here that looks very, very smooth with, internal controller coming in to to run the organization and happy to get folks connected with the company as they they need, or to help with folks as they they do their diligence. But thanks everybody for joining us today. We’ll look forward to talking to you guys soon.

Don Young, President and CEO, Aspen Aerogels: Thanks, much,

Ricardo Rodriguez, CFO, Aspen Aerogels: Colin. I’ll dial in as an attendee next time.

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