Aspen Aerogels, Inc.

Good morning. Thank you for attending the Aspen Aerogels Incorporated Q2 2022 Financial Results Call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I would now like to turn the conference over to your host, Laura Garant, Aspen's Vice President in Best Relations and Corporate Communications. Thank you. You may proceed, Ms. Garant.

Thank you, Faram. Good morning, and thank you for joining us for the Aspen Aerodels Fiscal Year 2022 Second Quarter Financial Results Conference Call. With us today are Don Young, President and CEO, and Ricardo Rodriguez, Chief Financial Officer. There are a few housekeeping items that I would like to address before turning the call over to Don. The press release announcing Aspen's financial results in business development, as well as the reconciliation of America's peace of non-GAAP financial measures compared to the most applicable U.S. generally accepted accounting principles or GAAP measures is available on the Investors section of Aspen's website, www.aerogel.com. Included in the press release is a summary statement of operations, a summary balance sheet, and a summary of key financial and operating statistics for the 2022 second quarter and to June 30, 2022. In addition, I'd like to highlight that we have uploaded to our website a slide deck that will accompany our conversation today. You can find the deck at the Investors section of our website. An archive of today's webcast will be on our website for approximately one year. Please note that our discussion today will include forward-looking statements, including any statement regarding outlook, expectations, beliefs, projections, estimates, targets, prospects, business plans, and any other statement that is not a historical fact. These forward-looking statements are subject to risks and uncertainties. Aspen Aerogel's actual results may differ materially from those expressed in these forward-looking statements. A list of factors that could affect the company's actual results can be found in Aspen's press release issued yesterday, page one of the presentation, and are discussed in more detail on the report's Aspen files with the SEC, particularly in the company's most recent annual report on Form 10-Q. The company's press release issued yesterday and filings with the SEC can also be found in the Investors section of Aspen's website. Forward-looking statements made today represent the company's views as of today, July 28, 2022. Aspen Aerogels disclaims any obligation to update these forward-looking statements to reflect future events or circumstances. During this call, we will refer to non-GAAP financial measures, including adjusted EBITDA. These financial measures are not prepared in accordance with GAAP. These non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. The definitions and reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures and the discussion of why we present these non-GAAP financial measures are included in yesterday's press release. And one final note, during the Q&A session, in the interest of time, We ask that you please limit your questions to two questions at a time. If you have additional questions beyond the initial two, please get back into the queue and we will get to all questions. I'll now turn the call over to Don. Don?

Thanks, Laura. Good morning, everyone. Thank you for joining us for our Q2 2022 earnings call. I will kick things off with a progress report on our financing activities and recent business developments. and Ricardo will discuss business results and outlook. We will conclude with a Q&A session. Over the past 16 months, we have raised over $300 million to scale a company that is targeting revenue of $1.6 billion and EBITDA of $400 million as we seek to fully utilize our second aerogel manufacturing plant in the years to come. We have existing manufacturing capacity to meet our 2X revenue target of $240 million for 2023 and expect to utilize phase one of plant two in order to meet our 3X revenue target of $720 million for 2025. We expect to continue to raise capital in order to build out the required infrastructure to capture our full opportunity. On June 29, we announced our decision not to proceed with concurrent public offerings of common stock and convertible notes. While we had significant demand from investors, including a $100 million indication of interest from Koch strategic platforms, overall market conditions were unfavorable. And as such, the terms of the offerings were determined not to be in the best interest of Aspen shareholders. As we have said in the past, and as is especially true in the current financial markets, we are taking an all of the above approach to financing our growth plan. As we explore a variety of prospective sources of capital, we have continued to focus on strategic investors who know our company and the markets we serve, and who have the potential to make equity investments in the business, as Koch Strategic Platforms has done in the past, and indicated its interest in doing so again in our June financing effort. In addition to potential strategic investors and the public equity and debt markets, we are engaged with government programs as potential 2023 sources of capital for Plant 2. We have applied for a $150 million US Department of Energy grant for advanced battery materials as part of the Bipartisan Infrastructure Act which is designed to support US-based companies dedicated to the electrification economy. We are also exploring other DOE programs that are focused on battery performance and safety. The programs target American manufacturing in an effort to address the resiliency of supply chains in the US, especially for projects in critical areas of sustainability, such as energy storage and related materials. While such DOE programs can take time and are unpredictable, we believe we are a very good candidate and that our pursuit is consistent with our all-of-the-above approach to raising the necessary capital for us to execute our long-term strategy. We also believe that as additional public market investors learn the Aspen story with its secular growth trends and sustainability-focused themes, these investors, and of course our existing investors, will again be a source of capital for a fast-growing dynamic company like Aspen AeroGels. Despite the challenging markets, we are confident that we will raise the necessary funds to execute on our strategy to become cash flow positive in 2024 and to create value for our shareholders. We appreciate your continued support. Our business performance in Q2 remained strong despite lingering supply chain and staffing challenges. We had a strong start to the year in Q1 with 37% year-over-year revenue growth and Q2 built on that momentum with 44% year-over-year revenue growth. The first half performance reflected continued penetration in the EV market and high levels of activity in the energy industrial market. With this commercial momentum and, of course, our existing awarded programs with General Motors and Toyota, we are confident that we will have high year-over-year growth rates in 2022, and we believe that we are in a strong position to meet our $240 million revenue target for 2023. Pyrethin. Thermal barrier revenue was nearly $11 million in Q2 compared to $7.6 million in Q1 and less than $7 million for all of 2021. We anticipate that multi-year thermal barrier revenue will be substantial and we are investing now to meet the demand. We also recognize that automotive OEMs will be impacted from time to time by their own supply chain challenges that could impact their growth ramps in any given period. We are trying to build in optionality to manage our overall revenue growth during this early stage of the EV megatrend by continuing to have a deep order book in the energy industrial side of our business. The strong outlook for energy industrial is fueled by pent-up maintenance demand, high energy prices, and strong long-term activity levels in LNG. This flexibility is a good example of the benefit of our strategy to leverage the aerogel technology platform into a diverse set of large and dynamic markets. I would also like to provide a brief update on Plant 2, our aerogel manufacturing facility under construction in Georgia. With long lead time items purchased starting in Q4 of last year, The first phase of Plant 2 remains on a projected timeline for completion in late 2023. While the project is not immune to challenges related to supply chain disruptions and inflation, our team, supported by Koch Project Solutions, is focused on building a first class aerogel manufacturing facility. The first phase of Plant 2 targets $650 million of annual revenue capacity and will bring our total annual revenue capacity to approximately $900 million. As we approach full capacity utilization at this revenue level, we are targeting EBITDA of approximately $225 million per year. With reports indicating that the auto industry is on track to invest a half a trillion dollars in the next five years to make the transition to electric vehicles, we believe that we are well positioned to play an important role in battery performance and safety. In addition to investments in Plant 2 in Georgia and in our high volume assembly facility in Mexico, we continue to make important investments in people, systems, and automation. These actions enable us to scale rapidly, to transition to positive cash flow in 2024, and to monetize our investments in building our dynamic business. We also continue to invest in our in the strategy to leverage our aerogel technology platform into other high value markets with sustainability themes. Our teams have been extremely productive this year expanding our intellectual capital position across the aerogel technology platform with over 60 new inventions captured in 33 patent families filed or in draft year to date. We believe these investments in technology and new business development will continue to validate the richness of our aerogel technology platform and create significant shareholder value. We expect our carbon aerogel initiative within Aspirin battery materials to be next in line to commercialized products. ABM has completed the development phase of its next generation silicon anode material that targets both lower costs and increased energy density and is now preparing qualifying materials for select automotive and battery OEMs. While these enterprise-wide investments require capital and burden margins in the short term, we believe they set us up structurally so that with full utilization of Plant 2, we are positioned to generate $1.6 billion of revenue and $400 million of EBITDA, and at the same time, have the opportunity from new businesses for potential additional breakout value. We have important work still ahead of us, but I am encouraged by the progress we are making towards achieving our goals. And finally, I would like to continue the practice of highlighting our ESG work during quarterly earnings calls. For the past two decades, ESG has been linked to the success of our business. It is a natural fit for us to explore new uses for our aerogel technology platform with the goal of improving the environmental performance and safety of our customers' products and processes. It is also at the core of our culture to respect and celebrate our employees by striving to create a diverse and inclusive environment. We believe we have the responsibility to make a positive impact on our communities, and we are committed to creating a corporate culture that pursues its mission with the highest standards of integrity. We will be releasing Aspen's inaugural ESG highlights report and launching our ESG webpage in the coming days, which will provide a comprehensive overview of our overall ESG strategy. We look forward to your feedback. I will now turn the call over to Ricardo.