Aspen Aerogels, Inc.

Good morning. Thank you for attending the Aspen Aerogels Inc. Q4 2024 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, Neil Baranowski, Aspen's Senior Director, Head of Investor Relations and Corporate Strategy. Thank you. You may proceed, Mr. Baranowski.

Thank you, Ezra. Good morning, and thank you for joining us for the Aspen Aerogel's fourth quarter 2024 financial results conference call. With us today are Don Young, President and CEO, and Ricardo Rodriguez, Chief Financial Officer and Treasurer. The press release announcing Aspen's financial results and business developments and the slide deck that will accompany our conversation today are available on the Investors section of Aspen's website, www.aerogel.com. During this call, we will refer to non-GAAP financial measures, including adjusted EBITDA. The reconciliations between GAAP and non-GAAP measures are included in the back of the slide presentation and earnings release. On today's call, management will make forward-looking statements about our expectations. These statements are subject to risks and uncertainties that could cause our actual results to differ materially. These risks and uncertainties include the factors identified in our filings with the SEC. Please review the disclaimer statements on page one of the slide deck as the content of our call will be governed by this language. I'd also like to note that from time to time in connection with the vesting of restricted stock units and or stock options issued under our long-term equity incentive program, we expect that our section 16 officers will file forms for to report the sale and or withholding of shares in order to cover the payment of taxes and or the exercise price of options. I also want to highlight a few of our near-term IR engagements. On Tuesday, February 25th, management will be hosting virtual one-on-one investor meetings at the Oppenheimer 10th Annual Emerging Growth Conference. On Wednesday, February 26th, management will be hosting virtual one-on-one investor meetings at the CG Sustainability Virtual Summit. And finally, on Monday, March 17th, management will be hosting one-on-one meetings at the 37th Annual Roth Conference in Dana Point, California. I'll now turn the call over to Don.

Thanks, Neil. Good morning, everyone. Thank you for joining us for our Q4 2024 earnings call. My comments will focus on the recent quarter and full year performance, the status and expected impact of several key elements of our strategy, and our view of the current environment. Ricardo will dig deeper into our 2024 financial performance and our strategy, and will provide a first look at our 2025 plan. We look forward to your questions. We operated well in Q4 and for the full year 2024. The execution of the plan was driven by the strength of our teams throughout the company. Revenue of $453 million, adjusted EBITDA of $90 million, and net income of $13 million were all milestones. We grew revenue by 90% in 2024, exceeded our long-term target of 35% gross margins, and increased adjusted EBITDA from negative $23 million in 2023 to positive $90 million. Our PyroThin thermal barrier revenue increased from $7 million in 2021 to $56 million in 2022 to $110 million in 2023 and to $307 million in 2024. At the last earnings call, We announced a new OEM award to supply pyrothin thermal barriers to Mercedes-Benz, and on this call, we are pleased to announce a pyrothin thermal barrier design award from Volvo Truck, our second in the commercial vehicle segment, highlighting the significant opportunities in this space. A major Korean battery manufacturer is supplying the cells to Volvo Truck, and we expect startup production during the second half of 2026 and for sales to ramp in 2027. This award was our third in 2024 and our eighth overall. Our energy industrial business also had an outstanding 2024 and a significant fourth quarter. A key achievement was the productive transition to our external manufacturing facility, or EMF, and the better matching of our supply capabilities with a growing global demand for our energy industrial products. The year-long drive to qualify our full line of products and to produce them in a high-quality, efficient manner was a success, with gross margins measurably exceeding our overall target of 35%. Our energy industrial revenue in Q4, most always the strongest quarter of any year, was $53 million with over $48 million produced by EMF and up from just over $3 million from EMF in the same quarter in 2023. As a point of reference, for the year 2024, we paid approximately 30% tariffs for energy industrial products delivered from EMF to the U.S. and generated gross margins exceeding 40%. Historically, approximately 40% of our overall energy industrial sales have been made in the US. In 2025, we are proactively addressing potential tariff risks through pricing strategies, sourcing optimization, and working closely with our EMF partner to lower product costs. In a world where tariffs are used to accomplish a wide range of national and international goals, and can come and go over relatively short periods of time, we believe it is difficult and likely unwise for us to make reactive and substantial structural changes based on tariffs. Overall, we believe the energy industrial business is well positioned for a policy approach in the United States that promotes an intensified focus on energy and power generation. The goal for the energy industrial team is to create shareholder value by consistently expanding the base load of revenue and profit for the company. Looking back on 2024, we executed successfully three key elements of our strategy. First, the conversion of the East Providence Aerogel manufacturing plant to support the growth of the Pyrethin thermal barrier business. the transition to our external manufacturing facility to support the growth of the energy industrial business, and third, the financial stewardship to reinforce the strength and flexibility of the company in part by generating positive net income in 2024 and by finishing the year with over $220 million of cash on the balance sheet. We believe that our strategic execution in 2024 provides the resources and operating flexibility necessary to navigate any near-term challenges and to deliver long-term profitable growth looking ahead to 2025 we are taking decisive actions to navigate an evolving environment most notably we have made the decision to seize construction of plant 2 in statesboro georgia and will meet long-term thermal barrier demand by maximizing capacity at our East Providence manufacturing facility while utilizing a flexible supply strategy. Our strong working relationship with EMF, which has been vital to our energy industrial segment, provides additional options to support our manufacturing capacity as we scale our businesses. This approach allows us to create capacity in a modular fashion that can more closely anticipate the demand curve and to do so with minimal capital. Other actions we are taking include the reduction of fixed costs by at least $8 million per quarter, which returns us to a level on par with the 2023 run rate. When we shared our 2024 outlook a year ago, we thought we were being aggressive with revenue growth rate approaching 50% and with significant improvement in adjusted EBITDA. We had doubled revenue from 2021 to 2023, and there was plenty of uncertainty around EV adoption rates and the transition to EMF to serve our energy industrial business. As the year played out, our initial outlook proved conservative with beaten raises in each quarter, culminating in a full year revenue growth of 90% and a correspondingly high adjusted EBITDA result. As we enter 2025, there are, of course, even more variables at play and we feel it is prudent to provide an outlook for Q1 alone, at least until the macro environment settles and the rules of the game become more clear. Our lead EV customer, GM, had a robust 2024 and our numbers reflected that level of activity. GM has set 300,000 vehicles as its target for 2025 and reiterated that number again this week. While our Q1 outlook does not reflect that pace, we are prepared to meet it as General Motors' sole source thermal barrier supplier. With a strong foundation in place, we are confident in our ability to adapt, innovate, and capture significant opportunities in 2025. Our focus remains on delivering both critical solutions to our customers and sustain value to our shareholders. Ricardo, over to you.