Aspen Aerogels, Inc.

Good morning. Thank you for attending the ASTHO Aerogel Inc. Q4 2025 and Full Year 2025 Financial Results Call. All the 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, ASTHO's Senior Director, Head of Investor Relations and Corporate Strategy. Thank you. You may now proceed, Mr. Baranowski.

Thank you, Gabby. Good morning and thank you for joining us for the Aspen Air Jail's fourth quarter and full year 2025 financial results conference call. With us today are Don Young, President and CEO, and Grant Thaley, 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 investor section of Aspen's website, www.aerogel.com. During this call, we will refer to non-GAAP financial measures, including adjusted EBITDA and adjusted net income. 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 4 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'll now turn the call over to Don. Don?

Thanks, Neil. Good morning, everyone. Thank you for joining us for our Q4 2025 earnings call. My comments will cover the evolving demand environment for electric vehicles and our related organizational adjustments, our growth outlook for the energy industrial segment, and our progress in developing a battery energy storage systems segment. I will also outline our strong liquidity position and a strategic review process that we are undertaking to explore opportunities to maximize shareholder value. Grant will amplify these points with his comments, and we look forward to your questions. Throughout 2025 and into 2026, We streamlined the organization, lowered our fixed cost base, strengthened liquidity, and positioned Aspen to operate effectively in a resetting EV market. As expected, U.S. EV sales in Q4 dropped significantly. GM followed suit with a ramp down of its EV production rates beginning in Q4 2025. We expect GM and other North American EV OEMs will determine the demand for EVs absent incentives and regulation during the first half of 2026 and align inventory and production rates based on the new market conditions. From this reset level, we expect EV penetration to resume growth, though at a more measured pace than in prior years. GM has maintained its full line of EV nameplates and has stated that it remains dedicated to its long-term EV success including in its Cadillac division where EV sales represented nearly 30% of total sales over the year 2025. In Europe, we see stronger structural drivers for our Pyro Thin Thermal Barrier segment. The key factors of market penetration, charging infrastructure, and steadier policy guidelines create a more visible multi-year adoption trajectory for OEMs. Battery-elected vehicles now represent over 20% of new vehicle registrations in the region. At our last earnings call, we disclosed a battery design award from a major European OEM. That customer is Volvo Car, bringing our total to seven European OEM design wins. We remain actively engaged with other European OEMs as they advance to their next generation EV platforms, and we anticipate securing an additional award During the year across these European awards, we are supporting programs that incorporate battery cells from a diversified global supply base, including European, Korean, Japanese and leading Chinese manufacturers. We are encouraged by our momentum in Europe and believe the region will be an important contributor to our revenue in 2027 and beyond. Our energy industrial segment is poised to grow through the year 2026 revenue in 2025 of 102Million dollars was comprised largely a base load maintenance and limited work and was largely absent subsidy project work where we had record years in 2023 and 2024. We believe 2026 growth. in this segment could reach twenty percent supported by three primary drivers. First, we now have a robust pipeline for subsea projects and anticipate strong demand throughout the decade as more subsea developments move into deeper water and more challenging environments. Aspen has led this segment for two decades and we are well placed to benefit from the current subsea cycle. We're off to a good start in twenty, twenty six with our 1st award win for an attractive North sea pipe and pipe subsidy project, which we expect to deliver in Q3. 2nd is an attractive growth vector for our energy industrial segment and we're positioned across the entire value chain. Not just liquefaction. The market is in a multi year build cycle, and we expect our LNG and natural gas infrastructure activity in 2026 to roughly double versus 2025 in both project count and revenue contribution. And we also see steady opportunities through the decade. Accelerating electricity demand keeps natural gas central for reliability and speed to power. We are positioned to convert this demand into profitable growth for our energy industrial segment. And the third key factor is pent-up demand for maintenance and refinery and petrochemical end users who have run their facilities hard and profitably over the past year while minimizing maintenance and turnarounds. Again, we are well placed to meet this demand and to increase our important baseload maintenance revenue. Collectively, these three drivers support the potential for 20% growth in 2026 for our energy industrial segment with opportunities for similar growth in 2027 and 2028. In 2026, we are investing in our energy industrial business by adding to our customer facing sales and technical service teams around the world. Our objective is to scale energy industrial into a $200 million high margin segment without the need for incremental capital investment. As part of our growth, long-term growth strategy, we are also investing in the development of additional commercial segments to leverage our unique technology, sales and technical service teams, and existing manufacturing assets. We believe the effort will diversify and broaden Aspen's addressable market. A key example is battery energy storage systems, or BES, where macro policy, and technology shifts are aligning in our favor. As developers move toward higher density LFP architectures, they are encountering the same thermal propagation challenges we have already solved in EV platforms. We are actively engaged in multiple qualifications and bids, supporting grid infrastructure, data centers, and other high reliability applications. With EB proven performance and domestic manufacturing capability, we believe we are well positioned to participate in this growing market beginning in 2026. We have taken decisive actions to strengthen and increase the flexibility of our balance sheet. We ended 2025 with approximately $159 million in cash and in a strong net cash position. In March, we will receive a payment from General Motors of nearly $38M dollars related to a commercial settlement associated with prior EV capacity adjustments. In addition, we have advanced the sale of our Plant 2 assets and are entering due diligence with the leading bidder following a competitive process. In addition, we continue to manage cash and working capital tightly. In parallel, We have structurally reduced fixed cash costs by approximately $75 million annually and expect further streamlining in 2026 with the longer-term goal to lower our adjusted EBITDA breakeven to $175 million of revenue. Importantly, beyond the breakeven level, incremental revenue carries an expected 50 to 60 percent adjusted EBITDA margin while requiring limited incremental capital investment. Again, we are initiating a strategic review to ensure our growth strategy and capital allocation priorities are aligned to maximize long-term shareholder value. Following a period of market change and internal restructuring, this review is a disciplined evaluation of our strategic options. Importantly, it is being conducted from a position of financial strength and operational progress. Our objective is clear. ensure our strategy, capital structure, and asset base are optimized to drive long-term value creation. Grant, over to you.