ASPEN AEROGELS INC
For the period ended Jun 30, 2024. Filed Aug 8, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 8, 2024
ASPN$4.91-4.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-02.
0000950170-24-052139
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0000950170-24-094005
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 139 previous paragraphs and 153 current paragraphs.
92 unchanged; 34 reworded; 18 added; 13 removed; 0 previous and 9 current paragraphs rearranged.
Tables are not compared: 8 previous and 17 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (18)
Current report
Total revenue increased $69.6 million, or 145%, to $117.8 million for the three months ended June 30, 2024 from $48.2 million in the comparable period in 2023. The increase in total revenue was the result of an increase in thermal barrier revenue and energy industrial revenue.
Current report
Energy industrial cost of revenue decreased $4.5 million, or 17%, to $21.5 million for the three months ended June 30, 2024 from $26.0 million in the comparable period in 2023, primarily due to a decrease in the volume of products shipped. The $4.5 million decrease was the result of an $8.4 million decrease in manufacturing and other operating costs due to lower volume of products manufactured at our plant, offset in part by a $3.9 million increase in material costs due to the manufacturing of products through the external manufacturing facility.
Current report
Gross profit increased by $43.2 million, or 514%, to $51.6 million for the three months ended June 30, 2024 from $8.4 million in the comparable period in 2023. The increase in gross profit was the result of the $69.6 million increase in total revenue, offset by the $26.4 million increase in total cost of revenue.
Current report
Research and development expenses as a percentage of total revenue decreased to 4% of total revenue for the three months ended June 30, 2024 from 8% in the comparable period in 2023.
Current report
Sales and marketing expenses increased by $1.4 million, or 17%, to $9.5 million for the three months ended June 30, 2024 from $8.1 million in the comparable period in 2023. The $1.4 million increase was principally the result of increases in compensation and related costs of $1.3 million, and depreciation and facility related expenses of $0.4 million, offset in part by a decrease in professional fees of $0.3 million.
Current report
General and administrative expenses increased by $4.1 million, or 31%, to $17.5 million for the three months ended June 30, 2024 from $13.4 million in the comparable period in 2023. The $4.1 million increase was the result of increases in compensation and related costs combined with additional staffing costs of $1.3 million, insurance costs of $1.0 million, foreign currency transaction losses of $0.8 million, utilities expenditures of $0.5 million, recruiting and training of $0.3 million, and other expenses of $0.2 million.
Current report
General and administrative expenses as a percentage of total revenue decreased to 15% for the three months ended June 30, 2024 from 28% in the comparable period in 2023.
Current report
Income Tax Expense
Current report
The $0.9 million of income tax expense for the three months ended June 30, 2024 is related to our maquiladora operations in Mexico. We did not incur income tax expense for the comparable period in 2023.
Current report
Results of Operations
Current report
Six months ended June 30, 2024 compared to the six months ended June 30, 2023
Current report
Revenue
Current report
Thermal barrier revenue was $146.2 million for the six months ended June 30, 2024 as compared to $24.3 million for the six months ended June 30, 2023. During the six months ended June 30, 2024 and 2023, thermal barrier revenue included $137.5 million and $24.3 million, respectively, to a major U.S. automotive OEM.
Current report
Total cost of revenue increased $45.3 million, or 56%, to $125.6 million for the six months ended June 30, 2024 from $80.3 in the comparable period in 2023. The increase in total cost of revenue was the result of an increase in thermal barrier cost of revenue, offset by a decrease in energy industrial cost of revenue.
Current report
Research and development expenses increased by $1.0 million, or 12%, to $9.1 million for the six months ended June 30, 2024 from $8.1 million in the comparable period in 2023. The $1.0 million increase reflects increases in compensation and related costs of $0.6 million, depreciation and facility related expenses of $0.3 million, and other expenses of $0.1 million.
Current report
Other Income (Expense), net
Current report
Income Tax Expense
Current report
The $1.6 million of income tax expense for the six months ended June 30, 2024 is related to our maquiladora operations in Mexico. We did not incur income tax expense for the comparable period in 2023.
Removed paragraphs (13)
Previous report
Cost of Revenue
Previous report
Gross Profit
Previous report
Research and Development Expenses
Previous report
Sales and Marketing Expenses
Previous report
General and Administrative Expenses
Previous report
Cost of Revenue
Previous report
Gross Profit
Previous report
Research and Development Expenses
Previous report
Sales and Marketing Expenses
Previous report
General and Administrative Expenses
Previous report
In December 2023, we entered into a securities purchase agreement with certain institutional investors named therein, pursuant to which we issued and sold, in a registered direct offering directly to the Investors an aggregate of 6,060,607 shares of our common stock at an offering price of $12.38 per share. We received net proceeds of $74.4 million, after deducting offering expenses of approximately $0.6 million.
Previous report
In November 2022, we entered into a loan agreement (the GM Loan Agreement) with General Motors Holdings LLC (GM), an entity affiliated with General Motors LLC, which provides for a multi-draw senior secured term loan (the GM Loan) in an aggregate principal amount of up to $100.0 million, available to the Company on a delayed draw basis beginning January 1, 2023 to September 30, 2023, subject to certain conditions precedent to funding. In September 2023, we amended the GM Loan Agreement to (i) extend the draw period for the delayed GM Loan to a period beginning on the date that is twelve months prior to the date agreed upon by the Company and GM for the start of production at an aerogel manufacturing facility in Bulloch County, Georgia and ending on March 31, 2024 (or any later date approved in writing by GM at its sole discretion); (ii) extend the maturity date of the GM Loan from March 31, 2025 to September 30, 2025; and (iii) add financial covenants measured starting from the fiscal quarter ending December 31, 2024 and at the end of each fiscal quarter thereafter. As of March 31, 2024, we have not drawn, and no longer have the ability to draw on, the GM Loan.
Previous report
In December 2023, we entered into a securities purchase agreement with certain institutional investors named therein, pursuant to which we issued and sold, in a registered direct offering directly to the Investors an aggregate of 6,060,607 shares of our common stock at an offering price of $12.38 per share. We received net proceeds of $74.4 million, after deducting offering expenses of approximately $0.6 million.
Reworded paragraphs (34)
Previous wording
We are also actively developing a number of promising aerogel products and technologies for the electric vehicle ("EV") market. We have developed and are commercializing our proprietary line of PyroThin® aerogel thermal barriers for use in battery packs in EVs. Our PyroThin product is an ultra-thin, lightweight and flexible thermal barrier designed with other functional layers to impede the propagation of thermal runaway across multiple lithium-ion battery system architectures. Our thermal barrier technology is designed to offer a unique combination of thermal management, mechanical performance and fire protection properties. These properties enable EV manufacturers to achieve critical battery performance and safety goals. In addition, we are seeking to leverage our patented carbon aerogel technology to develop industry-leading battery materials for use in lithium-ion battery cells. These battery materials have the potential to increase the energy density of the battery cells, thus enabling an increase in the driving range of EVs.
Current wording
We are actively developing a number of promising aerogel products and technologies for the electric vehicle ("EV") market. We have developed and are commercializing our proprietary line of PyroThin® aerogel thermal barriers for use in battery packs in EVs. Our PyroThin product is an ultra-thin, lightweight and flexible thermal barrier designed with other functional layers to impede the propagation of thermal runaway across multiple lithium-ion battery system architectures. Our thermal barrier technology is designed to offer a unique combination of thermal management, mechanical performance and fire protection properties. These properties enable EV manufacturers to achieve critical battery performance and safety goals. In addition, we are seeking to leverage our patented carbon aerogel technology to develop industry-leading battery materials for use in lithium-ion battery cells. These battery materials have the potential to increase the energy density of the battery cells, thus enabling an increase in the driving range of EVs.
Previous wording
We have entered into production contracts with certain major OEMs, including General Motors LLC (“GM”), to supply fabricated, multi-part thermal barriers for use in the battery system of its next-generation EVs. Pursuant to the contracts with GM, we are obligated to supply the barriers at fixed annual prices and at volumes to be specified by the customer up to a daily maximum quantity through the term of the agreements, which expire at various times from 2026 through 2034. While GM has agreed to purchase its requirement for the barriers from us at locations to be designated from time to time, it has no obligation to purchase any minimum quantity of barriers under the contracts. In addition, GM may terminate the contracts any time and for any or no reason. All other terms of the contracts are generally consistent with GM’s standard purchase terms, including quality and warranty provisions customary in the automotive industry. We have also entered into production contracts with Toyota, Scania, Audi, a luxury brand of the Volkswagen Group, and ACC, a battery cell joint venture between Stellantis N.V, Saft-TotalEnergies and Mercedes-Benz.
Current wording
We have entered into production contracts with certain major OEMs, including General Motors LLC (“GM”), to supply fabricated, multi-part thermal barriers for use in the battery system of its next-generation EVs. Pursuant to the contracts with GM, we are obligated to supply the barriers at fixed annual prices and at volumes to be specified by the customer up to a daily maximum quantity through the term of the agreements, which expire at various times from 2026 through 2034. While GM has agreed to purchase its requirement for the barriers from us at locations to be designated from time to time, it has no obligation to purchase any minimum quantity of barriers under the contracts. In addition, GM may terminate the contracts any time and for any or no reason. All other terms of the contracts are generally consistent with GM’s standard purchase terms, including quality and warranty provisions customary in the automotive industry. We have also entered into production contracts with Toyota, Scania, Audi, a luxury brand of the Volkswagen Group, ACC, a battery cell joint venture between Stellantis N.V, Saft-TotalEnergies and Mercedes-Benz, and a large EU battery manufacturer to supply a next generation vehicle platform of a major EU luxury sports car brand.
Previous wording
We design, develop and manufacture innovative, high-performance aerogel insulation used primarily in the energy industrial and sustainable insulation materials markets. We believe our aerogel blankets deliver the best thermal performance of any widely used insulation product available on the market today and provide a combination of performance attributes unmatched by traditional insulation materials. Our end-user customers select our products where thermal performance is critical and to save money, improve resource efficiency, enhance sustainability, preserve operating assets and protect workers. Our insulation is used by oil producers and the owners and operators of refineries, petrochemical plants, LNG facilities, power generating assets and other energy industrial companies. Our Pyrogel® and Cryogel® product lines have undergone rigorous technical validation by industry leading end-users and achieved significant market adoption.
Current wording
We also design, develop and manufacture innovative, high-performance aerogel insulation used primarily in the energy industrial and sustainable insulation materials markets. We believe our aerogel blankets deliver the best thermal performance of any widely used insulation product available on the market today and provide a combination of performance attributes unmatched by traditional insulation materials. Our end-user customers select our products where thermal performance is critical and to save money, improve resource efficiency, enhance sustainability, preserve operating assets and protect workers. Our insulation is used by oil producers and the owners and operators of refineries, petrochemical plants, LNG facilities, power generating assets and other energy industrial companies. Our Pyrogel® and Cryogel® product lines have undergone rigorous technical validation by industry leading end-users and achieved significant market adoption.
Previous wording
We announced that the U.S. Department of Energy ("DOE") Loan Programs Office invited us into the formal due diligence and term sheet negotiation stage of the process, which is one in several steps remaining in the due diligence process prior to the DOE making a decision on whether to issue a Conditional Commitment for a loan. This loan application is in connection with the construction of our planned second manufacturing plant in Bulloch County, Georgia. The DOE's continued evaluation of the application is not an assurance that the terms and conditions of a term sheet will be consistent with terms proposed by the applicant. The foregoing matters are wholly dependent on the results of DOE review and evaluation, and DOE's determination whether to proceed. While the DOE's invitation to the formal due diligence stage is not an assurance that the DOE will issue a loan, we remain deeply engaged with the Loan Programs Office and its advisors and continue to believe that we are a strong candidate to partner with the DOE Loan Programs Office in this program.
Current wording
We announced that the U.S. Department of Energy ("DOE") Loan Programs Office invited us into the formal due diligence and term sheet negotiation stage of the process, which is one in several steps remaining in the due diligence process prior to the DOE making a decision on whether to issue a Conditional Commitment for a loan. This loan application is in connection with the construction of our planned second manufacturing plant in Bulloch County, Georgia. In June 2024, after a public notice period, the Department of Energy released a Final Environmental Assessment and issued a “Finding of No significant Impact.” The DOE’s finding and the DOE's continued evaluation of the application is not an assurance that the terms and conditions of a term sheet will be consistent with terms proposed by the applicant. The foregoing matters are wholly dependent on the results of DOE review and evaluation, and DOE's determination whether to proceed. While the DOE's invitation to the formal due diligence stage and subsequent finding is not an assurance that the DOE will issue a loan, we remain deeply engaged with the Loan Programs Office and its advisors and continue to believe that we are a strong candidate to partner with the DOE Loan Programs Office in this program.
Previous wording
Our revenue for the three months ended March 31, 2024 was $94.5 million, which represented an increase of $48.9 million, or 107%, from $45.6 million for the three months ended March 31, 2023. Net loss for the three months ended March 31, 2024 was $1.8 million and net loss per share was $0.02. Net loss for the three months ended March 31, 2023 was $16.8 million and net loss per share was $0.24.
Current wording
Our revenue for the six months ended June 30, 2024 was $117.8 million, which represented an increase of $69.6 million, or 145%, from $48.2 million for the six months ended June 30, 2023. Net income for the six months ended June 30, 2024 was $16.8 million and net income per share was $0.22. Net loss for the six months ended June 30, 2023 was $32.2 million and net loss per share was $0.47.
Previous wording
The following table presents a reconciliation of net loss, the most directly comparable U.S. GAAP measure, to Adjusted EBITDA for the periods presented:
Current wording
The following table presents a reconciliation of net income (loss), the most directly comparable U.S. GAAP measure, to Adjusted EBITDA for the periods presented:
Previous wording
We expect to maintain strong revenue growth during 2024 driven by accelerating demand in the EV market and continued market share gains in the sustainable insulation materials market. Our expectation to maintain strong revenue growth is based, in part, on our OEM customers’ production volume forecasts and targets as well as our expectation to successfully scale our manufacturing capabilities and address any potential supply chain issues to meet this expected demand. As a result, we expect to experience a decrease in both net loss and negative Adjusted EBITDA during 2024.
Current wording
We expect to maintain strong revenue growth during 2024 driven by accelerating demand in the EV market and continued market share gains in the sustainable insulation materials market. Our expectation to maintain strong revenue growth is based, in part, on our OEM customers’ production volume forecasts and targets as well as our expectation to successfully scale our manufacturing capabilities and address any potential supply chain issues to meet this expected demand. As a result, we expect to experience a decrease in both net loss and negative Adjusted EBITDA during 2024, compared to 2023.
Previous wording
Manufacturing expense is also a significant component of cost of revenue. Manufacturing expense includes labor, utilities, maintenance expense, and depreciation on manufacturing assets. Manufacturing expense also includes stock-based compensation of manufacturing employees and shipping costs. We expect that manufacturing expense will increase in absolute dollars and decrease as a percentage of revenue during 2024 due to increased staffing and spending levels in support of our thermal barrier business, including the operation of an automated fabrication facility in Monterrey, Mexico. We are also continuing to monitor the impact of engaging one or more external manufacturing facilities in China to supply our aerogel products for the energy industrial market beginning in 2024 on our manufacturing expense and cost of product revenue.
Current wording
Manufacturing expense is also a significant component of cost of revenue. Manufacturing expense includes labor, utilities, maintenance expense, and depreciation on manufacturing assets. Manufacturing expense also includes stock-based compensation of manufacturing employees and shipping costs. We expect that manufacturing expense will increase in absolute dollars and decrease as a percentage of revenue during 2024 due to increased staffing costs and spending levels in support of our thermal barrier business, including the operation of an automated fabrication facility in Monterrey, Mexico.
Previous wording
We have incurred net losses since inception and have not recorded benefit provisions for U.S. federal income taxes or state income taxes since the tax benefits of our net losses have been offset by valuation allowances due to the uncertainty associated with the utilization of net operating loss carryforwards. We record tax expenses in connection with our Mexican maquiladora operations.
Current wording
We have incurred annual net losses since inception and have not recorded benefit provisions for U.S. federal income taxes or state income taxes since the tax benefits of our net losses have been offset by valuation allowances due to the uncertainty associated with the utilization of net operating loss carryforwards. We record tax expenses in connection with our Mexican maquiladora operations.
Previous wording
Energy industrial revenue for the three months ended March 31, 2024 included $7.5 million to a North American distributor, in comparison to $10.9 million for the comparable period of 2023.
Current wording
Energy industrial revenue for the three months ended June 30, 2024 included $6.0 million to a North American distributor, in comparison to $8.6 million for the comparable period of 2023.
Previous wording
The average selling price per square foot of our energy industrial products increased by 16% for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. The increase in average selling price reflected the impact of price increases enacted in 2023 and a change in the mix of products sold, as we strive to maximize capacity in our aerogel manufacturing facility. This increase in average selling price had the effect of increasing product revenue by $4.1 million for the three months ended March 31, 2024 from the comparable period in 2023.
Current wording
The average selling price per square foot of our energy industrial products increased by 13% for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The increase in average selling price reflected the impact of price increases enacted in 2023 and a change in the mix of products sold, as we strive to maximize capacity in our aerogel manufacturing facility. This increase in average selling price had the effect of increasing product revenue by $4.1 million for the three months ended June 30, 2024 from the comparable period in 2023.
Previous wording
In volume terms, energy industrial product shipments decreased by 26% as measured by square feet of our energy industrial products shipped for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. The decrease in volume had the effect of decreasing product revenue by $8.8 million for the three months ended March 31, 2024 from the comparable period in 2023.
Current wording
In volume terms, energy industrial product shipments decreased by 8% as measured by square feet of our energy industrial products shipped for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The decrease in volume had the effect of decreasing product revenue by $2.8 million for the three months ended June 30, 2024 from the comparable period in 2023.
Previous wording
Thermal barrier revenue was $65.4 million for the three months ended March 31, 2024 as compared to $11.7 million for the three months ended March 31, 2023. During the three months ended March 31, 2024 and 2023, thermal barrier revenue included $60.6 million and $9.7 million, respectively, to a major U.S. automotive OEM.
Current wording
Thermal barrier revenue was $80.8 million for the three months ended June 30, 2024 as compared to $12.6 million for the three months ended June 30, 2023. During the three months ended June 30, 2024 and 2023, thermal barrier revenue included $76.9 million and $9.8 million, respectively, to a major U.S. automotive OEM.
Previous wording
Total cost of revenue increased $18.8 million, or 47%, to $59.3 million for the three months ended March 31, 2024 from $40.5 in the comparable period in 2023. The increase in total cost of revenue was the result of an increase in thermal barrier cost of revenue, offset by a decrease in energy industrial cost of revenue.
Current wording
Total cost of revenue increased $26.4 million, or 67%, to $66.2 million for the three months ended June 30, 2024 from $39.8 in the comparable period in 2023. The increase in total cost of revenue was the result of an increase in thermal barrier cost of revenue, offset by a decrease in energy industrial cost of revenue.
Previous wording
Thermal barrier cost of revenue increased $26.3 million to $41.8 million for the three months ended March 31, 2024 as compared to $15.5 million for the three months ended March 31, 2023. The $26.3 million increase was the result of a $14.3 million increase in material costs and a $12.0 million increase in manufacturing costs, primarily driven by an increase in volume. Thermal barrier cost of revenue included $6.8 million for estimated costs related to impact from an engineering change notified by a customer to a part that we manufacture for that customer to enable incremental productivity and support a set of broader system level changes that could drive higher demand for its products. The Company has submitted a preliminary claim to the customer for reimbursement for estimated inventory and equipment losses incurred by the Company and its vendors due to potential obsolescence. The customer’s ordinary course process is to audit the claim to determine the proposed reimbursable amount. The Company expects the matter to be concluded by the second quarter of 2024.
Current wording
Thermal barrier cost of revenue increased $30.9 million to $44.7 million for the three months ended June 30, 2024 as compared to $13.8 million for the three months ended June 30, 2023. The $30.9 million increase was the result of a $27.4 million increase in material costs and a $3.5 million increase in manufacturing costs, primarily driven by an increase in volume. Thermal barrier cost of revenue includes a credit of $4.2 million for a partial reimbursement of costs related to the impact from an engineering change notified by a customer to a part that we manufacture for that customer to enable incremental productivity and support a set of broader system-level changes that could drive higher demand for its products. During the three months ended March 31, 2024, we had recognized a $6.8 million charge, net of contractual recoverable of $1.9 million, in cost of revenues for inventory obsolescence and impairment of equipment incurred by us and our vendors. We had submitted a preliminary claim to the customer for reimbursement of the losses incurred by us and our vendors. The customer’s ordinary course process is to audit the claim to determine the proposed reimbursable amount. We expect the matter to be concluded in the third quarter of 2024.
Previous wording
Research and development expenses increased by $0.4 million, or 10%, to $4.5 million for the three months ended March 31, 2024 from $4.1 million in the comparable period in 2023. The $0.4 million increase reflects increases in operating expenditures of $0.2 million and depreciation and facility related expenses of $0.2 million.
Current wording
Research and development expenses increased by $0.6 million, or 15%, to $4.6 million for the three months ended June 30, 2024 from $4.0 million in the comparable period in 2023. The $0.6 million increase reflects increases in compensation and related costs of $0.6 million.
Previous wording
Sales and marketing expenses as a percentage of total revenue decreased to 9% of total revenue for the three months ended March 31, 2024 from 17% in the comparable period in 2023.
Current wording
Sales and marketing expenses as a percentage of total revenue decreased to 8% of total revenue for the three months ended June 30, 2024 from 17% in the comparable period in 2023.
Previous wording
Total revenue increased $48.9 million, or 107%, to $94.5 million for the three months ended March 31, 2024 from $45.6 million in the comparable period in 2023. The increase in total revenue was the result of an increase in thermal barrier revenue, offset by a decrease energy industrial revenue.
Current wording
Total revenue increased $118.5 million, or 126%, to $212.2 million for the six months ended June 30, 2024 from $93.7 million in the comparable period in 2023. The increase in total revenue was the result of an increase in thermal barrier revenue, offset by a decrease energy industrial revenue.
Previous wording
Energy industrial revenue decreased by $4.8 million, or 14%, to $29.1 million for the three months ended March 31, 2024 from $33.9 million in the comparable period in 2023. This decrease was driven by a decrease in the volume of shipments in the global petrochemical and refinery markets of Asia, North America, and Latin America, offset in part by an increase in project-based demand in the subsea market and a more favorable mix of product shipments in the global petrochemical and refinery markets in Europe.
Current wording
Energy industrial revenue decreased by $3.4 million, or 5%, to $66.0 million for the six months ended June 30, 2024 from $69.4 million in the comparable period in 2023. This decrease was driven by a decrease in revenue to the global petrochemical and refinery markets of Asia and North America, offset in part by by an increase in project-based demand in the subsea market and a more favorable mix of product shipments in the global petrochemical and refinery markets in Latin America and Europe.
Previous wording
Energy industrial cost of revenue decreased $7.5 million, or 30%, to $17.5 million for the three months ended March 31, 2024 from $25.0 million in the comparable period in 2023. The $7.5 million decrease was the result of a $4.8 million decrease in material costs due to change in the product mix and a $2.7 million decrease in manufacturing and other operating costs from the comparable period in 2023.
Current wording
Energy industrial cost of revenue decreased $12.0 million, or 24%, to $39.0 million for the six months ended June 30, 2024 from $51.0 million in the comparable period in 2023, primarily due to a decrease in the volume of products shipped. The $12.0 million decrease was the result of a $0.9 million decrease in material costs due to change in the product mix and a $11.1 million decrease in manufacturing and other operating costs from the comparable period in 2023.
Previous wording
Gross profit increased by $30.1 million, or 591%, to $35.1 million for the three months ended March 31, 2024 from $5.0 million of gross profit in the comparable period in 2023. The increase in gross profit was the result of the $48.9 million increase in total revenue, offset by the $18.8 million increase in total cost of revenue.
Current wording
Gross profit increased by $73.2 million, or 543%, to $86.7 million for the six months ended June 30, 2024 from $13.5 million of gross profit in the comparable period in 2023. The increase in gross profit was the result of the $118.5 million increase in total revenue, offset by the $45.3 million increase in total cost of revenue.
Previous wording
Research and development expenses as a percentage of total revenue decreased to 5% of total revenue for the three months ended March 31, 2024 from 9% in the comparable period in 2023.
Current wording
Research and development expenses as a percentage of total revenue decreased to 4% of total revenue for the six months ended June 30, 2024 from 9% in the comparable period in 2023.
Previous wording
Sales and marketing expenses increased by $0.6 million, or 8%, to $8.3 million for the three months ended March 31, 2024 from $7.7 million in the comparable period in 2023. The $0.6 million increase was principally the result of increases in depreciation and facility related expenses of $0.5 million, and other general sales and marketing expenses of $0.1 million.
Current wording
Sales and marketing expenses increased by $2.0 million, or 13%, to $17.8 million for the six months ended June 30, 2024 from $15.8 million in the comparable period in 2023. The $2.0 million increase was principally the result of increases in compensation and related costs of $1.4 million, depreciation and facility related expenses of $0.8 million, and other expenses of $0.1 million, offset in part by a decrease in professional fees of $0.3 million.
Previous wording
General and administrative expenses increased by $5.0 million, or 41%, to $17.2 million for the three months ended March 31, 2024 from $12.2 million in the comparable period in 2023. The $5.0 million increase was the result of additional staffing combined with increases in compensation and related costs of $3.5 million, operating expenditures of $0.6 million, utilities expenditures of $0.5 million, professional services expenses of $0.2 million, and depreciation and facility related expenses of $0.2 million. Compensation and related costs include $2.0 million of charge from the cancellation of the unearned performance-based restricted shares.
Current wording
General and administrative expenses increased by $9.2 million, or 36%, to $34.7 million for the six months ended June 30, 2024 from $25.5 million in the comparable period in 2023. The $9.2 million increase was the result of additional staffing costs combined with increases in compensation and related costs of $4.8 million, foreign currency transaction losses of $1.4 million, insurance costs of $1.2 million, utilities expenditures of $1.0 million, legal costs of $0.5 million, and recruiting and training of $0.3 million. Compensation and related costs include $2.0 million of charge from the cancellation of the unearned performance-based restricted shares.
Previous wording
General and administrative expenses as a percentage of total revenue decreased to 18% for the three months ended March 31, 2024 from 27% in the comparable period in 2023.
Current wording
General and administrative expenses as a percentage of total revenue decreased to 16% for the six months ended June 30, 2024 from 27% in the comparable period in 2023.
Previous wording
Other income (expense), net decreased by $5.6 million to $3.5 million of other expense for the three months ended March 31, 2024 from $2.1 million of other income in the comparable period in 2023. The $5.6 million decrease was the result of a $2.7 million net impact of capitalized interest relating to our Convertible Note in the comparable period in 2023, $1.7 million of deferred financing costs related to the GM Loan Agreement for which the draw down date has expired, a $1.0 million decrease of interest income, and a $0.2 million increase of interest expense.
Current wording
Other income (expense), net decreased by $9.5 million to $5.8 million of other expense for the six months ended June 30, 2024 from $3.7 million of other income in the comparable period in 2023. The $9.5 million decrease was the result of a $5.1 million net impact of capitalized interest relating to our Convertible Note in the comparable period in 2023, $1.7 million of deferred financing costs related to the GM Loan Agreement for which the draw down date has expired, a $1.7 million decrease of interest income, and a $1.0 million increase of interest expense.
Previous wording
We believe that our March 31, 2024 cash and cash equivalents balance of $101.5 million will be sufficient to support current operating requirements, current research and development activities and the initial capital expenditures required to support the evolving commercial opportunities in the EV market and other strategic business opportunities.
Current wording
We believe that our June 30, 2024 cash and cash equivalents balance of $91.4 million will be sufficient to support current operating requirements, current research and development activities and the initial capital expenditures required to support the evolving commercial opportunities in the EV market and other strategic business opportunities.
Previous wording
Our principal sources of liquidity are currently our cash and cash equivalents. Cash and cash equivalents consist primarily of cash, money market accounts, and sweep accounts on deposit with banks. As of March 31, 2024, we had $101.5 million of unrestricted cash and cash equivalents.
Current wording
Our principal sources of liquidity are currently our cash and cash equivalents. Cash and cash equivalents consist primarily of cash, money market accounts, and sweep accounts on deposit with banks. As of June 30, 2024, we had $91.4 million of unrestricted cash and cash equivalents.
Previous wording
During the three months ended March 31, 2024, we used $17.7 million in net cash in operating activities, as compared to the use of $24.7 million in net cash during the comparable period in 2023, a decrease in the use of cash of $7.0 million. This decrease in use of cash was the result of lower net loss adjusted for non-cash items of $30.8 million offset by net cash used by changes in operating assets and liabilities of $23.8 million.
Current wording
During the six months ended June 30, 2024, we used $10.9 million in net cash in operating activities, as compared to the use of $32.3 million in net cash during the comparable period in 2023, a decrease in the use of cash of $21.4 million. This decrease in use of cash was the result of net income adjusted for non-cash items of $69.7 million offset by net cash used by changes in operating assets and liabilities of $48.3 million.
Previous wording
During the three months ended March 31, 2023, we used $24.7 million in net cash in operating activities, as compared to the use of $22.8 million in net cash during the comparable period in 2022, an increase in the use of cash of $1.9 million. This increase in use of cash was the result of cash provided by net loss adjusted for non-cash items of $3.3 million and in net cash used by changes in operating assets and liabilities of $5.2 million.
Current wording
During the six months ended June 30, 2023, we used $32.3 million in net cash in operating activities, as compared to the use of $32.9 million in net cash during the comparable period in 2022, a decrease in the use of cash of $0.6 million. This decrease in use of cash was the result of cash provided by net loss adjusted for non-cash items of $12.4 million and net cash used by changes in operating assets and liabilities of $11.8 million.
Previous wording
Net cash used in investing activities is for capital expenditures for machinery and equipment principally to improve the throughput, efficiency and capacity of our East Providence facility and engineering designs and construction costs for the planned aerogel manufacturing facility in Bulloch County, Georgia. Net cash used in investing activities for the three months ended March 31, 2024 and 2023 was $25.9 million and $49.4 million, respectively.
Current wording
Net cash used in investing activities is for capital expenditures for machinery and equipment principally to improve the throughput, efficiency and capacity of our East Providence facility, expansion of our automated fabrication facility in Mexico and engineering designs and construction costs for the planned aerogel manufacturing facility in Bulloch County, Georgia. Net cash used in investing activities for the six months ended June 30, 2024 and 2023 was $50.7 million and $115.4 million, respectively.
Previous wording
Net cash provided by financing activities for the three months ended March 31, 2024 totaled $5.3 million and consisted of $5.0 million in proceeds from a sales leaseback and $1.4 million in proceeds from employee stock option exercises, offset by $1.1 million in cash used for payments made for employee tax withholdings associated with the vesting of restricted stock units
Current wording
Net cash provided by financing activities for the six months ended June 30, 2024 totaled $13.4 million and consisted of $5.0 million in proceeds from a sales leaseback and $10.1 million in proceeds from employee stock option exercises, offset by $1.1 million in cash used for payments made for employee tax withholdings associated with the vesting of restricted stock units, $0.5 million in repayments of a sales leaseback, and less than $0.1 million in cash used for fees and issuance costs.
Previous wording
Net cash used in financing activities for the three months ended March 31, 2023 totaled $0.4 million and consisted of $0.4 million in cash used for payments made for employee tax withholdings associated with the vesting of restricted stock units, offset, in part, by less than $0.1 million in proceeds from employee stock option exercises.
Current wording
Net cash used in financing activities for the six months ended June 30, 2023 totaled $0.2 million and consisted of $0.4 million in cash used for payments made for employee tax withholdings associated with the vesting of restricted stock units, offset, in part, by $0.2 million in proceeds from employee stock option exercises.
Previous wording
The SEC encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This Quarterly Report on Form 10-Q contains such “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks, uncertainties and other important factors, which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. Forward-looking statements include, but are not limited to, statements about: the expected future growth of the market for our aerogel products and our continued gain in market share, in particular in the electric vehicle market, the energy infrastructure insulation market, the lithium-ion battery thermal barrier markets, and other markets we target; our beliefs in the appropriateness of our assumptions, the accuracy of our estimates regarding expenses, loss contingencies, future revenues, revenue capacity, future profits, uses of cash, available credit, capital requirements, and the need for additional financing to operate our business and for capital expenditures and to fund our planned strategic business initiatives; the performance of our aerogel blankets; our expectation that we will be successful in obtaining, enforcing and defending our patents against competitors and that such patents are valid and enforceable; our expectations regarding the investment to open a second manufacturing facility in Georgia, the extended construction and commissioning timeframe for the planned second manufacturing facility, our efforts to manage the construction of the second plant to align with our expectations of demand from EV customers; our estimates of annual production capacity; beliefs about the commercial potential for our technology in the electric vehicle market; beliefs about our ability to produce and deliver products to electric vehicle customers; beliefs about Aspen’s contracts with the major automotive manufacturers; our expectations about the size and timing of awarded business in the electric vehicle market, future revenues and profit margins, arising from our supply relationship and contract with automotive OEMs and our ability to win more business and increase revenue in the electric vehicle market; beliefs about the performance of our thermal barrier products in the battery systems of electric vehicles; the current or future trends in the energy, energy infrastructure, chemical and refinery, LNG, sustainable building materials, electric vehicle thermal barrier, electric vehicle battery materials or other markets and the impact of these trends on our business; our investments in the electric vehicle market and aerogel technology platform; our beliefs about the financial metrics that are indicative of our core performance; our e…
Excerpt shortened here; the source contains the full paragraph.
Current wording
The SEC encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This Quarterly Report on Form 10-Q contains such “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks, uncertainties and other important factors, which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. Forward-looking statements include, but are not limited to, statements about: the expected future growth of the market for our aerogel products and our continued gain in market share, in particular in the electric vehicle market, the energy infrastructure insulation market, the lithium-ion battery thermal barrier markets, and other markets we target; our beliefs in the appropriateness of our assumptions, the accuracy of our estimates regarding expenses, loss contingencies, future revenues, revenue capacity, future profits, uses of cash, available credit, capital requirements, and the need for additional financing to operate our business and for capital expenditures and to fund our planned strategic business initiatives; the performance of our aerogel blankets; our expectation that we will be successful in obtaining, enforcing and defending our patents against competitors and that such patents are valid and enforceable; our expectations regarding the investment to open a second manufacturing facility in Georgia, the extended construction and commissioning timeframe for the planned second manufacturing facility, our efforts to manage the construction of the second plant to align with our expectations of demand from EV customers; our estimates of annual production capacity; beliefs about the commercial potential for our technology in the electric vehicle market; beliefs about our ability to produce and deliver products to electric vehicle customers; beliefs about our contracts with the major automotive manufacturers; our expectations about the size and timing of awarded business in the electric vehicle market, future revenues and profit margins, arising from our supply relationship and contract with automotive OEMs and our ability to win more business and increase revenue in the electric vehicle market; beliefs about the performance of our thermal barrier products in the battery systems of electric vehicles; the current or future trends in the energy, energy infrastructure, chemical and refinery, LNG, sustainable building materials, electric vehicle thermal barrier, electric vehicle battery materials or other markets and the impact of these trends on our business; our investments in the electric vehicle market and Aerogel Technology Platform; our beliefs about the financial metrics that are indicative of our core performance; our expec…
Excerpt shortened here; the source contains the full paragraph.
Rearranged current paragraphs (9)
Current report — wording carried from elsewhere
We are also continuing to monitor the impact on our material costs, manufacturing expense, and cost of product revenue from engaging one or more external manufacturing facilities in China to supply our aerogel products for the energy industrial market beginning in 2024. We expect that our energy industrial product material costs will increase in absolute dollars and as a percentage of revenue, and manufacturing expense and cost of revenue will decrease as a percentage of revenue due to projected volume growth, which will be manufactured through the external manufacturing facility.
Current report — wording carried from elsewhere
Energy industrial revenue increased by $1.4 million, or 4%, to $36.9 million for the three months ended June 30, 2024 from $35.5 million in the comparable period in 2023. This increase was driven by an increase in revenue to the global petrochemical and refinery markets of Latin America, Europe, and North America, offset in part by a decrease in project-based demand in the subsea market and a less favorable mix of product shipments in the global petrochemical and refinery markets in Asia.
Current report — wording carried from elsewhere
Other income (expense), net decreased by $3.9 million to $2.3 million of other expense for the three months ended June 30, 2024 from $1.6 million of other income in the comparable period in 2023. The $3.9 million decrease was the result of a $2.6 million net impact of capitalized interest relating to our Convertible Note in the comparable period in 2023, a $0.7 million decrease of interest income, and a $0.6 million increase of interest expense.
Current report — wording carried from elsewhere
The following tables set forth a comparison of the components of our results of operations for the periods presented:
Current report — wording carried from elsewhere
Energy industrial revenue for the six months ended June 30, 2024 included $13.5 million to a North American distributor, in comparison to $19.5 million for the comparable period of 2023.
Current report — wording carried from elsewhere
The average selling price per square foot of our energy industrial products increased by 15% for six months ended June 30, 2024, compared to the six months ended June 30, 2023. The increase in average selling price reflected the impact of price increases enacted in 2023 and a change in the mix of products sold, as we strive to maximize capacity in our aerogel manufacturing facility. This increase in average selling price had the effect of increasing product revenue by $8.5 million for the six months ended June 30, 2024 from the comparable period in 2023.
Current report — wording carried from elsewhere
In volume terms, energy industrial product shipments decreased by 17% as measured by square feet of our energy industrial products shipped for the six months ended June 30, 2024, compared to the six months ended June 30, 2023. The decrease in volume had the effect of decreasing product revenue by $11.8 million for the six months ended June 30, 2024 from the comparable period in 2023.
Current report — wording carried from elsewhere
Thermal barrier cost of revenue increased $57.3 million to $86.6 million for the six months ended June 30, 2024 as compared to $29.3 million in the comparable period in 2023. The $57.3 million increase was the result of a $41.7 million increase in material costs and a $15.6 million increase in manufacturing costs, primarily driven by an increase in volume. Thermal barrier cost of revenue includes a charge of $6.8 million, net of contractual recoverable of $1.9 million, recognized during the three months ended March 31, 2024, for estimated costs related to impact from an engineering change notified by a customer to a part that we manufacture for that customer to enable incremental productivity and support a set of broader system level changes that could drive higher demand for its products. We have submitted a preliminary claim to the customer for reimbursement for estimated inventory and equipment losses incurred by us and our vendors due to potential obsolescence. The customer’s ordinary course process is to audit the claim to determine the proposed reimbursable amount. During the three months ended June 30, 2024, the customer approved reimbursement of portions of the claim totaling $4.2 for equipment losses incurred by us and our vendors which is recognized as an offset to the charge we recognized in the three months ended, March 31, 2024. We expect the matter to be concluded in the third quarter of 2024.
Current report — wording carried from elsewhere
Sales and marketing expenses as a percentage of total revenue decreased to 8% of total revenue for the six months ended June 30, 2024 from 17% in the comparable period in 2023.