Q1 2025 Aspen Aerogels Inc Earnings Call
Thank you. Thank you. Thank you.
Speaker Change: Good morning. Thank you for attending the Aspen Aerogel 1st Code to 2025 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, Neal Baranosky, Aspen Senior Director, Head of Investor Relations and Corporate Strategy. Thank you. You may proceed, Mr. Baranosky.
Neal Baranosky: Thank you Bruno. Good morning, and thank you for joining us for the Aspen Aerogels first quarter 2025 financial results conference call. With us today are Don Young, President and CEO , and Ricardo Rodriguez, Chief Financial Officer and Treasurer.
Neal Baranosky: During this call, we refer to non-GAAP financial measures, including adjusted EBITDA and adjusted that income. The recommendations between gap and non-GAAP measures are included in the back of the SLI presentation and earnings release.
Neal Baranosky: On today's call, mentioned only four-looking statements about our expectations. These statements are subject to risks on certainties that can cause our actual results to differ materially. These risks on certainties include the factors identified in our funds with the SEC.
Neal Baranosky: Please review the disclaimer statements on page one of the slide deck as the content of our call will be governed by this language.
Neal Baranosky: 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.
Neal Baranosky: We expect that 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.
Neal Baranosky: I also wanted to highlight a near-term IR engagement. On Wednesday, May 21st, management will be hosting one-on-one investor meetings at the BU RIOLE Securities 25th Annual Investor Conference.
I'll now turn the call over to Don. Don?
Don Young: Thanks Neal. Good morning everyone. Thank you for joining us for our Q1 2025 earnings call. My comments will focus on our performance, the status and the expected impact of several key elements of our strategy and our view of the current environment. [inaudible]
Don Young: Ricardo will dig deeper into our Q1 financial performance, our strategy and will provide comments on our Q2 Outlook. We look forward to your questions.
Our goal is to build a strong and profitable company.
Don Young: The focus during Q1 was to strengthen our resilience by broadening our commercial activities in both the EV thermal barrier and energy industrial businesses by building a robust and flexible supply chain and by optimizing our cost structure.
Don Young: This important work continues in Q2 and will continue throughout the year.
Don Young: Starting with our thermal barrier business, we secured during Q1 a major pyrethin award with GM for a next generation prismatic EV platform.
Don Young: This Pirate in Award, following recent awards from Mercedes-Benz and Volvo Truck, demonstrates our value in additional EV battery, form factors and chemistries, and we believe it's a clear endorsement of our innovation and trusted performance.
Don Young: This momentum validates our role in the electrification ecosystem and sets the stage for continued platform expansion across new and existing OEMs.
Don Young: We are also encouraged by the record level quoting activity in our Pirates in Thermal Barrier business.
which we believe signals.
Don Young: that the leading OEMs continue to invest in the battery electric platforms of the future.
Don Young: Positions Aspen as a key technology partner and reinforces our strategic leadership in EV Battery Performance and Safety.
Don Young: While the first quarter performance for the energy industrial business was on par with the first three quarters of 2024, it could not keep the toward pace of Q4 2024 when we had record revenue of over $53 million.
Don Young: It has not been uncommon in this segment for the first quarter revenue to tail off compared to the fourth quarter of the previous year. Our frequent pattern for the energy industrial business has been for revenue to step back in Q1 and then to build throughout the year.
Don Young: It is also likely that we are experiencing some destocking in our distribution channel.
Don Young: While our supply capacity, when our supply capacity is constrained, as it has been since 2023, distributors and contractors tend to store additional safety stock.
Don Young: Our leading, our lead times during the period of supply constraint were as long as six months versus more typical and currently times of approximately one month.
Don Young: Now that we have our external manufacturing facility, or EMF, fully transitioned and an adequate supply from two aerogel manufacturing sources, there is less need for distributors and contractors to hold as much safety stock as they prepare for maintenance work and projects at our end
Don Young: We believe we are now reaching an equilibrium with respect to inventory held by our distributors and contractors, and that EI revenue will build throughout the year and reach a full year revenue level approximating last year's revenue of $145.9 million.
While there is some uncertainty in the energy markets
Don Young: We note that most of the major oil and gas companies, including important end users of our products, such as Exxon, Chevron, Shell, and Total, maintain their 2025 capital expenditure guidance during recent earnings calls.
Don Young: We believe that we have ample opportunities for profitable long-term growth in our core segments and new adjacent markets.
Don Young: Overall, we believe our energy industrial business is well positioned for a policy approach in the United States that promotes an intensified focus on energy and power generation.
We have been working since.
Don Young: 2023 to diversify our raw material supply chain and to create a second source for Aerogel.
Don Young: We have been successful in building a resilient and flexible supply chain for raw materials and aerogel, which is an important tool in an environment with fluctuating tariff regimes.
Don Young: We have broad optionality from Asia, Europe , and of course strongly from the United States to optimize raw materials for our Aerogel manufacturing plant in these Providence.
Don Young: For Aerogel Supply, we can optimize sourcing for energy industrial with the flexibility to shift production for U.S. customers to the East Providence facility and to serve the rest of the world from EMF.
Don Young: In addition to sourcing optimization for energy and industrial, we are proactively seeking to address potential terror frisks through pricing strategies and by working closely with EMF to lower product costs.
Thank you.
Don Young: In terms of financial stewardship, we have taken and are continuing to take decisive actions to simplify and streamline the company.
Don Young: As Ricardo will describe in more detail, the goal is to reduce fixed cash costs to 2022 levels to lower dramatically the revenue level required for positive adjusted EBITDA performance and to minimize CAPEX investments.
Don Young: Our target for the new cost structure is to reduce the revenue level required for a adjusted EBITDAB break-even to approximately $245 million.
Don Young: We believe the optimized cost structure will enable us to achieve the same $90 million adjusted EBITDA that we recorded in 2024 with approximately $360 million of revenue significantly lower than last year's revenue of $453 million
Don Young: In terms of CAPEX, our EMF relationship and flexible sourcing strategy allow us to create capacity in a modular fashion that can more closely anticipate the demand curve and to do so with minimal capital.
Don Young: We believe we have the resources to grow both of our businesses and to navigate an involving environment. These actions reflect our commitment to building a resilient, growth-oriented, and profitable business.
Don Young: Ricardo, over here. Thank you, Donald, and good morning, everyone. I'm happy to report another quarter on behalf of our team starting on slide three.
Ricardo Rodriguez: We delivered $78.7 million of revenue in Q1, which translates in to a 17% year over year decline. This reflects an annual revenue run rate of almost $315 million and fell in line with our expectations for the corner.
Ricardo Rodriguez: Our Energy Industrial segments revenue so modest increase of 2% year-over-year by coming in at $29.8 million, reflecting the dynamics that Don mentioned in his remarks regarding inventory, rebalancing at distributors and contractors.
Ricardo Rodriguez: Following 18 months of supply constraints and several project completions during the second half of 2024.
Ricardo Rodriguez: EV Thermal Barrier Revenue of $48.9 million, represents a 25% decrease year-over-year, as the demand aligns with a lower vehicle production schedule at our key customers.
Ricardo Rodriguez: We were encouraged to see General Motors continue gaining US market share and manage finished vehicle inventory level of EVs in a way that gives us confidence of a potentially more direct relationship between show floor sales and production demand for our parts.
Ricardo Rodriguez: In Q1, company level gross profit margins were of 29% and our gross profit of 22.8 million dollars to represent a 35% decline over the same quarter last year.
Ricardo Rodriguez: Our energy industrial business led with gross margins of 39% and our EV thermal barrier business had gross margins of 23%, which was below our target of 35%, driven by reduced fixed cost leverage on lower production volumes and pricing initiatives.
Ricardo Rodriguez: Early in the year, and as part of longer-term additional award negotiations, we may occasionally and strategically leverage near-term prices to exchange commitments with customers as we expand our business.
Ricardo Rodriguez: To the expect the impact of those price actions to lessen over time as the benefits of ongoing productivity initiatives that we are aggressively pursuing materialists.
Ricardo Rodriguez: Well, we believe that 35% plus percent growth margins are appropriate at higher volumes. It is reasonable to expect our margins in this segment to hover in the mid to high 20% range this year, due to our limited ability to absorb fixed manufacturing costs at lower run rates.
Ricardo Rodriguez: in combination with lower content per vehicle due to smaller battery pack size mix.
Ricardo Rodriguez: Our adjusted operating income of negative $2.9 million was enabled by an adjusted off-ex run rate of $25.8 million, and our adjusted even that was a $4.9 million in Q1.
Ricardo Rodriguez: As a reminder, we define adjusted evit as net income or loss before interest, taxes, depreciation, immortalization, stock based compensation expenses, and other items that we do not believe are indicative of our core operating performance.
Ricardo Rodriguez: Thank you for these adjustments we're meaningful and they included $286.6 million in the impairment of Plan 2 assets in states for Georgia, $9.8 million of restructuring and financing expenses linked to Plan 2.
Ricardo Rodriguez: $2.1 million of stock-based compensation, $5.8 million of depreciation and immortalization, along with $1.9 million of net interest expenses.
Ricardo Rodriguez: Negative net income in Q1 of $301.2 million or $3.67 per diluted share, assuming $82.2 million shares would have been negative $4.8 million or $6 per diluted share if we exclude the Plan II acid impairment and restructuring costs of the quarter.
Next, Alternative Casulo and our Valencia
Ricardo Rodriguez: Our operation is consumed $7.4 million of cash in Q1 by generating $5.6 million in operating cash flow and investing $13 million of CAPX.
Ricardo Rodriguez: Operating cash flow benefited from a $31.9 million reduction in accounts receivable that drove an $11.2 million reduction in networking capital, highlighting our efforts to free up cash from the operations.
Ricardo Rodriguez: In Q1, to reduce our interest expenses, we pay down over $20 million of debt, including $13.2 million dollars towards our revolving credit facility, and a $6.5 million dollar payment towards our term loan with mid-cats.
Ricardo Rodriguez: Bringing down our total debt on these facilities to $141.8 million at the end of the quarter.
Ricardo Rodriguez: Within our $30 million of CAPEX during the quarter, $7.7 million went towards the remaining obligations of Plan 2 and the rest towards Equipment in Mexico and Rhode Island, linked to future EV Thermal Barrier Launches, scheduled for later this year in 2026.
Ricardo Rodriguez: As we made progress in mobilizing the site in Georgia, we are now in a phase that positions us to recapture value from the equipment and building on site over the next several quarters.
Ricardo Rodriguez: We expect to spend an additional, up to an additional $20 million to finish the removal icing the site and close out all remaining open obligations.
Ricardo Rodriguez: At the same time, we are already selling equipment to a set of selected buyers before holding an auction for the remainder, and the plant is available to purchase through our broker.
Ricardo Rodriguez: We expect that these activities will enable us to more than recoup the incremental spend over the next several quarters.
Ricardo Rodriguez: We ended the quarter with $192 million of cash and equivalence, and shareholders equity of $314.8 million.
Ricardo Rodriguez: We believe that our balance sheet and operating performance in combination with a recent amendment to the minimal liquidity and adjusted even the covenants of our mid cap that facilities
Ricardo Rodriguez: gives us the resiliency required to keep executing and flexibility to continuously optimize our capital's structure.
Ricardo Rodriguez: Before walking you through our outlook for the second quarter of the year, we thought that briefly discussing our positioning and ability to mitigate the current international trade environment made sense on slide four.
Ricardo Rodriguez: Initially, we had a complicated chart that laid out the entire value chain of our business [inaudible]
Ricardo Rodriguez: We're affected by what terra freight as these crossed from one trade block to another, but we won't bore you with all of that Instead we think that it's worth remembering a few key points when it comes to our supply chain a straight policy of all over the next several weeks
Ricardo Rodriguez: The first one is that we are lucky to have operations on both sides of the two main trade blocks that have been delineated recently on either side of the US, China trade lines, and this enables us to generally produce within a region for the region.
Ricardo Rodriguez: The second point is that, at our current demand levels, we have been able to source most of our raw materials within the production trade block, and this caps our total 2025 tariff exposure, the less than $4.5 million on the raw material sent.
Ricardo Rodriguez: The theme has been working since the second half of last year to potentially make this even lower by switching our buying of silence and batting use for production in Rhode Island to US sources, and we believe that we can get this impact down to less than a million dollars if all goes as planned.
Ricardo Rodriguez: Our different business segments are also treated very differently given their geographical scope and the classification codes used to import and export the products across trade lines.
Within our Energy Industrial Business, [inaudible]
Ricardo Rodriguez: All of our products are included in Annex II, which is a list of specific goods that are not subject to the additional duties levied on imports announced on April 2nd of this year.
Ricardo Rodriguez: This list was developed to protect the sourcing of strategically important materials to the U.S.
Ricardo Rodriguez: And in our case, makes the total tariffs and duties of importing products from China to the US at up to about 50% of the products cost versus the roughly 174% the products not included in annexed to would practically pay by the time you include all general duties.
Ricardo Rodriguez: for the 30% that one would pay before the implementation of the 2025 tariffs.
Ricardo Rodriguez: Highlighting the importance of our mitigation work on raw material sourcing, flexible production and pricing.
Ricardo Rodriguez: Some of our main raw materials, like S-40 and Silicene Carbide, are also included in annex 2.
Ricardo Rodriguez: With 50 to 60% of our energy industrial product revenues coming from outside of the US, the pair of regime for that portion of our revenues remains unchanged.
Ricardo Rodriguez: For the remaining products sold in the US, we are leveraging our capacity in Rhode Island to produce over half of the product in this segment within the region using raw materials that are also predominantly sourced from the US, or also included in annex 2.
Ricardo Rodriguez: Our ED thermal barrier business is mainly focused in North America with aerogel production in the US and part assembly in Mexico. This makes our parts USMCA compliant and not subject to the tariffs.
Ricardo Rodriguez: We also have a Makila setup in Mexico that enables us to temporarily import inventory to Mexico as value to it and then have our customers exported without any trade duties or value added taxes.
Ricardo Rodriguez: For all revenues in this segment, our customers are the importers of record to wherever the vehicle or battery pack is being assembled, so we do not import or export any finished EV thermal barrier parts. And again, these parts are all USMCA compliant.
Ricardo Rodriguez: In summary, the current terrorist environment does not meaningfully affect our company or operations thanks to the strategic importance of what we produce.
Ricardo Rodriguez: What we procure, and the efforts from our team to diversify our supply chain.
Ricardo Rodriguez: The uncertainty and trade policy may, however, impact a man for new vehicles and energy capital projects by affecting overall sentiment, and that is what we are focused on developing additional resiliency from.
Ricardo Rodriguez: Next, let's please turn over to slide five and discuss our Q2 Outlook.
Ricardo Rodriguez: With what we know today, we expect to deliver a range of 70 to 80 million dollars of revenue.
Ricardo Rodriguez: This would translate into break-even to $7 million if I just said Evita, which would drive a net income loss of $4 to $11 million or $5 to $13 cents per share.
Ricardo Rodriguez: CapEx to support our operations in Rhode Island and Mexico will continue being front-loaded to the first three-quarters of the year and we expect to spend less than ten million dollars aiming to still manage this to less than twenty-five million dollars for the year.
Ricardo Rodriguez: without including any of the remaining costs to the mobilized plan 2.
Ricardo Rodriguez: We realize that this continues to represent the lower level of the man relative to where we were in the second half of last year.
Ricardo Rodriguez: With the facts in front of us, it is easy to think of a baseline expectation for the year at the low end of our expected Q2 revenue run rate and our Q1 adjusted EBITDA run rate so at least $280 million of revenues and $20 million of adjusted EBITDA for the year.
Ricardo Rodriguez: When our visibility for the rest of the year improves, we will provide a more detailed expectation for the remainder of the year.
Ricardo Rodriguez: Turning over to slide six and returning to the topic of protecting our profitability in cashflow generation.
Ricardo Rodriguez: Even though our Q1 results in and totally reflect the full benefits of the fixed cost reductions that we made in mid-February of this year, we'd like to emphasize that we have further reductions in progress that will continue improving our profit potential and the amount of revenue required to deliver positive operating income or even.
Ricardo Rodriguez: On an annualized basis, our goal is to keep protecting the PNL from a broad range of demand outcomes, and ensure that we are delivering at least $20 million about just at Yvita on annualized revenues of as low as $250 million.
Ricardo Rodriguez: or over 20% lower than our Q1 run rate of $315 million.
Ricardo Rodriguez: In addition with additional process improvements, material savings, role expansions and reorganization, we believe that we are on a path to put the company's potential adjusted EBITDA on the green line that is on the chart on the left side of this slide, which represents various potential annualized EBITDA levels at various annualized revenue levels.
Ricardo Rodriguez: The red line shows the evita that could be expected from the fixed cost structure that we were carrying at the end of last year. The blue line represents the fixed cost structure that we got to in March of this year. And the green line represents a target that we're pursuing as we enter the second half of the year.
Ricardo Rodriguez: If we're able to meet this target, we'll have a business that is able to deliver an additional $65 million of adjusted evita at any revenue run rate relative to the fixed cost path that we ended last year on.
Ricardo Rodriguez: On the right side of this slide, one can see how our EBIT or operating income breakeven revenue level has come down from $360 million to $320 million dollars of annual revenues. And we are now targeting to bring this down further to approximately $270 million dollars of annual revenues.
Ricardo Rodriguez: That would mean a $90 million reduction in the revenues required to achieve breakeven operating income.
Ricardo Rodriguez: In our minds, this is how we control the company's destiny in the near term environment of demand uncertainty by driving what we can control versus worrying about the broader macro environment.
Speaker Change: Turning over to slide 7 and before handing the call back to dawn, I think that it's worth emphasizing and remembering why we remain so energized executing our strategy of leveraging our technology into our energy industrial and need eternal barrier segments.
Speaker Change: All one needs to do is think beyond the current day, see the longer term trends and think about a potential scenario for 2027.
Speaker Change: Well, we navigate through the uncertainty of 2025. We keep our eyes focused on what we can deliver in as little as two years' time thanks to the asset base that we manage, the customer relationships that have been developed over more than 20 years.
Speaker Change: And in the case of our ED thermal barrier segment, a new set of OEM awards that are now tied to more realistic growth expectations with meaningful launches ramping up in 2026 and 2027.
Speaker Change: These new all-EMs can drive over $200 million of additional revenues in as early as 2027.
Speaker Change: If we look at the supply capabilities that we now have within our energy industrial segment, we believe that with our current products and through reaping the rewards of sales investment in the new geographies and resourcefully exploring adjacent markets,
Speaker Change: We can growth that business to over 225 million dollars of annual sales.
Speaker Change: For our EV thermal barrier business, if we take the current revenue pipeline of all awards on hand that face value, this segment has the potential to deliver over $700 million of revenue in 2027.
Speaker Change: Applying a 50% discount to that would still make it a $350 million business that represents 75% growth over the annual rate that we delivered in Q1 of this year of $196 million.
Speaker Change: As the team continues winning in the marketplace, taking share from other insulation materials in the energy infrastructure site, and winning additional awards from the world's best automotive OEMs with our EV thermal barrier business.
Speaker Change: We will continue improving our market and financial positioning with a now-linear cost structure that should help us do justice to the asset base and the talent that we manage.
Speaker Change: We look forward to keeping our heads down, executing over the next several quarters and managing for actively what we can control to capture more than our fair share of returns on the capital that we've invested as sentiment improves.
Don Young: And with that, I'm happy you turn the call back to Donnery.
Don Young: Thank you, Ricardo. Before we move to Q&A, I would like to reiterate that we believe that electrification through this decade will be a major driver for both our thermal barrier and energy industrial businesses.
Don Young: The goal for the energy industrial team is to create shareholder value by expanding the base load of revenue and profit for the company.
and they are choosing Aspen as a key technology partner.
Don Young: These contracts add to our portfolio of long-term growth programs and position us for continued platform expansion with both existing and new OEMs.
Don Young: With the Strong Foundation in place, we are confident in our ability to adapt, innovate, and deliver both critical solutions to our customers and durable value to our shareholders.
Bruno, let's turn to Q&A please.
Speaker Change: Thank you. Ladies and gentlemen, if you'd like to ask a question, please press star-followed by one on your telephone keypad.
Let's start followed by one on your telephone keypad.
Speaker Change: If you'd like to cancel the question, the star followed by two, and please also remember to unmute your microphone when it's your turn to speak.
Speaker Change: Okay, we do have our first question comes from Eric Stine from Craig Aillum. Eric, your line is now open.
Thank you. Thank you. Thank you.
Thank you.
Speaker Change: Okay, I'll ask Eric to go back into the queue. We're not receiving any audio from your line.
Speaker Change: evaluating what to do with the Georgia facility. You know, is there some residual value that you guys might think about monetizing, thinking that just hang on to it and keep it for a little while. Just want to get a sense of what you're planning to do with that facility here.
All right.
The question matches what I was thinking.
is on what you were asking. So,
Speaker Change: You're mentioning what our plan is in the near term for the plant in Georgia, right? Georgia, whether we want to hold it or just get valuation. No, I mean, we've been pretty clear on this since going back three or four months ago on this.
Speaker Change: That we want to just capture the value from it as soon as possible. I mentioned in my remarks that we're already looking to play some of the equipment with a few strategic buyers.
Speaker Change: And then we'll hold an auction for the remainder. And then you should see the plan get listed for sale here pretty soon. And we do have quite a bit of interest since it's a pretty unique asset in a very good location.
Speaker Change: and our goal is just to recoup cash from those assets here in the near term.
Speaker Change: It's obviously tough to sell stuff in the environment that we're in, but that's why we're sprinting to get as much of its sold as soon as possible.
Speaker Change: Okay, great. And then with the oil gas business, you know, the the imagery clearing, I guess what signals are you seeing from your customers at this point, you know, that have changed in the last, you know, call it four to six weeks. I give you comfort that the imagery clearing is fully wrapped up.
We have a reasonably clear view of our...
Speaker Change: The supply that distributors and contractors hold, not perfect, but a reasonable...
Speaker Change: in that time frame that you're talking about really over the course of the past couple of months at least. You know what I just compare 2020.
Where we are here in 2025, relative to 2024.
Speaker Change: We are basically on par with the first three quarters of last year, and yes, we had the gangbuster Q4. We had some extra project work in that particular quarter that came to an end during the quarter. We see project opportunities as we go through the year.
Speaker Change: and our expectation is that we will now that we've reached that equilibrium, I think, in the de-stocking process in the inventory of arts.
Speaker Change: Distributors and Contractors that will build revenue over the course of the second half of this year and end up a year similar to our revenue levels from 2024.
Speaker Change: I'll hop back and tune and circle back. Thanks, Chris.
Thank you, come [inaudible]
Speaker Change: Our next question comes from David Anderson from Barclays. David, the lunch is now open.
David Ednerson: Thank you, good morning, gentlemen. So I have a specific question on several barriers and kind of a broader strategic question. So in your commentary, you said lower content mix, content mix per vehicle.
David Ednerson: I'm just curious, is that a trend you're expecting going forward? Is that sort of a one quarter thing? And then sort of a related to that, you talk about the next gen LFP
Speaker Change: I would assume that's less revenue per vehicle as well, just because of the...
David Ednerson: The nature of it, can you just walk through that for a few minutes with me? Thank you.
Thank you.
Speaker Change: Yeah, definitely. I mean, this is exactly why Content Proveicle is the wrong metric to apply to us as a supplier to the OEMs, right? We've seen this metric.
Speaker Change: used by the Tier 1s broadly and they get penalized when the content for vehicle goes down.
In our case, it's a very different dynamic because...
Speaker Change: As you know, the form factor of the cells inside of these battery packs are ultimately what drive the content for vehicle and so
Speaker Change: This will definitely go down over the next several years and quarters as we launch more prismatic cell battery pack products versus the pouch cell vehicles that we've been generally supplying up to this point.
and, you know, the content for vehicle has drifted from…
Speaker Change: Over $1,000 a vehicle, right now we believe we are sitting at about $800 a vehicle, and if you recall the prismatic cell, it could be as low as $200 to $250 per vehicle.
Speaker Change: So what we're more focused on is really just making sure that we consistently deliver 35% gross margins at a reasonable run rate.
Speaker Change: and that we pay back all of the capital that we're deploying, and it's actually something pretty attractive in that within the prismatic parts that have the lower content for vehicle.
Speaker Change: In the sense that we can share the equipment across various different OEMs which will enable us to pay back the CAPEX much better than how we've been paying back the CAPEX on the current pouch programs.
So yeah, I do think just in general C.P.V.
Speaker Change: is not really indicative of what to expect from us when it comes to our ability to generate margins and pay back the capital that we're deploying.
David, I would just add 100.
Speaker Change: David, I would just add one point to what Ricardo said.
Speaker Change: I would think of some of these new form factors and chemistries as being additive and not really replacements necessarily for our current businesses and expanding market. And we anticipate, we've been dissipated this as we bid on these projects.
Speaker Change: We're not particularly surprised by this phenomenon but again I'd like for you to think about it as a growing market as opposed to kind of a zero sum game across different product forms.
Speaker Change: I understood an expanding market a number of different ways, and you have other opportunities there. I totally understand that. My bigger security question is sort of around the US market versus the
European Market for Your Business. [inaudible]
of this. Obviously GM is lower direct expectation for the year.
Speaker Change: A lot of headwinds, I'm sure there's a lot of uncertainty and jam on the EV program.
Speaker Change: Just curious, just looking at looking across the sea here into Europe and those areas there, I saw on your chart there, Mercedes Volvo, a number of those other players over there. What's the opportunity for European expansion, and are you thinking about maybe shifting that to Europe , because that would seem to be at least a more opportunistic market, at least over the next three and a half years, I would think. Thank you.
Speaker Change: Yes, so far those customers have not been averse to purchasing product made in Mexico.
Speaker Change: and we would prefer to supply that from Mexico with somewhere housing in Europe .
Speaker Change: just to fully leverage what we've spent and invested in Mexico. And so we, I think expanding
Speaker Change: If you don't have enough of a baseline set of the man to start that with, we see Labour cost in Europe are nowhere near comparable with Mexico's and
Speaker Change: And so we think that especially as we try to use the same equipment for all these programs, we think that supplying that out of Mexico makes the most sense.
And David, I would just add to that that...
Speaker Change: You know, this is the set of customers who are dedicated to electrification and over that time period that you that you mentioned will help us diversify and be a little less concentrated on our work here in the United States.
Speaker Change: These are good companies. We've worked extremely closely with them technically and commercially and we're very optimistic that we'll have a great business in Europe .
Okay, great. Thank you very much, Tom. Appreciate it.
Thank you.
Speaker Change: Our next question comes from Eric Stine from Kirk Helom, back on the queue, Eric.
Speaker Change: You're letting them open. Do you have any information for many of my people about that? That push, the increase point in data that was for Eric? Eric, I'm right through. Can you hear me?
Speaker Change: for funding for your government. It is absolutely a sick offer.
One of the things we did was. Eric
Speaker Change: I think we're receiving any audio from Eric at the moment, so Eric, I'll just ask you to press start two and start one to come back into the queue. Thank you.
Speaker Change: Our next person in line is going to be Leane Hayden from Canacord. Leane, your line is now open.
Leanne Hayden: Morning, everyone. Thanks so much for taking my questions. Hey, how's it going? Just to start, can you please talk about any conversations or traction you may have seen with any South Korean EV OEM?
Speaker Change: I mean, they've been in the pipeline for a while and they're obviously interested in the product for self-to-self work. They did have a meaningful number of launches here recently.
Leanne Hayden: So, you know, in order to get on those vehicles, one would have had to have a product in 2019 or 2020.
Leanne Hayden: But our team is actively engaged for the next generation and some of the potential refreshes of those launches either directly with them or with the cell manufacturers.
Leanne Hayden: Yeah, I would just emphasize that that we are very close to both.
Leanne Hayden: both LG and to Samsung on the cell manufacturing side of it. The Korean OEMs are good at what they do and we're determined to partner with them and have them be a customer.
Thank you.
Speaker Change: Okay, thank you, that's very helpful. And just additionally, how quickly can we expect any additional OEM wins to gather momentum and impact your P&O?
Speaker Change: Yeah, I mean, that's what we were alluding to there on slide seven when we think about 2027 and in my prepared remarks I mentioned that if we look at some of the additional OEMs that we are not currently in production with those can add up to over $200 million of revenues in 2027.
Speaker Change: And we think that that's pretty meaningful growth, especially as the OEMs that we're currently supplying could keep growing by then as well.
Speaker Change: and then a lot of the quotes that we are looking on now and some of the additional awards that we have now have pretty early 2020 start production dates as well.
So it is fair to keep expecting the... [inaudible]
Speaker Change: The demand curve to get built up here from 2027 onwards.
from Muller-Oliens.
Okay, got it. Thank you very much.
Speaker Change: We currently have no further questions, so I'd like to hand the call back to Ton Young for closing remarks. Over to you.
Tom Young: Thank you, Brenna. We appreciate your interest in Aspen Aerogels and look forward to reporting to you our second quarter results in early August . Be well. Have a good day. Thank you.
Thank you. Thank you.
Tom Young: Ladies and gentlemen, this concludes today's call. Thank you for joining.
Have a good day.
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