Q2 2025 Aspen Aerogels Inc Earnings Call
Speaker #1: Excuse me , ladies and gentlemen , thank you for your patience . The call will begin momentarily . Again , thank you for your patience .
Speaker #1: The call will begin momentarily . Good morning . Thank you for attending the Aspen Aerogels Incorporated Q2 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 .
Speaker #1: I would now like to turn the conference over to your host , Neil Neal Baranosky , Aspen's Senior director , Head of Investor Relations and Corporate Strategy .
Speaker #1: Thank you . You may proceed , Mr. Baranowski .
Speaker #2: Thank you . Megan . Good morning , and thank you for joining us for the Aspen Second Quarter 2020 financial results conference call .
Speaker #2: With us today are Don young , president and CEO and Ricardo Rodriguez Chief Financial Officer and treasurer . The press release announcing Aspen's financial results and business developments , and the slide deck that will accompany our conversation today , are available on the investors section of Aspen's website .
Speaker #2: 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 .
Speaker #2: 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 These risks and uncertainties include the factors identified in our filings with the SEC .
Speaker #2: Please review the disclaimer statements on page one of the slide deck , as the content of our call will be governed by this language .
Speaker #2: I'd also like to note that from time to time , in connection with the vesting of restricted stock units and or stock options issued under our long term equity incentive program , we expect that our section 16 officers will file forms for us to report the sale and or withholding of shares in order to cover the payment of taxes and or the exercise price of options .
Speaker #2: I also want to highlight a few near-term IR engagements . On Monday , August 11th , Ricardo and I will be hosting one on one virtual meetings at the Oppenheimer 28th Annual Technology , Internet and Communications Conference on Tuesday , August 12th and Wednesday , August 13th .
Speaker #2: Don Ricardo will be hosting one on one meetings at Canaccord Genuity s 45th Annual Growth Conference at the Intercontinental Boston Hotel . Both conferences will also feature fireside chats .
Speaker #2: The live webcast of these presentations can be found on the investor section of Aspen's website . I'll now turn the call over to Don .
Speaker #2: Don . Thanks , Neil .
Speaker #3: Good morning everyone . Thank you for joining us for our Q2 2020 earnings call . My comments will cover our CFO transition , the expected impact of simplifying and streamlining our organization , our operating performance , and our view of the current environment and second half outlook .
Speaker #3: Ricardo will amplify these points with his comments . We look forward to your questions . As we announced in our Q2 earnings press release release , Ricardo plans to step down from his position as Chief Financial Officer at the end of the third quarter .
Speaker #3: Ricardo joined the company in November 2021 as the Chief strategy Officer , and assumed the role of CFO in April 2022 . He has been an invaluable partner to me these past years .
Speaker #3: He has elevated our game in many ways , which has directly resulted in our strong balance sheet and overall financial position . I'm deeply grateful for Ricardo's many contributions to Aspen , and have no doubt that he has great things ahead in his career .
Speaker #3: We are pleased to announce that Grant Baillie will become Aspen's chief financial officer at the end of the third quarter . Grant currently serves as our chief of staff to the CEO and our VP of Corporate Strategy and Finance .
Speaker #3: He has been with Aspen since 2021 and has played a pivotal role in shaping our financial strategy , including our midcap financing and our recent cost optimization efforts .
Speaker #3: Grant will be returning from parental leave later in August , and will continue to work closely with Ricardo and the senior executive team to ensure a seamless transition .
Speaker #3: Our core objective is to build a strong , profitable , capital efficient business . The focus during the first half of the year was to streamline and simplify the organization , to optimize our cost structure , drive profitability and build resilience .
Speaker #3: We have made significant progress , as shown in slide two by the red , blue and green lines . We have shifted our fixed cost structure to drive profitability at lower revenue levels .
Speaker #3: We have removed approximately $65 million in including lowering OpEx back to 2022 levels on a run rate basis . We have also structured the company to require minimum capital expenditures , the aerogel manufacturing facility in Rhode cost , and our EMF supplemental supply are positioned to provide the capacity to meet significant revenue growth in the future and to support a flexible sourcing strategy aimed at mitigating risk associated with the potential for fluctuating tariff scenarios .
Speaker #3: It is clear that US based OEMs value domestic supply , and we are well positioned to serve them in an environment where the growth rate in the EV market is facing regulatory headwinds , especially in the in the US , and the energy sector overall is in flux with a turbulent global economy .
Speaker #3: We have structured our teams and operating resources to build a resilient , growth oriented and profitable business . In Q2 , we delivered revenue , gross profit and adjusted EBITDA at the high end of expectations .
Speaker #3: The performance was led by our path and thermal barrier business , which has been holding steady here in Q3 . Our energy industrial segment is currently experiencing a slowdown in project activity , which traditionally contributes around 40% of the segment's total revenue .
Speaker #3: This has been particularly evident in our subsea market , dating back more than ten years . Subsea revenue cycled between 5 and $15 million per year in 2023 and 2024 .
Speaker #3: It averaged approximately $30 million per year . While the whole of the energy industrial business is behind expectation , weak subsea is the main reason we are having trouble keeping pace with last year .
Speaker #3: If there is a bright spot in an otherwise unsettled energy environment , we are seeing key customers such as Technipfmc winning subsea projects in 2025 that we believe will translate into attractive project revenue for us in 2026 .
Speaker #3: Similarly , after strong LNG revenues in 2024 , we are seeing a dip in LNG revenues in 2025 . But like the subsea segment , we are seeing opportunities for attractive LNG project work in 2026 .
Speaker #3: Overall , we believe our energy industrial segment is well positioned a policy for approach in the States that promotes an intensified United focus on energy and power generation .
And our EV thermal barrier business had gross margins of 31%, which was still below our Target of 35%, but a full 8 percentage points higher quarter over quarter. Thanks to higher part, production volumes and various productivity improvements in Rhode, Island and Mexico.
Our net loss of 5.2 million was driven by an adjusted Opex, run rate of 24.6 million. And there are just that even that was of 9.7 million in Q2.
Highlighting 1 of Don's earlier points, as we've worked to lower our fixed cost structure. It was encouraging to see adjusted. EV beta nearly double quarter of a quarter by 4.8 million on revenues that were $100,000 lower.
If you recall, the high end of our Evita guidance for the quarter was of 7 million. So we exceeded that by 38%.
As a reminder, we Define adjusted EV beta. As net income or loss before interest taxes. Depreciation amortization stock-based compensation expenses and other items that we do not believe are indicative of our core operating performance.
In Q2 these adjustments were meaningful and included $1 million in impairments, linked to some of them related equipment that are planted in Rhode Island. $1 million of restructuring costs linked to our recent Opex and Manufacturing overhead reductions
1.9 million related to the mobilizing plan too, 3.2 million of stock based compensation.
5.8 million of the depreciation and amortization along with 3.9 million of net interest expenses. Our net loss in Q2 was of 9.1 million or 11 cents per diluted share assuming 82.2 million shares.
Next altered, the cash flow, and our balance sheet. Our operating, our operations consumed 16.8 million of cash in Q2 by requiring, 3.9 million in operating cash flow and investing 12.9 million of cat-backs.
Operating cash flow benefited from a 4.6 million reduction in inventories as we continue to free up cash from the operations by focusing on every element of working capital.
In Q2 to continue reducing our interest expenses, we pay down 6 and a half million dollars of our Term Loan with midcap.
First, at the end of the quarter.
Within our 12.9 million of capex, only 3.6 million went towards remaining obligations at plan 2, which was meaningfully lower than last year. Last quarters plan to expenses of 7.7 million
The rest is linked to equipment in Mexico and Rhode Island. For Ev thermal barrier launches in the second half of this year in 2026.
As we finish closing out remaining obligations in Georgia for plan 2, we expect to recoup meaningful value from these assets over the next several quarters. The equipment is expected to bring in approximately 25 million dollars over the next 3 quarters. And the plant is available to purchase through our broker and we expect that to be sold for over 25 million dollars. The proceeds from the sale of these assets will bolster our balance sheet as they'll be used to prepay the term loan and reduce the company's interest expenses further.
We ended the quarter with 168 million of cash and equivalents and shareholders Equity of 308.8 million.
We believe that a strong positive net cash position in combination with meaningful enhancements and profitability. Thanks to our lower fixed cost structure and tight controls around. Networking Capital position, the company to keep executing without needing any additional capital.
As we work our way towards the end of the year higher, Evita levels in combination, with lower restructuring, charges freeing up additional working, capital no more expenses. Linked, the plan to and are contained capex plans, would enable the company's cash position to remain around the current levels. Even after paying down another 13 million of debt,
the asset sales that I mentioned earlier. Linked, the plan 2 would further improve the net cash position by at least 15 million and give the company added strategic flexibility in the future to refine the capital structure.
Next, let's turn to Slide 4 to review our outlook for the second half of the year.
With what we know today, we expected to deliver a range of 140 to 160 million of Revenue in the second half of the year.
Added to the actual, the first half of the year translates into $297 million to $317 million of revenue for the year.
This would translate into $20 to $30 million of adjusted EBITDA down in the second half of the year. So, potentially double what we delivered in the first half.
Echoing some of the ones earlier remarks. This highlights, the benefits of the lower fixed cost structure that are that our team has been working on implementing.
Adding the fifty million dollars of adjusted Eva that we delivered in the first half would position the company to deliver 35 to 45 million of adjusted Eva for the year.
Net income for the second half of the year is expected to range from a loss of $7 million, or negative $0.08 per share, to positive net income of $3 million, or $0.04 per share.
Capex to fund their operations in Rhode, Island. And Mexico will continue being managed to less than 25 million for the year without including the remaining costs to the mobilized plan too.
This guidance for the second half of the Year implies a potentially higher level of revenues than what we were expecting earlier this year. And it is driven by stable EB production volumes at GM
We believe that even after the 7500 tax credit to Consumers ends on September 30th in the US, the market share, gains of vehicles, like the Chevy Equinox and various Cadillac EVS cannot be ignored.
If there is a near-term surge in sales, as we get closer to the end of September Q4, and early 2026, could very well be times to rebuild inventory levels, and that would drive stable demand for our. Our EV thermal barrier parts during the entire second half of the year.
With this thing, my last earnings call at Aspen. I would like to sincerely. Thank Dawn our board of directors and the rest of the Aspen team.
I'm also grateful to the broader investment community for making my nearly four years' tour of duty at Aspen such an active, fulfilling, productive, and rewarding time.
I leave the team convinced that Aspen is well capitalized and positioned to deliver on its strategy. And take with me many fond, memories of ideas and discussions with you that shaped our thinking around the company and how to make the most of our resources.
Grant joined the team at at Aspen shortly before I did.
He has been more than a right-hand man to me as we led the finance function together with Santos, Neil, and Jack.
Love of its weight.
In all we have a productive team that includes some of the best Finance talent that I have worked with.
And I'm sure that Grant will transition into the roles seamlessly as he recruits from parental, leave to pick up the Baton at the end of the quarter.
And I'm very excited for all of you to get to meet him over the next several weeks.
Now, I'm happy to hand the call back to Don for his closing remarks.
Thank you Ricardo. Before we move to Q&A, I would like to reiterate that we believe that electric electrification through this decade will be a major driver for both, our thermal barrier and energy industrial businesses with a 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.
Our decisive actions this year, reflect our commitment to building a resilient growth oriented and profitable business.
Megan: Uh, let's turn to Q&A, please.
Thank you.
If you would like to ask a question, please press star. Followed by 1 on your telephone keypad. If for any reason you would like to remove that question, please press star followed by 2.
again, to ask a question, please press star 1
As a reminder, if you're using a speaker-phone, please remember to pick up your handset before asking your question.
We will pause here briefly to allow questions to register.
Our first question will go to the line of Eric Stein with Craig Hallam.
Eric, your line is open.
Hi Ricardo.
Hi Eric. Hey, Eric. Good morning. Hey. Um, maybe, uh, gosh, a lot of things here. Um, maybe to start with energy industrial, I know that in q1. Uh, you did call out distributor the stocking, um, but it it did seem like at least the thought then was that, you know, that was relatively short-term, uh, Dynamic. Um, and then this quarter. I mean, it it's, it seems pretty clear that that, that's ongoing. Um, any updated thoughts? I mean, it doesn't sound like, uh, you believe that this segment grows this year and that'd be pretty tough given the start, um, you know, but just maybe, where do you think Distributors stand on this?
Thanks Eric.
we've made a dent uh, in in in um, those inventories, in our Distributors, but we have uh, still a ways to go
We our project revenue is just lower than we anticipated. I think we could have done a better job coming into the year uh seeing that pipeline frankly and um but we are as I said in my comments,
We see good activity in some of our, uh, partner companies and customers I mentioned Technic. FMC for example, um, who are winning projects here in 2025 that we do think will translate into revenue for us in 2026 and and Eric, I I would also just add
We have seen this sort of cycle, uh, before of course, where uh, we we have a, a surge in in Project revenue and and then and then a dip. And and again, we could have done a better job anticipating this, I think. But having said that, we're we're confident that we'll, we'll work our way out of it. Work through those distributor inventories and win, our fair share of projects and, and get this thing growing again, again, um, at at gross margins that, um, have been consistent with our recent performance.
Yeah, and I would think this this go around that was made worse by the fact that it is Supply constrained, right? I mean Distributors not used or, you know, very long lead times that all of a sudden, you know, no longer the case.
It's a, it's a, it's a great Point. Let's face it, we were we, we were capacity constrained inconsistent capacity for what 5 5 or 6 quarters, and um, just turning the corner on that. We met again, we we might have been able to anticipate that a little bit differently. But again, I I, I think, uh, our our, our EI Revenue in this, in the second half will be somewhat on par with what it was, uh, in in, in the first half as we work through these these issues.
You know, is think about the the the the tax credit expiring. Um,
You know, where do you see things as you stand today? I mean do you believe that third quarter? Um,
You know, sales, there means pretty steady volumes for you, over the back half of the year or maybe how do you think that the, you know, um, third quarter, fourth quarter might be weighted in that segment?
Yeah, I mean, I think uh, just going back to my remarks there on on this 1, Eric, I I do see, uh, more optimistic view in Q4 than than 1, would think, just based on the tax credit going away. But if you look at how much market share GM has gained mostly at Tesla's expense within the EV Market, we got a we have a couple slides in the appendix of the deck.
That show, you know, just how much of a gain GM has made and I don't think they're going to let go of that market share, right? I mean, um, it's been pretty clear.
The GMS, uh, longer term Northstar is to have a high EV mix and they'll be driving that, uh, with or without the the 7500 credit.
and if you look at how much market share they've gained on the coastal markets here in the US,
Um, yeah, I just don't think that that's something that they're ready to walk away from.
Um, given that the demand is clearly there.
Yep. Okay, um, maybe just sneak in 1 last 1 in just to clarify. So, uh, Ricardo did you unclear? Uh, whether or how much is left to spend for plant 2? Um, you know, if it's largely wrapped up or if there's more to go to get it in a position to monetize it.
Yeah, this 1 is pretty much wrapped up. I mean, we have less than 10 million dollars to spend. But then as I mentioned, we believe that we can recoup
um, over 50 million dollars here, over the next several quarters.
um, so I think we've rounded the bend, um,
We actually paid out the the last large invoice towards plan 2 um here in July and um it was booked in June and and we're well past it and uh looking to move on from that.
Okay, thank you.
Anytime.
Thank you, Eric.
Our next question, goes to the line of Colin Rouge with Oppenheimer.
Calling your line is open. Thanks so much.
Thanks so much guys. You know, can you talk about design and activity with new oems and and how that's trending here over the last uh, quarter or 2? And and when we might start to see some real meaningful incremental revenue from uh EVMS uh, you know, either later this year or next year
Yeah. Colin I mean this you reading the Press every day. There's quite a bit of flux around the the product plans at these automakers says they're all reacting to, you know, some pretty drastic policy changes.
Um,
over the past several weeks.
But we do see when you look at the pipeline, we do see a couple of anchor oems that are going to drive incremental uh, revenues within the thermal barrier segment.
Over the next 6 quarters. Uh, the main ones are stellantis, like that's not changing the policy in Europe, does not changing.
The volumes there are expected to ramp up. Um,
Here in the fourth quarter of this year and next year and then we have Daimler in 2027.
the other oems are going through uh either a process of assessing, their timeline or switching cells from uh mostly away from North Wales over to a different cell supplier and we're still very well in the mix but that's obviously pushing the timing of those launches to
the second half of 2026 and and some of them potentially even later.
When it comes to new coding activity, I mean the team is as busy as ever. We, um, the trend that we had here in q1 of record level prototyping and quoting activity here in this building that Don. And I are in right now is still holding up.
But you obviously need to be realistic and look at what the longer term product pipeline of these oems is. They're all
Just reacting to the recent policy changes in the US. And well, at the same time, coming up with a way to compete in China, which has, you know, an over 50% EV mix.
We're seeing a Resurgence of EVS as well. So, as we,
Supply, some of these European oems, we do see that we're very well positioned in Europe to continue.
Adding wins definitely next year and you're going to see the result of um, a lot of this prototyping and development, work, and Technical sales work that the team is doing today.
Go. And I would just add, I was with the senior leadership of ACC in Europe at the end of, uh, end of Q2 and and, and they are making strides uh, with their productivity and quality, uh, of making sales for the European market, which is in, which is encouraging for us.
Thanks so much guys. And then from an R&D perspective, you know, obviously, you guys have made some pretty meaningful Innovations in and around. Um, you know, the product development for the various battery applications. I'm just curious about how much, um, you know there there can shift in terms of what you're offering or, you know how much you can change or improve the offering and out to oems. As we see kind of optimizing, you know, or optimizing, you know, vehicle designs as well as Evolution on the battery geometries and chemistries, you know, I guess, how should we think about, uh, the product cycle for you guys. And, and when we might start seeing some some meaningful shifts in that,
We've done uh we've done work with uh with our existing oems and and with prospective oems as they work through their, their chemistry, um uh expansions if you if you will and um I'm in General Motors is a good a good example, um, of that. And our R&D group and and um, our Design Group our engaged.
Uh, with Asia based companies European based companies and and the US uh oems um as well.
Trying to stay Uh current and ahead, and really being thought Leaders with um, with with with these companies. Um,
You know, Colin I would just just just tangential to that.
you know, we are
It is interesting. We are the, the, the emphasis on having us-based Supply uh,
Of these materials.
Has been, um, a positive for us. I, I think the oems, and I said this, in my prepared remarks, um, view this favorably, and as an important element of our of our ability to to supply, uh, domestic product here in the us as well.
Yeah, maybe just to add a comment, you know, the the requirements are no longer moving Target at all and that makes R&D and all the development and the technical sales work way more efficient.
And so I think the company's going to benefit from that greatly here.
Given that we know what the requirements are pretty clearly and and how we can meet them relative to any any, any potential option that the oems could be looking at.
Incredibly helpful, guys. Thanks so much.
Thank you. Colin. Our next call, uh, question will go to the line of Ryan Finks with B, Riley. Ryan, your line is open.
Hey guys, thanks for taking my questions. Um, I I'll ask 1 follow up on energy industrial. You you've talked about the potential 27 Revenue, buildup of 175 million, or, or even higher with potential expansion areas. Just curious given your comments earlier. Don if, if you still feel confident in the path to get there and maybe if you could give us a sneak, you know, preview of how you're thinking about growth and and 2026, given the activity, you talked about, uh, you know, with subsidy and LNG, uh, projects starting to show again.
Yeah, look, I I our our our, um, our goal right now.
At high gross, gross profit margins. And and um, we we as you know, we we've increased those profit margins um significantly combination of productivity efficiency and yields on our end and um and our and our EMF transition that we made uh and also some price increases along the way. So, so again, we believe we're in a in a strong position to reignite growth in that segment in 2026, both revenue and and profitability.
Appreciate that Don. And, and then Ricardo, um, you touched on it. But curious what conversations have been, like, with your non-gm, customers that you've already signed up and have been awarded and maybe when we could expect to see some of those shipments start to show up in a meaningful way for Aspen.
Yes I as I mentioned earlier, I think you're going to see in Q4 some for ACC and definitely next year that will ramp up and then Daimler will become a meaningful 1 in 2027.
And, you know, there are several with other oems that we haven't yet. Announced that could contribute in 2027 as well.
Got it. Appreciate it guys. I'll turn it back.
Thank you.
Thank you, Ryan.
Our next question will go to a line of David Anderson with barklay.
David. Your line is open. Thanks uh good morning. Um so when you were uh in your in your remarks you were talking about lowering your fixed cost by 605 million.
um, this quarter, I was just kind of curious, you know, going forward um in the thermal barrier Revenue in thermal barrier business, how quickly you can adjust costs kind of going forward because I'm just looking at the IHS forecasts, which are essentially calling for
Gmz V production to stay relatively flat.
I'm just wondering what happens if that is materially lower. How quickly can you adjust those costs? Is it is, it are you at a point now where you can kind of move things around and within a quarter, you can kind of get back to those, same kind of 35% operating margins.
1 1 Thing Dave though. Um,
Taking, um, the 65 million. Um, that was an Endeavor that
took place both in q1 and, and in Q2. Um, and, um, so so, but to your point, look, there's no question that for us to be able to achieve 35%, uh, gross margins. On the thermal barrier business. We do need some volume, um, to to, to absorb those, those fixed costs. We think what we're in a in a good position, um, today from a cost structure, um, point of view to be able, uh, with what we see in front of us to, um, maintain those targets of 35%, we were pretty close to that, uh, here in, in Q2 reporting here in Q2. And, uh, we, we think that those are very realistic targets. Yes, we have room around the edges to continue, um, to finetune our, our cost structure, uh, depending on what we see going forward. But at this moment we feel like we we've we've done a, we've done a lot of hard work, we've made a lot of tough decisions and uh but we're in a good good position.
Right now.
And and you're looking at this IHS forecast that they're putting out there. You you feel confident though those are are are pretty close to kind of what you're hearing from GM cuz I'm just a little surprised. They're not more severe in terms of the declines are expecting over the next 4 quarters.
Yeah, the customers are always higher than IHS. So we've had to make our own calls here. Um, but yeah, no, I mean, I think when we look at IHS today, we do see that as a realistic scenario. And then, the team has really knocked on with various cost improvement projects.
At the plant in Rhode Island to increase our efficiency. And and I think you know, these are things that have been in the works for well over 3 years that would enable us to increase roll lengths even further
And therefore, give us more productivity because remember a year ago we were on a path to 650 million plus of revenues and trying to increase the capacity of the plant in Rhode Island as much as possible.
To be able to push out the plan through decision further and further. Right? And so now as the team has had a chance to take a breather here on Lower volumes
the um,
Need the necessary.
Cost structure to improve our gross margin profile. Next year, on the on comparable volumes.
Which to your question data. I mean even if the volumes were to go down further, I think the company will be even more resilient quarter or quarter here as these projects they called
Okay.
Um, thank you Ricardo. Um,
So don you were talking in the energy industrial side. You're talking about subk and Technic FMC. Um,
I was a little surprised by the comments that that's so slow. Considering what we've been seeing on FTI's backlog, I mean, they're going to be after this. She'll be $30 billion over three years.
They think there's additional going forward, you know, 10 billion dollars annually.
Is this just a timing question because there is a enormous amount of sub seed trees that are about to be installed over the next, you know, 3 or 4 years. So I guess I'm just kind of curious your product maybe I and I'm just maybe helping you understand kind of when your product is kind of ordered, I guess like how close to delivery or how close to when the sub seed trees are installed.
Are are they ordering Aspen arrows because to me it's just like which quarter is it of when it starts? Could you just provide a little bit of help on kind of how that works out? Thanks.
Yeah, no, that's great. Um,
look, we just we just came off of 2 years where uh we had approximately 30 on average about 30 million dollars per year, which are strong, uh, years for us and we do we we just feel we're in a little, a little bit of low because we see the same thing that you do in our activity levels are are high
Typically for us. Uh, when we went up, we come late in projects that applies both to subk and, and, and to LG terminals, frankly. And, um, when we do receive an order, we typically deliver it within a quarter or maybe a quarter or 2 and
um, so so
So, so you can kind of piece that together. We see those same backlogs and activity levels, that that you're seeing, uh, Dave in your work. And, uh, and again, I I, um, we we not every project. I I should, I should say, requires, pipe and pipe installation though. Uh, and and so,
While, while that backlog is robust, it is a subset SE uh, sub.
Segment of that, that our our pipe and pipe, typically the most challenging project projects, plenty of them, uh, are are going to require pipe and pipe but not every single 1.
Don, you said it was 30. I think I might have misunderstood you. Did you say that the revenue was down about $30 million because of the subsidy? I wasn't sure that "dollars" was in reference to.
Yeah, let let me, let me say it again. Um, in in, in 2023 and 2024, we added, um, approximately 30 million dollars of subk Revenue and, um, our historic numbers, if you go back, you know, 10 years through the cycles, we have, typically been in the range of 5 to 15 million dollars. And um, and so much of our
You know much of our decrease uh for energy industrial overall has been because of the subsea law and um, again we believe we're seeing the same thing that you are that we have the opportunity to get back on a growth track track. As we, as we, um, we in our, our fair share of these of these, um, projects and, and it's why I answered Ryan's question, um, that we believe in 2026, you will see, um, both growth and and, and, and and solid profitability.
That makes makes a lot of sense. Uh, Ricardo is a pleasure working with you, um, best of luck on your your future endeavors.
Thanks so much, Dave, I'll see you.
Thank you, David.
All right, next question. Goes to the line of ite and Molly with
TD Cowen. It's a your line is open.
Uh, great, thanks. Good morning, everybody. Um, just to follow up for me. Um, first could we just kind of revisit the, um, the 2027 potential Revenue buildup for thermal? Um, and just if you can call out, if anything, as sort of significantly moved around versus, I think the 700 plus, uh we talked about last quarter from uh, launched or other volume perspectives from what, you know, uh, currently.
We see that on change still it. I mean the team does have a path to getting there both on the EI side.
I'm continuing to gain. Share here can help us get the 2027 number that we, um, mentioned during the last call for thermal barriers.
and and to Don's point, I mean, even even if you take what we're expecting on the
Energy industrial side for this year, add back, the project work, and then look at some of the other applications and markets of the team is working to start the commercialized. By then we we're still confident that the company can get there.
That's very helpful. Thank you. And as a follow-up, I think Ricardo you mentioned your team has still a healthy quoting activity. I'm curious, um, what you're seeing within that in terms of timing of future launches, the level of content, kind of may be a bit of a regional mix of the quoting pipeline. Uh, I just kind of curious any interesting insights to kind of glean from that.
Yes. So the content is definitely tilting towards the Prismatic cells.
And and the requirements that come from that and if you recall, that's a simpler thinner part mostly for the European oems. And also here in in North America with
The likes of GM Ford and, um, you know, ribbon and others, right? Um, we do see them taking their time more making these decisions.
because, you know, the oems are going from having a gun pointed to their head, to develop EVs, and start having them make up a meaningful portion of their
Fleet.
to now,
Potentially the total the polar opposite, right?
Um, and so I think oems right now are just really getting a read on what the consumer. The Man level for EVS is going to be
And as that becomes clear, in the first half of next year, we expect to...
Um, you know, to hear on some final decisions around vehicles that have been in development for the past year or so where the oems have had a quote from us or a proposal for, for quite some time and and they just need those those projects approved. Once they have a good idea of where consumers demand it's likely to be for EVS.
Perfect. That that's very helpful. Thank you.
Thank you.
Thank you. Our next question, will go to a line of lean Hayden with can't afford genuity lean. Your line is open.
Morning everyone. Thanks so much for taking my questions, just wanted to start by following up on some previous commentary. Uh, Mercedes recently announced plans to launch 15 new EVS, I believe in the next 2ish years. Do you expect any impact from this? Especially considering the Mercedes ACC partnership. Thank you.
Yeah, no thanks again. That's actually a good point. I mean there is potential for incremental volume within the ACC award and and
your Mercedes is uh, a meaningful, stakeholder and ACC. So all of those units could drive incremental volumes for the cells.
That we are on in the packs that that we are on those vehicles. Um,
are planned right now initially for Europe. And they'll from based on what we've read the they'll be Mercedes just kind of second attempt at cracking the EV Market in the US.
Appreciate it. Okay, that's very helpful. Um, just 1 more quick 1 for me. Have you seen any incremental Traction in alternative battery form factors like Prismatic or cylindrical or anything like that?
No. I mean it's really just been, uh, Prismatic and pouches primarily mostly prismatics.
and then, um,
You know, we're seeing a lot of the hype around the inerts of the cells dying down, which confirms the hypothesis that we've had for quite a while: that the current form factors and the current chemistry are what the OEMs have to work with for the next 15 plus years.
Got it, got it. That's very helpful. Thank you very much. Appreciate it.
Anytime, thank you. Yeah.
Thank you, lean.
Our last question.
Tom, Caroline is open.
Thank you. Thank you, Tom.
um,
Don could you speak for for both subk and LNG? Um,
um what what's the mix was expected to be between new projects turnaround and maintenance for for each of the businesses and you know to the extent and any 1 of those 3 areas has has negatively surprised
Uh what has the nature of it? Been? Has it been just you know, a delay. Have you actually seen any cancellations or or, um,
You know, other issues just curious for a bit more color there, both on the mix and then where um you know any any aspects of how how the the demand has materialized um you know might have disappointed relative to what you anticipated.
Yeah, um, so so on on the subk, you know that is pure Project work. No, no, no, no maintenance associated with that. Um, no maintenance opportunities associated with, uh, with that. I look, I think that has been, um, you know, the the, the biggest surprise for us because as, as as Dave Anderson cited and I know, you know, Tom the the, you know, the project work subk. Um, the the backlogs for the next 1, 2 3 4 years are are really quite robust. So, um, I I we believe that.
We're we're in a little bit of a low moment, after 2 very strong years and that will will will. Again, we'll get our fair share, um, especially of the pipe and pipe projects, um, LNG is a combination of Maintenance work and and project work. Uh, the, the the, you know, the big, the big headlines though, of course, are when we, when we can win a, when we can win a project, we know from history that uh, Project work can can be anywhere from 5 million dollars per project to, you know, our biggest project was $40 million and unusually large project, but that that. Um but it, those are big ranges. We do a lot of Maintenance work in facilities, all around all around the world and and that, that tip that maintenance work, typically gives us an opportunity to to demonstrate our value proposition. Before those facilities go on to have an expansion and it it allows us to get ourselves in a uh in the specifications and in in a good position with the engineering.
Uh, companies in the end and that asset owners.
So those are really the 2, those are the 2 areas. I mean, I think we all know that that, um, um, you know, LNG forecasts are, are are positive. And and uh, you know, that North America is is, is a is a strong location for for exports. And and again we're in we're in, we're in good positions, both with export facilities and in receiving terminals. So uh, those are the
To those are the 2 areas that where we think we've got an opportunity to to reignite growth and and again maintain significant profitability in that segment.
And Don, could you just remind us on?
Um the lead time that that you tend to have with orders for each of you know the credit you offer LNG in the space law for subk. You know how how far in advance um you know do you tend to get the booking ahead of when you would expect to ship?
Yes. For for subk, we we we we tend to win a project and deliver it within a quarter or 2 um that that that has been that has been um uh standard for for us for a long time. Uh LNG has a little bit more of a lead time and um as we work our way in, we do come as you know late in these projects from a from a build point of view. And um so sometimes projects can be well underway by the time, we uh secure our secure, our our position within that within that facility. So so these projects are not maybe 1 to 2 quarters but maybe 2 3 and 4 quarters uh in in advance.
Got it, I appreciate the time and answers.
Thank you, Tom.
Thank you, Tom.
There are no additional questions waiting at this time. So I would like to pass a conference back over to you Mr. Young for closing remarks.
Thank you. Thank you.
Um we we appreciate everyone's interest in.
Else we look forward to reporting, uh, our third quarter results to you in early early November, thank you so much. Be well.
To your participation and enjoy the rest of your day.