Aspen Aerogels' Earnings Call Contradictions: Shifting EI Growth Targets, Refined Products Outlook, and BESS Timing Delays

Date of Call: Aug 6, 2026

Financials Results

• Revenue: $49.8 million, up 32% quarter-over-quarter, including $4.9 million of deferred revenue recognized from GM settlement
• Gross Margin: 7% gross margin, including 5.3 million incremental costs from April incident; adjusted gross margin 17%

Guidance:

• Q3 revenue expected to be $65 to $80 million, representing 30% to 60% growth quarter-over-quarter.
• Q3 adjusted EBITDA expected to be $7 to $15 million, including add-back of incident-related charges.
• Energy industrial revenue expected to land at approximately $40 million in Q3, roughly double Q2.
• European thermal barrier revenue outlook raised to $20 to $30 million for 2026 from $10 to $15 million.
• Targeting 20% growth in energy industrial in 2026 and doubling European thermal barrier revenue to 40 to 60 million in 2027.
• Expect LNG-related activity to more than double in 2026.

Business Commentary:

Revenue and EBITDA Outlook:

• Aspen Aerogels Inc. provided a Q3 2026 revenue outlook of $65 to $80 million and adjusted EBITDA of $7 to $15 million.
• The growth is underpinned by robust energy industrial project deliveries, increased North American demand for Pyro-Thin thermal barriers, and elevated production ramps by European EV OEMs.

Energy Industrial Segment Growth:

• The energy industrial segment is targeting approximately 20% growth in 2026, despite disruptions, with a focus on large-scale LNG projects and subsea work.
• The growth is driven by strong project demand, favorable market conditions, and a backlog extending through the decade.

European Thermal Barrier Expansion:

• European thermal barrier revenue grew 14% quarter-over-quarter, and the company has raised its 2026 outlook to $20 to $30 million.
• This increase is due to new design awards, such as from Jaguar Land Rover, and the ramp-up of production volumes across multiple vehicle platforms.

Thermal Barrier Business Recovery:

• The thermal barrier business saw an 81% quarter-over-quarter growth in Q2, driven by GM's production ramp to align with EV sales.
• The stabilization of U.S. EV demand and GM's production adjustments are key contributors to this growth.

Supply Chain and Manufacturing Resilience:

• Despite the disruption from an explosion at the East Providence plant, Aspen managed to avoid significant supply issues through existing inventory and external manufacturing.
• The company is progressing with a staged restart and expects to restore full production capacity in the first half of 2027.

Sentiment Analysis:

Overall Tone: Positive

• Management expressed a 'strong outlook for Q3 performance' underpinned by 'robust energy industrial project deliveries' and 'increased North American demand'. They noted 'broad-based strength', 'strong project demand', and are 'encouraged by the region' for European growth. The tone was optimistic regarding scaling energy industrial to a '$200 million opportunities' and entering the battery storage market with 'near-term revenue'.

Q&A:

• Question from Eric Stein (Craig): Could you talk about subsea, LNG, and maintenance project timing for Q3/Q4 and the breakdown of Q4 positives?
  Response: Subsea work is primarily in Q3; strong LNG activity supports growth in both quarters. The Q3 outlook does not rely on a robust refining recovery but expects active petrochemical work to continue.

• Question from Eric Stein (Craig): Regarding thermal barrier OEM awards, are you being conservative with the 2026 outlook of $20-30 million?
  Response: The 135 million award value is based on full customer volumes, but the $20-30 million outlook is conservative, reflecting supply chain considerations and a prudent approach.

• Question from Colin Rush (Oppenheimer): When do you expect to start building inventory to meet 2027 EU production ramps?
  Response: Inventory building is required to prep for production ramps, and working capital is expected to be a use of cash as ramps begin.

• Question from Colin Rush (Oppenheimer): How are you managing inflationary pressures on raw materials?
  Response: Robust and diverse supply chain with external manufacturing partners allows for opportunistic bulk ordering to reduce price per part.

• Question from Justin (TD Cowen): What would give more confidence to narrow the gap between awarded $135 million and the 2027 implied $40-60 million revenue?
  Response: The gap reflects experience-based prudence; the company has upped its 2026 outlook from $10-15 million to $20-30 million and sees 2X growth into 2027 as achievable.

• Question from Justin (TD Cowen): How should we frame energy industrial (EI) growth in 2027 following the 20% guide for 2026?
  Response: Approximately 20% growth again in 2027 would get the business to its 2024 revenue run rate, supported by backlog and market dynamics.

• Question from Ryan Finks (B Riley Securities): What is the volume cadence for the Jaguar Land Rover thermal barrier awards?
  Response: The program has the ability to be noticeable in 2027, is multi-vehicle, and can become a meaningful part of the European business.

• Question from Ryan Finks (B Riley Securities): What are the latest customer conversations and validation milestones for battery storage?
  Response: Near-term revenue is expected; initial revenue would be the best validation. The goal is to complete qualification, win projects, and utilize products, with an update expected next earnings call.

• Question from Chip Moore (Roth Capital): How does the current energy industrial pipeline compare to past cycles looking to 2030?
  Response: There is more intensity in the investment cycle than any time recently, with broad geographic activity driven by supply diversification and electrification needs, positioning the company well through 2030.

Contradiction Point 1

Projected Growth Rate for Energy Industrial (EI) Segment in 2027

Guidance shifts from ambitious multi-year target to a more measured annual target.

Justin (TD Cowen) - Justin (TD Cowen)

2026Q2: The company targets another ~20% growth in 2027, which would position EI revenue to reach approximately 2024 levels. - Don Young(CEO)

Will energy industrial (EI) growth in 2027 follow the guided 20% growth in 2026 with another ~20% year or higher? - Luke (on behalf of Eric Stine, Craig-Hallum Capital)

2026Q1: The path to a $200 million EI business is supported by three key drivers... These factors collectively support the $200 million target. - Don Young(CEO)

Contradiction Point 2

Expected Performance of Refined Products/Maintenance Segment

Outlook for a key business subset shifts from expectations of a recovery to a statement of no reliance.

Eric Stein (Craig) - Eric Stein (Craig)

2026Q2: The Q3 outlook does not rely on a recovery in the refined products segment, but petrochemical work is expected to remain active, with reliability and maintenance needs eventually bringing that work back into scope. - Don Young(CEO)

Can you break down the Q3 and Q4 drivers, considering subsea projects, LNG, and the maintenance business impact? - Luke (on behalf of Eric Stine, Craig-Hallum Capital)

2026Q1: ...and 3) Maintenance and turnaround work in refineries, which is a deferred demand opportunity expected to normalize. These factors collectively support the $200 million target. - Don Young(CEO)

Contradiction Point 3

Thermal Barrier Revenue Outlook and Confidence Level

Confidence and prudence in reaching full awarded volumes shifted from high certainty to cautious optimism.

Eric Stein (Craig) - Eric Stein (Craig)

2026Q2: The 2026 outlook of $20–$30 million is considered prudent, accounting for supply chain and program ramp-up dynamics. - Grant Thaley(CFO) & Don Young(CEO)

Given the raised 2026 outlook to $20–$30 million, is $45 million still the best estimate for potential revenue, or are you now being more conservative? - Eric Stine (Craig-Hallum Capital Group LLC)

2025Q4: The $220M (2027) and $450M (2028) figures represent full customer-provided production volumes, not discounted. - Grant Thoele(CFO)

Contradiction Point 4

Battery Energy Storage Systems (BESS) Revenue Timing

Anticipated BESS revenue contribution shifted from 2026 to "near term" with none in 2026.

Ryan Finks (B Riley Securities) - Ryan Finks (B Riley Securities)

2026Q2: The company expects initial revenue in the near term from battery energy storage systems (BESS), though none is built into 2026. - Don Young(CEO)

What are the latest customer conversations and validation milestones in battery storage? - Eric Stine (Craig-Hallum Capital Group LLC)

2025Q4: BESS contributions are independent of the core 20% EI growth target for 2026... Revenue in this new segment is anticipated to begin in 2026. - Donald Young(CEO)

Contradiction Point 5

European OEM (Thermal Barrier) Revenue Outlook for 2026-2027

Inconsistent guidance on the revenue potential and timing for European thermal barrier awards.

Justin (TD Cowen) - Justin (TD Cowen)

2026Q2: The gap reflects experience-based caution... Confidence remains in doubling this to $40–$60 million in 2027. - Grant Thaley(CFO) & Don Young(CEO)

What factors would increase confidence in narrowing the gap between the awarded $135 million and the 2027 revenue outlook of $40–$60 million, and could you clarify the GM deferred revenue recognition in the 2027 outlook? - Ryan Pfingst (B. Riley Securities, Inc.)

2025Q3: Revenue from European OEMs is expected to be in the $10M to $15M range in 2026... $150M+ revenue potential for European OEMs at full volumes in 2027 includes this award. - Grant Thoele(CFO)