Release Date: February 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Given the change in business strategy, what is the long-term financial profile and business model for Aspen Aerogels? What EBITDA margin, revenue capacity, and free cash flow margin can we expect? A: Ricardo Rodriguez, CFO, stated that the margin targets remain unchanged, aiming for 35%+ gross margins and over 20% EBITDA margins. The supply strategy supports these targets, and the company plans to build capacity incrementally rather than through a large single project, which aligns with customer expectations.
Q: Is China the jurisdiction for building additional capacity for Pyro Thin, and are margin targets inclusive of tariffs from China? A: Ricardo Rodriguez confirmed that initial capacity expansion will be in China, with margin targets inclusive of tariffs. The company plans to add capacity in increments of $150 million to $200 million annually.
Q: With the lower fixed costs, when will the savings be realized, and what is the nature of these savings? A: Ricardo Rodriguez explained that the cost reductions, amounting to $8 million per quarter, are structural and involve reducing positions and external spend. These savings will be realized from Q2 onwards, protecting the company's ability to generate profit and cash flow.
Q: Regarding GM's inventory, do you expect it to normalize in Q1, and how should we think about the 2025 outlook? A: Ricardo Rodriguez indicated that GM's inventory is expected to normalize in Q1. For 2025, he suggested using the original 2024 expectations of $200 million as a starting point, considering the outsized performance in 2024 was due to unique demand factors.
Q: What are the plans for the capital deployed in Statesboro, and how will the modular strategy for capacity expansion work? A: Ricardo Rodriguez mentioned that some equipment from Statesboro will be moved to Rhode Island to increase throughput, and other equipment may be sent to external manufacturing facilities. The modular strategy allows for capacity increments of $150 million to $200 million annually, with the first new capacity expected online in 2026.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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