NORTHBOROUGH, Mass.,
Jan. 27, 2020 /PRNewswire/
-- Aspen Aerogels, Inc. (NYSE: ASPN) ("Aspen") today provided a business update,
preliminary 2019 financial results and a 2020 financial
outlook.
Battery Materials Initiative
During 2019, Aspen launched its
battery materials program to leverage the unique properties of its
proprietary and patented carbon aerogels to improve the performance
and cost of lithium-ion batteries for electric vehicles. Aligned
with Aspen's strategy to leverage
its aerogel technology platform, Aspen is engaging with companies throughout
the battery supply chain to focus technical development and
accelerate commercialization of these carbon aerogel materials. In
November 2019, Aspen signed an evaluation agreement with a
subsidiary of Evonik Industries AG ("Evonik"), an innovative
$16 billion specialty chemicals
company, to assess the potential of incorporating Evonik's
silicon-based nanoparticles in Aspen's carbon aerogel anode materials. In
addition, in January 2020,
Aspen entered into a Joint
Evaluation Agreement with SKC Co., Ltd. ("SKC") to explore the
potential use of Aspen's
silicon-rich carbon aerogel materials in the anode of lithium-ion
batteries. SKC is part of SK Group, a $200
billion Korean conglomerate and a leader in the development
and sale of lithium-ion batteries for the electric vehicle
market.
"We are excited to work with Evonik and SKC to accelerate the
adoption of our aerogel technology within the battery materials
market. Our initial objective with these partners is to optimize
our carbon aerogel materials to improve the performance, cost,
durability and safety of lithium-ion batteries. We will continue to
engage with industry leading companies to help us realize the full
potential of our aerogel technology in the emerging electric
vehicle market," stated Don Young,
Aspen's President and
CEO.
IP Enforcement Win
In December 2019, the Mannheim
Regional Court in Germany found
that Guangdong Alison Hi-Tech Co. ("Alison") infringed two of
Aspen's patents and issued an
injunction prohibiting Alison from engaging in further
infringement. The two judgments expand upon a prior decision of the
Mannheim Regional Court in March 2019
that found Alison had also infringed another of Aspen's patents. While the judgments
remain subject to appeal, Alison has been found liable at present
to Aspen for damages and specified
court costs as part of the judgments.
"Our continued success in the German courts, along with our
prior victories at the U.S. International Trade Commission and in
the U.S. courts, reinforces the scope and strength of Aspen's worldwide aerogel patent portfolio.
From the outset, we have maintained our well-supported position
that both Alison and Nano Tech Co., Ltd. ("Nano") infringe our
patents. We believe these recent court decisions have confirmed
that the Chinese manufacturers violate the law," said Mr.
Young.
"Our core strategy is to invest in the research, development,
and commercialization of our aerogel technology platform. We seek
to partner with industry leaders to bring these exciting
technologies to market. In support of our partners and customers,
we intend to aggressively assert our patents against Alison, Nano
or any other manufacturer, distributor or end-user that infringes
our technology worldwide," continued Mr. Young.
Preliminary Fourth Quarter and Full Year 2019 Financial
Results
Aspen expects to announce
growth in total revenue for the fourth quarter of approximately 30%
to about $46.5 million versus
$35.7 million in the fourth quarter
of 2018. Aspen also expects to
report growth in total revenue for the full year of approximately
34% to about $139.4 million versus
$104.4 million in 2018. Fourth
quarter and full year 2019 total revenue are each expected to
represent a new record revenue level for Aspen.
Fourth quarter net loss is expected to be approximately
$1.0 million versus $14.1 million in the fourth quarter of 2018. Net
loss for the full year is expected to be approximately $14.6 million versus $34.4
million in 2018.
Adjusted EBITDA for the fourth quarter is expected to be
approximately $2.6 million compared
to $(3.2) million in the fourth
quarter of 2018. Adjusted EBITDA for the full year is expected to
be $(0.2) million compared to
$(11.5) million in 2018. A
reconciliation of non-GAAP Adjusted EBITDA to net loss is provided
in the financial schedules that are part of this press release. An
explanation of this non-GAAP financial measure is also included
below under the heading "Non-GAAP Financial Measures."
"We are extremely pleased with the results we achieved during
2019. We anticipate that we will significantly exceed our 2019
revenue performance objectives that included total revenue growth
of more than 20% and project related revenue constituting more than
of 33% of total revenue for the year. This solid performance was
driven by strong demand in our core North American petrochemical
and refinery markets, and significant growth in project related
revenue in the subsea market, in the Middle East and from the PTT LNG Nong Fab
receiving terminal project," stated Mr. Young.
"We anticipate that the combination of our strong revenue growth
and the impact of our 2019 bill of material cost reduction
initiatives will drive an increase in our fourth quarter gross
margin to approximately 24% from 16% in the fourth quarter of 2018
and to approximately 19% for the full year from 12% in 2018. As a
result, we expect to report a substantial improvement in both our
net loss and Adjusted EBITDA versus 2018," continued Mr. Young.
Aspen's preliminary 2019
financial results are based solely on information currently
available to management and are unaudited. This financial
information does not represent a comprehensive statement of
Aspen's financial results for the
fourth quarter or full year 2019 and remains subject to the
completion of Aspen's financial
closing procedures and internal reviews. As a result, Aspen's actual results for the fourth quarter
and full year 2019 may vary materially from these preliminary
estimates.
Aspen expects to release actual
financial results for the fourth quarter on Thursday, February 20, 2020, following the market
close.
2020 Financial Outlook
Aspen issues its initial 2020
full year financial outlook as follows:
- Total revenue is expected to range between $138.0 million and $148.0
million
- Net loss is expected to range between $5.7 million and $9.7
million
- Adjusted EBITDA is expected to range between $5.0 million and $9.0
million
This 2020 financial outlook assumes depreciation and
amortization of $10.3 million,
stock-based compensation expense of $4.0 million, and interest expense of
$0.4 million for the year.
"After significant growth in 2019, we expect our revenue growth
rate to moderate in 2020 due principally to our expectation that
subsea revenue will be closer to our historical average of
$11 million in 2020 versus
approximately $17 million in 2019. We
also expect to see little to no growth from the PTT LNG Nong Fab
receiving terminal project during 2020 as we complete the second
half of the $35 to $40 million order during the year. In addition,
we have decided to wind down our government research services
business in 2020 that contributed approximately $2.4 million in revenue in 2019. This decision
reflects our desire to focus our R&D resources on improving the
profitability of our existing business and leveraging our aerogel
technology into new markets," said Mr. Young.
"Importantly, we expect the growth rate in the remainder of our
business to range from the mid-single digits to the mid-teens
during the year. We will also target our commercial efforts during
2020 to continue to build our project pipeline with the aim of
ensuring solid project related growth in 2021 and beyond. In
addition, we will remain laser focused on improving our
profitability. We expect that our ongoing initiatives to reduce raw
material costs will help to improve our gross margin to the mid-20s
for the full year from approximately 19% during 2019. As a result,
we again expect to deliver strong year-over-year improvements in
both net loss and Adjusted EBITDA in 2020," continued Mr.
Young.
"Consistent with our financial performance over the past three
years, we expect between 40% and 45% of our 2020 revenue will be
generated during the first half of the year. As a result, we
anticipate the projected improvement in net loss and Adjusted
EBITDA will be concentrated in the second half of the year,"
concluded Mr. Young.
A reconciliation of non-GAAP Adjusted EBITDA to net loss for the
2020 financial outlook is provided in the financial schedules that
are part of this press release. An explanation of this non-GAAP
financial measure is also included below under the heading
"Non-GAAP Financial Measures."
Aspen may incur charges,
realize gains or losses, incur financing costs or interest expense,
or experience other events in 2020 that could cause actual results
to vary materially from this financial outlook. In addition, the
timing of projects can be difficult to predict and may have a
significant impact on quarterly and annual revenue and
profitability.
Non-GAAP Financial Measures
In addition to providing financial measurements based on
generally accepted accounting principles in the United States of America ("GAAP"),
Aspen provides additional
financial metrics that are not prepared in accordance with GAAP
("non-GAAP"). The non-GAAP financial measure included in this press
release is Adjusted EBITDA. Management uses non-GAAP financial
measures, in addition to GAAP financial measures, as a measure of
operating performance because the non-GAAP financial measures do
not include the impact of items that management does not consider
indicative of Aspen's core
operating performance. In addition, management uses Adjusted EBITDA
(i) for planning purposes, including the preparation of
Aspen's annual operating budget,
(ii) to allocate resources to enhance the financial performance of
its business, and (iii) as a performance measure under its bonus
plan.
Management believes that these non-GAAP financial measures
reflect Aspen's ongoing business
in a manner that allows for meaningful comparisons and analysis of
trends in its business, as they exclude expenses and gains not
reflective of Aspen's ongoing
operating results or that may be infrequent and/or unusual in
nature. Management also believes that these non-GAAP financial
measures provide useful information to investors in understanding
and evaluating Aspen's operating
results and future prospects in the same manner as management and
in comparing financial results across accounting periods and to
those of peer companies. These non-GAAP measures may not be
comparable to similarly titled measures presented by other
companies.
The non-GAAP financial measures do not replace the presentation
of Aspen's GAAP financial results
and should only be used as a supplement to, not as a substitute
for, Aspen's financial results
presented in accordance with GAAP. In this press release,
Aspen has provided a
reconciliation of Adjusted EBITDA to net loss, the most directly
comparable GAAP financial measure. Management strongly encourages
investors to review Aspen's
financial statements and publicly-filed reports in their entirety
and not rely on any single financial measure.
About Aspen Aerogels, Inc.
Aspen is the global leader in
aerogel technology. The company's mission is to enable its
customers and partners to achieve their own objectives around the
global megatrends of resource efficiency and sustainability.
Aspen's Cryogel® and
Pyrogel® products are valued by the world's largest
energy infrastructure companies. Aspen's Spaceloft® products provide
building owners with industry-leading energy efficiency including
options for a safe, non-combustible fire rating. The company's
strategy is to partner with world-class industry leaders to
leverage its aerogel technology platform into additional markets.
Headquartered in Northborough,
Mass., Aspen manufactures
its products at its East Providence,
R.I. facility. For more information, please visit
www.aerogel.com
Special Note Regarding Forward-Looking and Cautionary
Statements
This press release and any related discussion contains
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 that involve risks and
uncertainties that could cause actual results to be materially
different from historical results or from any future results
expressed or implied by such forward-looking statements, including
statements relating to Aspen's
preliminary 2019 financial results and 2020 financial outlook.
These statements are not historical facts but rather are based on
Aspen's current expectations,
estimates and projections regarding Aspen's business, operations and other factors
relating thereto, including with respect to Aspen's preliminary 2019 financial results and
2020 financial outlook. Words such as "may," "will," "could,"
"would," "should," "anticipate," "predict," "potential,"
"continue," "expects," "intends," "plans," "projects," "believes,"
"estimates," "outlook," "assumes," and similar expressions are used
to identify these forward-looking statements. Such forward-looking
statements include statements regarding, among other things,
Aspen's expectations about
revenue, costs, expenses, profitability, gross margin, net loss,
Adjusted EBITDA and related variations, improvements, records,
timing or trends; beliefs about the general strength or health of
Aspen's business; beliefs about
current or future trends in the energy, energy infrastructure,
petrochemical, refinery, building materials, LNG, subsea, core,
adjacent, U.S., North American, Asian, European, South American,
Middle Eastern or other markets and the impact of these trends on
Aspen's business; beliefs about
the government research services business; beliefs about volume,
timing, pipeline or trends of subsea, LNG or other projects,
including the PTT LNG Nong Fab receiving terminal project, and
their impact on Aspen's business;
beliefs about the impact of pricing actions, cost reduction
initiatives and the economics of Aspen's business; beliefs about Aspen's strategic initiatives and
implementation; beliefs about the potential to develop new market
opportunities from Aspen's aerogel
technology platform; beliefs about the potential of new aerogel
products, technologies, businesses and partnerships, beliefs about
the role of our technology and partnership opportunities in the
battery materials or electric vehicle markets; beliefs about
Aspen's relationships with Evonik
and SKC, including the potential for activities associated with
evaluation agreements to lead to any development, commercial or
other arrangements with Evonik or SKC, or to accelerate the
development of new product opportunities in the battery materials
or electric vehicle markets, including the electric vehicle market;
beliefs about Aspen's intellectual
property strategy and its implementation; beliefs about the
strength of Aspen's patent
portfolio; expectations about the cost, timing or likelihood of
success of Aspen's patent
enforcement actions and defense of challenges to the validity of
its patents; beliefs about Aspen's
ability to continue to fund patent enforcement or defense actions
and to collect court costs and damages; beliefs about the
productivity, efficiency or output of Aspen's manufacturing operations; beliefs
about raw materials costs and availability; beliefs about the
Aspen's ability to fund its
operations; future operating performance on an annual or other
basis; and accounting and other assumptions involved in arriving at
the expectations. All such forward-looking statements are based on
management's present expectations and are subject to certain
factors, risks and uncertainties that may cause actual results,
outcome of events, timing and performance to differ materially from
those expressed or implied by such statements. These risks and
uncertainties include, but are not limited to, the following: an
inability to create new product, partnership and market
opportunities; any sustained downturn in the energy industry or
energy prices; any sustained downturn in the petrochemical,
refinery, building materials, subsea, LNG, core, adjacent, U.S.,
North American, Asian, European, South American, Middle Eastern or
other market; any failure to increase project-based demand in the
subsea, LNG or other markets; any disruption or inability to
achieve expected capacity levels in any of our three production
lines or the manufacturing facility in which they are located; the
failure to receive all regulatory or other approvals required to
operate, maintain or expand our facilities; any failure of demand
for Aspen's products; any failure
to achieve expected price increases or average selling prices for
Aspen's products; any significant
increase in the cost of raw materials, utilities or any other
manufacturing consumable; the failure to mitigate the impact of any
significant increase in the cost of raw materials, utilities or
other manufacturing consumable; shortages of raw materials,
utilities or any other manufacturing consumable; the failure to
generate sufficient operating cash flow or to obtain significant
additional capital to pursue Aspen's strategy; the failure of Aspen's products to become widely adopted; the
competition Aspen faces in its
business; any failure to enforce any of Aspen's patents; any failure to protect or
expand Aspen's aerogel technology
platform; any future finding of invalidity of any patent in any
jurisdiction; any failure to generate sufficient operating cash
flow or to obtain sufficient additional capital to continue to
pursue Aspen's new business,
technology, patent enforcement, or patent defense strategy; any
failure of Aspen's products to
meet applicable specifications and other performance, safety,
technical and delivery requirements; the general economic
conditions and cyclical demands in the markets that Aspen serves; the economic, operational and
political risks associated with sales and expansion of operations
in foreign countries; the loss of any direct customer, including
distributors, contractors and OEMs; compliance with health and
safety laws and regulations; the maintenance and development of
distribution channels; and the other risk factors discussed under
the heading "Risk Factors" in our Annual Report on Form 10-K for
the year ended December 31, 2018 and
filed with the Securities and Exchange Commission ("SEC") on
March 8, 2019, as well as any updates
to those risk factors filed from time to time in our subsequent
periodic and current reports filed with the SEC. All statements
contained in this press release are made only as of the date of
this press release, and Aspen does
not intend to update this information unless required by law.
Reconciliation of Non-GAAP Financial
Measures
The following tables present a reconciliation of
the non-GAAP financial measure included in this press
release to the most directly comparable GAAP measure:
Reconciliation of Adjusted EBITDA to Net Income
(Loss)
We define Adjusted EBITDA as net income (loss) before interest
expense, taxes, depreciation, amortization, stock-based
compensation expense and other items, which occur from time to time
and which we do not believe are indicative of our core operating
performance. These other items include an impairment of
construction in process and related items during the fourth quarter
and year ended December 31, 2018.
Our preliminary 2019 financial results are based solely on
information currently available to management and are unaudited.
The following reconciliation of preliminary Adjusted EBITDA to Net
Loss for the three months and year ended December 31, 2019 is approximate and subject to
change.
For the three months and year ended December 31, 2019 and 2018:
|
|
Three Months
Ended
|
|
Year
Ended
|
|
|
December
31,
|
|
December
31,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
(In
thousands)
|
Net loss
|
|
$
|
(1,000)
|
|
$
|
(14,108)
|
|
$
|
(14,600)
|
|
$
|
(34,440)
|
Depreciation and
amortization
|
|
|
2,600
|
|
|
2,528
|
|
|
10,200
|
|
|
10,787
|
Stock-based
compensation
|
|
|
900
|
|
|
888
|
|
|
3,800
|
|
|
4,302
|
Impairment of
construction in process
|
|
|
—
|
|
|
7,356
|
|
|
—
|
|
|
7,356
|
Interest expense,
net
|
|
|
100
|
|
|
166
|
|
|
400
|
|
|
524
|
Adjusted
EBITDA
|
|
$
|
2,600
|
|
$
|
(3,170)
|
|
$
|
(200)
|
|
$
|
(11,471)
|
For the 2020 financial outlook:
|
|
Year
Ending
|
|
|
December 31,
2020
|
|
|
Low
|
|
High
|
|
|
(In
thousands)
|
Net loss
|
|
$
|
(9,700)
|
|
$
|
(5,700)
|
Depreciation and
amortization
|
|
|
10,300
|
|
|
10,300
|
Stock-based
compensation
|
|
|
4,000
|
|
|
4,000
|
Interest expense,
net
|
|
|
400
|
|
|
400
|
Adjusted
EBITDA
|
|
$
|
5,000
|
|
$
|
9,000
|
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SOURCE Aspen Aerogels, Inc.