ASPN 10-K & 10-Q changes, risk factors and insider trading
Aspen Aerogels Inc. · NYSE · Wholesale-Lumber & Other Construction Materials · CIK 1145986 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “While we achieved positive operating cash flows for the fiscal years ended December 31, 2025 and 2024, our ability to continue generating positive cash flow is uncertain.”
New heading “The terms of our Credit Agreement with MidCap require us to meet certain operating and financial covenants and/or place restrictions on our operating and financial flexibility. If we raise additional capital through debt financing, the terms of any new debt could further restrict our ability to operate our business.”
New heading “Automotive OEM Customer Relationship Risks”
New heading “Our relationships with automotive OEM customers involve multiple interconnected risks that could materially adversely impact our business, revenues, and profitability. These risks include but are not limited to being party to contracts without minimum commitments, pricing pressures, and cost reduction initiatives, selection of cell chemistries, battery pack system architectures, and customer market share and production declines.”
New heading “Our success in the EV market is dependent upon consumers’ willingness to purchase and use EVs and demand for EVs generally.”
New heading “We have engaged third-party external manufacturing facilities in China to supplement our supply of our aerogel products. Our reliance on these external manufacturing facilities subjects us to operational, quality, regulatory, and geopolitical risks that could disrupt our supply chain, harm our reputation, and adversely affect our business operations.”
New heading “From time to time, we have had difficulty in consistently producing products that meet applicable product specifications and technical and delivery requirements, and such difficulties could expose us to financial, contractual, or other liabilities.”
New heading “Inadequate funding for the SEC and other government agencies, or a work slowdown or stoppage at those agencies as part of a broader federal government shutdown, could hinder their ability to hire and retain key leadership and other personnel, prevent new products and services from being developed or commercialized in a timely manner, or otherwise prevent those agencies from performing normal business functions on which the operation of our business may rely, which could negatively impact our business.”
New heading “Changes in U.S. trade policy and the impact of tariffs may have a material adverse effect on our business, results of operations and financial condition. Changes in the U.S. regulatory framework may also impact EV demand, which could have a material adverse effect on our business, results of operations and financial condition.”
New heading “Our revenue may fluctuate, which may result in a high degree of variability in our results of operations and make it difficult for us to plan based on our future outlook and to forecast our future performance, and the results of our operations could be materially adversely affected if our operating expenses incurred do not correspond with the timing of our revenues.”
Removed heading “We have engaged third-party external manufacturing facilities in China to supplement our supply of our aerogel products. If such external manufacturing facilities are unable to manufacture and deliver a sufficient quantity of high-quality products on a timely and cost-efficient basis, our net revenue and business operations may be harmed and our reputation may suffer.”
Removed heading “While we achieved positive total cash flow for the fiscal year ended December 31, 2024, our ability to continue generating positive cash flow is uncertain.”
Removed heading “The cyclical nature of automotive sales and production can adversely affect our business. Furthermore, disruptions in the components that our customers in the EV market, including our automotive OEM customers, use in their products may adversely affect our business operations and projected revenue.”
Removed heading “Trends in the selection of cell chemistries, battery pack system architectures, and the adoption of active cooling methods may reduce thermal complexities to render the demand for our thermal barrier products less obvious. Furthermore, changes by our automotive OEM customers in the cell form factor may have a direct impact on the demand for our product.”
Removed heading “We may not realize sales represented by awarded business.”
Removed heading “Continued pricing pressures, automotive OEM cost reduction initiatives and the ability of automotive OEMs to re-source or cancel vehicle programs may result in lower than anticipated margins, or losses, which may have a significant negative impact on our business.”
Removed heading “Our supply agreements with our automotive OEM customers are generally requirements contracts, and a decline in the production requirements of any of our customers, including as a result of a shift in their strategy or change in their battery form factor, could adversely impact the automotive OEM’s demand for our products, which could adversely impact our revenues and profitability.”
Removed heading “The terms of the Credit Agreement with MidCap require us to meet certain operating covenants and/or place restrictions on our operating and financial flexibility. If we raise additional capital through debt financing, the terms of any new debt could further restrict our ability to operate our business.”
Removed heading “From time to time we have had difficulty in consistently producing products that meet applicable product specifications and technical and delivery requirements, and such difficulties could expose us to financial, contractual, or other liabilities.”
Removed heading “Our business, results of operations and financial condition could be materially adversely affected by the effects of widespread public health epidemics, that are beyond our control.”
Removed heading “The markets we serve are subject to general economic conditions and cyclical demand, which could harm our business and lead to significant shifts in our results of operations from quarter to quarter that make it difficult to project long-term performance.”
Removed heading “If we do not respond appropriately, the evolution of the automotive industry towards mobility on demand services could adversely affect our business.”
Removed heading “Declines in the market share or business of our large customers may adversely impact our revenues and profitability.”
Removed heading “Our growth in the EV market is dependent upon consumers’ willingness to purchase and use EVs.”
Removed heading “Our revenue may fluctuate, which may result in a high degree of variability in our results of operations and make it difficult for us to plan based on our future outlook and to forecast our future performance.”
Removed heading “The results of our operations could be materially adversely affected if our operating expenses incurred do not correspond with the timing of our revenues.”
Removed heading “If we fail to achieve the increase in production capacity that our long-term growth requires in a timely manner, or at all, our growth may be hindered and our business or results of operations may be materially adversely affected.”
Removed heading “If the expected growth in the demand for our products does not follow after each of our planned capacity expansions, then our business will be materially adversely affected.”
Removed heading “Growth has placed significant demands on our management systems and our infrastructure. If we fail to manage our long-term growth effectively, we may be unable to execute our business plan, address competitive challenges and meet applicable product specifications and technical and delivery requirements.”
Largest changes
“We are subject to the risks arising from adverse changes in market and economic and political conditions, both domestically and globally, including trends toward protectionism and nationalism, other unfavorable changes in economic conditions as well as disruptions in global credit and financial markets, such as inflation, failures and instability in U.S. and international banking systems, downgrades of the U.S. …”see in full comparison
“We are subject to the risks arising from adverse changes in market and economic and political conditions, both domestically and globally, including trends toward protectionism and nationalism, other unfavorable changes in economic conditions as well as disruptions in global credit and financial markets, such as inflation, failures and instability in U.S. and international banking systems, downgrades of the U.S. …”see in full comparison
“The Credit Agreement includes representations and warranties, affirmative covenants (including reporting obligations), negative covenants and events of default that are usual and customary for facilities of this type, in each case, subject to certain permitted exceptions as set forth therein. …”see in full comparison
“Pursuant to Amendment No. 2, the financial covenants under the MidCap Loan Facility have been amended such that (a) the applicable minimum liquidity threshold (both for (i) the minimum liquidity financial covenant, which must be maintained by the Company at all times and (ii) the “Cash Dominion Event” definition for purposes of triggering cash dominion) has changed from (i) an amount equal to the greater of (x) $50 million and (y) 85% of the then aggregate outstanding principal amount of the Term Loan (as defined in the Amended MidCap Loan Facility) to (ii) an amount equal to the greater of …”see in full comparison
“We are currently in compliance with the financial covenants set forth in the Amended MidCap Loan Facility and as described above. However, given the decline in our revenues in 2025 as compared to the prior year, there can be no assurance that we will comply with one or more of these financial covenants throughout 2026. …”see in full comparison
“If there is no lawful manner for us to transfer personal data from the EEA, the UK or other jurisdictions to the United States, or if the requirements for a legally-compliant transfer are too onerous, we could face significant adverse consequences, including the interruption or degradation of our operations at significant expense, increased exposure to regulatory actions, substantial fines and penalties, the inability to transfer data and work with partners, vendors and other third parties, and injunctions against our processing or transferring of personal data necessary to operate our …”see in full comparison
Full comparison: every changed paragraph (208)
We have previously incurred annual net losses, and we may continue to incur net losses in the future and may never reach profitability.
We have engaged third-party external manufacturing facilities in China to supplement our supply of our aerogel products. IfOur suchreliance on these external manufacturing facilities aresubjects unableus to manufactureoperational, quality, regulatory, and delivergeopolitical arisks sufficientthat quantitycould ofdisrupt high-qualityour productssupply onchain, aharm timelyour reputation, and cost-efficientadversely basis,affect our net revenue and business operations may be harmed and our reputation may suffer.operations.
While we achieved positive totaloperating cash flowflows for the fiscal yearyears ended December 31, 31,2025 and 2024, our ability to continue generating positive cash flow is uncertain.
Our relationships with automotive OEM customers involve multiple interconnected risks that could materially adversely impact our business, revenues, and profitability. These risks include but are not limited to being party to contracts without minimum commitments, pricing pressures, and cost reduction initiatives, selection of cell chemistries, battery pack system architectures, and customer market share and production declines.
The cyclical nature of automotive sales and production can adversely affect our business. Furthermore, disruptions in the components that our customers in the EV market, including our automotive OEM customers, use in their products may adversely affect our business operations and projected revenue.
Trends in the selection of cell chemistries, battery pack system architectures, and the adoption of active cooling methods may reduce thermal complexities to render the demand for our thermal barrier products less obvious. Furthermore, changes by our automotive OEM customers in the cell form factor may have a direct impact on the demand for our product.
Our external manufacturing facility in China is subject to risks and uncertainties relating to the laws and regulations of China and the changes in relations between the United States and China. If the Chinese government determines that our manufacturing facility does not comply with applicable regulations, our business could be adversely affected. If the regulatory agencies of the People’s Republic of China (the PRC) determine that the agreements that establish the structure and relationship for our operations in China do not comply with PRC regulatory restrictions on foreign investment, we could be subject to severe penalties.
A substantial portion of our revenue comes from sales in foreign countries, and maywe are planning to further expand our operations outside of the United States, which subjects us to increased economic, trade, foreign exchange, operational, and political risks that could materially adversely impact our business, financial conditions and results of operations and also increase our costs and make it difficult for us to operate profitably.
We may not realize sales represented by awarded business. Continued pricing pressures, automotive OEM cost reduction initiatives and the ability of automotive OEMs to re-source or cancel vehicle programs may result in lower than anticipated margins, or losses, which may have a significant negative impact on our business.
Our supply agreements with our automotive OEM customers are generally requirements contracts, and a decline in the production requirements of any of our customers, including as a result of a shift in their strategy or change in their battery form factor, could adversely impact the automotive OEM’s demand for our products, could adversely impact our revenues and profitability.
Our revenue may fluctuate, which may result in a high degree of variability in our results of operations and make it difficult for us to plan based on our future outlook and to forecast our future performance.performance, and the results of our operations could be materially adversely affected if our operating expenses incurred do not correspond with the timing of our revenues.
The results of our operations could be materially adversely affected if our operating expenses incurred do not correspond with the timing of our revenues.
If we fail to achieve the increase in production capacity that our long-term growth requires in a timely manner, or at all, our growth may be hindered and our business or results of operations may be materially adversely affected.
If the expected growth in the demand for our products does not follow each of our planned capacity expansions, then our business and results of operations will be materially adversely affected.
A substantial portion of our revenue comes from sales in foreign countries and we are planning to expand our operations outside of the United States, which subjects us to increased economic, trade, foreign exchange, operational, and political risks that could materially adversely impact our business, financial conditions and results of operations and also increase our costs and make it difficult for us to operate profitably.
We or the third parties upon which we depend may be adversely affected by general political, unstable market and economic conditions, and other events beyond our control and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster.
The impact of the Russian invasion of Ukraine, and the conflict in the Middle East and tensions between China and Taiwan on the global economy, energy supplies and raw materials is uncertain, but may prove to negatively impact our business and operations.
We have in the past initiated intellectual property litigation that is and willany continuefuture tointellectual property litigation may be costly, and could limit or invalidate our intellectual property rights, divert time and efforts away from business operations, require us to pay damages and/or costs and expenses and/or otherwise have a material adverse impact on our business, and we could become subject to additional such intellectual property litigation in the future.
Our shareholdersstockholders may experience future dilution as a result of future equity offerings.
We have previously incurred annual net losses, and we may continue to incur net losses in the future and may never reach profitability.
We incurred net losses of $389.6 million, delivered net income of $13.4 million,million and incurred net losses of $45.8 million and $82.7 million for the fiscal years ended December 31, 2024,2025, 20232024 and 2022,2023, respectively. As of December 31, 2024,2025, our accumulated deficit was $660.2$1,049.8 million. We may incur operating losses in the future as a result of expenses associated with the continued development and expansion of our business. Our expenses include research and development, sales and marketing, and general and administrative costs. Furthermore, these expenses are not the only factors that may contribute to our net losses. For example, interest expense that we incur on any future financing arrangements could contribute to our net losses. Any failure to increase revenue or manage our cost structure as we implement initiatives to grow our business could prevent us from achieving profitability, or sustaining profitability if we do achieve it. In addition, our ability to achieve profitability is subject to a number of risks and uncertainties discussed below, many of which are beyond our control. Failure to remain profitable may adversely affect the market price of our common stock and our ability to raise capital and continue operations.
The growth of our business will depend on substantial amounts of additional capital for expansion of existing production lines or construction of new production lines or facilities, for ongoing operating expenses,expenses and for continued development of our Aerogel Technology Platform, or for introduction of new product lines.Platform. Our capital requirements will depend on many factors, including the rate of our revenue growth, our introduction of new products and technologies, our enhancements to existing products and technologies, and our expansion of sales and marketing and product development activities. In addition, we anticipate significant cash outlays during 2025 related to maintaining our aerogel manufacturing operations in our East Providence, Rhode Island facility, among other items. We may raise capital through debt financings, equity financings, partner financings, and/or technology licensing agreements to fund these operating and capital expenditure requirements in 20252026 and beyond. Any such futureinvestment significantin expansionthe development of our aerogelAerogel capacity,Technology Platform or similarenhancements investmentto existing products and technologies, as well as any future capital expenditures, will require us to raise substantial amounts of additional capital. There is no assurance that we will be able obtain any such type of financing on terms acceptable to us or at all and in a timely manner. The current economic landscape resulting in higher interest rates presents further challenges in obtaining financing on acceptable terms or at all.
We may not be able to obtain loans or raise additional capital on acceptable terms or at all. Any future credit facilities or debt instruments may contain restrictions, requirements and/or conditions that impact our ability to obtain needed capital. We may not be able to obtain bank credit arrangements or effect an equity or debt financing on terms acceptable to us or at all in order to fund our future capacity expansion plans. Any failure to obtain additional financing when needed could adversely affect our ability to maintain and grow our business.
While we achieved positive operating cash flows for the fiscal years ended December 31, 2025 and 2024, our ability to continue generating positive cash flow is uncertain.
To develop and expand our business, we have made significant up-front investments in our manufacturing capacity and have incurred, and will continue to incur, research and development, sales and marketing and general and administrative expenses. In addition, our growth has required a significant investment in working capital. While we experienced positive cash flows from operating activities of $32.9 million for the fiscal year ended December 31, 2025 and $45.5 million for the fiscal year ended December 31, 2024, we have historically experienced negative cash flows from operating activities, including $42.6 million for the fiscal year ended December 31, 2023. The negative cumulative cash flows from operating activities during 2023 were exacerbated by cash flows used in investing activities to maintain, enhance, and expand our manufacturing operations during the same time period.
While we expect our operating cash flow will be positive on an annual basis during 2026, we may not achieve sufficient revenue growth to generate positive cash flow in any future year. As a result, we may need to raise additional capital from investors to achieve our expected growth or to fund the working capital investment necessary to maintain operations. Any inability to generate positive future cash flow, to borrow funds or to raise additional capital on reasonable terms, if at all, may harm our short-term financial condition or threaten our long-term viability.
During 2014 and in 2024, we performed analyses pursuant to Section 382 of the Internal Revenue Code of 1986, as amended (the Internal Revenue Code), as well as similar state provisions, to determine whether any limitations might exist on the utilization of net operating losses and other tax attributes. Generally, a change of more than 50% in the ownership of a company’s stock, by value, over a three-year period constitutes an ownership change for U.S. federal income tax purposes. An ownership change may limit a company’s ability to use its net operating loss carryforwards attributable to the period prior to such change. Based on our 2014 analyses, we determined that it is more likely than not that an ownership change occurred on June 18, 2014 upon the closing of our IPO, resulting in an annual limitation on the use of our net operating losses and other tax attributes as of such date. As a result, our prior net operating losses were limited to $155.2 million, including built-in gains of $42.0 million at the date of that ownership change. During the year ended December 31, 2024, we performed a Section 382 ownership analysis and determined that no ownership change had occurred (within the meaning of Section 382 of the Internal Revenue Code) as a result of our financings since our IPO. The use of our net operating loss carryforwards may be restricted in the future in the event of any changes in our ownership.
The terms of our Credit Agreement with MidCap require us to meet certain operating and financial covenants and/or place restrictions on our operating and financial flexibility. If we raise additional capital through debt financing, the terms of any new debt could further restrict our ability to operate our business.
On August 19, 2024, we and Aspen Aerogels Rhode Island, LLC, a Rhode Island limited liability company (Aspen RI and, together with the Company, each, a Borrower and collectively, the Borrowers) entered into a Credit, Security and Guaranty Agreement (the Credit Agreement and the facilities provided thereunder, collectively, the MidCap Loan Facility), by and among the Borrowers, MidCap Funding IV Trust, as agent (the Agent), MidCap Financial Trust, as term loan servicer, the financial institutions or other entities from time to time party thereto as lenders (the Lenders), and the other parties party thereto as additional guarantors and/or borrowers from time to time. On May 6, 2025, the Borrowers and Aspen Aerogels Georgia, LLC, a Georgia limited liability company (Aspen Georgia), entered into that certain Amendment No. 1 and Joinder to Credit, Security and Guaranty Agreement (Amendment No. 1), by and among the Borrowers, Aspen Georgia, the Agent and the Lenders party thereto, amending the MidCap Loan Facility, and on December 16, 2025, the Borrowers, Aspen Georgia, and Aspen Aerogels Mexico Holdings, LLC, a Delaware limited liability company (Aspen Mexico), entered into that certain Amendment No. 2 and Joinder to Credit, Security and Guaranty Agreement (Amendment No. 2), by and among the Borrowers, Aspen Georgia, Aspen Mexico, the Agent and the Lenders party thereto, further amending the MidCap Loan Facility (the MidCap Loan Facility, as amended by Amendment No. 1 and Amendment No. 2, the Amended MidCap Loan Facility). The proceeds of the Amended MidCap Loan Facility were used to repurchase our outstanding convertible note that was issued to Wood River Capital, LLC, an entity affiliated with Koch Disruptive Technologies, LLC, the payment of related fees and expenses and for working capital. Loans borrowed under the Amended MidCap Loan Facility mature on August 19, 2029.
The Amended MidCap Loan Facility is guaranteed by Aspen Mexico and Aspen Georgia (together with the Borrowers and any future subsidiaries that are required to become guarantors or borrowers pursuant to the terms of the Credit Agreement, collectively, the Loan Parties) and is secured by a lien on substantially all existing and after-acquired assets of the Loan Parties, including the equity interest in Aspen RI, Aspen Mexico and Aspen Georgia owned by us, in each case, subject to customary exceptions.
Pursuant to Amendment No. 1, the financial covenants under the MidCap Loan Facility were amended such that (a) the minimum Liquidity (as defined in the Amended MidCap Loan Facility) which must be maintained at all times has changed from $75 million to an amount equal to the greater of (i) $50 million and (ii) 85% of the then aggregate outstanding principal amount of the Term Loan Facility and (b) the minimum EBITDA level to be tested quarterly has changed to reflect a new range from $15 million to $50 million, with the next test set at $15 million with respect to the fiscal quarter ended June 30, 2025 and a $50 million level applicable commencing with the fiscal quarter ended December 31, 2027 and thereafter. The Liquidity amount trigger of a cash dominion event was also reduced from $100 million to an amount equal to the greater of (i) $50 million and (ii) 85% of the then aggregate outstanding principal amount of the Term Loan Facility.
Pursuant to Amendment No. 2, the financial covenants under the MidCap Loan Facility have been amended such that (a) the applicable minimum liquidity threshold (both for (i) the minimum liquidity financial covenant, which must be maintained by the Company at all times and (ii) the “Cash Dominion Event” definition for purposes of triggering cash dominion) has changed from (i) an amount equal to the greater of (x) $50 million and (y) 85% of the then aggregate outstanding principal amount of the Term Loan (as defined in the Amended MidCap Loan Facility) to (ii) an amount equal to the greater of (x) $50 million and (y) 100% of the then aggregate outstanding principal amount of the Term Loan and (b) the minimum EBITDA (as defined in the Amended MidCap Loan Facility) financial maintenance covenant has been removed entirely. In addition, the Amended MidCap Loan Facility includes representations and warranties, affirmative covenants (including reporting obligations), negative covenants and events of default that are usual and customary for facilities of this type, in each case, subject to certain permitted exceptions as set forth therein.
We are currently in compliance with the financial covenants set forth in the Amended MidCap Loan Facility and as described above. However, given the decline in our revenues in 2025 as compared to the prior year, there can be no assurance that we will comply with one or more of these financial covenants throughout 2026. If we default under the terms of the Amended MidCap Loan Facility beyond the applicable grace period, if any, the Lenders may declare all amounts outstanding under the Amended MidCap Loan Facility to be immediately due and payable and terminate all unused commitments to extend further credit under the Amended MidCap Loan Facility. If we are unable to repay the amounts due under the Amended MidCap Loan Facility upon such Lenders’ declaration, the Lenders could proceed against the collateral granted to it to secure the obligations under the Amended MidCap Loan Facility (including, but not limited to, taking control of our pledged assets and foreclosing on other collateral). In the event of a default under the terms of the Amended MidCap Loan Facility, the Lenders could also require us to renegotiate the Amended MidCap Loan Facility on terms less favorable to us. Either the enforcement by the Lenders upon its declaration to accelerate the obligations under the Amended MidCap Loan Facility or the renegotiation of the Amended MidCap Loan Facility’s terms, each as mentioned above, could adversely affect our operations. Further, if we are liquidated, the Lenders’ right to repayment, as well as the right to repayment of other lenders under any additional debt financing, would be senior to the rights of the holders of our common stock. The Lenders’ interests as lenders may not always be aligned with our interests. If our interests come into conflict with those of the Lenders, including in the event of a default or an Event of Default (as defined in the Amended MidCap Loan Facility) under the Amended MidCap Loan Facility, the Lenders may choose to act in its self-interest, which could adversely affect the success of our current and future collaborative efforts with the Lenders.
We have a focus on developing and selling products in the automotive industry, specifically for EV applications. In 2020 and 2021, we entered into contracts with GM to supply our thermal barrier products for use in the battery system of its EVs, and in 2023, we entered into thermal barrier production contracts with Toyota, Scania, ACC, Audi, a luxury brand of the Volkswagen Group, Volvo Truck, and a large EU battery manufacturer to supply a next generation vehicle platform of a major EU luxury sports car brand. We are currently selling thermal barrier production parts to GM, ToyotaToyota, and Scania,ACC, among others, and prototype thermal barrier parts to a number of other companies. We are also continuing our efforts to develop additional thermal barrier products for sale to others in the EV market. As a result of our existing contract with GM and other OEMs, current sales to others in the EV market and any future supply of our products to the automotive industry, including through specific contracts, we are subject to a number of risks, including, but not limited to:
Under our contracts with the GM, they are not obligated to make any purchases from us and may terminate the contractcontracts at any time. There can be no assurance that significant revenue, or any revenue at all, will result from the contract.contracts. In 2025, GM reduced its demand for our aerogel product, which had a significant adverse impact on our business and operations. If GM further reduces their demand for our aerogel products, it could have a significantfurther adverse impact on our business and operations.
In order to support the projections and estimates of our product demand that our potential automotive customers present to us, we may need to makemade substantial capital and other investments without any assurance that such potential demand will materialize. For example, under thea contract with GM, we are obligated to supply products up to a daily maximum quantity even without a specific purchase commitment. This requiresrequired us to invest in capacity, infrastructure and personnel. These investments could resultresulted in substantial capital expenditures withoutthat may not result in any commensurate increase in revenue, or any increase at all. Even if significant sales of our products to automotive OEMs materialize, the need to make these significant capital investments, as well as the costs related to developing these products and related process and manufacturing developments, and the costs of meeting the stringent requirements of the automotive industry, could result in sales to the automotive industry being significantly less profitable than we expect, or potentially unprofitable.
Automotive OEMs purchasing from us may have certain rights to intellectual property developed by us in connection with our work for that OEM. These rights could permit the OEM to purchase products similar to ours from other third partythird-party suppliers or to develop internally products that could replace our products in their manufacturing process.
We have engaged third-party external manufacturing facilities in China to supplement our supply of our aerogel products. If such external manufacturing facilities are unable to manufacture and deliver a sufficient quantity of high-quality products on a timely and cost-efficient basis, our net revenue and business operations may be harmed and our reputation may suffer.
We have engaged external manufacturing facilities in China for a supplemental supply of our aerogel products. We expect to meet our long-term aerogel demand by maximizing capacity at our East Providence facility and utilizing a flexible supply strategy, including but not limited to using our external manufacturing capabilities in China, which currently support Aspen’s Energy Industrial segment and are capable of delivering increased aerogel production capacity. Accordingly, we have ceased construction at our previously planned second manufacturing plant in Statesboro, Georgia and will be demobilizing the plant and are in the process of assessing options to derive value from the assets, including potentially relocating certain equipment to improve and expand our existing manufacturing facility in East Providence. If our external manufacturing facilities are unable to deliver the required aerogel product on a timely basis, we may experience delays in delivering our finished aerogel product to customers in the energy industrial market. In addition, because our third-party external manufacturing facilities have manufacturing facilities in China, their ability to provide us with adequate supplies of high-quality products on a timely and cost-efficient basis is subject to a number of additional risks and uncertainties, including political, social and economic instability and other factors that could impact the shipment of supplies. In 2022, the indirect parent of the external manufacturing facility we engaged in 2023 was added to the list of “Chinese military companies” that are “operating directly or indirectly in the United States” in accordance with Section 1260H of the National Defense Authorization Act for Fiscal Year 2021. There are certain government contract related restrictions that are or will be imposed on Section 1260H list entities and their controlled affiliates. While we currently have no contracts that would be affected by these restrictions, and the legal impact of being included on the list is relatively limited, our work with a listed entity may have a material adverse effect on our reputation and our business opportunities. If our manufacturers are unable to provide us with adequate supplies of high-quality aerogel products on a timely and cost-efficient basis, our operations could be disrupted and our revenue and business operations may suffer. Moreover, if our third-party external manufacturing facilities cannot consistently produce high-quality products that are free of defects and/or violates applicable worker or product safety rules, regulations or laws, we may experience a loss of customers, which may also reduce our revenues and may harm our reputation and brand. Furthermore, our third-party external manufacturing facilities may become subject to various supply chain disruptions, including for key inputs into their manufacturing process such as methanol. Such disruptions could be the result of pandemics or public health crises, and/or geopolitical disputes and conflicts, any of which could slow or halt the delivery of products to us and increase the price of certain materials due to resulting increases in costs of raw materials and shipping costs.
We are party to a production contract with a contract manufacturer in China to produce certain of our aerogel products. Pursuant to the contract, the contract manufacturer is obligated to deliver products to us as we issue purchase orders on an as needed basis through the term of the agreement, which expires in 2025. The term of the contract will automatically extend for additional one-year periods unless either party notifies the other of its intention not to renew the contract. While we have agreed to purchase our requirement for certain aerogel products, we have no obligation to purchase any minimum quantity under the contract. In addition, we may terminate the contract at any time and for any or no reason. As of December 31, 2024, we had open purchase orders with the contract manufacturer of approximately $18.8 million.
Our estimates regarding market opportunity for our products in the EV market and the assumptions on which our financial targets and our planned production capacity increases are based may prove to be inaccurate, which may cause our actual results to materially differ from such targets, which may adversely affect our future profitability, cash flows, and stock price.
Our estimates regarding market opportunity for our products in the EV market, the estimated awarded business of our thermal barrier business, the assumptions underlying our estimates regarding market opportunityopportunity, awarded business and our financial targets, including any revenue targets we may provide from time to time, are dependent on certain estimates and assumptions related to, among other things, demand for our products from our automotive OEM customers, development and launch of innovative new products, market share projections, product pricing and sale, volume and product mix, volatility, material prices, distribution, cost savings, and our ability to generate sufficient cash flow to reinvest in our existing business. Awarded business typically includes business under arrangements that our customers in the EV market have the right to terminate without penalty. If actual production orders from our EV market customers are not consistent with the projections we use in calculating the amount of our awarded business, we could realize substantially less revenue over the life of these projects. The estimates and financial targets and our planned production capacity increases are based on estimates that our management believes are reasonable with respect to our future results of operations, based on present circumstances, and have not been reviewed by our independent accountants. Some assumptions upon which the estimates and financial targets are based, however, invariably will not materialize due to the inevitable occurrence of unanticipated events and circumstances beyond our management’s control or the occurrence of events that were believed to be less likely to occur. Our estimates regarding market opportunity and our financial targets are based on historical experience and on various other estimates and assumptions that we believe to be reasonable under the circumstances and at the time they are made, and our actual results may differ materially from our expectations. Any material variation between our estimates and financial targets and our actual results may adversely affect our future profitability, cash flows and stock price.
While we achieved positive total cash flow for the fiscal year ended December 31, 2024, our ability to continue generating positive cash flow is uncertain.
To develop and expand our business, we have made, and will need to continue to make, significant up-front investments in our manufacturing capacity and have incurred research and development, sales and marketing and general and administrative expenses. In addition, our growth has required a significant investment in working capital. While we experienced positive cash flows from operating activities of $45.5 million for the year ended December 31, 2024, we have historically experienced negative cash flows from operating activities of $42.6 million and $94.4 million for the years ended December 31, 2023 and 2022, respectively. The negative cumulative cash flows from operating activities during 2023 and 2022 were exacerbated by cash flows used in investing activities to maintain, enhance and expand our manufacturing operations during the same time period. As a result, we experienced negative total cash flows during the three-year period.
We anticipate that we will incur cash outlays related to maintaining and making additional productivity improvements in our aerogel manufacturing operations in our East Providence facility. We may raise capital through debt financings, equity financings, partner financings, government grant and loan programs, or technology licensing agreements to fund these capital expenditure requirements in 2025, and beyond. However, we expect that our existing cash balance or cash balance after any such financing, alone, may periodically be insufficient to fund these operating, capital expenditure or working capital requirements.
While we expect our operating cash flow will be positive on an annual basis during 2025, we may not achieve sufficient revenue growth to generate positive cash flow in any future year. As a result, we may need to raise additional capital from investors to achieve our expected growth or to fund the working capital investment necessary to maintain operations. Any inability to generate positive future cash flow, to borrow funds or to raise additional capital on reasonable terms, if at all, may harm our short-term financial condition or threaten our long-term viability.
In order to fulfill the product delivery requirements of our direct and end-user customers, we plan for working capital needs in advance of customer orders. In particular, our OEM customers estimate and place their orders significantly in advance of the time they are needed, requiring us to plan our working capital needs well in advance of delivering their orders. As a result, we base our funding and inventory decisions on estimates of future demand. If demand for our products does not increase as quickly as we have estimated or drops off sharply, our inventory and expenses could rise, and our business and results of operations could suffer. Alternatively, if we experience sales in excess of our estimates, which has occurred in previous reporting periods, our working capital needs may be higher than currently anticipated. Additionally, in the early years of EV adoption, our EV customers’ forecasts have been and may continue to be prone to multiple and frequent revisions resulting in changing demand levels. Our ability to meet this excess or changing customer demand depends on our ability to arrange for additional financing for any ongoing working capital shortages, since it is likely that cash flow from sales will lag behind these investment requirements. If we are unable to obtain adequate financing when needed, it could adversely affect our ability to invest in the working capital required to maintain and grow our business.
Automotive OEM Customer Relationship Risks
Our relationships with automotive OEM customers involve multiple interconnected risks that could materially adversely impact our business, revenues, and profitability. These risks include but are not limited to being party to contracts without minimum commitments, pricing pressures, and cost reduction initiatives, selection of cell chemistries, battery pack system architectures, and customer market share and production declines.
We receive automotive OEM purchase orders for specific components supplied for particular vehicles. Typically, our automotive OEM customers agree to purchase their requirements for specific products but are not required to purchase any minimum quantity of products from us. Therefore, a significant decrease in demand for certain key models or groups of related models sold by any of our automotive OEM customers, a shift in our automotive OEM customers' purchasing strategy, or change in their battery form factor, or the ability of a manufacturer to re-source and discontinue from us for a particular model or group of models, could have a material adverse effect on us and reduce the value of the awarded business. To the extent that we do not maintain our existing business with our automotive OEM customers because of a decline in their production requirements or because the contracts expire or are terminated for convenience, we will need to attract new customers or gain new business with existing customers, or our results of operations and financial condition as well as the value of the awarded business will be adversely affected.
In addition, cost-cutting initiatives adopted by our customers in the EV market or our automotive OEM customers result in increased downward pressure on pricing. In addition, our customers in the EV market often reserve the right to terminate their supply contracts for convenience, which enhances their ability to obtain price reductions. Automotive OEMs also possess significant leverage over their suppliers, including us, because the automotive technology and component supply industry is highly competitive, serves a limited number of customers, has a high fixed cost base and historically has had excess capacity. Based on these factors, and the fact that our automotive OEM customers' product programs are anticipated to encompass large volumes, our customers are able to negotiate favorable pricing. Accordingly, we are subject to substantial continuing pressure from automotive OEMs to reduce the price of our products. It is possible that pricing pressures beyond our expectations could intensify as automotive OEMs pursue restructuring and cost-cutting initiatives. If we are unable to generate sufficient production cost savings in the future to offset price reductions, our gross margin and profitability would be adversely affected.
The cyclical nature of automotive sales and production can adversely affect our business. Furthermore, disruptions in the components that our customers in the EV market, including our automotive OEM customers, use in their products may adversely affect our business operations and projected revenue.
Our thermal barrier business, which is projected to grow in the coming years, is directly related to sales and vehicle production by our automotive OEMs. A reduction in automotive sales and production could cause our automotive OEM customers to reduce their orders of our products. Automotive sales and production are highly cyclical and are dependent on general economic conditions, customer confidence, and consumer preferences. Lower global automotive sales would be expected to result in our automotive OEM customers having reduced vehicle production schedules, which has a direct impact on our revenues generated from this portion of our business. Automotive sales and production can also be affected by labor relation issues, regulatory requirements, trade agreements, the availability of consumer financing and supply chain disruptions. Our customers in the EV market, particularly our automotive OEM customers, use a broad range of materials and supplies and are reliant on a global supply chain. A significant disruption in the global supply chain may cause them to halt or delay production, which in turn would reduce their requirements of our aerogel thermal barrier or delay their orders. We have no control over these disruptions in supply chain and the resulting delay or reduction in our customers’ orders. Any such delay or reduction would adversely impact our targets of awarded business for our thermal barriers and other products. Our sales are also affected by inventory levels and OEMs’ production levels. We cannot predict when OEMs will decide to increase or decrease inventory levels or whether new inventory levels will approximate historical inventory levels. Uncertainty and other unexpected fluctuations could have a material adverse effect on our business and financial condition.
Trends in the selection of cell chemistries, battery pack system architectures, and the adoption of active cooling methods may reduce thermal complexities to render the demand for our thermal barrier products less obvious. Furthermore, changes by our automotive OEM customers in the cell form factor may have a direct impact on the demand for our product.
EnergyFurthermore, densitytrends requirements for EV batteries have been consistently increasing,in the resulting choiceselection of cell chemistrieschemistries, battery pack system architectures, and packthe architecturesadoption haveof typicallyactive presentedcooling moremethods demandingmay reduce thermal problemscomplexities thatto render the demand for our thermal barrier products areless designedobvious. to address. However, dueDue to the safety issues, we believe that some vehicle manufacturers tend to select less thermally demanding and inherently safer cell chemistries and design choices at the expense of lower energy densities and lower driving range. Such systems may not present a demanding thermal problem requiring solutions like our thermal barrier products. If the EV landscape evolves in such direction, the demand for our products will not materialize or not meet our current forecasts, plans and expectations,materialize, which will have a material adverse effect on our business and operations.
Our current thermal barrier product is compatible with pouch and prismatic cells, but not cylindrical cells. Currently, one ofIf our automotive OEMs, GM, plans to use pouch and prismatic cells in its future EVs under its platform, which we expect will be a significant source of demand for our products. If GMcustomers were to switch to usinguse cylindrical cells for their platform, our current thermal barrier product would not be compatible, resulting in reduced demand for our product from one of our key automotive OEM customers, which would adversely affect our business and results of operations.
Our success in the EV market is dependent upon consumers’ willingness to purchase and use EVs and demand for EVs generally.
Our success in the EV market is highly dependent upon the purchase and use by consumers of EVs. If the market for EVs does not gain broad market acceptance or develops more slowly than we anticipate, our business, prospects, financial condition, and operating results will be harmed. The market for EVs is relatively new, rapidly evolving, characterized by rapidly changing technologies, price competition, additional competitors, evolving government regulation and industry standards, frequent new vehicle announcements, long development cycles for EVs OEMs, and changing consumer demands and behaviors. Factors that may influence the purchase and use of EVs include:
perceptions about vehicle safety in general and, in particular, safety issues that may be attributed to the use of advanced technology, including vehicle electronics and regenerative braking systems;
safety concerns around EVs generally and battery systems in particular; and access to charging stations, standardization of EVs charging systems and consumers’ perceptions about convenience and cost to charge an EV.
Management's Discussion & Analysis (MD&A)
New heading “Restructuring and Demobilization Costs”
New heading “Loss on Disposal of Property, Plant and Equipment”
New heading “Impairment of Property, Plant and Equipment”
New heading “Year ended December 31, 2025 compared to year ended December 31, 2024”
New heading “Loss on Disposal of Property, Plant and Equipment”
New heading “Income Tax Expense”
New heading “Standards to be Implemented After December 31, 2025”
New heading “Inventory Valuation”
New heading “Impairment of the Statesboro Plant”
Removed heading “Underwritten Offering”
Removed heading “Repurchase of Convertible Note”
Removed heading “Year ended December 31, 2023 compared to year ended December 31, 2022”
Removed heading “Standards to be Implemented”
Removed heading “Revenue Recognition”
Largest changes
“Pursuant to Amendment No. 1, the financial covenants under the MidCap Loan Facility were amended such that (a) the minimum Liquidity (as defined in the Amended MidCap Loan Facility) which must be maintained at all times has changed from $75 million to an amount equal to the greater of (i) $50 million and (ii) 85% of the then aggregate outstanding principal amount of the Term Loan Facility and (b) the minimum EBITDA level to be tested quarterly has changed to reflect a new range from $15 million to $50 million, with the next test set at $15 million with respect to the fiscal quarter ended …”see in full comparison
“Pursuant to Amendment No. 1, the financial covenants under the MidCap Loan Facility were amended such that (a) the minimum Liquidity (as defined in the Amended MidCap Loan Facility) which must be maintained at all times has changed from $75 million to an amount equal to the greater of (i) $50 million and (ii) 85% of the then aggregate outstanding principal amount of the Term Loan Facility and (b) the minimum EBITDA level to be tested quarterly has changed to reflect a new range from $15 million to $50 million, with the next test set at $15 million with respect to the fiscal quarter ended June …”see in full comparison
“Pursuant to Amendment No. 2, the financial covenants under the MidCap Loan Facility have been amended such that (a) the applicable minimum liquidity threshold (both for (i) the minimum liquidity financial covenant, which must be maintained by the Company at all times and (ii) the “Cash Dominion Event” definition for purposes of triggering cash dominion) has changed from (i) an amount equal to the greater of (x) $50 million and (y) 85% of the then aggregate outstanding principal amount of the Term Loan (as defined in the Amended MidCap Loan Facility) to (ii) an amount equal to the greater of …”see in full comparison
“Pursuant to Amendment No. 2, the financial covenants under the MidCap Loan Facility have been amended such that (a) the applicable minimum liquidity threshold (both for (i) the minimum liquidity financial covenant, which must be maintained by the Company at all times and (ii) the “Cash Dominion Event” definition for purposes of triggering cash dominion) has changed from (i) an amount equal to the greater of (x) $50 million and (y) 85% of the then aggregate outstanding principal amount of the Term Loan (as defined in the Amended MidCap Loan Facility) to (ii) an amount equal to the greater of …”see in full comparison
“The Amended MidCap Loan Facility includes representations and warranties, affirmative covenants (including reporting obligations), negative covenants and events of default that are usual and customary for facilities of this type, in each case, subject to certain permitted exceptions as set forth therein. …”see in full comparison
“During 2024, we experienced strong volume growth in our thermal barrier products. As a result, we experienced total revenue growth of 90% during the year. Our expectation for 2025 revenue is based, in part, on our OEM customers’ production volume forecasts and targets. Our OEM customers operate in a cyclical industry that is sensitive to shifting consumer trends, political and regulatory uncertainty and economic conditions in the markets they operate. …”see in full comparison
Full comparison: every changed paragraph (156)
Investors and others should note that we routinely use the Investors section of our website to announce material information to investors and the marketplace. While not all of the information that we post on the Investors section of our website is of a material nature, some information could be deemed to be material. Accordingly, we encourage investors, the media, and others interested in us to review the information that we share on the Investors section of our website, https://www.aerogel.com/. The information contained on, or that can be accessed through, our website is not a part of, or incorporated by reference in, this Annual Report on Form 10-K or our other filings with the SEC. We have included our website address in this Annual Report on Form 10-K solely as an inactive textual reference.
We arehave actively developingdeveloped a number of promising aerogel products and technologies for the electric vehicle (EV) market.market, We have developed and are commercializingincluding our proprietary line of PyroThin® aerogel thermal barriers for use in battery packs in EVs. Our PyroThin product is an ultra-thin, lightweight and flexible thermal barrier designed with other functional layers to impede the propagation of thermal runaway across multiple lithium-ion battery system architectures. Our thermal barrier technology is designed to offer a unique combination of thermal management, mechanical performance and fire protection properties. These properties enable EV manufacturers to achieve critical battery performance and safety goals.goals Inby addition,impeding the Company's carbon aerogel initiative seeks to increase the performancepropagation of thermal runaway in lithium-ion battery cellssystems at the battery cell, module, and pack levels across multiple lithium-ion battery system architectures. Our ultra-thin, lightweight and flexible thermal barriers are designed to enableallow EVbattery manufacturers to reduceachieve chargingcritical timesafety andgoals thewithout costsacrificing ofenergy EVs.density.
The commercial potential for our PyroThin thermal barriers and our carbon aerogel initiative in the EV market is significant.
We have entered into multi-year production contracts with a number of automotive EV original equipment manufacturer (OEM) customers to supply fabricated, multi-part thermal barriers for use in the battery systems of their EV models. These customers include General Motors LLC (GM), Toyota, Scania, Automotive Cells Company, which is a battery cell joint venture between Stellantis N.V, Saft-TotalEnergies and Mercedes-Benz (ACC), Audi, a luxury brand of the Volkswagen Group, Volvo Truck, and a large EU battery manufacturer to supply a next generation vehicle platform of a major EU luxury sports car brand. We are currently supplying thermal barrier production parts to bothGM, General MotorsToyota, and Toyota,ACC, and thermal barrier prototype parts to a number of global manufacturers of EVs, grid storagestorage, and home battery systems. During 2024,2025, 20232024 and 2022,2023, we sold $306.8$168.9 million, $110.1$306.8 million and $55.6$110.1 million, respectively, of our PyroThin thermal barriers.barriers, primarily to GM.
We also design, develop and manufacture innovative, high-performance aerogel insulation used primarily in the energy industrial market. We believe our aerogel blankets deliver the best thermal performance of any widely used insulation product available on the market today and provide a combination of performance attributes unmatched by traditional insulation materials. Our insulation products help end-users to improve resource efficiency, reduce energy consumption, and reduce the carbon footprint of their operations. These products enable compact system design, reduce installation time and costs, promote freight and logistics cost savings, reduce system weight, minimize required storage space, and enhance job site safety. Our insulation products reduce the incidence of corrosion under insulation, which is a significant maintenance cost and safety issue in energy industrial facilities. Our end-user customers select our products where thermal performance is critical and to save money, improve resource efficiency, enhance sustainability, preserve operating assetsassets, and protect workers. Our insulation is used by oil producers and the owners and operators of refineries, petrochemical plants, liquefied natural gas (LNG) facilities, power generating assetsassets, and other energy industrial sites. Our Pyrogel® and Cryogel® product lines have undergone rigorous technical validation by industry leading end-users and achieved significant market adoption.
We also derive revenue from a number of other end markets. Customers in these markets use our products for applications as diversesuch as military and commercial aircraft,aircrafts, trains, buses, appliances, apparel, footwear and outdoorbuses. gear. As we continue to enhance our Aerogel Technology Platform, weWe believe we will have additional opportunities to address high-value applications in the global insulation market, andas well as in aadjacent numbermarket opportunities such as energy storage applications, including battery energy storage systems, electrification applications and other potential adjacent applications subject to their commercial potential, the differentiation of new,our high-value markets, including hydrogen energy, filtration, water purification,products, and gasthe sorption.ability to leverage our existing manufacturing platform.
We market and sell our products primarily through a sales force based in North America, EuropeEurope, and Asia. The efforts of our sales force are supported by a small number of sales consultants with extensive knowledge of a particular market or region. Our sales force is responsible for establishing and maintaining customer and partner relationships, delivering highly technical information and ensuring high-quality customer service.
We manufacture our products using our proprietary technology at our facility in East Providence, Rhode Island.Island, Wewhich we have operated the East Providence facility since 2008 and have increased our capacity in phases.2008. During 2024, we converted our East Providence facility to support the growth of the thermal barrier program. ToWe manage the capacity of our East Providence facility on an ongoing basis in order to meet expected demand for our aerogel products,products. weWe plan to make additional productivity improvements in our existing East Providence facility andalso utilize a flexible supply strategy, includingincluding, but not limited toto, use of our external manufacturing capabilities in China, which currently support Aspen’sour Energy Industrial segment and are capable of delivering increased aerogel production capacity. We expect that the productivity improvements in our existing East Providence facility as well as the supply from our external manufacturing facility will permit us to achieve our target revenue capacity in 2025.segment. Pursuant to our supply contract with this contract manufacturer, they are obligated to deliver products to us as we issue purchase orders on an as-needed basis through the term of the contract. The contract automatically renews year-to-year unless either party notifies the other of its intention not to renew the contract. While we have agreed to purchase our requirement for certain Energy Industrial products from the contract manufacturer, we have no obligation to purchase any minimum quantity under the contract and we may terminate the contract at any time and for any or no reason. Additionally, we have entered into a contract with Prodensa Servicios de Consultora (Prodensa) to establish OPE Manufacturer Mexico S de RL de CV, a maquiladora located in Mexico (OPE), which assembles thermal barrier PyroThin products and operates an automated fabrication facility for PyroThin. PursuantWe tosubsequently suchpurchased contract,OPE we pay Prodensafor a managementnominal feevalue andin haveaccordance anwith optionthe to purchase OPE from Prodensa after a periodterms of 18 months. As of December 31, 2024, we have notified Prodensa of our intent to purchase OPE. We expect to meet our long-term Thermal Barrier program demand by maximizing capacity at our East Providence facility and utilizing a flexible supply strategy, including but not limited to using our external manufacturing capabilities, which currently support Aspen’s Energy Industrial segment and are capable of delivering increased aerogel production capacity. Accordingly, we have ceased construction at our previously planned second manufacturing plant in Statesboro, Georgia. We will be demobilizing the plant and are in the process of assessing options to derive value from the assets, including potentially relocating certain equipment to improve and expand our existing manufacturing facility in East Providence.agreement.
We expect to meet demand for our aerogel products by utilizing both our East Providence facility and our flexible supply strategy, including, but not limited to, using our external manufacturing capabilities.
Underwritten Offering
In October 2024, we entered into an underwriting agreement (the Underwriting Agreement) with Goldman Sachs & Co. LLC and Morgan Stanley & Co. LLC (collectively, the Underwriters), pursuant to which we issued and sold an aggregate of 4,887,500 shares of our common stock, which included 637,500 shares pursuant to the Underwriters’ option to purchase additional shares of our common stock, to the Underwriters in a registered underwritten offering (the Offering). The price to the public in the Offering was $20.00 per share. The net proceeds to us from the Offering were approximately $93.2 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.
On August 19, 2024, we and Aspen Aerogels Rhode Island, LLC, a Rhode Island limited liability company (Aspen RI and, together with the Company, each, a Borrower and collectively, the Borrowers) entered into a Credit, Security and Guaranty Agreement (the Credit Agreement and the facilities provided thereunder, collectively, the MidCap Loan Facility), by and among the Borrowers, MidCap Funding IV Trust, as agent (the Agent), MidCap Financial Trust, as term loan servicer,servicer (the Term Loan Servicer), the financial institutions or other entities from time to time party thereto as lenders (the Lenders), and the other parties party thereto as additional guarantors and/or borrowers from time to time. The proceeds of the MidCap Loan Facility have beenwere used into connectionrepurchase withour theoutstanding transactionconvertible contemplated by the Note Repurchase Agreement (as defined below),note, the payment of related fees and expenses and for working capital of the Company and its subsidiaries.capital. Loans borrowed under the MidCap Loan Facility mature on August 19, 2029.
On May 6, 2025, the Borrowers and Aspen Aerogels Georgia, LLC, a Georgia limited liability company (Aspen Georgia), entered into that certain Amendment No. 1 and Joinder to Credit, Security and Guaranty Agreement (Amendment No. 1), by and among the Borrowers, Aspen Georgia, the Agent and the Lenders party thereto, amending the MidCap Loan Facility and on December 16, 2025, the Borrowers, Aspen Georgia, and Aspen Aerogels Mexico Holdings, LLC, a Delaware limited liability company (Aspen Mexico), entered into that certain Amendment No. 2 and Joinder to Credit, Security and Guaranty Agreement (Amendment No. 2), by and among the Borrowers, Aspen Georgia, Aspen Mexico, the Agent and the Lenders party thereto, further amending the MidCap Loan Facility (the MidCap Loan Facility, as amended by Amendment No. 1 and Amendment No. 2, the Amended MidCap Loan Facility).
The Amended MidCap Loan Facility is guaranteed by Aspen Mexico and Aspen Georgia (together with the Borrowers and any future subsidiaries that are required to become guarantors or borrowers pursuant to the terms of the Credit Agreement, collectively, the Loan Parties) and is secured by a lien on substantially all existing and after-acquired assets of the Loan Parties, including the equity interest in Aspen RI, Aspen Mexico and Aspen Georgia owned by us, in each case, subject to customary exceptions.
Pursuant to Amendment No. 1, the financial covenants under the MidCap Loan Facility were amended such that (a) the minimum Liquidity (as defined in the Amended MidCap Loan Facility) which must be maintained at all times has changed from $75 million to an amount equal to the greater of (i) $50 million and (ii) 85% of the then aggregate outstanding principal amount of the Term Loan Facility and (b) the minimum EBITDA level to be tested quarterly has changed to reflect a new range from $15 million to $50 million, with the next test set at $15 million with respect to the fiscal quarter ended June 30, 2025 and a $50 million level applicable commencing with the fiscal quarter ended December 31, 2027 and thereafter. The Liquidity amount trigger of a cash dominion event was also reduced from $100 million to an amount equal to the greater of (i) $50 million and (ii) 85% of the then aggregate outstanding principal amount of the Term Loan Facility.
Pursuant to Amendment No. 2, the financial covenants under the MidCap Loan Facility have been amended such that (a) the applicable minimum liquidity threshold (both for (i) the minimum liquidity financial covenant, which must be maintained by the Company at all times and (ii) the “Cash Dominion Event” definition for purposes of triggering cash dominion) has changed from (i) an amount equal to the greater of (x) $50 million and (y) 85% of the then aggregate outstanding principal amount of the Term Loan (as defined in the Amended MidCap Loan Facility) to (ii) an amount equal to the greater of (x) $50 million and (y) 100% of the then aggregate outstanding principal amount of the Term Loan (as defined in the Amended MidCap Loan Facility) and (b) the minimum EBITDA (as defined in the Amended MidCap Loan Facility) financial maintenance covenant has been removed entirely.
The Amended MidCap Loan Facility includes representations and warranties, affirmative covenants (including reporting obligations), negative covenants and events of default that are usual and customary for facilities of this type, in each case, subject to certain permitted exceptions as set forth therein. In addition, the mandatory prepayment provisions were revised to make clear that any mandatory prepayment of the loans under the Amended MidCap Loan Facility made with proceeds of an asset sale will be used to reduce the Company’s required amortization payments in direct order of maturity, and the basket for making permitted acquisitions under the Amended MidCap Loan Facility was reduced.
The MidCap Loan Facility is comprised of (i) a term loan facility in an aggregate principal amount of $125.0 million (the Term Loan Facility) and (ii) an asset-based revolving credit facility in an aggregate principal amount not to exceed the lesser of (A) $100.0 million and (B) the value of the borrowing base (defined as the sum of (x) 85% of certain eligible accounts of the Borrowers and (y) the lesser of 85% of the NOLV (as defined in the Credit Agreement) or 85% of the cost of certain eligible inventory of the Borrowers) (the Revolving Facility). Loans borrowed under the Term Loan Facility will bear an interest rate equal to Term SOFR (as defined in the Credit Agreement) for a one-month interest period plus 4.50% per year, subject to a Term SOFR floor of 4.50% and a Term SOFR cap of 7.50%. Loans borrowed under the Revolving Facility will bear an interest rate equal to Term SOFR plus 4.60% per year, subject to a Term SOFR floor of 2.50%. The Term Loan Facility is subject to amortization of principal, payable quarterly on the last day of each quarter, commencing September 30, 2024, in an amount as set forth in the Credit Agreement with the remaining aggregate principal amount payable on the maturity date. The Revolving Facility has a required minimum balance set at 30% of the average borrowing base during the immediate preceding month. The Borrowers are required to pay the Lenders under the Revolving Facility an unused line fee of 0.30% of the average unused availability under the Revolving Facility, subject to the aforementioned minimum balance.
The MidCap Loan Facility is guaranteed by Aspen Aerogels Mexico Holdings and is secured by a lien on substantially all existing and after-acquired assets of the Loan Parties, including the equity interest in Aspen RI, Aspen Aerogels Mexico Holdings and Aspen Aerogels Georgia owned by us, in each case, subject to customary exceptions. Aspen Aerogels Georgia is not a guarantor (thus not a Loan Party) and its assets are excluded from the collateral under the MidCap Loan Facility, subject to its entrance into the DOE Loan Documents (as defined in the Credit Agreement) within one year from the closing date of the MidCap Loan Facility. To the extent the DOE Loan Documents will not be entered into within such one-year period, Aspen Aerogels Georgia will be obligated to become a Loan Party under the MidCap Loan Facility and pledge substantially all of its assets as security for the obligations thereunder.
Repurchase of Convertible Note
On August 19, 2024, we entered into a note purchase and sale agreement (the Note Repurchase Agreement) with Wood River Capital, LLC (Wood River), an entity affiliated with Koch Disruptive Technologies, LLC, pursuant to which we repurchased from Wood River $123.9 million in aggregate capitalized principal amount (inclusive of PIK interest paid through June 30, 2024) of Convertible Senior PIK Toggle Notes due 2027, dated February 18, 2022, as amended by Amendment No. 1 to Convertible Senior PIK Toggle Notes due 2027, dated November 28, 2022 (the Convertible Note), such aggregate amount being the entire outstanding amount of the Convertible Note, for a total purchase price of $150.0 million in cash, which amount equals to the Redemption Price (as defined in the Convertible Note). Pursuant to the Note Repurchase Agreement, all rights and obligations, covenants and agreements under the Convertible Note and the underlying note purchase agreement were satisfied and discharged.
On March 16, 2022, we entered into a sales agreement for an at-the-market offering program with Cowen and Company, LLC and Piper Sandler & Co., as our sales agents (the 2022 ATM offering program). During the year ended December 31, 2022, we sold 5,241,400 shares of our common stock through the 2022 ATM offering program and received net proceeds of $72.7 million. The 2022 ATM offering program was terminated on June 20, 2023.
On March 28, 2022, we sold to an affiliate of Koch, 1,791,986 shares of our common stock for aggregate gross proceeds of $50.0 million, pursuant to a securities purchase agreement, dated as of February 15, 2022, by and between us and the affiliate of Koch.
On November 29, 2022, we completed an underwritten public offering of 29,052,631 shares of our common stock at a public offering price of $9.50 per share. We received net proceeds of $267.5 million after deducting underwriting discounts and commissions of $8.1 million and offering expenses of approximately $0.5 million.
The following table presents a reconciliation of net loss,income (loss), the most directly comparable U.S. GAAP measure, to Adjusted EBITDA for the years presented:
Represents non-cash stock-based compensation related to vesting and modifications of stock option grants, vesting of restricted stock units and vesting(RSUs) and modification of restricted common stock.stock, and cash settled RSUs issued in March 2025.
The following table presents a reconciliation of net loss,income (loss), the most directly comparable U.S. GAAP measure, to Adjusted EBITDA for the quarters presented:
Represents non-cash stock-based compensation related to vesting and modifications of stock option grants, vesting of restricted stock unitsRSUs and vesting and modification of restricted common stock.stock, and cash settled RSUs issued in March 2025.
During 2025, we experienced a significant decline in volume for our thermal barrier products, primarily driven by lower North American EV production levels. As a result, total revenue decreased by 40% compared to the prior year. Our expectation for 2026 thermal barrier revenue is based, in part, on our OEM customers’ production forecasts. The automotive industry in which our OEM customers operate is cyclical and is sensitive to changes in consumer demand, regulatory environments, and broader economic conditions. EV adoption rates in certain markets have been lower than previously anticipated, influenced in part by changes in regulatory frameworks and incentive programs as well as evolving consumer demand. OEMs have adjusted production plans and investment timelines accordingly. These actions have resulted in revised capacity plans and re-timed EV-related investments, particularly in North America. In addition, changes in trade policy and other macroeconomic factors have impacted both our customers and our operating environment, and we expect these conditions to continue to influence demand. OEM customers continue to pursue cost reduction and product redesign initiatives, which may result in engineering changes to the components we supply. Our supply agreements generally include pricing step-down provisions over the production life of a program, consistent with industry practice. We expect thermal barrier revenues to decline in 2026, primarily due to lower anticipated production volumes. In February 2026, there was a fire at our manufacturing facility in East Providence, Rhode Island, which damaged one of our emissions control units and rendered it inoperable. If our remaining emissions control unit were to fail or otherwise cease to operate before the damaged unit is replaced, or if demand for our products increases materially before our damaged emissions control is replaced, we may not able to meet customer demand for our products, which could have a material adverse impact our revenue and earnings.
We expect energy industrial revenue to increase in 2026, driven by anticipated volume growth in our core petrochemical and refinery markets, project-based demand, and continued penetration into adjacent applications.
In response to these developments, we plan to continue cost reduction measures, including reduced headcount and operational efficiency initiatives. As a result, we expect Adjusted EBITDA to decline in 2026 primarily due to lower thermal barrier revenue. However, we expect net loss to improve relative to 2025, as the impairment recorded for the previously planned second plant in Statesboro, Georgia is not expected to recur. We also expect capital expenditures to decrease in 2026.
During 2024, we experienced strong volume growth in our thermal barrier products. As a result, we experienced total revenue growth of 90% during the year. Our expectation for 2025 revenue is based, in part, on our OEM customers’ production volume forecasts and targets. Our OEM customers operate in a cyclical industry that is sensitive to shifting consumer trends, political and regulatory uncertainty and economic conditions in the markets they operate. EV adoption rates in some of our customers’ markets are expected to be at a slower rate than originally expected and EV investment continues to be re-timed as demand expectations in North America and Europe are reset. However, some of our OEM customers have been gaining market share from a low base volume and expect to continue to gain market share in 2025. Furthermore, changes are being considered to government and economic policies, incentives, and tariffs that may impact our customers and our production, sales, cost structure and the competitive landscape. Additionally, our OEM customers continue to innovate which could result in engineering changes to the parts we supply primarily to reduce costs for our OEMs. Cost-cutting initiatives adopted by our customers may result in increased downward pressure on pricing. Accordingly, we expect thermal barrier revenues could range from a decline to moderately higher in 2025. However, we are expecting an increase in energy industrial revenues. We are projecting growth in energy industrial revenue due to expected volume growth in our core petrochemical and refinery markets, an anticipated increase in project-based demand and continued penetration of new markets. We will continue to adjust to these developments, and we believe our ongoing cost reduction, including improved production innovation and efficiency, will continue to benefit us. As a result, we expect to experience a decline to no or minimal growth in net income and Adjusted EBITDA during 2025. We also expect to incur reduced capital expenditures during 2025.
Energy industrial revenue accounted for 38%, 32%, 54%, and 69%54% of total revenue for the years ended December 31, 2024,2025, 20232024 and 2022,2023, respectively. We experienced a 90%40% increasedecrease in total revenue during 20242025 driven by the increasedecreases in our EV business and energy industrial business, particularly in North America,Latin and continuedNorth growth in the EV market.America.
Cost of product revenue consists primarily of materials and manufacturing expense.expenses. Cost of product revenue is recorded when the related product revenue is recognized.
Material is a significant component of cost of product revenue and includes fibrous batting, silica materialsmaterials, CO2 and other additives. Material costs as a percentage of product revenue were 38%,42%, 36%38% and 51%36% for the years ended December 31, 2024,2025, 20232024 and 2022,2023, respectively. Material costs as a percentage of product revenue vary from product to product due to differences in average selling prices, material requirements, product thicknesses, and manufacturing yields. In addition, we provide warranties for our products and record the estimated cost within cost of revenue in the period that the related revenue is recorded or when we become aware that a potential warranty claim is probable and can be reasonably estimated. As a result of these factors, material costs as a percentage of product revenue will vary from period to period due to changes in the mix of aerogel products sold, the costs of our raw materials or the estimated cost of warranties. In addition, global supply chain disturbances, increased reliance on foreign materials procurement, industrial gas supply constraints, increases in the cost of our raw materials, engineering changes, higher prototype sales and other factors may significantly impact our material costs and have a material impact on our operations. We expect that material costs will increasedecrease in absolute dollars during 20252026 due to projected growthdecline in product shipments and contracts but remain stable as a percentage of revenue due to improved manufacturing, and fabrication yields and a favorable mix of products sold.
Manufacturing expense is also a significant component of cost of revenue. Manufacturing expense includes labor, utilities, maintenance expense, and depreciation on manufacturing assets. Manufacturing expense also includes stock-based compensation of manufacturing employees and shipping costs. Manufacturing expense as a percentage of product revenue was 22%,33%, 46%22% and 44%46% for the years ended December 31, 2024,2025, 20232024 and 2022,2023, respectively. We expect that manufacturing expense will remain relatively flatdecline in absolute dollars, due to ongoing cost reduction efforts, and increase as a percentage of revenue during 20252026 due to lower expected revenues from the thermal barrier business, including the operation of an automated fabrication facility in Monterrey, Mexico.business.
InDuring the longer term,2026, we expect gross profit to improvedecline in absolute dollars and as a percentage of revenue due to expected increasesdecreases in total revenue,revenue and production volumesvolumes, andoffset partially by manufacturing productivity. In addition, we expect the gross profit improvement derived from the increases in revenue, volume and productivity will be supported by the continued implementation of lower cost product formulations and realization of material purchasing efficiencies.
Research and development expenses consist primarily of expenses for personnel engaged in the development of next generation aerogel compositions, form factors and manufacturing technologies. These expenses also include testing services, prototype expenses, consulting services, trial formulations for new products, equipment depreciation, facilities costs and related overhead. We expense research and development costs as incurred. We expect to continue to devote substantial resources to the development of new aerogel technologies, including our carbon aerogel battery materials. We believe that these investments are necessary to maintain and improve our competitive position. We also expect to continue to invest in research and engineering personnel and the infrastructure required in support of their efforts.technologies.
General and administrative expenses consist primarily of personnel costs, legal expenses, consulting and professional services, audit fees, compliance with securities, corporate governance and related laws and regulations, investor relations and insurance premiums, including director and officer insurance. We expect our general and administrative expenses to increasedecrease as we add general and administrative personnel to support the anticipated growth ofcontinue our business.ongoing cost reduction measures, including reduced headcount. We also expect that the patent enforcement actions, described in more detail under “Legal Proceedings” in Part I, Item 3 of this Annual Report on Form 10-K, if protracted, could result in significant legal expenseexpenses over the medium to long-term.time.
Restructuring and Demobilization Costs
Restructuring and demobilization costs consists of severance and other personnel costs, and costs associated with the demobilization of our previously planned Statesboro Plant.
Loss on Disposal of Property, Plant and Equipment
During the fiscal year ended December 31, 2025, loss on disposal of property, plant and equipment consists of charges to remeasure at fair value less costs to sell the assets of our previously planned Statesboro Plant which have been classified as assets held for sale.
Impairment of Property, Plant and Equipment
During the fiscal year ended December 31, 2025, impairment of property, plant and equipment consists of impairment incurred on our previously planned Statesboro Plant and impairment of other property, plant and equipment in connection with a restructuring action.
During the fiscal year ended December 31, 2024, the impairment of equipment under development was the result of a charge for impairment of assets due to obsolescence following the development of new and more efficient equipment.
Interest expense, convertible note - related party is net of the capitalized interest related to the $100.0 million in aggregate principal amount of our 2022 Convertible Senior PIK Toggle Notes.Note.
Interest expense consists of interest expense and amortization or write-off of deferred financing costs related to our other financing arrangementsarrangements, including our Amended MidCap Loan Facility, a failed sale and leaseback arrangement accounted as a financing transaction and interest earned on the cash balances invested in deposit accounts, money market accounts, and high-quality debt securities issued by the U.S. government.
On August 19, 2024, we entered into a note purchase and sale agreement (the Note PurchaseRepurchase Agreement,Agreement) with Wood River, LLC (Wood River), an entity affiliated with Koch Disruptive Technologies, LLC (Koch), pursuant to which we repurchased from Wood River $123.9 million in aggregate capitalized principal amount (inclusive of PIK interest paid through June 30, 2024) of the 2022 Convertible Note, such aggregate amount being the entire outstanding amount of the 2022 Convertible Note, for a total purchase price of $150.0 million in cash, which amount equals to the Redemption Price (as defined in the 2022 Convertible Note). Pursuant to the Note Repurchase Agreement, all rights and obligations, covenants and agreements under the 2022 Convertible Note and the Note Purchase Agreement were satisfied and discharged. The Redemption Price less capitalized principal amount and accrued interest to redemption date, of $24.6 million along with unamortized deferred issuance costs was classified in the income statement as Loss on Extinguishment of Debt.
Employee retention credit consists of other income related to our submitted filings for CARESemployee retention credits under the Coronavirus Aid, Relief and Economic Safety Act (the Employee Retention Credits.Credits).
Year ended December 31, 2025 compared to year ended December 31, 2024
Total revenue decreased $181.6 million, or 40%, to $271.1 million in 2025 from $452.7 million in 2024. The decrease in total revenue was the result of decreases in both energy industrial and thermal barrier revenue.
Energy industrial revenue decreased by $43.7 million, or 30%, to $102.2 million in 2025 from $145.9 million in 2024. This decrease was driven by a decrease in revenue from the global petrochemical and refinery markets of North America, Europe, and Latin America, and in project-based demand in the subsea market, offset in part by an increase in revenue from the global petrochemical and refinery market of Asia.
Energy industrial revenue for the years ended December 31, 2025 and 2024 included $24.1 million and $28.8 million in sales to Distribution, respectively. The average selling price per square foot of our products decreased by $0.16, or 3%, to $4.95 per square foot for the year ended December 31, 2025, from $5.11 per square foot for the year ended December 31, 2024. The decrease in average selling price reflected a change in the mix of products sold. This decrease in average selling price had the effect of decreasing product revenue by approximately $3.3 million for the year ended December 31, 2025.
In volume terms, product shipments decreased by 7.9 million square feet, or 28%, to 20.6 million square feet of aerogel products for the year ended December 31, 2025, as compared to 28.5 million square feet for the year ended December 31, 2024. The decrease in product volume had the effect of decreasing product revenue by approximately $40.4 million for the year ended December 31, 2025.
Thermal barrier revenue decreased by $137.9 million, or 45%, to $168.9 million in 2025 from $306.8 million in 2024. Thermal barrier revenue for the year ended December 31, 2025 included $160.3 million to a major U.S. automotive OEM. Thermal barrier revenue for the year ended December 31, 2024 included $291.2 million to a major U.S. automotive OEM and $5.9 million to a major Asian automotive OEM.
Energy industrial revenue as a percentage of total revenue was 38% and 32% of total revenue in 2025 and in 2024, respectively. Thermal barrier revenue was 62% and 68% of total revenue in 2025 and in 2024, respectively.
Total cost of revenue decreased $44.7 million, or 17%, to $225.1 million in 2025 from $269.8 million in 2024 driven by declines in both thermal barrier and energy industrial cost of revenues.
Energy industrial cost of revenue decreased $22.4 million, or 26%, to $65.0 million from $87.4 million in the comparable period in 2024. The $22.4 million decrease was the result of a $13.7 million decrease in material costs and an $8.7 million decrease in manufacturing and other operating costs due to lower volume in comparison to the same period in 2024.
Thermal barrier cost of revenue decreased $22.3 million to $160.1 million as compared to $182.4 million in the comparable period in 2024. The $22.3 million decrease was the result of a $44.4 million decrease in material cost, partially offset by accelerated depreciation of $22.1 million on certain assets whose useful lives were lowered to align utilization with revised expected demand. Material costs decreased primarily due to lower volume and operational efficiencies generating lower scrap.
What changed in the latest 10-Q
Risk Factors
The ownership of our securities involves a number of risks and uncertainties. When evaluating the Company and our business before making an investment decision regarding our securities, potential investors should carefully consider the risk factors and uncertainties described in Part I, Item 1A. “Risk Factors” of our Annual Report. Since the filing of our Annual Report, there have been no material changes in our risk factors, other than as disclosed in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2026. We may disclose changes to risk factors or additional risk factors from time to time in our future filings with the SEC.
Removed heading “We are dependent on a single manufacturing facility located in East Providence, Rhode Island, as well as our third-party external manufacturing facility in China. Any significant disruption to these facilities or the failure of any of these facilities to operate according to our expectations could have a material adverse effect on our business and results of operations.”
Largest changes
“We are dependent on a single manufacturing facility located in East Providence, Rhode Island, as well as our third-party external manufacturing facility in China. Any significant disruption to these facilities or the failure of any of these facilities to operate according to our expectations could have a material adverse effect on our business and results of operations.”see in full comparison
“We are reliant on a single manufacturing facility located in East Providence, Rhode Island, as well as our third-party external manufacturing facility in China, to meet customer demand. Our ability to meet customer demand depends on efficient, proper and uninterrupted operations at our East Providence facility and our external manufacturing facility in China. …”see in full comparison
“In January 2026, there was a fire at our manufacturing facility in East Providence, Rhode Island, which damaged one of our emissions control units and rendered it inoperable. Until the damaged emissions control unit is replaced, we are reliant on our one remaining emissions control unit, which is older and smaller than the damaged control unit, to continue manufacturing operations at our East Providence facility and to meet customer demand for certain of our products. Furthermore, on April 8, 2026, an explosion occurred at our manufacturing facility in East Providence, Rhode Island. …”see in full comparison
“The insurance policies we maintain to cover losses caused by fire or natural disaster, including business interruption insurance, may not adequately compensate us for any such losses. Moreover, these insurance policies will not address the adverse impacts of any loss of customers that may result from such events and may have large deductibles insufficient to support our continuing operations.”see in full comparison
The ownership of our securities involves a number of risks and uncertainties. When evaluating the Company and our business before making an investment decision regarding our securities, potential investors should carefully consider the risk factors and uncertainties described in Part I, Item 1A. “Risk Factors” of our Annual Report. Since the filing of our Annual Report, there have been no material changes in our risk factors, other than assee in full comparisondescribeddisclosedbelow.in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2026. We may disclose changes to risk factors or additional risk factors from time to time in our future filings with the SEC.
Full comparison: every changed paragraph (5)
The ownership of our securities involves a number of risks and uncertainties. When evaluating the Company and our business before making an investment decision regarding our securities, potential investors should carefully consider the risk factors and uncertainties described in Part I, Item 1A. “Risk Factors” of our Annual Report. Since the filing of our Annual Report, there have been no material changes in our risk factors, other than as describeddisclosed below.in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2026. We may disclose changes to risk factors or additional risk factors from time to time in our future filings with the SEC.
We are dependent on a single manufacturing facility located in East Providence, Rhode Island, as well as our third-party external manufacturing facility in China. Any significant disruption to these facilities or the failure of any of these facilities to operate according to our expectations could have a material adverse effect on our business and results of operations.
We are reliant on a single manufacturing facility located in East Providence, Rhode Island, as well as our third-party external manufacturing facility in China, to meet customer demand. Our ability to meet customer demand depends on efficient, proper and uninterrupted operations at our East Providence facility and our external manufacturing facility in China. Accordingly, in the event of a significant disruption to our sole manufacturing facility or third-party external manufacturing facility in China, or breakdown of any production lines, we may not have sufficient inventory in stock to meet demand until the operations can be restored. In addition, power failures or disruptions, the breakdown, failure, or substandard performance of equipment, or the damage or destruction of buildings and other facilities due to fire or natural disasters could severely affect our ability to continue our operations. In the event of such disruptions, we are unlikely to find suitable alternatives or may not be able to make needed repairs on a timely basis and at reasonable cost, which could have a material adverse effect on our business and results of operations. In particular, our manufacturing processes include the use of high pressures, high temperatures, and flammable chemicals, which subject us to a significant risk of loss resulting from fire, spill, or related event.
In January 2026, there was a fire at our manufacturing facility in East Providence, Rhode Island, which damaged one of our emissions control units and rendered it inoperable. Until the damaged emissions control unit is replaced, we are reliant on our one remaining emissions control unit, which is older and smaller than the damaged control unit, to continue manufacturing operations at our East Providence facility and to meet customer demand for certain of our products. Furthermore, on April 8, 2026, an explosion occurred at our manufacturing facility in East Providence, Rhode Island. The incident related to a high temperature oven and resulted in damage to a portion of the facility’s production space and temporary cessation of operations. As of May 8, 2026, the facility remains offline. We continue to work with the relevant authorities to execute a plan to resume operations. We expect that restart of operations at the manufacturing facility will be in stages and is dependent on the continued progress of mechanical, operational and safety reviews and our work with local and state agencies. To date, we believe we have mitigated any significant commercial impact of the disruption by working through inventory and by leveraging the capacity of our external manufacturing facility. However, our ability to continue to mitigate the impacts of the disruption assume that the staged restart of our East Providence manufacturing facility proceeds as we currently expect, and that we are able to continue to meet customer demand for our products through a combination of restored production in East Providence, production at our external manufacturing facility, and other efforts to mitigate the impact of the disruptions. If we are unable to resume normal operations at our manufacturing facility in East Providence in a timely manner or manufacture the full array of our products, it may impact our ability to meet customer demand, which could have a material adverse impact on our business, results of operations and financial condition. Even if we are successful in our mitigation efforts, if we experience increased customer demand, we may be unable to produce sufficient product to meet such increased customer demand, which could have a material adverse impact on our business, results of operations and financial condition.
The insurance policies we maintain to cover losses caused by fire or natural disaster, including business interruption insurance, may not adequately compensate us for any such losses. Moreover, these insurance policies will not address the adverse impacts of any loss of customers that may result from such events and may have large deductibles insufficient to support our continuing operations.
Management's Discussion & Analysis (MD&A)
New heading “Results of Operations”
New heading “Six months ended June 30, 2026 compared to the six months ended June 30, 2025”
New heading “Cost of Revenue”
New heading “Research and Development Expenses”
New heading “Sales and Marketing Expenses”
New heading “General and Administrative Expenses”
New heading “Other Income (Expense), net”
New heading “Income Tax Expense”
Removed heading “Restructuring and Demobilization Costs”
Removed heading “Restructuring and Demobilization Costs”
Largest changes
“Six months ended June 30, 2026 compared to the six months ended June 30, 2025”see in full comparison
“In February 2025, we announced and began implementing a restructuring plan to realign our operational focus to improve costs and align capital expenditure to anticipated long-term demand. The plan included reducing our headcount and ceasing construction of our previously planned Statesboro Plant. In connection with the demobilization, we are no longer pursuing our application for a loan from the Department of Energy’s Loan Programs Office and have withdrawn from the loan application process. …”see in full comparison
Full comparison: every changed paragraph (97)
The following information and any forward-looking statements should be considered in light of factors discussed elsewhere in this Quarterly Report on Form 10-Q, including Part II, Item 1 “Financial Statements,” which includes our financial statements and related notes, and under the sections titled “Risk Factors” in Item 1A of the Annual Report, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, and this Quarterly Report on Form 10-Q.
We also derive revenue from a number of other end markets. Customers in these markets have used our products for applications such as military aircrafts,aircraft, trains, and buses. We believe we will have additional opportunities to address high-value applications in the global insulation market, as well as in adjacent market opportunities such as energy storage applications, including battery energy storage systems, electrification applications, and other potential adjacent applications subject to their commercial potential, the differentiation of our products, and the ability to leverage our existing manufacturing platform.
We manufacture our products using our proprietary technology at our facility in East Providence, Rhode Island, which we have operated since 2008, as well as by utilizing our external manufacturing facility in China. We manage the capacity of our East Providence facility on an ongoing basis in order to meet expected demand for our aerogel products. We also utilize a flexible supply strategy, including, but not limited to, use of our external manufacturing facility in China, which currently supportsupports our Energy Industrial segment. We are working closely with our external manufacturing facility as we seek to expand its capabilities to support our Energy Industrial and Thermal Barrier segments and to enhance short- and long-term supply flexibility. Pursuant to our supply contract with this contract manufacturer, they are obligated to deliver products to us as we issue purchase orders on an as-needed basis through the term of the contract. The contract automatically renews year-to-year unless either party notifies the other of its intention not to renew the contract. While we have agreed to purchase our requirement for certain Energy Industrial products from the contract manufacturer, we have no obligation to purchase any minimum quantity under the contract, and we may terminate the contract at any time and for any or no reason. Additionally, we previously entered into a contract with Prodensa Servicios de Consultora (Prodensa) to establish OPE Manufacturer Mexico S de RL de CV, a maquiladora located in Mexico (OPE), which assembles thermal barrier PyroThin products and operates an automated fabrication facility for PyroThin. We subsequently purchased OPE for a nominal value in accordance with the terms of the agreement.
On April 8, 2026, an explosion occurred at our manufacturing facility in East Providence, Rhode Island. The incident related to a high temperature oven and resulted in damage to a portion of the facility’s production space and the temporary cessation of operations.operations As(the ofApril 2026 Incident). On May 8,14, 2026, we initiated a staged restart of the facility remainsand offline.we Weare continue to workproceeding with the relevant authorities to execute a planphased to resume operations, which restart is dependent on the continued progressramp-up of mechanical, operational and safety reviews and our work with local and state agencies.production. To date, we believe we have mitigated any significant commercial impact of the disruption by working through inventoryexisting and byinventory, leveraging the capacity of our external manufacturing facility, and resuming limited production at our East Providence facility. However, our ability to continue to mitigate the impacts of the disruption assumeassumes that the staged restart of our East Providence manufacturing facility proceeds as we currently expect, and that we are able to continue to meet customer demand for our products through a combination of restored production in East Providence, production at our external manufacturing facilityfacility, and other efforts to mitigate the impact of the disruptions. If we are unable to resume normal operations at our manufacturing facility in East Providence in a timely manner or manufacture the full array of our products, it may impact our ability to meet customer demand, which could have a material adverse impact on our business, results of operations and financial condition. Even if we are successful in our mitigation efforts, if we experience increased customer demand, we may be unable to produce sufficient product to meet such increased customer demand, which could have a material adverse impact on our business, results of operations and financial condition.
Our revenue for the threesix months ended MarchJune 31,30, 2026 was $37.9$87.7 million, which represented a decrease of $40.8$69.0 million, or 52%,44%, from $78.7$156.7 million of revenue for the threesix months ended MarchJune 31,30, 2025. Net loss for the threesix months ended MarchJune 31,30, 2026 was $23.7$47.0 million and net loss per share was $0.29.$0.57. Net loss for the threesix months ended MarchJune 31,30, 2025 was $301.2$310.3 million and net loss per share was $3.67.$3.78. Revenue for the threesix months ended MarchJune 31,30, 2026 includes $3.5$8.4 million of revenue from a settlement agreement with a customer for $37.6 million for a claim for certain losses incurred arising from lower forecasted long-term demand by the customer which is being deferred and recognized as revenue over a period of approximately two years.years from the settlement date.
We use Adjusted EBITDA, a non-GAAP financial measure, as a means to assess our operating performance. We define Adjusted EBITDA as net income (loss) before interest expense, taxes, depreciation, amortization, stock-based compensation expense and other items, from time to time, which we do not believe are indicative of our core operating performance. These excluded items include costs related to the East Providence Incidents, including expedited freight, professional fees, and the incremental cost of temporarily sourcing certain Energy Industrial products from our external manufacturing facility until the East Providence facility returns to full production capacity. Adjusted EBITDA is a supplemental measure of our performance that is not presented in accordance with U.S. GAAP. Adjusted EBITDA should not be considered as an alternative to net income (loss) or any other measure of financial performance calculated and presented in accordance with U.S. GAAP. In addition, our definition and presentation of Adjusted EBITDA may not be comparable to similarly titled measures presented by other companies.
(2)
Other (income) expense, net in the accompanying condensed consolidated statement of operations includes an $8.9 million insurance recovery receivable recognized in connection with the April 2026 Incident. For purposes of calculating Adjusted EBITDA, this amount has been presented separately to enhance comparability between periods.
(3)
Represents an $8.9 million insurance recovery receivable recognized in connection with the April 2026 Incident. This amount is included within Other (income) expense, net in the accompanying condensed consolidated statement of operations and fully offsets the loss on property damage recognized during the period.
(4)
Represents items management believes are not indicative of ongoing operating performance related to the East Providence Incidents, including expedited freight and professional fees.
During 2025, we experienced a significant decline in volume for our thermal barrier products, primarily driven by lower North American EV production levels. As a result, total thermal barrier revenue decreased by 67%47% compared to the prior year. Our expectation for 2026 thermal barrier revenue is based, in part, on our OEM customers’ production forecasts. The automotive industry in which our OEM customers operate is cyclical and is sensitive to changes in consumer demand, regulatory environments, and broader economic conditions. EV adoption rates in certain markets have been lower than previously anticipated, influenced in part by changes in regulatory frameworks and incentive programs as well as evolving consumer demand. OEMs have adjusted production plans and investment timelines accordingly. These actions have resulted in revised capacity plans and re-timed EV-related investments, particularly in North America. In addition, changes in trade policy and other macroeconomic factors have impacted both our customers and our operating environment, and we expect these conditions to continue to influence demand. OEM customers continue to pursue cost reduction and product redesign initiatives, which may result in engineering changes to the components we supply. Our supply agreements generally include pricing step-down provisions over the production life of a program, consistent with industry practice. We expect thermal barrier revenues tofor continuefull year 2026 to decline in 2026 compared to 2025, primarily due to lower anticipated production volumes. In addition, we have experienced operational disruptions at our manufacturing facility in East Providence, Rhode Island in 2026, which have adversely impacted our manufacturing capacity and are expected to increase near-term costs. In January 2026, there was a fire at our manufacturing facility in East Providence, Rhode Island. The January 2026 fire damaged one of our emissions control units and rendered it inoperable. Subsequently, on April 8, 2026, an explosion occurred at our manufacturing facility in East Providence, Rhode Island. The incident related to a high temperature oven and resulted in damage to a portion of the facility’s production space and temporary cessation of operations. As of May 8, 2026, the facility remains offline. We continue to work with the relevant authorities to execute a plan to resume operations, which restart is dependent on the continued progress of mechanical, operational and safety reviews and our work with local and state agencies. To date, we believe we have mitigated any significant commercial impact of the disruption by working through inventory and by leveraging the capacity of our external manufacturing facility. However, our ability to continue to mitigate the impacts of the disruption assume that the staged restart of our East Providence manufacturing facility proceeds as we currently expect, and that we are able to continue to meet customer demand for our products through a combination of restored production in East Providence, production at our external manufacturing facility and other efforts to mitigate the impact of the disruptions. If we are unable to resume normal operations at our manufacturing facility in East Providence in a timely manner or manufacture the full array of our products, it may impact our ability to meet customer demand, which could have a material adverse impact on our business, results of operations and financial condition. Even if we are successful in our mitigation efforts, if we experience increased customer demand, we may be unable to produce sufficient product to meet such increased customer demand, which could have a material adverse impact on our business, results of operations and financial condition.
In addition, we have experienced operational disruptions at our manufacturing facility in East Providence, Rhode Island in 2026, which have adversely impacted our manufacturing capacity and are expected to increase near-term costs. In January 2026, there was a fire at our manufacturing facility in East Providence, Rhode Island (the January 2026 Incident). The January 2026 Incident damaged one of our emissions control units and rendered it inoperable. Subsequently, on April 8, 2026, an explosion occurred at our manufacturing facility in East Providence, Rhode Island (the April 2026 Incident, and together with the January 2026 Incident, the “East Providence Incidents”). The incident related to a high temperature oven and resulted in damage to a portion of the facility’s production space and the temporary cessation of operations. On May 14, 2026, we initiated a staged restart of the facility and we are proceeding with a phased ramp-up of production. To date, we believe we have mitigated any significant commercial impact of the disruption by working through existing inventory, leveraging the capacity of our external manufacturing facility, and resuming limited production at our East Providence facility. However, our ability to continue to mitigate the impacts of the disruption assumes that the staged restart of our East Providence manufacturing facility proceeds as we currently expect, and that we are able to continue to meet customer demand for our products through a combination of restored production in East Providence, production at our external manufacturing facility and other efforts to mitigate the impact of the disruptions. If we are unable to resume normal operations at our manufacturing facility in East Providence in a timely manner or manufacture the full array of our products, it may impact our ability to meet customer demand, which could have a material adverse impact on our business, results of operations and financial condition. Even if we are successful in our mitigation efforts, if we experience increased customer demand, we may be unable to produce sufficient product to meet such increased customer demand, which could have a material adverse impact on our business, results of operations and financial condition.
These efforts to mitigate the disruption atfrom ourthe East Providence manufacturing facilityIncidents and expand the external manufacturing facility’s capabilities, including expedited freight and expedited repair costs related to our East Providence manufacturing facility, are expected to result in increased costs of revenue and increased general and administrative expenses during 2026.
We expect Adjusted EBITDA to decline in 2026 primarily due to lower thermal barrier revenue, as well as the increased costs of revenue and increased general and administrative expenses during 2026 related to the supply disruptions and mitigation efforts resulting from the operational disruptions at our East Providence manufacturing facility.revenue. However, we expect net loss to improve relative to 2025, as the impairment recorded for the previously planned second plant in Statesboro, Georgia (the Statesboro Plant) is not expected to recur. We also expect capital expenditures to decrease in 2026.
Material is a significant component of cost of product revenue and includes fibrous batting, silica materials and additives. Material costs as a percentage of product revenue vary from product to product due to differences in average selling prices, material requirements, product thicknesses, and manufacturing yields. In addition, we provide warranties for our products and record the estimated cost within cost of revenue in the period that the related revenue is recorded or when we become aware that a potential warranty claim is probable and can be reasonably estimated. As a result of these factors, material costs as a percentage of product revenue will vary from period to period due to changes in the volume and mix of aerogel products sold, the costs of our raw materials or the estimated cost of warranties. In addition, global supply chain disturbances, increased reliance on foreign materials procurement, industrial gas supply constraints, increases in the cost of our raw materials, engineering changes, higher prototype sales and other factors may significantly impact our material costs and have a material impact on our operations. During 2026, we expect to incur increased costs of revenue primarily due to the supply disruptions and mitigation efforts resulting from the operational disruptions atfrom ourthe East Providence manufacturing facility.Incidents.
Our gross profit as a percentage of revenue is affected by a number of factors, including the volume of products produced and sold, the mix of products sold, average selling prices, our material and manufacturing costs and realized capacity utilization. Accordingly, we expect our gross profit to vary significantly in absolute dollars and as a percentage of revenue from period to period. During 2026, we expect gross profit to decline in absolute dollars and as a percentage of revenue due to expected decreases in total revenue and production volumes.volumes and the inclusion of certain related costs associated with the East Providence Incidents in cost of revenue.
General and administrative expenses consist primarily of personnel costs, legal expenses, consulting and professional services, audit fees, compliance with securities, corporate governance and related laws and regulations, investor relations and insurance premiums, including director and officer insurance. During 2026, while we expect to continue our ongoing cost reduction measures, we expect our general and administrative expenses to increase due to the impact of supply disruptions and mitigation efforts resulting from the operational disruptions atfrom ourthe East Providence manufacturing facility.Incidents.
We expect that the patent enforcement actions, described in more detail under “Legal Proceedings” in Part I, Item 3 of our Annual Report and “Legal Proceedings” in Part II, Item 1 of this Quarterly Report on Form 10-Q, if protracted, could result in significant legal expense over the medium to long-term.
Restructuring and Demobilization Costs
Reflects the write-off of the net book value of property, plant and equipment damaged in the April 2026 Incident during the three months ended June 30, 2026.
Interest expense, net consists of interest expense and amortization or write-off of deferred financing costs related to our other financing arrangements including our Amended MidCap Loan Facility (as defined below), a failed sale and leaseback arrangement accounted as a financing transaction, and interest earned on the cash balances invested in deposit accounts, money market accounts, and high-quality debt securities issued by the U.S. government.
Three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025
Total revenue decreased $40.8$28.2 million, or 52%,36%, to $37.9$49.8 million for the three months ended MarchJune 31,30, 2026 from $78.7$78.0 million in the comparable period in 2025. The decrease in total revenue was the result of decreases in thermal barrier revenue and energy industrial revenue.
Energy industrial revenue decreased by $8.2$2.4 million, or 28%,11%, to $21.6$20.4 million for the three months ended MarchJune 31,30, 2026 from $29.8$22.8 million in the comparable period in 2025. This decrease was driven by a decrease in revenue from the global petrochemical and refinery markets of NorthAsia, America, AsiaEurope, and Latin America, and project-based demand in the subsea market, offset in part by an increase in revenue from the global petrochemical and refinery market of Europe.North America.
Energy industrial revenue for the three months ended MarchJune 31,30, 2026 included $4.7$5.5 million and $3.6$4.6 million from two North American distributors, in comparison to $2.5$2.6 million and $10.7$1.7 million for the comparable period of 2025.
The average selling price per square foot of our energy industrial products decreased by 5%6% for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025. The decrease in average selling price reflected a change in the mix of products sold. This decrease in average selling price had the effect of decreasing product revenue by $1.1$1.3 million for the three months ended MarchJune 31,30, 2026 from the comparable period in 2025.
In volume terms, energy industrial product shipments decreased by 24%5% as measured by square feet of our energy industrial products shipped for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025. The decrease in volume had the effect of decreasing product revenue by $7.1$1.1 million for the three months ended MarchJune 31,30, 2026 from the comparable period in 2025.
Thermal barrier revenue decreased by $32.6$25.8 million, or 67%,47%, to $16.3$29.4 million for the three months ended MarchJune 31,30, 2026 from $48.9$55.2 million in the comparable period in 2025. During the three months ended MarchJune 31,30, 2026 and 2025, thermal barrier revenue included $11.2$23.7 million and $47.4$53.8 million, respectively, from a major U.S. automotive OEM. The decrease in thermal barrier revenue was driven by a reduction in the volume of parts ordered by our OEM customer and a lower contractual component price during the period compared to the same period in the prior year. Thermal Barrierbarrier revenue for the three months ended MarchJune 31,30, 2026 includes $3.5$4.9 million of revenue from a settlement agreement with a customer for $37.6 million for a claim for certain losses incurred arising from lower forecasted long-term demand by the customer which is being deferred and recognized as revenue over a period of approximately two years.years from the settlement date.
Total cost of revenue decreased $22.3$6.1 million, or 40%,12%, to $33.6$46.6 million for the three months ended MarchJune 31,30, 2026 from $55.9$52.7 million in the comparable period in 2025. The decrease in total cost of revenue was the result of a decrease in thermal barrier cost of revenue offset by an increase in energy industrial cost of revenue.
Energy industrial cost of revenue increased $0.2$2.0 million, or 1%,14%, to $18.3$16.5 million for the three months ended MarchJune 31,30, 2026 from $18.1$14.5 million in the comparable period in 2025, primarily due to a higher volume of energy industrial products manufactured at our plant and allocation received of overheads during temporary plant shutdown.2025. The $0.2$2.0 million increase resulted from aan $5.7increase of $8.1 million increase in manufacturing costs, unabsorbed overheads, and other operating costs, partially offset by a $5.5decrease of $6.1 million decrease in material costs due to lower volume. The higher manufacturing costs were driven by a shift in production of energy industrial products from an external facility to our plant compared to the prior year, combined with the allocation of overheads during our temporary plant shutdown.costs.
Thermal barrier cost of revenue decreased $22.5$8.1 million, or 59%,21%, to $15.3$30.1 million for the three months ended MarchJune 31,30, 2026 from $37.8$38.2 million in the comparable period in 2025. The $22.5$8.1 million decrease was the result of a $13.9decrease of $15.4 million decrease in manufacturing costs and ana $8.6decrease of $5.0 million decrease in material costs.costs partially offset by an increase of $7.0 million in costs due to the plant shut-down, and $5.3 million in costs related to the East Providence Incidents. Material costs decreased primarily due to lower volume and operational efficiencies generating lower scrap.volume. Manufacturing costs decreased due to lower volumes in comparison to the same period in 2025,volumes, benefits from the headcount reduction and other cost cutting efforts in 2026 offset by the allocations of overheads during our temporary plant shutdown.efforts.
Total gross profit decreased by $18.5$22.0 million, or 81%,87%, to $4.3$3.3 million in gross profit for the three months ended MarchJune 31,30, 2026 from $22.8$25.3 million in the comparable period in 2025. The decrease in gross profit was the result of the $40.8$28.2 million decrease in total revenue,revenue partially offset byand the $22.3inclusion millionof decreasecertain related costs associated with the East Providence Incidents in total cost of revenue.
Research and development expenses decreased by $1.6$0.6 million, or 37%,16%, to $2.7$3.2 million for the three months ended MarchJune 31,30, 2026 from $4.3$3.8 million in the comparable period in 2025. The $1.6$0.6 million decrease reflects a decrease in operating material and supplies of $0.3 million, decreases in compensation and related costs of $1.0$0.2 million, driven by a headcount reduction, a decrease in utility expenses of $0.5 million and a decrease in other expenditures of $0.1 million.
Research and development expenses as a percentage of total revenue increased to 7%6% of total revenue for the three months ended MarchJune 31,30, 2026 from 6%5% in the comparable period in 2025.
Sales and marketing expenses decreasedincreased by $1.7less than $0.1 million, or 20%,0%, to $6.7$7.0 million for the three months ended MarchJune 31,30, 2026 from $8.4$6.9 million in the comparable period in 2025. The $1.7less than $0.1 million decreaseincrease primarily reflects decreasesincreases in compensation and related costs of $1.4 million, partially driven by a headcount reduction, freight related expenses of $0.2 million and other expenses of $0.1 million.costs.
Sales and marketing expenses as a percentage of total revenue increased to 18%14% of total revenue for the three months ended MarchJune 31,30, 2026 from 11%9% in the comparable period in 2025.
General and administrative expenses increased by $2.3 million, or 17%, to $15.3 million for the three months ended March 31, 2026 from $13.0 million in the comparable period in 2025. The $2.3 million increase was the result of a $1.9 million increase in property taxes, $1.1 million increase in bonus expense, $0.5 million increase in professional fees, $0.4 million increase in foreign currency losses, $0.3 million increase in information technology costs and a $0.1 million increase in other expenses, offset by a decrease in base compensation and benefit costs of $1.5 million and $0.5 million decrease in insurance costs.
General and administrative expenses asdecreased aby percentage$0.8 ofmillion, totalor revenue increased6%, to 40%$13.0 million for the three months ended MarchJune 31,30, 2026 from 17%$13.8 million in the comparable period in 2025. The $0.8 million decrease was primarily the result of a decrease in insurance fees of $0.8 million.
General and administrative expenses as a percentage of total revenue increased to 26% for the three months ended June 30, 2026 from 18% in the comparable period in 2025.
Restructuring and Demobilization Costs
During the three months ended March 31, 2026, we began implementing a restructuring plan to consolidate the operations of the automated fabrication facility in Mexico to improve costs. The plan includesincluded reducing our headcount in Mexico and consolidating facilities. In connection with the restructuring, we incurred $0.4 million of severance costs for headcount reduction. During the three months ended June 30, 2026 we did not incur restructuring and demobilization costs.
In February 2025, we announced and began implementing a restructuring plan to realign our operational focus to improve costs and align capital expenditure to anticipated long-term demand. The plan included reducing our headcount and ceasing construction of our previously planned Statesboro Plant. In connection with the demobilization, we are no longer pursuing our application for a loan from the Department of Energy’s Loan Programs Office and have withdrawn from the loan application process. Restructuring and demobilization costs include severance and other personnel costs of $2.9$3.1 million,million and facility closures and other costs associated with demobilization of $0.8$1.8 million and write off of deferred financing costs of $6.2 million incurred in connection with pursuing financing for the constructionthree ofmonths theended plant.June 30, 2025.
Impairment of property, plant and equipment costs for the three months ended MarchJune 31,30, 2025 of less than $1.0 million was due to impairment incurred of $286.6 million on ourresearch previouslyand planneddevelopment Statesboro Plant.equipment.
On April 8, 2026, an explosion occurred at our manufacturing facility in East Providence, Rhode Island. The incident related to a high temperature oven and resulted in damage to a portion of the facility’s production space and the temporary cessation of operations. On May 14, 2026, we initiated a staged restart of the facility.
During the three months ended June 30, 2026, we incurred an $8.9 million loss on property damage associated with the April 2026 Incident.
The $1.2$0.3 million increasedecrease in interest expense, net for the three months ended MarchJune 31,30, 2026 is primarily due to the result of a decrease in interest income of $1.3$0.4 million.
During the three months ended June 30, 2026, we recorded a receivable for estimated insurance recoveries of $8.9 million within other income related to property damage resulting from the April 2026 Incident. The receivable reflects management's estimate of probable insurance recoveries associated with the net book value of damaged property, plant and equipment.
The other income decrease of $1.1 million for the three months ended March 31, 2026 is primarily due to the result of a legal settlement payment to us in the comparable period in 2025.
Income Tax Benefit (Expense)
The $0.6 million of income tax expense for the three months ended June 30, 2026 is primarily related to an expense of $0.6 million related to our Mexican maquiladora operations. The $0.8 million of income tax expense for the three months ended June 30, 2025 is related to our Mexican maquiladora operations, in addition to a provision for state income taxes of $0.4 million.
Results of Operations
Six months ended June 30, 2026 compared to the six months ended June 30, 2025
The following tables set forth a comparison of the components of our results of operations for the periods presented:
Total revenue decreased $69.0 million, or 44%, to $87.7 million for the six months ended June 30, 2026 from $156.7 million in the comparable period in 2025. The decrease in total revenue was the result of decreases in energy industrial revenue and thermal barrier revenue.
Energy industrial revenue decreased by $10.6 million, or 20%, to $42.0 million for the six months ended June 30, 2026 from $52.6 million in the comparable period in 2025. This decrease was driven by a decrease in revenue from the global petrochemical and refinery markets of Asia, Latin America, North America, Europe, and project-based demand in the subsea market.
Energy industrial revenue for the six months ended June 30, 2026 included $10.2 million and $8.2 million from two North American distributors, in comparison to $12.3 million and $5.3 million for the comparable period of 2025.
The average selling price per square foot of our energy industrial products decreased by 5% for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The decrease in average selling price reflected a change in the mix of products sold. This decrease in average selling price had the effect of decreasing product revenue by $2.3 million for the six months ended June 30, 2026 from the comparable period in 2025.
In volume terms, energy industrial product shipments decreased by 16% as measured by square feet of our energy industrial products shipped for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The decrease in volume had the effect of decreasing product revenue by $8.3 million for the six months ended June 30, 2026 from the comparable period in 2025.
ASPN insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 1 filing (1 insider, 1 trade date, 12,280,426 shares, about $58.1M). Net open-market shares: -12,280,426 (purchases minus sales); net value about -$58.1M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-30 | Deegan Glenn E. |
Shares withheld for tax | 1,143 | $5.48 | $6.3K |
| 2026-09-23 | Wood River Capital, Llc |
Open-market sale | 12,280,426 | $4.73 | $58.1M |
| 2026-06-23 | Noglows William P |
Option exercise | 14,799 | $4.75 | $70.3K |
| 2026-05-13 | Mitchell Steven R |
Grant/award | 10,370 | — | — |
| 2026-05-13 | Sweetnam James E |
Grant/award | 10,370 | — | — |
| 2026-05-13 | Noglows William P |
Grant/award | 10,370 | — | — |
| 2026-05-13 | Kool Kathleen |
Grant/award | 10,370 | — | — |
| 2026-05-13 | Robinson Cari |
Grant/award | 10,370 | — | — |
Well-known investors holding ASPN (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 1,276,346 | $8.1M | 0.0% | Added 143% |
| Millennium Management (Israel Englander) | 2026-06-30 | 1,190,616 | $7.5M | 0.01% | Reduced 15% |
| D. E. Shaw & Co. | 2026-06-30 | 1,066,501 | $6.8M | 0.0% | Added 28% |
| Two Sigma Investments | 2026-06-30 | 779,468 | $4.9M | 0.0% | Added 77% |
| Renaissance Technologies | 2026-06-30 | 274,392 | $1.7M | 0.0% | New position |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 238,731 | $1.5M | 0.0% | Reduced 59% |
| Point72 Asset Management (Steve Cohen) | 2026-06-30 | 9,006 | $57.1K | 0.0% | Reduced 96% |