Aspen Aerogels, Inc. (ASPN) Q4 2022 Earnings Call Transcript

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Aspen Aerogels, Inc. (NYSE:ASPN) Q4 2022 Earnings Conference Call February 16, 2023 8:30 AM ET

Company Participants

Laura Guerrant - VP, IR and Corporate Communications

Don Young - President and CEO

Ricardo Rodriguez - CFO

Conference Call Participants

Eric Stine - Craig-Hallum

Colin Rusch - Oppenheimer

Chris Souther - B. Riley

Alex Potter - Piper Sandler

George Gianarikas - Canaccord Genuity

Jeff Osborne - Cowen

Amit Dayal - H.C. Wainwright


Good morning. Thank you for attending Aspen Aerogels, Inc. 2022 Financial Results Call. [Operator Instructions]

I would now for illustration to move nan convention complete to your host, Laura Guerrant, Aspen's Vice President of Investor Relations and Corporate Communications. Thank you. You whitethorn proceed, Ms. Guerrant.

Laura Guerrant

Thank you, Elliot. Good greeting and convey you for joining america for nan Aspen Aerogels fiscal twelvemonth 2022 and 4th fourth financial results convention call. With america coming are Don Young, President and CEO; and Ricardo Rodriguez, Chief Financial Officer.

There are a fewer housekeeping items that I would for illustration to reside earlier turning nan telephone complete to Don. The property merchandise announcing Aspen's financial results and business developments arsenic good arsenic a reconciliation of management's usage of non-GAAP financial measures compared to nan astir applicable U.S. mostly accepted accounting principles aliases GAAP measures is disposable connected nan Investors conception of Aspen's website,

Included successful nan property merchandise is simply a summary connection of operations, a summary equilibrium expanse and a summary of cardinal financial and operating statistic for nan 2022 4th fourth and afloat twelvemonth ended December 31, 2022. In addition, I'd for illustration to item that we person uploaded to our website, a descent platform that will travel our speech today. You tin find nan platform astatine nan Investors conception of our website. An archive of today's webcast will beryllium connected our website for astir 1 year.

Please statement that our chat coming will see forward-looking statements including immoderate statements regarding outlook, expectations, beliefs, projections, estimates, targets, prospects business plans and immoderate different connection that is not a humanities fact. These forward-looking statements are taxable to risks and uncertainties. Aspen Aerogels existent results whitethorn disagree materially from those expressed successful these forward-looking statements. A database of factors that could impact nan company's existent results tin beryllium recovered successful Aspen's property merchandise issued yesterday, Page 1 of nan position and are discussed successful much item connected nan reports Aspen files pinch nan SEC, peculiarly successful nan company's astir caller yearly study connected Form 10-Q. The Company's property merchandise issued yesterday and filings pinch nan SEC tin besides beryllium recovered successful nan Investors conception of Aspen's website. Forward-looking statements made coming correspond nan company's views arsenic of coming February 16, 2023. Aspen Aerogels disclaims immoderate responsibility to update these forward-looking statements to bespeak early events aliases circumstances.

During this call, we will mention to non-GAAP financial measures, including adjusted EBITDA. These financial measures are not prepared successful accordance pinch GAAP. These non-GAAP financial measures are not intended to beryllium considered successful isolation aliases arsenic a substitute for results prepared successful accordance pinch GAAP. The definitions and reconciliations of these non-GAAP financial measures to nan astir straight comparable GAAP financial measures and a chat of why we coming these non-GAAP financial measures, are included successful yesterday property release.

And 1 last note. During nan Q&A session, successful nan liking of time, we inquire that you limit your questions to 2 questions astatine a time. If you person further questions beyond nan first two, please get backmost into nan queue and we will get to each questions.

I'll now move nan telephone complete to Don. Don?

Don Young

Thanks, Laura. Good morning, everyone. Thank you for joining america for our Q4 2022 net call.

I will commencement pinch comments connected our performance, our Q4 financing, our outlook for 2023 and our highlights from our EV OEM improvement work. Ricardo will talk business results and outlook successful detail. We will reason pinch a Q&A session.

During nan 4th quarter, we had grounds PyroThin thermal obstruction revenue, somewhat surpassing nan $25 cardinal people and a robust power business bid book, which together enabled america to execute our target of $180 cardinal pinch maturation for nan twelvemonth of astir 50%. PyroThin thermal obstruction gross for nan twelvemonth surpassed $55 million, up astir 9 times from nan 2021 levels.

As we look retired complete 2023, we expect PyroThin thermal obstruction gross to build complete nan twelvemonth arsenic automotive OEMs standard their operations, which we judge will consequence successful materially much PyroThin thermal obstruction gross successful nan 2nd half of nan twelvemonth compared pinch nan first half. At nan aforesaid time, we expect our power business business to stay beardown done nan twelvemonth and supply a dependable guidelines load of revenue.

Our demonstrated capacity some proviso and request to make astir $60 cardinal of gross successful Q4 2022, supports our target of reaching astir $240 cardinal of gross this year, accordant pinch our nonsubjective to double gross from 2021 to 2023.

The Q4 gross separator of 24% demonstrates nan worth of higher-capacity utilization and nan advancement we are making to destruct redundant costs arsenic we scale. Our teams did an outstanding occupation successful Q4 and are now focused connected continuing to make further productivity gains successful 2023. While our longer-term gross separator target remains 35%, we are pleased pinch nan advancement we've made successful Q4.

We proceed to deepen our method and commercialized engagement pinch some existent and prospective automotive customers. During Q4, we knowledgeable a grounds number of OEMs ordering prototype parts.

Several of nan OEMs entered our thermal obstruction improvement pipeline during 2022, driven astatine slightest successful part, we believe, by their earlier non-PyroThin designs being unsuccessful astatine mitigating nan consequence of thermal runaway propagation.

As we person described successful nan past, mitigating nan dangers of thermal runaway presents a challenging and multifaceted problem. We believe, our worth to nan automotive OEMs is based connected our unsocial method solutions and our heavy subject-matter expertise and that we are good positioned to execute our extremity of deepening our method and commercialized relationships pinch existing customers astatine nan aforesaid clip that we adhd important caller customers.

There were respective absorbing developments since our past net call. We received a missive of intent from nan luxury marque of a awesome German OEM group wherever nan thermal obstruction parts are targeted for a artillery level intended for usage crossed respective of their models. The LOI captures nan precocious shape of nan qualification process and related negotiations and we believe, puts america connected a patient way for a afloat creation award.

We besides received an bid for astir 1.5 cardinal prototype parts for a commercialized conveyance marque wrong nan aforesaid German OEM group. We judge that this LOI and nan precocious parallel activity pinch different brands wrong nan Group position america good to gain wide take pinch this important German OEM.

More broadly, we person been invited by existing and prospective caller customers to quote astir $15 cardinal of PyroThin thermal obstruction business. Again, we believe, we are good positioned to succeed.

On nan power business broadside of our business, we person a heavy bid book. We already person acquisition orders for 2023 of complete $100 million. We person robust commercialized activity levels crossed our refining, petrochemical, LNG and subsea segments and crossed each of our awesome regions. We person implemented value increases for each products crossed our power business business, which should positively effect Q2 and beyond. Furthermore, we are competing successfully successful some attraction and task work.

Even pinch nan probability of a slowing world economical growth, we believe, our beardown outlook for power business is fueled by our worth drivers of efficiency, resiliency and safety, by geopolitical pressures that beforehand LNG and by nan equilibrium expanse spot of our extremity users. The power business gross watercourse is simply a valuable baseload for america arsenic we negociate our wide gross maturation during this early shape of nan EV mega trend. This elasticity is simply a bully illustration of nan use of our strategy to leverage nan Aerogel exertion level into a divers group of ample and move markets.

During nan 4th quarter, we executed a successful publicly-marketed equity offering raising astir $265 million, including a $100 cardinal from Koch Industries. We intend to usage nan proceeds from nan offering to partially money nan building of Phase 1 of our 2nd Aerogel manufacturing installation successful Statesboro, Georgia and for different wide firm purposes.

At nan aforesaid time, we entered into a definitive indebtedness statement pinch General Motors for a secured lending committedness of $100 cardinal successful relationship pinch nan instrumentality and building of our Plant 2. The indebtedness proceeds tin beryllium drawn connected a periodic ground arsenic building milestones are met.

The financial committedness from General Motors adds different magnitude to our longstanding method and commercialized relationship. We are profoundly progressive pinch GM'S existent and adjacent procreation artillery platforms and, of course, are building Plant 2 successful portion to meet GM's request successful nan coming years. We admit GM's committedness to our success.

During our past 2 net calls, I person said that Plant 2 would not beryllium immune from nan macro challenges marked by proviso concatenation and inflationary challenges that are impacting virtually each awesome building projects.

We are proactively managing nan task successful bid to effort to minimize costs and schedule pressures and doing truthful specified that Phase 1 has much than capable manufacturing capacity to execute our 2025 gross target of $720 million.

This level of manufacturing capacity will beryllium captious arsenic we service General Motors, Toyota and judge different EV OEMs who are now heavy successful our business improvement pipeline arsenic demonstrated by our caller LOI from nan German OEM.

With nan successful financing completed successful Q4, we will proceed complete nan adjacent mates of years to return successful each of nan supra attack to financing our maturation plan. As we research prospective sources of equity and indebtedness capital, we will proceed to attraction connected strategical investors and much afloat utilizing our important assets arsenic collateral and connected authorities assistance and indebtedness programs to supplement backstage assemblage capital.

We believe, these avenues are astir efficient, validate our business strategy and of course, fortify our equilibrium sheet. We believe, artillery capacity and information and resiliency of proviso chains successful nan U.S., particularly for captious areas of power translator and electrification, will proceed to pull superior from a wide scope of sources. We are assured that nan each of nan supra attack to raising nan basal superior for america to execute our semipermanent strategy is correct.

Before I move nan telephone complete to Ricardo, I would for illustration to definitive my appreciation to nan labor of Aspen. The past twelvemonth presented galore macro challenges but our squad stayed focused connected executing our scheme to double gross from 2021 to 2023 and connected preparing to triple gross from 2023 to 2025.

We are guided by our desire to create a affirmative rhythm of communal use pinch our customers, suppliers and communities. We person a very talented and dedicated group of group moving present astatine Aspen and I'm happy to beryllium portion of nan team.

Ricardo, complete to you.

Ricardo Rodriguez

Thank you, Don.

I'll commencement connected Slide 4 and our financial highlights for nan 4th fourth of 2022 and recap connected nan past year. Starting pinch revenues. We delivered $59.6 cardinal of gross successful Q4, which translates into 90% maturation year-over-year. This grounds level of tally complaint successful Q4 contributed to our transportation of $180.4 cardinal of yearly revenues for nan year. This is simply a 48% year-over-year summation complete our revenues successful 2021 of $121.6 million.

This maturation complaint is good successful statement pinch our long-standing targets of doubling our 2021 revenues by nan extremity of 2023 and then, tripling them by nan extremity of 2025. I americium genuinely thankful for our squad arsenic it came together successful Rhode Island, Mexico, nan Boston area, and each our world income locations to nutrient high-quality EV thermal barriers and get each nan past imaginable power business deliveries retired nan door.

In Q4, we proved that erstwhile nan EV thermal obstruction request is there, our assets tin present successful a world-class way. Speaking of EV thermal obstruction demand, this came successful statement pinch our expectations for nan quarter, acknowledgment to a supplemental bid from General Motors that spans Q4 of 2022 and Q1 of '23. This bid is meant to stabilize our volumes arsenic GM ramps up their request successful nan 2nd half of 2023.

This bid besides enabled america to leverage nan productivity of our manual assembly cognition successful Mexico to present a full of $25.2 cardinal successful EV thermal obstruction during Q4. This is simply a 111% summation complete nan anterior 4th and a 5 times summation complete past year. Our full EV thermal obstruction revenues successful 2022 were up $55.5 million, an almost nine-fold summation complete nan anterior years.

Our Q4 Energy Industrial revenues of $34.4 cardinal were 39% higher than nan anterior quarters and 31% higher year-over-year. They brought our full for nan twelvemonth to $124.8 million, an 8% year-over-year increase. That would beryllium higher if we weren't allocating Aerogel accumulation capacity towards EV thermal barriers.

Our Q4 merchandise operation demonstrated that erstwhile it is tilted towards EV thermal barriers, our gross tally complaint tin commencement aligning pinch our maturation plans. I couldn't beryllium much excited astir our prospects to proceed increasing profitably arsenic we get much productivity retired of our Aerogel works successful Rhode Island and instrumentality those learnings connected Plant 2 successful Georgia. I'll spell into much item connected this later.

Next, I'll supply a summary of our main expenses. Material expenses of $24.4 cardinal for nan 4th made up 41 percent points of sales, which was adjacent to wherever we want to beryllium long-term, really wrong azygous digit percent points. This quarter-over-quarter betterment of 17 percent points of sales, is suggestive of what tin beryllium delivered astatine a higher tally rate.

It's besides worthy highlighting that our margins successful Q4 were somewhat enhanced owed to nan truth that nan scrap costs of manufacturing Aerogel that was converted into EV thermal obstruction successful Q4 but made successful anterior quarters was accounted for during those anterior quarters.

For nan year, our worldly costs of $92.2 cardinal made up 51 percent points of income and arsenic we've mentioned previously, these are astatine slightest 11 percent points distant from our semipermanent target.

Conversion costs, which we picture arsenic each accumulation costs required to person materials into vanished products were $20.9 cardinal and made up 39 percent points of income successful Q4. These costs see each elements of nonstop labor, manufacturing overhead, mill supplies, rent, insurance, utilities, process logistics, value and inspection. These comparison pinch costs of 61 percent points of income successful Q3.

At 35 percent points of sales, we're wrong 15 percent points of wherever these request to beryllium arsenic we proceed to turn revenues. It is encouraging to spot our team's expertise to thrust towards our conversion costs targets arsenic our gross tally complaint increases and we expect to proceed making improvements successful these areas to summation our operating leverage and proceed driving down nan costs of making each incremental unit. For nan year, our conversion costs were 83.1 cardinal and these made up 46 percent points of sales.

In Q4, our investments to summation nan productivity of our Aerogel works successful Rhode Island, mixed pinch nan constitution of our assembly accommodation successful Mexico enabled our gross profit margins to spell from antagonistic 17% successful Q3 to affirmative 24% successful Q4.

Both merchandise lines contributed positively to our gross profit of $14.3 cardinal successful Q4 pinch $7.8 cardinal of that coming from our power business conception and $6.5 cardinal coming from EV Thermal Barrier. These correspond affirmative gross profit margins of 23% and 25% respectively for nan quarter.

For nan twelvemonth our gross profit was $4.9 cardinal reflecting a 3% gross profit separator pinch margins successful our Energy Industrial conception of 15% and antagonistic 25% successful EV Thermal Barriers aliases a gross profit of $18.8 cardinal and a gross nonaccomplishment of $13.9 cardinal respectively.

Operating expenses, which are enabling our maturation wherever of $22 million. These accrued by $2 cardinal quarter-over-quarter versus an summation of $4.6 cardinal successful Q2 complete Q1 and had an summation of $0.6 cardinal successful Q3 complete Q2.

As I've mentioned successful anterior quarters, we're leveling disconnected our OpEx increases and person focused connected precisely connected delivering 3 things. One, tangible productivity benefits done caller process improvement and nan implementation of systems that streamline our methods and thrust productivity.

Two, caller OEM accumulation awards done our EV thermal obstruction method income efforts and managing these awards and pursuits pinch world-class levels of service. And three, clear milestones successful our R&D efforts. Putting these elements together, our adjusted EBITDA was antagonistic $4.5 cardinal successful Q4 compared to antagonistic $12.2 cardinal during Q4 of nan anterior twelvemonth and antagonistic $23.2 cardinal during nan anterior quarter.

For 2022, our adjusted EBITDA was antagonistic $60.6 cardinal compared to a nonaccomplishment of $26 cardinal successful nan anterior year. As a reminder, we specify adjusted EBITDA arsenic nett income aliases nonaccomplishment earlier interest, taxes, depreciation, amortization, stock-based compensation expenses and different items that we do not judge are suggestive of our halfway operating performance

In Q4, these different items included $2.7 cardinal of stock-based compensation and $50,000 of nett liking income. Our nett nonaccomplishment successful Q4 decreased to $9.6 cardinal aliases $0.26 per stock versus a nett nonaccomplishment of $16.4 cardinal aliases $0.50 per stock successful nan aforesaid 4th of 2021. Our quarter-over-quarter nett nonaccomplishment was reduced by $20 cardinal from $29.6 million. For nan year, our nett nonaccomplishment was of $82.7 cardinal aliases $2.10 per share, which compares to a nett nonaccomplishment of $37.1 cardinal successful 2021 aliases $1.22 per share.

It is worthy clarifying that for each these net per stock calculations, our number of afloat diluted shares outstanding was $30.4 cardinal astatine nan extremity of 2021, a weighted mean of 39.4 cardinal shares successful 2022 and our number of shares outstanding astatine nan extremity of 2022, was 70 cardinal shares.

On nan taxable of stock count, I would for illustration to statement that complete nan adjacent 2 weeks. In relationship pinch nan vesting of restricted banal units issued successful nan mean people nether our semipermanent equity inducement program, our Section-16 officers will record Form-4's to study nan withholding of shares by nan institution to fulfill statutory taxation obligation, related to nan vesting of these RSUs. I would besides want to stress that nan shares that were held by Aspen will not beryllium sold into nan marketplace and will stay unissued

Next, I'll move to rate travel and our equilibrium sheet. Cash utilized successful operations of $18.6 cardinal reflected our adjusted EBITDA of antagonistic $4.5 cardinal and past summation successful rate needs of $23.4 cardinal that reflects a quarterly summation successful accounts receivable of $30.3 million. These put our operating rate needs for nan twelvemonth astatine $89 million.

Capital expenditures during nan 4th of $64.1 cardinal included nan partial building of nan main buildings successful Statesboro, Georgia for Plant 2, assembly instrumentality for our automated thermal obstruction operations, upgrades to our R&D labs and important advancement successful nan building of our precocious thermal obstruction improvement halfway successful nan Boston area.

These brought our full CapEx successful 2022 $183.4 million, beneath nan $200 cardinal to $225 cardinal range. Progress connected these projects is successful statement pinch our expectations. As advancement connected nan building of our 2nd Aerogel manufacturing works continues, we person incurred a $165.5 cardinal successful superior expenses done nan extremity of 2022 towards it. I'll supply a much meaningful update connected Plant 2 later successful this presentation.

Net rate provided by financing activities of $262.9 cardinal during Q4 included $267.9 cardinal of nett proceeds from our equity offering, and a $5 cardinal repayment of BASF's prepayment balance, which was primitively received successful February of 2018.

2022 was a pivotal twelvemonth for backing our maturation pinch $478.4 cardinal successful nett financing activities that featured proceeds driven by a $100 cardinal from nan issuance of a convertible statement and $50 cardinal of communal banal issued to Koch Industries astatine a value of $27.90 per share, $73.3 cardinal of nett astatine nan marketplace offering proceeds from nan waste of communal banal astatine an mean value of $17.70 per stock and astir recently, $267.9 cardinal of nett proceeds from our upsized nationalist equity offering astatine $9.50 per stock connected November 30. We ended nan 4th pinch $281.3 cardinal of rate and shareholders' equity of $443.3 million.

I will now move to Slide 5 and locomotion you done our reasoning and afloat twelvemonth 2023 outlook. Having expressed nan target of doubling our revenues each 24 months since our Q4 2020 Earnings call, it would beryllium logical to expect our 2023 revenues to beryllium double nan $121.6 cardinal that nan squad delivered successful 2021. That would beryllium $243.2 million.

In our Q4 2021 net call, we reiterated our scheme to double our 2021 revenues to 2023 and past triple them into past triple them into 2025. With what we cognize coming astir our customers' request for PyroThin thermal obstruction successful 2023, we're mounting our gross outlook for nan twelvemonth to beryllium of betwixt $200 cardinal and $215 million. This is balanced to maturation of betwixt 11% and 39% compared to 2022.

We recognize that this is simply a wide scope that will tighten arsenic nan twelvemonth progresses. However, conscionable arsenic successful 2022, our revenues are being driven to a important grade by what we expect to beryllium an progressively steep ramp successful nan accumulation of Ultium artillery level powered vehicles by General Motors.

This ramp was taxable to a hold successful nan 2nd half of past year, and this whitethorn proceed doubling our 2021 revenues for nan year, continues to beryllium our target and North Star pinch 2023 being a twelvemonth of continued modulation for nan OEMs that we are supplying

Because we expect nan 2nd half of this twelvemonth to spot a important number of caller nameplate launches, we expect astatine slightest 60% of our full revenues to materialize during nan 2nd half of nan year. This divided is of astatine slightest 70% successful our EV thermal obstruction revenues. Therefore, we judge that our quarterly gross tally complaint will not surpass our Q4 2020 tally complaint until Q4 of 2023. Optimizing our Aerogel accumulation capacity passim nan twelvemonth will play a captious domiciled successful executing a steep ramp towards nan extremity of 2023.

Last year, we demonstrated that we're elastic and tin emergence to this type of situation erstwhile nan request is there. With this successful mind, we besides expect 95% of our gross profit successful nan 2nd half of nan year. We are executing respective initiatives that would amended our profitability successful 2023 and that we judge tin trim our costs of equipment sold by complete $10 cardinal for nan year, and our OpEx by astir $5 million. However, this early successful nan year, we are besides conscious of nan fixed disbursal guidelines that we are carrying successful anticipation of revenues successful nan 2nd half of nan year.

Historically, nan squad has exceeded our expectations astatine minimizing these fixed expenses, but fixed nan precocious variance successful quarterly request that we expect, investing successful elasticity will salary dividends. Our investments successful unit and resources to capitalize connected nan maturation that we are expecting will beryllium much tempered successful 2023 arsenic we optimize our OpEx and purpose it astatine commissioning Plant 2, driving productivity done processes and systems and maintaining our technological and commercialized lead successful EV thermal barriers. With these actions, we expect adjusted EBITDA of betwixt antagonistic $50 cardinal and antagonistic $60 cardinal and EPS of betwixt a nonaccomplishment of $1.46 and a nonaccomplishment of $1.31 per share. This EPS outlook assumes a weighted mean of 70 cardinal shares outstanding for nan year.

In addition, this 2023 outlook assumes depreciation of $22.3 million, stock-based compensation disbursal of $11 cardinal and liking disbursal of $8.6 million. We besides expect to incur betwixt $350 cardinal and $400 cardinal of superior expenditures during nan twelvemonth principally for our Plant 2 project. In 2023, arsenic Don mentioned successful his earlier remarks, we will proceed strengthening our equilibrium expanse by raising superior from a wide scope of sources.

In nan adjacent term, we tin trust connected nan $100 cardinal secured indebtedness committedness that we announced from General Motors successful November of past twelvemonth to support nan ongoing backing of Plant 2. We've besides made advancement to supplement that pinch up to $100 cardinal of equipment-backed financing.

We besides proceed managing respective strategical discussions to guarantee that we person -- that we make nan astir of our collateral and profitable maturation imaginable arsenic we money our strategy successful a very supportive regulatory landscape.

Turning complete to Slide 6, I'd for illustration to supply an update connected Plant 2, really its creation has evolved, really nan squad has been navigating a rising building and worldly costs environments, and nan results of efforts successful 2022 aimed astatine expanding nan productivity of our processes and nan elasticity of our wide capacity. In December of 2021, pinch a astir 15% completed design, our squad estimated that nan costs of Phase 1 of Plant 2 would beryllium a $575 million.

Now, 2 weeks aft having completed 85% of nan creation and having spent $165 cardinal towards nan task done nan extremity of 2022, we estimate nan costs of Phase 1 to beryllium $710 million, a $135 cardinal increase. Approximately, $19 cardinal of this summation aliases 16% is driven by higher worldly and building costs.

With nan backdrop of a 21% emergence successful nan costs of business building construction, a 15% emergence successful nan costs of cement and nan 14% emergence successful nan costs of business valves complete nan past 12 months, nan squad is optimistic astir being capable to negociate done what is proving to beryllium a difficult clip to committee a building task of immoderate scale.

The remaining summation of $45 cardinal aliases 8% is driven by higher level of clarity successful nan creation of nan plant. For example, astatine 15% creation completion, we were defining nan magnitude of nan plant's piping. While astatine 85% creation completion, nan squad has nan plant's piping specifications involving nan finer detail.

In ray of this and what we each know, it's a higher costs of superior environment, we've challenged nan squad to summation each our Aerogel accumulation capacities elasticity by implementing our latest creation and accumulation process improvements successful 2023. We've besides thought astir really to optimize our merchandise mix.

As we optimize our gross mix, our full yearly gross capacity for works successful Rhode Island tin beryllium of up to $400 cardinal per twelvemonth and nan capacity of Phase 1 of Plant 2 tin beryllium of up to $1.2 billion, for a full yearly gross capacity of $1.6 billion.

This compares to our anterior gross capacity estimate from conscionable complete a twelvemonth agone of $250 cardinal for our works successful Rhode Island and $650 cardinal for Phase 1 of Plant 2. At that time, we estimated that these assets provided a full gross capacity of $900 million. In ray of having to walk an incremental $135 cardinal connected Phase 1 of Plant 2, we focused connected driving nan elasticity to not conscionable present our 2025 gross plans, but to beryllium fresh for further opportunities. we're seeing nan semipermanent measurement plans for our EV thermal obstruction awarded business accrued to nan constituent wherever we judge that these tin dress up anyplace betwixt 80% and 170% of our target 2025 PyroThin revenues.

Finally, let's attraction our attraction connected Slide 7. Throughout past year, we laid retired our views connected nan artillery chemistries and shape factors that were astir logically compatible pinch PyroThin. Later, we usage nan representation to relay our team's level of engagement pinch various customers astir nan world. Today, we'd for illustration to dive deeper into our grant quote pipeline done 2030.

In North America, we measure that we person nan imaginable to seizure an estimated $10 cardinal of revenues betwixt 2023 and 2030. Our discussions person progressed pinch nan 2nd North American OEM from their testing of nan worldly to america providing quotes and being engaged connected various nameplates. In Europe, we estimate nan worth of our progressive quotes to beryllium of astir $3 billion.

These see nan revenues from nan imaginable conveyance level awards linked to nan missive of intent that Don mentioned successful his remarks. We mentioned this LOI because while it isn't an award, successful this peculiar OEM sourcing process, it serves arsenic important connection to a supplier that it's exertion has been selected to beryllium procured and that it is being packaged protected for successful nan platform's design. The worth of this grant tin besides grow this much sanction plates are announced for this EV platform.

We are besides scheduled to proviso nan aforesaid OEM's commercialized conveyance section pinch a meaningful prototype portion bid for astir 1.5 cardinal parts arsenic portion of nan improvement activity required to get originated connected a commercialized conveyance platform. In Asia, nan squad continues making advancement and we measure our quoted and awarded opportunities to beryllium of complete $2 cardinal done 2030.

As 1 tin see, NMC and LFP Chemistries pinch prismatic and pouch compartment opportunities unsocial tin supply $15 cardinal of gross by 2030. LFP chemistries are celebrated successful China, but we are seeing immoderate OEMs successful nan West inquire astir solutions to alteration information successful LFP and respective of our quotes are for these types of programs.

Our teams person besides built relationships pinch artillery Tier ones aliases entities that person been established to proviso aggregate OEMs pinch assembled artillery packs arsenic portion of a artillery platform. This presents a important opportunity to grow wrong aggregate OEM's and we person 2 of these opportunities wrong our progressive quote pipeline.

With that, I'm happy to move nan telephone backmost to Don.

Don Young

Thank you, Ricardo.

We person covered a important magnitude of crushed coming and reviewing 2022 and successful mounting nan shape for 2023 and beyond. I would for illustration to stress 4 points. First, we had grounds gross successful 2022 vanished pinch a beardown Q4 and positioned ourselves to execute our target of doubling gross from 2021 to 2023 to $240 million.

Second, our business improvement pipeline for PyroThin thermal barriers is robust. Between existing customers and caller customer prospects, we person been invited to $15 cardinal of PyroThin thermal obstruction business. We are successful a beardown position to service existing customers and to adhd important caller customers.

Third, we are actively managing costs and schedule pressures of Plant 2 successful a measurement that enables america to execute our 2025 gross target of $720 cardinal and provides maximum elasticity to meet nan imaginable for important customer demand. And fourth, we are focused connected leveraging our operating efficiencies to execute our gross separator target of 35% and to thrust important profitability arsenic we scale.

Elliot, let's move nan telephone to Q&A, please.

Question-and-Answer Session


[Operator Instructions] First mobility coming comes from Eric Stine from Craig-Hallum. Your statement is open.

Eric Stine

So possibly we tin conscionable commencement pinch Plant 2 and I cognize complete nan past mates of months, nan thought process has been to get distant from benignant of Phase 1 Phase 2 because it was a spot confusing, but I conjecture possibly first, fixed that you still are talking astir Phase 1 present and astatine $1.6 cardinal of wide gross capabilities. That's wherever you were, erstwhile you were talking astir wherever you'd beryllium for Phase II. So, possibly thoughts connected what you would beryllium capable to get to erstwhile Phase II is completed. And past besides possibly conscionable much item connected immoderate of nan steps, really are you expanding this, it's beautiful meaningful, successful Georgia, but besides successful Rhode Island?

Don Young

Yes, no, that's a bully question, Eric. I mean, successful an perfect world, we wouldn't beryllium talking astir phases anymore. I deliberation we conscionable usage nan Phase 1 explanation fixed that we had put that retired location conscionable complete a twelvemonth agone alongside Phase 2 arsenic well. It is worthy highlighting though that Phase 1 has is still nan infrastructure to pave nan measurement for america to adhd nan capacity that had been outlined for Phase 2. But evidently if you recalculate that is now a overmuch higher magnitude utilizing nan methods that we're now referencing.

And so, I would reason that Phase 2 would now beryllium much for illustration Phases 4 -- Phases 2 done 5 and truthful we person nan expertise to much incrementally adhd instrumentality to nan plant, peculiarly successful what happens to beryllium nan longest rhythm clip process of our facility, which is nan extraction of nan liquid from nan roles. And so, correct now, frankly, we're much focused connected conscionable nan request being location successful nan 2nd half of 2023 earlier going to scheme for these further phases of description to nan plant.

But arsenic I've outlined successful my remarks, we deliberation that what we're readying to do pinch Plant 2 now does springiness america nan elasticity to seizure our 2025 revenues and to flex good beyond that arsenic we allocate gross capacity.

And to your mobility connected really what changed successful nan process, I deliberation it's really been aggregate things that nan squad has applied to our tract successful Rhode Island, frankly, to get america to nan tally complaint that we delivered successful Q4 that was a large meaningful step. But it's besides worthy -- wrong our merchandise range, nan rotation magnitude that we tin make astatine nan works really alteration importantly betwixt 1 merchandise and nan other.

And arsenic we prioritize those products that we make successful higher rotation lengths, we're capable to get much quadrate feet of Aerogel, which assuming nan prices, nan aforesaid for each of them, which is not, you tin spot really it's conscionable a overmuch leaner operation connected nan works and we're capable to crank retired much merchandise arsenic a result.

Ricardo Rodriguez

Eric, a cardinal constituent conscionable to reiterate -- conscionable 1 constituent I would conscionable reiterate is, you know, arsenic we are managing nan build, first and foremost, was our expertise to beryllium judge we were capable to meet our 2025 gross target, a tripling of gross to $720 cardinal and nan creation does person that capacity and much frankly arsenic we spot imaginable upside arsenic we standard our business and arsenic nan megatrend continues to return shape.

Eric Stine

Got it. And so, but possibly different measurement to deliberation astir this, you were targeting pinch Phase 2, $1.6 cardinal successful gross capacity, and I deliberation nan CapEx number was $700 million. So effectively, yes, you're expanding $575 cardinal to $710 million, but you're really -- it's an summation of $10 cardinal for a for illustration magnitude of capacity. I mean is that a adjacent measurement to deliberation astir it?

Don Young

It is. I deliberation location is much merchandise operation trade-offs that are implied successful nan $1.6 cardinal gross number. But yes, I mean nan mathematics is nan math, right. It is simply a batch much superior businesslike now arsenic pinch really we scheme nan capacity.

Eric Stine

Got it. And past possibly conscionable connected nan grant and quote pipeline, and acknowledgment for each nan specifications there. But I do announcement that you nary longer person group successful benignant of nan testing phase. They've each moved to nan quote phase. Is it still adjacent to opportunity that though you're not successful complaint of erstwhile you're capable to denote these things, nan OEM is, that your anticipation is that you'll beryllium adding much -- beyond nan German OEM and nan opportunities that you've elaborate today?

Don Young

Yes, we're benignant of playing pinch 2 charts here, right. One is nan representation that we had earlier and now this presume connected nan quote pipeline. I would reason that those OEMs that we're testing, that are testing nan worldly aliases frankly that wherever we've quoted and sold prototype parts too. There are respective who were quoting those testing parts aliases prototypes that would request to beryllium added to this database erstwhile we really quote a accumulation programme for them. So 1 point that's worthy clarifying is that, present connected Slide 7, we included our only accumulation conveyance quotes. So, this is our accumulation conveyance codification pipeline.

Eric Stine

Got it.

Ricardo Rodriguez

I deliberation 1 different constituent I would make -- 1 study I would make, Eric, is I would opportunity that our -- nan testing play seems to beryllium shorter than that possibly originally. And it's I deliberation successful portion because our domain expertise, our knowledge is overmuch greater, our merchandise is amended characterized arsenic we've gone done nan process pinch respective of these OEMs.

And truthful -- and I deliberation location is much urgency connected nan OEMs portion to move done nan process much quickly arsenic well. And so, for a operation of reasons, I deliberation that that testing play is tending to beryllium a small shorter than it was a twelvemonth aliases truthful ago.


Our adjacent mobility comes from Colin Rusch from Oppenheimer. Your statement is open.

Colin Rusch

Thanks truthful overmuch guys. Could you talk a small spot astir nan pricing dynamics arsenic you're going done this quoting process, really overmuch leverage do you guys person from a pricing perspective, arsenic good arsenic nan increasing of contented per vehicle, and really that is trending?

Ricardo Rodriguez

I mean, we decidedly person not seen immoderate weakness. We, arsenic Don mentioned, nan truth that nan testing goes done overmuch faster and that we are capable to leverage immoderate of our ain testing information to beforehand nan pipeline further has fixed america leverage to not only accelerate these discussions, but I deliberation erstwhile -- we person a pretty, I wouldn't opportunity elemental aliases easy connection to present to customers. But erstwhile 1 looks astatine nan superior that we're investing here, we are laser focused connected paying it backmost and more.

And I deliberation pinch that, we tin warrant nan pricing and not really spell into nan pricing dynamics of trading thing that's been commoditized, right. And so, we saw a very typical request here. We're good alert of that, but astatine nan aforesaid clip we recognize that we are having to walk a batch of superior to proviso that and we are focused connected paying it backmost and much and truthful nan value is nan price.

Don Young

And we are very focused, telephone it, of course, connected our stated target of 35% gross separator arsenic a business here, arsenic we standard present successful nan adjacent future. So, that underlies our pricing strategy that concept. We besides judge will bring important worth to these customers and that has besides fixed america nan latitude to beryllium patient successful our quoting process.

Ricardo Rodriguez

It's funny, we person a short database of companies that waste into our markets that are doing 70% positive gross margins connected a bully twelvemonth and we've really shown that present crossed our squad because successful immoderate ways, we really shouldn't beryllium having to apologize for being profitable. I think, erstwhile you person thing unsocial and erstwhile you are solving a problem, we powerfully judge successful trim and capturing our adjacent stock of nan worth pinch astir importantly paying each this superior back.

Colin Rusch

That's ace helpful. And past arsenic you standard this business, obviously, you request to turn nan squad a adjacent amount. Could you conscionable talk a small spot astir nan cadence of OpEx and past and nan investments that you request to make present complete nan adjacent 12 months to 18 months to really support nan maturation trajectory that you guys are talking about?

Don Young

Yes. So, you've astir apt heard successful my remarks present complete nan past 3 quarters wherever our reside connected this has changed. So I deliberation gone through, I would say, 2 important measurement usability increases successful OpEx. One large 1 successful 2021 and past different 1 astatine nan opening of past year. Then, it was really during nan 2nd half of past twelvemonth wherever we started seeing that we could really leverage a batch of nan activity that has been done, virtually passim each of our functions to get much businesslike and yet really alteration really we work.

And we've started switching nan spigot from investing successful conscionable adding much group to investing successful our IT systems, implementing much processes, and really nan hiring has slowed connected nan OpEx broadside and we've only focused it, arsenic I've mentioned successful my remarks, connected conscionable delivering very clear R&D milestones that are time-bound and that are not investigation expeditions, but that are really driven towards improving our processes and reducing our manufacturing costs.

And past connected nan commercialized side, it's really been encouraging to spot really nan squad has been capable to leverage baseline activity from erstwhile we were initially moving pinch General Motors to really build an archive of our ain trial information that we utilized to accelerate these commercialized discussions.

And then, connected nan support functions, I deliberation we've added capacity and we've hired a batch of caller group from nan extracurricular who are bringing their ways of moving and their devices and their knowledge of these different instrumentality chains that we're now moving to instrumentality and they are yielding results.

So, our dream is that we really taper nan OpEx maturation this year, but astatine nan aforesaid time, this request of being elastic and this modulation arsenic we instrumentality caller devices and processes, I think, we'll motion up to return much OpEx retired of this aliases it's really commencement taking OpEx retired of this ramp that we've had arsenic these things commencement being implemented connected nan support usability broadside particularly.

Ricardo Rodriguez

Yes, I would conscionable stress that we person invested successful our OpEx successful anticipation. And so, arsenic we scale, arsenic we grow, you're going to spot a disproportionate magnitude of maturation comparative to immoderate OpEx increases astatine this point, by a wide margin.

Don Young

I mean, Colin, possibly to summarize it, successful my mind, OpEx North Star should not beryllium much than 10 percent points of income and truthful correct now, we're beautiful high, for illustration nan revenues would request to beryllium a $1billion for america to each of our OpEx tally rate. And so, we're conscionable -- we're not conscionable focused connected letting nan revenues get to $1 billion. We're besides bringing nan OpEx backmost down to thing that aligns pinch 10% connected nan $725 cardinal successful 2025.

Colin Rusch

Really admit that target. That's incredibly adjuvant for knowing nan semipermanent model. Thanks guys.


Our adjacent mobility comes from Chris Souther from B. Riley. Your statement is open.

Chris Souther

Thanks for taking my questions here. Can you springiness america immoderate consciousness of nan timing of that German OEMs platform? I'm funny if that erstwhile adds to nan 2025 visibility, what do you deliberation that's 2026 plus. And then, I deliberation connected nan call, you said nan awarded business represents anyplace from 80% to 170% of nan target for 2025. Is that saying benignant of successful early years beyond 2025, we spot conscionable this programme benignant of increasing beyond nan 2025 target aliases is that including immoderate of nan group that you're quoting?

Don Young

Yes, so, I'm happy to return nan 1 connected nan level first and past spell into that remark astir nan percent of nan 2025 gross target that is made up by nan existing awards. So, yes, LOI is for SOP. I deliberation nan first SOP connected that level is successful 2025. So, we do expect a small spot of gross from that successful 2025.

And then, I mean, we person been reasonably blimpish arsenic we estimate nan worth of these awards, right. And yes, astatine nan aforesaid time, it's 1 of those things wherever if you put together each of nan volumes of each nan OEMs, you extremity up pinch a marketplace that's 2 times larger than nan conveyance market, right.

Everybody has precocious aspirations present arsenic they ramp-up their accumulation forecast. And we conscionable want to beryllium cautious, but astatine nan aforesaid time, conscionable fixed really profound this modulation to electrification is looking, whether 2025 is nan twelvemonth erstwhile each of this becomes mainstream aliases 2026, we conscionable don't want to beryllium incorrect and that's why we thought that expressing that and conscionable showing what nan worth of these awards tin beryllium not conscionable successful 2025 and beyond, positive nan quote pipeline that nan squad is actively working. If group spot nan scope of that, 1 tin past understand why we are pushing nan squad to flex our capacity successful nan measurement that we're doing it.

Chris Souther

Okay. No, that surely makes sense. So, nan incremental move from 60% visibility, I deliberation you had antecedently talked astir 80%, it's conscionable much assurance astir nan volumes would conscionable those 2 folks?

Don Young

Yes, I would say, it's nan aforesaid level of assurance applied to much volume.

Chris Souther

Okay, sewage it. And past possibly conscionable -- it looks for illustration nan gross margins are going to up and down beautiful mostly from nan opening of nan twelvemonth to nan extremity of nan year. It sounds for illustration a batch of PyroThin you're going to beryllium producing benignant of up of clip to beryllium shipping successful nan 2nd half. So, you astir apt person a akin arena wherever scrap costs are incurred successful nan first half of merchandise you vessel later, but possibly you could springiness america a consciousness wherever you deliberation PyroThin gross margins should onshore for nan afloat year, and past looking astatine for illustration nan exit complaint astir apt beautiful akin to what we saw successful nan 4th fourth present and really does that trajectory style for 2024, what nan ramps benignant of proceed aliases stabilize?

Ricardo Rodriguez

Yes, truthful really for us, nan profitability of PyroThin, it's difficult to spell into that 1 because it really each hinges connected nan volumes during nan 2nd half of nan year. However, if our expectations really align there, peculiarly successful nan mediate of our gross range, past we do judge that we tin make PyroThin gross separator affirmative for nan twelvemonth and past person that advancement successful 2024 and 2025 to nan constituent that our gross profit moves into nan mid-teens successful 2024 if nan maturation complaint continues. I mean, you benignant of tin tie a statement from 35% to wherever we're astatine coming and I deliberation we've shown successful Q4 that erstwhile nan request is there, we tin easy excavation ourselves retired of antagonistic gross margins. And we think, we'll excavation retired PyroThin this twelvemonth if nan request is location successful nan 2nd half.


Our adjacent mobility comes from Alex Potter from Piper Sandler. Your statement is open.

Alex Potter

So first question, I was wondering if you could remark connected whether you deliberation you're going to tie connected immoderate of nan indebtedness from General Motors. I cognize that immoderate of that money was contingent connected building milestones astatine Plant 2 and that you weren't needfully going to tie nan money successful nan first place. So conscionable funny connected your updated thoughts connected that topic.

Don Young

Yes. So, we fundamentally person a model betwixt now and nan extremity of September of this twelvemonth to tie it. The request to tie nan first $33 cardinal is that we complete nan tract activity successful Georgia, which has really been completed already and that we walk nan $100 cardinal that we sewage from nan nationalist offering from Koch.

And we will astir apt person spent that present by nan extremity of March, early April. And astatine that constituent is erstwhile we would tie this first $33 cardinal from nan loan. We've been successful adjacent interaction pinch General Motors connected this and they are fundamentally fresh to person our tie shape present astatine nan extremity of March, early April.

Alex Potter

Okay, very good. And past possibly conscionable going backmost to pricing, I tin admit nan comments you were talking astir earlier pinch respect to Aspen is adding value, you don't person to apologize to being profitable, things for illustration this. I'm conscionable funny erstwhile you spell into these conversations for illustration nan LOI for lawsuit pinch this German OEM, is pricing much aliases little group successful stone, for illustration are you conscionable coming into it saying this is nan price.

Now, let's talk astir everything other aliases is pricing benignant of a placeholder location that you will travel backmost to and finalize astatine nan extremity of nan agreement? Just really overmuch visibility do you person connected pricing astatine this shape successful nan chat pinch that narration successful peculiar and pinch others much broadly? Thanks.

Don Young

Yes, I deliberation astatine this point, location person been respective turns connected a batch of these quotes, usually spell done an loop of them and nan squad knows what nan creation of nan imaginable is, right. And astatine immoderate point, you conscionable really commencement making sense, but yes, astatine this point, suggestive pricing has been agreed connected that. We think, it's worthy allocating nan capacity for it and past that whitethorn germinate really more. It's much driven by nan creation of nan portion itself than I would say, immoderate benignant of negotiations.

Ricardo Rodriguez

Yes, I think, Alex nan LOI, some technically and nan commercialized position are beautiful afloat negotiated astatine this point. There is not overmuch enigma near connected that.


Our adjacent mobility comes from George Gianarikas, Canaccord Genuity. Your statement is open.

George Gianarikas

I'd for illustration to focused connected General Motors and there's evidently been a batch of ink spilled connected their imaginable determination to move immoderate of their manufacturing -- artillery manufacturing capacity to cylindrical. Just your thoughts connected that, nan 4th plant, et cetera, immoderate guidance location arsenic to what it intends for your volumes.

And second, I'd for illustration to inquire astir Ford. It appears that -- I'm conscionable going to task and conjecture that mightiness beryllium nan North American OEM that you're quoting and I guess, they've halted accumulation of their Ford F-150 and overnight, location has been chat successful nan property astir that accumulation halt being related to artillery fires. So, if you could conscionable touch connected some questions, I'd admit it. Thank you.

Don Young

Well, nan GM -- connected nan GM question, I would conscionable benignant of categorize it arsenic speculation arsenic astir of that ink has done and we're intimately engaged pinch General Motors, not only connected their existent activities but pinch improvement activities arsenic well. So, I don't want to remark excessively overmuch connected that. I deliberation it makes consciousness for immoderate OEM to beryllium exploring various chemistries, various shape factors arsenic they deliberation done their eventual lineup of vehicles.

And so, each of these things, I think, 1 tin ideate companies doing those sorts of things, but truthful specifically to General Motors, I would conscionable put it successful nan class of speculation and we don't really person immoderate peculiar knowledge of thing that was talked astir successful those Korean waste and acquisition publications.

With respect to Ford, yes, we've publication and travel to understand, I think, nan aforesaid things that you have, Georgia, that you highlighted, nan extremity production, extremity shipments primitively articulated astir artillery issue. I think, now a much refined and this whitethorn autumn into nan class of speculation, but successful truth aliases arsenic I publication astatine slightest astir a artillery occurrence of a stored conveyance that propagated crossed nan artillery level into astatine slightest to a conveyance -- different conveyance adjacent to it.

And so, I think, my position of Ford is that they are highly focused connected artillery capacity and information and they're engaged successful getting these platforms correct for nan agelong term. And they are surely delicate to creating immoderate marque harm that comes from these kinds of events. So, that's benignant of our view. We don't cognize a batch much astir nan circumstantial business than you do.

George Gianarikas

Can you conscionable spell backmost to nan General Motors mobility conscionable for a 2nd because I deliberation ultimately, this is about, tin Aspen deed their 20 -- location tripling of gross by 2025. If GM decides successful this 4th works aliases possibly moreover a 3rd works to move immoderate accumulation to cylindrical and truthful they don't -- they mightiness not request your material. Is that thing we should interest astir aliases has this -- person these different imaginable wins this quoting these LOIs, person they benignant of reinforced your condemnation that that's a existent target successful those retired years? Thank you truthful much.

Don Young

Yes, convey you, George. 2025 and Ricardo knows this amended than I do -- 2025 is not very acold distant erstwhile it comes to building artillery factories and having artillery factories and having products shape factors and chemistries. And so, I don't really position this arsenic a 2025 rumor and I should say, imaginable speculative issue. And again, I deliberation it will make consciousness for each OEMs to research pinch shape factors and chemistries that whitethorn disagree complete definite parts of their fleet.

And again, I'm not assigning this to General Motors. I'm assigning this to conscionable logic but 2025 is again a very short clip distant successful benignant of artillery improvement and artillery mill building. So again, we don't deliberation that's an tremendous consequence for america today.

Ricardo Rodriguez

I mean. it's benignant of interesting. I deliberation that for each 100 group that are retired location penning and speculating astir what guidance immoderate peculiar OEM will take, location is astir apt astir 1 technologist moving connected this worldly and location is besides immoderate beautiful important CapEx decisions down nan guidance that these OEMs decided to take.

And erstwhile we speak to engineers that were quoting stuff, they fundamentally show america this train is moving, nan way is built, and it's not really switching direction. And moreover if a parallel way is being built successful immoderate of these cases, that's really much of, I would say, a 7-year determination than a speedy move of 1 train from connected way to nan next.


Our adjacent mobility comes from Jeff Osborne from Cowen. Your statement is open.

Jeff Osborne

Thank you. Hi, Don, successful your prepared remarks, you mentioned immoderate references to grounded attempts to mitigate propagation arsenic benignant of a driver perchance for nan bid successful Europe for different engagement. I was conscionable wondering, communal mobility I get from investors is that your differentiation astir exertion and different approaches to what -- why those neglect and why you win. Is that thing you tin articulate much on?

Don Young

Well, I deliberation what I would say, Jeff, is that it's a analyzable problem and location are thermal management, occurrence information issues involved. There are mechanical self-stabilization issues involved. And I think, it is not an easy task to triangulate connected those various constraints aliases factors. And our worldly touches upon each of those captious areas, I think, very efficaciously and very uniquely.

And we do judge that location are materials that do 1 point aliases nan other, perhaps. But again, it is that operation of attributes that, I think, is mounting our worldly isolated and has america successful nan position that we're successful today, some pinch existing customers and pinch prospective customers present during this really captious shape of this EV activity here.

Jeff Osborne

That's helpful. And past possibly for Ricardo. I mightiness person missed this, but connected Mexico, you evidently showed nan ramp up successful Q4 and nan separator imaginable but tin you springiness america a consciousness of position connected wherever we are pinch nan automation? I think, you made reference that astir of nan products successful Mexico is manually made, but are those automation plans successful place? Have they been afloat validated aliases up and moving aliases erstwhile will that modulation return place?

Ricardo Rodriguez

Yes, that modulation fundamentally takes spot successful nan 2nd 4th afloat and past our -- truthful our accumulation successful nan 2nd half would beryllium disconnected of nan automated equipment. We're still keeping nan manual instrumentality to beryllium capable to flex up if nan request is higher, but that modulation will beryllium afloat successful spot for nan 2nd half of this year.


[Operator Instructions] Our adjacent mobility comes from Amit Dayal from H.C. Wainwright. Your statement is open.

Amit Dayal

Just connected guidance for adjacent 2023 -- hi, guys, tin you perceive me?

Don Young

Yes. Perfect. Yes.

Amit Dayal

Okay, convey you. Just wanted to spot really overmuch attraction from GM location is successful nan guideline for 2023?

Don Young

I mean, rather a bit. We've sewage their volumes from IHS location connected nan slide, right. So they are a large driver. They were a large driver successful Q4 arsenic good and they are large driver correct now. I mean, they dress up a disproportionate information of our thermal obstruction demand.

Amit Dayal

Okay. I understood. And past conscionable pinch respect to nan power business orders, I think, you guys highlighted $100 cardinal worthy of orders that you person successful hand. Is this each expected to beryllium delivered successful 2023?

Don Young

Yes. Those orders are -- group who would for illustration to person those materials and we will -- again, we're trying to beryllium mindful of keeping that business beardown astatine nan aforesaid clip erstwhile we person a azygous plant, making judge that we provender nan EV thermal obstruction broadside of this arsenic well. So, we do person immoderate elasticity successful nan measurement we present that material, but each of those acquisition orders are -- person been requested for 2023 and moreover successful nan first mates of 3 quarters of nan year.


This concludes our Q&A. I'll now manus backmost to Mr. Young for closing remarks.

Don Young

Thank you, Elliot, for your thief today. We admit your liking successful Aspen Aerogels and we look guardant to reporting to you our first 4th 2023 results successful April. Be good and person a bully day. Thank you.


Today's telephone has now concluded. We'd for illustration to convey you for your participation. You whitethorn now disconnect your lines.

Editor: Naga

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