Investor Presentation November 2015

Transcription

1 Investor Presentation November

2 Disclaimer This presentation contains statements that constitute forward looking statements under the Private Securities Litigation Reform Act of All statements other than statements of historical facts contained in this presentation, including statements regarding our short-term and long-term growth strategies, efforts to develop and commercialize our products, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management and expected market growth are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. The words anticipate, believe, could, estimate, expect, guidance, intend, may, plan, potential, predict, project, should, target, will, would and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward looking statements are only predictions and we may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, so you should not rely on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our business, financial condition and operating results. The information in this presentation is current as of November 18, 2015 and speaks only as of such date. We expressly disclaim any obligation to release any updates or revisions to any information presented herein, including any forward-looking statements, to reflect any change in our expectations or projections or any changes in events, conditions or circumstances on which any such information or statements are based for any reason, except as required by law, even as new information becomes available. All information and forward-looking statements in this presentation are qualified in their entirety by this cautionary statement. In addition to results presented in accordance with U.S. GAAP, this presentation and related tables include Adjusted EBIDTA, a non-gaap financial measure. We have provided a reconciliation of this measure to the most directly comparable GAAP measure, which is available in Reconciliations starting on slide 31. We use Adjusted EBITDA as a measure of operating performance, because it does not include the impact of items that we do not consider indicative of our core operating performance, for planning purposes, including the preparation of our annual operating budget, to allocate resources to enhance the financial performance of our business and as a performance measure under our bonus plan. We also believe that the presentation of Adjusted EBITDA provides useful information to investors with respect to our results of operations and in assessing the performance and value of our business. Although we believe this non-gaap financial measure enhances investors understanding of our business and performance, this non-gaap financial measure should not be considered an alternative to or substitute for accompanying GAAP financial measures. The risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2014 and filed with the SEC on March 13, 2015 pursuant to the Securities Exchange Act of 1934, as amended, are incorporated by reference into this presentation and should be read in their entirety alongside this presentation. 2

3 Disclaimer This presentation contains market data and industry forecasts that were obtained from industry publications, third party market research and publicly available information. These publications generally state that the information contained therein has been obtained from sources believed to be reliable, but the accuracy and completeness of such information is not guaranteed. This presentation also contains estimates and other statistical data made by independent parties and by us relating to market size and growth, size of insulation opportunity at various types of energy infrastructure facilities and other data about our industry. We obtained the industry and market data in this presentation from our own research as well as from industry and general publications, surveys and studies conducted by third parties, some of which may not be publicly available. For example, this presentation includes statistical data extracted from an off-the-shelf market research report (World Insulation - #2956) by The Freedonia Group, an independent international market research firm, and a separate custom market research report by Freedonia Custom Research, Inc., a wholly-owned subsidiary of The Freedonia Group, or Freedonia, which was commissioned by us and was issued in February Such data may be outdated and involves a number of assumptions and limitations and contains projections and estimates of the future performance of the industries in which we operate that are subject to a high degree of uncertainty. We caution you not to give undue weight to such projections, assumptions and estimates. The Freedonia Custom Research, Inc. Report, or the Freedonia Report, represents data, research opinion or viewpoints developed independently on our behalf and does not constitute a specific guide to action. In preparing the Freedonia Report, Freedonia used various sources, including publicly available third party financial statements; government statistical reports; press releases; industry magazines; and interviews with manufacturers of related products (including us), manufacturers of competitive products, distributors of related products and government and trade associations. The Freedonia Report speaks as of its final publication date (and not as of the date of this presentation). 3

4 Overview 4

5 Leadership Team Donald R. Young President & CEO Jeffrey A. Ball Vice President, Operations John F. Fairbanks Vice President, CFO & Treasurer George L. Gould Vice President, Research & Development Corby C. Whitaker Senior Vice President, Sales & Marketing President, CEO and member of Board of Aspen Aerogels since 2001 Prior to 2001, in senior operating roles at Cabot Corporation BA Harvard College and MBA Harvard Business School Joined Aspen as VP Engineering in 2013 and appointed VP Operations in years in operational roles with Genzyme, Bayer and Rohm & Haas BS Bucknell University and MS Villanova University, Chemical Engineering CFO since years as SVP of NEBS, in senior financial and operating roles BA Economics Middlebury College and MBA Wharton Has led R&D since 2001 Research at Aspen Systems and professor at University of Illinois at Chicago BA College of Wooster, PhD Yale, Chemistry & post-doc at Brookhaven Labs SVP Sales and Marketing since 2013 Sales, Marketing & Bus Dev for Solyndra, United Solar and Johns Manville BS Mechanical Engineering from Texas A&M University 5

6 Aspen Aerogels: An Energy Technology Company Designs, develops and manufactures innovative, high-performance aerogel insulation primarily used in largescale energy infrastructure process facilities Offers a superior combination of performance and long-term value End users save money, reduce energy use, preserve operating assets and protect workers Global network of energy-focused distributors, contractors and engineering firms Proven market adoption Used by 24 of the world s 25 largest refining companies; 20 of 20 largest petrochemical companies Initial installations in approximately 30% of the world s 640 refineries Installed base of >180 million sq. ft., >$450 million of product sales since 2008 Expanding capacity to meet demand Targeted Energy End Markets Geography 2014 Product Revenue by Region Europe 14% REFINERIES PETROCHEMICAL PLANTS LNG & GAS PRODUCTION USA 36% Asia Pacific 35% OIL SANDS OFFSHORE POWER GENERATION Latin America 9% Canada 6% 6

7 Key Business Highlights 1) Disruptive insulation products offering superior value and performance 2) Attractive and growing energy infrastructure end markets 3) Substantial installed base with industry-leading end users 4) Significant growth opportunities: expanded market penetration and new projects 5) 29% 5-year revenue CAGR through 2014, EBITDA positive, growing profitability 6) Protected technology platform and proprietary manufacturing capability 7) Proven, scalable business model with attractive returns 8) Experienced management team with a demonstrated track record 7

8 Technology 8

9 Unique Technological Advantages What are Aerogels? Aerogels are amorphous silica solids Characterized by impressive material properties Lowest density solid -- ~97% air Lowest thermal conductivity Our Breakthrough Technology Industrially robust Unique product form Proprietary manufacturing process Patent-protected 81 issued and 60 pending patents owned or co-owned worldwide Advantages vs. Traditional Insulation Best thermal performance of any widely used insulation product Reduced corrosion under insulation Compact design and faster installation High durability and fire protection Proven Manufacturing Process Our Aerogel Products Step 1: Fill fibrous batting with a liquid-solid solution Step 2: Extract solvents with supercritical carbon dioxide Step 3: Resulting dry fiber-reinforced aerogel blanket Pyrogel XT / XT-E / XTF ( hot insulation) Cryogel Z ( cold insulation ) 9

10 Thermal Conductivity Disruptive Products with Compelling Value Proposition Traditional Insulation Best Thermal Performance Pyrogel XT Two to five times better thermal performance Broad range of applications from -200 C to 650 C Temperature Range Reduced Corrosion Under Insulation Compact Design & Faster Installation Vapor Permeable Hydrophobic Traditional Insulation Enhances plant safety Improves reliability Reduces major maintenance expense 50% to 80% reduced volume Space savings Faster installation time with improved safety and logistics High Durability and Fire Protection Traditional Insulation; Installed on site Transport-ready; Supports modular construction Excellent compression resistance, tensile strength, and vibration resiliency Fire protection 10

11 Sales & Marketing 11

12 End Markets & Products REFINING PETROCHEMICAL LNG POWER OFFSHORE OTHER Used by 24 of the world s 25 largest refining companies Installed by 20 of the top 20 petrochemical companies Preferred by LNG & FLNG for space saving design Maximum efficiency for power generation Thin and durable for pipe-in-pipe applications Building & Construction District Energy Transportation Footwear and Apparel Pyrogel Cryogel Spaceloft Hot Process Applications Cold Process Applications Ambient & Low Temperature Applications 12

13 Overview of The Energy Insulation Market Energy Insulation End Markets by Sector Energy Insulation End Markets by Region $ Millions $4,000 $ Millions $4,000 $3,000 $2,000 $1,000 $2, ,087 $2, ,248 $3, ,600 $ Power Generation Petrochemical Onshore Oil Production Offshore Oil Production Gas Production Refinery Source: Freedonia Custom Research Report $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 $3, $2,814 $2, ,485 1, USA Canada Latin America Europe Asia Pacific Middle East Africa 13

14 Global Distribution Network and Installed Base Distributor Contractor OEM Installed Base Source: Company Management. Installed in more than 40 countries worldwide 39 sales and marketing employees and 45 distributors 14

15 Industry-Leading End Users 15

16 Case Study Compact Design End User: Technip Product: Spaceloft Subsea Project: Dalia Field Offshore Angola Problem: Low reservoir temperatures caused oil to cool and fall below a required minimum temperature as it was transported via pipeline from the wellhead to the production facility Solution: Spaceloft Subsea blankets provided the required thermal performance and were thin enough to fit in the narrow gap between the inner 12 flowline and the outer 17 steel casing. Aspen has since worked with Technip on more than 20 subsea projects 16

17 Case Study Corrosion Under Insulation End User: Formosa Petrochemical Product: Pyrogel XT Project: Formosa industrial piping Problem: Following severe corrosion under insulation (CUI) challenges at a petrochemical complex, Formosa embarked on a facility-wide renewal project with a commitment to corrosion control Solution: Pyrogel s hydrophobic and vapor permeable characteristics, and thin form factor allowed Formosa to pack its piping more tightly, reduce the number of decks, and free additional space for future expansion work 17

18 Operations 18

19 Capacity Expansions Expand capacity at East Providence facility to meet customer needs Line 3 Improve plant equipment redundancies Provide space for future pilot studies to improve existing processes and introduce new technologies Plant 2 Expand capacity of Aspen Aerogels to meet customer needs Improve raw material supply and product distribution channels Lower cost of manufacture 19

20 Utilize Sound Project Management Practices Strategic Planning / Feasibility Concept Preliminary Design Detailed Design Construction Commission & Start Up 0 Program stage gate approach Industry best practices Improves project delivery and efficiency Incorporates all stakeholders and provides a framework for them to engage Focus on business drivers Includes business risk management Program deliverables (sample) Business case Project execution plan (PEP) Environment & Safety plan Quality plan Design basis Commercialization Project Closeout & Benefits Realization 7 20

21 Line 3 Project: Results Safety: Executed safely Schedule: On schedule Cost: On budget Quality: First blankets successfully produced Benefits Realized Increased capacity of East Providence by 25% Improved redundancy and uptime of key pieces of equipment Provided space for piloting of process improvements and new technologies 21

22 Plant 2 Project Kickoff December 2014 Strategic planning and feasibility Development of business case Site selection process Overall feasibility Long Term Manufacturing Goals Increase capacity to meet customer needs Lower cost of manufacture Increase raw material supply security Optimize product distribution channels Site Selection Criteria - Summary Tangible Criteria Bill of material costs Utility costs Labor costs Taxes (corporate, real estate, labor) Shipping costs Capital investment Government grants / assistance Intangible Criteria Workforce availability / education Workforce productivity Logistic efficiencies Community involvement Surrounding projects Intellectual property protection 22

23 Plant 2 Project Strategic Planning / Feasibility 0 Site selection complete Robust process 1 Statesboro GA recently announced as site of choice Concept 2 Preliminary Design 3 Detailed Design Potential ports 4 Construction Commission & Start Up Commercialization Project Closeout & Benefits Realization Strong engineering team engaged Design basis aligned with demand plan Continuing to follow program phase gate model 23

24 Finance 24

25 Nine Months 2015 Performance Growth Supported By Third Production Line ($ in thousands) Nine Months Ended Change 9/30/15 9/30/14 $ % Total Revenue Cost of Revenue $ 85,134 $ 74,415 $ 10,719 14% 70,339 62,571 7,768 12% Gross Profit 14,795 11,844 2,951 25% Operating Expenses 22,714 25,226 (2,512) -10% Operating Loss (7,919) (13,382) 5,463 41% Adjusted EBITDA Add-backs: Depreciation & Amortization 7,422 7,692 (270) -4% Stock-based Compensation 4,175 7,398 (3,223) -44% Other Items - 15 (15) -100% Adjusted EBITDA $ 3,678 $ 1,723 $ 1, % Gross Margin 17% 16% Adjusted EBITDA Margin 4% 2% See slide 31 herein for a reconciliation of net income (loss), the most directly comparable GAAP measure, to Adjusted EBITDA for the periods presented. 25

26 Annual Revenue & Adjusted EBITDA History of Top and Bottom Line Growth For the Year Ended December 31, 2015 Guidance ($ in thousands) Low High Total Revenue Cost of Revenue Gross Profit $ 63,453 $ 86,094 $ 102,399 $ 120,000 $ 122,000 71,421 75,363 85,319 (7,968) 10,731 17,080 Operating Expenses 25,005 30,703 33,123 Operating Loss (32,973) (19,972) (16,043) Adjusted EBITDA Add-backs: Depreciation & Amortization 9,684 10,061 10,183 Stock-based Compensation 1,654 4,426 8,781 Other Items 2,489 3, Adjusted EBITDA $ (19,146) $ (1,815) $ 3,040 $ 8,300 $ 9,000 Revenue Growth 38% 36% 19% 17% 19% Gross Margin -13% 12% 17% Adjusted EBITDA Margin -30% -2% 3% 7% 7% See slide 32 herein for a reconciliation of net income (loss), the most directly comparable GAAP measure, to Adjusted EBITDA for the periods presented. 26

27 Financial Guidance Profitability Projected To Improve in Guidance 2016 Guidance (in thousands, except EPS) Low High Low High Total Revenue Adjusted EBITDA $ 120,000 $ 122,000 $ 117,000 $ 122,000 $ 8,300 $ 9,000 $ 11,500 $ 13,000 EPS $ (0.31) $ (0.28) $ (0.15) $ (0.06) Shares Outstanding 23,000 23,000 23,200 23,200 Depreciation $ 9,900 $ 9,900 $ 9,500 $ 9,800 Stock Compensation $ 5,400 $ 5,400 $ 4,700 $ 4,900 Gross Margin Approaching 20% Mid-Twenties 27

28 Balance Sheets Assets Available to Support Expansion Assets September 30, 2015 December 31, 2014 Cash and cash equivalents $ 29,964 $ 49,719 Accounts receivable, net 24,491 17,924 Inventories 6,629 4,897 Prepaids and other current assets 1, Total current assets 62,921 73,376 Property, plant and equipment, net 77,424 71,492 Other assets Total assets $ 140,445 $ 145,043 Liabilities and Stockholders' Equity Accounts payable $ 9,594 $ 14,202 Accrued expenses 4,465 5,588 Deferred revenue 5, Other current liabilities Total current liabilities 20,554 20,208 Other long-term liabilities 293 1,119 Total liabilities 20,847 21,327 Total stockholders equity 119, ,716 Total liabilities and stockholders equity $ 140,445 $ 145,043 28

29 Capacity Expansion Plan Annual Capacity (MM ft 2 / year) 100 Historical Projected Plant 2 - Line Line 3 Line East Providence Line 1 Line 1 Expansion A 2009A 2010A 2011A 2012A 2013A 2014A 2015E 2016E 2017E 2018E Nameplate Capacity (1), Year-End Effective Capacity (2), Annual Actual Production, Annual 1. Nameplate capacity represents our projected maximum sustainable annual output 2. Effective capacity is the capacity at which we can operate while maintaining the quality of our products and efficiency of our operations in a given period. Actual effective capacity is also impacted by the date within a given year on which we add the capacity. The projected nameplate and effective capacity for the years 2015 through 2018 are based on certain assumptions that the Company s management believes are reasonable, but these assumptions could prove to be incorrect, which could result in actual capacity differing materially from the projections above. 29

30 Appendices 30

31 Reconciliation ($ in thousands) Nine Months Ended 9/30/15 9/30/14 Net loss $ (8,055) $ (63,607) Interest expense ,225 Depreciation and amortization 7,422 7,692 Stock-based compensation 4,175 7,398 Loss on disposal of assets - 15 Adjusted EBITDA $ 3,678 $ 1,723 Note: The table above presents a reconciliation of net income (loss), the most directly comparable GAAP measure, to Adjusted EBITDA for the periods presented. 31

32 Reconciliation ($ in thousands) Year Ended December 31, Net loss $ (56,142) $ (47,611) $ (66,324) Interest expense 21,790 30,599 50,281 Depreciation and amortization 9,684 10,061 10,183 Loss on disposal of assets 2, Stock-based compensation 1,654 4,426 8,781 Gain on extinguishment of convertible notes - (8,898) - Loss on exchange of convertible notes - 5,697 - Debt extinguishment costs 1, Write-off of costs associated with postponed public offering Write-off of construction in progress - 3,440 - Adjusted EBITDA $ (19,146) $ (1,815) $ 3,040 Note: The table above presents a reconciliation of net income (loss), the most directly comparable GAAP measure, to Adjusted EBITDA for the periods presented. 32

33 Investor Presentation November