Good morning. Thank you for attending the Aspen Aerogels Incorporated Q2 2025 Financial Results Call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I would now like to turn the conference over to your host, Neil Baranowski, Aspen's Senior Director, Head of Investor Relations and Corporate Strategy. Thank you. You may proceed, Mr. Baranowski.

Thank you, Megan. Good morning, and thank you for joining us for the Aspen Aerogel's second quarter 2025 Financial Results Conference call. With us today are Don Young, President and CEO, and Ricardo Rodriguez, Chief Financial Officer and Treasurer. The press release announcing Aspen's financial results and business developments and the slide deck that will accompany our conversation today are available on the Investors section of Aspen's website, www.aerogel.com. During this call, we will refer to non-GAAP financial measures, including adjusted EBITDA and adjusted net income. The reconciliations between GAAP and non-GAAP measures are included in the back of the slide presentation and earnings release. On today's call, management will make forward-looking statements about our expectations. These statements are subject to risks and uncertainties that could cause our actual results to differ materially. These risks and uncertainties include the factors identified in our filings with the SEC. Please review the disclaimer statements on page one of the slide deck as the content of our call will be governed by this language. I'd also like to note that from time to time, in connection with the vesting of restricted stock units and or stock options issued under our Long-Term Equity Incentive Program, we expect that our Section 16 officers will file Forms 4 to report the sale and or withholding of shares in order to cover the payment of taxes and or the exercise price of options. I also want to highlight a few near-term IR engagements. On Monday, August 11th, Ricardo and I will be hosting one-on-one virtual meetings at the Oppenheimer 28th Annual Technology, Internet, and Communications Conference. On Tuesday, August 12th, and Wednesday, August 13th, Don and Ricardo will be hosting one-on-one meetings at Canaccord Juniors' 45th Annual Growth Conference at the Intercontinental Boston Hotel. Both conferences will also feature fireside chats. The live webcasts of these presentations can be found on the Investor's section of Aspen's website. I'll now turn the call over to Don.

Thanks, Neil. Good morning, everyone. Thank you for joining us for our Q2 2025 earnings call. My comments will cover our CFO transition, the expected impact of simplifying and streamlining our organization, our operating performance, and our view of the current environment and second-half outlook. Ricardo will amplify these points with his comments. We look forward to your questions. As we announced in our Q2 earnings press release, Riccardo plans to step down from his position as Chief Financial Officer at the end of the third quarter. Riccardo joined the company in November 2021 as the Chief Strategy Officer and assumed the role of CFO in April 2022. He has been an invaluable partner to me these past years. He has elevated our game in many ways, which has directly resulted in our strong balance sheet and overall financial position. I'm deeply grateful for Ricardo's many contributions to Aspen and have no doubt that he has great things ahead in his career. We are pleased to announce that Grant Faley will become Aspen's Chief Financial Officer at the end of the third quarter. Grant currently serves as our Chief of Staff to the CEO and our VP of Corporate Strategy and Finance. He has been with Aspen since 2021 and has played a pivotal role in shaping our financial strategy, including our mid-cap financing and our recent cost optimization efforts. Grant will be returning from parental leave later in August and will continue to work closely with ricardo and the senior executive team to ensure a seamless transition our core objective is to build a strong profitable capital efficient business the focus during the first half of the year was to streamline and simplify the organization to optimize our cost structure drive profitability and build resilience we have made significant progress as shown in slide two by the red, blue, and green lines, we have shifted our fixed cost structure to drive profitability at lower revenue levels. We have removed approximately $65 million in costs, including lowering OPEX back to 2022 levels on a run rate basis. We have also structured the company to require minimum capital expenditures. The Aerogel manufacturing facility in Rhode Island and our EMF Supplemental Supply are positioned to provide the capacity to meet significant revenue growth in the future and to support a flexible sourcing strategy aimed at mitigating risk associated with the potential for fluctuating tariff scenarios. It is clear that U.S.-based OEMs value domestic supply, and we are well positioned to serve them. In an environment where the growth rate in the EV market is facing regulatory headwinds, especially in the U.S., and the energy sector overall is in flux with a turbulent global economy, we have structured our teams and operating resources to build a resilient, growth-oriented, and profitable business. In Q2, we delivered revenue, gross profit, and adjusted EBITDA at the high end of expectations. Their performance was led by our Python thermal barrier business, which has been holding steady here in Q3. Our energy industrial segment is currently experiencing a slowdown in project activity, which traditionally contributes around 40% of the segment's total revenue. This has been particularly evident in our subsea market. Dating back more than 10 years, subsea revenue cycled between $5 and $15 million per year. In 2023 and 2024, it averaged approximately $30 million per year. While the whole of the energy industrial business is behind expectation, weak subsea is the main reason we are having trouble keeping pace with last year. If there's a bright spot in an otherwise unsettled energy environment, we are seeing key customers such as Technip FMC winning subsea projects in 2025 that we believe will translate into attractive project revenue for us in 2026. Similarly, after strong LNG revenues in 2024, we are seeing a dip in LNG revenues in 2025. But like the subsea segment, we are seeing opportunities for attractive LNG project work in 2026. Overall, we believe our energy industrial segment is well positioned for a policy approach in the United States that promotes an intensified focus on energy and power generation. We anticipate that we will grow revenue and produce high gross profit margins in 2026 and beyond. Looking ahead to the second half of 2025, our revenue outlook is roughly on par with that of the first half. The major distinction is that we anticipate generating approximately two times the adjusted EBITDA. This leverage reflects the progress we made during the first half of the year to streamline our organization and optimize our fixed cost structure. We are operating with discipline to build a business with strengthened resilience and enhanced profitability. Ricardo, over to you.

Thank you, Don, and good morning, everyone. I'm happy to report another quarter on behalf of our team starting on slide three we delivered 78 million dollars of revenue in q2 which translates into a 34 percent year-over-year decline and the nearly flat trend quarter over quarter the annual run rate of approximately 312 million dollars came in on the higher end of our expectations for the quarter you may recall that we were expecting between 70 and 80 million dollars of revenues for Q2. Our energy industrial segment's revenue saw a significant decrease in quarterly revenues to $22.8 million, or 38% year-over-year. This reflects the dynamics that Don mentioned in his remarks regarding inventory rebalancing of distributors and contractors, along with the near-term absence of new projects from end-users. Don also mentioned the absence of sub-sea demand in the quarter live input from the field from our team along with oil prices that are over 20 percent lower year over year along with refining capacity being fully utilized in the summer months lead us to believe that turnarounds and new projects are being retimed for the fall of this year and next year ev thermal barrier demand of 55.2 million dollars represents a 32 percent decrease year-over-year, as demand aligned with a lower vehicle production schedule at our key customers. General Motors continues gaining U.S. market share, and it is encouraging to see their production volumes not just stabilize, but increase meaningfully quarter-over-quarter. This led our revenues in this segment to increase by 14 percent quarter-over-quarter. In Q2, company-level gross profit margins were of 32%, and our gross profit of $25.3 million represented a 51% decline over the same quarter last year. Our energy industrial business was still able to maintain gross margins of 36%, thanks to our flexible supply strategy on lower revenues. and our EV thermal barrier business had gross margins of 31%, which was still below our target of 35%, but a full eight percentage points higher, quarter over quarter, thanks to higher part production volumes and various productivity improvements in Rhode Island and Mexico. Our net loss of $5.2 million was driven by an adjusted OPEX run rate of $24.6 million, and our adjusted EBITDA was of $9.7 million in Q2, highlighting one of Don's earlier points. As we've worked to lower our fixed cost structure, it was encouraging to see adjusted EBITDA nearly double quarter over quarter by $4.8 million on revenues that were $700,000 lower. If you recall, the high end of our EBITDA guidance for the quarter was of $7 million, so we exceeded that by 38%. As a reminder, we define adjusted EBITDA as net income or loss before interest, taxes, depreciation, amortization, stock-based compensation expenses, and other items that we do not believe are indicative of our core operating performance. In Q2, these adjustments were meaningful and included $1 million in impairments linked to some oven-related equipment that are planted in Rhode Island, $3 million of restructuring costs linked to our recent OPEX and manufacturing overhead reductions, $1.9 million related to demobilizing plan 2, $3.2 million of stock-based compensation, $5.8 million of depreciation and amortization, along with $3.9 million of net interest expenses. Our net loss in Q2 was of $9.1 million, or 11 cents per diluted share, assuming 82.2 million shares. Next, I'll turn to cash flow and our balance sheet. Our operations consumed $16.8 million of cash in Q2 by requiring $3.9 million in operating cash flow and investing $12.9 million of CapEx. Operating cash flow benefited from a $4.6 million reduction in inventories as we continue to free up cash from the operations by focusing on every element of working capital. In Q2, to continue reducing our interest expenses, we paid down six and a half million dollars of our term loan with MidCAP, bringing our total debt on this loan and the revolver to $135.3 million at the end of the quarter. Within our $12.9 million of CapEx, only $3.6 million went towards remaining obligations at Plan 2, which was meaningfully lower than last year last quarters plan to expenses of 7.7 million dollars the rest is linked to equipment in mexico and rhode island for ev thermal barrier launches in the second half of this year in 2026 as we finish closing out remaining obligations in georgia for plan 2 we expect to recoup meaningful value from these assets over the next several quarters the equipment is expected to bring in approximately $25 million over the next three quarters, and the plant is available to purchase through our broker, and we expect that to be sold for over $25 million. The proceeds from the sale of these assets will bolster our balance sheet as they'll be used to prepay the term loan and reduce the company's interest expenses further. We ended the quarter with $168 million of cash in the equivalents and shareholders' equity of $308.8 million. dollars we believe that a strong positive net cash position in combination with meaningful enhancements and profitability thanks to a lower fixed cost structure and tight controls around networking capital position the company to keep executing without needing any additional capital as we work our way towards the end of the year higher evital levels in combination with lower restructuring charges freeing up additional working capital no more expenses linked to plan two and our contained capex plans would enable the company's cash position to remain around the current levels even after paying down another 13 million dollars of debt the asset sales that i mentioned earlier linked to plan two would further improve the net cash position by at least 50 million dollars and give the company added strategic flexibility in the future to refine the capital structure next let's turn to slide four to review our outlook for the second half of the year. With what we know today, we expect to deliver a range of $140 to $160 million of revenue in the second half of the year. Added to the actuals of the first half of the year, this translates into $297 to $317 million of revenue for the year. This would translate into $20 to $30 million of adjusted EBITDA in the second half of the year, so potentially double what we delivered in the first half. Echoing some of Don's earlier remarks, this highlights the benefits of the lower fixed cost structure that our team has been working on implementing. Adding the $15 million of adjusted EBITDA that we delivered in the first half would position the company to deliver $35 to $45 million of adjusted EBITDA for the year. Net income for the second half of the year is expected to range from a loss of $7 million or negative $0.08 per share to positive net income of $3 million or $0.04 per share. CapEx to fund their operations in Rhode Island and Mexico will continue being managed to less than $25 million for the year without including the remaining costs to the Mobilize Plan 2. This guidance for the second half of the year implies a potentially higher level of revenues than what we were expecting earlier this year, and it is driven by stable EV production volumes at GM. We believe that even after the $7,500 tax credit to consumers ends on September 30th in the U.S., the market share gains of vehicles like the Chevy Equinox and various Cadillac EVs cannot be ignored. if there is a near-term surge in sales as we get closer to the end of september q4 and early 2026 could very well be times to rebuild inventory levels and that would drive stable demand for our our ev thermal barrier parts during the entire second half of the year with this being my last earnings call at aspen i would like to sincerely thank don our board of directors and the rest of the aspen team i'm also grateful to the broader investment community for making my nearly four-year tour of duty at Aspen such an active, fulfilling, productive, and rewarding time. I leave the team convinced that Aspen is well capitalized and positioned to deliver on its strategy and take with me many fond memories of ideas and discussions with you that shaped our thinking around the company and how to make the most of our resources. Grant joined the team at Aspen shortly before I did. He has been more than a right-hand man to me as we led the finance function together with Santosh, Neil and Jack. He along with some great recruits like Zach Reed and Matt Overham and others have built an FB&A team that punches well above its weight. In all we have a productive team that includes some of the best finance talent that I have worked with and I am sure that Grant will transition into the role seamlessly as he returns from parental leave to pick up the baton at the end of the quarter and I'm very excited for all of you to get to meet him over the next several weeks. Now I'm happy to hand the call back to Don for his closing remarks.

Thank You Ricardo. Before we move to Q&A I would like to reiterate that we believe that electrification through this decade will be a major driver for both our thermal barrier and energy industrial businesses. With a strong foundation in place we are confident in our ability to adapt, innovate, and deliver both critical solutions to our customers and durable value to our shareholders. Our decisive actions this year reflect our commitment to building a resilient, growth-oriented, and profitable business. Megan, let's turn to Q&A, please.

Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two again to ask a question please press star one as a reminder if you're using a speakerphone please remember to pick up your handset before asking your question we will pause here briefly to allow questions to register our first question will go to the line of eric stein with craig hallam eric your line is open hi don hi ricardo hey good morning hey um maybe gosh, a lot of things here.

Maybe to start with energy industrial. I know that in Q1, you did call out distributor de-stocking, but it did seem like at least the thought then was that that was relatively a short-term dynamic. And then this quarter, I mean, it seems pretty clear that that's ongoing. Any updated thoughts? I mean, it doesn't sound like you believe that this segment grows this year, and that'd be pretty tough given the start. But just maybe where do you think distributors stand on this?

Thanks, Eric. We've made a dent in those inventories and our distributors, but we have still a ways to go. So our project revenue is just lower than we anticipated. I think we could have done a better job coming into the year seeing that pipeline, frankly. But we are, as I said in my comments, we see good activity in some of our partner companies and customers. I mentioned Technique FMC, for example, who are winning projects here in 2025 that we do think will translate into revenue for us in 2026. And, Eric, I would also just add, we have seen this sort of cycle before, of course, where we have a surge in project revenue and then a dip. And, again, we could have done a better job anticipating this, I think, but having said that, we're confident that we'll work our way out of it, work through those distributor inventories, and win our fair share of projects and get this thing growing again, again, at gross margins that have been consistent with our recent performance.

Yeah, and I would think this go-around, that was made worse by the fact that it is supply constrained, right? I mean, distributors not used or, you know, very long lead times that all of a sudden, you know, no longer the case.

It's a great point. Let's face it. We were capacity constrained, inconsistent capacity for, what, five or six quarters? And just turning the corner on that, again, we might have been able to anticipate that a little bit differently. But, again, I think our EI revenue in the second half will be somewhat on par with what it was in the first half as we work through these issues.

Okay, that is helpful. Maybe then just turn into pyrothin. And, you know, I know GM put out their July sales and they were quite strong. And I would think that that's got a positive read through to just working through any excess inventory that they may have. You know, if you think about the tax credit expiring, you know, where do you see things as you stand today? I mean, do you believe that third quarter, you know, sales there means pretty steady volumes for you over the back half of the year? Or maybe how do you think that the, you know, third quarter, fourth quarter might be weighted in that segment?

Yeah, I mean, I think just going back to my remarks there on this one, Eric, I do see a more optimistic view in Q4 than one would think just based on the tax credit going away. but if you look at how much market share gm has gained mostly at tesla's expense within the ev market we got we have a couple slides in the appendix of the deck that show you know just how much of a gain gm has made and i don't think they're going to let go of that market share right i mean it's been pretty clear the gm's longer term north star is to have a high ev mix and they'll be driving that with or without the $7,500 credit. And if you look at how much market share they've gained on the coastal markets here in the U.S., yeah, I just don't think that that's something that they're ready to walk away from, given that the demand is clearly there.

Okay. Maybe just sneaking one last one in just to clarify. So, Ricardo, did you unclear whether or how much is left to spend for plant two, you know, if it's largely wrapped up or if there's more to go to get it in a position to monetize it?

Yeah, at this point, it's pretty much wrapped up. I mean, we have less than $10 million to spend. But then, as I mentioned, we believe that we can recoup over $50 million here over the next several quarters. So I think I think we've rounded the bend. We actually paid out the last large invoice towards Plan 2 here in July, and it was booked in June and we're well past it and looking to move on from that. Okay, thank you.

Thank you, Eric. Our next question goes to the line of Colin Roosh with Oppenheimer. Colin, your line is open.

Thanks so much. Thanks so much, guys. Can you talk about design and activity with new OEMs and how that's trending here over the last quarter or two and when we might start to see some real meaningful incremental revenue from EV OEMs either later this year or next year?

Yeah, Colin. I mean, as you read in the press every day, there's quite a bit of flux around the product plans at these automakers automakers as they're all reacting to you know some pretty drastic policy changes over the past several weeks but we do see when you look at the pipeline we do see a couple of anchor oems that are going to drive incremental revenues within the thermal barrier segment over the next six quarters the main ones are stillantis like that's not changing the policy in Europe is not changing. The volumes there are expected to ramp up here in the fourth quarter of this year and next year. And then we have Daimler in 2027. The other OEMs are going through either a process of assessing their timeline or switching cells from mostly away from Northvolt over to a different cell supplier. And we're still very well in the mix, but that's obviously pushing the timing of those launches to the second half of 2026 and and some of them potentially even later when it comes to new coding activity i mean the team is as busy as ever we um the trend that we had here in q1 of record level prototyping and coding activity here in this building that don and i are in right now is still holding up but you obviously need to be realistic and look at what the longer term product pipeline of these OEMs is. They're all just reacting to the recent policy changes in the U.S. and while at the same time coming up with a way to compete in China which has an over 50% EV mix and then Europe where we're seeing a resurgence of EVs as well. So as we supply some of these European OEMs, we do see that we're very well positioned in Europe up to continue adding wins definitely next year and you're going to see the result of a lot of this prototyping and development work and technical sales work that the team is doing today Colin I would just add I was with the senior leadership of ACC in Europe at the end of end of Q2 and and and they are making strides with their productivity and quality of making sales for the European market which is in which is encouraging for us and thanks so much guys and then

from an R&D perspective you know obviously you guys have made some pretty meaningful innovations in around you know product development for the various battery applications I'm just curious about how much you know there there can shift in terms of what you're offering or you know how much you can change or improve the offering out to OEMs as we see kind of optimizing you you know, their optimized vehicle designs as well as evolution on the battery, geometries and chemistries. You know, I guess, how should we think about the product cycle for you guys and when we might start seeing some meaningful shifts in that?

We've done work with our existing OEMs and with prospective OEMs as they work through their chemistry expansions, if you will. And I mean, General Motors is a good example of that. And our R&D group and our design group are engaged with Asia-based companies, European-based companies and the U.S. OEMs as well, trying to stay current and ahead and really being thought leaders with these companies. You know, Colin, I would just tangential to that, you know, we are, it is interesting, we are, the the emphasis on having U.S.-based supply of these materials has been a positive for us. I think the OEMs, and I said this in my prepared remarks, view this favorably and as an important element of our ability to supply domestic product here in the U.S. as well.

Yeah, maybe just to add, Colin, you know, the requirements are no longer a moving target at all, and that makes R&D and all the development and the technical sales work way more efficient. And so I think the company is going to benefit from that greatly here, given that we know what the requirements are pretty clearly and how we can meet them relative to any potential option that the OEMs could be looking at. incredibly helpful guys thanks so much thanks colin thank you colin our next call uh question will go to a line of ryan finkst with v riley ryan your line is open hey guys thanks for taking my questions um i'll ask one follow-up on energy industrial you you've talked about the potential

27 revenue buildup of $175 million or even higher with potential expansion areas. Just curious, given your comments earlier, Don, if you still feel confident in the path to get there, and maybe if you could give us a sneak preview of how you're thinking about growth in 2026, given the activity you talked about with subsea and LNG projects starting to show again.

Yeah. Look, our goal right now, Ryan, is to be sure that we're well positioned to participate in the project side of our business. And I said it in my comments, historically, it's been about 40% of our revenue. And typically, it represents almost all of our variability from year to year. And so our project teams are focused to be sure that we get back on track and participate in any and all subsidy projects and L&Z projects. And we believe that we will do that. With respect to 2026, we firmly believe that we will begin a new growth pattern at high gross profit margins. And we've increased those profit margins significantly, a combination of productivity, efficiency, and yields on our end and our EMF transition that we made and also some price increases along the way. So, again, we believe we're in a strong position to reignite growth in that segment in 2026, both revenue and profitability.

Appreciate that, Don. And then, Ricardo, you touched on it, but I'm curious what conversations have been like with your non-GM customers that you've already signed up and have been awarded, and maybe when we could expect to see some of those shipments start to show up in a meaningful way for Aspen.

Yeah, as I mentioned earlier, I think you're going to see in Q4 some for ACC, and definitely next year that'll ramp up, and then Daimler will become a meaningful one in 2027. And, you know, there are several with other OEMs that we haven't yet announced that could contribute in 2027 as well.

Got it. Appreciate it, guys. I'll turn it back.

Thank you, Ryan.

Thank you, Ryan. Our next question will go to a line of David Anderson with Barclays. David, your line is open.

Good morning. In your remarks, you were talking about lowering your fixed cost by $65 million this quarter. I was just kind of curious, going forward in the thermal barrier revenue, in thermal barrier business, how quickly you can adjust costs kind of going forward. I'm just looking at the IHS forecasts, which are essentially calling for GMZV production to stay relatively flat. I'm just wondering what happens if that is materially lower? How quickly can you adjust those costs? Are you at a point now where you can kind of move things around and within a quarter you can kind of get back to those same kind of 35% operating margins?

Just one thing, Dave. Taking the $65 million, that was an endeavor that took place both in Q1 and in Q2. But to your point, there's no question that for us to be able to achieve 35% gross margins on the thermal barrier business, we do need some volume to absorb those fixed costs. We think we're in a good position today from a cost structure point of view to be able, with what we see in front of us, to maintain those targets of 35%. We were pretty close to that here in Q2, reporting here in Q2, and we think that those are very realistic targets. Yes, we have room around the edges to continue to fine-tune our cost structure depending on what we see going forward. But at this moment, we feel like we've done a lot of hard work. We've made a lot of tough decisions, but we're in a good position right now.

And you're looking at this IHS forecast that they're putting out there. You feel confident, though, those are pretty close to kind of what you're hearing from GM?

Because I'm just a little surprised they're not more severe in terms of the declines are expecting over the next four quarters yeah the customers are always higher than IHS so we've had to make our own calls here but yeah no I mean I think when we look at IHS today we do see that as a realistic scenario and then and then the team is really knocked on with various cost improvement projects at the plant in Rhode Island to increase our efficiency. And I think, you know, these are things that have been in the works for well over three years that would enable us to increase row lengths even further and therefore give us more productivity. Because remember, a year ago we were on a path to $650 million plus of revenues and trying to increase the capacity of the plant in Rhode Island as much as possible to be able to push out the plan to decision further and further right and so now as the team has had a chance to take a breather here on lower volumes the all of these projects for continuous improvement have been accelerated and that'll give the company the necessary cost structure to improve our gross margin profile next year on on comparable volumes which to your question Dave I mean even as

volumes work to go down further i think the company will be even more resilient quarter over quarter here as these projects take hold okay um thank you ricardo um so don you were talking in the energy industrial side you're talking about sub c and technique fmc um i was a little surprised by the comments that that's so slow considering what we've been seeing on fti's backlog when they're going to be after this you'll be 30 billion dollars over three years they think there's additional going forward you know 10 billion dollars annually is this just a timing question because there is a enormous amount of subsea trees that are about to be installed over the next you know three or four years so i guess i'm just kind of curious your product

maybe and i'm just maybe helping you understand kind of when your product is kind of ordered i guess like how close to delivery or how close to when the subsea trees are installed are they ordering Aspen AeroJose because to me it's just like which quarter is it of when it starts could you just provide a little bit of help on how that works out thanks yeah no that's great um look we just we just came off of two years where uh we had approximately on average about 30 million dollars per year which are strong uh years for us and we do we just feel we're in a little a a little bit of lull because we see the same thing that you do and our activity levels are are high typically for us uh when we win uh we come late in projects that applies both to subsea and and and to lng terminals frankly and um when we do receive an order we typically deliver it within a quarter or maybe a quarter or two and um so so so you can kind of piece that together we We see those same backlogs and activity levels that you're seeing, Dave, in your work. And again, not every project, I should say, requires pipe and pipe insulation, though. And so while that backlog is robust, it is a sub-segment of that that are pipe and pipe, typically the most challenging projects. Plenty of them are going to require pipe and pipe, but not every single one.

Don, you said it was 30. I think I might have misunderstood you. Did you say that the revenue was down about $30 million because of subsea? I wasn't sure that $30 million was in reference to.

Yeah, let me say it again. In 2023 and 2024, we averaged approximately $30 million of subsea revenue. And our historic numbers, if you go back 10 years through the cycles, we have typically been in the range of $5 to $15 million. And so much of our decrease for energy industrial overall has been because of the subsea law. And again, And we believe we're seeing the same thing that you are, that we have the opportunity to get back on a growth track as we win our fair share of these projects. And it's why I answered Ryan's question, that we believe in 2026 you will see both growth and solid profitability.

That makes a lot of sense. Ricardo, it's a pleasure working with you. best of luck on your future endeavors.

Thanks so much, Dave. I'll see you.

Thank you, David. Our next question goes to the line of Iteya McAuley with T.D. Cowan. Iteya, your line is open.

Great. Thanks. Good morning, everybody. Just two follow-ups for me. First, can we just kind of revisit the 2027 potential revenue buildup for Thermal? And just if you can caught if anything has sort of significantly moved around versus, I think, the 700-plus we talked about last quarter from a launch or other volume perspectives from what you know currently?

We see that on change still, Itai. I mean, the team does have a path to getting there, both on the EI side and the thermal barrier side. The two launches that I mentioned, ACC and Daimler, along with GM continuing to gain share here can help us get the 2027 number that we um mentioned during the last call for thermal barriers and and to don's point i mean even if you take what we're expecting on the energy industrial side for this year add back the project work and then look at some of the other applications and markets that the team is working to start to commercialize by then we're still confident that the company can get there.

That's very helpful. Thank you. And as a follow-up, I think, Ricardo, you mentioned your team has still a healthy quoting activity. I'm curious what you're seeing within that in terms of timing of future launches, the level of content, maybe a bit of a regional mix of the quoting pipeline. Just kind of curious, any interesting insights to kind of glean from that?

Yes, so the content is definitely tilting towards the prismatic cells and the requirements that come from that. And if you recall, that's a simpler, thinner part, mostly for the European OEMs and also here in North America with the likes of GM, Ford, and, you know, Rivian and others, right? We do see them taking their time more making these decisions because the OEMs are going from having a gun pointed to their head to develop EVs and start having them make up a meaningful portion of their fleet to now potentially the polar opposite, right? Right. And so I think OEMs right now are just really getting a read on what the consumer demand level for EVs is going to be. And as that becomes clear in the first half of next year, we expect to hear on some final decisions or on vehicles that have been in development for the past year or so where the OEMs have had a quote from us or a proposal for quite some time. and they just need those those projects approved once they have a good idea of where consumer demand is likely to be for evs terrific that's very helpful thank you thank you thank you our next question will go to a line of leanne hayden with canaccord genuity leanne your line is open morning everyone thanks so much for taking my questions just wanted to start by following up on some previous commentary mercedes recently announced plans to launch 15 new evs i believe in the next two-ish years do you expect any impact from this especially considering the mercedes acc partnership thank you yeah no thanks leon that's actually a good point i mean there is potential for incremental volume within the acc award and and your mercedes is a meaningful stakeholder in acc So all of those units could drive incremental volumes for the cells that we are on and the packs that we are on. Those vehicles are planned right now initially for Europe, and based on what we've read, they'll be Mercedes' second attempt at cracking the EV market in the U.S.

Appreciate it. Okay, that's very helpful. Just one more quick one from me. have you seen any incremental traction in alternative battery form factors like prismatic or cylindrical or anything like that?

No, I mean, it's really just been prismatic in pouches primarily, mostly prismatics. And then, you know, we're seeing a lot of the hype around the innards of the cells dying down, which confirms the hypothesis that we've had for quite a while that the current form factors and the current chemistries are what the OEMs have to work with for the next 15 plus years.

Got it. That's very helpful. Thank you very much. Appreciate it.

Anytime. Thank you, Leigh Ann.

Our last question will go to the line of Tom Curran with Seaport Research Partners. Tom, your line is open.

Thank you. Ricardo, congratulations on an impressive transformative tenure and i'd echo don and seeing great things ahead for you thank you thank you tom um yeah i wanted to follow up on ei uh don could you speak for for both subsea and lng um what the mix was expected to be between new projects turnaround and maintenance for each of the businesses. And to the extent any one of those three areas has negatively surprised, what has the nature of it been? Has it been just a delay? Have you actually seen any cancellations or other issues?

Just curious for a bit more color there both on the mix and then where um you know any any aspects of how how the the demand has materialized um you know might have disappointed relative to what you anticipated yeah um so so on on the sub c you know that is pure project work no no maintenance associated with that uh no maintenance opportunities associated with uh with that i look i think that has been um you know the the biggest surprise for us because as as dave anderson cited and i know you know tom the the you know the project works up c um that the backlogs for the next one two three four years are are really quite robust so um i we believe that we're in a little bit of a low moment after two very strong years and that we'll we'll again we'll get our fair share especially of the pipe and pipe projects. LNG is a combination of maintenance work and project work. The big headlines though, of course, are when we can win a project. We know from history that project work can be anywhere from $5 million per project to our biggest project was $40 million, an unusually large project, But those are big ranges. We do a lot of maintenance work in facilities all around the world, and that maintenance work typically gives us an opportunity to demonstrate our value proposition before those facilities go on to have an expansion. And it allows us to get ourselves in the specifications and in a good position with the engineering companies and the asset owners.

So those are really the two areas.

I mean, I think we all know that LNG forecasts are positive, and North America is a strong location for exports, and again, we're in good positions both with export facilities and in receiving terminals. So those are the two areas where we think we've got an opportunity to reignite growth and, again, maintain significant profitability in that segment.

And, Don, could you just remind us on the lead time that you tend to have with orders for each of, you know, the prior job for LNG and the space law for subsea, you know, how far in advance, you know, do you tend to get the booking ahead of when you would expect to ship?

Yes. For subsea, we tend to win a project and deliver it within a quarter or two. That has been standard for us for a long time. LNG has a little bit more of a lead time as we work our way. we do come as you know late in these projects from a from a build point of view and so sometimes projects can be well underway by the time we secure our secure our position within that within that facility so so these projects are not maybe one to two quarters but maybe two three and four quarters in in advance I appreciate the time and answers.

Thank you, Tom.

Thank you, Tom. There are no additional questions waiting at this time, so I'd like to pass the conference back over to you, Mr. Young, for closing remarks.

Thank you. Thank you, Megan. We appreciate everyone's interest in Aspen Aerogels. We look forward to reporting our third quarter results to you in early November. Thank you so much.

That concludes today's conference call. Thank you for your participation and enjoy the rest of the year.