Earnings Call Transcript - ASPN Q2 2025

Operator, Operator

Good morning. Thank you for joining the Aspen Aerogels Inc. Q2 2025 Financial Results Call. I will now hand it over to your host, Neal Baranosky, who is Aspen's Senior Director, Head of Investor Relations and Corporate Strategy. Thank you. You may proceed, Mr. Baranosky.

Neal Baranosky, Senior Director, Head of Investor Relations and Corporate Strategy

Thank you, Megan. Good morning, and thank you for joining us for the Aspen Aerogels 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 1 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 11, Ricardo and I will be hosting one-on-one virtual meetings at the Oppenheimer 28th Annual Technology Internet & Communications Conference. On Tuesday, August 12 and Wednesday, August 13, Don and Ricardo will be hosting one-on-one meetings at Canaccord Genuity's 45th Annual Growth Conference at the Intercontinental Boston Hotel. Both conferences will also feature fireside chats; the live webcast of these presentations can be found on the Investors section of Aspen's website. I'll now turn the call over to Don.

Donald R. Young, President and CEO

Thanks, Neal. 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, Ricardo plans to step down from his position as Chief Financial Officer at the end of the third quarter. Ricardo 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 Thoele 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 2, 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 cost, 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 Power and 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 million 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 expectations, weak Subsea is the main reason we are having trouble keeping pace with last year. If there is a bright spot in an otherwise unsettled energy environment, we are seeing key customers such as TechnipFMC, 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 twice 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 strength and resilience and enhanced profitability. Ricardo, over to you.

Ricardo C. Rodriguez, Chief Financial Officer and Treasurer

Thank you, Don, and good morning, everyone. I'm happy to report another quarter on behalf of our team, starting on Slide 3. We delivered $78 million of revenue in Q2, which translates into a 34% year-over-year decline and a nearly flat trend quarter-over-quarter. The annual run rate of approximately $312 million came in on the higher end of our expectations for the quarter. You may recall that we were expecting between $70 million and $80 million 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 subsea demand in the quarter. Live input from the field from our team, along with oil prices that are over 20% 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 represents a 32% 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 the production volumes not just stabilize, but increase meaningfully quarter-over-quarter. This led our revenues in this segment to increase by 14% quarter-over-quarter. In Q2, company-level gross profit margins were 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 8 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 work 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 at our plant in Rhode Island, $3 million of restructuring costs linked to our recent OpEx and manufacturing overhead reductions, $1.9 million related to the mobilizing Plant 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 $9.1 million or $0.11 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 $6.5 million 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 Plant 2, which was meaningfully lower than last quarter's Plant 2 expenses of $7.7 million. The rest is linked to equipment in Mexico and Rhode Island for EV thermal barrier launches in the second half of this year and 2026. As we finish closing out remaining obligations in Georgia for Plant 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 and equivalents and shareholders' equity of $308.8 million. 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 net working capital, position the company to keep executing without needing any additional capital. As we work our way towards the end of the year, higher EBITDA levels in combination with lower restructuring charges, freeing up additional working capital, no more expenses linked to Plant 2, 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 of debt. The asset sales that I mentioned earlier linked to Plant 2 would further improve the net cash position by at least $50 million and give the company added strategic flexibility in the future to refine the capital structure. Next, let's turn to Slide 4 to review our outlook for the second half of the year. With what we know today, we expect to deliver a range of $140 million 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 million to $317 million of revenue for the year. This would translate into $20 million 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 million 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 a positive net income of $3 million or $0.04 per share. CapEx to fund our operations in Rhode Island and Mexico will continue being managed to less than $25 million for the year, without including the remaining costs to mobilize Plant 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 30 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 can very well be times to rebuild inventory levels and that would drive stable demand for 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 Santhosh, Neal, and Jack. He, along with some great recruits like Zach Reed and Matt Overham and others have built an FP&A team that punches well above its weight. All in all, we have a productive team that includes some of the best finance talent that I have worked with. And I'm 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 them over the next several weeks.

Donald R. Young, President and CEO

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.

Operator, Operator

Our first question will come from Eric Stine with Craig-Hallum.

Eric Stine, Analyst

A lot to discuss here. To begin with Energy Industrial, I know that in the first quarter, you mentioned distributor destocking. It seemed then that this would be a short-term issue. However, this quarter, it appears that this trend is still happening. What are your updated thoughts on this? It doesn’t seem like you expect growth in this segment this year, which would be challenging given the current situation. Where do you think the distributors currently stand?

Donald R. Young, President and CEO

Thanks, Eric. We've made some progress in reducing inventories within our distributors, but we still have more work to do. Our projected revenue is lower than we expected. I believe we could have done a better job assessing the pipeline at the start of the year. However, as I mentioned earlier, we are seeing positive activity with some of our partner companies and customers. For example, TechnipFMC is securing projects for 2025 that we believe will generate revenue for us in 2026. Additionally, we've experienced similar cycles in the past where there is an increase in project revenue followed by a decline. We could have better anticipated this situation. That said, we are confident in our ability to navigate through it, address the distributor inventories, secure our share of projects, and achieve growth again while maintaining consistent gross margins.

Eric Stine, Analyst

Yes. I think this situation was exacerbated by supply constraints, since distributors were not used to very long lead times that suddenly became irrelevant.

Donald R. Young, President and CEO

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, we 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.

Eric Stine, Analyst

Got it. Okay. That is helpful. Maybe then just turning to PyroThin. 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. As you think about the tax credit expiring, where do you see things as you stand today? I mean, do you believe that third quarter sales there means pretty steady volumes for you over the back half of the year? Or maybe how do you think that the third quarter or fourth quarter might be weighted in that segment?

Ricardo C. Rodriguez, Chief Financial Officer and Treasurer

Yes. 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 have a couple of slides in the appendix of the deck that show 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 that 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., yes, I just don't think that, that's something that they're ready to walk away from, given that the demand is clearly there.

Eric Stine, Analyst

Yes. Okay. And 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 2 if it's largely wrapped up or if there's more to go to get it in a position to monetize it?

Ricardo C. Rodriguez, Chief Financial Officer and Treasurer

Yes, 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 we've rounded the bend we actually paid out the last large invoice towards Plant 2 here in July. And it was booked in June, and we're well past it and looking to move on from that.

Operator, Operator

Our next question comes from the line of Colin Rusch with Oppenheimer.

Colin William Rusch, Analyst

Can you talk about design 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?

Ricardo C. Rodriguez, Chief Financial Officer and Treasurer

Yes, Colin. As you've seen in the news, there is considerable uncertainty regarding product strategies at various automakers, largely due to significant policy shifts in recent weeks. However, when we examine our pipeline, a couple of key OEMs are poised to generate additional revenue in the Thermal Barrier segment over the next six quarters. Stellantis remains a solid player, as their policy in Europe is stable and volume production is expected to increase in the fourth quarter of this year and in 2024. Additionally, we look forward to working with Daimler by 2027. Other OEMs are currently evaluating their timelines or shifting suppliers, which may delay some launches until the second half of 2026 or even later. In terms of quoting activity, our team is as busy as ever, maintaining the trend of record-level prototyping and quoting that we experienced in Q1. While this is promising, it's essential to consider the long-term product plans of these OEMs, as they are adjusting to recent policy changes in the U.S. and devising strategies for competing in China and Europe, where the EV market is rapidly growing. As we collaborate with European OEMs, we believe we are well-positioned to secure additional wins in the coming year, and you will see the outcomes of our prototyping, development, and technical sales efforts soon.

Donald R. Young, President and CEO

Colin, I would just add, I was with the senior leadership of ACC in Europe at the end of Q2, and they are making strides with their productivity and quality of making sales for the European market, which is encouraging for us.

Colin William Rusch, Analyst

From an R&D perspective, you have made significant innovations in product development for various battery applications. I am curious about the potential shifts in your offerings or improvements you can make for OEMs as we see optimized vehicle designs and changes in battery geometries and chemistries. How should we view your product cycle, and when can we expect to see meaningful changes?

Donald R. Young, President and CEO

We've collaborated with our current OEMs and potential OEMs as they explore their chemistry expansions. General Motors serves as a strong example of this collaboration. Our research and development team, along with our design team, is actively working with companies in Asia, Europe, and the U.S. to stay ahead and be thought leaders in the industry. It's noteworthy that the focus on having a U.S.-based supply of these materials has been beneficial for us. The OEMs view this positively, which is crucial for our ability to provide domestic products in the U.S.

Ricardo C. Rodriguez, Chief Financial Officer and Treasurer

Yes. Maybe just to add, Colin, 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.

Operator, Operator

Our next question will go to the line of Ryan Pfingst with B. Riley.

Ryan James Pfingst, Analyst

I'll ask one follow-up on Energy Industrial. You've talked about the potential 2027 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?

Donald R. Young, President and CEO

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 it typically 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 Subsea projects and LNG 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. 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.

Ryan James Pfingst, Analyst

Appreciate that, Don. And then Ricardo, you touched on it, but 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?

Ricardo C. Rodriguez, Chief Financial Officer and Treasurer

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

Operator, Operator

Our next question will go to the line of David Anderson with Barclays.

J. David Anderson, Analyst

In your remarks, you discussed reducing your fixed costs by $65 million this quarter. I'm curious about your ability to adjust costs in the Thermal Barrier business going forward. According to the IHS forecast, GM EV production is expected to remain relatively flat. What would happen if the production were to decrease significantly? How quickly can you adapt your costs? Are you currently in a position to realign resources and maintain those operating margins of around 35% within a quarter?

Donald R. Young, President and CEO

Just one thing, Dave. Taking the $65 million, that was an endeavor that took place in both Q1 and Q2. But to your point, there’s no question that to achieve 35% gross margins on the Thermal Barrier business, we need some volume to absorb those fixed costs. We believe we are well-positioned from a cost structure perspective to maintain those targets of 35% based on what we see ahead of us. We were quite close to that in Q2. We think those targets are very realistic. Yes, we have some flexibility to continue refining our cost structure depending on future conditions. But at this moment, we feel we've done a lot of hard work and made many tough decisions, and we are in a good position right now.

J. David Anderson, Analyst

And you're looking at this IHS forecast that they're putting out there, you feel confident that those are pretty close to kind of what you're hearing from GM. So I'm just a little surprised they're not more severe in terms of the declines you're expecting over the next four quarters?

Ricardo C. Rodriguez, Chief Financial Officer and Treasurer

Yes. Our customer projections are consistently higher than those from IHS, which necessitated our own assessments. Upon reviewing IHS today, we find their outlook to be realistic. The team has successfully implemented several cost improvement initiatives at our Rhode Island plant to enhance efficiency. These efforts have been in progress for over three years, positioning us to further extend our roll lengths and boost productivity. It's important to recall that a year ago, we were on track for revenues exceeding $650 million while striving to maximize the capacity of our Rhode Island plant, thereby postponing the Plant 2 decision. Now, as the team adjusts to lower volumes, these continuous improvement projects are gaining momentum. This will ultimately provide the company with a robust cost structure, helping to enhance our gross margin next year even with comparable volumes. In response to your question, Dave, I believe the company will exhibit increased resilience on a quarter-over-quarter basis, even if volumes decline further, as these initiatives take effect.

J. David Anderson, Analyst

Okay, Ricardo. Don, you mentioned the Energy Industrial sector, specifically regarding Subsea and TechnipFMC. I was somewhat surprised by your comments about the slow pace, especially given what we've seen in FTI's backlog. After this, they'll have $30 billion over three years. Do you anticipate an additional $10 billion each year moving forward? Is this mainly a timing issue? There's a significant number of subsea trees that are set to be installed in the next three or four years. I'm curious about when your product is typically ordered in relation to delivery or when the subsea trees are being installed. Could you clarify how that process works?

Donald R. Young, President and CEO

Yes, that's great. We just wrapped up two years averaging about $30 million each year, which were strong for us. We feel we're currently in a bit of a lull since we're observing the same trends you are, but our activity levels remain high. Generally, when we win contracts, we come in late during projects, which applies to both subsea and LNG terminals. When we receive an order, we typically deliver it within a quarter or sometimes within two quarters. You can see the same backlogs and activity levels in your work as we do. However, not every project requires pipe and pipe insulation. While our backlog is strong, only a portion of it corresponds to pipe and pipe projects, which tend to be the most challenging. Many projects will need pipe and pipe, but not all of them will.

J. David Anderson, Analyst

Don, did you mention it was $30 million? I think I may have misunderstood you. Were you saying that the revenue was down about $30 million due to Subsea? I wasn't clear on what the $30 million referred to.

Donald R. Young, President and CEO

Yes. 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 million to $15 million. And so much of our decrease for Energy Industrial overall has been because of the Subsea lull. And again, 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.

Ricardo C. Rodriguez, Chief Financial Officer and Treasurer

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

Operator, Operator

Our next question goes from the line of Itay Michaeli with TD Cowen.

Itay Michaeli, Analyst

Just two follow-ups from me. First, could we just kind of revisit the 2027 potential revenue buildup for thermal? And just if you can call out 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 perspective from what you know currently?

Ricardo C. Rodriguez, Chief Financial Officer and Treasurer

We see that unchanged still, Itay. 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 mentioned during the last call for Thermal Barriers. 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.

Itay Michaeli, Analyst

That's very helpful. And then 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, kind of maybe a bit of a regional mix of the quoting pipeline. Just kind of curious, any interesting insights to kind of glean from that?

Ricardo C. Rodriguez, Chief Financial Officer and Treasurer

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 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? 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 around 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 projects approved once they have a good idea of where consumer demand is likely to be for EVs.

Operator, Operator

Our last question will go to the line of Leanne Hayden with Canaccord Genuity.

Leanne Hayden, Analyst

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?

Ricardo C. Rodriguez, Chief Financial Officer and Treasurer

Yes, that's a good point. There is potential for additional volume within the ACC Award, and Mercedes is a significant partner in ACC. All of those units could contribute to increased volumes for the cells and packs we are involved with. Currently, those vehicles are intended for Europe, and it seems they will be Mercedes' second effort to succeed in the U.S. EV market.

Leanne Hayden, Analyst

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?

Ricardo C. Rodriguez, Chief Financial Officer and Treasurer

No. I mean, it's really just been prismatic and pouches primarily, mostly prismatics. And then 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.

Operator, Operator

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

Thomas Patrick Curran, Analyst

Congratulations on an impressive transformative tenure, and I'd echo with Don in seeing great things ahead for you.

Ricardo C. Rodriguez, Chief Financial Officer and Treasurer

Thank you. Thank you, Tom.

Thomas Patrick Curran, Analyst

I wanted to follow up on EI. Don, could you discuss the expected mix of new projects, turnaround, and maintenance for both Subsea and LNG? If any of these areas have experienced negative surprises, could you elaborate on the nature of those issues? Were they simply delays, or have there been cancellations or other complications? I'm looking for more details on both the mix and any aspects of demand that may have fallen short of your expectations.

Donald R. Young, President and CEO

On the Subsea front, we are focused solely on project work, with no associated maintenance opportunities. This has been quite surprising for us, as the project backlog for the next several years appears to be strong. We view ourselves as currently experiencing a slight lull following two very strong years, but we still expect to capture a fair share of pipe projects. The LNG sector includes both maintenance and project work, but the key newsworthy moments come when we secure a project. Historically, project values can range significantly, from around $5 million to as high as $40 million for larger projects. We also perform a substantial amount of maintenance work globally, which allows us to showcase our value before facilities expand and helps us establish strong relationships with engineering firms and asset owners. The outlook for LNG remains positive, particularly in North America, which is a favorable region for exports. We believe there are good opportunities in both export and receiving terminals to drive growth and maintain strong profitability in this segment. 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. Be well.

Operator, Operator

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