Good afternoon. My name is Jesse, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Aspen Aerogels Third Quarter 2018 Earnings Call. All lines are placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session. [Operator Instructions]. John Fairbanks, you may begin your conference.

Good afternoon. Thank you for joining us for the Aspen Aerogels conference call. I'm John Fairbanks, Aspen's Chief Financial Officer. There are a few housekeeping items that I would like to address before turning the call over to Don Young, Aspen's President and CEO. Press release announcing Aspen's financial results and business developments, as well as a reconciliation of management's use of non-GAAP financial measures compared to the most applicable GAAP measures is available on the Investors section of Aspen's website, www.aerogel.com. Included in the press release is a summary statement of operations, a summary balance sheet and a summary of key financial and operating statistics for the quarter and nine months ended September 30, 2018. In addition, the Investors section of Aspen's website will contain an archived version of this webcast for approximately one year. Please note that our discussion today will include forward-looking statements, including any statement regarding outlook, expectations, beliefs, projections, estimates, targets, prospects, business plans and any other statement that is not a historical fact. Such statements are subject to risks and uncertainties. Aspen Aerogels' actual results may differ materially from those expressed in these forward-looking statements. A list of factors that could affect the Company's actual results can be found in Aspen's press release issued today and are discussed in more detail in the reports Aspen files with the SEC, particularly in the Company's most recent annual report on Form 10-K. Company's press release issued today and filings with the SEC can also be found in the Investors section of Aspen's website. Forward-looking statements made today represent the Company's views as of today November 1, 2018. Aspen Aerogels disclaims any obligation to update these forward-looking statements to reflect future events or circumstances. During this call, we will refer to non-GAAP financial measures, including adjusted EBITDA. These financial measures are not prepared in accordance with U.S. Generally Accepted Accounting Principles or GAAP. These non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. The definitions of and reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures, the discussion of why we present these non-GAAP financial measures is also available in today's press release. I'll now turn the call over to Don Young, President and CEO of Aspen Aerogels.

Thank you, John. Good afternoon. Thank you for joining us for our Q3 2018 earnings call. I will start by providing comments about the business and our performance. Next, John will review our Q3 and year-to-date 2018 financials and update our guidance for the year. We will conclude the call with a Q&A session. I plan to cover three topics in my prepared remarks. First, I will review Q3, describe the current commercial environment and also comment on how we see the market playing out for the remainder of 2018 including the outlook against our three 2018 performance indicators. Second, I'll provide an update on the execution of our strategy, which is to leverage our aerogel technology platform across our core, adjacent and new markets. And third, I will share my early view of the commercial outlook for 2019 and our key targets of the year. At a summary level, Q3 revenue of $23.9 million was 10% higher than Q2 and we are projecting a significantly stronger fourth quarter. At the time of our last earnings call. I noted that revenue in Q2 was comprised virtually entirely of maintenance orders and lacked the usual handful of $1 million, $2 million and $3 million projects that we have historically captured each quarter for many years. We believe the lack of project work in the second quarter was the result of decisions made by asset owners back in 2015 and 2016 that has delayed capital investments. While project revenue in Q3 was only slightly higher than in Q2. We see our project pipeline becoming considerably more active in near-term. We are projecting strong growth in project work during Q4 and a significant expansion of our project based revenue in 2019 and 2020. We believe that two of the key building blocks of…

Thanks Don. I’d like to start by running through our reported financial results for the third quarter and the first nine months of 2018 at a summary level. Third quarter total revenue declined to $23.9 million from $27.2 million in 2017. Third quarter net loss was $6.5 million or $0.27 per share versus a net loss of $3.1 million or $0.13 per share last year. Third quarter adjusted EBITDA was negative $2.7 million, compared to positive $1.1 million, a year ago. We define adjusted EBITDA as net income or loss for interest taxes, depreciation, amortization, stock-based compensation expense and other items that we do not believe are indicative of our core operating performance. We encourage 283,000 of patent enforcement costs, during the third quarter of 2018 versus $53,000 in the third quarter of last year. The first nine months, total revenue declined to $68.7 million from $75.3 million last year. Net loss was $20.3 million or $0.86 per share in the first nine months of 2018 versus a net loss of $17.6 million or $0.76 per share last year. And adjusted EBITDA for the first nine months of 2018 was negative $8.3 million, compared to negative $5.5 million last year. We incurred $519,000 of patent enforcement costs in the first nine months of 2018 versus $2.9 million last year. I will now provide additional detail on the components of our third quarter results. First, I'll discuss revenue. Third quarter total revenue was comprised of product revenue of $23.3 million and Research Services revenue of $595,000. During the third quarter, products revenue decreased by $3.5 million versus last year's $26.8 million. This decrease was driven by a decline in project work in the subsea and South American markets during the third quarter of 2018. This decline in project related revenue was…

Hi, Don and John.

Hi, Eric, how are you?

Hi, Eric.

Fine. So I just want to start with subsea, I know last quarter you talked about I think $7 million in orders, you were expecting to hit in the second half and then $4.5 million for 2019. You gave some updated numbers today. I'm just wondering is that additive to the numbers that you had given with the second quarter. Or have you just added it looks like $1.5 million to $2 million to 2019?

Yes, that's exactly right. So we've added to the total, it isn't – the entire number isn’t added, we are going up by about $1.5 million, that's exactly correct.

Okay. Is that something you expect, I mean, that's number one when all is said and done, I would assume that you're looking for growth in subsea year-over-year. And maybe how you see that playing out in terms of orders for the rest of the year?

We have had a good pipeline of subsea projects right now. And it's been an active market for us. So we have where we are in a lot of specifications. We bid well for them and we anticipate that we will continue to with the subsea projects for 2019 at this point, including quite possible that we’ll win some additional ones in 2018 but again deliverable in 2019.

Right, right. Okay.

As Don said, Eric, we also [Audio Dip] $8 million this year in subsea project work in 2018 and we expect significant growth in 2019.

You'll remember, Eric. And we've had years where we've had as little as $3 million or $4 million, or $5 million of subsea revenue and years where we've had as much as $25 plus or minus million of this. So that's obviously a segment that's swing to get for us right now but it's moving in the right direction at the moment.

Okay. And maybe just turning to LNG, I was going to ask if you've seen any negative impact from the proposed tariff on LNG from China but it sounds like given the increased confidence, it sounds like you are not. Maybe just more color on that confidence .I know in the past I think you've been chasing or had optimism over one project. It sounds like now that maybe has expanded to multiple projects and maybe if you could just dig in there a little bit. That’d be helpful.

That’s great. China is a portion of our LNG outlook but not a major portion. We are working hard though because as you know there are several receiving terminals on the drawing board. It's interesting that several of those are being engineered by international companies and that suits us well because what we participated with most of those international companies at this point. So they know our product well and they know how to bid our product et cetera, et cetera. But you are right. So we're seeing broad base, not any single project. Although, there are a few projects that are rather large, but we are seeing broad based activities in the U.S., in Asia, including in Australia but also in Africa as well. So a lot of LNG activity happening and we’re fortunate, right. We delivered really well three projects in 2017. And those would become really excellent case studies for our product, our products perform extremely well in their first year of service and certainly through the installation portion of these projects. And so we are confident about the LNG business and it’s going to play a meaningful role in our growth in 2019 and 2020.

Okay, got it. Maybe just last one for me, obviously looking for a big step up in the fourth quarter. Maybe just talk about the puts and takes there, I mean, its sounds like its broad based. But I’d assume you’re counting on an uptick in those – as you say, bread and butter, $1 million to $3 million, the project work but just wondering are there some large projects in there that could swing it as well?

There are not any significantly large projects or anything that we don’t have largely in hand at this point. There are some maintenance activities that could play, John, provided a range of roughly $5 million of high end or the low end of fourth quarter. And that is not depending on any one or two projects. That’s as you suggested a meat and potatoes kind of orders throughout the remaining part of the year.

And Eric, once again I think we mentioned, we’ve got a nearly $5 million of subsea project work in that fourth quarter. And that is already in hand, so that’s a good solid base that underlies the projections on [Audio Dip].

Okay, thanks a lot.

Thank you, Eric.

Your next question comes from Chip Moore with Canaccord. Your line is open.

Thanks. Hey guys. How is it going?

Hey, Chip.

Wondering if you can back to the project pipeline, talk a bit more about visibility maybe what you’re seeing, how that compares with some of the things you see in the past. Are you thinking about win rates there?

It’s different than the past. Even in the past if you go back a little ways back to the seven year period where we had 30% revenue CAGR. It’s different in the sense that we now have $800 million or approaching $800 million of product installed. We have a lot of case studies, we are in a lot of specifications now and including, and this is I think the reason that we feel strongly about 2019 and 2020. We're in the specifications of active projects, not guess pipeline but active projects. And so it feels different to us and it's broad based. It's no one project, it is broad based number of projects across geographies and also include subsea LNG and petrochemical. So, across our segment as well. So, it feels it is different and you'll remember those three LNG projects that we did in 2017. We were not in the specifications of those projects at the beginning. We broke into those projects later on as problem solvers and now there are just many more projects that where we're in the specifications. And that hasn't happened by accident that really happened partly by our track record but also on our sales and marketing teams focus, and I would say resource allocation on dedicating an effort towards being in those specifications. We now have a project group that largely their mission in life is to be sure we're in as many specifications as possible.

Got it. And let follow-up that, the price increase, your comfort with that and ability to stay competitive. I guess we get stronger dollar here, how are you think about those dynamics?

Yeah. We want to see how it plays out. It takes effect on January 1 but we're confident. We believe, we're delivering a lot of value and that we will be able to offset some of that tick-up that we felt in some of our raw materials with this price increase. We're not alone in our industry in putting price increases in place right now. So, it's not an isolated event.

And maybe one more for me. You bought BASF and within that relationship next year if you touch on that and then it sounded like you hinted at potential for another partnership, suggesting maybe having some discussions already, is that fair or not and maybe you can update us there. Thanks guys.

So, BASF we've had a terrific – continue to have a terrific relationship with them. And we are beginning to see some revenue flow to them in this so-called [indiscernible] area, really dedicated to energy efficiency and but with a non-combustible product. And we work technically with them on a improved second generation product as well, which we're really working hand in glove with them on that portion as well. So there are a lot of dimensions to the relationship. And as I said in my comments, I think that they will continue to expand as a partner with us technically commercially and financially into 2019. With respect to additional – using that as a template and having additional opportunities we feel the aerogel technology platform is rich with possibilities and we nearly a year ago put in place a dedicated team to look for additional markets. And we will no doubt take a partner to probe into areas and we have several opportunities to do that in an indifferent markets. So, that is something I would love to be able to say less than a year from now that, yes, in fact we have picked partner to go after segment A,B or C. And again, we feel the platform is rich with opportunity.

Thanks guys.

Thank you Chip.

And that's all the time that we have for questions today. With that, I'll pass the call back to Don.

Thank you, Jessie. We appreciate your interest in Aspen Aerogels and we look forward to reporting to you our fourth quarter 2018 results in February 2019. Have a good evening. Thanks very much.

This concludes today's conference call. You may now disconnect.