Good morning. Thank you for attending the Aspen Aerogels Incorporated Q1 2022 Earnings 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, Laura Guerrant, Aspen’s Vice President, Investor Relations and Corporate Communications. Thank you. You may proceed, Ms. Guerrant.

Thank you, Emily. Good morning, and thank you for joining us for the Aspen Aerogels fiscal year 2022 first quarter financial results conference call. With us today are Don Young, President and CEO; Ricardo Rodriguez, Chief Financial Officer, and Keith Schilling, Senior Vice President, Technology There are a few housekeeping items that I’d like to address before turning the call over to Don. The 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 US Generally Accepted Accounting Principles, or 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 of balance sheet, and a summary of key financial and operating statistics for the 2022 first quarter ended March 31, 2022. In addition, I’d like to highlight that we have uploaded to our website a slide deck that will accompany our conversation today. You can find the deck at the Investors section of our website. An archive of today’s webcast will be on our site 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. These forward-looking 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 yesterday, Page 1 of the presentation, and are discussed in more detail on the reports Aspen files with the SEC, particularly in the company’s most recent Annual Report on Form 10-K. The company’s press release issued yesterday, 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, April 28, 2022. 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 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 and reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures, and a discussion of why we present these non-GAAP financial measures, are included in yesterday’s press release. And one final note. During the Q&A session, in the interest of time, we ask that you limit your questions to two questions at a time. If you have additional questions beyond the initial two, please get back into the queue, and we will get to all questions. I’ll now turn the call over to Don. Don?

Thank you, Laura. Good morning, everyone. Thank you for joining us for our Q1 2022 earnings call. I will kick things off with a progress report on recent business developments. Ricardo will discuss business results and outlook, and Keith will cover our work at Aspen Battery Materials. We will conclude with a Q&A session. Starting on Slide 3, I'm highly encouraged by the progress we are making towards achieving our goals. Our teams throughout the company are operating at a high level of performance. These outstanding teams are being strengthened as we continue to recruit talented people with deep experience. On the heels of a solid 2021, Aspen is off to a strong start in 2022. Total first quarter revenue was up 37% year-over-year and 22% sequentially, reflecting continued penetration in the EV market, and an advancing recovery in the energy industrial market. With this commercial momentum, and of course our existing awarded programs with GM and Toyota, we are confident that we will meet or exceed our 2022 revenue guidance of $145 million to $155 million. And we believe that we are in a strong position to meet our $240 million revenue target in 2023. I'll talk more about that shortly. During the quarter, we were honored to receive the Overdrive award as part of GM's 30th Annual Supplier of The Year ceremony. We won the award for launch excellence, which recognized our role in GM's thermal propagation strategy for its Ultium battery platform. The recognition is indicative of the depth of the technical and commercial collaboration between Aspen and GM. We are excited to see GM's unwavering commitment to battery performance and safety in its Ultium battery platform, and are equally excited to be part of GM's fast-paced transition to electrification. Turning to Slide 4, let's talk further…

Thanks, Don. Turning to Slide 5, first, let me attempt to describe the opportunity. Electric vehicles consist of multiple types of batteries today that are stacked or wound to form pouches or cylinders, each with lithium ion that flow through the electrolyte from a negative anode, through a permeable separator, to a positive cathode. We'll focus on the anode for this discussion, as this is one of the more difficult challenges facing the industry. Current forms of batteries use graphite as the anode material. Silicone would be a better choice since it's plentiful, less expensive, and holds 10 times more lithium than graphite. It is widely accepted that boosting performance relies on incorporating additional silicone in the anode. The challenge is, that when silicone reacts with the - with and absorbs lithium ion, it swells by nearly 300%, compared to roughly 7% for graphite. This swelling, through charge and discharge cycles, eventually destroys the silicon's ability to carry the lithium ion as shown through the cracking of silicone as a result of swelling shown in the images here, as well as solid electrolyte interface formation, also seen in the images, resulting in decreased battery performance. The opportunity for a carbon aerogel solution is shown compared on the right to alternative solutions in terms of key performance metrics of energy density, sync range, and cost. As you can see, what is commercially available and in use in the market, is represented as a white ellipse. There are other potential alternatives that are being explored, but have not commercialized, as represented by the colored ellipses in the top right of the chart. Our solution is captured in the bottom right of the graphic, representing our ambition and backed by early and very encouraging test results for our solution. So, what exact is…

Thank you, Keith. Good morning, everyone. I will start by providing a summary of our Q1 2022 financial results, then go into a short recap of our outlook for the year, and detail our current thinking on funding stage one of our business plan, before turning the call back to Don. Turning to Slide 7 and our financial highlights for the quarter, at a high level, our results show a clear continuation of the growth drivers that we have been investing to capture for several quarters, with 37% year-over-year quarterly revenue growth driven by all our principal markets. As Don mentioned, the Thermal Barrier opportunity is materializing faster than expected, thanks to various successful vehicle launches, combined with higher than anticipated initial volumes. To illustrate this, our internal expectations for the quarter’s Thermal Barrier revenues were $4.3 million as we budgeted for the year in December of 2021. We delivered $7.6 million of Thermal Barrier revenue during the first quarter of 2022, a 76% increase over our original plan. Our energy industrial revenues were up 10% year-over-year from $27.9 million in the same quarter last year, to $30.7 million in Q1 of this year, reflecting the industry's need to increase capacity while enabling alternate value chains. Our growth expectations for the energy industrial market, are aligned with what we’ve seen in the order books of our distribution partners, and the broader value chain. Ensuring that our sales channels have enough inventory on hand to sustain the near-term demand increase, is at the top of our mind as we finish the first half of the year. It is also worth highlighting that we are managing for the capacity and levels of service that we anticipate, at least five quarters from now, and continue to make the necessary investments in people, systems,…

Thank you, Ricardo. Turning to Slide 8, and before we move to Q&A, I would like to continue the practice of highlighting our ESG work during quarterly earnings calls. We value environmental, social, and governance criteria as an integral part of our business strategy, and have started the process of reorganizing our sustainability-related policies and programs into a formal ESG strategy. It is a natural fit for us to explore new uses for our Aerogel Technology Platform, with the goal of improving the environmental performance and safety of our customers’ products and processes. It is also at the core of our culture to respect and celebrate our employees, by striving to create a diverse and inclusive environment in which people thrive. We will be publishing our first ESG report shortly, which will outline key sustainability initiatives and ESG priorities. Our goal is to provide a foundation for deeper discussions with investors and other stakeholders on specific ESG topics and to enable everyone to have access to accurate and timely information. I will now turn the call back to Emily for the Q&A session.

Thank you very much. [Operator Instructions] Our first question today comes from Eric Stine from Craig-Hallum. Eric, please proceed with your question.

Good morning, everyone. Thanks for all the details. So, on that $7.4 million of PyroThin revenue, I mean, obviously, GM and Toyota make up the lion’s share of that, but just curious if you could talk about how many customers went into that number? And then in terms of number of units, is it as easy as just dividing by your average content, or do you have other revenue lines in there, whether that's development milestones or other things in that number?

Yes, Eric. I think - I mean, dividing by the CP - the weighted average CPD that we sort of outlined in the prior quarter, would make sense if you're trying to back into the number of units that we shipped. Frankly, there, on the number of customers, it's fair to assume that the bulk of the revenue really came from both GM and Toyota. Breaking out the additional customers that we've been selling prototype parts to, we don't really think it's an indicative measure of the commercial progress. In fact, our prototyping activities have intensified with other customers. And whether we're shipping parts to 10 customers, as we disclosed last year, to 20 or four, we don't think it's an indication of the true depth and the progress of the commercial pipeline. So, we’d like to leave it at that.

Yes, Eric, I would just add and just emphasize the intensity part of Ricardo's comment. The activity level from our Thermal Barrier team has has never been greater in all three of the important regions producing electric vehicles today.

Got it. Well, I mean, I was - for my second question, I guess I was going to talk about those 10, I mean, and maybe not necessarily from a quantity or revenue perspective, but whether it's those 10 or others. Are you seeing - I mean, clearly it sounds like you're seeing a step-up of those programs moving forward. I would assume some of those launch plans crystallize, and then whether or not your confidence level, where that lies, in terms of being part of the platform when it launches. So, I mean, if you could just go into what you can, again, not from a unit perspective, but more just high level, and then thoughts about why wouldn't this be the industry standard going forward, given the early progress you've made and the progress within that pipeline that you're seeing right now?

Yes. I mean, I think in terms of managing those customers that we're engaged with at the prototyping or the technical assessment stage, right, this is an area where you do all of your work, and then you're almost at the mercy of the different programs being available to accept the technology. And not every OEM is positioned in the way that somebody like GM is, where they're starting from scratch with an all-new battery platform that immediately scales to multiple vehicle nameplates. Some of those customers that we've sent prototype parts to, or are engaged with in the commercial funnel, are balancing a mixed portfolio of nameplates that has old battery platforms, combined with what seems to be on the surface, an all-new battery platform, but it's really just an evolution of the prior battery. And so, to your question on why this isn't adopted as a standard from the GetGo, it's really because it's difficult to adapt prior batteries, unless you're in the fortunate position that GM finds itself in, where they're really starting from scratch and have the wherewithal to invest as aggressively as they are today. So, for us, really, we also have to pick and choose who our prototype team supports, to be honest. And it's really with these OEMs that have taken a platform approach to the battery and that have the resources to scale something akin to what GM is doing with Altium. And so, you can at least find one customer in each region of the world that is taking that approach, and that's really where we're focused.

Eric, I would add, I think if you just go a little higher too, I think our feeling has never been stronger, that it is inevitable that these EV producers are going to have a strategy for thermal management and to mitigate thermal runaway. I think that is becoming crystal clear for all of them. And maybe some of them were a little slow to want to get there, but I think that is becoming increasingly clear. The second thing I would say, and again, to reiterate what was, I think, in my script and in Ricardo's, for our 2023 doubling of revenue, we have the awarded programs necessary to - from a PyroThin Thermal Barrier point of view, to reach that target. That also assumes 10% growth in our energy industrial business as well, which we feel very positive about. And we feel we have 60% of revenue - EV revenue necessary to hit the 2025 tripling. And so, if you think about the programs that Ricardo referenced, the additional programs that he referenced from other OEMs, we’re filling in, at least through this stage one of this long-range plan, we're filling in that last 40%. And these come in pretty big chunks, as you can tell, and when you have a design win. And so, let me just say, we have multiple opportunities to fill in the remaining 40% of our 2025 target. So, we have a lot in common. And if you look back on sort of the timeframe of General Motors, and how that sort of played out and how we competed in the RFQs, and how we had our early wins and then provided prototype parts, and then ultimately production parts, if you think about that timeframe, it was an 18, 24-month sort of timeframe. And we're sort of engaged in that process with several other OEMs right now, which is perfect for us in the sense that it's likely to come on in meaningful volumes in that 2024, 2025 timeframe, just as we're bringing up phase one of plant two. So, some - good questions, and there's some detail for you.

Yep. Thanks a lot. I appreciate it.

The next question comes from the line of Alex Potter from Piper Sandler. Your line is open, Alex.

Perfect. Thank you. So, obviously, encouraging to see the higher-than-expected revenue on PyroThin in the quarter. Was wondering if you could dig a little deeper into that. Do you think that this reflects your customers being surprised by the amount of demand and their ability to sort of front-end load production? Or are they trying to, I don't know, stock up inventory in advance of their own launch to sort of de-risk their production curve? Any sort of insight into why you think revenue is tracking ahead of plan for that particular product would be helpful.

Yes. Thanks, Alex. I mean, I think this one really seems to be just - these launches in particular, for instance, LYRIQ, LYRIQ, as we see it launched actually several months ahead of when even GM was planning to launch it. And so, that's a good example of just GM prioritizing their EV launches as they try to meet their electrification goals. And then, of course, having the material on hand to make the vehicles themselves. When it comes to demand for the vehicles, I think we've all seen that the new car market right now is really hurting for inventory and units to sell. And so, we're seeing this right now as a sudden acceleration of revenue. And as we work with our customers here over the next quarters, we'll see how much of that truly comes in as real additional demand for the year, right.

Yes. I think also both Ricardo and I use the phrase that these activities, and what you cited, Alex, give us the momentum and the confidence to make the statement that we feel that we're positioned to meet or exceed our $145 million to $155 million of outlook - revenue outlook. I think if we knew the exact answer to your question, we might have been a little bit more aggressive in playing around with that outlook, but we feel very good about meeting and potentially exceeding, just given where we are in the momentum. And it's not always the case where these new technologies come faster. I mean, normally, they come slower, right? And so, the fact that it's coming faster, I think is definitely noteworthy, and we're working hard to be prepared to fulfill that and to be able to meet or exceed our revenue outlook for the year.

Okay, perfect. That's super helpful. Then one other question, maybe following up on some of the others that were asked previously. Would you say that if - we're talking about customers. Obviously, there's an ocean of different OEMs out there, and they all have different battery strategies, but there's also this handful of tier one battery specialists who are trying to achieve scale and make “commoditized” cells. How high on the priority list would you say customers or potential customers like that are, and what are the pros and cons of aligning with somebody like that relative to something like Ultium, which is obviously more of a brand-specific or company-specific battery platform? Thanks.

Yes. I mean, when we look at the OEMs and the ones can deliver you the steady volumes with franchise nameplates that just - that you can rely on, we don't see a trend towards actually wanting to integrate a pack from someone else. And so, instead, it's actually, they're leaning heavily into it and replacing a lot of their internal combustion engine development with development into all of the details of the battery itself and developing a battery platform that is not just the sales, but the overall battery as a system within the broader system that is the car. And so, for us in the - on our products, it makes more sense to align with customers that are resourced to think that way. And really, when we look at the customers that the team is engaged with, it's really hard to be happier with the folks that we're engaged in and the level of technical depth that one is able to go into when your system level approach is really the car and not just the battery or the cell, right? So, for us to come at this from the cell perspective, or to engage more aggressively with folks who are limited to the scope of the cell when this really is a broader system issue, doesn't make as much sense as some of the OEMs that we're engaged with.

Yes. It's just evident to us that the automotive OEMs are owning this issue. And more broadly, the strategy of their battery platform. And as you’ve cited, Alex, they all have little twists and turns on how they think about their battery platform, but they're owning this issue.

The other piece that we look at is just folks access to capital, right? So, the OEMs seem to have the quite a bit of access to capital. And it's interesting, even when we look at where are the battery experts, and a lot of them really are at the OEMs at this point.

Fascinating. Thanks very much, guys.

Our next question comes from Jed Dorsheimer from Canaccord Genuity. Jed, please go ahead.

Hey, congratulations, and excellent job in the progression here, guys. Just two questions, and I'm a little under the weather, so apologize if that (clues) you, but I guess first, just on the ramp of Georgia, can you outline some of the timelines that we should be looking at or for in terms of how to gauge that progression of that facility?

Yes. So, we've targeted our 2023 revenue at - that doubling would be - we've targeted $240 million, and we feel our revenue capacity with our existing assets, and as we build out our fabrication capability, et cetera, is about $250 million. So, we're right up against it as we go work our way deep into 2023. So, we are laser focused on bringing that plant out in late 2023, and have it contribute in the early part of 2024. And so, we've built a heck of a team to execute that project. And as I've said before, that team is made up, not only of an outstanding Aspen strategic capital projects team, but a strong group of supporting cast and leadership, frankly, from our friends at Koch as well, who are highly experienced at building this scale of a facility, and other excellent resources as well. And frankly, a very cooperative Statesboro, Bulloch County, Georgia, folks as well, who are facilitating our every move down there. So, we really - we feel we've got a strong team and we're on track to do what we've said we're going to do, and that is to bring that facility up later in the late part of 2023.

Great. And then just as a follow up, one maybe a bit more technical, but on the silicon composite solution for the anode, you pointed out some technical details in terms of the states versus charge. I'm wondering, can you comment on (dendritic) growth within the battery over that? Or have you published any peer-reviewed literature data around this? Because it seems like you're becoming more open at this point. That's just my read on it in terms of what you're doing here, and it seems like a shift directionally, I guess, based on the progress that you're now seeing. So, I'm curious about that.

Yes. We - our commitment is to be more open on this as - over the course of 2022. And I think - I hope today was a good example of that. I'll let Keith and Ricardo comment on more - on the more technical aspect of the question.

Sure. Thanks, Don. we haven't published something yet. Our intention, obviously, is to continue to work through the validation of our solution. And then, obviously, we'll continue to be more forthcoming with those kind of technical details. We're working through, as you can imagine, a long list of opportunities in terms of how to continue to solve this challenge that is an opportunity in the industry. And as Don mentioned, we'll continue to be more forthcoming in the future as those technical details are at a place where we can share them relative to our intellectual capital position. So, I appreciate the question and we'll look forward to more information there as we continue to evolve.

Thank you.

Our next question comes from Chip Moore from EF Hutton. Chip, please go ahead.

Morning. Hey, thanks. Want to follow up there on Battery Materials. Great to see the update and the good progress, just given some of your comments on development and commercialization over the next, call it, 18 months or so. Maybe you can expand on how we should think about upcoming investments. I know you've talked about potential licensing efforts in the past, other efforts. Anything you can offer there.

Keith, you want to grab that?

Yes. So, thanks, Chip. Right now, we've made some investments in all of our lab space, and probably more importantly, in the human capital part of that business. As Ricardo mentioned in the prepared comments, we're expecting that expanded space and facility to be completed. We’re targeting for the first half of this year. And really our efforts have been really laser-focused on solving some of the technical challenges, because as you know, they're quite daunting, but we've made some really good progress. We've highlighted that here. And as we continue to progress towards those validation targets, I think we're seeing good results and we'll continue to invest in that space where necessary and where it's appropriate, but we believe the investments we've included so far are necessary and meet the needs that we need today to really accelerate our program. (indiscernible).

And Chip, if I may add there just on - to your point on the licensing versus going at this on our own. I mean, I think as Keith laid out, the opportunity is substantial here, but we definitely want to match the capital commitments with the eagerness from other folks to cooperate with us in this, and obviously our achievement of the technical milestones that will enable commercial viability. And so, we're trying to not get ahead of our skis here in funding this and committing us to processes and actually making the material at scale until commercial viability is proven, ideally with the help of some outside parties or customers, and then really fund this as efficiently as possible. And if licensing is the business model that does that more quickly and effectively, then so be it, but we'll cross that bridge when we get there.

Yes, absolutely. We'll stay tuned. Thanks.

Our next question comes from Chris Souther from B. Riley. Chris, your line is open.

Yes. Hey, thanks for taking my question, guys. I just wanted to get a sense of, if you could provide a margin breakdown for the Thermal Barrier business versus the energy infrastructure business. I'd just love to get some color on the investment and ramp-up fixed costs, and how the sampling component is baked in on the thermal side. And how should we think about that gross margin cadence throughout the year? I think would be helpful.

Yes. No, that's a good question. Chris, I mean, really for us, as we look at the Thermal Barrier side, and in our remarks, we mentioned how we feel good about the structural costs that we have there, right? So, I mean, when you're quoting something of this scale, you obviously don't want to let the material costs get above a certain point, and then really keep your conversion costs in that 20 to 35% of sales range, right. For us right now, really the - I mean, when you're running a $30-million run rate operation, but have quite a bit of amount of fixed expenses and the overhead, that could almost pretty much run a $240 million operation, you operate at a negative gross margin there. And so, we're working through the allocations and you're going to see the breakdown in the Q. But in that sense, we can expect our energy industrial business to be bringing in low double-digits gross margins, while the Thermal Barrier side stays slightly negative in the near term, with that potentially worsening in the next quarter, as we have two facilities running, right? We have the overhead of the Mexico facility that's getting ramped up without the revenue to show for that just yet. But then as we mentioned in our remarks, we really are managing for five quarters from now when we'll have the higher volume manual processes that the team has designed, along with an automated facility kicking in and just a much higher revenue run rate.

Okay, got it. No, that all makes sense. And obviously, with the PyroThin revenue well above the run rate you’ve previously talked about here, I just wanted to kind of clarify, it seems like you guys are taking a wait and see approach on overall volumes coming through, but there might have been a bit of kind of pre-shipments with the LYRIQ launch, et cetera. Just wanted to get a sense over the next quarter visibility, should we expect kind of a similar run rate to what we saw, or some moderation for the PyroThin business as customers kind of digest what - the impressive shipments you had?

Yes. I mean, we think the current run rate is an indication of where things are looking, but again, there's quite a few actors here outside of ours or even GM’s control, or Toyota’s, at actually getting the vehicles assembled. So, for us operating - that's why even in my remarks, I mentioned the $30 million run rate instead of the $20 million run rate, because we are gearing ourselves up for a much higher run rate anyways, right? So, whether it's 20 or 30, that's not the main thing that's driving our decisions. Right now, our decisions are truly based on the $200 million to$ 240 million annual run rate that we have to be ready to deliver. And the interesting thing is that the levels of service don't really change the engagement of our quality team. Our supply chain team has the same intensity, whether the operation is running at 20 or 30, or whether it's running at 220 or 240.

Not to put too fine of a point on it, but when we say doubling revenue ‘21 to ’23 - from 2021 to 2023 to $240 million, to make the obvious statement, 2023 is just next year at - so, 240. We're talking about a serious ramp of of this business. And that's why we're making these pre-investments. That's why we’re going to have two facilities fabricating at the same time, because we want to move to those higher volumes, to more automation, to more better manufacturability of design, to a lower labor cost environment, et cetera. And so, we’re doing that, but sometimes we have these sort of redundant activities going on, and that's what we're sort of facing here this quarter, next quarter. But let me just say that we're confident in the ramp and the communications that we're getting from General Motors and Toyota, and quite frankly, from some of the other of the OEMs where we're engaged very intensely right now and in the quoting process.

Understood. Thanks, guys.

Our next question comes from Colin Rusch from Oppenheimer. Colin, please go ahead.

Thanks so much, guys. Can you talk about, with the new anode material, the volume of cells that you guys are testing, as well as the maturity of your efforts around electrolyte and separator technology at this point to support that material?

Keith?

Yes. So, thanks for the question, Colin. So, in terms of - we're really focused on the anode at this point. We have some other products - projects in our pipeline that we're really not discussing right now, primarily around cathode materials, but not necessarily separators or others. So, I think just to focus on it, it’s really more about a plug-and-play anode material, and that's really where our focus is at. And in terms of the quality performance and quantities, we're working through a pretty systematic validation program, and we're handling that appropriately and at the right patient scale. And I feel like we've been able to demonstrate good progress. And as we continue to evolve that technology and build out our platform, we'll be sharing additional details over the course of the next 18 months. But it feels like really good progress has been made by the team, and we wanted to share that here today.

Okay. Thanks so much. And then around input costs and pricing and market structure, obviously, you guys are getting to better utilization levels on the current facility and still kind of running at breakeven margins, or so. Can you talk a little bit about your interest or willingness to go to a cost-plus model? Is that something that you guys are exploring with your customers? Is that something that you guys want to do? And how many other areas are there for you guys to start driving costs out and control those to start driving margin on top of utilization levels?

Yes. I mean, I think on the pricing side, I mean, that's a fluid conversation that we're having with folks, particularly on the energy industrial side. And on some of the inputs, it is worth evaluating the cost-plus model, which we are already mirroring with some of our inputs. Going back to your point on the cost, right, so really at this point on the energy infrastructure side, it's really - we're focusing on just getting our - getting the material side right, and then optimizing the conversion side as we make further investments that are also the same ones that are behind the increase in capacity for the facility in Rhode Island. So, then, when we scale the Thermal Barrier side, it's really interesting because a lot of the investments that we're making to deliver the additional throughput, are also going to help the way our production flows for energy industrial. Right now, energy industrials is, for example, being overly penalized every time we have to change over products in the facility in Rhode Island, or with some of the extra overhead that we have managing the criticality of the operation as we're delivering to GM and Toyota. And so, as that gets better absorbed with the run rate increase, both businesses will benefit, and you're going to start seeing the improvement, particularly on the conversion side.

Great. Thanks so much, guys.

Our next question. Comes from Tom Curran with Seaport Research Partners. Tom, please proceed with your question.

Good morning, guys. Don, you've repeatedly emphasized the real competition between EV OEMs to own leading shares of the EV future, is really a race between branded battery platforms. When you look at the customer prospects who are in stage three of your commercial development funnel, the most advanced stage, how many of them have proprietary platforms or have joined the platform of arrival such as Honda has done with GM? And then if Toyota were to decide to use PyroThin in another EV model launch, or even to adopt it for platform-wide standardization, when would you expect to see that incremental award from Toyota?

So, let me start with the first part of that, and Ricardo commented on this, I think, in a slightly different way, but our focus is on the OEMs who are having - who are developing a unique, broad-based platform for all of their models and for all of their nameplates. And that's a much more efficient relationship in some sense for us. And the entity that I would say is - maybe I should say entities, that are most engaged aged with us from an intensity point of view, have broad-based platforms that are going to be used across multiple models. And again, it comes in pretty big chunks of business. And it's another reason why we're building the capacity the way we're building it. I've talked about building plant two in two phases, but during phase one, we're putting in the infrastructure to be able to support phase two, an additional $700 million of annual revenue capacity, because of the nature of the design wins, the award programs that we get. So, we're principally focused on the big platforms themselves, as opposed to individual models. It just makes more sense for us. And then with Toyota, obviously, a deep relationship with Toyota. And that's a little contrary to what I was just talking about. But even with Toyota, we see them moving, if not a universal platform, a platform that will serve multiple models, multiple nameplates. And we’re engaged with them in those discussions in a significant way, and feel we’re delivering excellent product. We're on schedule, et cetera. We've been a good partner to them, and we think that's the best sort of advertisement, if you will, for adopting us more broadly in that nameplate. So, we believe - if you look at Toyota's rolling out vehicles between now and 2025, many of them are in that 2023, 2024 timeframe. And so, we think we're in a good position to participate with those.

Got it.

Tom, I think the other - oh, sorry. I just think the other part of your question that - answer that, yes, is this idea of piggybacking on other people's nameplates. Wow, it takes a lot to have your own battery platform in terms of investment and capital and technical expertise and scale. And it's not for the fainthearted. And so, we do believe that we'll see more and more of these collaborations take place. It just makes tons of sense to do that. Yes. Your example of Honda and GM and even since we last spoke, we've seen additional announcements about some high-volume vehicles coming out. I believe it was in the 2025 timeframe, if - I might have that slightly wrong, but not immediately, but in that 2025 timeframe, but some high-volume GM/Honda vehicles coming out, which would be - which are going to use the alternative battery platform.

Right. And then turning to ABM, when it comes to your plug-and-play silicon carbon anode material, you've previously contemplated potentially setting a commercial target of getting that material specked into a 2023 vintage battery. Should we still think of that as sort of the key commercial milestone to look to as that first commercial breakthrough? And if so, what sort of timeframe do you seem to be on track for at this point?

Hey, Keith, do you want to talk a little bit more about sort of the 18-month profile that you alluded to in your script?

Sure. So, one of the things, just to maybe go backwards a little bit to go forward, our first step is really validation. We are looking to ensure that we can use third-party validations of a 300-watt hour per kilogram solution that supports 80% energy density at 500 cycles. So, that's kind of the near-term targets in terms of metrics that we're working towards. And we believe we're on track to achieve that within the next 18 months. So, it really comes down to validation first. And then obviously, the second portion of that is our ability to do that with low variability. And in our current point cells, if I refer back to the chart that we had shown, you can see that our cell variability, at least in the current point cells has been at OEM-type levels. So, kind of 3%, which is really state of the art. And so, that gives us some confidence. We want it to be below 10% variability and a 31-amp hour pouch cell using our material. And we've got some confidence that given our variability, that we can continue to tune and get to a place where we can commercialize at a very commercially viable target. So, I hope that answers your question. We've got an 18-month roadmap, and we are well on our way with some very early and excellent results from our extremely talented team at Aspen. And we're really proud of what we're showing. We want to be open and share what we're learning as we go through this process, because it's pretty exciting and meaningful in terms of our ability to service this market.

I would just add, Tom …

So, the next mile stage will actually be technical?

I think makes sense. We're very comfortable with that idea. And as we said in our last earnings call, and we'll say again here, and I think Keith has, and I think it even goes back, I think, to Jed's question a little bit, about providing meaningful data, comparative data, third party data, apples to apples data, I think that's really our goal through the year 2022 here. And I think the logical extension of that is deeper relationships with a small handful of important companies in this space.

Got it. So, 2022 will be a technical validation year, and once you've made it past those hurdles, then you can turn to commercial targets? Understood.

I think that's …

Thanks for taking my questions.

Our next question comes from the line of Jeff Osborne with Cowen. Jeff, your line is open.

Great. Good morning. Just two quick ones. Don, I was wondering, a lot's happened in the last three months since your last call, the comment you made about the awarded programs, $1 billion through ‘25 and then $2 billion beyond ‘26. Is that new, or has that changed at all in the last three months?

It has changed slightly, but not significantly actually. These are obviously coming from General Motors and Toyota. And we're - while the revenue is coming at us a little faster, the awarded programs are more or less the same in terms of projected volumes out over time. So, we had to think about it a little bit, but I think while it's coming at us faster, the absolute number has stayed roughly the same, I think is a good way of thinking about it.

Got it. That's helpful. And then the follow-up I had is just, is there anything that you're monitoring that would encourage investors to monitor over the next 12 to 18 months on the policy side as the US or Europe might consider adopting the Chinese rules around safety or something possibly more stringent? And just the potential policy - sorry, for the follow-up, does the potential policy changes change the way OEMs are approaching you folks?

I did talk a little bit about, and I believe it was Eric's question, so the inevitably of these battery platform - these automotive OEMs having a thermal management and a strategy to mitigate thermal runaway. And I think that's sort of twofold. The reason I use the word inevitable, I think it's twofold. One is, you just - we think a catastrophic event for any brand really impairs the entire industry and the entire mega-trend. And we think that there will be internal reasons for the industry to have these strategies, these thermal management strategies, one. And the second one, and I do - I put this second because I think it's second most important, is that there will be - I think there is an inevitability also that we'll see policy across Asia, across Europe, and here in the United States, that will put some baseline requirements on these companies when it comes to protecting battery safety, let's call it. I just think for those two reasons, you're going to see all of these companies implement their - execute on their strategy here around thermal runaway.

Yes. In many ways, it goes back to this whole notion of, are you system-oriented, or are you component-oriented, right? And we see the industry recently, just in this effort of getting batteries to this $100 per kilowatt hour milestone, there's been a lot of focus on performance, right? But when one actually steps back and looks at it from the broader system that is a car parked next to a house, right, that's when safety really becomes critical. And we're starting to see more and more OEMs take that broader system and user level approach versus focusing on the performance of specific components.

I think, Jeff, and just - I mean, just going to brand is so critical to - I mean, not - I don't mean to - they're investing billions of dollars, tens of billions of dollars, and we know how fragile brand can be and how few catastrophic events would need to take place for any one of those brands to wipe out those billions of dollars of investment. And so, again, I think there is a - for so many reasons, there is an inevitability to getting one's arms around this issue, and we do have a solution

Makes sense. I appreciate it. Thanks for the thoughts, guys.

[Operator instructions]. Our next question comes from Amit Dayal from H.C. Wainwright. Amit, please go ahead.

Thank you. Good morning, everyone. Just a few questions for me. If you were to exceed guidance, Don, for this year, would that come from the energy infrastructure business, or from the EV side?

Ricardo, in his comments, said that we’re seeing acceleration of business in both of our principal markets, and I think that's absolutely right. Yes, we cited that it's - that the $7.6 million of EV Thermal Barrier revenue in Q1 exceeded our internal thoughts that we put in place coming into the year, for sure. But we're seeing a significant amount of activity in the energy industrial business as well. And it’s really a function of pent-up demand coming out of the pandemic. High energy prices always spark activity. And then - and this is partly driven geopolitically, but the LNG activity, it's hard to imagine a more active moment in time for that business in all three of the major regions as well. So, we’re really excited about our energy industrial business right now. And so, again, to answer your question on outlook, it would be a broad-based set of reasons why we would ultimately increase the outlook, but today, we’re very comfortable saying that we’re confident that we'll meet or beat it.

Okay, thank you, Don. Just one more. Are you already pursuing applications outside the EV space for the Thermal Barrier product, or is it too early? I mean, you don't have enough bandwidth right now to pursue those types of customers?

We're swimming as fast as we can right now with everything we've got on our plate, to be honest with you. And I would say that we are - all of our focus are around the Thermal Barriers today is in converting additional prototype work, additional quoting activity, into awarded programs. And that just makes all the difference in the world for us. And if we can get one or two more of these, and we can start talking about not having 60% of our 2025 target accounted for with existing awards, but 70%, 80%, 90%, 100%, and that puts us in a very, very strong position through stage one of this long-range plan. And as Ricardo pointed out, puts us in a very solid cash position, cash flow position, and self-sustaining and really monetizing these investments that we're making today over the course of the next four or five quarters, we think in a very attractive way.

Understood. Thank you. that’s it for me. Appreciate it.

Those are all the questions we have for today. I’ll now turn the call back to Mr. Young for concluding remarks.

Thank you, Emily. We appreciate everyone's interest in Aspen Aerogels, and we look forward to reporting our second quarter 2022 results in late July. Be well, have a good day. Thank you very much.

Thank you everyone for joining us today. This concludes our call. You may now disconnect your lines.