Aspen Aerogels Preliminary Q3 Financials and Conditional Commitment of DOE Loan

I mentioned previously about estimates being too bearish on $ASPN in H2 2024 and their press release yesterday has reaffirmed this with their preliminary Q3 Financial Results along with another positive catalyst in confirming their DOE Loan to help them expand the production capacity of their Pyrothin Product. See below the main highlights:

Main Highlights

• Q3 revenue of $117 million vs ~$95m expected.

• Net loss of $13 million (partly due to a $27.5 million debt extinguishment charge)

• Adjusted EBITDA of $25 million vs ~$14m expected.

Why are the above figures so good? Analysts expectations have been blown out of the water again with revenues coming in at 23% above estimates and Adj. EBITDA coming in at 78.5% above estimates.

• Additionally, Aspen received a conditional commitment for a $670.6 million DOE loan to finance its second aerogel plant.

• This could add $1.2-$1.6 billion in revenue capacity.

• The loan, structured as project financing, would help scale production of PyroThin® thermal barriers for EV batteries.

Market Reaction

The stock rose to $29 from $22.50 Pre-Market, pulled back to $24, and consolidated at $26 to finish the day. I used the pull back to $24-$25 to add to my position. If you have a high conviction on a position over the long term, days like today are when I personally feel are best to be adding to your position, buy dips and trim on sharp run ups. However, pre-market trading when the stock had risen as much as it did is a no-go however, I would never trade during volatile hours such as that, a pullback almost always follows, you must have patience during these sorts of periods.

Main Takeaways

What are the main takeaways from the press release? Well, they’re fairly obvious based just on the numbers, but comparing to my valuation assumptions that I have set out since I began investing in the company, we have the following:

Their current production capacity across EVs and Energy Segments is $650m which the CEO said in a recent press conference that he believes they can increase by $100m (so up to $850m). The new plant from the DOE loan will open up a further $1.2bn - $1.6bn in production capacity, so we could be seeing $2.0 - $2.5bn in production capacity in the future.

My Base Case price target assumes $1.5bn in Revenues in 2029, this doesn’t look so unreasonable to other people now (I would hope). One thing I will be looking out for however is when the new plant is set to finish construction and when they’re able to begin producing from there, I would imagine that they’re going to be working very quick to keep up with the inevitable EV demand that I have been banging on the table about.

We will see how the full Q3 results look, but for now, I will personally be buying back any pullbacks or weakness in the market, especially considering they have not confirmed their new German OEM which almost inevitably will be a positive catalyst for the stock again even though it should be common knowledge for investors by now. 🤦

Hims and Hers Health Investment Thesis coming soon (have been building up a position however pen to paper writing of my thesis is very time consuming).

Comment below any of your highest conviction investments right now along with your thoughts on Aspen Aerogels too 👇