Aspen Aerogels, Inc. (NYSE: ASPN) provided a business update, preliminary 2019 financial results and a 2020 financial outlook.

Battery Materials Initiative

During 2019, Aspen launched its battery materials program to leverage the unique properties of its proprietary and patented carbon aerogels to improve the performance and cost of lithium-ion batteries for electric vehicles. Aligned with Aspen's strategy to leverage its aerogel technology platform, Aspen is engaging with companies throughout the battery supply chain to focus technical development and accelerate commercialization of these carbon aerogel materials. In November 2019, Aspen signed an evaluation agreement with a subsidiary of Evonik Industries AG ("Evonik"), an innovative $16 billion specialty chemicals company, to assess the potential of incorporating Evonik's silicon-based nanoparticles in Aspen's carbon aerogel anode materials. In addition, in January 2020, Aspen entered into a Joint Evaluation Agreement with SKC Co., Ltd. ("SKC") to explore the potential use of Aspen's silicon-rich carbon aerogel materials in the anode of lithium-ion batteries. SKC is part of SK Group, a $200 billion Korean conglomerate and a leader in the development and sale of lithium-ion batteries for the electric vehicle market.

"We are excited to work with Evonik and SKC to accelerate the adoption of our aerogel technology within the battery materials market. Our initial objective with these partners is to optimize our carbon aerogel materials to improve the performance, cost, durability and safety of lithium-ion batteries. We will continue to engage with industry leading companies to help us realize the full potential of our aerogel technology in the emerging electric vehicle market," stated Don Young, Aspen's President and CEO.

IP Enforcement Win

In December 2019, the Mannheim Regional Court in Germany found that Guangdong Alison Hi-Tech Co. ("Alison") infringed two of Aspen's patents and issued an injunction prohibiting Alison from engaging in further infringement. The two judgments expand upon a prior decision of the Mannheim Regional Court in March 2019 that found Alison had also infringed another of Aspen's patents. While the judgments remain subject to appeal, Alison has been found liable at present to Aspen for damages and specified court costs as part of the judgments.

"Our continued success in the German courts, along with our prior victories at the U.S. International Trade Commission and in the U.S. courts, reinforces the scope and strength of Aspen's worldwide aerogel patent portfolio. From the outset, we have maintained our well-supported position that both Alison and Nano Tech Co., Ltd. ("Nano") infringe our patents. We believe these recent court decisions have confirmed that the Chinese manufacturers violate the law," said Mr. Young.

"Our core strategy is to invest in the research, development, and commercialization of our aerogel technology platform. We seek to partner with industry leaders to bring these exciting technologies to market. In support of our partners and customers, we intend to aggressively assert our patents against Alison, Nano or any other manufacturer, distributor or end-user that infringes our technology worldwide," continued Mr. Young.

Preliminary Fourth Quarter and Full Year 2019 Financial Results

Aspen expects to announce growth in total revenue for the fourth quarter of approximately 30% to about $46.5 million versus $35.7 million in the fourth quarter of 2018. Aspen also expects to report growth in total revenue for the full year of approximately 34% to about $139.4 million versus $104.4 million in 2018. Fourth quarter and full year 2019 total revenue are each expected to represent a new record revenue level for Aspen.

Fourth quarter net loss is expected to be approximately $1.0 million versus $14.1 million in the fourth quarter of 2018. Net loss for the full year is expected to be approximately $14.6 million versus $34.4 million in 2018.

Adjusted EBITDA for the fourth quarter is expected to be approximately $2.6 million compared to $(3.2) million in the fourth quarter of 2018. Adjusted EBITDA for the full year is expected to be $(0.2) million compared to $(11.5) million in 2018. A reconciliation of non-GAAP Adjusted EBITDA to net loss is provided in the financial schedules that are part of this press release. An explanation of this non-GAAP financial measure is also included below under the heading "Non-GAAP Financial Measures."

"We are extremely pleased with the results we achieved during 2019. We anticipate that we will significantly exceed our 2019 revenue performance objectives that included total revenue growth of more than 20% and project related revenue constituting more than of 33% of total revenue for the year. This solid performance was driven by strong demand in our core North American petrochemical and refinery markets, and significant growth in project related revenue in the subsea market, in the Middle East and from the PTT LNG Nong Fab receiving terminal project," stated Mr. Young.

"We anticipate that the combination of our strong revenue growth and the impact of our 2019 bill of material cost reduction initiatives will drive an increase in our fourth quarter gross margin to approximately 24% from 16% in the fourth quarter of 2018 and to approximately 19% for the full year from 12% in 2018. As a result, we expect to report a substantial improvement in both our net loss and Adjusted EBITDA versus 2018," continued Mr. Young.

Aspen's preliminary 2019 financial results are based solely on information currently available to management and are unaudited. This financial information does not represent a comprehensive statement of Aspen's financial results for the fourth quarter or full year 2019 and remains subject to the completion of Aspen's financial closing procedures and internal reviews. As a result, Aspen's actual results for the fourth quarter and full year 2019 may vary materially from these preliminary estimates.

Aspen expects to release actual financial results for the fourth quarter on Thursday, February 20, 2020, following the market close.

2020 Financial Outlook

Aspen issues its initial 2020 full year financial outlook as follows:

• Total revenue is expected to range between $138.0 million and $148.0 million
• Net loss is expected to range between $5.7 million and $9.7 million
• Adjusted EBITDA is expected to range between $5.0 million and $9.0 million

This 2020 financial outlook assumes depreciation and amortization of $10.3 million, stock-based compensation expense of $4.0 million, and interest expense of $0.4 million for the year.

"After significant growth in 2019, we expect our revenue growth rate to moderate in 2020 due principally to our expectation that subsea revenue will be closer to our historical average of $11 million in 2020 versus approximately $17 million in 2019. We also expect to see little to no growth from the PTT LNG Nong Fab receiving terminal project during 2020 as we complete the second half of the $35 to $40 million order during the year. In addition, we have decided to wind down our government research services business in 2020 that contributed approximately $2.4 million in revenue in 2019. This decision reflects our desire to focus our R&D resources on improving the profitability of our existing business and leveraging our aerogel technology into new markets," said Mr. Young.

"Importantly, we expect the growth rate in the remainder of our business to range from the mid-single digits to the mid-teens during the year. We will also target our commercial efforts during 2020 to continue to build our project pipeline with the aim of ensuring solid project related growth in 2021 and beyond. In addition, we will remain laser focused on improving our profitability. We expect that our ongoing initiatives to reduce raw material costs will help to improve our gross margin to the mid-20s for the full year from approximately 19% during 2019. As a result, we again expect to deliver strong year-over-year improvements in both net loss and Adjusted EBITDA in 2020," continued Mr. Young.

"Consistent with our financial performance over the past three years, we expect between 40% and 45% of our 2020 revenue will be generated during the first half of the year. As a result, we anticipate the projected improvement in net loss and Adjusted EBITDA will be concentrated in the second half of the year," concluded Mr. Young.

A reconciliation of non-GAAP Adjusted EBITDA to net loss for the 2020 financial outlook is provided in the financial schedules that are part of this press release. An explanation of this non-GAAP financial measure is also included below under the heading "Non-GAAP Financial Measures."

Aspen may incur charges, realize gains or losses, incur financing costs or interest expense, or experience other events in 2020 that could cause actual results to vary materially from this financial outlook. In addition, the timing of projects can be difficult to predict and may have a significant impact on quarterly and annual revenue and profitability.

About Aspen Aerogels, Inc.

Aspen is the global leader in aerogel technology. The company's mission is to enable its customers and partners to achieve their own objectives around the global megatrends of resource efficiency and sustainability. Aspen's Cryogel® and Pyrogel® products are valued by the world's largest energy infrastructure companies. Aspen's Spaceloft® products provide building owners with industry-leading energy efficiency including options for a safe, non-combustible fire rating. The company's strategy is to partner with world-class industry leaders to leverage its aerogel technology platform into additional markets. Headquartered in Northborough, Mass., Aspen manufactures its products at its East Providence, R.I. facility. For more information, please visit www.aerogel.com