NYSE: ASPN

Aspen Aerogels

Company Overview

Aspen Aerogels, Inc. designs, develops, manufactures, and sells aerogel products for applications in four major markets: EV Thermal Barrier, EV Battery Material, Sustainable Building Material, and Energy Infrastructure. The company is currently experiencing a strategic pivot into new, high-growth markets specifically within the electric vehicle industry. Although the primary use of the company’s aerogel product has historically been in the energy infrastructure market, the recent launch of the company’s PyroThin™ product line and the development of battery materials leveraging carbon aerogel technology is shifting the direction of the business to generate a higher organic growth opportunity for the company. In addition, the company’s traditional sustainable building materials and energy infrastructure markets offer robust growth opportunities with a large TAM. However, EV applications and opportunities should become increasingly dominant in the coming years based on the company’s expectations.

The Technology

The company states that its patented aerogel insulation is up to five times more effective than traditional insulation materials. The product enables easy installation, making it one of the most efficient industrial insulation available on the market. Aspen’s products are priced at a premium to traditional insulation materials. While Aspen’s competitors offer many traditional insulation products that are priced below Aspen’s products on a per-unit basis, the company believes that its products have superior performance attributes, cost less on a fully installed basis, and offer significant lifecycle cost savings.

The company’s PyroThin™ thermal barriers are ultra-thin, lightweight, and flexible materials designed to impede the propagation of thermal runaway in lithium-ion batteries. The company believes its PyroThin™ products offer a unique combination of performance attributes that allow EV manufacturers to achieve critical safety goals without sacrificing drive range. The company’s carbon aerogel battery materials have the potential for use as a dropin replacement for graphite in the anode of lithium-ion batteries to increase the drive range of electric vehicles.

End Markets and Applications

Currently, Aspen’s products are primarily used in large-scale energy infrastructure facilities, but the company is positioned to move aggressively into the battery materials market.

Electric Vehicles: The company has two material technology platforms targeting the EV market. The first is a passive fire protection material branded PyroThin™. The EV industry has been struggling to invent and deploy a proper safety solution for EV battery fires. During the third quarter of 2020, a major US automotive OEM, yet to be disclosed, awarded Aspen with a contract for PyroThinTM with initial commercial shipments expected to begin in 2021. The second is a carbon aerogel battery material enabling the addition of silicon to the anodes of lithium-ion batteries. The company is targeting its materials to enable a 20% to 40% improvement in lithium-ion battery performance with initial market adoption in 2023.

Sustainable Building Materials: Buildings are a key target for energy efficiency improvements. According to Aspen, buildings are responsible for 30% to 40% of the energy consumption in most countries. Aspen states that its Spaceloft® building materials substantially reduce that energy by providing superior insulation across various applications. Aspen’s Spaceloft® products also provide a thin form factor and options for enhanced fire safety. Aspen’s product line in this sector is well developed and has an installed base of approximately $50 million. BASF is a key partner for Aspen in sustainable building materials.

Energy Infrastructure: The company’s aerogel technology products are used extensively in a variety of refining, petrochemical, LNG, and power applications. Aspen’s product lines serving these markets are Pyrogel®, Cryogel®, and Spaceloft® Subsea. The company has an installed base of over $1 billion showing these are well-proven technologies. Aspen offers a premium product providing a variety of advantages including ease of installation, durability, waterresistance, and efficient thermal properties. The global energy infrastructure market is estimated to be a $3 billion market according to Aspen.