ASPEN AEROGELS INC (ASPN)

Results of Operations

Three months ended June 30, 2026 compared to the three months ended June 30, 2025

The following tables set forth a comparison of the components of our results of operations for the periods presented:

Revenue

Total revenue decreased $28.2 million, or 36%, to $49.8 million for the three months ended June 30, 2026 from $78.0 million in the comparable period in 2025. The decrease in total revenue was the result of decreases in thermal barrier revenue and energy industrial revenue.

Energy industrial revenue decreased by $2.4 million, or 11%, to $20.4 million for the three months ended June 30, 2026 from $22.8 million in the comparable period in 2025. This decrease was driven by a decrease in revenue from the global petrochemical and refinery markets of Asia, Europe, and Latin America, offset in part by an increase in revenue from the global petrochemical and refinery market of North America.

Energy industrial revenue for the three months ended June 30, 2026 included $5.5 million and $4.6 million from two North American distributors, in comparison to $2.6 million and $1.7 million for the comparable period of 2025.

The average selling price per square foot of our energy industrial products decreased by 6% for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The decrease in average selling price reflected a change in the mix of products sold. This decrease in average selling price had the effect of decreasing product revenue by $1.3 million for the three months ended June 30, 2026 from the comparable period in 2025.

In volume terms, energy industrial product shipments decreased by 5% as measured by square feet of our energy industrial products shipped for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The decrease in volume had the effect of decreasing product revenue by $1.1 million for the three months ended June 30, 2026 from the comparable period in 2025.

Thermal barrier revenue decreased by $25.8 million, or 47%, to $29.4 million for the three months ended June 30, 2026 from $55.2 million in the comparable period in 2025. During the three months ended June 30, 2026 and 2025, thermal barrier revenue included $23.7 million and $53.8 million, respectively, from a major U.S. automotive OEM. The decrease in thermal barrier revenue

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was driven by a reduction in the volume of parts ordered by our OEM customer and a lower contractual component price during the period compared to the same period in the prior year. Thermal barrier revenue for the three months ended June 30, 2026 includes $4.9 million of revenue from a settlement agreement with a customer for $37.6 million for a claim for certain losses incurred arising from lower forecasted long-term demand by the customer which is being deferred and recognized as revenue over a period of approximately two years from the settlement date.

Cost of Revenue

Total cost of revenue decreased $6.1 million, or 12%, to $46.6 million for the three months ended June 30, 2026 from $52.7 million in the comparable period in 2025. The decrease in total cost of revenue was the result of a decrease in thermal barrier cost of revenue offset by an increase in energy industrial cost of revenue.

Energy industrial cost of revenue increased $2.0 million, or 14%, to $16.5 million for the three months ended June 30, 2026 from $14.5 million in the comparable period in 2025. The $2.0 million increase resulted from an increase of $8.1 million in manufacturing costs, unabsorbed overheads, and other operating costs, partially offset by a decrease of $6.1 million in material costs.

Thermal barrier cost of revenue decreased $8.1 million, or 21%, to $30.1 million for the three months ended June 30, 2026 from $38.2 million in the comparable period in 2025. The $8.1 million decrease was the result of a decrease of $15.4 million in manufacturing costs and a decrease of $5.0 million in material costs partially offset by an increase of $7.0 million in costs due to the plant shut-down, and $5.3 million in costs related to the East Providence Incidents. Material costs decreased primarily due to lower volume. Manufacturing costs decreased due to lower volumes, benefits from the headcount reduction and other cost cutting efforts.

Gross Profit

Total gross profit decreased by $22.0 million, or 87%, to $3.3 million in gross profit for the three months ended June 30, 2026 from $25.3 million in the comparable period in 2025. The decrease in gross profit was the result of the $28.2 million decrease in total revenue and the inclusion of certain related costs associated with the East Providence Incidents in cost of revenue.

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Research and Development Expenses

Research and development expenses decreased by $0.6 million, or 16%, to $3.2 million for the three months ended June 30, 2026 from $3.8 million in the comparable period in 2025. The $0.6 million decrease reflects a decrease in operating material and supplies of $0.3 million, decreases in compensation and related costs of $0.2 million, driven by a headcount reduction, and a decrease in other expenditures of $0.1 million.

Research and development expenses as a percentage of total revenue increased to 6% of total revenue for the three months ended June 30, 2026 from 5% in the comparable period in 2025.

Sales and Marketing Expenses

Sales and marketing expenses increased by less than $0.1 million, or 0%, to $7.0 million for the three months ended June 30, 2026 from $6.9 million in the comparable period in 2025. The less than $0.1 million increase primarily reflects increases in compensation and related costs.

Sales and marketing expenses as a percentage of total revenue increased to 14% of total revenue for the three months ended June 30, 2026 from 9% in the comparable period in 2025.

General and Administrative Expenses

General and administrative expenses decreased by $0.8 million, or 6%, to $13.0 million for the three months ended June 30, 2026 from $13.8 million in the comparable period in 2025. The $0.8 million decrease was primarily the result of a decrease in insurance fees of $0.8 million.

General and administrative expenses as a percentage of total revenue increased to 26% for the three months ended June 30, 2026 from 18% in the comparable period in 2025.

Restructuring and Demobilization Costs

During the three months ended March 31, 2026, we began implementing a restructuring plan to consolidate the operations of the automated fabrication facility in Mexico to improve costs. The plan included reducing our headcount in Mexico and consolidating facilities. In connection with the restructuring, we incurred $0.4 million of severance costs for headcount reduction. During the three months ended June 30, 2026 we did not incur restructuring and demobilization costs.

In February 2025, we announced and began implementing a restructuring plan to realign our operational focus to improve costs and align capital expenditure to anticipated long-term demand. The plan included reducing our headcount and ceasing construction of our previously planned Statesboro Plant. Restructuring and demobilization costs include severance and other personnel costs of $3.1 million and facility closures and other costs associated with demobilization of $1.8 million for the three months ended June 30, 2025.

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Impairment of property, plant and equipment

Impairment of property, plant and equipment costs for the three months ended June 30, 2025 of less than $1.0 million was due to impairment incurred on research and development equipment.

Loss on property damage

On April 8, 2026, an explosion occurred at our manufacturing facility in East Providence, Rhode Island. The incident related to a high temperature oven and resulted in damage to a portion of the facility’s production space and the temporary cessation of operations. On May 14, 2026, we initiated a staged restart of the facility.

During the three months ended June 30, 2026, we incurred an $8.9 million loss on property damage associated with the April 2026 Incident.

Other Income (Expense), net

The $0.3 million decrease in interest expe

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Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes thereto included in this Annual Report on Form 10-K. In addition to historical information, some of the information contained in the following discussion and analysis or set forth elsewhere in this report, including information with respect to our plans and strategy for our business, includes forward-looking information that involves risks, uncertainties and assumptions. You should read the Risk Factors set forth in Item 1A of this Annual Report on Form 10-K for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Our actual results and the timing of events could differ materially from those anticipated by these forward looking statements.

Investors and others should note that we routinely use the Investors section of our website to announce material information to investors and the marketplace. While not all of the information that we post on the Investors section of our website is of a material nature, some information could be deemed to be material. Accordingly, we encourage investors, the media, and others interested in us to review the information that we share on the Investors section of our website, https://www.aerogel.com/. The information contained on, or that can be accessed through, our website is not a part of, or incorporated by reference in, this Annual Report on Form 10-K or our other filings with the SEC. We have included our website address in this Annual Report on Form 10-K solely as an inactive textual reference.

Products

Our core businesses are organized into two reportable segments: Thermal Barrier and Energy Industrial. The following describes our key product offerings and new product innovations by reportable segment.

Thermal Barrier

We have developed a number of promising aerogel products and technologies for the electric vehicle (EV) market, including our proprietary line of PyroThin aerogel thermal barriers for use in battery packs in EVs. Our PyroThin product is an ultra-thin, lightweight and flexible thermal barrier designed with other functional layers to impede the propagation of thermal runaway across multiple lithium-ion battery system architectures. Our thermal barrier technology is designed to offer a unique combination of thermal management, mechanical performance and fire protection properties. These properties enable EV manufacturers to achieve critical battery performance and safety goals by impeding the propagation of thermal runaway in lithium-ion battery systems at the battery cell, module, and pack levels across multiple lithium-ion battery system architectures. Our ultra-thin, lightweight and flexible thermal barriers are designed to allow battery manufacturers to achieve critical safety goals without sacrificing energy density.

We have entered into multi-year production contracts with a number of automotive EV original equipment manufacturer (OEM) customers to supply fabricated, multi-part thermal barriers for use in the battery systems of their EV models. These customers include General Motors LLC (GM), Scania, Automotive Cells Company, which is a battery cell joint venture between Stellantis N.V, Saft-TotalEnergies and Mercedes-Benz (ACC), Audi, a luxury brand of the Volkswagen Group, Volvo Truck, and a large EU battery manufacturer to supply a next generation vehicle platform of a major EU luxury sports car brand. We are currently supplying thermal barrier production parts to GM, Toyota, and ACC, and thermal barrier prototype parts to a number of global manufacturers of EVs, grid storage, and home battery systems. During 2025, 2024 and 2023, we sold $168.9 million, $306.8 million and $110.1 million, respectively, of our PyroThin thermal barriers, primarily to GM.

Energy Industrial

We design, develop and manufacture innovative, high-performance aerogel insulation used primarily in the energy industrial market. We believe our aerogel blankets deliver the best thermal performance of any widely used insulation product available on the market today and provide a combination of performance attributes unmatched by traditional insulation materials. Our insulation products help end-users to improve resource efficiency, reduce energy consumption, and reduce the carbon footprint of their operations. These products enable compact system design, reduce installation time and costs, promote freight and logistics cost savings, reduce system weight, minimize required storage space, and enhance job site safety. Our insulation products reduce the incidence of corrosion under insulation, which is a significant maintenance cost and safety issue in energy industrial facilities. Our

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end-user customers select our products where thermal performance is critical and to save money, improve resource efficiency, enhance sustainability, preserve operating assets, and protect workers. Our insulation is used by oil producers and the owners and operators of refineries, petrochemical plants, liquefied natural gas (LNG) facilities, power generating assets, and other energy industrial sites. Our Pyrogel® and Cryogel® product lines have undergone rigorous technical validation by industry leading end-users and achieved significant market adoption.

We also derive revenue from a number of other end markets. Customers in these markets use our products for applications such as military aircrafts, trains, and buses. We believe we will have additional opportunities to address high-value applications in the global insulation market, as well as in adjacent market opportunities such as energy storage applications, including battery energy storage systems, electrification applications and other potential adjacent applications subject to their commercial potential, the differentiation of our products, and the ability to leverage our existing manufacturing platform.

We market and sell our products primarily through a sales force based in North America, Europe, and Asia. The efforts of our sales force are supported by a small number of sales consultants with extensive knowledge of a particular market or region. Our sales force is responsible for establishing and maintaining customer and partner relationships, delivering highly technical information and ensuring high-quality customer service.

Our salespeople work directly with end-user customers and engineering firms to promote the qualification, specification and acceptance of our aerogel and thermal barrier products. We also rely on an existing and well-established channel of qualified insulation distributors and contractors in more than 50 countries around the world to ensure rapid delivery of our aerogel products and strong end-user support.

Manufacturing Operations

We manufacture our products using our proprietary technology at our facility in East Providence, Rhode Island, which we have operated since 2008. During 2024, we converted our East Providence facility to support the growth of the thermal barrier program. We manage the capacity of our East Providence facility on an ongoing basis in order to meet expected demand for our aerogel products. We also utilize a flexible supply strategy, including, but not limited to, use of our external manufacturing capabilities in China, which currently support our Energy Industrial segment. Pursuant to our supply contract with this contract manufacturer, they are obligated to deliver products to us as we issue purchase orders on an as-needed basis through the term of the contract. The contract automatically renews year-to-year unless either party notifies the other of its intention not to renew the contract. While we have agreed to purchase our requirement for certain Energy Industrial products from the contract manufacturer, we have no obligation to purchase any minimum quantity under the contract and we may terminate the contract at any time and for any or no reason. Additionally, we entered into a contract with Prodensa Servicios de Consultora (Prodensa) to establish OPE Manufacturer Mexico S de RL de CV, a maquiladora located in Mexico (OPE), which assembles thermal barrier PyroThin products and operates an automated fabrication facility for PyroThin. We subsequently purchased OPE for a nominal value in accordance with the terms of the agreement.

We expect to meet demand for our aerogel products by utilizing both our East Providence facility and our flexible supply strategy, including, but not limited to, using our external manufacturing capabilities.

MidCap Loan Facility

On August 19, 2024, we and Aspen Aerogels Rhode Island, LLC, a Rhode Island limited liability company (Aspen RI and, together with the Company, each, a Borrower and collectively, the Borrowers) entered into a Credit, Security and Guaranty Agreement (the Credit Agreement and the facilities provided thereunder, collectively, the MidCap Loan Facility), by and among the Borrowers, MidCap Funding IV Trust, as agent (the Agent), MidCap Financial Trust, as term loan servicer (the Term Loan Servicer), the financial institutions or other entities from time to time party thereto as lenders (the Lenders), and the other parties party thereto as additional guarantors and/or borrowers from time to time. The proceeds of the MidCap Loan Facility were used to repurchase our outstanding convertible note, the payment of related fees and expenses and for working capital. Loans borrowed under the MidCap Loan Facility mature on August 19, 2029.

On May 6, 2025, the Borrowers and Aspen Aerogels Georgia, LLC, a Georgia limited liability company (Aspen Georgia), entered into that certain Amendment No. 1 and Joinder to Credit, Security and Guaranty Agreement (Amendment No. 1), by and among the Borrowers, Aspen Georgia, the Agent and the Lenders party thereto, amending the MidCap Loan Facility and on December 16, 2025, the Borrowers, Aspen Georgia, and Aspen Aerogels Mexico Holdings, LLC, a Delaware limited liability company (Aspen Mexico), entered into that certain Amendment No. 2 and Joinder to Credit, Security and Guaranty Agreement (Amendment No. 2), by and among the Borrowers, Aspen Georgia, Aspen Mexico, the Agent and the Lenders party thereto, further amending the MidCap Loan Facility (the MidCap Loan Facility, as amended by Amendment No. 1 and Amendment No. 2, the Amended MidCap Loan Facility).

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The Amended MidCap Loan Facility is guaranteed by Aspen Mexico and Aspen Georgia (together with the Borrowers and any future subsidiaries that are required to become guarantors or borrowers pursuant to the terms of the Credit Agreement, collectively, the Loan Parties) and is secured by a lien on substantially all existing and after-acquired assets of the Loan Parties, including the equity interest in Aspen RI, Aspen Mexico and Aspen Georgia owned by us, in each case, subject to customary exceptions.

Pursuant to Amendment No. 1, the financial covenants under the MidCap Loan Facility were amended such that (a) the minimum Liquidity (as defined in the Amended MidCap Loan Facility) which must be maintained at all times has changed from $75 million to an amount equal to the greater of (i) $50 million and (ii) 85% of the then aggregate outstanding principal amount of the Term Loan Facility and (b) the minimum EBITDA level to be tested quarterly has changed to reflect a new range from $15 million to $50 million, with the next test set at $15 million with respect to the fiscal quarter ended June 30, 2025 and a $50 million level applicable commencing with the fiscal quarter ended December 31, 2027 and thereafter. The Liquidity amount trigger of a cash dominion event was also reduced from $100 million

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