Don Young: Sure. I referenced in my comments the sixth one that we’ve talked about for some time. Technically, we started the milestones and this is a matter of negotiating final terms, if you will in that announcement. In terms of additional ones, we are heavily engaged with additional OEMs as they work through the timing of the development of their own platforms. We believe that we will be part of those platforms. In terms of timing, I think it’s fair to say that the start of production for additional OEMs. It’s probably more likely to be SOP 2026 and 2025. Quite honestly, I think we have our hands full from a revenue demand point of view in 2024 and 2025. That probably suits us quite well. We are not aware of say, losing a process to other materials or other solutions. We think we have an excellent solution that addresses both the thermal management and the mechanical challenges associated with these thermal barriers. We feel like we are in good shape.
Operator: Our next question comes from the line of Eric Stine of Craig-Hallum.
Eric Stine: Maybe, if we could just talk about ’24 a little bit. Obviously, you’ve laid out a pretty it sounds like conservative baseline and some scenarios that are upside for the second half. I know previously you had talked about a kind of a goal or a $550 million revenue run rate. With the expectation that you could hit that as early as third quarter of ’24, just curious if you have updated thoughts on that, is that still the type of timeline which is possible?
Ricardo Rodriguez: I think it’s still possible, but it’s not really up to us frankly. I mean I think we are ready to capture it, but it really depends more on our main customer here. And it’s still a possibility.
Don Young: We have the capacity in place to be able to do that Eric, as we — I think one important thing that we voiced today was this additional capacity from our East Providence facility for thermal barriers from originally $400 million to $500 million. And again based really empirically on our productivity and yields that we’re experiencing today. And then of course, on top of that is our supplemental supply that we target at $150 million. That ability to get out to a run rate of the $550 million as you cite even with additional capacity from there. So, we feel like, we’ve sort of done our part and now we’re doing everything we can to make our OEM successful.
Eric Stine: And maybe for my second one, this is just a follow-up on a previous question. You talked about the pricing strength you have, especially in energy industrial because its capacity constrained. I mean, is there a scenario that you are able to increase that? I mean, maybe this is a question a couple of quarters from now, but when you’re at $150 million, I think in the past you’ve talked about you see demand in excess of $200 million a year. So just maybe thoughts on how you think about that longer term?
Don Young: Our team has a strong track record of increasing prices and associated with the value that we’re bringing to those end users. And so, I think you will see us continue to test the market with strong pricing. I’m very pleased with the arrangement that we have with our supplemental supply, supporting our cost structure, pretty known cost structure, if you will. And so, as I said in my comments, I think you will see our energy industrial business meet our expectations and I think it’s got a lot of potential to continue to grow as well from that’s sort of nominal $150 million baseline that we’ve created, both from a demand point of view and from a capacity point of view.
Operator: Our next question comes from the line of Alex Potter of Piper Sandler.
Alex Potter: One question on, I guess, incremental OEM. To what extent are they making orders contingent upon Aspen opening additional capacity in Georgia or elsewhere? I know that, historically, some of these automotive suppliers get a little jittery when they have so much reliance on a single plant. If a meteor strikes the Rhode Island facility, what happens to their supply chain? To what extent is that factoring into conversations that you’re having either with existing customers or additional ones?
Ricardo Rodriguez: We don’t see the same level of sensitivity to the single supply source as one would think. They’re very concentrated on sells and actually some of the raw materials throughout the rest of the battery value chain. But for us, if an OEM is asking us about 2027, we present that as being supplied out of Georgia and that gives customers a lot of comfort if you combine it with Rhode Island. Right now in our selling efforts, I think customers are just assuming that the Georgia plant will be there in 2027 and thus giving them the necessary comfort to come in.
Don Young: I think Alex that sort of area where they are likely or I should say are pushing us a little bit is on the fabrication side, especially our European customers. I think they would like us to shorten that part of the supply chain, if you will. And so as we win more and more European business, I think you may very well see us create a fabrication capability like the one we have in Mexico to serve that part of our market.
Ricardo Rodriguez: Or build up more inventory in Europe?
Don Young: Exactly.
Ricardo Rodriguez: For instance, the idea of setting up a storage and inspection facility at a neutral point, Netherlands, Belgium in Europe is something that customers have been totally okay with and we’ll probably take that step before looking at manufacturing in Europe.
Alex Potter: And then maybe, you mentioned, talking about 2027 and beyond sourcing out of Georgia. Obviously, you are not going to be able to provide any incremental commentary on the DOE loan process. One thing I am sort of interested in something that’s come up in conversations with clients is the election. Again, maybe hard to predict, but to what extent, let’s say that the loan isn’t finalized and the capital is not deployed prior to November. And then who knows how things happen in November, but assuming you have a less maybe DOE-friendly administration coming in November. To what extent does that put the DOE loan at risk?
Don Young: We are working very hard to do it in a timeframe that brings us and there are no assurances here, but brings us to a conditional approval and final terms. At that point, that money is allocated from the DOE and wouldn’t be reversed come a November election that might be less favorable towards these kinds of programs. So, we’re working hard and fast as possible on this. And I think again, as I said in my comments, the LPO Loan Programs Office is — we’re very engaged with them and their advisors. And again, it’s no assurance of a final result but we’re in really good position we believe.
Ricardo Rodriguez: Yes, that is worth highlighting. Once you get into this diligence and the term negotiation phase with the DOE, we have actually been very surprised that the speed at which the DOE moves, I mean it’s moving faster than a lot of the private investors that we were encountering last year, right? Everybody is very actively engaged. We actually have to step up our response be to the DOE in many cases. And so we feel confident about the timing and where we are today.
Don Young: And Alex, we’re a good candidate. We have proven technology. We have customers. We have contracts. We’ve positive EBITDA as of fourth quarter. Our projections are strong. We have two different businesses supporting the overall growth of our company — growth and profitability of our company. We’re a good candidate I think for this program.
Operator: Our next question comes from the line of Tom Curran of Seaport Research Partners.
Tom Curran: At East Providence, you just saw for and we’ll unleash another 20% of annual capacity. That’s a considerable increase and this is not the first time Aspen has unlocked significantly higher throughput and/or yields there. Just theoretically, assuming Plant 1 remains dedicated to PyroThin. Just how much more productive capacity could you potentially bring out of that facility?
Ricardo Rodriguez: I think we are at the point where it really depends more on the mix and who we are producing parts for then finding more capacity through improving the yields, increasing the line speeds, introducing longer roll lengths, et cetera, which the team is still continuing to work on. But I think, yes, above that $500 million annual revenue capacity level, I think if we’re producing some of the thinner material for a broader set of customers, there’s potential for additional capacity, but there we sort of need the mix to work in our favor. But then again, I mean, I think our team has been really incredible at coming up with a couple of breakthroughs here, particularly in improving our yields and we’re still working on that. So it’s a bit of a balance, but I do feel much less conservative around the latest capacity assessment than when we were calculating the $400 million a year ago.
Don Young: We made some capital investments over the course of 2023, as we convert the three lines in East Providence, one at a time from optimized around energy industrial to optimize around EV, and we still have a little bit more of that to do. But again, the team has done an excellent job on this. And as Ricardo says, we feel confident in what we talked about today. And also as Ricardo said, I think what you’ll see from here is more incremental than a big 20% chunk that we’ve talked about earlier today.
Tom Curran: I mistakenly said 20%. I think it’s actually 25%, right? So even more impressive. And then, we don’t want to undercut what your team has achieved. Again, very impressive. And then based on GM’s current Ultium production guidance and sales targets 2024. They are not your internal discounted baseline, but they are actual bounded plans. And then the result and expected nameplate mix. Ricardo, what is the weighted average range for CPV that you’d expect to realize for Ultium sales this year?
Ricardo Rodriguez: About $900,000 to $100,000 of vehicle.
Tom Curran: And that would be like the weighted average midpoint of their range? We do not expect it to really vary?
Ricardo Rodriguez: You can the IHS mix — I mean it could vary more to the upside, frankly. It does seem like some of the larger battery pack models will probably be built first, but we cannot need to wait and see that.
Operator: Our final question comes from Amit Dayal of H.C. Wainwright.
Amit Dayal: Just one question on the CapEx plans. Is any of that dependent on the DOE loan coming through or is that sort of baked into your cash flow assumptions et cetera already?
