ASPEN AEROGELS INC, 10-Q filed on 11/3/2016
Quarterly Report
Document and Entity Information
9 Months Ended
Sep. 30, 2016
Oct. 31, 2016
Document And Entity Information [Abstract]
 
 
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Sep. 30, 2016 
 
Document Fiscal Year Focus
2016 
 
Document Fiscal Period Focus
Q3 
 
Trading Symbol
ASPN 
 
Entity Registrant Name
ASPEN AEROGELS INC 
 
Entity Central Index Key
0001145986 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
23,366,937 
Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2016
Dec. 31, 2015
Current assets:
 
 
Cash and cash equivalents
$ 21,129 
$ 32,804 
Accounts receivable, net of allowances of $101 and $89, respectively
19,625 
20,624 
Inventories
12,902 
6,532 
Prepaid expenses and other current assets
1,831 
1,687 
Total current assets
55,487 
61,647 
Property, plant and equipment, net
81,905 
78,322 
Other assets
79 
105 
Total assets
137,471 
140,074 
Current liabilities:
 
 
Capital leases, current portion
41 
67 
Accounts payable
11,544 
10,684 
Accrued expenses
4,145 
5,568 
Deferred revenue
753 
681 
Other current liabilities
 
409 
Total current liabilities
16,483 
17,409 
Capital leases, excluding current portion
11 
40 
Other long-term liabilities
703 
151 
Total liabilities
17,197 
17,600 
Commitments and contingencies (Note 6)
   
   
Stockholders' equity:
 
 
Preferred stock, $0.00001 par value; 5,000,000 shares authorized, no shares issued and outstanding at September 30, 2016 and December 31, 2015
   
   
Common stock, $0.00001 par value; 125,000,000 shares authorized, 23,366,937 and 23,184,852 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively
Additional paid-in capital
532,056 
527,975 
Accumulated deficit
(411,782)
(405,501)
Total stockholders' equity
120,274 
122,474 
Total liabilities and stockholders' equity
$ 137,471 
$ 140,074 
Consolidated Balance Sheets (Parenthetical) (USD $)
In Thousands, except Share data, unless otherwise specified
Sep. 30, 2016
Dec. 31, 2015
Statement of Financial Position [Abstract]
 
 
Allowance for doubtful accounts
$ 101 
$ 89 
Preferred stock, par value
$ 0.00001 
$ 0.00001 
Preferred stock, shares authorized
5,000,000 
5,000,000 
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value
$ 0.00001 
$ 0.00001 
Common stock, shares authorized
125,000,000 
125,000,000 
Common stock, shares issued
23,366,937 
23,184,852 
Common stock, shares outstanding
23,366,937 
23,184,852 
Consolidated Statements of Operations (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Revenue:
 
 
 
 
Product
$ 28,877 
$ 30,926 
$ 88,286 
$ 83,891 
Research services
683 
613 
1,813 
1,243 
Total revenue
29,560 
31,539 
90,099 
85,134 
Cost of revenue:
 
 
 
 
Product
22,790 
26,017 
69,505 
69,676 
Research services
368 
350 
1,012 
663 
Gross profit
6,402 
5,172 
19,582 
14,795 
Operating expenses:
 
 
 
 
Research and development
1,328 
1,146 
3,924 
4,001 
Sales and marketing
3,056 
2,793 
8,939 
7,847 
General and administrative
4,422 
3,709 
12,229 
10,866 
Total operating expenses
8,806 
7,648 
25,092 
22,714 
Loss from operations
(2,404)
(2,476)
(5,510)
(7,919)
Other expense, net
 
 
 
 
Interest expense, net
(37)
(46)
(115)
(136)
Postponed financing costs
(656)
 
(656)
 
Total other expense, net
(693)
(46)
(771)
(136)
Net loss
$ (3,097)
$ (2,522)
$ (6,281)
$ (8,055)
Net loss per share:
 
 
 
 
Basic
$ (0.13)
$ (0.11)
$ (0.27)
$ (0.35)
Diluted
$ (0.13)
$ (0.11)
$ (0.27)
$ (0.35)
Weighted-average common shares outstanding:
 
 
 
 
Basic and diluted
23,168,251 
23,060,456 
23,114,280 
23,017,822 
Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Cash flows from operating activities:
 
 
Net loss
$ (6,281)
$ (8,055)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
Depreciation and amortization
7,298 
7,422 
Stock-compensation expense
4,277 
4,175 
Settlement of asset retirement obligation
 
(14)
Postponed financing costs
656 
 
Changes in operating assets and liabilities:
 
 
Accounts receivable
999 
(5,425)
Inventories
(6,370)
(1,732)
Prepaid expenses and other assets
189 
(1,001)
Accounts payable
(17)
1,504 
Accrued expenses
(2,189)
(1,123)
Deferred revenue
72 
4,167 
Net cash used in operating activities
(1,366)
(82)
Cash flows from investing activities:
 
 
Capital expenditures
(9,994)
(19,377)
Purchases of marketable securities
 
(2,500)
Maturity and sale of marketable securities
 
2,500 
Net cash used in investing activities
(9,994)
(19,377)
Cash flows from financing activities:
 
 
Repayment of obligations under capital lease
(55)
(58)
Payments made for employee restricted stock tax withholdings
(196)
(238)
Payment of deferred financing costs
(64)
 
Net cash used in financing activities
(315)
(296)
Net decrease in cash
(11,675)
(19,755)
Cash at beginning of period
32,804 
49,719 
Cash at end of period
21,129 
29,964 
Supplemental disclosures of cash flow information:
 
 
Interest paid
153 
149 
Income taxes paid
Supplemental disclosures of non-cash activities:
 
 
Changes in accrued capital expenditures
602 
(6,112)
Changes in building lease incentives
268 
 
Advanced billings
 
1,142 
Unpaid financing costs
(592)
 
Capitalized leases
 
21 
Settlement of asset retirement obligation
$ 241 
 
Description of Business and Basis of Presentation
Description of Business and Basis of Presentation

(1) Description of Business and Basis of Presentation

Nature of Business

Aspen Aerogels, Inc. (the Company) is an aerogel technology company that designs, develops and manufactures innovative, high-performance aerogel insulation used primarily in the energy infrastructure and building materials markets. The Company also conducts research and development related to aerogel technology supported by funding from several agencies of the U.S. government and other institutions in the form of research and development contracts.

The Company maintains its corporate offices in Northborough, Massachusetts. The Company has three wholly owned subsidiaries: Aspen Aerogels Rhode Island, LLC, Aspen Aerogels Germany, GmbH and Aspen Aerogels Georgia, LLC, which was formed in August 2016.

Unaudited Interim Financial Information

The accompanying unaudited interim consolidated financial statements include the accounts of the Company and have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and disclosures normally included in the consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and accompanying notes in our Annual Report on Form 10-K for the year ended December 31, 2015 (the Annual Report), filed with the Securities and Exchange Commission on March 4, 2016.

In the opinion of the Company’s management, the unaudited interim consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and include all adjustments that are of a normal recurring nature and necessary for the fair statement of the Company’s financial position as of September 30, 2016 and the results of its operations for the three and nine months ended September 30, 2016 and 2015 and the cash flows for the nine months then ended. The Company has evaluated events through the date of this filing.

The results of operations for the three and nine months ended September 30, 2016 are not necessarily indicative of the results to be expected for the year ending December 31, 2016 or any other period.

There have been no changes to the Company’s significant accounting policies described in the Annual Report that have had a material impact on the Company’s consolidated financial statements and notes thereto.

Principles of Consolidation

The accompanying consolidated financial statements, which have been prepared in accordance with U.S. GAAP, include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Significant Accounting Policies
Significant Accounting Policies

(2) Significant Accounting Policies

Use of Estimates

The preparation of the consolidated financial statements requires the Company to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include allowances for doubtful accounts, sales returns and allowances, product warranty costs, inventory valuation, the carrying amount of property and equipment, stock-based compensation and deferred income taxes. The Company evaluates its estimates and assumptions on an on-going basis using historical experience and other factors, including the current economic environment, which is believed to be reasonable under the circumstances. Management adjusts such estimates and assumptions when facts and circumstances dictate. Illiquid credit markets, volatile equity markets and declines in business investment increase the uncertainty inherent in such estimates and assumptions. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in these estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods.

 

Cash and Cash Equivalents

Cash equivalents include short-term, highly liquid instruments, which consist of money market accounts. All cash and cash equivalents are maintained with major financial institutions in North America. Deposits with these financial institutions may exceed the amount of insurance provided on such deposits; however, these deposits typically may be redeemed upon demand and, therefore, bear minimal risk.

Concentration of Credit Risk

For the three months ended September 30, 2016, three customers represented 32%, 13% and 10% of total revenue. For the three months ended September 30, 2015, three customers represented 13%, 12% and 11% of total revenue.

For the nine months ended September 30, 2016, two customers represented 20% and 14% of total revenue. For the nine months ended September 30, 2015, two customers represented 15% and 15% of total revenue.

At September 30, 2016, the Company had two customers that accounted for 30% and 15% of accounts receivable. At December 31, 2015, the Company had three customers that accounted for 17%, 14% and 13% of accounts receivable.

Revenue Recognition

The Company recognizes revenue from the sale of products and delivery of research and development services. Revenue is recognized when all of the following criteria are met: persuasive evidence of an arrangement exists, the price to the buyer is fixed or determinable, delivery has occurred or services have been provided, and collectability is reasonably assured.

Product Revenue

Product revenue is recognized upon transfer of title and risk of loss, which is upon shipment or delivery. The Company’s customary shipping terms are free on board (FOB) shipping point.

The Company records deferred revenue for product sales when (i) the Company has delivered products but other revenue recognition criteria have not been satisfied or (ii) payments have been received in advance of products being delivered.

Research Services Revenue

The Company performs research services under contracts with various government agencies and other institutions. The Company records revenue earned on research services contracts using the percentage-of-completion method in two ways: (1) for firm-fixed-price contracts, the Company accrues that portion of the total contract price that is allocable, on the basis of the Company’s estimates of costs incurred to date to total contract costs; and (2) for cost-plus-fixed-fee contracts, the Company records revenue that is equal to total payroll cost incurred times a stated factor plus reimbursable expenses, to a stated upper limit. The primary cost is the labor effort expended in completing research, and the only deliverable, other than the labor hours expended, is reporting of research results to the customer. Because the input measure of labor hours expended is also reflective of the output measure, it is a reliable means to measure the extent of progress towards completion. Revisions in cost estimates and fees during the course of the contract are reflected in the accounting period in which the facts that require the revisions become known. Contract costs and rates used to allocate overhead to contracts are subject to audit by the respective contracting government agency. Adjustments to revenue as a result of audit are recorded in the period they become known. To date, adjustments to revenue as a result of audit have been insignificant.

Stock-based Compensation

Stock-based compensation expense is measured at the grant date based on the fair value of the award. Expense is recognized on a straight-line basis over the requisite service period for all awards with service conditions. For performance-based awards, the grant date fair value is recognized as expense when the condition is probable of being achieved, and then on a graded basis over the requisite service period. The Company uses the Black-Scholes option-pricing model to determine the fair value of service-based option awards, which requires a number of complex and subjective assumptions including fair value of the underlying security, the expected volatility of the underlying security, a risk-free interest rate and the expected term of the option. The fair value of restricted stock and restricted stock unit grants is determined using the closing trading price of the Company’s common stock on the date of grant. The fair value of awards containing market conditions is determined using a Monte Carlo simulation model based upon the terms of the conditions, the expected volatility of the underlying security, and other relevant factors.

During the nine months ended September 30, 2016, the Company granted 75,152 shares of restricted common stock and non-qualified stock options (NSOs) to purchase 103,593 shares of common stock with a fair value of $0.4 million and $0.2 million, respectively, vesting over a period of one year to its non-employee directors under the 2014 Employee, Director and Consultant Equity Incentive Plan (the 2014 Equity Plan). During the nine months ended September 30, 2016, the Company granted 420,284 restricted common stock units (RSUs) and NSOs to purchase 259,469 shares of common stock to employees under the 2014 Equity Plan. The employee RSUs and NSOs will vest over a three year period. Stock-based compensation is included in cost of sales or operating expenses, as applicable, and consists of the following:

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2016      2015      2016      2015  
     (In thousands)  

Cost of product revenue

   $ 241       $ 241       $ 632       $ 647   

Research and development expenses

     184         181         472         544   

Sales and marketing expenses

     314         288         852         774   

General and administrative expenses

     735         766         2,321         2,210   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total stock-based compensation

   $ 1,474       $ 1,476       $ 4,277       $ 4,175   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

Pursuant to the “evergreen” provisions of the 2014 Equity Plan, the number of shares of common stock authorized for issuance under the plan automatically increased by 463,697 shares to 6,069,201 shares effective January 1, 2016.

As of September 30, 2016, 2,628,813 shares of common stock were reserved for issuance upon the exercise or vesting, as appropriate, of outstanding stock-based awards granted under the 2014 Equity Plan. In addition, as of September 30, 2016, 93,014 shares of common stock were reserved for issuance upon the exercise of outstanding stock options granted under the Company’s 2001 Equity Incentive Plan, as amended (the 2001 Equity Plan). Any cancellations or forfeitures of the options outstanding under the 2001 Equity Plan will result in the shares reserved for issuance upon exercise of such options becoming available for grant under the 2014 Equity Plan. As of September 30, 2016, there were 2,845,219 shares of common stock available for grant under the 2014 Equity Plan.

Earnings per Share

The Company calculates net loss per common share based on the weighted-average number of common shares outstanding during each period. Potential common stock equivalents are determined using the treasury stock method. The weighted-average number of common shares included in the computation of diluted net loss gives effect to all potentially dilutive common equivalent shares, including outstanding stock options, RSUs and warrants. Common equivalent shares are excluded from the computation of diluted net loss per share if their effect is antidilutive.

Segments

Operating segments are identified as components of an enterprise about which separate, discrete financial information is available for evaluation by the chief operating decision maker in making decisions on how to allocate resources and assess performance. The Company’s chief operating decision maker is the Chief Executive Officer. The Company’s chief operating decision maker reviews consolidated operating results to make decisions about allocating resources and assessing performance for the entire Company. The Company views its operations and manages its business as one operating segment.

Information about the Company’s total revenues, based on shipment destination or services location, is presented in the following table:

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2016      2015      2016      2015  
     (In thousands)  

Revenue:

           

U.S.

   $ 6,850       $ 12,088       $ 28,471       $ 33,810   

International

     22,710         19,451         61,628         51,324   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 29,560       $ 31,539       $ 90,099       $ 85,134   
  

 

 

    

 

 

    

 

 

    

 

 

 

Warranty Costs

The Company provides warranties for its products and records the estimated cost within cost of sales in the period that the related revenue is recorded. The Company’s standard warranty period extends to one year from the date of shipment. The standard warranties provide that the Company’s products will be free from defects in material and workmanship, and will, under normal use, conform to the specifications for the product. Historically, warranty claims and charges have been insignificant.

The Company’s products may be utilized in systems that may involve new technical demands and new configurations. As such, the Company will continue to regularly review and assess whether warranty reserves shall be recorded in the period the related revenue is recorded. For initial shipments of products where the Company is unsure of meeting the customer’s specifications, the Company will defer the recognition of product revenue and related costs until written customer acceptance is obtained.

During the nine months ended September 30, 2016, the Company recorded warranty expense of $0.5 million. This specific reserve was principally related to product warranty claims for a specific project. These claims were outside of the Company’s typical experience. As of September 30, 2016, the Company had satisfied all outstanding warranty claims.

Additionally, during the nine months ended September 30, 2016, a customer notified the Company of a specific product application issue. The customer continues to request and receive shipment of additional aerogel product and no claim has been made. The Company cannot be certain that it will not be subject to a warranty claim.

 

Recently Issued Accounting Standards

In August 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (ASU 2016-15). This amendment addresses eight classification issues related to the statement of cash flows. For public business entities, the amendments in ASU 2016-15 are effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period. The Company has not yet selected a transition method and is evaluating the effect the updated standard will have on its consolidated financial statements and related disclosures.

In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (ASU 2016-09). The amendment is to simplify several aspects of the accounting for share-based payment transactions including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. For public entities, the amendments in ASU 2016-09 are effective for interim and annual reporting periods beginning after December 15, 2016. The Company does not expect adoption of this standard to have a material impact on its consolidated results of operations and financial condition.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (FASB ASU 2016-02). FASB ASU 2016-02 changes the accounting for leases and includes a requirement to record all leases on the consolidated balance sheets as assets and liabilities. This update is effective for fiscal years beginning after December 15, 2018. Early application is permitted. The Company has not yet selected a transition method and is evaluating the effect the updated standard will have on its consolidated financial statements and related disclosures.

In August 2015, the FASB issued a deferral of ASU 2014-09, Revenue from Contracts with Customers. The standard will eliminate the transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. As a result of the deferral, public entities are required to apply the revenue recognition standard for the annual reporting period beginning on or after December 15, 2017, including interim periods within that annual reporting period. Early application is not permitted. The Company has not yet selected a transition method and is evaluating the effect that the updated standard will have on its consolidated financial statements and related disclosures.

In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330), which, for entities that do not measure inventory using the last-in, first-out (LIFO) or retail inventory method, changes the measurement principle for inventory from the lower of cost or market to lower of cost and net realizable value. The ASU also eliminates the requirement for these entities to consider replacement cost or net realizable value less an approximately normal profit margin when measuring inventory. Public entities are required to apply the standards for fiscal years beginning after December 15, 2016, including interim periods within those fiscal periods. Early adoption is permitted as of the beginning of an interim or annual period. The Company does not expect adoption of this standard to have a material impact on its consolidated results of operations and financial condition.

Inventories
Inventories

(3) Inventories

Inventories consist of the following:

 

     September 30,
2016
     December 31,
2015
 
     (In thousands)  

Raw materials

   $ 3,862       $ 4,432   

Finished goods

     9,040         2,100   
  

 

 

    

 

 

 

Total

   $ 12,902       $ 6,532   
  

 

 

    

 

 

 
Property, Plant and Equipment, Net
Property, Plant and Equipment, Net

(4) Property, Plant and Equipment, Net

Property, plant and equipment consist of the following:

 

     September 30,
2016
     December 31,
2015
     Useful life  
     (In thousands)         

Construction in progress

   $ 10,830       $ 5,138         —     

Buildings

     23,901         23,884         30 years   

Machinery and equipment

     109,156         104,658         3-10 years   

Computer equipment and software

     7,472         6,888         3 years   
  

 

 

    

 

 

    

Total

     151,359         140,568      

Accumulated depreciation

     (69,454      (62,246   
  

 

 

    

 

 

    

Property, plant and equipment, net

   $ 81,905       $ 78,322      
  

 

 

    

 

 

    

Depreciation expense was $7.3 million and $7.4 million for the nine months ended September 30, 2016 and 2015, respectively.

Construction in progress totaled $10.8 million and $5.1 million at September 30, 2016 and December 31, 2015, respectively, which included engineering designs and other pre-construction costs for the planned manufacturing facility in Statesboro, Georgia of $6.3 million and $2.3 million at September 30, 2016 and December 31, 2015, respectively.

Accrued Expenses
Accrued Expenses

(5) Accrued Expenses

Accrued expenses consist of the following:

 

     September 30,
2016
     December 31,
2015
 
     (In thousands)  

Employee compensation

   $ 2,452       $ 4,184   

Other accrued expenses

     1,693         1,384   
  

 

 

    

 

 

 

Total

   $ 4,145       $ 5,568   
  

 

 

    

 

 

 
Commitments and Contingencies
Commitments and Contingencies

(6) Commitments and Contingencies

Customer Supply Agreement

On June 21, 2016, the Company entered into a supply agreement and a side agreement (together, the supply agreement) and a joint development agreement with BASF SE (BASF). Pursuant to the supply agreement, the Company will sell exclusively to BASF the Company’s Spaceloft® A2 product at annual volumes to be specified by BASF, subject to certain volume limits. The supply agreement will terminate on December 31, 2027, if not renewed prior to such date. Upon expiration of the supply agreement, the Company will be subject to a post-termination supply commitment for an additional two years. The joint development agreement is designed to facilitate the collaboration between the parties on the development and commercialization of new products.

In addition, BASF will make a non-interest bearing prepayment to the Company in the aggregate amount of $22 million during the construction of the planned manufacturing facility in Statesboro, Georgia (Plant Two), subject to the Company’s prior satisfaction of certain preconditions related to the finalization of certain aspects of the product specification and the progress of the financing and construction of Plant Two, including securing a debt commitment from a third party lender for at least $30 million. BASF is obligated to pay the prepayment to the Company in eight equal consecutive quarterly installments commencing on the later of (i) October 1, 2016 or (ii) the first day of the calendar quarter following the date on which the Plant Two progress preconditions are met. Once commenced, BASF’s obligation to make such quarterly payments shall be subject to postponement in the event of delays of three months or more in the projected date of completion of Plant Two by a commensurate number of months.

After October 1, 2018, the Company will, at BASF’s instruction, credit up to 25.3% of any amounts invoiced by the Company for Spaceloft® A2 product sold to BASF against the prepayment balance. However, BASF has no obligation to purchase products under the supply agreement. If any of the prepayment remains uncredited against amounts invoiced by the Company as of September 30, 2023, BASF may request that the Company repay the uncredited amount to BASF in four equal quarterly installments beginning on December 31, 2023. The repayment obligation will be secured by a security interest in real estate, plant and equipment at the Company’s Rhode Island and Georgia manufacturing facilities.

 

As of September 30, 2016, the Company anticipates that the general uncertainty in the energy markets and recent weakness in the downstream markets will continue into 2017. With this view of the market, the Company had elected to temporarily delay the board approved Plant Two project and its related financing to better align the capacity expansion with the Company’s assessment of demand for the 2018 to 2020 period. As a result, the Company has yet to fulfill certain of the prepayment preconditions and commencement of the quarterly prepayments from BASF will be delayed until such preconditions are satisfied.

Financing Costs

During the nine months ended September 30, 2016, the Company engaged with a third party lender to secure a debt commitment to support the construction of Plant Two. During the three months ended September 2016, the Company decided, at its sole discretion, to temporarily delay both the Plant Two project and its related financing to better align the capacity expansion with the Company’s assessment of demand for the 2018 to 2020 period. In addition, the Company anticipates that debt commitments from third party lenders will be postponed for a period of at least six months. As a result, the Company recorded a $0.6 million charge included in other expense, net for postponed financing costs. The charge included legal fees incurred by the Company itself and on behalf of the potential lender.

Asset Retirement Obligation

As of December 31, 2015, the Company had asset retirement obligations (ARO) arising from requirements to perform certain asset retirement activities upon the termination of its Northborough, Massachusetts facility lease and upon disposal of certain machinery and equipment.

During the nine months ended September 30, 2016, the Company incurred approximately $0.2 million in expenditures in support of completing the restoration of 31,577 square feet of space formerly utilized for manufacturing operations in the Northborough, Massachusetts facility. This manufacturing space was vacated and returned to the landlord on July 1, 2016.

On June 29, 2016, the Company executed an agreement to remain at the Northborough, Massachusetts facility through December 31, 2026. As part of the new agreement, the Company’s obligation to restore the remaining space in the Northborough facility was eliminated. The settlement of the remaining reserve balance of approximately $0.2 million was reclassified to accrued expenses and will be amortized as a reduction to rent expense over the term of the new lease agreement.

 

     Nine Months Ended
September 30,

2016
 
     (In thousands)  

Balance at beginning of period

   $ 397   

Expenditures

     (156

Settlement of asset retirement obligation

     (241
  

 

 

 

Balance at end of period

   $ —     
  

 

 

 

Revolving Line of Credit

The Company maintains a revolving credit facility with Silicon Valley Bank. On August 19, 2016, the Company amended the Amended and Restated Loan and Security Agreement with Silicon Valley Bank, which was originally effective from August 31, 2014 to August 31, 2016 (the Credit Facility), pursuant to which, the Credit Facility’s maturity date was extended to November 29, 2016. The Company may borrow up to $20 million under the facility subject to compliance with certain covenants and borrowing base limitations. At the Company’s election, the interest rate applicable to borrowings under the revolving credit facility may be based on the prime rate or LIBOR. Prime rate-based rates vary from prime rate plus 0.75% per annum to prime rate plus 1.75% per annum, while LIBOR-based rates vary from LIBOR plus 3.75% per annum to LIBOR plus 4.25% per annum. In addition, the Company is required to pay a monthly unused revolving line facility fee of 0.5% per annum of the average unused portion of the revolving credit facility. The revolving credit facility is secured by a first priority security interest in all assets of the Company, including those at the East Providence facility, except for certain exclusions.

 

At both September 30, 2016 and December 31, 2015, the Company had no amounts drawn on the revolving credit facility. Under the revolving credit facility, the Company is required to comply with financial covenants relating to, among other items, minimum Adjusted EBITDA, maximum unfinanced capital expenditures and other non-financial covenants. At September 30, 2016, the Company was in compliance with all such financial covenants.

Pursuant to the terms of its existing Northborough, Massachusetts facility lease, the Company has been required to provide the landlord with letters of credit securing certain obligations. In addition, the Company has been required to provide certain customers with letters of credit securing obligations under commercial contracts. The Company had outstanding letters of credit backed by the revolving credit facility of $2.5 million and $2.7 million September 30, 2016 and December 31, 2015, respectively, which reduce the funds otherwise available to the Company under the revolving credit facility. Based on the available borrowing base and net of the $2.5 million of outstanding letters of credit, the amount available to the Company under the revolving credit facility at September 30, 2016 was $12.5 million.

Litigation

The Company is, from time to time, a party to litigation that arises in the normal course of its business operations. See Part II, Item 1 (“Legal Proceedings”) of this Quarterly Report on Form 10-Q for a description of certain of the Company’s current legal proceedings. The Company is not presently a party to any litigation for which it believes a loss is probable requiring an amount to be accrued or a possible loss contingency requiring disclosure.

Operating Leases

On June 29, 2016, the Company entered into a new agreement with Cabot II- MA1M03, LLC (Cabot Properties) to lease approximately 51,650 square feet of office space in Northborough, MA, the location of the Company’s current headquarters. The new lease follows the existing lease between the Company and Cabot Properties that expires on December 31, 2016. The lease term will commence on January 1, 2017 and expire on December 31, 2026. The annual base rent associated with the lease will be approximately $408,000 during the first year of the lease, and increase by approximately 3% annually for the term of the lease. The lease also provides for the payment by the Company of its pro rata share of real estate taxes and certain other expenses. Prior to the expiration of the lease term, the Company will have the right to extend the lease for an additional term of three years.

Under the terms of the new lease, Cabot Properties will provide the Company with an allowance of up to $1.2 million to be utilized for improvements to the leased premises. The Company will account for the reimbursements from Cabot Properties for such improvements as a lease obligation incentive. In addition, the new lease eliminated the Company’s asset retirement obligations under the existing lease. The settlement of the remaining asset retirement reserve balance of approximately $0.2 million was reclassified to other liabilities. These amounts will be recorded as a component of deferred rent in determining the minimum lease payments for the property. As of September 30, 2016, the Company had capitalized $0.4 million in leasehold improvement costs.

Net Loss Per Share
Net Loss Per Share

(7) Net Loss Per Share

The computation of basic and diluted net loss per share consists of the following:

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2016      2015      2016      2015  
     (In thousands, except share and per share data)  

Numerator:

           

Net loss

   $ (3,097    $ (2,522    $ (6,281    $ (8,055
  

 

 

    

 

 

    

 

 

    

 

 

 

Denominator:

           

Weighted average shares outstanding, basic and diluted

     23,168,251         23,060,456         23,114,280         23,017,822   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net loss per share, basic and diluted

   $ (0.13    $ (0.11    $ (0.27    $ (0.35
  

 

 

    

 

 

    

 

 

    

 

 

 

 

Potentially dilutive common shares that were excluded from the computation of diluted net loss per share because they were anti-dilutive consist of the following:

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2016      2015      2016      2015  

Common stock options

     2,044,840         1,224,279         2,044,840         1,224,279   

Restricted common stock units

     677,001         405,463         677,001         405,463   

Common stock warrants

     115         131         115         131   

Restricted common stock awards

     153,277         54,005         153,277         54,005   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     2,875,233         1,683,878         2,875,233         1,683,878   
  

 

 

    

 

 

    

 

 

    

 

 

 

In the table above, anti-dilutive shares consist of those common stock equivalents that have (i) an exercise price that exceeds the average stock price for the period or (ii) related average unrecognized stock compensation expense sufficient to buy-back the entire amount of shares. The Company excludes the shares issued in connection with restricted stock awards from the calculation of basic weighted average common shares outstanding until the restrictions lapse.

Income Taxes
Income Taxes

(8) Income Taxes

The Company incurred net operating losses and recorded a full valuation allowance against net deferred tax assets for all periods presented. Accordingly, the Company has not recorded a provision for federal or state income taxes.

Description of Business and Basis of Presentation (Policies)

Nature of Business

Aspen Aerogels, Inc. (the Company) is an aerogel technology company that designs, develops and manufactures innovative, high-performance aerogel insulation used primarily in the energy infrastructure and building materials markets. The Company also conducts research and development related to aerogel technology supported by funding from several agencies of the U.S. government and other institutions in the form of research and development contracts.

The Company maintains its corporate offices in Northborough, Massachusetts. The Company has three wholly owned subsidiaries: Aspen Aerogels Rhode Island, LLC, Aspen Aerogels Germany, GmbH and Aspen Aerogels Georgia, LLC, which was formed in August 2016.

Unaudited Interim Financial Information

The accompanying unaudited interim consolidated financial statements include the accounts of the Company and have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and disclosures normally included in the consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and accompanying notes in our Annual Report on Form 10-K for the year ended December 31, 2015 (the Annual Report), filed with the Securities and Exchange Commission on March 4, 2016.

In the opinion of the Company’s management, the unaudited interim consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and include all adjustments that are of a normal recurring nature and necessary for the fair statement of the Company’s financial position as of September 30, 2016 and the results of its operations for the three and nine months ended September 30, 2016 and 2015 and the cash flows for the nine months then ended. The Company has evaluated events through the date of this filing.

The results of operations for the three and nine months ended September 30, 2016 are not necessarily indicative of the results to be expected for the year ending December 31, 2016 or any other period.

There have been no changes to the Company’s significant accounting policies described in the Annual Report that have had a material impact on the Company’s consolidated financial statements and notes thereto.

Principles of Consolidation

The accompanying consolidated financial statements, which have been prepared in accordance with U.S. GAAP, include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the consolidated financial statements requires the Company to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include allowances for doubtful accounts, sales returns and allowances, product warranty costs, inventory valuation, the carrying amount of property and equipment, stock-based compensation and deferred income taxes. The Company evaluates its estimates and assumptions on an on-going basis using historical experience and other factors, including the current economic environment, which is believed to be reasonable under the circumstances. Management adjusts such estimates and assumptions when facts and circumstances dictate. Illiquid credit markets, volatile equity markets and declines in business investment increase the uncertainty inherent in such estimates and assumptions. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in these estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods.

Cash and Cash Equivalents

Cash equivalents include short-term, highly liquid instruments, which consist of money market accounts. All cash and cash equivalents are maintained with major financial institutions in North America. Deposits with these financial institutions may exceed the amount of insurance provided on such deposits; however, these deposits typically may be redeemed upon demand and, therefore, bear minimal risk.

Concentration of Credit Risk

For the three months ended September 30, 2016, three customers represented 32%, 13% and 10% of total revenue. For the three months ended September 30, 2015, three customers represented 13%, 12% and 11% of total revenue.

For the nine months ended September 30, 2016, two customers represented 20% and 14% of total revenue. For the nine months ended September 30, 2015, two customers represented 15% and 15% of total revenue.

At September 30, 2016, the Company had two customers that accounted for 30% and 15% of accounts receivable. At December 31, 2015, the Company had three customers that accounted for 17%, 14% and 13% of accounts receivable.

Revenue Recognition

The Company recognizes revenue from the sale of products and delivery of research and development services. Revenue is recognized when all of the following criteria are met: persuasive evidence of an arrangement exists, the price to the buyer is fixed or determinable, delivery has occurred or services have been provided, and collectability is reasonably assured.

Product Revenue

Product revenue is recognized upon transfer of title and risk of loss, which is upon shipment or delivery. The Company’s customary shipping terms are free on board (FOB) shipping point.

The Company records deferred revenue for product sales when (i) the Company has delivered products but other revenue recognition criteria have not been satisfied or (ii) payments have been received in advance of products being delivered.

Research Services Revenue

The Company performs research services under contracts with various government agencies and other institutions. The Company records revenue earned on research services contracts using the percentage-of-completion method in two ways: (1) for firm-fixed-price contracts, the Company accrues that portion of the total contract price that is allocable, on the basis of the Company’s estimates of costs incurred to date to total contract costs; and (2) for cost-plus-fixed-fee contracts, the Company records revenue that is equal to total payroll cost incurred times a stated factor plus reimbursable expenses, to a stated upper limit. The primary cost is the labor effort expended in completing research, and the only deliverable, other than the labor hours expended, is reporting of research results to the customer. Because the input measure of labor hours expended is also reflective of the output measure, it is a reliable means to measure the extent of progress towards completion. Revisions in cost estimates and fees during the course of the contract are reflected in the accounting period in which the facts that require the revisions become known. Contract costs and rates used to allocate overhead to contracts are subject to audit by the respective contracting government agency. Adjustments to revenue as a result of audit are recorded in the period they become known. To date, adjustments to revenue as a result of audit have been insignificant.

Stock-based Compensation

Stock-based compensation expense is measured at the grant date based on the fair value of the award. Expense is recognized on a straight-line basis over the requisite service period for all awards with service conditions. For performance-based awards, the grant date fair value is recognized as expense when the condition is probable of being achieved, and then on a graded basis over the requisite service period. The Company uses the Black-Scholes option-pricing model to determine the fair value of service-based option awards, which requires a number of complex and subjective assumptions including fair value of the underlying security, the expected volatility of the underlying security, a risk-free interest rate and the expected term of the option. The fair value of restricted stock and restricted stock unit grants is determined using the closing trading price of the Company’s common stock on the date of grant. The fair value of awards containing market conditions is determined using a Monte Carlo simulation model based upon the terms of the conditions, the expected volatility of the underlying security, and other relevant factors.

During the nine months ended September 30, 2016, the Company granted 75,152 shares of restricted common stock and non-qualified stock options (NSOs) to purchase 103,593 shares of common stock with a fair value of $0.4 million and $0.2 million, respectively, vesting over a period of one year to its non-employee directors under the 2014 Employee, Director and Consultant Equity Incentive Plan (the 2014 Equity Plan). During the nine months ended September 30, 2016, the Company granted 420,284 restricted common stock units (RSUs) and NSOs to purchase 259,469 shares of common stock to employees under the 2014 Equity Plan. The employee RSUs and NSOs will vest over a three year period. Stock-based compensation is included in cost of sales or operating expenses, as applicable, and consists of the following:

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2016      2015      2016      2015  
     (In thousands)  

Cost of product revenue

   $ 241       $ 241       $ 632       $ 647   

Research and development expenses

     184         181         472         544   

Sales and marketing expenses

     314         288         852         774   

General and administrative expenses

     735         766         2,321         2,210   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total stock-based compensation

   $ 1,474       $ 1,476       $ 4,277       $ 4,175   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

Pursuant to the “evergreen” provisions of the 2014 Equity Plan, the number of shares of common stock authorized for issuance under the plan automatically increased by 463,697 shares to 6,069,201 shares effective January 1, 2016.

As of September 30, 2016, 2,628,813 shares of common stock were reserved for issuance upon the exercise or vesting, as appropriate, of outstanding stock-based awards granted under the 2014 Equity Plan. In addition, as of September 30, 2016, 93,014 shares of common stock were reserved for issuance upon the exercise of outstanding stock options granted under the Company’s 2001 Equity Incentive Plan, as amended (the 2001 Equity Plan). Any cancellations or forfeitures of the options outstanding under the 2001 Equity Plan will result in the shares reserved for issuance upon exercise of such options becoming available for grant under the 2014 Equity Plan. As of September 30, 2016, there were 2,845,219 shares of common stock available for grant under the 2014 Equity Plan.

Earnings per Share

The Company calculates net loss per common share based on the weighted-average number of common shares outstanding during each period. Potential common stock equivalents are determined using the treasury stock method. The weighted-average number of common shares included in the computation of diluted net loss gives effect to all potentially dilutive common equivalent shares, including outstanding stock options, RSUs and warrants. Common equivalent shares are excluded from the computation of diluted net loss per share if their effect is antidilutive.

Segments

Operating segments are identified as components of an enterprise about which separate, discrete financial information is available for evaluation by the chief operating decision maker in making decisions on how to allocate resources and assess performance. The Company’s chief operating decision maker is the Chief Executive Officer. The Company’s chief operating decision maker reviews consolidated operating results to make decisions about allocating resources and assessing performance for the entire Company. The Company views its operations and manages its business as one operating segment.

Information about the Company’s total revenues, based on shipment destination or services location, is presented in the following table:

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2016      2015      2016      2015  
     (In thousands)  

Revenue:

           

U.S.

   $ 6,850       $ 12,088       $ 28,471       $ 33,810   

International

     22,710         19,451         61,628         51,324   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 29,560       $ 31,539       $ 90,099       $ 85,134   
  

 

 

    

 

 

    

 

 

    

 

 

 

Warranty Costs

The Company provides warranties for its products and records the estimated cost within cost of sales in the period that the related revenue is recorded. The Company’s standard warranty period extends to one year from the date of shipment. The standard warranties provide that the Company’s products will be free from defects in material and workmanship, and will, under normal use, conform to the specifications for the product. Historically, warranty claims and charges have been insignificant.

The Company’s products may be utilized in systems that may involve new technical demands and new configurations. As such, the Company will continue to regularly review and assess whether warranty reserves shall be recorded in the period the related revenue is recorded. For initial shipments of products where the Company is unsure of meeting the customer’s specifications, the Company will defer the recognition of product revenue and related costs until written customer acceptance is obtained.

During the nine months ended September 30, 2016, the Company recorded warranty expense of $0.5 million. This specific reserve was principally related to product warranty claims for a specific project. These claims were outside of the Company’s typical experience. As of September 30, 2016, the Company had satisfied all outstanding warranty claims.

Additionally, during the nine months ended September 30, 2016, a customer notified the Company of a specific product application issue. The customer continues to request and receive shipment of additional aerogel product and no claim has been made. The Company cannot be certain that it will not be subject to a warranty claim

Recently Issued Accounting Standards

In August 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (ASU 2016-15). This amendment addresses eight classification issues related to the statement of cash flows. For public business entities, the amendments in ASU 2016-15 are effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period. The Company has not yet selected a transition method and is evaluating the effect the updated standard will have on its consolidated financial statements and related disclosures.

In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (ASU 2016-09). The amendment is to simplify several aspects of the accounting for share-based payment transactions including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. For public entities, the amendments in ASU 2016-09 are effective for interim and annual reporting periods beginning after December 15, 2016. The Company does not expect adoption of this standard to have a material impact on its consolidated results of operations and financial condition.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (FASB ASU 2016-02). FASB ASU 2016-02 changes the accounting for leases and includes a requirement to record all leases on the consolidated balance sheets as assets and liabilities. This update is effective for fiscal years beginning after December 15, 2018. Early application is permitted. The Company has not yet selected a transition method and is evaluating the effect the updated standard will have on its consolidated financial statements and related disclosures.

In August 2015, the FASB issued a deferral of ASU 2014-09, Revenue from Contracts with Customers. The standard will eliminate the transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. As a result of the deferral, public entities are required to apply the revenue recognition standard for the annual reporting period beginning on or after December 15, 2017, including interim periods within that annual reporting period. Early application is not permitted. The Company has not yet selected a transition method and is evaluating the effect that the updated standard will have on its consolidated financial statements and related disclosures.

In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330), which, for entities that do not measure inventory using the last-in, first-out (LIFO) or retail inventory method, changes the measurement principle for inventory from the lower of cost or market to lower of cost and net realizable value. The ASU also eliminates the requirement for these entities to consider replacement cost or net realizable value less an approximately normal profit margin when measuring inventory. Public entities are required to apply the standards for fiscal years beginning after December 15, 2016, including interim periods within those fiscal periods. Early adoption is permitted as of the beginning of an interim or annual period. The Company does not expect adoption of this standard to have a material impact on its consolidated results of operations and financial condition.

Significant Accounting Policies (Tables)

Stock-based compensation is included in cost of sales or operating expenses, as applicable, and consists of the following:

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2016      2015      2016      2015  
     (In thousands)  

Cost of product revenue

   $ 241       $ 241       $ 632       $ 647   

Research and development expenses

     184         181         472         544   

Sales and marketing expenses

     314         288         852         774   

General and administrative expenses

     735         766         2,321         2,210   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total stock-based compensation

   $ 1,474       $ 1,476       $ 4,277       $ 4,175   
  

 

 

    

 

 

    

 

 

    

 

 

 

Information about the Company’s total revenues, based on shipment destination or services location, is presented in the following table:

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2016      2015      2016      2015  
     (In thousands)  

Revenue:

           

U.S.

   $ 6,850       $ 12,088       $ 28,471       $ 33,810   

International

     22,710         19,451         61,628         51,324   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 29,560       $ 31,539       $ 90,099       $ 85,134   
  

 

 

    

 

 

    

 

 

    

 

 

 
Inventories (Tables)
Schedule of Inventories

Inventories consist of the following:

 

     September 30,
2016
     December 31,
2015
 
     (In thousands)  

Raw materials

   $ 3,862       $ 4,432   

Finished goods

     9,040         2,100   
  

 

 

    

 

 

 

Total

   $ 12,902       $ 6,532   
  

 

 

    

 

 

 
Property, Plant and Equipment, Net (Tables)
Summary of Property, Plant and Equipment

Property, plant and equipment consist of the following:

 

     September 30,
2016
     December 31,
2015
     Useful life  
     (In thousands)         

Construction in progress

   $ 10,830       $ 5,138         —     

Buildings

     23,901         23,884         30 years   

Machinery and equipment

     109,156         104,658         3-10 years   

Computer equipment and software

     7,472         6,888         3 years   
  

 

 

    

 

 

    

Total

     151,359         140,568      

Accumulated depreciation

     (69,454      (62,246   
  

 

 

    

 

 

    

Property, plant and equipment, net

   $ 81,905       $ 78,322      
  

 

 

    

 

 

    
Accrued Expenses (Tables)
Schedule of Accrued Expenses

Accrued expenses consist of the following:

 

     September 30,
2016
     December 31,
2015
 
     (In thousands)  

Employee compensation

   $ 2,452       $ 4,184   

Other accrued expenses

     1,693         1,384   
  

 

 

    

 

 

 

Total

   $ 4,145       $ 5,568   
  

 

 

    

 

 

 
Commitments and Contingencies (Tables)
Summary of ARO Activity
     Nine Months Ended
September 30,

2016
 
     (In thousands)  

Balance at beginning of period

   $ 397   

Expenditures

     (156

Settlement of asset retirement obligation

     (241
  

 

 

 

Balance at end of period

   $ —     
  

 

 

 
Net Loss Per Share (Tables)

The computation of basic and diluted net loss per share consists of the following:

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2016      2015      2016      2015  
     (In thousands, except share and per share data)  

Numerator:

           

Net loss

   $ (3,097    $ (2,522    $ (6,281    $ (8,055
  

 

 

    

 

 

    

 

 

    

 

 

 

Denominator:

           

Weighted average shares outstanding, basic and diluted

     23,168,251         23,060,456         23,114,280         23,017,822   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net loss per share, basic and diluted

   $ (0.13    $ (0.11    $ (0.27    $ (0.35
  

 

 

    

 

 

    

 

 

    

 

 

 

Potentially dilutive common shares that were excluded from the computation of diluted net loss per share because they were anti-dilutive consist of the following:

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2016      2015      2016      2015  

Common stock options

     2,044,840         1,224,279         2,044,840         1,224,279   

Restricted common stock units

     677,001         405,463         677,001         405,463   

Common stock warrants

     115         131         115         131   

Restricted common stock awards

     153,277         54,005         153,277         54,005   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     2,875,233         1,683,878         2,875,233         1,683,878   
  

 

 

    

 

 

    

 

 

    

 

 

 
Description of Business and Basis of Presentation - Additional Information (Detail)
9 Months Ended
Sep. 30, 2016
Subsidiary
Basis Of Presentation [Line Items]
 
Number of Subsidiaries
Aspen Aerogels Georgia, LLC [Member]
 
Basis Of Presentation [Line Items]
 
Date of incorporation
2016-08 
Significant Accounting Policies - Additional Information (Detail) (USD $)
In Millions, except Share data, unless otherwise specified
9 Months Ended 3 Months Ended 9 Months Ended 12 Months Ended 3 Months Ended 9 Months Ended 12 Months Ended 3 Months Ended 9 Months Ended 12 Months Ended 3 Months Ended 12 Months Ended 0 Months Ended 9 Months Ended
Sep. 30, 2016
Segment
Sep. 30, 2016
Total Revenue [Member]
Customer
Sep. 30, 2015
Total Revenue [Member]
Customer
Sep. 30, 2016
Total Revenue [Member]
Customer
Sep. 30, 2015
Total Revenue [Member]
Customer
Sep. 30, 2016
Accounts Receivable [Member]
Customer
Dec. 31, 2015
Accounts Receivable [Member]
Customer
Sep. 30, 2016
Customer One [Member]
Total Revenue [Member]
Customer Concentration Risk [Member]
Sep. 30, 2015
Customer One [Member]
Total Revenue [Member]
Customer Concentration Risk [Member]
Sep. 30, 2016
Customer One [Member]
Total Revenue [Member]
Customer Concentration Risk [Member]
Sep. 30, 2015
Customer One [Member]
Total Revenue [Member]
Customer Concentration Risk [Member]
Sep. 30, 2016
Customer One [Member]
Accounts Receivable [Member]
Customer Concentration Risk [Member]
Dec. 31, 2015
Customer One [Member]
Accounts Receivable [Member]
Customer Concentration Risk [Member]
Sep. 30, 2016
Customer Two [Member]
Total Revenue [Member]
Customer Concentration Risk [Member]
Sep. 30, 2015
Customer Two [Member]
Total Revenue [Member]
Customer Concentration Risk [Member]
Sep. 30, 2016
Customer Two [Member]
Total Revenue [Member]
Customer Concentration Risk [Member]
Sep. 30, 2015
Customer Two [Member]
Total Revenue [Member]
Customer Concentration Risk [Member]
Sep. 30, 2016
Customer Two [Member]
Accounts Receivable [Member]
Customer Concentration Risk [Member]
Dec. 31, 2015
Customer Two [Member]
Accounts Receivable [Member]
Customer Concentration Risk [Member]
Sep. 30, 2016
Customers Three [Member]
Total Revenue [Member]
Customer Concentration Risk [Member]
Sep. 30, 2015
Customers Three [Member]
Total Revenue [Member]
Customer Concentration Risk [Member]
Dec. 31, 2015
Customers Three [Member]
Accounts Receivable [Member]
Customer Concentration Risk [Member]
Jan. 1, 2016
2014 Equity Plan [Member]
Sep. 30, 2016
2014 Equity Plan [Member]
Jan. 1, 2016
2014 Equity Plan [Member]
Sep. 30, 2016
2014 Equity Plan [Member]
Non-Employee Directors [Member]
Sep. 30, 2016
2014 Equity Plan [Member]
Restricted Stock Units [Member]
Sep. 30, 2016
2014 Equity Plan [Member]
Non-Qualified Stock Options [Member]
Sep. 30, 2016
2014 Equity Plan [Member]
Non-Qualified Stock Options [Member]
Non-Employee Directors [Member]
Sep. 30, 2016
2014 Equity Plan [Member]
Restricted Common Stock [Member]
Non-Employee Directors [Member]
Sep. 30, 2016
2001 Equity Incentive Plan [Member]
Summary Of Significant Accounting Policies [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of customers
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Concentration risk, percentage
 
 
 
 
 
 
 
32.00% 
13.00% 
20.00% 
15.00% 
30.00% 
17.00% 
13.00% 
12.00% 
14.00% 
15.00% 
15.00% 
14.00% 
10.00% 
11.00% 
13.00% 
 
 
 
 
 
 
 
 
 
Stock-based awards granted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
420,284 
 
 
75,152 
 
Stock-based awards granted to purchase common stock
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
259,469 
103,593 
 
 
Stock-based award fair value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 0.2 
$ 0.4 
 
Stock-based award vesting period
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 year 
3 years 
3 years 
 
 
 
Authorized number of shares increased by
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
463,697 
 
 
 
 
 
 
 
 
Increased number of shares available for grant
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,845,219 
6,069,201 
 
 
 
 
 
 
Shares reserved for issuance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,628,813 
 
 
 
 
 
 
93,014 
Number of segment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Warranty expense
$ 0.5 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Significant Accounting Policies - Summary of Stock Based Compensation Included in Cost of Sales or Operating Expenses (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
 
 
 
 
Total stock-based compensation
$ 1,474 
$ 1,476 
$ 4,277 
$ 4,175 
Cost of Product Revenue [Member]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
 
 
 
 
Total stock-based compensation
241 
241 
632 
647 
Research and Development Expenses [Member]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
 
 
 
 
Total stock-based compensation
184 
181 
472 
544 
Sales and Marketing Expenses [Member]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
 
 
 
 
Total stock-based compensation
314 
288 
852 
774 
General and Administrative Expenses [Member]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
 
 
 
 
Total stock-based compensation
$ 735 
$ 766 
$ 2,321 
$ 2,210 
Significant Accounting Policies - Schedule of Total Revenues, Based on Shipment Destination or Research Services Location (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Segment Reporting Information [Line Items]
 
 
 
 
Revenue
$ 29,560 
$ 31,539 
$ 90,099 
$ 85,134 
U.S. [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Revenue
6,850 
12,088 
28,471 
33,810 
International [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Revenue
$ 22,710 
$ 19,451 
$ 61,628 
$ 51,324 
Inventories - Schedule of Inventories (Detail) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2016
Dec. 31, 2015
Inventory Disclosure [Abstract]
 
 
Raw materials
$ 3,862 
$ 4,432 
Finished goods
9,040 
2,100 
Total
$ 12,902 
$ 6,532 
Property, Plant and Equipment, Net - Summary of Property, Plant and Equipment (Detail) (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2016
Dec. 31, 2015
Property, Plant and Equipment [Line Items]
 
 
Property, plant and equipment, gross
$ 151,359 
$ 140,568 
Accumulated depreciation
(69,454)
(62,246)
Property, plant and equipment, net
81,905 
78,322 
Buildings [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Property, plant and equipment, gross
23,901 
23,884 
Property, plant and equipment, Useful life
30 years 
 
Machinery and Equipment [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Property, plant and equipment, gross
109,156 
104,658 
Computer Equipment and Software [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Property, plant and equipment, gross
7,472 
6,888 
Property, plant and equipment, Useful life
3 years 
 
Construction in Progress [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Property, plant and equipment, gross
$ 10,830 
$ 5,138 
Minimum [Member] |
Machinery and Equipment [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Property, plant and equipment, Useful life
3 years 
 
Maximum [Member] |
Machinery and Equipment [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Property, plant and equipment, Useful life
10 years 
 
Property, Plant and Equipment, Net - Additional Information (Detail) (USD $)
9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Dec. 31, 2015
Property, Plant and Equipment [Line Items]
 
 
 
Depreciation expense
$ 7,300,000 
$ 7,400,000 
 
Property, plant and equipment, gross
151,359,000 
 
140,568,000 
Construction in Progress [Member]
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Property, plant and equipment, gross
10,830,000 
 
5,138,000 
Statesboro, Georgia [Member] |
Construction in Progress [Member]
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Property, plant and equipment, gross
$ 6,300,000 
 
$ 2,300,000 
Accrued Expenses - Schedule of Accrued Expenses (Detail) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2016
Dec. 31, 2015
Accrued Liabilities, Current [Abstract]
 
 
Employee compensation
$ 2,452 
$ 4,184 
Other accrued expenses
1,693 
1,384 
Total
$ 4,145 
$ 5,568 
Commitments and Contingencies - Additional Information (Detail) (USD $)
9 Months Ended 0 Months Ended 9 Months Ended 9 Months Ended
Sep. 30, 2016
sqft
Jun. 29, 2016
Cabot II- MA1M03, LLC [Member]
New Lease Agreement [Member]
Jun. 29, 2016
Cabot II- MA1M03, LLC [Member]
New Lease Agreement [Member]
sqft
Sep. 30, 2016
Supply and Joint Development Agreement [Member]
BASF [Member]
Installment
Sep. 30, 2016
Supply and Joint Development Agreement [Member]
BASF [Member]
Maximum [Member]
Sep. 30, 2016
Supply and Joint Development Agreement [Member]
BASF [Member]
Third Party Lender [Member]
Minimum [Member]
Plant Two [Member]
Sep. 30, 2016
Silicon Valley Bank Credit Facility [Member]
Revolving Credit Facility [Member]
Dec. 31, 2015
Silicon Valley Bank Credit Facility [Member]
Revolving Credit Facility [Member]
Sep. 30, 2016
Silicon Valley Bank Credit Facility [Member]
Revolving Credit Facility [Member]
Maximum [Member]
Prime Rate [Member]
Sep. 30, 2016
Silicon Valley Bank Credit Facility [Member]
Revolving Credit Facility [Member]
Maximum [Member]
LIBOR Rate [Member]
Sep. 30, 2016
Silicon Valley Bank Credit Facility [Member]
Revolving Credit Facility [Member]
Minimum [Member]
Prime Rate [Member]
Sep. 30, 2016
Silicon Valley Bank Credit Facility [Member]
Revolving Credit Facility [Member]
Minimum [Member]
LIBOR Rate [Member]
Commitments And Contingencies [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
Supply agreement termination date
 
 
 
Dec. 31, 2027 
 
 
 
 
 
 
 
 
Non-interest bearing prepayment, aggregate amount
 
 
 
$ 22,000,000 
 
 
 
 
 
 
 
 
Number of quarterly installments
 
 
 
 
 
 
 
 
 
 
 
Secured debt, commitment
 
 
 
 
 
30,000,000 
 
 
 
 
 
 
Credit limit percentage on prepayment balance
 
 
 
 
25.30% 
 
 
 
 
 
 
 
Postponed financing costs net
600,000 
 
 
 
 
 
 
 
 
 
 
 
Number of square feet for lease
31,577 
 
51,650 
 
 
 
 
 
 
 
 
 
Expenditures
241,000 
 
 
 
 
 
 
 
 
 
 
 
ARO reserve reclassified to accrued expenses
200,000 
 
 
 
 
 
 
 
 
 
 
 
Line of credit agreement, extended maturity date
 
 
 
 
 
 
Nov. 29, 2016 
 
 
 
 
 
Maximum increased borrowing amount
 
 
 
 
 
 
20,000,000 
 
 
 
 
 
Additional interest rate per annum
 
 
 
 
 
 
 
 
1.75% 
4.25% 
0.75% 
3.75% 
Percentage of unused revolving line facility fee
 
 
 
 
 
 
0.50% 
 
 
 
 
 
Interest rate description
 
 
 
 
 
 
The interest rate applicable to borrowings under the revolving credit facility may be based on the prime rate or LIBOR. Prime rate-based rates vary from prime rate plus 0.75% per annum to prime rate plus 1.75% per annum, while LIBOR-based rates vary from LIBOR plus 3.75% per annum to LIBOR plus 4.25% per annum. 
 
 
 
 
 
Line of credit facility amount withdrawn
 
 
 
 
 
 
 
 
 
 
Letters of credit outstanding
 
 
 
 
 
 
2,500,000 
2,700,000 
 
 
 
 
Line of credit facility borrowing capacity
 
 
 
 
 
 
12,500,000 
 
 
 
 
 
Lease commence date
 
Jan. 01, 2017 
 
 
 
 
 
 
 
 
 
 
Lease end date
 
Dec. 31, 2026 
 
 
 
 
 
 
 
 
 
 
Lease annual base rent
 
408,000 
 
 
 
 
 
 
 
 
 
 
Lease increased percentage
 
3.00% 
 
 
 
 
 
 
 
 
 
 
Lease extended term
 
3 years 
 
 
 
 
 
 
 
 
 
 
Amount receivables as an aid to construction of improvements of the leased premise
 
 
1,200,000 
 
 
 
 
 
 
 
 
 
Leasehold improvement costs capitalized
$ 400,000 
 
 
 
 
 
 
 
 
 
 
 
Commitments and Contingencies - Summary of ARO Activity (Detail) (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2016
Commitments and Contingencies Disclosure [Abstract]
 
Balance at beginning of period
$ 397 
Expenditures
(156)
Settlement of asset retirement obligation
(241)
Balance at end of period
$ 0 
Net Loss Per Share - Computation of Basic and Diluted Net Loss Per Share (Detail) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Numerator:
 
 
 
 
Net loss
$ (3,097)
$ (2,522)
$ (6,281)
$ (8,055)
Denominator:
 
 
 
 
Weighted average shares outstanding, basic and diluted
23,168,251 
23,060,456 
23,114,280 
23,017,822 
Net loss per share, basic and diluted
$ (0.13)
$ (0.11)
$ (0.27)
$ (0.35)
Net Loss Per Share - Summary of Potentially Dilutive Common Shares Excluded from Computation of Diluted Net Loss Per Share (Detail)
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
Anti-dilutive Securities
2,875,233 
1,683,878 
2,875,233 
1,683,878 
Common Stock Options [Member]
 
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
Anti-dilutive Securities
2,044,840 
1,224,279 
2,044,840 
1,224,279 
Restricted Common Stock Units [Member]
 
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
Anti-dilutive Securities
677,001 
405,463 
677,001 
405,463 
Common Stock Warrants [Member]
 
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
Anti-dilutive Securities
115 
131 
115 
131 
Restricted Common Stock Awards [Member]
 
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
Anti-dilutive Securities
153,277 
54,005 
153,277 
54,005