ASPEN AEROGELS INC, 10-K filed on 3/12/2021
Annual Report
v3.20.4
Document and Entity Information - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2020
Mar. 09, 2021
Jun. 30, 2020
Cover [Abstract]      
Document Type 10-K    
Amendment Flag false    
Document Period End Date Dec. 31, 2020    
Document Fiscal Year Focus 2020    
Document Fiscal Period Focus FY    
Trading Symbol ASPN    
Entity Registrant Name ASPEN AEROGELS, INC.    
Entity Central Index Key 0001145986    
Current Fiscal Year End Date --12-31    
Entity Well-known Seasoned Issuer No    
Entity Current Reporting Status Yes    
Entity Voluntary Filers No    
Entity Filer Category Accelerated Filer    
Entity File Number 001-36481    
Entity Tax Identification Number 04-3559972    
Entity Address, Address Line One 30 Forbes Road    
Entity Address, Address Line Two Building B    
Entity Address, City or Town Northborough    
Entity Address, State or Province MA    
Entity Address, Postal Zip Code 01532    
City Area Code 508    
Local Phone Number 691-1111    
Entity Emerging Growth Company false    
Entity Small Business true    
Entity Shell Company false    
ICFR Auditor Attestation Flag true    
Entity Interactive Data Current Yes    
Title of 12(b) Security Common Stock, par value $0.00001 per share    
Security Exchange Name NYSE    
Entity Incorporation, State or Country Code DE    
Document Annual Report true    
Document Transition Report false    
Entity Common Stock, Shares Outstanding   28,301,338  
Entity Public Float     $ 169.5
Documents Incorporated by Reference

 

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive Proxy Statement for its Annual Meeting of Stockholders to be held on June 1, 2021 are incorporated by reference into Part III of this Annual Report on Form 10-K to the extent stated herein.

   
v3.20.4
Consolidated Balance Sheets - USD ($)
$ in Thousands
Dec. 31, 2020
Dec. 31, 2019
Current assets:    
Cash and cash equivalents $ 16,496 $ 3,633
Accounts receivable, net of allowances of $442 and $144 15,698 32,254
Inventories 13,099 8,768
Prepaid expenses and other current assets 1,830 1,114
Total current assets 47,123 45,769
Property, plant and equipment, net 46,739 53,617
Operating lease right-of-use assets 3,478 4,032
Other long-term assets 84 84
Total assets 97,424 103,502
Current liabilities:    
Accounts payable 5,351 12,596
Accrued expenses 3,884 8,057
Current portion of long-term debt 1,609  
Revolving line of credit   3,123
Deferred revenue 2,037 5,620
Operating lease liabilities 1,046 1,038
Total current liabilities 13,927 30,434
Prepayment liability 9,555 9,786
Long-term debt 2,059  
Operating lease liabilities long-term 3,597 4,292
Other long-term liabilities 434  
Total liabilities 29,572 44,512
Commitments and contingencies (Note 11)
Stockholders' equity:    
Preferred stock, $0.00001 par value; 5,000,000 shares authorized, no shares issued or outstanding at December 31, 2020 and 2019
Common stock, $0.00001 par value; 125,000,000 shares authorized, 27,821,685 and 24,302,504 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively   0
Additional paid-in capital 575,811 545,140
Accumulated deficit (507,959) (486,150)
Total stockholders' equity 67,852 58,990
Total liabilities and stockholders' equity $ 97,424 $ 103,502
v3.20.4
Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Thousands
Dec. 31, 2020
Dec. 31, 2019
Statement Of Financial Position [Abstract]    
Allowance for accounts receivables $ 442 $ 144
Preferred stock, par value $ 0.00001 $ 0.00001
Preferred stock, shares authorized 5,000,000 5,000,000
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
Common stock, par value $ 0.00001 $ 0.00001
Common stock, shares authorized 125,000,000 125,000,000
Common stock, shares issued 27,821,685 24,302,504
Common stock, shares outstanding 27,821,685 24,302,504
v3.20.4
Consolidated Statements of Operations - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Revenue:      
Total revenue $ 100,273 $ 139,375 $ 104,361
Cost of revenue:      
Gross profit 14,594 26,284 12,669
Operating expenses:      
Research and development 8,729 8,407 6,319
Sales and marketing 11,753 15,557 13,794
General and administrative 15,681 16,479 19,116
Impairment of construction in progress     7,356
Total operating expenses 36,163 40,443 46,585
Loss from operations (21,569) (14,159) (33,916)
Interest expense, net (240) (406) (524)
Total interest expense, net (240) (406) (524)
Net loss $ (21,809) $ (14,565) $ (34,440)
Net loss per share:      
Basic and diluted $ (0.83) $ (0.60) $ (1.45)
Weighted-average common shares outstanding:      
Basic and diluted 26,377,652 24,099,438 23,738,852
Product [Member]      
Revenue:      
Total revenue $ 99,834 $ 136,934 $ 102,123
Cost of revenue:      
Cost of revenue 85,545 111,759 90,660
Research Services [Member]      
Revenue:      
Total revenue 439 2,441 2,238
Cost of revenue:      
Cost of revenue $ 134 $ 1,332 $ 1,032
v3.20.4
Consolidated Statements of Stockholders' Equity - USD ($)
$ in Thousands
Total
Underwritten Public Offering [Member]
At The Market Offering [Member]
Common Stock 0.00001 Par Value [Member]
Common Stock 0.00001 Par Value [Member]
Underwritten Public Offering [Member]
Common Stock 0.00001 Par Value [Member]
At The Market Offering [Member]
Additional Paid-in Capital [Member]
Additional Paid-in Capital [Member]
Underwritten Public Offering [Member]
Additional Paid-in Capital [Member]
At The Market Offering [Member]
Accumulated Deficit [Member]
Beginning balance at Dec. 31, 2017 $ 100,943           $ 538,088     $ (437,145)
Beginning balance, shares at Dec. 31, 2017       23,643,189            
Net loss (34,440)                 (34,440)
Stock compensation expense 4,302           4,302      
Issuance of restricted stock, shares       58,062            
Vesting of restricted stock units (551)           (551)      
Vesting of restricted stock units, shares       272,266            
Ending balance at Dec. 31, 2018 70,254           541,839     (471,585)
Ending balance, shares at Dec. 31, 2018       23,973,517            
Net loss (14,565)                 (14,565)
Stock compensation expense 3,771           3,771      
Issuance of restricted stock, shares       50,328            
Vesting of restricted stock units (470)           (470)      
Vesting of restricted stock units, shares       278,659            
Ending balance at Dec. 31, 2019 58,990           545,140     (486,150)
Ending balance, shares at Dec. 31, 2019       24,302,504            
Net loss (21,809)                 (21,809)
Stock compensation expense 5,004           5,004      
Issuance of restricted stock, shares       45,066            
Vesting of restricted stock units (1,219)           (1,219)      
Vesting of restricted stock units, shares       344,158            
Proceeds from employee stock option exercises $ 2,661           2,661      
Proceeds from employee stock option exercises, shares 460,600     460,600            
Proceeds from offering, net   $ 14,751 $ 9,474         $ 14,751 $ 9,474  
Proceeds from offering, net, shares         1,955,000 714,357        
Ending balance at Dec. 31, 2020 $ 67,852           $ 575,811     $ (507,959)
Ending balance, shares at Dec. 31, 2020       27,821,685            
v3.20.4
Consolidated Statements of Stockholders' Equity (Parenthetical)
$ in Thousands
12 Months Ended
Dec. 31, 2020
USD ($)
Underwritten Public Offering [Member]  
Underwriting discounts and commissions $ 1,093
Issuance costs 285
At The Market Offering [Member]  
Issuance costs 199
commissions and fees $ 299
v3.20.4
Consolidated Statements of Cash Flows - USD ($)
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Cash flows from operating activities:      
Net loss $ (21,809,000) $ (14,565,000) $ (34,440,000)
Adjustments to reconcile net loss to net cash used in operating activities:      
Depreciation 10,198,000 10,213,000 10,787,000
Impairment of construction in process     7,356,000
Amortization of debt issuance costs 9,000    
Provision for bad debt 325,000 0 2,922,000
Stock compensation expense 5,004,000 3,771,000 4,302,000
Reduction in the carrying amount of operating lease right-of-use assets 971,000 947,000  
Lease incentives     (121,000)
Changes in operating assets and liabilities:      
Accounts receivable 16,231,000 (6,689,000) (1,723,000)
Inventories (4,331,000) (1,450,000) 1,597,000
Prepaid expenses and other assets (716,000) (84,000) 261,000
Accounts payable (7,149,000) 141,000 1,557,000
Accrued expenses (4,173,000) 4,344,000 (2,056,000)
Deferred revenue (3,814,000) 3,392,000 810,000
Operating lease liabilities (1,104,000) (1,018,000)  
Other liabilities 434,000 (56,000) 94,000
Net cash used in operating activities (9,924,000) (1,054,000) (8,654,000)
Cash flows from investing activities:      
Capital expenditures (3,416,000) (2,112,000) (3,593,000)
Net cash used in investing activities (3,416,000) (2,112,000) (3,593,000)
Cash flows from financing activities:      
Proceeds from issuance of long-term debt 3,686,000    
Issuance costs from long-term debt (27,000)    
Prepayment proceeds under customer supply agreement   5,000,000 5,000,000
Proceeds from employee stock option exercises 2,661,000    
Payments made for employee restricted stock tax withholdings (1,219,000) (470,000) (551,000)
Proceeds from (repayments of) borrowings under line of credit, net (3,123,000) (1,058,000) 431,000
Net cash provided by financing activities 26,203,000 3,472,000 4,880,000
Net increase (decrease) in cash 12,863,000 306,000 (7,367,000)
Cash and cash equivalents at beginning of period 3,633,000 3,327,000 10,694,000
Cash and cash equivalents at end of period 16,496,000 3,633,000 3,327,000
Supplemental disclosures of cash flow information:      
Interest paid 216,000 440,000 338,000
Income taxes paid 0 0 0
Supplemental disclosures of non-cash activities:      
Initial recognition of operating lease liabilities related to right-of-use assets   5,995,000  
Right-of-use assets obtained in exchange for new operating lease liabilities 417,000 353,000  
Changes in accrued capital expenditures (96,000) $ 63,000 182,000
Capitalized interest     $ 44,000
Underwritten Public Offering [Member]      
Cash flows from financing activities:      
Proceeds from offering, net 15,036,000    
Issuance costs (285,000)    
At The Market Offering [Member]      
Cash flows from financing activities:      
Proceeds from offering, net 9,673,000    
Issuance costs $ (199,000)    
v3.20.4
Consolidated Statements of Cash Flows (Parenthetical)
$ in Thousands
12 Months Ended
Dec. 31, 2020
USD ($)
Underwritten Public Offering [Member]  
Underwriting discounts and commissions, net $ 1,093
At The Market Offering [Member]  
Commissions and fees net $ 299
v3.20.4
Description of Business
12 Months Ended
Dec. 31, 2020
Organization Consolidation And Presentation Of Financial Statements [Abstract]  
Description of Business

(1) Description of Business

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. In addition, the Company is developing high value applications for its aerogel technology in the electric vehicle market. The Company also conducts research related to aerogel technology supported by funding from several agencies of the U.S. government and other institutions in the form of research contracts. The Company has decided to cease efforts to secure additional funded research contracts and to wind down existing contract research activities.

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.

On June 18, 2014, the Company completed the initial public offering (IPO) of its common stock.

Liquidity

During the year ended December 31, 2020, the Company incurred a net loss of $21.8 million and used $9.9 million of cash in operations. On February 18, 2020, the Company received net proceeds of $14.8 million upon the completion of an underwritten public offering of the Company’s common stock. On May 4, 2020, Aspen Aerogels Rhode Island, LLC received loan proceeds of $3.7 million upon the execution of a promissory note pursuant to the Paycheck Protection Program (PPP) established by the Coronavirus Aid, Relief and Economic Security Act (CARES Act) and administered by the U.S. Small Business Administration (SBA) (see note 8). During November and December 2020, the Company received net proceeds of $9.5 million through an at-the-market offering of the Company’s stock. The Company had cash and cash equivalents of $16.5 million, total debt of $3.7 million and no outstanding borrowings under its revolving line of credit as of December 31, 2020 (see note 7). After giving effect to the $1.4 million of outstanding letters of credit, the amount available to the Company at December 31, 2020 under the revolving line of credit was $5.4 million. The existing revolving line of credit matures on April 28, 2022.

The Company is increasing investment in the research and development of next-generation aerogel products and manufacturing process technologies. The Company is continuing to develop aerogel products and technologies for the electric vehicle market. The commercial potential for the Company’s technology in the electric vehicle market is significant and could require the Company to hire additional personnel, incur additional operating expenses, and incur capital expenditures to expand aerogel manufacturing capacity, build an automated fabrication operation, and construct a battery materials facility, among other items.

The Company expects its existing cash balance and the amount anticipated to be available under the existing revolving line of credit will be sufficient to support current operating requirements and research and development activities. However, the Company plans to supplement its cash balance and available credit with debt financings, customer prepayments, technology licensing fees or equity financings to provide the capital necessary to fund the evolving commercial opportunity in the electric vehicle market and other strategic business opportunities.

v3.20.4
Summary of Basis of Presentation and Significant Accounting Policies
12 Months Ended
Dec. 31, 2020
Accounting Policies [Abstract]  
Summary of Basis of Presentation and Significant Accounting Policies

(2) Summary of Basis of Presentation and Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (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 current economic conditions, which are believed to be reasonable under the circumstances. Management adjusts such estimates and assumptions when facts and circumstances warrant. Illiquid credit markets, volatile equity markets and declines in business investment can 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

Financial instruments, which potentially expose the Company to concentrations of credit risk, consist principally of accounts receivable. The Company’s customers are primarily insulation distributors, insulation contractors, insulation fabricators and select end-users located throughout the world. The Company performs ongoing credit evaluations of its customers’ financial condition and generally requires no collateral to secure accounts receivable. The Company maintains an allowance for doubtful accounts based on its assessment of the collectability of accounts receivable. The Company reviews the allowance for doubtful accounts quarterly. During the year ended December 31, 2020, the Company recorded a charge for estimated customer uncollectible accounts receivable of $0.3 million. During the year ended December 31, 2019, the Company did not record any charges for uncollectible accounts receivable. During the year ended December 31, 2018, the Company recorded a charge for uncollectible accounts receivable of $2.9 million related to four customers of which one customer accounted for $2.8 million. During the year ended December 31, 2019, the Company received collections of $0.3 million from this customer. The Company subsequently determined that collection of the remaining unpaid accounts receivable from this customer of $2.6 million was unlikely due to the customer’s filing of judicial reorganization under Brazilian laws. Therefore, the Company recorded a write-off of the accounts receivable and the corresponding allowance for doubtful accounts. During 2020, the Company established an estimated reserve for uncollectible accounts receivable for $0.3 million. Allowance for doubtful accounts was $0.3 million and zero at December 31, 2020 and 2019, respectively. The Company does not have any off-balance-sheet credit exposure related to its customers.

For the year ended December 31, 2020, two customers represented 21% and 15% of total revenue, respectively. For the year ended December 31, 2019, two customers represented 20% and 13% of total revenue, respectively. For the year ended December 31, 2018, one customer represented 20% of total revenue

At December 31, 2020, the Company had one customer which accounted for 26% of accounts receivable. At December 31, 2019, the Company had two customers that accounted for 19% and 16% of accounts receivable, respectively.

Inventories

Inventory consists of finished products and raw materials. Inventories are carried at lower of cost, determined using the first-in, first-out (FIFO) method, and net realizable value. Cost includes materials, labor and manufacturing overhead. Manufacturing overhead is allocated to the costs of conversion based on normal capacity of the Company’s production facility. Abnormal freight, handling costs and material waste is expensed in the period it occurs.

The Company periodically reviews its inventories and makes provisions as necessary for estimated excess, obsolete or damaged goods to ensure values approximate the lower of cost and net realizable value. The amount of any such provision is equal to the difference between the cost of inventory and the estimated net realizable value based upon assumptions about future demand, selling prices and market conditions.

Property, Plant and Equipment, Net

Property, plant and equipment are stated at cost. Expenditures for maintenance and repairs are charged to expense as incurred. Expenditures for major betterments are capitalized as additions to property, plant and equipment.

Depreciation on plant and equipment is calculated on the straight-line method over the estimated useful lives of the assets. Assets related to leasehold improvements are amortized on a straight-line basis over the shorter of the lease term or estimated useful life of the asset.

Assets utilized in the Company’s operations that are taken out of service with no future use are charged to cost of revenue or operating expenses, depending on the department in which the asset was utilized. Impairments of construction in progress are charged to operating expenses upon the determination of no future use.

Other Assets

Other assets primarily include long-term deposits.

Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recognition and measurement of a potential impairment is performed on assets grouped with other assets and liabilities at the lowest level where identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset or asset group to future undiscounted net cash flows expected to be generated by the asset or asset group. If the carrying amount of an asset or asset group exceeds its estimated undiscounted future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset or asset group exceeds the fair value of the asset or asset group. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary.

During 2016, the Company completed the design and engineering for a second manufacturing facility to be located in Statesboro, Georgia. At that time, the Company elected to delay construction of the facility due to its assessment of future demand. In December 2018, the Company determined that due to its cumulative manufacturing process advancements since 2016 and expected additional improvements in the near future, it would not use the existing design and engineering to construct a second facility in any location. Accordingly, the Company determined that the design and engineering costs were not recoverable and recorded an impairment charge of $7.4 million on construction in progress assets during 2018.

Leases

On January 1, 2019, the Company adopted Accounting Standards Update (ASU) 2016-02, Leases (Topic 842). See note 10 for further details.

Revenue Recognition

The Company recognizes revenue in accordance with Accounting Standards Codification 606, Revenue from Contracts with Customers (ASC 606). See note 3 for further details.

Warranty

The Company provides warranties for its products and records the estimated cost within cost of revenue in the period that the related revenue is recorded. The Company’s standard warranty period extends to one year from the date of shipment. This standard warranty provides 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.

The Company’s products may be utilized in systems that involve new technical demands and new configurations. Accordingly, the Company regularly reviews and assesses whether warranty reserves should be recorded in the period the related revenue is recorded. For an initial shipment of product for use in a system with new technical demands or new configurations and 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.

The Company did not record any warranty expense during the years ended December 31, 2020, 2019 and 2018.

Shipping and Handling Costs

Shipping and handling costs are classified as a component of cost of revenue. Customer payments of shipping and handling costs are recorded as product revenue.

Stock-based Compensation

The Company grants share-based awards to its employees and non-employee directors. All share-based awards granted, including grants of stock options, restricted stock and restricted stock units (RSUs), are recognized in the statement of operations based on their fair value as of the date of grant. 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. The Black-Scholes model requires the use of 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 RSUs is determined using the closing price of the Company’s common stock on the date of grant. All shares of restricted stock are not transferable until vested. Restricted stock is typically issued to non-employee directors and typically vests over a one-year period from the date of issuance. RSUs are issued to employees and typically vest over a three-year period from the date of issuance. The fair value of restricted stock and RSUs upon which vesting is solely service-based is expensed ratably over the vesting period. If the service condition for shares of restricted stock is not met for any reason, the shares of unvested restricted stock will be forfeited and returned to the Company.

For stock options that contain a market condition, the Company uses the Monte-Carlo simulation option-pricing model to determine the fair value of the awards. In addition to the input assumptions used in the Black-Scholes model, the Monte-Carlo simulation option-pricing model factors the probability that the specific market condition may or may not be satisfied into the valuation. Stock-based compensation expense for awards with a market condition is recognized on a straight-line basis over the requisite service period for each such award.

Pursuant to the “evergreen” provisions of the 2014 Employee, Director and Consultant Equity Incentive Plan, the number of shares of common stock authorized for issuance under the plan automatically increased by 486,050 shares to 7,974,980 shares effective January 1, 2020.

Research and Development

Costs incurred in the Company’s research and development activities include compensation and related costs, services provided by third-party contractors, materials and supplies and are classified as research and development expenses as incurred. Research and development costs directly associated with research services revenue are classified as research services in cost of revenue.

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 income (loss) gives effect to all potentially dilutive common equivalent shares, including outstanding stock options and RSUs. Common equivalent shares are excluded from the computation of diluted net loss per share if their effect is antidilutive.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using

enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. The Company accounts for uncertain tax positions using a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Differences between tax positions taken in a tax return and amounts recognized in the financial statements are recorded as adjustments to income taxes payable or receivable, or adjustments to deferred taxes, or both. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company recognizes penalties and interest related to uncertain tax positions, if any, as a component of income tax expense.

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 presently 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:

 

 

 

Year Ended December 31,

 

 

 

2020

 

 

2019

 

 

2018

 

 

 

(In thousands)

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

$

44,842

 

 

$

58,328

 

 

$

41,733

 

International

 

 

55,431

 

 

 

81,047

 

 

 

62,628

 

Total revenue

 

$

100,273

 

 

$

139,375

 

 

$

104,361

 

 

Recently Issued Accounting Standards

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies. Recently issued standards typically do not require adoption until a future effective date. Prior to their effective date, the Company evaluates the pronouncements to determine the potential effects of adoption to its consolidated financial statements.

Standards Implemented Since December 31, 2019

The Company has not implemented any accounting standards that had a material impact on its consolidated financial statements during the year ended December 31, 2020.

Standards to be Implemented After December 31, 2020

The Company believes that the impact of recently issued accounting standards that are not yet effective will not have a material impact on its consolidated financial statements.

v3.20.4
Revenue from Contracts with Customers
12 Months Ended
Dec. 31, 2020
Revenue From Contract With Customer [Abstract]  
Revenue from Contracts with Customers

(3) Revenue from Contracts with Customers

Revenue Recognition

Revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements within the scope of ASC 606, the Company performs the following five steps: (i) identification of the contract with a customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the separate performance obligations in the contract; and (v) recognition of the revenue associated with

performance obligations as they are satisfied. The Company applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price based on the estimated relative standalone-selling prices of the promised products or services underlying each performance obligation. The Company determines standalone-selling prices based on the price at which the performance obligation is sold separately. If the standalone-selling price is not observable through past transactions, the Company estimates the standalone-selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

When determining the transaction price of a contract, an adjustment is made if payment from a customer occurs either significantly before or significantly after performance, resulting in a significant financing component. Applying the practical expedient in paragraph ASC 606-10-32-18, the Company does not assess whether a significant financing component exists if the period between when the Company performs its obligations under the contract and when the customer pays is one year or less. The Company did not have any contracts outstanding at both December 31, 2019 and December 31, 2018 and did not enter into any contracts during each of the years ended December 31, 2020 and 2019 that contained a significant financing component.

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 the completion of required performance obligations.

Shipping and Handling Costs

Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as fulfillment costs and are included in the cost of product revenue. The associated amount of revenue recognized includes the consideration to which the Company expects to be entitled to receive in exchange for incurring these shipping and handling costs.

Product Revenue

The Company generally enters into contracts containing one type of performance obligation. The Company recognizes product revenue when the performance obligation is satisfied, which is generally upon delivery according to contractual shipping terms within customer purchase orders.

The Company also enters into rebate agreements with certain customers. These agreements may be considered an additional performance obligation of the Company or variable consideration within a contract. Rebates are recorded as a reduction of revenue in the period the related product revenue is recognized. A corresponding liability is recorded as a component of deferred revenue on the consolidated balance sheets. These arrangements are primarily based on the customer attaining contractually specified sales volumes.

The Company estimates the amount of its product sales that may be returned by its customers and records this estimate as a reduction of revenue in the period the related product revenue is recognized. The Company currently estimates product return liabilities using historical rates of return, current quarter credit sales, and specific items of exposure on a contract-by-contract basis. Sales return reserves were approximately $0.1 million at both Decembers 31, 2020 and December 31, 2019.

Subsea Projects

The Company manufactures and sells subsea products that are designed for pipe-in-pipe applications in offshore oil production and are typically customized to meet customer specifications. Subsea products typically have no alternative use and contain an enforceable right to payment. Customer invoicing terms for subsea products are typically based on certain milestones within the production and delivery schedule. Under the provisions of ASC 606, the Company recognizes revenue at a point in time when transfer of control of the products is passed to the customer, or over time utilizing the input method. The timing of revenue recognition is assessed on a contract-by-contract basis. During the years ended December 31, 2020, 2019, and 2018 the Company recognized revenue of $9.7 million, $17.0 million, and $8.1 million respectively, in connection with subsea projects.

Research Services

The Company performs research services under contracts with various government agencies and other institutions. These contracts generally have one type of performance obligation associated with the provision of research services including certain licenses to any resulting intellectual property. The Company records revenue 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 under the Company’s research service contracts is the labor expended in completing the research. Typically, the only deliverable, other than the labor hours expended, is reporting research results to the customer or delivery of research grade aerogel products. 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 toward 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 within the period they become known. To date, adjustments to revenue as a result of contracting agency audits have been insignificant.

Disaggregation of Revenue

In the following tables, revenue is disaggregated by primary geographical region and source of revenue:

 

 

December 31, 2020

 

 

 

U.S.

 

 

International

 

 

Total

 

 

 

(In thousands)

 

Geographical region

 

 

 

 

 

 

 

 

 

 

 

 

Asia

 

$

 

 

$

38,403

 

 

$

38,403

 

Canada

 

 

 

 

 

986

 

 

 

986

 

Europe

 

 

 

 

 

13,881

 

 

 

13,881

 

Latin America

 

 

 

 

 

2,161

 

 

 

2,161

 

U.S.

 

 

44,842

 

 

 

 

 

 

44,842

 

Total revenue

 

$

44,842

 

 

$

55,431

 

 

$

100,273

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Source of revenue

 

 

 

 

 

 

 

 

 

 

 

 

Product revenue

 

$

42,416

 

 

$

47,678

 

 

$

90,094

 

Subsea projects

 

 

1,987

 

 

 

7,753

 

 

 

9,740

 

Research services

 

 

439

 

 

 

 

 

 

439

 

Total revenue

 

$

44,842

 

 

$

55,431

 

 

$

100,273

 

 

 

 

December 31, 2019

 

 

 

U.S.

 

 

International

 

 

Total

 

 

 

(In thousands)

 

Geographical region

 

 

 

 

 

 

 

 

 

 

 

 

Asia

 

$

 

 

$

44,485

 

 

$

44,485

 

Canada

 

 

 

 

 

9,064

 

 

 

9,064

 

Europe

 

 

 

 

 

24,081

 

 

 

24,081

 

Latin America

 

 

 

 

 

3,417

 

 

 

3,417

 

U.S.

 

 

58,328

 

 

 

 

 

 

58,328

 

Total revenue

 

$

58,328

 

 

$

81,047

 

 

$

139,375

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Source of revenue

 

 

 

 

 

 

 

 

 

 

 

 

Product revenue

 

$

52,050

 

 

$

67,856

 

 

$

119,906

 

Subsea projects

 

 

3,837

 

 

 

13,191

 

 

 

17,028

 

Research services

 

 

2,441

 

 

 

 

 

 

2,441

 

Total revenue

 

$

58,328

 

 

$

81,047

 

 

$

139,375

 

 

 

 

 

December 31, 2018

 

 

 

U.S.

 

 

International

 

 

Total

 

 

 

(In thousands)

 

Geographical region

 

 

 

 

 

 

 

 

 

 

 

 

Asia

 

$

 

 

$

34,597

 

 

$

34,597

 

Canada

 

 

 

 

 

4,749

 

 

 

4,749

 

Europe

 

 

 

 

 

19,905

 

 

 

19,905

 

Latin America

 

 

 

 

 

3,377

 

 

 

3,377

 

U.S.

 

 

41,733

 

 

 

 

 

 

41,733

 

Total revenue

 

$

41,733

 

 

$

62,628

 

 

$

104,361

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Source of revenue

 

 

 

 

 

 

 

 

 

 

 

 

Product revenue

 

$

39,490

 

 

$

54,487

 

 

$

93,977

 

Subsea projects

 

 

5

 

 

 

8,141

 

 

 

8,146

 

Research services

 

 

2,238

 

 

 

 

 

 

2,238

 

Total revenue

 

$

41,733

 

 

$

62,628

 

 

$

104,361

 

 

Contract Balances

The following table presents changes in the Company’s contract assets and contract liabilities during the year ended December 31, 2020:

 

 

Balance at

December 31,

2019

 

 

Additions

 

 

Deductions

 

 

Balance at

December 31,

2020

 

 

 

(In thousands)

 

Contract assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subsea projects

 

$

2,811

 

 

$

9,424

 

 

$

(10,865

)

 

$

1,370

 

Research services

 

 

172

 

 

 

207

 

 

 

(312

)

 

 

67

 

Total contract assets

 

$

2,983

 

 

$

9,631

 

 

$

(11,177

)

 

$

1,437

 

Contract liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product revenue

 

$

4,991

 

 

$

1,162

 

 

$

(4,294

)

 

$

1,859

 

Subsea projects

 

 

491

 

 

 

4,835

 

 

 

(5,148

)

 

 

178

 

Research services

 

 

138

 

 

 

94

 

 

 

(232

)

 

 

 

Prepayment liability

 

 

9,786

 

 

 

 

 

 

(231

)

 

 

9,555

 

Total contract liabilities

 

$

15,406

 

 

$

6,091

 

 

$

(9,905

)

 

$

11,592

 

During the year ended December 31, 2020, the Company recognized $4.6 million of revenue that was included in deferred revenue at December 31, 2019.

A contract asset is recorded when the Company satisfies a performance obligation by transferring a promised good or service and has earned the right to consideration from its customer. These assets may represent a conditional or unconditional right to consideration and are included within accounts receivable on the consolidated balance sheets.

A contract liability is recorded when consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or services under the terms of the contract. Contract liabilities are recognized as revenue after control of the products or services is transferred to the customer and all revenue recognition criteria have been met. 

v3.20.4
Inventories
12 Months Ended
Dec. 31, 2020
Inventory Disclosure [Abstract]  
Inventories

(4) Inventories

Inventories consist of the following:

 

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

 

(In thousands)

 

Raw material

 

$

4,068

 

 

$

4,334

 

Finished goods

 

 

9,031

 

 

 

4,434

 

Total

 

$

13,099

 

 

$

8,768

 

 

v3.20.4
Property, Plant and Equipment, Net
12 Months Ended
Dec. 31, 2020
Property Plant And Equipment [Abstract]  
Property, Plant and Equipment, Net

(5) Property, Plant and Equipment, Net

Property, plant and equipment consist of the following:

 

 

 

December 31,

 

 

 

 

 

2020

 

 

2019

 

 

Useful life

 

 

(In thousands)

 

 

 

Construction in progress

 

$

1,906

 

 

$

1,309

 

 

Buildings

 

 

24,016

 

 

 

24,016

 

 

30 years

Machinery and equipment

 

 

124,807

 

 

 

122,485

 

 

3 — 10 years

Computer equipment and software

 

 

8,850

 

 

 

8,556

 

 

3 years

Total

 

 

159,579

 

 

 

156,366

 

 

 

Accumulated depreciation and amortization

 

 

(112,840

)

 

 

(102,749

)

 

 

Property, plant and equipment, net

 

$

46,739

 

 

$

53,617

 

 

 

Depreciation expense was $10.2 million, $10.2 million and $10.8 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Construction in progress totaled $1.9 million and $1.3 million at December 31, 2020 and 2019, respectively, associated with the Company’s East Providence, Rhode Island facility.

v3.20.4
Accrued Expenses
12 Months Ended
Dec. 31, 2020
Payables And Accruals [Abstract]  
Accrued Expenses

(6) Accrued Expenses

Accrued expenses consist of the following:

 

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

 

(In thousands)

 

Employee compensation

 

$

2,587

 

 

$

6,472

 

Other accrued expenses

 

 

1,297

 

 

 

1,585

 

Total

 

$

3,884

 

 

$

8,057

 

v3.20.4
Revolving Line of Credit
12 Months Ended
Dec. 31, 2020
Debt Disclosure [Abstract]  
Revolving Line of Credit

(7) Revolving Line of Credit

The Company is party to an Amended and Restated Loan and Security Agreement with Silicon Valley Bank (Loan Agreement). On March 3, 2020, the Loan Agreement was amended to extend the maturity date of the revolving credit facility to April 28, 2021.The Company further amended the Loan Agreement to revise the minimum Adjusted EBITDA financial convent on September 25, 2020 and to secure a preemptive waiver of the Adjusted EBITDA financial convent on December 24, 2020, among other things. On March 12, 2021, the Loan Agreement was amended and restated to extend the maturity date of the revolving credit facility to April 28, 2022 and to establish certain minimum Adjusted EBITDA levels and minimum Adjusted Quick Ratio covenants, as defined.

Under the revolving credit facility, the Company is permitted to borrow a maximum of $20.0 million, subject to continued covenant compliance and borrowing base requirements. The interest rate applicable to borrowings under the revolving credit facility is based on prime rate, subject to a minimum rate of 4.00% per annum. Prime rate-based rates vary from prime rate plus 0.75% per annum to prime rate plus 2.00% per annum. In addition, the Company is required to pay a monthly unused revolving line facility fee of 0.50% per annum of the average unused portion of the revolving credit facility.

Under the Loan Agreement, the Company is required to comply with both non-financial and financial covenants, including a minimum Adjusted EBITDA covenant, as defined. At December 31, 2020, the Company was in compliance with all such covenants. Obligations under the Loan Agreement are secured by a security interest in all assets of the Company, including those at the East Providence facility, except for certain exclusions. The Company intends to extend or replace the facility prior to its maturity.

During the year ended December 31, 2020, the Company borrowed $19.4 million and repaid $22.6 million under the line of credit. At December 31, 2020 the Company had no amounts drawn from the revolving credit facility. At December 31, 2019 the Company had $3.1 million drawn from the revolving credit facility.

The Company has provided letters of credit to secure obligations under certain commercial contracts and other obligations. The Company had outstanding letters of credit backed by the revolving credit facility of $1.4 million and $0.9 million at December 31, 2020 and 2019, respectively, which reduce the funds otherwise available to the Company under the facility.

At December 31, 2020, the amount available to the Company under the revolving credit facility was $5.4 million after giving effect to the $1.4 million of outstanding letters of credit.

v3.20.4
Debt
12 Months Ended
Dec. 31, 2020
Debt Disclosure [Abstract]  
Debt

(8) Debt

On May 1, 2020, Aspen Aerogels Rhode Island, LLC (Borrower) executed a promissory note (Note) in favor of Northeast Bank to receive an unsecured loan in the principal amount of $3.7 million (the PPP Loan) pursuant to the Paycheck Protection Program (PPP) established by the CARES Act, as amended by the Paycheck Protection Program Flexibility Act (Flexibility Act), and administered by the SBA. The Borrower conferred with representatives of the SBA prior to finalizing the PPP Loan. The PPP Loan was subsequently sold by Northeast Bank to The Loan Source, Inc. (PPP Investor), a secondary market investor.

The PPP Loan carries an interest rate of 1% per year and matures two years from the date of the Note. The PPP Loan indebtedness may be forgiven in whole or in part upon application by the Borrower to the PPP Investor. The PPP Investor will determine to what extent the PPP Loan is eligible for forgiveness, subject to SBA guidelines and other regulations, based on the use of loan proceeds for payroll costs, payment of interest on covered mortgage obligations, rent and utility costs over either an eight-week or 24-week period, at the Borrower’s option, following the Borrower’s receipt of the loan proceeds. Upon the Borrower’s application for forgiveness, the SBA will review the Borrower’s eligibility, use of proceeds and other certifications in connection with the application for the PPP Loan. Upon such review, the SBA may approve or deny the Borrower’s loan forgiveness application, in whole or in part. As of December 31, 2020, the Borrower had not applied for forgiveness.

If the Borrower has not applied for forgiveness within ten months from the end of the 24-week period following receipt of the loan proceeds, the Borrower will be required make payments of principal and accrued interest in equal monthly installments over the remaining term of the loan. In addition, the Flexibility Act permits the Borrower and the PPP Investor to mutually agree to extend the term of the PPP Loan to five years from the date of the Note. The Borrower may repay the PPP Loan at any time without penalty.

While the Borrower is not required to apply for forgiveness of the PPP Loan, upon application for forgiveness, the Borrower may not receive forgiveness of the PPP Loan in whole or in part. In addition, the amount of potential loan forgiveness may be reduced if the Borrower failed to maintain employee and salary levels during the applicable eight-week or 24-week period following receipt of the loan proceeds. If the Borrower applies for forgiveness, and the PPP Loan is not forgiven in whole or in part, the Borrower will be required to make payments of principal and accrued interest in equal monthly installments over the remaining term of the loan for the post-forgiveness balance outstanding.

The Note contains customary events of default relating to, among other things, payment defaults, breaches of representations and warranties, and defaults under any loan or agreement with another debtor, including the Company’s credit facility with SVB, to the extent the PPP Investor believes such default may materially affect the Borrower’s ability to repay the PPP Loan. The occurrence of an event of default, if not cured, may result in the Borrower’s repayment of the PPP Loan prior to maturity.

The Borrower has used the proceeds of the PPP Loan to support ongoing operations and to sustain staffing levels in its East Providence, Rhode Island manufacturing facility despite the unfavorable impact of the COVID-19 pandemic and volatile energy markets on its business.

 

 

 

Long-term debt consists of the following:

 

 

 

December 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

 

(In thousands)

 

Long-term debt, principal

 

$

3,686

 

 

$

 

Current portion of long-term debt

 

 

(1,609

)

 

 

 

Debt issuance costs, net of accumulated amortization

 

 

(18

)

 

 

 

Long-term debt

 

$

2,059

 

 

$

 

 

 

 

 

 

 

 

 

 

 

The schedule of required principal payments remaining on long-term debt outstanding as of December 31, 2020 is as follows:

 

Year

 

Principal

Payments

 

 

 

(In thousands)

 

2021

 

 

1,609

 

2022

 

 

2,077

 

Total principal payments

 

$

3,686

 

 

v3.20.4
Interest Expense, Net
12 Months Ended
Dec. 31, 2020
Interest Income Expense Net [Abstract]  
Interest Expense, net

(9) Interest Expense, net

For the years ended December 31, 2020, 2019, and 2018, interest expense, net was $0.2 million, $0.4 million, and $0.5 million, respectively, and consisted primarily of fees and interest expense related to the Company’s revolving credit facility with Silicon Valley Bank.

v3.20.4
Leases
12 Months Ended
Dec. 31, 2020
Leases [Abstract]  
Leases

(10) Leases

The Company leases office and warehouse space in Northborough, Massachusetts and East Providence, Rhode Island under operating leases. Under these agreements, the Company is obligated to pay annual rent, real estate taxes, and certain other operating expenses. The Company also leases equipment under operating leases. The Company’s operating leases expire at various dates through 2026.

On January 1, 2019, the Company adopted ASU 2016-02 which modified the accounting for leases and required that all leases be recorded on the consolidated balance sheets as assets and liabilities. The Company adopted this standard using the modified retrospective transition approach with the effective date as the date of initial application. The Company also elected the package of practical expedients under the new standard, which permitted the Company to not reassess prior conclusions about lease identification, lease classification, and initial direct costs. In addition, the Company elected the short-term lease recognition exemption under which the Company will not recognize ROU assets or lease liabilities for all leases that qualify. The Company also elected the practical expedient to not separate non-lease components from the associated lease components for all of its equipment leases.

The Company determines if an arrangement is a lease at inception. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s payment obligations under the lease. Operating lease ROU assets and liabilities are recognized based on the present value of lease payments over the lease term. To measure its lease liabilities, the Company uses its incremental borrowing rate or the rate implicit in the lease, if available. The Company calculates its incremental borrowing rate using a synthetic credit rating analysis based on Moody’s Building Materials Industry Rating Methodology. ROU assets also include any direct costs and prepaid lease payments but exclude any lease incentives received. The Company’s lease term may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

The Company elected the short-term lease recognition exemption for all leases that qualify. For leases that qualify for this exemption, the Company does not recognize ROU assets or lease liabilities. For lease agreements with lease and non-lease components, the Company accounts for each component separately. However, in the case of equipment leases, the Company accounts for lease and non-lease components as a single component.

Upon adoption of ASU 2016-02 on January 1, 2019, the Company recognized operating lease liabilities of approximately $6.0 million with corresponding ROU assets of approximately $4.6 million. Additionally, the Company derecognized deferred rent liabilities of $1.4 million. Maturities of operating lease liabilities at December 31, 2020 are as follows:

 

Year

 

Operating

Leases

 

 

 

(In thousands)

 

2021

 

 

1,359

 

2022

 

 

1,249

 

2023

 

 

1,193

 

2024

 

 

684

 

2025

 

 

517

 

Thereafter

 

 

532

 

Total lease payments

 

 

5,534

 

Less imputed interest

 

 

(891

)

Total lease liabilities

 

$

4,643

 

 

The Company incurred operating lease costs of $1.4 million and $1.5 million during the years ended December 31, 2020 and 2019, respectively. Cash payments related to operating lease liabilities were $1.5 million and $1.4 million during the years ended December 31, 2020 and 2019, respectively. At December 31, 2020, the weighted average remaining lease term for operating leases was 4.6 years. At December 31, 2020, the weighted average discount rate for operating leases was 7.8%.

As of December 31, 2020, the Company has additional operating equipment leases that will commence during 2021 with total lease payments of $0.2 million and a weighted average lease term of 4.0 years.

v3.20.4
Commitments and Contingencies
12 Months Ended
Dec. 31, 2020
Commitments And Contingencies Disclosure [Abstract]  
Commitments and Contingencies

(11) Commitments and Contingencies

Thermal Barrier Contract

The Company is party to a contract with a major U.S. automotive original equipment manufacturer (OEM) to supply fabricated, multi-part thermal barriers (Barriers) for use in the battery system of its next-generation electric vehicles (Contract). Pursuant to the Contract, the Company is obligated to supply Barriers at fixed annual prices and at volumes to be specified by the OEM up to a daily maximum quantity through the term of the agreement, which expires on September 1, 2026. While the OEM has agreed to purchase its requirement for Barriers at locations to be designated from time to time from the Company, it has no obligation to purchase any minimum quantity of Barriers under the Contract. In addition, the OEM may terminate the Contract any time and for any or no reason. All other terms of the Contract are generally consistent with the OEM’s standard purchase terms, including customary quality and warranty provisions.

BASF Supply Agreement

The Company is party to a supply agreement, as amended, with BASF Polyurethanes GmbH (BASF) (the Supply Agreement) and a joint development agreement with BASF SE (the JDA). Pursuant to the Supply Agreement, the Company will sell exclusively to BASF certain of the Company’s products at annual volumes to be specified by BASF, subject to certain volume limits. However, BASF has no obligation to purchase products under the Supply Agreement. The Supply Agreement will terminate on December 31, 2027 with respect to the Company’s Spaceloft A2 product and December 31, 2028 with respect to a new product developed under the JDA. Upon the expiration of the Supply Agreement with respect to each product, the Company will be subject to a post-termination supply commitment for an additional two years. The JDA is designed to facilitate collaboration by the parties on the development and commercialization of new products.

In addition, BASF, in its sole discretion, may make prepayments to the Company in the aggregate amount of up to $22.0 million during the term of the Supply Agreement. These prepayment obligations are secured by a security interest in real estate, plant and equipment at the Company’s Rhode Island facility and a license to certain intellectual property. BASF made a prepayment in the amount of $5.0 million to the Company in 2018 (the 2018 Prepayment). As of January 1, 2019, 25.3% of any amounts that the Company invoices for Spaceloft A2 sold to BASF are credited against the outstanding balance of the 2018 prepayment. If any of the 2018 Prepayment remains uncredited as of December 31, 2021, BASF may require that the Company repay the uncredited amount to BASF beginning in 2022.

Pursuant to the first addendum to the Supply Agreement, on January 30, 2019, BASF made an additional prepayment in the amount of $5.0 million to the Company (the 2019 Prepayment). As of January 1, 2020, 50.0% % of any amounts that the Company invoices for the newly developed product sold to BASF are credited against the outstanding balance of the 2019 Prepayment. After December 31, 2022, BASF may require that the Company credit an additional 24.7% of any amounts invoiced by the Company for Spaceloft A2 product sold to BASF against the outstanding balance of the 2019 Prepayment, if any, or may require that the Company repay the uncredited amount of the 2019 Prepayment to BASF in full.

As of December 31, 2020, the Company had received $10.0 million in prepayments from BASF and applied approximately $0.2 million of credits against amounts invoiced. The prepayments are recorded on the balance sheet as a prepayment liability, net of the current portion of $0.3 million and $0.2 million at December 31, 2020 and 2019, respectively, which is included within deferred revenue. The amounts and terms of additional prepayment installments, if any, are subject to negotiation between the Company and BASF.

Letters of Credit

The Company has provided certain customers with letters of credit securing obligations under commercial contracts. The Company had letters of credit outstanding of $1.4 million and $0.9 million at December 31, 2020 and 2019, respectively. These letters of credit are secured by the Company’s revolving credit facility (see note 7).

Operating Leases

During 2016, the Company entered into an agreement to extend its lease of approximately 51,650 square feet of office space in Northborough, Massachusetts. The lease commenced on January 1, 2017 and will expire on December 31, 2026. The annual base rent associated with the lease was $408,000 during 2017 and is increasing by approximately 3% annually for the term of the lease. The lease also requires 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, the Company will have the right to extend the lease for an additional term of three years.

Under the terms of the lease extension, the landlord provided the Company with an allowance of $1.2 million to be utilized for improvements to the leased premises. These amounts were considered a lease incentive and were excluded from the Company’s ROU assets upon its adoption of ASU 2016-02 on January 1, 2019 (see note 10). At December 31, 2020 and 2019, the Company had capitalized $1.2 million in associated leasehold improvement costs.

The Company also leases facilities and equipment under operating leases expiring at various dates through 2026. Under these agreements, the Company is obligated to pay annual rent, real estate taxes, and certain operating expenses. See note 10 for further information on future minimum lease payments under operating leases at December 31, 2020.

The Company incurred rent expense under all operating leases of approximately $1.4 million, $1.5 million and $1.5 million in the years ended December 31, 2020, 2019 and 2018, respectively.

Federal, State and Local Environmental Regulations

The Company is subject to federal, state and local laws and regulations relating to the environment. These laws generally provide for control of pollutants released into the environment and require responsible parties to undertake remediation. Penalties may be imposed for noncompliance.

During the year ended 2020, the Company was in technical discussions with the U.S. Environmental Protection Agency (EPA) in connection with the EPA’s notice of potential violation and opportunity to confer that the Company received regarding the applicability of certain Resource Conservation and Recovery Act (RCRA) provisions to certain aspects of its manufacturing unit operations. The EPA notice was in connection with the EPA’s RCRA Compliance Evaluation Inspection of the Company’s East Providence, Rhode Island manufacturing facility in May 2019. Subsequent to these initial discussions, the Company received notice from the EPA that there were no violations with respect to its manufacturing unit operations.

Litigation

The Company is, from time to time, a party to litigation that arises in the normal course of its business operations. See Part I, Item 3 (“Legal Proceedings”) of this Annual Report on Form 10-K 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.

v3.20.4
Stockholders' Equity
12 Months Ended
Dec. 31, 2020
Equity [Abstract]  
Stockholders' Equity

(12) Stockholders’ Equity

At December 31, 2020 and 2019, the Company was authorized to issue 130,000,000 shares of stock, of which 125,000,000 shares were designated as common stock and 5,000,000 shares were designated as preferred stock.

v3.20.4
Employee Benefit Plan
12 Months Ended
Dec. 31, 2020
Postemployment Benefits [Abstract]  
Employee Benefit Plan

(13) Employee Benefit Plan

The Company sponsors the Aspen Aerogels, Inc. 401(k) Plan. Under the terms of the plan, the Company’s employees may contribute a percentage of their pretax earnings. During each of the years ended December 31, 2020, 2019 and 2018, the Company provided matching contributions of $0.2 million.

v3.20.4
Employee Stock Ownership Plans
12 Months Ended
Dec. 31, 2020
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
Employee Stock Ownership Plans

(14) Employee Stock Ownership Plans

Effective June 12, 2014, the Company adopted the 2014 Employee, Director and Consultant Equity Incentive Plan (the 2014 Equity Plan). Under the 2014 Equity Plan, the Company may grant incentive stock options (ISOs), non-qualified stock options (NSOs), restricted stock, restricted stock units (RSUs) and other stock-based awards. Stock options under the plan are to be granted with an exercise price not less than the fair market value of the Company’s common stock at the date of grant. Equity awards granted to employees generally vest over a service period of three to four years. Restricted stock and stock options granted to nonemployee directors generally vest over a one-year service period.

During 2020, the Company granted 165,430 RSUs with a grant date fair value of $1.3 million and NSOs to purchase 659,655 shares of common stock with a grant date fair value of $2.8 million to employees under the 2014 Equity Plan. The RSUs and NSOs granted to employees will vest over a three-year period.

During the year ended December 31, 2020, the Company also granted 45,066 shares of restricted common stock with a grant date fair value of $0.3 million and NSOs to purchase 58,902 shares of common stock with a grant date fair value of $0.2 million to its non-employee directors under the 2014 Equity Plan. The restricted common stock and NSOs granted to non-employee directors will vest upon the earlier of the date that is the one-year anniversary of the grant or the day prior to the Company’s annual meeting of stockholders to be held in 2021.

On December 11, 2015, the Company issued certain equity grants to its chief executive officer which included 78,125 shares of restricted stock, NSOs to purchase 84,745 shares of common stock vesting solely over three years and NSOs to purchase 370,181 shares of common stock vesting subject to certain common stock price target achievements, as defined, over a three to five-year period (the CEO Options). Collectively, these equity grants had an aggregate fair value of $2.0 million at the time of grant. The restricted stock award will vest based on achievement of a Company financial performance target for fiscal year 2020.

On August 2, 2017, the Company modified the performance target for the year ending December 31, 2020 with respect to 78,125 shares of restricted stock held by its chief executive officer. In addition, the Company modified the vesting conditions of NSOs to purchase 131,578 and 122,324 shares of common stock held by its chief executive officer to extend the time period to achieve certain common stock price targets by an additional year to four and five years from the date of grant, respectively.

The Company accounted for the extension of the time periods for the achievement of the common stock price target vesting conditions of the NSOs as modifications in determining the stock-based compensation expense to be recognized over the remaining service period. The total incremental compensation expense resulting from the modification was $0.1 million. The incremental compensation expense associated with these awards will be recognized over the remaining service period of the awards.

On November 7, 2018, the Company modified the vesting conditions of the CEO Options such that in the event of a change in control, all the outstanding NSOs would vest, regardless of whether or not the common stock price target vesting conditions of the NSOs are achieved. The total incremental compensation expense resulting from the modification was approximately $0.1 million which will be recognized over the remaining term of the options.

On December 10, 2020, the Company modified the vesting conditions of NSOs to purchase 116,279 of common stock held by its chief executive officer to extend the time period to achieve the common stock price target. The Company accounted for the extension of the time period for the achievement of the common stock price target vesting condition of the NSOs as a modification and recognized $1.1 million of incremental stock compensation expense during the year ended December 31, 2020.

 

 

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

 

 

 

Year Ended December 31,

 

 

 

2020

 

 

2019

 

 

2018

 

 

 

(In thousands)

 

Cost of product revenue

 

$

598

 

 

$

573