Last year about this time, Aspen Aerogels, a Massachusetts-based maker of flexible aerogel insulation materials, withdrew its registration for a $115 million IPO and turned to private markets to raise $12 million in debt. Aspen is essentially an energy efficiency firm which designs and builds high-performance aerogel insulation for a variety of applications.
Now, a year later, the company has priced its IPO with 7,500,000 shares of common stock at $11, well shy of the anticipated $14 to $16 per share pricing, for total gross proceeds of $82.5 million. Since listing, shares have moved lower to $10.75. Barclays, J.P. Morgan, and Citigroup are the book runners for the offering, and Baird and Canaccord Genuity are co-managers. (Here's a link to the prospectus.)
The new funding is intended to repay debts and to add a third production line at its plant in East Providence, Rhode Island. The company's revenues have continued to grow since its founding, as has its losses.
Aerogels are complex strands of silica that capture air or molecules; they have been the world’s best form of insulation for decades. A centimeter of aerogel insulation works as well as 10 centimeters of regular insulation, saving time and architectural space. But to date, the material has only been able to penetrate niche markets because of its high cost.
Insulation is not the sexiest of cleantech technologies, but aerogels are deep science that can improve energy efficiency across variety of markets.
We reported on the original IPO filing back in July 2011. The original VC and corporate investors included Rockport Capital, BASF Venture Capital, Tenaya Capital, Reservoir Capital Group, Arcapita Ventures and Argonaut Ventures. Aspen has raised more than $112 million in private equity and debt.
Aspen's insulation can be used in industrial applications ranging from -270 degrees C to 650 degrees C, as well as in wall systems for commercial and residential buildings and applications such as piping, vessels, tanks and equipment, and refineries.
Excerpts from the Aspen Aerogels S-1:
- "Our technologically advanced products are targeted at the estimated $32 billion annual global market for insulation materials. Our insulation is principally used by industrial companies, such as ExxonMobil and NextEra Energy, that operate petrochemical, refinery, industrial and power generation facilities. We are also working with BASF Construction Chemicals and other leading companies to develop and commercialize products for applications in the building and construction market."
- "Our aerogels are complex structures in which 97 percent of the volume consists of air trapped in nanopores between intertwined clusters of amorphous silica solids. These extremely low-density solids provide superior insulating properties. Although aerogels are usually fragile materials, we have developed innovative and proprietary manufacturing processes that enable us to produce industrially robust aerogel insulation cost-effectively and at commercial scale."
- Customers include Exxon Mobil (XOM), Pemex Gas, Formosa Petrochemical, and NextEra Energy, according to the firm.
Although the company sizes its available market at $32 billion, the market for insulation is fragmented and diverse. The primary markets for insulation are: industrial, including use as covering for pipes, valves and storage tanks; building and construction, in walls, floors and ceilings; and original equipment manufacture, including use in transportation, appliances and apparel applications.
Some financial takeaways:
- As of March 31, 2014, the firm's accumulated deficit stood at $351.8 million. The firm expects to continue to experience operating losses.
- President and CEO Donald Young, with the firm since 2001, had a 2013 annual compensation of $4,136,290.
- 2013 revenue was $86 million with losses of $47.6 million.
- Q1 2014 income was $22.4 million with losses of $19 million.
- Total assets are $88.1 million with total liabilities of $168.8 million.
Cabot builds aerogels that compete directly with Aspen's offerings. Standard insulation vendors include Johns Manville, Rockwool and Owens Corning.