Aspen Aerogels reported Q2 2025 revenue of $78 million, a 34% year-over-year decline but flat quarter-over-quarter, with an annual run rate of approximately $312 million.
Debt was reduced by $6.5 million, ending the quarter with $168 million in cash and equivalents and $308.8 million in shareholders' equity.
Energy Industrial segment revenue declined 38% year-over-year to $22.8 million due to distributor inventory rebalancing and project delays, especially in the Subsea market.
EV Thermal Barrier segment revenue was $55.2 million, down 32% year-over-year but up 14% quarter-over-quarter, driven by stabilized and increased GM production volumes.
Gross profit margin was 32% with gross profit of $25.3 million, down 51% year-over-year; Energy Industrial margins held at 36%, and EV Thermal Barrier margins improved to 31%, up 8 points quarter-over-quarter.
Net loss was $9.1 million or $0.11 per diluted share, with adjusted EBITDA of $9.7 million, exceeding guidance by 38% and nearly doubling quarter-over-quarter despite slightly lower revenues.
Operating cash flow was $3.9 million positive, with $12.9 million in CapEx, including $3.6 million for Plant 2 obligations, which are largely completed.
Strategic Focus on High-Margin Revenue Mix and Tariff Mitigation
Thermon's strategic shift toward higher-margin OpEx revenues across diverse end markets has contributed to a 30 basis point gross margin improvement despite volume declines.
Tariff mitigation measures, including prebuying materials, sourcing shifts, and price increases, began to take effect late in Q1, supporting margin expansion.
Management emphasized that operational discipline and proactive tariff strategies are key to maintaining profitability amid global trade uncertainties.
While revenue was impacted by delays, the company expects these to translate into future revenue recognition, indicating a focus on long-term margin stability.
Adjusted earnings per share was $0.39, an increase of approximately 8%, driven by underlying operating performance, offset partially by prior year nonrecurring gains and unfavorable foreign exchange.
Adjusted EBITDA was $199 million with a margin of 22.5%, a decrease of 30 basis points compared to prior year, impacted by a $7 million one-time real estate gain in the prior year.
Fluid Power segment sales were $334 million, down 2.5% on a core basis, with mixed end market dynamics including weaker on-highway and construction demand but low single-digit growth in agriculture.
Free cash flow grew 11% year-over-year to $74 million, with 73% conversion to adjusted net income and net leverage declined to 2.2x, improving 0.1x year-over-year.
Gross margin expanded 40 basis points to 40.8%, remaining above 40% for five consecutive quarters.
Power Transmission segment revenues were $550 million, up slightly on a core basis, with high single-digit growth in industrial OEM and 18% growth in personal mobility.
Second quarter total sales were $884 million, representing a 0.6% decline on a core basis with slightly positive foreign currency impact.
Dafinchi