Maxwell Technologies Reports Third Quarter Financial Results

CONFERENCE CALL & WEBCAST AT 5 P.M. (EDT) TODAY - DETAILS BELOW

25 Oct, 2012, 16:00 ET from Maxwell Technologies, Inc.

SAN DIEGO, Oct. 25, 2012 /PRNewswire/ -- Maxwell Technologies, Inc. (Nasdaq: MXWL) today reported revenue of $43.9 million for its third quarter ended September 30, 2012, up 7 percent over the $41.1 million recorded in the same period in 2011. Third quarter ultracapacitor revenue was $28.8 million, up 15 percent from the $24.9 million recorded in Q311. Sales of high voltage capacitor and microelectronics products totaled $15.1 million in Q312, down 7 percent from the $16.2 million recorded in Q311.

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On a U.S. generally accepted accounting principles (GAAP) basis, operating income for the third quarter 2012 was $5.9 million, compared with $1.2 million in Q311. GAAP net income for Q312 was $5.4 million, or $0.19 per diluted share, compared with $298,000, or $0.01 per diluted share, in Q311.

On a non-GAAP basis, the company reported operating income of $6.5 million in Q312 compared with $2.1 million in Q311. Non-GAAP net income for Q312 was $6.0 million, or $0.21 per diluted share, compared with $1.2 million, or $0.04 per diluted share in Q311. A reconciliation of GAAP to non-GAAP financial measures is included as an addendum to this release.

GAAP gross margin was 42 percent in Q312, compared with 40 percent in Q311 and 42 percent in Q212.  GAAP operating expenses totaled $12.4 million, or 28 percent of revenue, in Q312 compared with $15.3 million, or 37 percent of revenue in Q311.  Non-GAAP operating expenses totaled $12.0 million, or 27 percent of revenue, in Q312 compared with $14.6 million, or 36 percent of revenue, in Q311. Cash and cash equivalents totaled $20.1 million as of September 30, 2012, compared with $22.3 million as of June 30, 2012. Complete financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations will be available in the Company's Quarterly Report on Form 10-Q, which we anticipate filing next week with the Securities & Exchange Commission.

Outlook:  "Lower demand in Europe and elsewhere has slowed ultracapacitor sales growth this year," said David Schramm, Maxwell's president and chief executive officer. "Looking ahead, global economic conditions and uncertainty about the direction of government policies and related funding make it difficult to forecast with any reasonable level of confidence. In this challenging environment we are focusing on identifying and developing new growth opportunities, improving efficiency and controlling expenses to optimize bottom line performance."

"Wind energy and hybrid transit bus applications continue to be primary drivers of ultracapacitor sales, and we believe that long-term growth prospects in those and other key verticals remain solid. However, we are now working with customers to resolve recently encountered hybrid bus drive system application issues that will delay previously forecasted deliveries. As a result of those delays and generally lower demand, we now expect fourth quarter revenue to be similar to that recorded in the first quarter of this year."

"Seasonal softness, primarily related to the Chinese New Year observance, is likely to push revenue sequentially lower in the coming first quarter. Despite this tempered near-term growth outlook, we are confident that our current cash and credit resources are sufficient to enable the Company to continue to advance its core technologies, develop and launch new products and expand production capacity as needed."

Non-GAAP Financial Measures: The Company uses non-GAAP financial measures for internal evaluation and to report the results of its business. These non-GAAP financial measures include non-GAAP gross profit, non-GAAP operating expenses, non-GAAP income from operations, non-GAAP net income (loss), and non-GAAP net income (loss) per diluted share. These measures are not in accordance with, nor an alternative to, GAAP. These measures are intended to supplement GAAP financial information, and may be computed differently from non-GAAP financial measures used by other companies. The Company believes that these measures provide useful information to its management, board of directors and investors about its operating activities and business trends related to its financial condition and results of operations. The Company believes that it is useful to provide investors with information to understand how specific line items in the statement of operations are affected by certain non-cash or non-recurring items, such as:

  • stock-based compensation expense;
  • amortization of intangible assets;
  • expense in a prior period for a legal settlement, and
  • gains or losses in prior periods on embedded derivative.

In addition, the Company's management and board of directors use these non-GAAP financial measures in developing operating budgets and in reviewing the Company's results of operations, as non-cash and non-recurring items have limited impact on current and future operating decisions. Additionally, the Company believes that inclusion of non-GAAP financial measures provide consistency and comparability with its past reports of financial results. However, investors should be aware that non-GAAP measures have inherent limitations and should be read in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP. Please refer to the accompanying tables for a detailed reconciliation of GAAP to non-GAAP gross profit, operating expenses, income (loss) from operations, net income (loss), and net income (loss) per share.

Management will conduct a conference call and simultaneous webcast to discuss third quarter financial results and the future outlook at 5 p.m. (EDT) today. The call may be accessed by dialing toll-free, (866) 952-1908 from the U.S. and Canada, or (785) 424-1827 for international callers, and entering the conference ID, MAXWELL. The live webcast and subsequent archived replay may be accessed at the company's web site via the following link: http://investors.maxwell.com/phoenix.zhtml?c=94560&p=irol-calendar.

Maxwell is a leading developer and manufacturer of innovative, cost-effective energy storage and power delivery solutions. Our ultracapacitor products provide safe and reliable power solutions for applications in consumer and industrial electronics, automotive, transportation and information technology. Our high-voltage capacitors products help to ensure the safety and reliability of electric utility infrastructure and other applications involving transport, distribution and measurement of high-voltage electrical energy. Our radiation-mitigated microelectronic products include power modules, memory modules and single board computers that incorporate powerful commercial silicon for superior performance and high reliability in aerospace applications.

Forward-looking statements: Statements in this news release that are "forward-looking statements" are based on current expectations and assumptions that are subject to risks and uncertainties. Such risks, uncertainties and contingencies include, but are not limited to, the following:

  • risks related to our international operations including, but not limited to, our ability to adequately comply with the changing rules and regulations in countries where our business is conducted, our
  • successful acquisition, development and retention of key personnel;
  • our ability to effectively manage our reliance upon certain suppliers of key component parts, specialty equipment and logistical services;
  • our ability to match production volume to actual customer demand;
  • our ability to manage product quality problems;
  • our ability to protect our intellectual property rights and to defend claims against us;
  • our ability to effectively identify, enter into, manage and benefit from strategic alliances;
  • occurrence of a catastrophic event at any of our facilities;
  • occurrence of a technology systems failure, network disruption, or breach in data security; and,
  • our ability to obtain sufficient capital to meet our operating or other needs.

For further information regarding risks and uncertainties associated with Maxwell's business, please refer to the "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" sections of our SEC filings, including, but not limited to, our annual report on Form 10-K and quarterly reports on Form 10-Q. Copies of these documents may be obtained by contacting Maxwell's investor relations department at (858) 503-3434 or at our investor relations website: http://investors.maxwell.com/phoenix.zhtml?c=94560&p=irol-sec. All information in this release is as of October 25, 2012. The company undertakes no duty to update any forward-looking statement to reflect actual results or changes in the company's expectations.

MAXWELL TECHNOLOGIES, INC. 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(Unaudited)

Three Months Ended  

Nine Months Ended

September 30, 2012

September 30, 2011

September 30, 2012

September 30, 2011

Revenue

$             43,907

$             41,096

$           123,993

$           114,818

Cost of revenue

25,534

24,547

72,503

68,909

Gross profit

18,373

16,549

51,490

45,909

Operating expenses:

Selling, general and administrative

7,293

9,544

24,715

29,225

Research and development

5,084

5,707

15,974

16,976

Amortization of intangibles

51

51

153

153

Total operating expenses

12,428

15,302

40,842

46,354

Income (loss) from operations

5,945

1,247

10,648

(445)

Interest expense, net

(56)

(27)

(138)

(88)

Amortization of debt discount and prepaid debt costs

(16)

-

(42)

(55)

Gain on embedded derivatives

-

-

-

1,086

Income before income taxes

5,873

1,220

10,468

498

Income tax provision 

470

922

1,903

1,221

Net income (loss)

$               5,403

$                  298

$               8,565

$                 (723)

Net income (loss) per common share:

Basic 

$                 0.19

$                 0.01

$                 0.30

$                (0.03)

Diluted

$                 0.19

$                 0.01

$                 0.30

$                (0.03)

Weighted average common shares outstanding:

Basic

28,736

27,733

28,511

27,564

Diluted

28,748

28,161

28,695

27,564

MAXWELL TECHNOLOGIES, INC. 

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

(Unaudited)

September 30,

December 31,

2012

2011

ASSETS

Current assets:

Cash and cash equivalents

$                 20,073

$                 29,289

Trade and other accounts receivable, net

52,988

36,131

Inventories

31,930

27,232

Prepaid expenses and other current assets

2,829

3,125

  Total current assets

107,820

95,777

Property and equipment, net

35,806

28,541

Intangible assets, net

758

1,111

Goodwill

24,826

24,887

Pension asset

6,945

6,359

Other non-current assets

79

261

  Total assets

$               176,234

$               156,936

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable and accrued liabilities

$                 32,789

$                 37,145

Accrued warranty

244

258

Accrued employee compensation

5,025

6,243

Short-term borrowings and current portion of long-term debt

6,909

5,431

Deferred tax liability

499

499

  Total current liabilities

45,466

49,576

Deferred tax liability, long-term

962

933

Long-term debt, excluding current portion

2,960

68

Other long-term liabilities

699

3,028

  Total liabilities

50,087

53,605

Stockholders' equity:

Common stock, $0.10 par value per share, 40,000 shares authorized;  29,183 and 28,174 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively

2,915

2,815

Additional paid-in capital

267,069

252,907

Accumulated deficit

(154,456)

(163,021)

Accumulated other comprehensive income

10,619

10,630

  Total stockholders' equity

126,147

103,331

  Total liabilities and stockholders' equity

$               176,234

$               156,936

MAXWELL TECHNOLOGIES, INC. 

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(in thousands, except per share data)

(Unaudited)

Three Months Ended

Nine Months Ended

September 30, 2012

June 30, 2012

September 30, 2011

September 30, 2012

September 30, 2011

Gross Profit Reconciliation:

GAAP gross profit

$            18,373

$   16,980

$            16,549

$            51,490

$            45,909

Stock-based compensation expense included in cost of sales

A

163

238

89

543

292

Amortization of intangible assets included in cost of sales

B

46

69

96

198

269

Non-GAAP gross profit

$            18,582

$   17,287

$            16,734

$            52,231

$            46,470

Total Operating Expenses Reconciliation:

GAAP total operating expenses

$            12,428

$   13,532

$            15,302

$            40,842

$            46,354

Stock-based compensation expense

A

(342)

(532)

(646)

(2,018)

(2,148)

Amortization of intangible assets

B

(51)

(51)

(51)

(153)

(153)

Accrual for legal settlement

C

-

-

-

-

(2,600)

Non-GAAP total operating expenses

$            12,035

$   12,949

$            14,605

$            38,671

$            41,453

Income (Loss) From Operations Reconciliation:

GAAP income (loss) from operations

$              5,945

$     3,448

$              1,247

$            10,648

$               (445)

Stock-based compensation expense

A

505

770

735

2,561

2,440

Amortization of intangible assets

B

97

120

147

351

422

Accrual for legal settlement

C

-

-

-

-

2,600

Non-GAAP income from operations

$              6,547

$     4,338

$              2,129

$            13,560

$              5,017

Net Income (Loss) Reconciliation:

GAAP net income (loss)

$              5,403

$     2,658

$                298

$              8,565

$               (723)

Stock-based compensation expense

A

505

770

735

2,561

2,440

Amortization of intangible assets

B

97

120

147

351

422

Accrual for legal settlement, net of tax

C

-

-

-

-

2,035

Gain on embedded derivatives

D

-

-

-

-

(1,086)

Non-GAAP net income 

$              6,005

$     3,548

$              1,180

$            11,477

$              3,088

Diluted Net Income per Share Reconciliation:

GAAP diluted net income (loss) per share

$                0.19

$       0.09

$                0.01

$                0.30

$              (0.03)

Stock-based compensation expense

A

0.02

0.03

0.03

0.09

0.09

Amortization of intangible assets

B

-

-

-

0.01

0.02

Accrual for legal settlement, net of tax

C

-

-

-

-

0.07

Gain on embedded derivatives

D

-

-

-

-

(0.04)

Non-GAAP diluted net income per share

$                0.21

$       0.12

$                0.04

$                0.40

$                0.11

See notes on next page

MAXWELL TECHNOLOGIES, INC. 

(A)

        Stock-based compensation expense consists of non-cash charges for employee stock options, restricted stock awards, restricted stock units and employee stock purchase plan awards. 

Results include stock-based compensation expense as follows (in thousands):

Three Months Ended

Nine Months Ended 

September 30, 2012

June 30, 2012

September 30, 2011

September 30, 2012

September 30, 2011

Cost of revenue

$                  163

$               238

$                   89

$                   543

$                   292

Selling, general and administrative

213

411

531

1,586

1,773

Research and development

129

121

115

432

375

Total stock-based compensation expense

$                 505

$              770

$                 735

$                2,561

$                2,440

(B)

Amortization of intangible assets associated with acquisitions.

(C)

Accrual for settlement of product defect matter of $2.6 million, or $2.0 million net of the related tax impact.

(D)

Gain on embedded derivatives associated with the Company's convertible debt. As the convertible debentures were retired in February 2011, the company no longer records gains or losses related to the conversion features.

 

SOURCE Maxwell Technologies, Inc.



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