Maxwell Reports First Quarter 2016 Results

SAN DIEGO, May 3, 2016 /PRNewswire/ -- Maxwell Technologies, Inc. (NASDAQ: MXWL) today reported operational and financial results for the three months ended March 31, 2016. Total revenues for the first quarter of 2016 were $35.2 million, compared with $49.8 million for the fourth quarter of 2015 and $34.7 million for the prior year quarter. The Company reported $(1.3) million of adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) for the first quarter of 2016, compared with $3.9 million for the fourth quarter of 2015 and $(4.9) million for the prior year quarter. Net loss for the first quarter of 2016 was $6.8 million, compared with $2.2 million for the fourth quarter of 2015 and $9.3 million for the prior year quarter. Non-GAAP net loss for the first quarter of 2016 was $4.3 million, compared with non-GAAP net income of $0.6 million for the fourth quarter of 2015 and non-GAAP net loss of $8.5 million for the prior year quarter.

"We achieved first quarter revenue of $35.2 million, even in the face of a challenging market for our hybrid bus and high-voltage capacitor products in China," said Dr. Franz Fink, Maxwell's president and chief executive officer. "We believe we have taken the right steps to focus and streamline our business, reducing operating expenses nearly 25% year-over-year. Additionally, in the first quarter we completed the consolidation of our U.S. manufacturing facilities and in late April we announced the completion of the sale of our Microelectronics product line for $21 million in cash, further strengthening our balance sheet. These actions, as well as the steps we plan to take throughout the remainder of the year, including the introduction of new and innovative products for the high-voltage and hybrid bus markets, the expansion of our footprint in the wind market, and new technology for the rail market, position us well to sustain and grow our business as we transition to profitability and revenue growth in the years ahead."

Discussion of Financial and Operational Results for the Quarter

Revenue and Non-GAAP Gross Margin

• Total revenue for the first quarter of 2016 was $35.2 million, compared with $49.8 million for the fourth quarter of 2015, primarily due to decreases in ultracapacitor and high voltage revenues.
  • Ultracapacitor revenue for the first quarter of 2016 was $23.5 million, compared with $37.3 million for the fourth quarter of 2015, primarily driven by an expected seasonal decline in the China hybrid bus market.
  • High-voltage revenue was $8.2 million for the first quarter of 2016, compared with $8.9 million for the fourth quarter of 2015, primarily driven by a soft market in China as customers put orders on hold while waiting for the release of China's new 5-year plan which was released at the end of the quarter.
  • Microelectronic revenue for the first quarter of 2016 was $3.5 million, compared with $3.6 million for the fourth quarter of 2015.
• Non-GAAP gross margin for the first quarter of 2016 was 28.4%, a decrease when compared with the fourth quarter of 2015, reflecting lower factory utilization and a decline in high-voltage revenue.

Adjusted EBITDA, Operating Expense, Operating Loss & Net Loss

• Adjusted EBITDA for the first quarter of 2016 was $(1.3) million, compared with $3.9 million for the fourth quarter of 2015. The quarter-over-quarter decrease was primarily driven by lower gross margins and higher operating expenses.
• Operating expense for the first quarter of 2016 was $15.9 million, compared with $15.8 million for the fourth quarter of 2015, primarily driven by higher payroll costs due to annual payroll tax resets, legal expenses associated with the sale of the Microelectronics product line, and executive transition costs.
• Non-GAAP operating expense for the first quarter of 2016 was $13.7 million compared with $13.2 million for the fourth quarter of 2015 and excludes stock-based compensation, legal expenses associated with SEC and FCPA matters, and other non-standard charges not reflective of the on-going costs to run the business.
• Operating loss for the first quarter of 2016 was $6.2 million, compared with an operating loss of $1.5 million for the fourth quarter of 2015. The quarter-over-quarter increase was primarily driven by lower gross margins and higher operating expenses.
• Non-GAAP operating loss for the first quarter of 2016 was $3.7 million compared with non-GAAP operating income of $1.2 million for the fourth quarter of 2015.
• Net loss for the first quarter of 2016 was $6.8 million, or $(0.22) per share, compared with a net loss of $2.2 million, or $(0.07) per share, for the fourth quarter of 2015.
• Non-GAAP net loss for the first quarter of 2016 was $4.3 million compared with non-GAAP net income of $0.6 million for the fourth quarter of 2015.

Capital Expenditures

• Capital expenditures during the first quarter of 2016 were $2.2 million, compared with $1.4 million for the fourth quarter of 2015. Capital expenditures of $1.6 million in the first quarter of 2016 related to the consolidation of the two U.S. manufacturing facilities completed during the quarter.

Business Outlook

• The business outlook for the second quarter of 2016 reflects expected results for Maxwell, excluding the Microelectronics product line, except for the 27 days during the quarter in which it was still owned by Maxwell.
• Total revenue for the second quarter of 2016 is expected to be in the range of $34 million to $36 million.
• Non-GAAP gross margin for the second quarter of 2016 is expected to be in the range of 30% to 32%.
• Non-GAAP operating expense for the second quarter of 2016 is expected to be in the range of $13 million to $13.5 million.

Other Business & Operational Highlights

• Maxwell ultracapacitors selected as the core component of the first megawatt-scale, ultracapacitor-based wind farm energy storage system in the world by China Guodian Corporation's Beijing Huadian Tianren Electric Power Control Technology Co.
• Introduced the 3-volt, 3,000-farad ultracapacitor cell as the newest addition to the K2 product family, giving customers the flexibility to increase power and energy at the same time or to significantly cost-optimize system designs utilizing fewer cells or modules without compromising power or energy.
• Welcomed automotive industry veterans, Jörg Buchheim, as senior vice president and chief sales officer, and Dr. Henning Hauenstein, as vice president, strategy & marketing.

Webcast Information
As previously announced, Maxwell management will host a live webcast at approximately 5:00 p.m. EDT / 2:00 p.m. PDT today to discuss these results. Other forward-looking and material information may also be discussed during this call.

The call may be accessed by dialing toll-free, (800) 862-9098 from the U.S. and Canada, or (785) 424-1051 for international callers, and entering the conference ID, MAXWELL.

More information about this event including a live webcast and other supporting materials may be accessed by visiting http://investors.maxwell.com.

A replay of the conference call will be available for a limited time by visiting http://investors.maxwell.com.

About Maxwell
Maxwell is a global leader in the development and manufacture 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, transportation, renewable energy and information technology. Our CONDIS® high-voltage grading and coupling capacitors 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-hardened microelectronic products for satellites and spacecraft include single board computers and components incorporating our proprietary RADPAK® packaging and shielding technology that enables them to perform reliably in space. For more information, visit www.maxwell.com.

Notes Regarding Non-GAAP Financial Measures
The Company uses non-GAAP financial measures for internal evaluation and to report the results of its business. Information presented in this press release and in the attached financial tables includes financial information prepared in accordance with generally accepted accounting principles in the U.S., or GAAP, as well as non-GAAP financial measures. Generally, a non-GAAP financial measure, within the meaning of Item 10 of Regulation S-K promulgated by the Securities and Exchange Commission (SEC), is a numerical measure of a company's financial performance or cash flows that (a) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, which are included in the most directly comparable measure calculated and presented in accordance with GAAP in the condensed consolidated balance sheets, condensed consolidated statements of comprehensive income or condensed consolidated statements of cash flows; or (b) includes amounts, or is subject to adjustments that have the effect of including amounts, which are excluded from the most directly comparable measure so calculated and presented. 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, significant non-standard tax charges, significant non-standard legal expenses, and restructuring-related costs.

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 provides consistency and comparability with its past reports of financial results. Non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with GAAP. These measures are intended to supplement GAAP financial information, and may be computed differently from non-GAAP financial measures used by other companies. 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.

Reconciliations of non-GAAP financial measures used in this release to the most directly comparable GAAP financial measures can be found in the section entitled "Reconciliation of GAAP to Non-GAAP Financial Measures" included toward the end of this release.

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 and are subject to the Safe Harbor provisions created by the Private Securities Litigation Reform Act of 1995. Such risks, uncertainties and contingencies include, but are not limited to, the following:

• Our ability to remain competitive and stimulate customer demand through successful introduction of new products, and to educate our prospective customers on the products we offer;
• Dependence upon the sale of products to a small number of customers and vertical markets, some of which are heavily dependent on government funding or government subsidies which may or may not continue in the future;
• Dependence upon the sale of products into Asia and Europe, where macroeconomic factors outside our control may adversely affect our sales;
• Downward pressures on product pricing from increased competition and potential shift in sales mix with respect to low margin and high margin business;
• 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 ability to oversee and control our foreign subsidiaries and their operations, our ability to effectively manage foreign currency exchange rate fluctuations arising from our international operations, and our ability to continue to comply with the U.S. Foreign Corrupt Practices Act as well as the anti-bribery laws of foreign jurisdictions;
• Risk that activist stockholders attempt to effect changes to our company which could adversely affect our corporate governance;
• Risk that our restructuring efforts may not be successful and that we may not be able to realize the anticipated cost savings and other benefits;
• 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;
• Our ability to obtain sufficient capital to meet our operating or other needs; and,
• Our ability to manage and minimize the impact of unfavorable legal proceedings.

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) 503-3359, or at our investor relations website: investors.maxwell.com. All information in this release is as of May 3, 2016. The Company undertakes no duty to update any forward-looking statement to reflect actual results or changes in the Company's expectations.

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Media & Investor Contact:
Amy Wakeham
858-503-3359
[email protected] 

SOURCE Maxwell Technologies, Inc.

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