Power Components

Maxwell Narrows Gap towards Breakeven Results

Maxwell Technologies, Inc. reported financial results for the three months ended June 30, 2017. Total revenues for the second quarter of 2017 were $37.1 million, compared with $26.7 million for the first quarter of 2017 and $34.1 million for the prior year quarter.

Net loss for the second quarter of 2017 was $10.1 million, compared with a net loss of $10.4 million for the first quarter of 2017 and net income of $2.2 million for the prior year quarter. The Company reported $(1.8) million of adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) for the second quarter of 2017, compared with $(3.9) million for the first quarter of 2017 and $(0.7) million for the prior year quarter.

“We delivered solid sequential revenue growth, building on the momentum we have created over the last 12 months. Our strategy is gaining traction and our business transformation is making progress,” said Dr. Franz Fink, Maxwell’s President and Chief Executive Officer.

“We closed the quarter slightly above the top end of our revenue guidance range, coming in at $37.1 million, a 39% sequential increase over the first quarter, and we narrowed the adjusted EBITDA gap towards breakeven. Furthermore, the integration of Nesscap is progressing nicely, with a high level of collaboration as our teams merge together as one and collectively realize our targeted synergies," Mr. Fink continued.

Discussion of Financial Results for the Quarter (note that Nesscap is included in all results and outlook beginning May 1, 2017):

Revenue and Gross Margin

  • Total revenue for the second quarter of 2017 was $37.1 million, compared with $26.7 million for the first quarter of 2017, driven by strong ultracapacitor revenue in the wind market. Ultracapacitor revenue for the second quarter of 2017 was $25.1 million, compared with $14.2 million for the first quarter of 2017. High-voltage revenue was $12.0 million for the second quarter of 2017, compared with $12.5 million for the first quarter of 2017.
  • Gross margin for the second quarter of 2017 was 21.1% compared with 23.2% in the first quarter of 2017, driven by strong ultracapacitor sales, which generally have lower gross margins than the corporate average. Q2 gross margin was also impacted by approximately $351,000 of acquisition related intangible amortization and inventory step-up expense.
  • Non-GAAP gross margin for the second quarter of 2017 was 22.7% compared with 23.9% in the first quarter of 2017 and excludes the acquisition related expense mentioned in the prior bullet and stock-based compensation expense.

Operating Expense, Net Loss & Adjusted EBITDA

  • Operating expense for the second quarter of 2017 was $16.5 million, compared with $15.2 million for the first quarter of 2017. The quarter-over-quarter increase was driven primarily by the inclusion of the business of Nesscap, beginning in May, and related acquisition expenses.
  • Non-GAAP operating expense for the second quarter of 2017 was $12.5 million compared with $12.4 million for the first quarter of 2017 and excludes stock-based compensation, amortization of intangibles, acquisition related expenses and other non-recurring legal costs.
  • Net loss for the second quarter of 2017 was $10.1 million, or $(0.28) per share, compared with a net loss of $10.4 million, or $(0.32) per share, for the first quarter of 2017.
  • Non-GAAP net loss for the second quarter of 2017 was $5.5 million compared with a non-GAAP net loss of $7.4 million for the first quarter of 2017.
  • Adjusted EBITDA for the second quarter of 2017 was $(1.8) million, compared with $(3.9) million for the first quarter of 2017.

Strategic Business & Operational Highlights

  • In February 2017, Maxwell announced that we entered into an agreement to acquire substantially all of the assets and business of Nesscap Energy, Inc., a developer and manufacturer of ultracapacitor products for use in transportation, renewable energy, industrial and consumer markets. On April 28, 2017, the company completed this acquisition through the issuance of approximately 4.1 million shares of Maxwell common stock and the assumption of certain liabilities. The acquisition of Nesscap adds complementary businesses to our operations and expands our portfolio of products and we believe the acquisition will add value for our customers.
  • In April 2017, Maxwell signed a strategic equity investment agreement with China’s SDIC Fund Management Co., Ltd. (“SDIC Fund”), subject to approval by the Committee on Foreign Investment in the United States (“CFIUS”). On August 4, just prior to the August 7 expiration of the final phase of the CFIUS review process, they withdrew the filing to allow more time for review and discussion with CFIUS. To that end, Maxwell is continuing to work with CFIUS, SDIC Fund, and our advisors to address the remaining open information requests before a refiling.

Business Outlook

  • Total revenue for the third quarter of 2017 is expected to be in the range of $35 million to $38 million.
  • Gross margin for the third quarter of 2017 is expected to be 20.5%, plus or minus 150 basis points.
  • Non-GAAP gross margin for the third quarter of 2017 is expected to be 22.5%, plus or minus 150 basis points.
  • GAAP operating expense for the third quarter of 2017 is expected to be in the range of $15.7 million to $16.1 million.
  • Non-GAAP operating expense for the third quarter of 2017 is expected to be in the range of $12.7 million to $13.1 million.
Maxwell Technologies Inc.
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