Maxwell Technologies Reports Third Quarter Financial Results - CEO Announces Retirement

 Maxwell Technologies Reports Third Quarter Financial Results - CEO Announces


PR Newswire

SAN DIEGO, Oct. 24, 2013

SAN DIEGO, Oct. 24, 2013 /PRNewswire/ -- Maxwell Technologies, Inc. (Nasdaq:
MXWL) today reported revenue of $51.2 million for its third quarter ended
September30, 2013, up 20 percent over the $42.7 million recorded in the same
period in 2012. Third quarter ultracapacitor revenue was $37.0 million, up 30
percent from the $28.3 million recorded in Q312. Sales of high voltage
capacitor and microelectronics products totaled $14.2 million in Q313, down 1
percent from the $14.4 million recorded in Q312.


"Although the expiration of a Chinese government subsidy for diesel electric
hybrid buses resulted in lower ultracapacitor shipments volume in the third
quarter, revenue recognition of $11.3 million, net, of ultracapacitor product
that was shipped but not recognized as revenue in previous periods partially
offset that softness," said David Schramm, Maxwell's president and CEO.

On a U.S. generally accepted accounting principles (GAAP) basis, operating
income for the third quarter 2013 was $6.2 million, compared with $5.7 million
in Q312. GAAP net income for Q313 was $6.0 million, or $0.21 per diluted
share, compared with $5.2 million, or $0.18 per diluted share, in Q312.

On a non-GAAP basis, the company reported operating income of $6.9 million in
Q313 compared with $6.2 million in Q312. Non-GAAP net income for Q313 was $6.7
million, or $0.23 per diluted share, compared with $5.7 million, or $0.20 per
diluted share in Q312. A reconciliation of GAAP to non-GAAP financial measures
is included as an addendum to this release.

GAAP gross margin was 41 percent in Q313, compared with 42 percent in Q312 and
39 percent in Q213. GAAP operating expenses totaled $14.9 million, or 29
percent of revenue, in Q313 compared with $12.4 million, or 29 percent of
revenue in Q312. Non-GAAP operating expenses totaled $14.4 million, or 28
percent of revenue, in Q313 compared with $12.1 million, or 28 percent of
revenue, in Q312. Cash and cash equivalents and restricted cash totaled $41.1
million as of September30, 2013, compared with $38.6 million as of June 30,
2013. 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: "Historically, Maxwell has sold ultracapacitor modules to customers
who build diesel-electric hybrid buses. The subsidy policy which addresses
diesel-electric hybrid buses has expired and has not yet been renewed.
Recently, the Chinese government released a subsidy policy which addresses all
electric buses and plug-in hybrid buses. As a result of the electric bus and
plug-in hybrid bus policy, our Chinese bus customers have started receiving
orders for battery-powered plug-in hybrid buses that qualify for these
announced government subsidies, and incorporate ultracapacitor modules,"
Schramm said. "We are currently focused on supporting ramping plug-in hybrid
demand, which we expect to drive sales of several thousand ultracapacitor
modules in the current quarter. Ultracapacitor sales for wind energy
applications are up, auto-related sales remain steady, and we are encouraged
by successful field trials for our engine starting module for heavy trucks,
which have begun to drive demand from major fleets and truck OEMs in North
America. We expect fourth quarter sales of microelectronic and high-voltage
capacitor products to be similar to or slightly higher than third quarter
levels. However, given the uncertainty around current diesel-electric hybrid
bus-related demand, we are managing expenses carefully to deal with the
possibility that total company sales could be lower by 30 percent or more
sequentially in the fourth quarter."

CEO Announcement: Today, Mr. Schramm is announcing that he will retire from
his position as President, CEO and Director effective as of December 31,
2013. Mr. Schramm and Maxwell have entered into a consulting services
agreement whereby he will provide transitional guidance and advice to the
company for a two-year period following his retirement. We have begun the
search for a qualified individual to succeed Mr. Schramm as President and CEO.
Effective January 1, 2014, John Warwick, the company's current Chief Operating
Officer, will serve as the interim CEO until such time as a permanent
successor is appointed to this role.

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, and non-GAAP net income
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.

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 from operations, net income, and net income
per share.

Management will conduct a conference call and simultaneous webcast to discuss
third quarter of 2013, financial results and the future outlook at 5 p.m.
(EDT) today. The call may be accessed by dialing toll-free, (866) 952-1906
from the U.S. and Canada, or (785) 424-1825 for international callers, and
entering the conference ID, MAXWELL. The live web cast and subsequent archived
replay may be accessed at the Company's web site via the following link:

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-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. For more information, visit

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:

  oDependence 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
  oDependence upon the sale of products into China and Europe, where
    macroeconomic factors outside our control may adversely affect our sales;
  oOur 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;
  oRisks 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 and the terms and conditions of
    our settlement agreements with the Securities and Exchange Commission and
    the Department of Justice;
  oSuccessful acquisition, development and retention of key personnel;
  oOur ability to effectively manage our reliance upon certain suppliers of
    key component parts, specialty equipment and logistical services;
  oOur ability to match production volume to actual customer demand;
  oOur ability to manage product quality problems;
  oOur ability to protect our intellectual property rights and to defend
    claims against us;
  oOur ability to effectively identify, enter into, manage and benefit from
    strategic alliances;
  oOccurrence of a catastrophic event at any of our facilities;
  oOccurrence of a technology systems failure, network disruption, or breach
    in data security;
  oOur ability to obtain sufficient capital to meet our operating or other
    needs; and,
  oOur ability to manage and minimize the impact of unfavorable legal

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: All
information in this release is as of October 24, 2013. The Company undertakes
no duty to update any forward-looking statement to reflect actual results or
changes in the Company's expectations.

Media & Investor Contact: Michael Sund, +1 858.503.3233;

(in thousands, except per share data)
                    Three Months Ended            Nine Months Ended
                    September30,  September30,  September30,  September30,
                    2013           2012           2013           2012
                                   (Restated)                    (Restated)
Revenue             $   51,197     $   42,713     $  154,555     $  114,755
Cost of revenue     30,084         24,571         93,636         66,932
Gross profit        21,113         18,142         60,919         47,823
Operating expenses:
Selling, general    9,455          7,342          32,945         25,539
and administrative
Research and        5,450          5,084          16,851         15,948
Total operating     14,905         12,426         49,796         41,487
Income from         6,208          5,716          11,123         6,336
Interest expense,   36             56             121            138
Amortization of
debt discount and   16             16             46             42
prepaid debt costs
Income before       6,156          5,644          10,956         6,156
income taxes
Income tax          129            416            1,802          1,849
Net income          $   6,027      $   5,228      $  9,154       $  4,307
Net income per
common share:
Basic               $   0.21       $   0.18       $  0.32        $  0.15
Diluted             $   0.21       $   0.18       $  0.32        $  0.15
Weighted average
common shares
Basic               28,884         28,736         28,857         28,511
Diluted             28,940         28,748         28,883         28,695

(in thousands, except per share data)
                                         September30, 2013  December31, 2012
Current assets:
Cash and cash equivalents                $    37,047         $    28,739
Restricted cash                          4,050               —
Trade and other accounts receivable,     29,370              33,420
Inventories                              42,576              41,620
Prepaid expenses and other current       3,190               3,228
Total current assets                     116,233             107,007
Property and equipment, net              41,976              36,235
Intangible assets, net                   420                 669
Goodwill                                 25,678              25,416
Pension asset                            7,733               6,939
Other non-current assets                 331                 206
Total assets                             $    192,371        $    176,472
Current liabilities:
Accounts payable and accrued             $    29,829         $    27,181
Accrued warranty                         129                 269
Accrued employee compensation            8,344               4,743
Deferred revenue                         2,594               6,408
Short-term borrowings and current        8,253               9,452
portion of long-term debt
Deferred tax liability                   980                 980
Total current liabilities                50,129              49,033
Deferred tax liability, long-term        1,376               1,384
Long-term debt, excluding current        86                  83
Other long-term liabilities              2,280               1,039
Total liabilities                        53,871              51,539
Stockholders' equity:
Common stock, $0.10 par value per
share, 40,000 shares authorized;
29,641 and 29,162 shares issued and      2,961               2,913
outstanding at September 30, 2013 and
December 31, 2012, respectively
Additional paid-in capital               270,455             267,623
Accumulated deficit                      (148,980)           (158,134)
Accumulated other comprehensive income   14,064              12,531
Total stockholders' equity               138,500             124,933
Total liabilities and stockholders'      $    192,371        $    176,472

(in thousands, except per share data)
                  Three Months Ended                       Nine Months Ended
                  September30,  June30,   September30,  September30,  September30,
                  2013           2013       2012           2013           2012
                                            (Restated)                    (Restated)
Gross Profit
GAAP gross        $   21,113     $ 21,576   $   18,142     $   60,919     $   47,823
expense         A 228            261        163            762            543
included in
cost of sales
Non-GAAP gross  B $   21,341     $ 21,837   $   18,305     $   61,681     $   48,366
Total Operating
GAAP total
operating         $   14,905     $ 17,366   $   12,426     $   49,796     $   41,487
compensation    A (491)          (685)      (342)          (1,860)        (2,018)
Non-GAAP total
operating       B $   14,414     $ 16,681   $   12,084     $   47,936     $   39,469
Income From
GAAP income       $   6,208      $ 4,210    $   5,716      $   11,123     $   6,336
from operations
compensation    A 719            946        505            2,622          2,561
Non-GAAP income B $   6,927      $ 5,156    $   6,221      $   13,745     $   8,897
from operations
Net Income
GAAP net income   $   6,027      $ 3,405    $   5,228      $   9,154      $   4,307
compensation    A 719            946        505            2,622          2,561
Non-GAAP net    B $   6,746      $ 4,351    $   5,733      $   11,776     $   6,868
Diluted Net
Income per
GAAP diluted
net income per    0.21           $ 0.12     $   0.18       $   0.32       $   0.15
compensation    A 0.02           0.03       0.02           0.09           0.09
diluted net     B $   0.23       $ 0.15     $   0.20       $   0.41       $   0.24
income per

See notes on next page

    Stock-based compensation expense consists of non-cash charges for employee stock
(A) options, restricted stock awards, restricted stock units and employee stock purchase
    plan awards. Results include stock-based compensation expense as follows (in
                    Three Months Ended                      Nine Months Ended
                    September30,  June30,  September30,  September30,  September30,
                    2013           2013      2012           2013           2012
    Cost of         $    228       $  261    $    163       $   762        $   543
    general and     332            507       213            1,337          1,586
    Research and    159            178       129            523            432
    stock-based     $    719       $  946    $    505       $   2,622      $   2,561
    Non-GAAP measures for periods prior to December 31, 2012 have been adjusted to
    conform to the current methodology wherein amortization of intangible assets is no
(B) longer excluded from GAAP financial measures for purposes of non-GAAP measures. This
    adjustment to the Company's non-GAAP measures was made because amortization of
    intangible assets is no longer a significant expense to the Company.

SOURCE Maxwell Technologies, Inc.

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