SAN DIEGO, Nov. 6, 2018 /PRNewswire/ -- Maxwell
Technologies, Inc. (NASDAQ: MXWL), a leading developer and
manufacturer of energy storage and power delivery solutions, today
reported results for its 2018 third quarter for the period ended
September 30, 2018.
"Overall, our third quarter results were in line with the
midpoint of our guidance range, and we continued to make progress
with the build-out of our product portfolio and in establishing new
business relationships. In Q3, we experienced sequential revenue
growth driven by energy storage product sales in the wind and
non-China bus markets, enhanced
our position in the grid market with a new partnership, and our
overall pipeline continues to grow. Additionally, testing of our
dry battery electrode technology is progressing to plan and we are
making headway with potential partners, which should change the
long-term dynamics of our business. Long-term, we remain optimistic
about our competitive position and our ability to capitalize on the
global opportunities ahead of us," said Dr. Franz Fink, Maxwell's President and Chief
Executive Officer.
Mr. Fink continued, "In Q4, we expect to see typical seasonal
softness in the wind market, with revenue pressure somewhat offset
by sequential growth in the grid and auto markets. We are
continuing to forecast relatively flat high voltage product line
revenue given the uncertainty surrounding the recent U.S. tariffs
on China imports, as well as an
unclear U.S. tax incentive policy. While we expect near-term
results to be impacted by global issues, we are focused on tightly
managing our expenditures and generating efficiencies across our
organization and throughout our global footprint, and our long-term
position remains strong. Overall, momentum is building and we
believe we are well positioned in large, global markets that are
growing and have a need for our technology solutions."
Business Highlights
- In August, Maxwell closed a public offering of 7,590,000 shares
of its common stock at a public offering price of $3.25 per share. The Company received total net
proceeds of approximately $23 million
from the offering, after deducting the underwriting discounts and
commissions and estimated offering expenses payable by the
Company.
- Maxwell announced a grid energy storage subsystem design-in
with Siemens Transmission Solutions. Maxwell's Grid Energy Storage
Systems will provide economical, fast responding, long life grid
voltage and frequency support as an integral design element in
Siemens advanced system solution. This solution is intended to
stabilize global power grids, enabling ISOs, electric utilities and
transmission system operators to have better control of their grids
and reduce the risk of blackouts.
- Maxwell announced that its CONDIS® branded
capacitors will be the first to market with the largest 550kV DC
meshed grid that includes four types of new capacitors for DC
converter valve ultra high voltage circuit breakers using four
lines and four substations. These products will be delivered to the
major OEMs involved in a grid initiative called the ZhangBei
Project, which will secure power supply to Beijing from a variety of renewable sources,
including wind and solar power.
Third Quarter 2018 Financial Highlights
Revenue and Gross Margin
- Total revenue for the third quarter of 2018 was $33.7 million, compared with $29.5 million for the second quarter of 2018.
Energy storage revenue for the third quarter of 2018 was
$26.5 million, compared with
$22.7 million for the second quarter
of 2018, driven by seasonal growth in wind and sequential growth in
non-China bus. High voltage
capacitor revenue was $7.2 million
for the third quarter of 2018, compared with $6.8 million for the second quarter of 2018.
- Gross margin for the third quarter of 2018 was 18.9% compared
with 18.4% in the second quarter of 2018, driven primarily by the
slight increase in high voltage capacitor product sales, which
generally have higher gross margins than the corporate
average.
- Non-GAAP gross margin was 19.9% for both the second and third
quarters of 2018 and excludes acquisition related intangibles
amortization and stock-based compensation expense.
Operating Expense, Interest Expense, Net Loss &
Adjusted EBITDA
- Operating expense for the third quarter of 2018 was
$14.6 million, compared with
$15.4 million for the second quarter
of 2018. The sequential decrease was driven primarily by lower
stock-based compensation expense.
- Non-GAAP operating expense was $12.7
million for both the second and third quarters of 2018 and
excludes stock-based compensation, amortization of intangibles, and
restructuring and related expenses.
- Net interest expense was approximately $1.3 million for the third quarter of 2018
compared with $1.0 million for the
second quarter of 2018, and includes coupon interest and non-cash
interest from amortization of debt issuance costs and discounts on
convertible notes issued in 2017.
- Non-GAAP interest expense was approximately $0.8 million for the third quarter of 2018
compared with $0.7 million for the
second quarter of 2018, and excludes the non-cash interest
mentioned above.
- Net loss for the third quarter of 2018 was $9.7 million, or $(0.23) per share, compared with a net loss of
$11.3 million, or $(0.30) per share, for the second quarter of
2018.
- Non-GAAP net loss for the third quarter of 2018 was
$7.0 million compared with a non-GAAP
net loss of $7.8 million for the
second quarter of 2018.
- Adjusted EBITDA for the third quarter of 2018 was $(3.7) million, compared with $(4.6) million for the second quarter of
2018.
Capital Expenditures
Capital expenditures were $1.9
million for the third quarter of 2018, compared with
$3.9 million for the second quarter
of 2018. Capital expenditures in the third quarter were primarily
related to the Korea manufacturing facility expansion as well as
ultracapacitor, lithium-ion capacitor and dry battery electrode
equipment.
Liquidity
As of September 30, 2018, Maxwell
had approximately $23.6 million in
cash, in addition to a Revolving Line of Credit for up to
$25.0 million. As of September 30, 2018, there were no borrowings
outstanding on the Revolving Line of Credit and the amount
available, based on borrowing base limitations, was $16.3 million.
Maxwell's operating plan for the next 12 months takes into
account existing cash resources and funding requirements, and
management is currently evaluating avenues to reduce operating cash
outflows and to potentially defer certain capital expenditures
given the current state of its high voltage product line, including
delays in various infrastructure projects and uncertainty from tax
reform legislation and tariffs.
Further, Maxwell has a shelf registration statement which allows
the sale of up to an aggregate of $125.0
million of any combination of its common stock, warrants,
debt securities or units. As of September
30, 2018, $24.7 million of
securities have been issued under this shelf-registration statement
and a balance of $100.3 million
remains available for future issuance. Concurrently, the Company is
actively exploring non-dilutive funding opportunities that will
provide the necessary resources to fund its working capital
requirements and fuel investments in research & development,
primarily in its dry battery electrode technology solutions, which
Maxwell believes holds the greatest long-term potential. Please
refer to the Company's Form 10-Q filed with the Securities and
Exchange Commission for additional information regarding risk
factors associated with the execution of this plan.
Financial Results
and Operating Metrics (1)
|
(Unaudited; in
thousands, except for per share amounts)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30, 2018
|
|
June 30,
2018
|
|
September
30,
2017
(2)
|
|
September
30,
2018
|
|
September
30,
2017
(2)
|
Total
revenue
|
$
|
33,727
|
|
|
$
|
29,464
|
|
|
$
|
35,816
|
|
|
$
|
91,607
|
|
|
$
|
99,605
|
|
Energy Storage
revenue
|
$
|
26,535
|
|
|
$
|
22,705
|
|
|
$
|
27,564
|
|
|
$
|
72,242
|
|
|
$
|
66,877
|
|
High-Voltage
revenue
|
$
|
7,192
|
|
|
$
|
6,759
|
|
|
$
|
8,252
|
|
|
$
|
19,365
|
|
|
$
|
32,728
|
|
Gross margin
(2)
|
18.9
|
%
|
|
18.4
|
%
|
|
20.4
|
%
|
|
19.1
|
%
|
|
21.3
|
%
|
Non-GAAP gross margin
(2)
|
19.9
|
%
|
|
19.9
|
%
|
|
22.3
|
%
|
|
20.4
|
%
|
|
22.7
|
%
|
Loss from operations
(2)
|
$
|
(8,234)
|
|
|
$
|
(9,986)
|
|
|
$
|
(13,401)
|
|
|
$
|
(27,586)
|
|
|
$
|
(31,404)
|
|
Non-GAAP loss from
operations (2)
|
$
|
(5,982)
|
|
|
$
|
(6,847)
|
|
|
$
|
(4,497)
|
|
|
$
|
(19,248)
|
|
|
$
|
(14,874)
|
|
Interest expense,
net
|
$
|
1,252
|
|
|
$
|
1,030
|
|
|
$
|
152
|
|
|
$
|
3,275
|
|
|
$
|
312
|
|
Non-GAAP interest
expense, net
|
$
|
787
|
|
|
$
|
704
|
|
|
$
|
128
|
|
|
$
|
2,045
|
|
|
$
|
288
|
|
Net loss
|
$
|
(9,723)
|
|
|
$
|
(11,302)
|
|
|
$
|
(13,860)
|
|
|
$
|
(30,230)
|
|
|
$
|
(34,377)
|
|
Net loss per
share
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
$
|
(0.23)
|
|
|
$
|
(0.30)
|
|
|
$
|
(0.37)
|
|
|
$
|
(0.77)
|
|
|
$
|
(0.98)
|
|
Adjusted
EBITDA
|
$
|
(3,732)
|
|
|
$
|
(4,622)
|
|
|
$
|
(2,125)
|
|
|
$
|
(12,559)
|
|
|
$
|
(7,797)
|
|
Non-GAAP net
loss
|
$
|
(7,006)
|
|
|
$
|
(7,837)
|
|
|
$
|
(4,932)
|
|
|
$
|
(20,662)
|
|
|
$
|
(17,823)
|
|
Non-GAAP net loss per
share
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
$
|
(0.16)
|
|
|
$
|
(0.21)
|
|
|
$
|
(0.13)
|
|
|
$
|
(0.52)
|
|
|
$
|
(0.51)
|
|
Net cash used in
operating activities
|
$
|
(14,045)
|
|
|
$
|
(14,790)
|
|
|
$
|
(2,274)
|
|
|
$
|
(40,046)
|
|
|
$
|
(8,776)
|
|
Cash purchases of
property and equipment
|
$
|
1,861
|
|
|
$
|
3,929
|
|
|
$
|
1,255
|
|
|
$
|
9,708
|
|
|
$
|
3,315
|
|
Cash and cash
equivalents
|
$
|
23,561
|
|
|
$
|
21,547
|
|
|
$
|
52,852
|
|
|
$
|
23,561
|
|
|
$
|
52,852
|
|
|
(1) For a
reconciliation of non-GAAP financial measures, please refer to the
section entitled "Reconciliation of GAAP to Non-GAAP Financial
Measures" included at the end of this release.
|
|
(2)
Historical amounts have been reclassified for the three and nine
months ended September 30, 2017 in accordance with our adoption of
ASU 2017-07 on January 1, 2018 which requires the non-service cost
components of income and expense related to our defined benefit
plans to be presented in the statement of operations separately
from the service cost component and outside the subtotal of loss
from operations.
|
Fourth Quarter 2018 Business Outlook
- Total revenue is expected to be in the range of $25 million to $27
million.
- Gross margin is expected to be 17.3%, plus or minus 100 basis
points.
- Non-GAAP gross margin is expected to be 19.0%, plus or minus
100 basis points.
- GAAP operating expense is expected to be in the range of
$14.6 million to $15.0 million.
- Non-GAAP operating expense is expected to be in the range of
$12.6 million to $13.0 million.
The Company has reconciled expected GAAP and non-GAAP gross
margin, operating expenses, adjusted EBITDA, net loss and net loss
per share at the midpoint of guidance. However, the Company is not
able to estimate additional potentially excluded and reconciling
amounts due to the substantial uncertainties involved. The effect
of these excluded items may be significant. The reconciliation of
GAAP and non-GAAP fourth quarter outlook is as follows (in
millions, except for percentages and per share data):
|
Projected at
Midpoint of Guidance
|
|
Projected at
Midpoint of Guidance
|
|
Three Months
Ended
|
|
Three Months
Ended
|
|
|
December 31,
2018
|
|
|
|
December 31,
2018
|
|
Gross Margin
Reconciliation:
|
|
|
|
Total Operating
Expenses Reconciliation:
|
|
|
|
GAAP gross
margin
|
|
17.3
|
%
|
|
GAAP total operating
expenses
|
|
$
|
14.8
|
|
|
Stock-based
compensation expense
|
|
1.3
|
%
|
|
Stock-based
compensation expense
|
|
(1.8)
|
|
|
Amortization of
intangible assets (1)
|
|
0.4
|
%
|
|
Amortization of
intangible assets (1)
|
|
(0.2)
|
|
|
Non-GAAP gross
margin
|
|
19.0
|
%
|
|
Non-GAAP total
operating expenses
|
|
$
|
12.8
|
|
|
|
|
|
|
|
|
|
|
Net Loss
Reconciliation:
|
|
|
|
Adjusted EBITDA
Reconciliation:
|
|
|
|
GAAP net
loss
|
|
$
|
(11.4)
|
|
|
GAAP net
loss
|
|
$
|
(11.4)
|
|
|
Stock-based
compensation expense
|
|
2.1
|
|
|
Non-cash interest
expense
|
|
0.5
|
|
|
Non-cash interest
expense
|
|
0.5
|
|
|
Interest, taxes,
depreciation, amortization
|
|
3.2
|
|
|
Amortization of
intangible assets (1)
|
|
0.3
|
|
|
EBITDA
|
|
(7.7)
|
|
|
Non-GAAP net
loss
|
|
$
|
(8.5)
|
|
|
Stock-based
compensation expense
|
|
2.1
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
$
|
(5.6)
|
|
|
Net Loss per
Share Reconciliation:
|
|
|
|
|
|
|
|
GAAP net loss per
diluted share
|
|
$
|
(0.25)
|
|
|
|
|
|
|
Expenses excluded
from GAAP
|
|
0.07
|
|
|
|
|
|
|
Non-GAAP net loss per
diluted share
|
|
$
|
(0.18)
|
|
|
|
|
|
|
|
_________________
|
(1)
|
Amortization of
intangible assets is partially recorded in operating expenses and
partially recorded in cost of revenue.
|
Webcast Information
As previously announced, Maxwell management will host a live
webcast at approximately 5:00 p.m.
EST / 2:00 p.m. PST 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, (866) 393-4306
from the U.S. or (734) 385-2616 for international callers, and
entering the conference ID 3668514.
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. We have developed and transformed our patented,
proprietary and fundamental dry electrode manufacturing technology
that we have historically used to make ultracapacitors to create a
breakthrough technology that can be applied to the manufacturing of
batteries. 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. For
more information, visit http://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 operations, condensed
consolidated statements of comprehensive income (loss) 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 uses the following non-GAAP financial measures in
this release, in its earnings conference call and in its on-going
evaluation of the business: (a) non-GAAP gross profit; (b) non-GAAP
operating expense; (c) non-GAAP income (loss) from operations; (d)
EBITDA; (e) adjusted EBITDA; (f) non-GAAP net income (loss); (g)
non-GAAP net income (loss) per diluted share and (h) non-GAAP gross
margin.
The definitions of non-GAAP financial measures used in this news
release are presented below:
- Non-GAAP gross margin and non-GAAP gross profit exclude the
effect of stock-based compensation, amortization of intangible
assets and acquisition related expense.
- Non-GAAP operating expense excludes the effect of stock-based
compensation, amortization of intangible assets, restructuring and
related costs, strategic equity transaction costs, acquisition
related expense, shareholder advisement and settlement costs and
SEC and FCPA legal and settlement costs.
- Non-GAAP loss from operations excludes the effect of
stock-based compensation, amortization of intangible assets,
restructuring and related costs, strategic equity transaction
costs, acquisition related expense, shareholder advisement and
settlement costs and SEC and FCPA legal and settlement costs.
- Adjusted EBITDA excludes the effect of foreign currency
exchange loss (gain), other (income) loss, stock-based
compensation, restructuring and related costs, strategic equity
transaction costs, acquisition related expense, shareholder
advisement and settlement costs and SEC and FCPA legal and
settlement costs.
- Non-GAAP net loss and non-GAAP net loss per share exclude the
effect of stock-based compensation, amortization of intangible
assets, non-cash interest expense, restructuring and related costs,
strategic equity transaction costs, acquisition related expense,
shareholder advisement and settlement costs and SEC and FCPA legal
and settlement costs.
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.
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
items, non-recurring items and items unrelated to ongoing operating
results 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.
The Company's non-GAAP financial measures included in this news
release exclude the following non-cash items, non-recurring items
or items unrelated to its ongoing operating results, as
applicable:
- Stock-based compensation expense consisting of non-cash charges
for stock options, restricted stock awards, restricted stock units,
employee stock purchase plan awards and bonuses and director's fees
expected to be settled with the Company's fully vested common
stock.
- Amortization of intangibles consisting of non-cash amortization
of purchased intangibles acquired in connection with the Company's
acquisition of the assets, including the operating subsidiaries, of
Nesscap Energy, Inc.
- Non-cash interest expense consisting of amortization of
convertible debt discounts and amortization of convertible debt
transaction costs, net of interest capitalized.
- Restructuring and related costs including restructuring and
exit costs incurred in connection with the Company's restructuring
plans.
- Strategic equity transaction costs consisting of expenses
incurred in connection with the Company's strategic equity
investment agreement with China's
SDIC Fund which was terminated in the third quarter of 2017.
- Acquisition related expense consisting of costs incurred in
connection with the Company's acquisition of the assets, including
the operating subsidiaries, of Nesscap Energy, Inc. which include
transaction and integration expenses as well as the fair value
adjustment for acquired inventory recorded in cost of revenue.
- Shareholder advisement and settlement costs which represent
external advisor expenses incurred in connection with preparing for
the Company's 2016 and 2017 shareholder proxy and annual meeting
and shareholder settlement costs.
- SEC and FCPA legal and settlement costs which represent
external legal expenses and settlement expenses related to the U.S.
Securities and Exchange Commission's investigation of the facts and
circumstances surrounding the restatement of the Company's
financial statements for the fiscal years 2011 and 2012, as well as
for ongoing legal matters related to previous Foreign Corrupt
Practices Act (FCPA) violations.
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
Maxwell cautions you that statements included in this news
release or made on the investor conference call referenced herein
that are not a description of historical facts are forward-looking
statements that involve risks, uncertainties, assumptions and other
factors which, if they do not materialize or prove correct, could
cause Maxwell's results to differ materially from historical
results or those expressed or implied by such forward-looking
statements. In addition, this news release contains selected
financial results for the third quarter of 2018, as well as
projections for 2018 financial guidance and longer-term financial
performance goals. The Company's projections for 2018 financial
guidance and longer-term financial performance goals represent
current estimates, including initial estimates of the potential
benefits, synergies and cost savings associated with acquisitions,
which are subject to the risk of being inaccurate because of the
preliminary nature of the forecasts, the risk of further
adjustment, or unanticipated difficulty in developing or selling
products and technologies. The potential risks and uncertainties
that could cause actual growth and results to differ materially
include, but are not limited to:
- Our intentions, beliefs and expectations regarding our
expenses, cost savings, sales, operations and future financial
performance;
- Our operating results;
- Our ability to manage cash flows to enable the business to
continue as a going concern;
- Our ability to develop, introduce and commercialize new
products, technologies applications or enhancements to existing
products and educate prospective customers;
- Anticipated growth and trends in our business;
- Our ability to successfully complete one or more
financings;
- Our ability to otherwise obtain sufficient capital to meet
our operating requirements, including, but not limited to, our
investment requirements for new technology and products, or other
needs;
- Our ability to manage our long-term debt and our ability to
service our debt, including our convertible debt;
- Risks related to changes in, and uncertainty with respect
to, legislation, regulation and governmental policy;
- Risks related to tax laws and tax changes (including U.S.
and foreign taxes on foreign subsidiaries);
- Risks related to our international operations;
- Our expectations regarding our revenues, customers and
distributors;
- Our beliefs and expectations regarding our market
penetration and expansion efforts, especially considering the small
number of vertical markets and a small number of geographic
regions;
- Our expectations regarding the benefits and integration of
recently-acquired businesses and our ability to make future
acquisitions and successfully integrate any such future-acquired
businesses;
- Our ability to protect our intellectual property rights and
to defend claims against us;
- Dependence upon third party manufacturing and other service
providers, many of which are located outside the U.S. and our
ability to manage reliance upon certain key suppliers;
- Our anticipated trends and challenges in the markets in
which we operate; and
- Our expectations and beliefs regarding and the impact of
investigations, claims and litigation.
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 any subsequent quarterly reports on Form 10-Q. Copies of
these documents are available with the Securities and Exchange
Commission at www.sec.gov or may be obtained by contacting
Maxwell's investor relations department at (858) 503-3368, or at
our investor relations website: investors.maxwell.com. The
forward-looking statements contained herein are based on the
current expectations and assumptions of Maxwell and not on
historical facts. All information in this release is as of
November 6, 2018. The Company undertakes no duty to update any
forward-looking statement to reflect actual results or changes in
the Company's expectations.
Investor Contact: Kimberly
Tom, CFA, +1 (858) 503-3368, ir@maxwell.com
MAXWELL
TECHNOLOGIES, INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(in thousands, except
per share data)
|
(Unaudited)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September 30,
2018
|
|
June 30,
2018
|
|
September 30,
2017 (1)
|
|
September 30,
2018
|
|
September 30,
2017 (1)
|
Revenue
|
$
|
33,727
|
|
|
$
|
29,464
|
|
|
$
|
35,816
|
|
|
$
|
91,607
|
|
|
$
|
99,605
|
|
Cost of revenue
(1)
|
27,357
|
|
|
24,036
|
|
|
28,492
|
|
|
74,128
|
|
|
78,420
|
|
Gross profit
(1)
|
6,370
|
|
|
5,428
|
|
|
7,324
|
|
|
17,479
|
|
|
21,185
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative (1)
|
9,052
|
|
|
9,787
|
|
|
14,565
|
|
|
28,411
|
|
|
36,277
|
|
Research and
development (1)
|
5,599
|
|
|
5,549
|
|
|
4,909
|
|
|
16,680
|
|
|
14,064
|
|
Restructuring and
exit costs
|
(47)
|
|
|
78
|
|
|
1,251
|
|
|
(26)
|
|
|
2,248
|
|
Total operating
expenses (1)
|
14,604
|
|
|
15,414
|
|
|
20,725
|
|
|
45,065
|
|
|
52,589
|
|
Loss from operations
(1)
|
(8,234)
|
|
|
(9,986)
|
|
|
(13,401)
|
|
|
(27,586)
|
|
|
(31,404)
|
|
Interest expense,
net
|
1,252
|
|
|
1,030
|
|
|
152
|
|
|
3,275
|
|
|
312
|
|
Other components of
defined benefit plans, net (1)
|
(217)
|
|
|
(211)
|
|
|
(141)
|
|
|
(649)
|
|
|
(439)
|
|
Other (income)
loss
|
34
|
|
|
(41)
|
|
|
(14)
|
|
|
(7)
|
|
|
(67)
|
|
Foreign currency
exchange loss (gain), net
|
56
|
|
|
238
|
|
|
(65)
|
|
|
383
|
|
|
50
|
|
Loss before income
taxes
|
(9,359)
|
|
|
(11,002)
|
|
|
(13,333)
|
|
|
(30,588)
|
|
|
(31,260)
|
|
Income tax provision
(benefit)
|
364
|
|
|
300
|
|
|
527
|
|
|
(358)
|
|
|
3,117
|
|
Net loss
|
$
|
(9,723)
|
|
|
$
|
(11,302)
|
|
|
$
|
(13,860)
|
|
|
$
|
(30,230)
|
|
|
$
|
(34,377)
|
|
Net loss per common
share:
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
$
|
(0.23)
|
|
|
$
|
(0.30)
|
|
|
$
|
(0.37)
|
|
|
$
|
(0.77)
|
|
|
$
|
(0.98)
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
42,497
|
|
|
38,068
|
|
|
37,008
|
|
|
39,381
|
|
|
34,929
|
|
|
(1)
Historical amounts have been reclassified for all periods in 2017
in accordance with our adoption of ASU 2017-07 on January 1,
2018 which requires the non-service cost components of income and
expense related to our defined benefit plans to be presented in the
statement of operations separately from the service cost component
and outside the subtotal of loss from operations.
|
MAXWELL
TECHNOLOGIES, INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(in thousands, except
shares and per share data)
|
(Unaudited)
|
|
|
September 30,
2018
|
|
December 31,
2017
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
23,561
|
|
|
$
|
50,122
|
|
Trade and other
accounts receivable, net
|
30,022
|
|
|
31,643
|
|
Inventories
|
39,621
|
|
|
32,228
|
|
Prepaid expenses and
other current assets
|
4,119
|
|
|
2,983
|
|
Total current
assets
|
97,323
|
|
|
116,976
|
|
Property and
equipment, net
|
31,308
|
|
|
28,044
|
|
Intangible assets,
net
|
10,344
|
|
|
11,715
|
|
Goodwill
|
35,464
|
|
|
36,061
|
|
Pension
asset
|
11,949
|
|
|
11,712
|
|
Other non-current
assets
|
730
|
|
|
871
|
|
Total
assets
|
$
|
187,118
|
|
|
$
|
205,379
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
18,870
|
|
|
$
|
32,758
|
|
Accrued employee
compensation
|
7,244
|
|
|
9,070
|
|
Deferred revenue and
customer deposits
|
4,101
|
|
|
6,669
|
|
Short-term borrowings
and current portion of long-term debt
|
34
|
|
|
33
|
|
Total current
liabilities
|
30,249
|
|
|
48,530
|
|
Deferred tax
liability, long-term
|
7,831
|
|
|
8,762
|
|
Long-term debt,
excluding current portion
|
36,454
|
|
|
35,124
|
|
Defined benefit plan
liability
|
4,109
|
|
|
3,942
|
|
Other long-term
liabilities
|
2,356
|
|
|
2,920
|
|
Total
liabilities
|
80,999
|
|
|
99,278
|
|
Stockholders'
equity:
|
|
|
|
Common stock, $0.10
par value per share, 80,000,000 shares authorized at September 30,
2018 and December 31, 2017; 45,867,418 and 37,199,519 shares issued
and outstanding at September 30, 2018 and December 31, 2017,
respectively
|
4,584
|
|
|
3,717
|
|
Additional paid-in
capital
|
368,044
|
|
|
337,541
|
|
Accumulated
deficit
|
(277,185)
|
|
|
(247,233)
|
|
Accumulated other
comprehensive income
|
10,676
|
|
|
12,076
|
|
Total stockholders'
equity
|
106,119
|
|
|
106,101
|
|
Total liabilities and
stockholders' equity
|
$
|
187,118
|
|
|
$
|
205,379
|
|
MAXWELL
TECHNOLOGIES, INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(in thousands)
(Unaudited)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September 30,
2018
|
|
June 30,
2018
|
|
September 30,
2017
|
|
September 30,
2018
|
|
September 30,
2017
|
OPERATING
ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(9,723)
|
|
|
$
|
(11,302)
|
|
|
$
|
(13,860)
|
|
|
$
|
(30,230)
|
|
|
$
|
(34,377)
|
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
|
Depreciation
|
2,033
|
|
|
2,014
|
|
|
2,231
|
|
|
6,040
|
|
|
6,638
|
|
Amortization of
intangible assets
|
305
|
|
|
314
|
|
|
300
|
|
|
935
|
|
|
502
|
|
Non-cash interest
expense
|
465
|
|
|
452
|
|
|
24
|
|
|
1,356
|
|
|
24
|
|
Loss (recovery) on
lease due to restructuring
|
—
|
|
|
(86)
|
|
|
179
|
|
|
(86)
|
|
|
179
|
|
Pension and defined
benefit plan cost
|
237
|
|
|
248
|
|
|
243
|
|
|
736
|
|
|
520
|
|
Stock-based
compensation expense
|
1,994
|
|
|
2,747
|
|
|
2,755
|
|
|
7,365
|
|
|
6,547
|
|
Gain on sale of
property and equipment
|
—
|
|
|
—
|
|
|
(20)
|
|
|
(4)
|
|
|
(20)
|
|
Provision for
(recovery of) losses on accounts receivable
|
(22)
|
|
|
—
|
|
|
2
|
|
|
(32)
|
|
|
4
|
|
Losses on write downs
of inventory
|
730
|
|
|
190
|
|
|
841
|
|
|
1,395
|
|
|
1,669
|
|
Provision for
warranties
|
5
|
|
|
95
|
|
|
396
|
|
|
165
|
|
|
605
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Trade and other
accounts receivable
|
(211)
|
|
|
2,197
|
|
|
3,111
|
|
|
1,734
|
|
|
(3,662)
|
|
Inventories
|
1,395
|
|
|
(4,893)
|
|
|
(2,431)
|
|
|
(9,492)
|
|
|
3,626
|
|
Prepaid expenses and
other assets
|
(1,195)
|
|
|
521
|
|
|
744
|
|
|
(1,129)
|
|
|
145
|
|
Pension
asset
|
(134)
|
|
|
(152)
|
|
|
(197)
|
|
|
(442)
|
|
|
(502)
|
|
Accounts payable and
accrued liabilities
|
(9,155)
|
|
|
(4,445)
|
|
|
2,579
|
|
|
(13,291)
|
|
|
7,293
|
|
Deferred revenue and
customer deposits
|
(238)
|
|
|
(1,858)
|
|
|
466
|
|
|
(2,161)
|
|
|
1,817
|
|
Accrued employee
compensation
|
76
|
|
|
(668)
|
|
|
950
|
|
|
(1,368)
|
|
|
1,190
|
|
Deferred tax
liability
|
(409)
|
|
|
(6)
|
|
|
(791)
|
|
|
(789)
|
|
|
(981)
|
|
Other long-term
liabilities
|
(198)
|
|
|
(158)
|
|
|
204
|
|
|
(748)
|
|
|
7
|
|
Net cash used in
operating activities
|
(14,045)
|
|
|
(14,790)
|
|
|
(2,274)
|
|
|
(40,046)
|
|
|
(8,776)
|
|
INVESTING
ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Purchases of property
and equipment
|
(1,861)
|
|
|
(3,929)
|
|
|
(1,255)
|
|
|
(9,708)
|
|
|
(3,315)
|
|
Proceeds from sale of
property and equipment
|
—
|
|
|
—
|
|
|
20
|
|
|
8
|
|
|
20
|
|
Cash used in
acquisition, net of cash acquired
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(97)
|
|
Proceeds from sale of
product line
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,500
|
|
Net cash used in
investing activities
|
(1,861)
|
|
|
(3,929)
|
|
|
(1,235)
|
|
|
(9,700)
|
|
|
(1,892)
|
|
FINANCING
ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Repayments of line of
credit and other borrowings
|
(15,008)
|
|
|
(9)
|
|
|
(7)
|
|
|
(15,025)
|
|
|
(24)
|
|
Line of credit
borrowings
|
10,000
|
|
|
—
|
|
|
—
|
|
|
15,000
|
|
|
—
|
|
Proceeds from
convertible debt, net of discount and issuance costs
|
—
|
|
|
—
|
|
|
37,333
|
|
|
—
|
|
|
37,333
|
|
Proceeds from sale of
common stock, net of offering costs
|
22,974
|
|
|
—
|
|
|
—
|
|
|
22,974
|
|
|
—
|
|
Proceeds from
issuance of common stock under equity compensation plans
|
—
|
|
|
229
|
|
|
(1)
|
|
|
229
|
|
|
193
|
|
Net cash provided
by financing activities
|
17,966
|
|
|
220
|
|
|
37,325
|
|
|
23,178
|
|
|
37,502
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
(46)
|
|
|
(57)
|
|
|
(145)
|
|
|
7
|
|
|
659
|
|
Increase
(decrease) in cash and cash equivalents
|
2,014
|
|
|
(18,556)
|
|
|
33,671
|
|
|
(26,561)
|
|
|
27,493
|
|
Cash and cash
equivalents, beginning of period
|
21,547
|
|
|
40,103
|
|
|
19,181
|
|
|
50,122
|
|
|
25,359
|
|
Cash and cash
equivalents, end of period
|
$
|
23,561
|
|
|
$
|
21,547
|
|
|
$
|
52,852
|
|
|
$
|
23,561
|
|
|
$
|
52,852
|
|
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,
2018
|
|
June 30,
2018
|
|
September 30,
2017
|
|
September 30,
2018
|
|
September 30,
2017 (1)
|
Gross Margin
Reconciliation:
|
|
|
|
|
|
|
|
|
|
GAAP gross margin
(1)
|
18.9
|
%
|
|
18.4
|
%
|
|
20.4
|
%
|
|
19.1
|
%
|
|
21.3
|
%
|
Stock-based
compensation expense
|
0.7
|
%
|
|
1.2
|
%
|
|
0.8
|
%
|
|
1.0
|
%
|
|
0.7
|
%
|
Amortization of
intangible assets
|
0.3
|
%
|
|
0.3
|
%
|
|
0.3
|
%
|
|
0.3
|
%
|
|
0.1
|
%
|
Acquisition related
expense
|
—
|
%
|
|
—
|
%
|
|
0.8
|
%
|
|
—
|
%
|
|
0.6
|
%
|
Non-GAAP gross margin
(1)
|
19.9
|
%
|
|
19.9
|
%
|
|
22.3
|
%
|
|
20.4
|
%
|
|
22.7
|
%
|
Gross Profit
Reconciliation:
|
|
|
|
|
|
|
|
|
|
GAAP gross profit
(1)
|
$
|
6,370
|
|
|
$
|
5,428
|
|
|
$
|
7,324
|
|
|
$
|
17,479
|
|
|
$
|
21,185
|
|
Stock-based
compensation expense
|
255
|
|
|
338
|
|
|
271
|
|
|
939
|
|
|
721
|
|
Amortization of
intangible assets
|
90
|
|
|
93
|
|
|
88
|
|
|
276
|
|
|
148
|
|
Acquisition related
expense
|
—
|
|
|
—
|
|
|
287
|
|
|
—
|
|
|
578
|
|
Non-GAAP gross profit
(1)
|
$
|
6,715
|
|
|
$
|
5,859
|
|
|
$
|
7,970
|
|
|
$
|
18,694
|
|
|
$
|
22,632
|
|
Total Operating
Expenses Reconciliation:
|
|
|
|
|
|
|
|
|
|
GAAP total operating
expenses (1)
|
$
|
14,604
|
|
|
$
|
15,414
|
|
|
$
|
20,725
|
|
|
$
|
45,065
|
|
|
$
|
52,589
|
|
Stock-based
compensation expense
|
(1,739)
|
|
|
(2,409)
|
|
|
(2,484)
|
|
|
(6,426)
|
|
|
(5,826)
|
|
Amortization of
intangible assets
|
(215)
|
|
|
(221)
|
|
|
(212)
|
|
|
(659)
|
|
|
(354)
|
|
Restructuring and
related costs
|
47
|
|
|
(78)
|
|
|
(1,251)
|
|
|
26
|
|
|
(2,248)
|
|
Strategic equity
transaction costs
|
—
|
|
|
—
|
|
|
(503)
|
|
|
—
|
|
|
(503)
|
|
Acquisition related
expense
|
—
|
|
|
—
|
|
|
(46)
|
|
|
—
|
|
|
(1,833)
|
|
Shareholder
advisement and settlement costs
|
—
|
|
|
—
|
|
|
(761)
|
|
|
—
|
|
|
(1,135)
|
|
SEC and FCPA legal
and settlement costs
|
—
|
|
|
—
|
|
|
(3,001)
|
|
|
(64)
|
|
|
(3,184)
|
|
Non-GAAP operating
expenses (1)
|
$
|
12,697
|
|
|
$
|
12,706
|
|
|
$
|
12,467
|
|
|
$
|
37,942
|
|
|
$
|
37,506
|
|
Loss from
Operations Reconciliation:
|
|
|
|
|
|
|
|
|
|
GAAP loss from
operations (1)
|
$
|
(8,234)
|
|
|
$
|
(9,986)
|
|
|
$
|
(13,401)
|
|
|
$
|
(27,586)
|
|
|
$
|
(31,404)
|
|
Stock-based
compensation expense
|
1,994
|
|
|
2,747
|
|
|
2,755
|
|
|
7,365
|
|
|
6,547
|
|
Amortization of
intangible assets
|
305
|
|
|
314
|
|
|
300
|
|
|
935
|
|
|
502
|
|
Restructuring and
related costs
|
(47)
|
|
|
78
|
|
|
1,251
|
|
|
(26)
|
|
|
2,248
|
|
Strategic equity
transaction costs
|
—
|
|
|
—
|
|
|
503
|
|
|
—
|
|
|
503
|
|
Acquisition related
expense
|
—
|
|
|
—
|
|
|
333
|
|
|
—
|
|
|
2,411
|
|
Shareholder
advisement and settlement costs
|
—
|
|
|
—
|
|
|
761
|
|
|
—
|
|
|
1,135
|
|
SEC and FCPA legal
and settlement costs
|
—
|
|
|
—
|
|
|
3,001
|
|
|
64
|
|
|
3,184
|
|
Non-GAAP loss from
operations (1)
|
$
|
(5,982)
|
|
|
$
|
(6,847)
|
|
|
$
|
(4,497)
|
|
|
$
|
(19,248)
|
|
|
$
|
(14,874)
|
|
Adjusted EBITDA
Reconciliation:
|
|
|
|
|
|
|
|
|
|
GAAP net
loss
|
$
|
(9,723)
|
|
|
$
|
(11,302)
|
|
|
$
|
(13,860)
|
|
|
$
|
(30,230)
|
|
|
$
|
(34,377)
|
|
Interest expense,
net
|
1,252
|
|
|
1,030
|
|
|
152
|
|
|
3,275
|
|
|
312
|
|
Income tax provision
(benefit)
|
364
|
|
|
300
|
|
|
527
|
|
|
(358)
|
|
|
3,117
|
|
Depreciation
|
2,033
|
|
|
2,014
|
|
|
2,231
|
|
|
6,040
|
|
|
6,638
|
|
Amortization of
intangible assets
|
305
|
|
|
314
|
|
|
300
|
|
|
935
|
|
|
502
|
|
EBITDA
|
(5,769)
|
|
|
(7,644)
|
|
|
(10,650)
|
|
|
(20,338)
|
|
|
(23,808)
|
|
Foreign currency
exchange loss (gain), net
|
56
|
|
|
238
|
|
|
(65)
|
|
|
383
|
|
|
50
|
|
Other
income
|
34
|
|
|
(41)
|
|
|
(14)
|
|
|
(7)
|
|
|
(67)
|
|
Stock-based
compensation expense
|
1,994
|
|
|
2,747
|
|
|
2,755
|
|
|
7,365
|
|
|
6,547
|
|
Restructuring and
related costs
|
(47)
|
|
|
78
|
|
|
1,251
|
|
|
(26)
|
|
|
2,248
|
|
Strategic equity
transaction costs
|
—
|
|
|
—
|
|
|
503
|
|
|
—
|
|
|
503
|
|
Acquisition related
expense
|
—
|
|
|
—
|
|
|
333
|
|
|
—
|
|
|
2,411
|
|
Shareholder
advisement and settlement costs
|
—
|
|
|
—
|
|
|
761
|
|
|
—
|
|
|
1,135
|
|
SEC and FCPA legal
and settlement costs
|
—
|
|
|
—
|
|
|
3,001
|
|
|
64
|
|
|
3,184
|
|
Adjusted
EBITDA
|
$
|
(3,732)
|
|
|
$
|
(4,622)
|
|
|
$
|
(2,125)
|
|
|
$
|
(12,559)
|
|
|
$
|
(7,797)
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September 30,
2018
|
|
June 30,
2018
|
|
September 30,
2017
|
|
September 30,
2018
|
|
September 30,
2017 (1)
|
Interest
Expense, net Reconciliation
|
|
|
|
|
|
|
|
|
|
GAAP interest
expense, net
|
$
|
1,252
|
|
|
$
|
1,030
|
|
|
$
|
152
|
|
|
$
|
3,275
|
|
|
$
|
312
|
|
Non-cash interest
expense
|
(465)
|
|
|
(326)
|
|
|
(24)
|
|
|
(1,230)
|
|
|
(24)
|
|
Non-GAAP interest
expense, net
|
$
|
787
|
|
|
$
|
704
|
|
|
$
|
128
|
|
|
$
|
2,045
|
|
|
$
|
288
|
|
Net Loss
Reconciliation
|
|
|
|
|
|
|
|
|
|
GAAP net
loss
|
$
|
(9,723)
|
|
|
$
|
(11,302)
|
|
|
$
|
(13,860)
|
|
|
$
|
(30,230)
|
|
|
$
|
(34,377)
|
|
Stock-based
compensation expense
|
1,994
|
|
|
2,747
|
|
|
2,755
|
|
|
7,365
|
|
|
6,547
|
|
Amortization of
intangible assets
|
305
|
|
|
314
|
|
|
300
|
|
|
935
|
|
|
502
|
|
Non-cash interest
expense
|
465
|
|
|
326
|
|
|
24
|
|
|
1,230
|
|
|
24
|
|
Restructuring and
related costs
|
(47)
|
|
|
78
|
|
|
1,251
|
|
|
(26)
|
|
|
2,248
|
|
Strategic equity
transaction costs
|
—
|
|
|
—
|
|
|
503
|
|
|
—
|
|
|
503
|
|
Acquisition related
expense
|
—
|
|
|
—
|
|
|
333
|
|
|
—
|
|
|
2,411
|
|
Shareholder
advisement and settlement costs
|
—
|
|
|
—
|
|
|
761
|
|
|
—
|
|
|
1,135
|
|
SEC and FCPA legal
and settlement costs
|
—
|
|
|
—
|
|
|
3,001
|
|
|
64
|
|
|
3,184
|
|
Non-GAAP net
loss
|
$
|
(7,006)
|
|
|
$
|
(7,837)
|
|
|
$
|
(4,932)
|
|
|
$
|
(20,662)
|
|
|
$
|
(17,823)
|
|
Net Loss per
Diluted Share Reconciliation:
|
|
|
|
|
|
|
|
|
|
GAAP net loss per
diluted share
|
$
|
(0.23)
|
|
|
$
|
(0.30)
|
|
|
$
|
(0.37)
|
|
|
$
|
(0.77)
|
|
|
$
|
(0.98)
|
|
Stock-based
compensation expense
|
0.05
|
|
|
0.07
|
|
|
0.07
|
|
|
0.19
|
|
|
0.19
|
|
Amortization of
intangible assets
|
0.01
|
|
|
0.01
|
|
|
0.01
|
|
|
0.03
|
|
|
0.01
|
|
Non-cash interest
expense
|
0.01
|
|
|
0.01
|
|
|
*
|
|
0.03
|
|
|
*
|
Restructuring and
related costs
|
*
|
|
*
|
|
0.04
|
|
|
*
|
|
0.07
|
|
Strategic equity
transaction costs
|
—
|
|
|
—
|
|
|
0.01
|
|
|
—
|
|
|
0.01
|
|
Acquisition related
expense
|
—
|
|
|
—
|
|
|
0.01
|
|
|
—
|
|
|
0.07
|
|
Shareholder
advisement and settlement costs
|
—
|
|
|
—
|
|
|
0.02
|
|
|
—
|
|
|
0.03
|
|
SEC and FCPA legal
and settlement costs
|
—
|
|
|
—
|
|
|
0.08
|
|
|
*
|
|
0.09
|
|
Non-GAAP net loss per
diluted share
|
$
|
(0.16)
|
|
|
$
|
(0.21)
|
|
|
$
|
(0.13)
|
|
|
$
|
(0.52)
|
|
|
$
|
(0.51)
|
|
Weighted
Average Common Shares Outstanding:
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
42,497
|
|
38,068
|
|
37,008
|
|
39,381
|
|
34,929
|
|
*
|
Net loss effect of
this reconciling item was less than $0.01 per share.
|
(1)
Historical amounts have been reclassified for all periods in 2017
in accordance with our adoption of ASU 2017-07 on January 1,
2018 which requires the non-service cost components of income and
expense related to our defined benefit plans to be presented in the
statement of operations separately from the service cost component
and outside the subtotal of loss from operations.
|
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SOURCE Maxwell Technologies, Inc.