Maxwell Reports Third Quarter 2017 Results
SAN DIEGO, Nov. 8, 2017 /PRNewswire/ -- Maxwell Technologies, Inc. (NASDAQ: MXWL) today reported financial results for the three months ended September 30, 2017. Total revenues for the third quarter of 2017 were $35.8 million, compared with $37.1 million for the second quarter of 2017 and $25.5 million for the prior year quarter. Net loss for the third quarter of 2017 was $13.9 million, compared with a net loss of $10.1 million for the second quarter of 2017 and a net loss of $6.9 million for the prior year quarter. The Company reported $(2.1) million of adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) for the third quarter of 2017, compared with $(1.8) million for the second quarter of 2017 and $(2.3) million for the prior year quarter. Non-GAAP net loss for the third quarter of 2017 was $4.9 million, compared with a non-GAAP net loss of $5.5 million for the second quarter of 2017 and $5.6 million for the prior year quarter. Non-GAAP financial measures are described and defined later in this release.
"We have been focused on intersecting three disruptive megatrends in the automotive and grid markets that we expect will accelerate future growth. We expect those megatrends - renewable power generation, vehicle electrification and the battery electric vehicle revolution - to drive unprecedented growth in these markets, which are at the center of our strategy, and for the technologies in our portfolio. With $43 million in net cash recently raised, we are optimistic that we are now sufficiently capitalized to seize this considerable opportunity," said Dr. Franz Fink, Maxwell's President and Chief Executive Officer. "At the same time, we are very focused on continuing to cement our foundation through improving operational efficiencies, developing cutting-edge technology platforms, optimizing our product portfolio and achieving profitability to create the runway to capitalize on the aforementioned opportunities."
Financial Results and Operating Metrics (1)
(Unaudited; in thousands, except for per share amounts)
Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30, September 30,
2017 2017 2016 2017 2016
---- ---- ---- ---- ----
Total revenue $35,816 $37,103 $25,506 $99,605 $94,844
Ultracapacitor revenue $27,564 $25,079 $14,017 $66,877 $58,761
High-Voltage revenue $8,252 $12,024 $11,489 $32,728 $31,507
Microelectronics revenue $ - $ - $ - $ - $4,576
Gross margin 20.6% 21.1% 29.9% 21.5% 28.7%
Non-GAAP gross margin 22.5% 22.7% 30.5% 23.0% 29.6%
Loss from operations $(13,260) $(8,673) $(5,939) $(30,965) $(15,991)
Non-GAAP loss from operations $(4,356) $(4,037) $(4,730) $(14,435) $(11,571)
Interest expense, net $152 $97 $48 $312 $179
Non-GAAP interest expense, net $128 $97 $48 $288 $179
Net loss $(13,860) $(10,118) $(6,855) $(34,377) $(11,536)
Net loss per share
Basic and diluted $(0.37) $(0.28) $(0.21) $(0.98) $(0.36)
Adjusted EBITDA $(2,125) $(1,778) $(2,280) $(7,797) $(4,280)
Non-GAAP net loss $(4,932) $(5,482) $(5,646) $(17,823) $(14,013)
Non-GAAP net loss per share
Basic and diluted $(0.13) $(0.15) $(0.18) $(0.51) $(0.44)
Net cash used in operating
activities $(2,274) $(2,677) $(6,995) $(8,776) $(13,983)
Cash purchases of property and
equipment $1,255 $1,115 $1,060 $3,315 $4,689
Cash, cash equivalents and
restricted cash $52,852 $19,181 $27,902 $52,852 $27,902
(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.
Discussion of Financial Results for the Quarter
Please note that Nesscap is included in all results and outlook beginning May 1, 2017.
Revenue and Gross Margin
-- Total revenue for the third quarter of 2017 was $35.8 million, compared
with $37.1 million for the second quarter of 2017, driven by seasonal
softness in high-voltage offset by strong ultracapacitor revenue in the
wind market. Ultracapacitor revenue for the third quarter of 2017 was
$27.6 million, compared with $25.1 million for the second quarter of
2017. High-voltage revenue was $8.3 million for the third quarter of
2017, compared with $12.0 million for the second quarter of 2017.
-- Gross margin for the third quarter of 2017 was 20.6% compared with 21.1%
in the second quarter of 2017, driven by stronger ultracapacitor sales,
which generally have lower gross margins than the corporate average, and
softer high-voltage sales, which generally have higher gross margins
than the corporate average.
-- Non-GAAP gross margin for the third quarter of 2017 was 22.5% compared
with 22.7% in the second quarter of 2017 and excludes acquisition
related intangibles amortization and inventory step-up expense as well
as stock-based compensation expense.
Operating Expense, Interest Expense, Net Loss & Adjusted EBITDA
-- Operating expense for the third quarter of 2017 was $20.7 million,
compared with $16.5 million for the second quarter of 2017. The
quarter-over-quarter increase was driven by restructuring charges
associated with the early execution of an organizational optimization
following the Nesscap acquisition and costs related to certain legal
matters, including an amended agreement with Viex, a settlement with the
SEC and fees associated with an investment agreement with SDIC that were
previously capitalized.
-- Non-GAAP operating expense for the third quarter of 2017 was $12.4
million compared with $12.5 million for the second quarter of 2017 and
excludes stock-based compensation, amortization of intangibles,
acquisition related expenses, restructuring charges and other
non-recurring legal and settlement costs, including, as noted above, the
Viex amendment, the SEC settlement and fees associated with the SDIC
agreement.
-- Net interest expense for the third quarter of 2017 was $152,000 and
includes the coupon interest for the last 6 days of the quarter from the
convertible notes issued on September 25, 2017 and non-cash interest for
amortization of debt issuance costs and discounts.
-- Non-GAAP interest expense for the third quarter of 2017 was $128,000,
which excludes the non-cash interest mentioned above.
-- Net loss for the third quarter of 2017 was $13.9 million, or $(0.37) per
share, compared with a net loss of $10.1 million, or $(0.28) per share,
for the second quarter of 2017.
-- Non-GAAP net loss for the third quarter of 2017 was $4.9 million
compared with a non-GAAP net loss of $5.5 million for the second quarter
of 2017.
-- Adjusted EBITDA for the third quarter of 2017 was $(2.1) million,
compared with $(1.8) million for the second quarter of 2017.
Capital Expenditures
-- Capital expenditures during the third quarter of 2017 were $1.3 million,
compared with $1.1 million for the second quarter of 2017. Capital
expenditures in the third quarter were primarily related to investments
in the Korea manufacturing facility, Switzerland facility and equipment
upgrades and dry battery electrode spending.
Strategic Business & Operational Highlights
-- Maxwell issued $46 million aggregate principal of convertible senior
notes in a private offering to qualified institutional buyers. The
initial $40 million was issued on September 25th and the exercise of the
full $6 million over-allotment was issued on October 11th (collectively
the "Notes"). The Notes bear interest at a fixed rate of 5.5%, paid
semi-annually in arrears on March 15th and September 15th, beginning
March 15, 2018 and mature on September 15, 2022, unless earlier
purchased, redeemed or converted. The conversion rate is approximately
157.51 shares of Maxwell common stock per $1000 principal amount of
Notes, equivalent to an initial conversion price of $6.35 per share. The
Notes are convertible by noteholders under certain conditions until June
2022, and then convertible after June 2022 without restriction. Maxwell
can convert the Notes after September 2020 under certain conditions if
Maxwell's stock trades above 130% of the conversion price. Maxwell
received approximately $43 million net cash, including debt discount and
offering costs. In conjunction with this issuance, the Company's
previous agreement with SDIC was terminated.
-- Maxwell recently made an offer of settlement with the Securities and
Exchange Commission ("SEC") to resolve 2011 and 2012 financial
restatement matters for a settlement fee of $2.8 million. While the
Company's settlement offer remains subject to review by the SEC
Commissioners, the proposed settlement would be entered into by the
Company without admitting or denying the SEC's findings and would
resolve alleged violations of certain anti-fraud and books and records
provisions of the federal securities laws and related rules, thereby
concluding the investigation. Under the terms of the proposed
settlement, Maxwell would pay $2.8 million in a civil penalty and agree
not to commit or cause any violations of certain anti-fraud and books
and records provisions of the federal securities laws and related rules.
The full amount of the settlement fee is anticipated to be payable by
Maxwell in full once the definitive settlement agreement has been
approved and finalized.
Business Outlook
-- Total revenue for the fourth quarter of 2017 is expected to be in the
range of $31 million to $33 million.
-- Gross margin for the fourth quarter of 2017 is expected to be 26%, plus
or minus 150 basis points.
-- Non-GAAP gross margin for the fourth quarter of 2017 is expected to be
in the range of 26% to 29%.
-- GAAP operating expense for the fourth quarter of 2017 is expected to be
in the range of $14.4 million to $14.8 million.
-- Non-GAAP operating expense for the fourth quarter of 2017 is expected to
be in the range of $11.9 million to $12.3 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 expectations. 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 Projected at
of Guidance Midpoint of
Guidance
--------------------- -------------
Three Months Ended Three Months Ended
December 31, 2017 December 31, 2017
----------------- -----------------
Gross Margin
Reconciliation: Total Operating Expenses Reconciliation:
---------------- ----------------------------------------
GAAP gross margin 26.0% GAAP total operating expenses $14.6
Stock-based compensation
expense 0.9% Stock-based compensation expense (2.0)
Acquisition related
expense (1) 0.6% Acquisition related expense (1) (0.4)
Non-GAAP gross margin 27.5% SEC and FCPA legal and settlement costs (0.1)
==== ----
Non-GAAP total operating expenses $12.1
=====
Net Loss Reconciliation:
------------------------
GAAP net loss $(7.5) Adjusted EBITDA Reconciliation:
-------------------------------
Stock-based compensation
expense 2.3 GAAP net loss $(7.5)
Non-cash interest expense 0.4 Non-cash interest expense 0.4
Acquisition related 0.6 Interest, taxes, depreciation,
expense (1) amortization 3.5
---
SEC and FCPA legal and
settlement costs 0.1 EBITDA (3.6)
---
Non-GAAP net loss $(4.1) Stock-based compensation expense 2.3
=====
Acquisition related expense (1) 0.1
Net Loss per Share
Reconciliation: SEC and FCPA legal and settlement costs 0.1
------------------ ---
GAAP net loss per diluted
share $(0.20) Adjusted EBITDA $(1.1)
=====
Expenses excluded from
GAAP 0.09
Non-GAAP net loss per
diluted share $(0.11)
======
___________________
(1) Acquisition related expense 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, (833) 286-5806 from the U.S. or (647) 689-4451 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. 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 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 intangibles, accelerated
depreciation 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, release of tax
liability and SEC and FCPA legal and settlement costs.
-- Non-GAAP loss from operations excludes the effect of accelerated
depreciation, stock-based compensation, amortization of intangible
assets, restructuring and related costs, strategic equity transaction
costs, acquisition related expense, shareholder advisement and
settlement costs, release of tax liability and SEC and FCPA legal and
settlement costs.
-- Adjusted EBITDA excludes the effect of foreign currency exchange loss,
other income, stock-based compensation, restructuring and related costs,
strategic equity transaction costs, acquisition related expense,
shareholder advisement and settlement costs, release of tax liability,
gain on sale of product line and SEC and FCPA legal and settlement
costs.
-- Non-GAAP net loss and non-GAAP net loss per share exclude the effect of
accelerated depreciation, 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, release of tax liability,
gain on sale of product line 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 operating subsidiaries of Nesscap Energy, Inc.
-- Non-cash interest expense consisting of amortization of convertible debt
discounts and amortization of convertible debt transaction costs.
-- Gain on sale of product line consisting of the gain recorded in
connection with the sale of the Company's microelectronics product line.
-- Release of tax liability consisting of a foreign tax liability that was
released without payment due to the lapse of a statute of limitation.
-- Restructuring and related costs including restructuring and exit costs
incurred in connection with the Company's restructuring plans,
disposition transaction costs consisting of legal fees and other
expenses incurred in connection with the sale of the microelectronics
product line and executive transition costs representing recruiting and
other expenses incurred in relation to the resignation and hiring of
certain executive officers.
-- Accelerated depreciation charges representing the adjustment of the
remaining useful life for certain manufacturing equipment in connection
with the Company's restructuring plan.
-- 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 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
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:
-- Dependence upon the sale of products to a small number of vertical
markets, many of which are dependent on government funding or government
subsidies which may or may not continue in the future;
-- Uncertainties related to the global geopolitical landscape and the
recent elections in the United States;
-- Risks related to acquisitions and potential for unsuccessful integration
of acquired businesses;
-- 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;
-- Our ability to obtain sufficient capital to meet our operating or other
needs;
-- Our ability to manage our liabilities;
-- Our ability to service our debt;
-- Risks related to the triggering of the conditional conversion feature in
our senior notes;
-- Downward pressures on product pricing from increased competition and
potential shifts in sales mix with respect to low margin and high margin
business;
-- Our ability to manage and minimize the impact of unfavorable legal
proceedings;
-- Risk that activist stockholders attempt to effect changes to our company
which could adversely affect our corporate governance;
-- 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;
-- Dependence upon the sale of products into Asia and Europe, where
macroeconomic factors outside our control may adversely affect our
sales;
-- 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;
-- 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 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 match production volume to actual customer demand.
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) 503-3368, or at our investor relations website: investors.maxwell.com. All information in this release is as of November 8, 2017. The Company undertakes no duty to update any forward-looking statement to reflect actual results or changes in the Company's expectations.
Investor Contact: Soohwan Kim, CFA, The Blueshirt Group, +1 (858) 503-3368, ir@maxwell.com
Media Contact: Sylvie Tse, Metis Communications, +1 (617) 236-0500, maxwell@metiscomm.com
MAXWELL TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30, September 30,
2017 2017 2016 2017 2016
---- ---- ---- ---- ----
Revenue $35,816 $37,103 $25,506 $99,605 $94,844
Cost of revenue 28,420 29,276 17,878 78,191 67,582
------ ------ ------ ------ ------
Gross profit 7,396 7,827 7,628 21,414 27,262
Operating expenses:
Selling, general and administrative 14,514 12,070 8,374 36,124 26,695
Research and development 4,891 4,430 5,038 14,007 16,106
Restructuring and exit costs 1,251 - - 2,248 297
Impairment of assets - - 155 - 155
--- --- --- --- ---
Total operating expenses 20,656 16,500 13,567 52,379 43,253
------ ------ ------ ------ ------
Loss from operations (13,260) (8,673) (5,939) (30,965) (15,991)
Gain on sale of product line - - - - (6,657)
Interest expense, net 152 97 48 312 179
Other income (14) (52) (5) (67) (136)
Foreign currency exchange (gain) loss,
net (65) 18 49 50 252
--- --- --- ---
Loss before income taxes (13,333) (8,736) (6,031) (31,260) (9,629)
Income tax provision 527 1,382 824 3,117 1,907
Net loss $(13,860) $(10,118) $(6,855) $(34,377) $(11,536)
======== ======== ======= ======== ========
Net loss per common share:
Basic and diluted $(0.37) $(0.28) $(0.21) $(0.98) $(0.36)
Weighted average common shares
outstanding:
Basic and diluted 37,008 35,526 31,989 34,929 31,828
MAXWELL TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(Unaudited)
September 30, December 31, 2016
2017
----
ASSETS
Current assets:
Cash and cash equivalents $52,852 $25,359
Trade and other accounts receivable, net 27,142 20,441
Inventories, net 31,599 32,248
Prepaid expenses and other current
assets 3,336 4,407
-----
Total current assets 114,929 82,455
Property and equipment, net 26,069 26,120
Intangible assets, net 11,147 -
Goodwill 35,188 22,799
Pension asset 9,605 8,887
Other non-current assets 883 613
Total assets $197,821 $140,874
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $29,580 $19,181
Accrued employee compensation 8,865 6,152
Deferred revenue and customer deposits 6,236 3,967
Short-term borrowings and current
portion of long-term debt 33 40
--- ---
Total current liabilities 44,714 29,340
Deferred tax liability, long-term 7,965 8,580
Long-term debt, excluding current
portion 30,171 43
Defined benefit plan liability 3,462 -
Other long-term liabilities 3,004 2,089
Total liabilities 89,316 40,052
------ ------
Stockholders' equity:
Common stock, $0.10 par value per share,
80,000,000 shares authorized at
September 30, 2017 and December 31,
2016; 37,075,764 and 32,135,029 shares
issued and outstanding at September 30,
2017 and December 31, 2016,
respectively 3,705 3,210
Additional paid-in capital 334,593 296,316
Accumulated deficit (238,481) (204,104)
Accumulated other comprehensive income 8,688 5,400
----- -----
Total stockholders' equity 108,505 100,822
Total liabilities and stockholders'
equity $197,821 $140,874
======== ========
MAXWELL TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, except per share data) (Unaudited)
Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30, September 30,
2017 2017 2016 2017 2016
---- ---- ---- ---- ----
OPERATING ACTIVITIES:
Net loss $(13,860) $(10,118) $(6,855) $(34,377) $(11,536)
Adjustments to reconcile net loss to
net cash used in operating
activities:
Depreciation 2,231 2,259 2,450 6,638 7,416
Amortization of intangible assets 300 202 - 502 -
Non-cash interest expense 24 - - 24 -
Loss on lease due to restructuring 179 - - 179 87
Pension and defined benefit plan cost 243 191 161 520 479
Stock-based compensation expense 2,755 2,254 1,097 6,547 3,759
Gain on sale of property and
equipment (20) - - (20) (131)
Impairment of property and equipment - - 155 - 155
Gain on sale of product line - - - - (6,657)
Unrealized (gain) loss on foreign
currency exchange rates 14 (48) 6 (8) 45
Release of tax liability - - - - (1,518)
Provision for losses on accounts
receivable 2 2 (11) 4 56
Provision for losses on inventory 841 811 87 1,669 226
Provision for warranties 396 20 137 605 444
Changes in operating assets and
liabilities:
Trade and other accounts receivable 3,097 (3,319) 5,320 (3,654) 20,151
Inventories (2,431) 4,135 (2,023) 3,626 (7,209)
Prepaid expenses and other assets 744 (146) (660) 145 (1,288)
Pension asset (197) (150) (144) (502) (441)
Accounts payable and accrued
liabilities 2,579 3,143 (5,985) 7,293 (16,704)
Deferred revenue and customer
deposits 466 (1,275) (238) 1,817 11
Accrued employee compensation 950 (545) (467) 1,190 (962)
Deferred tax liability (791) 19 123 (981) 113
Other long-term liabilities 204 (112) (148) 7 (479)
---
Net cash used in operating activities (2,274) (2,677) (6,995) (8,776) (13,983)
------ ------ ------ ------ -------
INVESTING ACTIVITIES:
Purchases of property and equipment (1,255) (1,115) (1,060) (3,315) (4,689)
Proceeds from sale of property and
equipment 20 - - 20 133
Cash used in acquisition, net of cash
acquired - (97) - (97) -
Proceeds from sale of product line - 1,500 - 1,500 20,486
---
Net cash provided by (used in)
investing activities (1,235) 288 (1,060) (1,892) 15,930
------ --- ------ ------ ------
FINANCING ACTIVITIES:
Principal payments on long-term debt
and short-term borrowings (7) (7) (12) (24) (33)
Proceeds from long-term debt and
short-term borrowings, net of
discount and issuance costs 37,333 - - 37,333 -
Proceeds from issuance of common
stock under equity compensation
plans (1) 194 5 193 618
---
Net cash provided by (used in)
financing activities 37,325 187 (7) 37,502 585
Effect of exchange rate changes on
cash, cash equivalents and
restricted cash (145) 489 189 659 588
---- --- --- --- ---
Increase (decrease) in cash, cash
equivalents and restricted cash 33,671 (1,713) (7,873) 27,493 3,120
Cash, cash equivalents and restricted
cash, beginning of period 19,181 20,894 35,775 25,359 24,782
Cash, cash equivalents and restricted
cash, end of period $52,852 $19,181 $27,902 $52,852 $27,902
======= ======= ======= ======= =======
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, 2017 June 30, September 30,
2016 September 30, 2017 September 30, 2016
2017
----
Gross Margin Reconciliation:
----------------------------
GAAP gross margin 20.6% 21.1% 29.9% 21.5% 28.7%
Stock-based compensation expense 0.8% 0.7% 0.6% 0.7% 0.8%
Amortization of intangible assets 0.3% 0.1% - % 0.2% - %
Accelerated depreciation - % - % - % - % 0.1%
Acquisition related expense 0.8% 0.8% - % 0.6% - %
--- --- --- --- --- --- ---
Non-GAAP gross margin 22.5% 22.7% 30.5% 23.0% 29.6%
==== ==== ==== ==== ====
Gross Profit Reconciliation:
----------------------------
GAAP gross profit $7,396 $7,827 $7,628 $21,414 $27,262
Stock-based compensation expense 271 257 146 721 643
Amortization of intangible assets 88 60 - 148 -
Accelerated depreciation - - - - 125
Acquisition related expense 287 291 - 578 -
--- --- --- --- ---
Non-GAAP gross profit $8,042 $8,435 $7,774 $22,861 $28,030
====== ====== ====== ======= =======
Total Operating Expenses
Reconciliation:
------------------------
GAAP total operating expenses $20,656 $16,500 $13,567 $52,379 $43,253
Stock-based compensation expense (2,484) (1,997) (951) (5,826) (3,116)
Amortization of intangible assets (212) (142) - (354) -
Restructuring and related costs (1,251) - - (2,248) (853)
Release of tax liability(1) - - - - 1,278
Strategic equity transaction costs (503) - - (503) -
Acquisition related expense (46) (1,512) - (1,833) -
Shareholder advisement and
settlement costs (761) (315) - (1,135) (314)
SEC and FCPA legal and settlement
costs (3,001) (62) (112) (3,184) (647)
------ --- ---- ------ ----
Non-GAAP operating expenses $12,398 $12,472 $12,504 $37,296 $39,601
======= ======= ======= ======= =======
Loss from Operations
Reconciliation:
--------------------
GAAP loss from operations $(13,260) $(8,673) $(5,939) $(30,965) $(15,991)
Stock-based compensation expense 2,755 2,254 1,097 6,547 3,759
Amortization of intangible assets 300 202 - 502 -
Restructuring and related costs 1,251 - - 2,248 853
Accelerated depreciation - - - - 125
Release of tax liability(1) - - - - (1,278)
Strategic equity transaction costs 503 - - 503 -
Acquisition related expense 333 1,803 - 2,411 -
Shareholder advisement and
settlement costs 761 315 - 1,135 314
SEC and FCPA legal and settlement
costs 3,001 62 112 3,184 647
Non-GAAP loss from operations $(4,356) $(4,037) $(4,730) $(14,435) $(11,571)
======= ======= ======= ======== ========
Adjusted EBITDA Reconciliation:
-------------------------------
GAAP net loss $(13,860) $(10,118) $(6,855) $(34,377) $(11,536)
Interest expense, net 152 97 48 312 179
Income tax provision 527 1,382 824 3,117 1,907
Depreciation 2,231 2,259 2,450 6,638 7,416
Amortization of intangible assets 300 202 - 502 -
--- --- --- --- ---
EBITDA (10,650) (6,178) (3,533) (23,808) (2,034)
Foreign currency exchange loss,
net (65) 18 49 50 252
Other income (14) (52) (5) (67) (136)
Stock-based compensation expense 2,755 2,254 1,097 6,547 3,759
Gain on sale of product line - - - - (6,657)
Restructuring and related costs 1,251 - - 2,248 853
Strategic equity transaction costs 503 - - 503 -
Acquisition related expense 333 1,803 - 2,411 -
Release of tax liability(1) - - - - (1,278)
Shareholder advisement and
settlement costs 761 315 - 1,135 314
SEC and FCPA legal and settlement
costs 3,001 62 112 3,184 647
----- --- --- ----- ---
Adjusted EBITDA $(2,125) $(1,778) $(2,280) $(7,797) $(4,280)
======= ======= ======= ======= =======
Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30, September 30,
2017 2016 2017 2016
2017
----
Interest Expense, net
Reconciliation
---------------------
GAAP interest expense,
net $152 $97 $48 $312 $179
Non-cash interest expense (24) - - (24) -
Non-GAAP interest
expense, net $128 $97 $48 $288 $179
==== === === ==== ====
Net Loss Reconciliation
-----------------------
GAAP net loss $(13,860) $(10,118) $(6,855) $(34,377) $(11,536)
Stock-based compensation
expense 2,755 2,254 1,097 6,547 3,759
Amortization of
intangible assets 300 202 - 502 -
Non-cash interest expense 24 - - 24 -
Gain on sale of product
line - - - - (6,657)
Restructuring and related
costs 1,251 - - 2,248 853
Accelerated depreciation - - - - 125
Release of tax
liability(1) - - - - (1,518)
Strategic equity
transaction costs 503 - - 503 -
Acquisition related
expense 333 1,803 - 2,411 -
Shareholder advisement
and settlement costs 761 315 - 1,135 314
SEC and FCPA legal and
settlement costs 3,001 62 112 3,184 647
----- --- --- ----- ---
Non-GAAP net loss $(4,932) $(5,482) $(5,646) $(17,823) $(14,013)
======= ======= ======= ======== ========
Net Loss per Diluted
Share Reconciliation:
----------------------
GAAP net loss per diluted
share $(0.37) $(0.28) $(0.21) $(0.98) $(0.36)
Stock-based compensation
expense 0.07 0.06 0.03 0.19 0.12
Amortization of
intangible assets 0.01 0.01 - 0.01 -
Non-cash interest expense * - - * -
Gain on sale of product
line - - - - (0.21)
Restructuring and related
costs 0.04 - - 0.07 0.03
Accelerated depreciation - - - - *
Release of tax
liability(1) - - - - (0.05)
Strategic equity
transaction costs 0.01 - - 0.01 -
Acquisition related
expense 0.01 0.05 - 0.07 -
Shareholder advisement
and settlement costs 0.02 0.01 - 0.03 0.01
SEC and FCPA legal and
settlement costs 0.08 * * 0.09 0.02
---- --- --- ---- ----
Non-GAAP net loss per
diluted share $(0.13) $(0.15) $(0.18) $(0.51) $(0.44)
====== ====== ====== ====== ======
Weighted Average Diluted
Common Shares
Outstanding used for:
------------------------
GAAP net loss 37,008 35,526 31,989 34,929 31,828
Non-GAAP net loss 37,008 35,526 31,989 34,929 31,828
* Net loss effect of this
reconciling item was less
than $0.01 per share.
Release of tax liability is
partially related to
operating expense and
partially related to income
(1) tax expense.
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SOURCE Maxwell Technologies, Inc.
