Maxwell Reports Fourth Quarter and Full Year 2017 Results
SAN DIEGO, Feb. 15, 2018 /PRNewswire/ -- Maxwell Technologies, Inc. (NASDAQ: MXWL) today reported financial results for the three months and full year ended December 31, 2017. Total revenues for the fourth quarter of 2017 were $30.8 million, compared with $35.8 million for the third quarter of 2017 and $26.4 million for the prior year quarter. Net loss for the fourth quarter of 2017 was $8.8 million, compared with a net loss of $13.9 million for the third quarter of 2017 and a net loss of $12.2 million for the prior year quarter. The Company reported $(1.8) million of adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) for the fourth quarter of 2017, compared with $(2.1) million for the third quarter of 2017 and $(3.9) million for the prior year quarter. Non-GAAP net loss for the fourth quarter of 2017 was $5.3 million, compared with a non-GAAP net loss of $4.9 million for the third quarter of 2017 and $7.5 million for the prior year quarter.
For the full year ended December 31, 2017, net revenues were $130.4 million, compared with $121.2 million for the year ended December 31, 2016. Net loss for 2017 was $43.1 million, compared to a net loss of $23.7 million for the prior year. Non-GAAP net loss for 2017 was $23.1 million, compared with a non-GAAP net loss of $21.5 million for the prior year. Non-GAAP financial measures are described and defined later in this release.
Full Year 2017 Highlights
-- Successfully completed the acquisition of the core business and
operating entities of Nesscap Energy, Inc., creating the most
comprehensive ultracapacitor product portfolio globally.
-- Grew top-line revenue 8% year over year.
-- Reduced annual non-GAAP operating expense 5% due to focus on expense
management and organizational optimization, achieving the lowest
operating expense in six years.
-- Solidified the balance sheet by adding $43 million in cash from a
convertible debt financing to facilitate investment in future growth
areas.
-- Successfully completed the dry battery electrode "proof of concept"
technology program, achieving an energy density milestone of
approximately 300 Wh/kg, as compared to an average of 250 Wh/kg for
current batteries in the market.
"2017 was a year in which we delivered many significant accomplishments to further advance our business transformation and to better position us to capitalize on the coming inflection points and next phase of growth," said Dr. Franz Fink, Maxwell's President and Chief Executive Officer. "As I look at 2018, I am excited as we enter the year with the strongest opportunity pipeline and design win momentum ever and we are expecting year over year revenue growth. By capitalizing on this growth and improving gross margins as well as our continued attention to expense management, we expect improved financial performance, targeting breakeven adjusted EBITDA for the full year. Most importantly, we believe that 2018 will be the year that advancements with our revolutionary dry battery electrode position us for strategic partnerships to accelerate the commercialization of this technology."
Financial Results and Operating Metrics (1)
(Unaudited; in thousands, except for per share amounts)
Three Months Ended Years Ended
December 31, September 30, December 31, December 31, December 31,
2017 2017 2016 2017 2016
---- ---- ---- ---- ----
Total revenue $30,763 $35,816 $26,400 $130,368 $121,244
Ultracapacitor revenue $20,832 $27,564 $12,730 $87,709 $71,491
High-Voltage revenue $9,931 $8,252 $13,670 $42,659 $45,177
Microelectronics revenue $ - $ - $ - $ - $4,576
Gross margin 24.0% 20.6% 21.6% 22.1% 27.2%
Non-GAAP gross margin 25.6% 22.5% 22.4% 23.6% 28.0%
Loss from operations $(6,931) $(13,260) $(9,895) $(37,896) $(25,886)
Non-GAAP loss from operations $(3,923) $(4,356) $(6,381) $(18,358) $(17,952)
Interest expense, net $1,043 $152 $69 $1,355 $248
Non-GAAP interest expense, net $623 $128 $69 $911 $248
Net loss $(8,752) $(13,860) $(12,169) $(43,129) $(23,705)
Net loss per share
Basic and diluted $(0.24) $(0.37) $(0.38) $(1.22) $(0.74)
Adjusted EBITDA $(1,790) $(2,125) $(3,926) $(9,587) $(8,206)
Non-GAAP net loss $(5,324) $(4,932) $(7,451) $(23,147) $(21,464)
Non-GAAP net loss per share
Basic and diluted $(0.14) $(0.13) $(0.23) $(0.65) $(0.67)
Net cash used in operating
activities $(6,230) $(2,274) $(374) $(15,006) $(14,357)
Cash purchases of property and
equipment $2,502 $1,255 $1,267 $5,817 $5,956
Cash, cash equivalents and
restricted cash $50,122 $52,852 $25,359 $50,122 $25,359
(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 Fourth Quarter
Revenue and Gross Margin
-- Total revenue for the fourth quarter of 2017 was $30.8 million, compared
with $35.8 million for the third quarter of 2017, driven by expected
seasonal softness in ultracapacitor revenue in the wind market.
Ultracapacitor revenue for the fourth quarter of 2017 was $20.8 million,
compared with $27.6 million for the third quarter of 2017. High-voltage
revenue was $9.9 million for the fourth quarter of 2017, compared with
$8.3 million for the third quarter of 2017.
-- Gross margin for the fourth quarter of 2017 was 24.0% compared with
20.6% in the third quarter of 2017, driven by increased high-voltage
sales, which generally have higher gross margins than the corporate
average, and lower losses related to inventory write downs and
provisions for product warranties.
-- Non-GAAP gross margin for the fourth quarter of 2017 was 25.6% compared
with 22.5% in the third 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 fourth quarter of 2017 was $14.3 million,
compared with $20.7 million for the third quarter of 2017. In the third
quarter, the Company incurred 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 Capital Advisors, LLC, a settlement with the
SEC and previously capitalized fees associated with an investment
agreement with SDIC that did not close. Additionally, expense was lower
in the fourth quarter due to a continued focus on operational
efficiencies and discipline, a benefit from the aforementioned
restructuring and higher than expected vacation usage during the
year-end holiday shutdown.
-- Non-GAAP operating expense for the fourth quarter of 2017 was $11.8
million compared with $12.4 million for the third quarter of 2017 and
excludes stock-based compensation, amortization of intangibles,
acquisition related expenses, a small amount of restructuring charges
and other non-recurring legal costs.
-- Net interest expense for the fourth quarter of 2017 was $1.0 million
compared to $0.2 million for the third quarter of 2017, including the
convertible note coupon interest and non-cash interest for amortization
of debt issuance costs and discounts. The increase was due to a full
quarter of accrued interest in the fourth quarter.
-- Non-GAAP interest expense for the fourth quarter of 2017 was $0.6
million compared to $0.1 million for the third quarter of 2017, which
excludes the non-cash interest mentioned above.
-- Net loss for the fourth quarter of 2017 was $8.8 million, or $(0.24) per
share, compared with a net loss of $13.9 million, or $(0.37) per share,
for the third quarter of 2017.
-- Non-GAAP net loss for the fourth quarter of 2017 was $5.3 million
compared with a non-GAAP net loss of $4.9 million for the third quarter
of 2017.
-- Adjusted EBITDA for the fourth quarter of 2017 was $(1.8) million,
compared with $(2.1) million for the third quarter of 2017.
Capital Expenditures
-- Capital expenditures during the fourth quarter of 2017 were $2.5
million, compared with $1.3 million for the third quarter of 2017.
Capital expenditures in the fourth quarter were primarily related to
investments in the Korea manufacturing facility, the Switzerland
manufacturing facility and equipment upgrades and research and
development activities.
First Quarter 2018 Business Outlook
-- Total revenue is expected to be in the range of $31 million to $33
million.
-- Gross margin is expected to be 25.4%, plus or minus 150 basis points.
-- Non-GAAP gross margin is expected to be 26.5%, plus or minus 150 basis
points.
-- GAAP operating expense is expected to be in the range of $14.9 million
to $15.3 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 first quarter outlook is as follows (in millions, except for percentages and per share data):
Projected at Projected at
Midpoint of Guidance Midpoint of Guidance
-------------------- --------------------
Three Months Ended Three Months Ended
March 31, 2018 March 31, 2018
-------------- --------------
Gross Margin
Reconciliation: Total Operating Expenses Reconciliation:
---------------- ----------------------------------------
GAAP gross margin 25.4% GAAP total operating expenses $15.1
Stock-based compensation
expense 0.8% Stock-based compensation expense (2.0)
Acquisition related
expense (1) 0.3% Acquisition related expense (1) (0.2)
Non-GAAP gross margin 26.5% SEC and FCPA legal costs (0.1)
==== ----
Non-GAAP total operating expenses $12.8
=====
Net Loss Reconciliation:
------------------------
GAAP net loss $(7.7) Adjusted EBITDA Reconciliation:
-------------------------------
Stock-based compensation
expense 2.2 GAAP net loss $(7.7)
Non-cash interest expense 0.5 Non-cash interest expense 0.5
Acquisition related 0.3 Interest, taxes, depreciation,
expense (1) amortization 3.0
---
SEC and FCPA legal costs 0.1 EBITDA (4.2)
---
Non-GAAP net loss $(4.6) Stock-based compensation expense 2.2
=====
SEC and FCPA legal costs 0.1
---
Net Loss per Share
Reconciliation: Adjusted EBITDA $(1.9)
------------------ =====
GAAP net loss per diluted
share $(0.20)
Expenses excluded from
GAAP 0.08
Non-GAAP net loss per
diluted share $(0.12)
======
(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, (866) 393-4306 from the U.S. or (734) 385-2616 for international callers, and entering the conference ID 3987793.
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 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, 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, impairment of assets, 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, impairment of assets, 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,
impairment of assets, 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, tax impact of potential
cash repatriation, restructuring and related costs, impairment of
assets, 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 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.
-- Gain on sale of product line consisting of the gain recorded in
connection with the sale of the Company's microelectronics product line.
-- Tax impact of potential cash repatriation consists of non-cash charges
associated with a portion of the unremitted earnings of a foreign
subsidiary that may be repatriated to the U.S.
-- 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.
-- Impairment of assets which represent impairment of the net book value of
machinery no longer forecasted to be used for its remaining useful life.
-- Release of tax liability consisting of a foreign tax liability that was
released without payment due to the lapse of a statute of limitation.
-- 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 fourth quarter and full year 2017, 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 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 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 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 February 15, 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 Years Ended
December 31, September 30, December 31, December 31, December 31,
2017 2017 2016 2017 2016
---- ---- ---- ---- ----
Revenue $30,763 $35,816 $26,400 $130,368 $121,244
Cost of revenue 23,382 28,420 20,692 101,573 88,274
------ ------ ------ ------- ------
Gross profit 7,381 7,396 5,708 28,795 32,970
Operating expenses:
Selling, general and administrative 9,694 14,514 9,586 45,818 36,281
Research and development 4,344 4,891 4,783 18,351 20,889
Restructuring and exit costs 34 1,251 - 2,282 297
Impairment of assets 240 - 1,234 240 1,389
--- --- ----- --- -----
Total operating expenses 14,312 20,656 15,603 66,691 58,856
------ ------ ------ ------ ------
Loss from operations (6,931) (13,260) (9,895) (37,896) (25,886)
Gain on sale of product line - - - - (6,657)
Interest expense, net 1,043 152 69 1,355 248
Other income (18) (14) 3 (85) (133)
Foreign currency exchange (gain)
loss, net 256 (65) (36) 306 216
--- --- --- ---
Loss before income taxes (8,212) (13,333) (9,931) (39,472) (19,560)
Income tax provision 540 527 2,238 3,657 4,145
Net loss $(8,752) $(13,860) $(12,169) $(43,129) $(23,705)
======= ======== ======== ======== ========
Net loss per common share:
Basic and diluted $(0.24) $(0.37) $(0.38) $(1.22) $(0.74)
Weighted average common shares
outstanding:
Basic and diluted 37,115 37,008 31,995 35,480 31,870
MAXWELL TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except shares and per share data)
(Unaudited)
December 31, December 31,
2017 2016
---- ----
ASSETS
Current assets:
Cash and cash equivalents $50,122 $25,359
Trade and other accounts receivable, net 31,643 20,441
Inventories 32,228 32,248
Prepaid expenses and other current
assets 2,983 4,407
-----
Total current assets 116,976 82,455
Property and equipment, net 28,044 26,120
Intangible assets, net 11,715 -
Goodwill 36,061 22,799
Pension asset 11,712 8,887
Other non-current assets 871 613
Total assets $205,379 $140,874
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $32,758 $19,181
Accrued employee compensation 9,070 6,152
Deferred revenue and customer deposits 6,669 3,967
Short-term borrowings and current
portion of long-term debt 33 40
--- ---
Total current liabilities 48,530 29,340
Deferred tax liability, long-term 8,762 8,580
Long-term debt, excluding current
portion 35,124 43
Defined benefit plan liability 3,942 -
Other long-term liabilities 2,920 2,089
Total liabilities 99,278 40,052
------ ------
Stockholders' equity:
Common stock, $0.10 par value per share,
80,000,000 shares authorized at
December 31, 2017 and 2016; 37,199,519
and 32,135,029 shares issued and
outstanding at December, 2017 and 2016,
respectively 3,717 3,210
Additional paid-in capital 337,541 296,316
Accumulated deficit (247,233) (204,104)
Accumulated other comprehensive income 12,076 5,400
------ -----
Total stockholders' equity 106,101 100,822
Total liabilities and stockholders'
equity $205,379 $140,874
======== ========
MAXWELL TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) (Unaudited)
Three Months Ended Years Ended
December 31, September 30, December 31, December 31, December 31,
2017 2017 2016 2017 2016
---- ---- ---- ---- ----
OPERATING ACTIVITIES:
Net loss $(8,752) $(13,860) $(12,169) $(43,129) $(23,705)
Adjustments to reconcile net loss to
net cash used in operating
activities:
Depreciation 2,133 2,231 2,455 8,771 9,871
Amortization of intangible assets 307 300 - 809 -
Non-cash interest expense 420 24 - 444 -
Loss on lease due to restructuring - 179 - 179 87
Pension and defined benefit plan cost 250 243 156 770 635
Stock-based compensation expense 2,490 2,755 1,605 9,037 5,364
Gain on sale of property and
equipment - (20) - (20) (131)
Impairment of property and equipment 240 - 1,234 240 1,389
Gain on sale of product line - - - - (6,657)
Unrealized (gain) loss on foreign
currency exchange rates (142) 14 18 (150) 63
Release of tax liability - - - - (1,518)
Provision for (recovery of) losses on
accounts receivable 6 2 (162) 10 (106)
Losses on write downs of inventory 640 841 171 2,309 397
Provision for (release of) warranties (302) 396 (61) 303 383
Changes in operating assets and
liabilities:
Trade and other accounts receivable (4,327) 3,097 (66) (7,981) 20,085
Inventories (1,058) (2,431) 2,253 2,568 (4,956)
Prepaid expenses and other assets 332 744 916 477 (372)
Pension asset (565) (197) (143) (1,067) (584)
Accounts payable and accrued
liabilities 1,549 2,579 1,820 8,842 (14,884)
Deferred revenue and customer
deposits 539 466 619 2,356 630
Accrued employee compensation (581) 950 (516) 609 (1,478)
Deferred tax liability 827 (791) 1,844 (154) 1,957
Other long-term liabilities (236) 204 (348) (229) (827)
----
Net cash used in operating activities (6,230) (2,274) (374) (15,006) (14,357)
------ ------ ---- ------- -------
INVESTING ACTIVITIES:
Purchases of property and equipment (2,502) (1,255) (1,267) (5,817) (5,956)
Proceeds from sale of property and
equipment - 20 - 20 133
Cash used in acquisition, net of cash
acquired - - - (97) -
Proceeds from sale of product line - - - 1,500 20,486
---
Net cash provided by (used in)
investing activities (2,502) (1,235) (1,267) (4,394) 14,663
------ ------ ------ ------ ------
FINANCING ACTIVITIES:
Principal payments on long-term debt
and short-term borrowings (8) (7) (12) (32) (45)
Proceeds from long-term debt and
short-term borrowings, net of
discount and issuance costs 5,658 37,333 - 42,991 -
Proceeds from issuance of common
stock under equity compensation
plans 133 (1) 223 326 841
---
Net cash provided by financing
activities 5,783 37,325 211 43,285 796
Effect of exchange rate changes on
cash, cash equivalents and
restricted cash 219 (145) (1,113) 878 (525)
--- ---- ------ --- ----
Increase (decrease) in cash, cash
equivalents and restricted cash (2,730) 33,671 (2,543) 24,763 577
Cash, cash equivalents and restricted
cash, beginning of period 52,852 19,181 27,902 25,359 24,782
Cash, cash equivalents and restricted
cash, end of period $50,122 $52,852 $25,359 $50,122 $25,359
======= ======= ======= ======= =======
MAXWELL TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(in thousands, except per share data) (Unaudited)
Three Months Ended Years Ended
December 31, September 30, December 31, December 31, December 31,
2017 2017 2016 2017 2016
---- ---- ---- ---- ----
Gross Margin Reconciliation:
----------------------------
GAAP gross margin 24.0% 20.6% 21.6% 22.1% 27.2%
Stock-based compensation expense 1.1% 0.8% 0.8% 0.8% 0.7%
Amortization of intangible assets 0.3% 0.3% - % 0.2% - %
Accelerated depreciation - % - % - % - % 0.1%
Acquisition related expense 0.2% 0.8% - % 0.5% - %
--- --- --- --- --- --- ---
Non-GAAP gross margin 25.6% 22.5% 22.4% 23.6% 28.0%
==== ==== ==== ==== ====
Gross Profit Reconciliation:
----------------------------
GAAP gross profit $7,381 $7,396 $5,708 $28,795 $32,970
Stock-based compensation expense 349 271 211 1,070 854
Amortization of intangible assets 90 88 - 238 -
Accelerated depreciation - - - - 125
Acquisition related expense 67 287 - 645 -
--- --- --- --- ---
Non-GAAP gross profit $7,887 $8,042 $5,919 $30,748 $33,949
====== ====== ====== ======= =======
Total Operating Expenses
Reconciliation:
------------------------
GAAP total operating expenses $14,312 $20,656 $15,603 $66,691 $58,856
Stock-based compensation expense (2,141) (2,484) (1,394) (7,967) (4,510)
Amortization of intangible assets (217) (212) - (571) -
Restructuring and related costs (34) (1,251) - (2,282) (853)
Impairment of assets - - (1,234) - (1,234)
Release of tax liability(1) - - - - 1,278
Strategic equity transaction
costs - (503) - (503) -
Acquisition related expense (46) (46) (675) (1,879) (675)
Shareholder advisement and
settlement costs - (761) - (1,135) (314)
SEC and FCPA legal and settlement
costs (64) (3,001) - (3,248) (647)
--- ------ --- ------ ----
Non-GAAP operating expenses $11,810 $12,398 $12,300 $49,106 $51,901
======= ======= ======= ======= =======
Loss from Operations
Reconciliation:
--------------------
GAAP loss from operations $(6,931) $(13,260) $(9,895) $(37,896) $(25,886)
Stock-based compensation expense 2,490 2,755 1,605 9,037 5,364
Amortization of intangible assets 307 300 - 809 -
Restructuring and related costs 34 1,251 - 2,282 853
Accelerated depreciation - - - - 125
Impairment of assets - - 1,234 - 1,234
Release of tax liability(1) - - - - (1,278)
Strategic equity transaction
costs - 503 - 503 -
Acquisition related expense 113 333 675 2,524 675
Shareholder advisement and
settlement costs - 761 - 1,135 314
SEC and FCPA legal and settlement
costs 64 3,001 - 3,248 647
Non-GAAP loss from operations $(3,923) $(4,356) $(6,381) $(18,358) $(17,952)
======= ======= ======= ======== ========
Adjusted EBITDA Reconciliation:
-------------------------------
GAAP net loss $(8,752) $(13,860) $(12,169) $(43,129) $(23,705)
Interest expense, net 1,043 152 69 1,355 248
Income tax provision 540 527 2,238 3,657 4,145
Depreciation 2,133 2,231 2,455 8,771 9,871
Amortization of intangible assets 307 300 - 809 -
--- --- --- --- ---
EBITDA (4,729) (10,650) (7,407) (28,537) (9,441)
Foreign currency exchange loss,
net 256 (65) (36) 306 216
Other income (18) (14) 3 (85) (133)
Stock-based compensation expense 2,490 2,755 1,605 9,037 5,364
Gain on sale of product line - - - - (6,657)
Restructuring and related costs 34 1,251 - 2,282 853
Impairment of assets - - 1,234 - 1,234
Strategic equity transaction
costs - 503 - 503 -
Acquisition related expense 113 333 675 2,524 675
Release of tax liability(1) - - - - (1,278)
Shareholder advisement and
settlement costs - 761 - 1,135 314
SEC and FCPA legal and settlement
costs 64 3,001 - 3,248 647
--- ----- --- ----- ---
Adjusted EBITDA $(1,790) $(2,125) $(3,926) $(9,587) $(8,206)
======= ======= ======= ======= =======
Three Months Ended Years Ended
December 31, September 30, December 31, December 31, December 31,
2017 2017 2016 2017 2016
---- ---- ---- ---- ----
Interest Expense, net
Reconciliation
---------------------
GAAP interest expense,
net $1,043 $152 $69 $1,355 $248
Non-cash interest expense (420) (24) - (444) -
Non-GAAP interest
expense, net $623 $128 $69 $911 $248
==== ==== === ==== ====
Net Loss Reconciliation
-----------------------
GAAP net loss $(8,752) $(13,860) $(12,169) $(43,129) $(23,705)
Stock-based compensation
expense 2,490 2,755 1,605 9,037 5,364
Amortization of
intangible assets 307 300 - 809 -
Non-cash interest expense 420 24 - 444 -
Gain on sale of product
line - - - - (6,657)
Tax impact of potential
cash repatriation - - 1,204 - 1,204
Restructuring and related
costs 34 1,251 - 2,282 853
Accelerated depreciation - - - - 125
Impairment of assets - - 1,234 - 1,234
Release of tax
liability(1) - - - - (1,518)
Strategic equity
transaction costs - 503 - 503 -
Acquisition related
expense 113 333 675 2,524 675
Shareholder advisement
and settlement costs - 761 - 1,135 314
SEC and FCPA legal and
settlement costs 64 3,001 - 3,248 647
--- ----- --- ----- ---
Non-GAAP net loss $(5,324) $(4,932) $(7,451) $(23,147) $(21,464)
======= ======= ======= ======== ========
Net Loss per Diluted
Share Reconciliation:
----------------------
GAAP net loss per diluted
share $(0.24) $(0.37) $(0.38) $(1.22) $(0.74)
Stock-based compensation
expense 0.07 0.07 0.05 0.26 0.17
Amortization of
intangible assets 0.01 0.01 - 0.02 -
Non-cash interest expense 0.01 * - 0.01 -
Gain on sale of product
line - - - - (0.21)
Tax impact of potential
cash repatriation - - 0.04 - 0.04
Restructuring and related
costs * 0.04 - 0.07 0.03
Accelerated depreciation - - - - *
Impairment of assets - - 0.04 - 0.04
Release of tax
liability(1) - - - - (0.05)
Strategic equity
transaction costs - 0.01 - 0.01 -
Acquisition related
expense 0.01 0.01 0.02 0.08 0.02
Shareholder advisement
and settlement costs - 0.02 - 0.03 0.01
SEC and FCPA legal and
settlement costs * 0.08 - 0.09 0.02
--- ---- --- ---- ----
Non-GAAP net loss per
diluted share $(0.14) $(0.13) $(0.23) $(0.65) $(0.67)
====== ====== ====== ====== ======
Weighted Average Diluted
Common Shares
Outstanding used for:
------------------------
GAAP net loss 37,115 37,008 31,995 35,480 31,870
Non-GAAP net loss 37,115 37,008 31,995 35,480 31,870
* Net loss effect of this
reconciling item was less
than $0.01 per share.
(1) Release of tax liability is
partially related to
operating expense and
partially related to income
tax expense.
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SOURCE Maxwell Technologies, Inc.
