EX-99.1 3 mxwl033118ex991earningspre.htm EXHIBIT 99.1 EARNINGS PRESS RELEASE Exhibit
Exhibit 99.1


maxwelllogoa12.jpg
 
FOR IMMEDIATE RELEASE
Investor Contact:
Kimberly Tom, CFA
(858) 503-3368
ir@maxwell.com

Maxwell Reports First Quarter 2018 Results and Provides Business Outlook for Second Quarter 2018
~ Announces Significant Partnership with Geely/Volvo ~

Note: A webcast of Maxwell's conference call will be available at 5:00 p.m. EDT today at http://investors.maxwell.com.
SAN DIEGO - May 8, 2018 - Maxwell Technologies, Inc. (NASDAQ: MXWL) today reported financial results for the three months ended March 31, 2018. Total revenues for the first quarter of 2018 were $28.4 million, compared with $30.8 million for the fourth quarter of 2017 and $26.7 million for the prior year quarter. Net loss for the first quarter of 2018 was $9.2 million, compared with a net loss of $8.8 million for the fourth quarter of 2017 and a net loss of $10.4 million for the prior year quarter. Non-GAAP net loss for the first quarter of 2018 was $5.8 million, compared with a non-GAAP net loss of $5.3 million for the fourth quarter of 2017 and $7.4 million for the prior year quarter. The Company reported $(6.9) million of earnings before interest, taxes, depreciation and amortization (EBITDA) for the first quarter of 2018, compared with $(4.7) million for the fourth quarter of 2017 and $(7.0) million for the prior year quarter. The Company reported $(4.2) million of adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) for the first quarter of 2018, compared with $(1.8) million for the fourth quarter of 2017 and $(3.9) million for the prior year quarter.
Strategic Business Highlights
•
Today Maxwell announced a technology partnership with Zhejiang Geely Holding Group ("Geely"), the parent company of leading brands such as Volvo and Geely Auto. The collaboration kicks off with the inclusion of Maxwell’s ultracapacitor-based peak power subsystem in five mild-hybrid and plug-in hybrid vehicles which will initially be available in North America and Europe. The production ramp for these vehicles is slated to begin in late 2019 and marks the most significant milestone in Maxwell’s automotive market history.
•
Today Maxwell renewed a $25 million revolving credit facility with its banking partner, East West Bank, for a 3-year term, providing Maxwell with further financial flexibility to operate its business and execute on strategic investments.




  Maxwell Reports First Quarter 2018 Results and Provides Business Outlook for Second Quarter 2018
Page 2 of 16

“While our energy storage product revenue exceeded expectations for the quarter, our first quarter revenue results reflect a shortfall in orders related to our high voltage capacitor products. We expect a recovery in the high voltage product line in the second half of 2018 and overall we are anticipating revenue growth in Q2,” said Dr. Franz Fink, Maxwell's President and Chief Executive Officer. "We continue to make progress each quarter on our strategic objectives and to build momentum in the business. Today’s announcement of the Geely design win and partnership represents a significant accomplishment for the team at Maxwell and validates that ultracapacitors are ideally suited to solve many of the challenges faced by the automotive industry as it readies for the coming global megatrend of the electrification of combustion engine vehicles.”


  Maxwell Reports First Quarter 2018 Results and Provides Business Outlook for Second Quarter 2018
Page 3 of 16

Financial Results and Operating Metrics (1)
(Unaudited; in thousands, except for per share amounts)
 
 
Three Months Ended
 
 
March 31,
2018
 
December 31,
 2017 (2)
 
March 31,
 2017 (2)
Total revenue
 
$
28,416

 
$
30,763

 
$
26,686

Energy Storage revenue
 
$
23,002

 
$
20,832

 
$
14,234

High-Voltage revenue
 
$
5,414

 
$
9,931

 
$
12,452

Gross margin (2)
 
20.0
%
 
23.8
%
 
22.9
%
Non-GAAP gross margin (2)
 
21.5
%
 
25.4
%
 
23.6
%
Loss from operations (2)
 
$
(9,366
)
 
$
(7,065
)
 
$
(9,187
)
Non-GAAP loss from operations (2)
 
$
(6,419
)
 
$
(4,057
)
 
$
(6,197
)
Interest expense, net
 
$
993

 
$
1,043

 
$
63

Non-GAAP interest expense, net
 
$
554

 
$
623

 
$
63

Net loss
 
$
(9,205
)
 
$
(8,752
)
 
$
(10,399
)
Net loss per share
 
 
 
 
 
 
Basic and diluted
 
$
(0.25
)
 
$
(0.24
)
 
$
(0.32
)
Adjusted EBITDA
 
$
(4,205
)
 
$
(1,790
)
 
$
(3,894
)
Non-GAAP net loss
 
$
(5,819
)
 
$
(5,324
)
 
$
(7,409
)
Non-GAAP net loss per share
 
 
 
 
 
 
Basic and diluted
 
$
(0.16
)
 
$
(0.14
)
 
$
(0.23
)
Net cash used in operating activities
 
$
(11,211
)
 
$
(6,230
)
 
$
(3,825
)
Cash purchases of property and equipment
 
$
3,918

 
$
2,502

 
$
945

Cash, cash equivalents and restricted cash
 
$
40,103

 
$
50,122

 
$
20,894

 
 
 
 
 
 
 
(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 months ended December 31, 2017 and March 31, 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 Reports First Quarter 2018 Results and Provides Business Outlook for Second Quarter 2018
Page 4 of 16

Discussion of Financial Results for the First Quarter
Revenue and Gross Margin
•
Total revenue for the first quarter of 2018 was $28.4 million, compared with $30.8 million for the fourth quarter of 2017, driven by a decrease in high voltage revenue partially offset by higher energy storage revenue. Energy storage revenue for the first quarter of 2018 was $23.0 million, compared with $20.8 million for the fourth quarter of 2017, related to higher revenue in the grid, non-China bus and rail markets, offset by lower revenue in the seasonally soft wind market. High-voltage capacitor revenue was $5.4 million for the first quarter of 2018, compared with $9.9 million for the fourth quarter of 2017; the shortfall is attributable to delays in the processing of Chinese tenders for infrastructure projects as well as delays in infrastructure investment by utilities caused by uncertainty from revisions to taxes and incentives introduced by U.S. tax reform and from potential increased tariffs on steel.
•
Gross margin for the first quarter of 2018 was 20.0% compared with 23.8% in the fourth quarter of 2017, driven primarily by decreased high-voltage capacitor product sales, which generally have higher gross margins than the corporate average.
•
Non-GAAP gross margin for the first quarter of 2018 was 21.5% compared with 25.4% in the fourth quarter of 2017 and excludes acquisition related intangibles amortization and stock-based compensation expense.
Operating Expense, Interest Expense, Net Loss & Adjusted EBITDA
•
Operating expense for the first quarter of 2018 was $15.0 million, compared with $14.4 million for the fourth quarter of 2017. The quarter-over-quarter increase was driven primarily by higher payroll related expense, including the annual FICA tax reset, annual merit increases and higher vacation accrual, as well as lower expense reimbursement from funded R&D programs.
•
Non-GAAP operating expense for the first quarter of 2018 was $12.5 million compared with $11.9 million for the fourth quarter of 2017 and excludes stock-based compensation, amortization of intangibles and other non-recurring legal costs, offset by a credit for restructuring charges due to a change in estimate.
•
Net interest expense was approximately $1.0 million for both the first quarter of 2018 and the fourth quarter of 2017, which 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 $0.6 million for both the first quarter of 2018 and the fourth quarter of 2017, and excludes the non-cash interest mentioned above.


  Maxwell Reports First Quarter 2018 Results and Provides Business Outlook for Second Quarter 2018
Page 5 of 16

•
Net loss for the first quarter of 2018 was $9.2 million, or $(0.25) per share, compared with a net loss of $8.8 million, or $(0.24) per share, for the fourth quarter of 2017.
•
Non-GAAP net loss for the first quarter of 2018 was $5.8 million compared with a non-GAAP net loss of $5.3 million for the fourth quarter of 2017.
•
Adjusted EBITDA for the first quarter of 2018 was $(4.2) million, compared with $(1.8) million for the fourth quarter of 2017.
Capital Expenditures
•
Capital expenditures during the first quarter of 2018 were $3.9 million, compared with $2.5 million for the fourth quarter of 2017. Capital expenditures in the first quarter were primarily related to the Switzerland manufacturing facility expansion and equipment upgrades, the Korea manufacturing facility expansion, ultracapacitor and lithium-ion capacitor production equipment and IT infrastructure upgrades.




  Maxwell Reports First Quarter 2018 Results and Provides Business Outlook for Second Quarter 2018
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Second Quarter 2018 Business Outlook
•
Total revenue is expected to be in the range of $28 million to $33 million.
•
Gross margin is expected to be 20.1%, plus or minus 150 basis points.
•
Non-GAAP gross margin is expected to be 21.5%, plus or minus 150 basis points.
•
GAAP operating expense is expected to be in the range of $15.1 million to $15.5 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 second 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
 
 
June 30, 2018
 
 
 
June 30, 2018
 
Gross Margin Reconciliation:
 
 
 
Total Operating Expenses Reconciliation:
 
 
 
GAAP gross margin
 
20.1
%
 
GAAP total operating expenses
 
$
15.3

 
Stock-based compensation expense
 
1.1
%
 
Stock-based compensation expense
 
(2.3
)
 
Amortization of intangible assets (1)
 
0.3
%
 
Amortization of intangible assets (1)
 
(0.2
)
 
Non-GAAP gross margin
 
21.5
%
 
Non-GAAP total operating expenses
 
$
12.8

 
 
 
 
 
 
 
 
 
Net Loss Reconciliation:
 
 
 
Adjusted EBITDA Reconciliation:
 
 
 
GAAP net loss
 
$
(10.4
)
 
GAAP net loss
 
$
(10.4
)
 
Stock-based compensation expense
 
2.7

 
Non-cash interest expense
 
0.4

 
Non-cash interest expense
 
0.4

 
Interest, taxes, depreciation, amortization
 
3.5

 
Amortization of intangible assets (1)
 
0.3

 
EBITDA
 
(6.5
)
 
Non-GAAP net loss
 
$
(7.0
)
 
Stock-based compensation expense
 
2.7

 
 
 
 
 
Adjusted EBITDA
 
$
(3.8
)
 
Net Loss per Share Reconciliation:
 
 
 
 
 
 
 
GAAP net loss per diluted share
 
$
(0.27
)
 
 
 
 
 
Expenses excluded from GAAP
 
0.09

 
 
 
 
 
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.


  Maxwell Reports First Quarter 2018 Results and Provides Business Outlook for Second Quarter 2018
Page 7 of 16

Webcast Information
As previously announced, Maxwell management will host a live webcast at approximately 5:00 p.m. EDT / 2:00 p.m. PDT 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 2368326.
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.


  Maxwell Reports First Quarter 2018 Results and Provides Business Outlook for Second Quarter 2018
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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, other income, 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.


  Maxwell Reports First Quarter 2018 Results and Provides Business Outlook for Second Quarter 2018
Page 9 of 16

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.
•
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.


  Maxwell Reports First Quarter 2018 Results and Provides Business Outlook for Second Quarter 2018
Page 10 of 16

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 first 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 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;


  Maxwell Reports First Quarter 2018 Results and Provides Business Outlook for Second Quarter 2018
Page 11 of 16

•
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 May 8, 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 Reports First Quarter 2018 Results and Provides Business Outlook for Second Quarter 2018
Page 12 of 16

MAXWELL TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)

 
 
Three Months Ended
 
 
March 31,
2018
 
December 31,
 2017 (1)
 
September 30,
 2017 (1)
 
June 30,
 2017 (1)
 
March 31,
 2017 (1)
Revenue
 
$
28,416

 
$
30,763

 
$
35,816

 
$
37,103

 
$
26,686

Cost of revenue (1)
 
22,735

 
23,449

 
28,492

 
29,350

 
20,578

Gross profit (1)
 
5,681

 
7,314

 
7,324

 
7,753

 
6,108

Operating expenses:
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative (1)
 
9,572

 
9,743

 
14,565

 
12,120

 
9,592

Research and development (1)
 
5,532

 
4,362

 
4,909

 
4,449

 
4,706

Restructuring and exit costs
 
(57
)
 
34

 
1,251

 
—

 
997

Impairment of assets
 
—

 
240

 
—

 
—

 
—

Total operating expenses (1)
 
15,047

 
14,379

 
20,725

 
16,569

 
15,295

Loss from operations (1)
 
(9,366
)
 
(7,065
)
 
(13,401
)
 
(8,816
)
 
(9,187
)
Interest expense, net
 
993

 
1,043

 
152

 
97

 
63

Other components of defined benefit plans, net (1)
 
(221
)
 
(134
)
 
(141
)
 
(143
)
 
(155
)
Other income
 
—

 
(18
)
 
(14
)
 
(52
)
 
(1
)
Foreign currency exchange (gain) loss, net
 
89

 
256

 
(65
)
 
18

 
97

Loss before income taxes
 
(10,227
)
 
(8,212
)
 
(13,333
)
 
(8,736
)
 
(9,191
)
Income tax provision (benefit)
 
(1,022
)
 
540

 
527

 
1,382

 
1,208

Net loss
 
$
(9,205
)
 
$
(8,752
)
 
$
(13,860
)
 
$
(10,118
)
 
$
(10,399
)
Net loss per common share:
 
 
 
 
 
 
 
 
 
 
Basic and diluted
 
$
(0.25
)
 
$
(0.24
)
 
$
(0.37
)
 
$
(0.28
)
 
$
(0.32
)
Weighted average common shares outstanding:
 
 
 
 
 
 
 
 
 
 
Basic and diluted
 
37,522

 
37,115

 
37,008

 
35,526

 
32,197


(1) Historical amounts have been reclassified for all quarters of 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 Reports First Quarter 2018 Results and Provides Business Outlook for Second Quarter 2018
Page 13 of 16

MAXWELL TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except shares and per share data)
(Unaudited)

 
 
March 31,
2018
 
December 31, 2017
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
40,103

 
$
50,122

Trade and other accounts receivable, net
 
32,391

 
31,643

Inventories
 
37,485

 
32,228

Prepaid expenses and other current assets
 
3,478

 
2,983

Total current assets
 
113,457

 
116,976

Property and equipment, net
 
30,174

 
28,044

Intangible assets, net
 
11,469

 
11,715

Goodwill
 
36,636

 
36,061

Pension asset
 
12,095

 
11,712

Other non-current assets
 
845

 
871

Total assets
 
$
204,676

 
$
205,379

 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable and accrued liabilities
 
$
32,966

 
$
32,758

Accrued employee compensation
 
6,624

 
9,070

Deferred revenue and customer deposits
 
6,299

 
6,669

Short-term borrowings and current portion of long-term debt
 
5,034

 
33

Total current liabilities
 
50,923

 
48,530

Deferred tax liability, long-term
 
8,433

 
8,762

Long-term debt, excluding current portion
 
35,556

 
35,124

Defined benefit plan liability
 
4,125

 
3,942

Other long-term liabilities
 
2,573

 
2,920

Total liabilities
 
101,610

 
99,278

Stockholders' equity:
 
 
 
 
Common stock, $0.10 par value per share, 80,000,000 shares authorized at March 31, 2018 and December 31, 2017; 38,000,620 and 37,199,519 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively
 
3,797

 
3,717

Additional paid-in capital
 
341,897

 
337,541

Accumulated deficit
 
(256,160
)
 
(247,233
)
Accumulated other comprehensive income
 
13,532

 
12,076

Total stockholders' equity
 
103,066

 
106,101

Total liabilities and stockholders' equity
 
$
204,676

 
$
205,379



  Maxwell Reports First Quarter 2018 Results and Provides Business Outlook for Second Quarter 2018
Page 14 of 16

MAXWELL TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) (Unaudited)
 
 
Three Months Ended
 
 
March 31,
2018
 
December 31,
2017
 
March 31,
2017
OPERATING ACTIVITIES:
 
 
 
 
 
 
Net loss
 
$
(9,205
)
 
$
(8,752
)
 
$
(10,399
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
 
 
 
Depreciation
 
1,993

 
2,133

 
2,148

Amortization of intangible assets
 
316

 
307

 
—

Non-cash interest expense
 
439

 
420

 
—

Pension and defined benefit plan cost
 
251

 
250

 
86

Stock-based compensation expense
 
2,624

 
2,490

 
1,538

Gain on sale of property and equipment
 
(4
)
 
—

 
—

Impairment of property and equipment
 
—

 
240

 
—

Provision for (recovery of) losses on accounts receivable
 
(10
)
 
6

 
—

Losses on write downs of inventory
 
475

 
640

 
17

Provision for (release of) warranties
 
65

 
(302
)
 
189

Changes in operating assets and liabilities:
 
 
 
 
 
 
Trade and other accounts receivable
 
(252
)
 
(4,469
)
 
(3,406
)
Inventories
 
(5,994
)
 
(1,058
)
 
1,922

Prepaid expenses and other assets
 
(455
)
 
332

 
(453
)
Pension asset
 
(156
)
 
(565
)
 
(155
)
Accounts payable and accrued liabilities
 
309

 
1,549

 
1,571

Deferred revenue and customer deposits
 
(65
)
 
539

 
2,626

Accrued employee compensation
 
(776
)
 
(581
)
 
785

Deferred tax liability
 
(374
)
 
827

 
(209
)
Other long-term liabilities
 
(392
)
 
(236
)
 
(85
)
Net cash used in operating activities
 
(11,211
)
 
(6,230
)
 
(3,825
)
INVESTING ACTIVITIES:
 
 
 
 
 
 
Purchases of property and equipment
 
(3,918
)
 
(2,502
)
 
(945
)
Proceeds from sale of property and equipment
 
8

 
—

 
—

Net cash used in investing activities
 
(3,910
)
 
(2,502
)
 
(945
)
FINANCING ACTIVITIES:
 
 
 
 
 
 
Principal payments on long-term debt and short-term borrowings
 
(8
)
 
(8
)
 
(10
)
Proceeds from long-term debt and short-term borrowings, net of discount and issuance costs
 
5,000

 
5,658

 
—

Proceeds from issuance of common stock under equity compensation plans
 
—

 
133

 
—

Net cash provided by (used in) financing activities
 
4,992

 
5,783

 
(10
)
Effect of exchange rate changes on cash and cash equivalents
 
110

 
219

 
315

Decrease in cash and cash equivalents
 
(10,019
)
 
(2,730
)
 
(4,465
)
Cash and cash equivalents, beginning of period
 
50,122

 
52,852

 
25,359

Cash and cash equivalents, end of period
 
$
40,103

 
$
50,122

 
$
20,894


  Maxwell Reports First Quarter 2018 Results and Provides Business Outlook for Second Quarter 2018
Page 15 of 16

MAXWELL TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(in thousands, except per share data) (Unaudited)
 
 
Three Months Ended
 
 
March 31, 2018
 
December 31,
 2017 (1)
 
September 30,
 2017 (1)
 
June 30,
 2017 (1)
 
March 31,
 2017 (1)
Gross Margin Reconciliation:
 
 
 
 
 
 
 
 
 
 
GAAP gross margin (1)
 
20.0
%
 
23.8
%
 
20.4
%
 
20.9
%
 
22.9
%
Stock-based compensation expense
 
1.2
%
 
1.1
%
 
0.8
%
 
0.7
%
 
0.7
%
Amortization of intangible assets
 
0.3
%
 
0.3
%
 
0.3
%
 
0.1
%
 
—
%
Acquisition related expense
 
—
%
 
0.2
%
 
0.8
%
 
0.8
%
 
—
%
Non-GAAP gross margin (1)
 
21.5
%
 
25.4
%
 
22.3
%
 
22.5
%
 
23.6
%
Gross Profit Reconciliation:
 
 
 
 
 
 
 
 
 
 
GAAP gross profit (1)
 
$
5,681

 
$
7,314

 
$
7,324

 
$
7,753

 
$
6,108

Stock-based compensation expense
 
346

 
349

 
271

 
257

 
193

Amortization of intangible assets
 
93

 
90

 
88

 
60

 
—

Acquisition related expense
 
—

 
67

 
287

 
291

 
—

Non-GAAP gross profit (1)
 
$
6,120

 
$
7,820

 
$
7,970

 
$
8,361

 
$
6,301

Total Operating Expenses Reconciliation:
 
 
 
 
 
 
 
 
 
 
GAAP total operating expenses (1)
 
$
15,047

 
$
14,379

 
$
20,725

 
$
16,569

 
$
15,295

Stock-based compensation expense
 
(2,278
)
 
(2,141
)
 
(2,484
)
 
(1,997
)
 
(1,345
)
Amortization of intangible assets
 
(223
)
 
(217
)
 
(212
)
 
(142
)
 
—

Restructuring and related costs
 
57

 
(34
)
 
(1,251
)
 
—

 
(997
)
Strategic equity transaction costs
 
—

 
—

 
(503
)
 
—

 
—

Acquisition related expense
 
—

 
(46
)
 
(46
)
 
(1,512
)
 
(275
)
Shareholder advisement and settlement costs
 
—

 
—

 
(761
)
 
(315
)
 
(59
)
SEC and FCPA legal and settlement costs
 
(64
)
 
(64
)
 
(3,001
)
 
(62
)
 
(121
)
Non-GAAP operating expenses (1)
 
$
12,539

 
$
11,877

 
$
12,467

 
$
12,541

 
$
12,498

Loss from Operations Reconciliation:
 
 
 
 
 
 
 
 
 
 
GAAP loss from operations (1)
 
$
(9,366
)
 
$
(7,065
)
 
$
(13,401
)
 
$
(8,816
)
 
$
(9,187
)
Stock-based compensation expense
 
2,624

 
2,490

 
2,755

 
2,254

 
1,538

Amortization of intangible assets
 
316

 
307

 
300

 
202

 
—

Restructuring and related costs
 
(57
)
 
34

 
1,251

 
—

 
997

Strategic equity transaction costs
 
—

 
—

 
503

 
—

 
—

Acquisition related expense
 
—

 
113

 
333

 
1,803

 
275

Shareholder advisement and settlement costs
 
—

 
—

 
761

 
315

 
59

SEC and FCPA legal and settlement costs
 
64

 
64

 
3,001

 
62

 
121

Non-GAAP loss from operations (1)
 
$
(6,419
)
 
$
(4,057
)
 
$
(4,497
)
 
$
(4,180
)
 
$
(6,197
)
Adjusted EBITDA Reconciliation:
 
 
 
 
 
 
 
 
 
 
GAAP net loss
 
$
(9,205
)
 
$
(8,752
)
 
(13,860
)
 
(10,118
)
 
$
(10,399
)
Interest expense, net
 
993

 
1,043

 
152

 
97

 
63

Income tax provision
 
(1,022
)
 
540

 
527

 
1,382

 
1,208

Depreciation
 
1,993

 
2,133

 
$
2,231

 
$
2,259

 
2,148

Amortization of intangible assets
 
316

 
307

 
300

 
202

 
—

EBITDA
 
(6,925
)
 
(4,729
)
 
(10,650
)
 
(6,178
)
 
(6,980
)
Foreign currency exchange (gain) loss, net
 
89

 
256

 
(65
)
 
18

 
97

Other income
 
—

 
(18
)
 
(14
)
 
(52
)
 
(1
)
Stock-based compensation expense
 
2,624

 
2,490

 
2,755

 
2,254

 
1,538

Restructuring and related costs
 
(57
)
 
34

 
1,251

 
—

 
997

Strategic equity transaction costs
 
—

 
—

 
503

 
—

 
—

Acquisition related expense
 
—

 
113

 
333

 
1,803

 
275

Shareholder advisement and settlement costs
 
—

 
—

 
761

 
315

 
59

SEC and FCPA legal and settlement costs
 
64

 
64

 
3,001

 
62

 
121

Adjusted EBITDA
 
$
(4,205
)
 
$
(1,790
)
 
$
(2,125
)
 
$
(1,778
)
 
$
(3,894
)

  Maxwell Reports First Quarter 2018 Results and Provides Business Outlook for Second Quarter 2018
Page 16 of 16

 
 
Three Months Ended
 
 
March 31, 2018
 
December 31,
 2017 (1)
 
September 30,
 2017 (1)
 
June 30,
 2017 (1)
 
March 31,
 2017 (1)
Interest Expense, net Reconciliation
 
 
 
 
 
 
 
 
 
 
GAAP interest expense, net
 
$
993

 
$
1,043

 
152

 
97

 
$
63

Non-cash interest expense
 
(439
)
 
(420
)
 
(24
)
 
—

 
—

Non-GAAP interest expense, net
 
$
554

 
$
623

 
$
128

 
$
97

 
$
63

Net Loss Reconciliation
 
 
 
 
 
 
 
 
 
 
GAAP net loss
 
$
(9,205
)
 
$
(8,752
)
 
(13,860
)
 
(10,118
)
 
$
(10,399
)
Stock-based compensation expense
 
2,624

 
2,490

 
2,755

 
2,254

 
1,538

Amortization of intangible assets
 
316

 
307

 
300

 
202

 
—

Non-cash interest expense
 
439

 
420

 
24

 
—

 
—

Restructuring and related costs
 
(57
)
 
34

 
1,251

 
—

 
997

Strategic equity transaction costs
 
—

 
—

 
503

 
—

 
—

Acquisition related expense
 
—

 
113

 
333

 
1,803

 
275

Shareholder advisement and settlement costs
 
—

 
—

 
761

 
315

 
59

SEC and FCPA legal and settlement costs
 
64

 
64

 
3,001

 
62

 
121

Non-GAAP net loss
 
$
(5,819
)
 
$
(5,324
)
 
$
(4,932
)
 
$
(5,482
)
 
$
(7,409
)
Net Loss per Diluted Share Reconciliation:
 
 
 
 
 
 
 
 
 
 
GAAP net loss per diluted share
 
$
(0.25
)
 
$
(0.24
)
 
$
(0.37
)
 
$
(0.28
)
 
$
(0.32
)
Stock-based compensation expense
 
0.07

 
0.07

 
0.07

 
0.06

 
0.05

Amortization of intangible assets
 
0.01

 
0.01

 
0.01

 
0.01

 
—

Non-cash interest expense
 
0.01

 
0.01

 
*
 
—

 
—

Restructuring and related costs
 
*

 
*

 
0.04

 
—

 
0.03

Strategic equity transaction costs
 
—

 
—

 
0.01

 
—

 
—

Acquisition related expense
 
—

 
0.01

 
0.01

 
0.05

 
0.01

Shareholder advisement and settlement costs
 
—

 
—

 
0.02

 
0.01

 
*

SEC and FCPA legal and settlement costs
 
*

 
—

 
0.08

 
—

 
*

Non-GAAP net loss per diluted share
 
$
(0.16
)
 
$
(0.14
)
 
$
(0.13
)
 
$
(0.15
)
 
$
(0.23
)
Weighted Average Common Shares Outstanding:
 
 
 
 
 
 
 
 
 
 
Basic and diluted
 
37,522
 
37,115
 
37,008
 
35,526
 
32,197

*
Net loss effect of this reconciling item was less than $0.01 per share.

(1) Historical amounts have been reclassified for all quarters of 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.