Maxwell Technologies Presentation

Maxwell Reports Fourth Quarter and Full Year 2017 Results

February 15, 2018

~ Provides Business Outlook for First Quarter 2018
~Note: A webcast of Maxwell's conference call will be available at 5:00 p.m. EST today at http://investors.maxwell.com.

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,
2017


September 30,
2017


December 31,
2016


December 31,
2017


December 31,
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
Midpoint of Guidance


Projected at
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 expense (1)


0.3



Interest, taxes, depreciation, 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,
2017


September 30,
2017


December 31,
2016


December 31,
2017


December 31,
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,
2017


December 31,
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,
2017


September 30,
2017


December 31,
2016


December 31,
2017


December 31,
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,
2017


September 30,
2017


December 31,
2016


December 31,
2017


December 31,
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,
2017


September 30,
2017


December 31,
2016


December 31,
2017


December 31,
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.

 

Enabling Energy's Future. (PRNewsfoto/Maxwell Technologies, Inc.)

 

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SOURCE Maxwell Technologies, Inc.