Maxwell Technologies Inc. reports operational and financial results for the three and nine months ended September 30, 2015. Total revenues for the third quarter of 2015 were $45.1 million, an increase of 19.3% from the second quarter of 2015 and an increase of 8.4% from the prior year quarter. Ultracapacitor revenue increased to $31.8 million, an increase of 35.6% from the second quarter of 2015 and an increase of 10.4% from the prior year quarter. The company reported $3.8 million of adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) for the third quarter of 2015, compared with $711,000 in the second quarter of 2015 and $1.6 million for the prior year quarter. Net loss for the third quarter of 2015 was $1.4 million, compared with $9.4 million in the second quarter of 2015 and $3.3 million in the prior year quarter.
"During the third quarter, we made meaningful progress transitioning our business to higher growth opportunities and executing on our restructuring plan, which is already yielding positive results," says Dr. Franz Fink, Maxwell's President and Chief Executive Officer. "We achieved better than expected revenue, primarily driven by upside demand in the China hybrid bus market. We expect this strength to continue into the fourth quarter. While we expect the new China hybrid bus policy to put pressure on our top-line revenue early in 2016, we believe there is a long-term baseline business for ultracapacitors in that market.
"As our business evolves and diversifies, our continued focus on costs and operational efficiencies should position us for sustainable profitability over the long term. Maxwell's opportunity is large and growing, with our current served available market of nearly $600 million expected to grow to more than $1.4 billion by 2020 and further beyond that. Our five-year plan for revenue growth will build upon a solid revenue base today to more mid- and long-term opportunities as we diversify further in auto, rail and grid energy storage. Looking ahead, we are excited about the significant prospects for our company, and we are confident that we are taking the right steps to grow our business and enhance shareholder returns," concludes Fink.
Discussion of Financial and Operational Results for the Quarter
Revenue and Non-GAAP Gross Margin
Total revenue for the third quarter of 2015 was $45.1 million, compared with $37.8 million in the second quarter of 2015, primarily due to increases in ultracapacitor and microelectronics revenue.
- Ultracapacitor revenue for the third quarter of 2015 was $31.8 million, compared with $23.4 million in the second quarter of 2015, primarily driven by increased demand in the China hybrid bus market.
- High-voltage revenue was $10.3 million for the third quarter of 2015, compared with $11.9 million in the second quarter of 2015.
- Microelectronic revenue for the third quarter of 2015 was $3.0 million, compared with $2.5 million in the second quarter of 2015.
Non-GAAP gross margin in the third quarter of 2015 was 32.3%, a slight decrease when compared with the second quarter of 2015, reflecting increased demand in the ultracapacitor business.
Adjusted EBITDA & Operating Expense
- Adjusted EBITDA for the third quarter of 2015 was $3.8 million, compared with $711,000 in the second quarter of 2015. The quarter-over-quarter increase was primarily driven by higher revenues due to increased demand for our ultracapacitor products and a reduction in our operating expenses as a result of our restructuring and cost reduction efforts.
- Operating expense in the third quarter of 2015 was $14.9 million, compared with $18.4 millionin the second quarter of 2015, primarily driven by lower restructuring related charges and cost reduction efforts.
- Non-GAAP operating expense for the third quarter of 2015 was $13.5 million and excludes adjustments for stock-based compensation, restructuring related and various other non-standard charges.
- Third quarter 2015 operating loss was $651,000, compared with an operating loss of $6.3 million in the second quarter of 2015. The quarter-over-quarter reduction in operating loss was primarily driven by lower restructuring related charges, increased demand for our ultracapacitor products and reduction in our operating expenses as a result of our restructuring and cost reduction efforts.
- Non-GAAP operating income for the third quarter of 2015 was $1.0 million.
- Net loss for the third quarter of 2015 was $1.4 million, or $(0.05) per share, compared with a net loss of $9.4 million, or $(0.31) per share, in the second quarter of 2015.
- Non-GAAP net income for the third quarter of 2015 was $234,000.
Capital Expenditures
Capital expenditures during the third quarter of 2015 were $562,000, compared with $942,000in the second quarter of 2015.
Business Outlook
- Total revenue for the fourth quarter of 2015 is expected to be between $46 million and $50 million, a 6% increase at the midpoint of guidance.
- Non-GAAP gross margin for the fourth quarter of 2015 is expected to be between 31% and 33%.
- Non-GAAP operating expense for the fourth quarter of 2015 is expected to be approximately $13.5 million.
Other Business & Operational Highlights
- Secured $25 million revolving credit facility with East West Bank.
- Selected as the exclusive capacitive energy storage supplier by China's largest rail company, China Railway Rolling Stock Corporation.
- Announced the availability of Maxwell's Engine Start Module (ESM) as a factory-installed option on select new Peterbilt trucks.
- Announced that Continental Automotive System's Maxwell-powered voltage stabilization system (VSS) will be a standard feature on 2016 Cadillac ATS and CTS sedans and ATS coupes (excludes the ATS-V, CTS-V and CT6 models). Production rollout began in July.
