Maxwell Technologies Inc. has reported operational and financial results for the three months ended March 31, 2016. Total revenues for the first quarter of 2016 were $35.2 million, compared with $49.8 million for the fourth quarter of 2015 and $34.7 million for the prior year quarter. The company reported $(1.3) million of adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) for the first quarter of 2016, compared with $3.9 million for the fourth quarter of 2015 and $(4.9) million for the prior year quarter. Net loss for the first quarter of 2016 was $6.8 million, compared with $2.2 million for the fourth quarter of 2015 and $9.3 million for the prior year quarter. Non-GAAP net loss for the first quarter of 2016 was $4.3 million, compared with non-GAAP net income of $0.6 million for the fourth quarter of 2015 and non-GAAP net loss of $8.5 million for the prior year quarter.
"We achieved first quarter revenue of $35.2 million, even in the face of a challenging market for our hybrid bus and high-voltage capacitor products in China," says Dr. Franz Fink, Maxwell's President and Chief Executive Officer. "We believe we have taken the right steps to focus and streamline our business, reducing operating expenses nearly 25% year-over-year. Additionally, in the first quarter we completed the consolidation of our U.S. manufacturing facilities and in late April we announced the completion of the sale of our Microelectronics product line for $21 million in cash, further strengthening our balance sheet. These actions, as well as the steps we plan to take throughout the remainder of the year, including the introduction of new and innovative products for the high-voltage and hybrid bus markets, the expansion of our footprint in the wind market, and new technology for the rail market, position us well to sustain and grow our business as we transition to profitability and revenue growth in the years ahead."
Discussion of Financial and Operational Results for the Quarter
Revenue and Non-GAAP Gross Margin
Total revenue for the first quarter of 2016 was $35.2 million, compared with $49.8 million for the fourth quarter of 2015, primarily due to decreases in ultracapacitor and high voltage revenues.
- Ultracapacitor revenue for the first quarter of 2016 was $23.5 million, compared with $37.3 million for the fourth quarter of 2015, primarily driven by an expected seasonal decline in the China hybrid bus market.
- High-voltage revenue was $8.2 million for the first quarter of 2016, compared with $8.9 million for the fourth quarter of 2015, primarily driven by a soft market in China as customers put orders on hold while waiting for the release of China's new 5-year plan which was released at the end of the quarter.
- Microelectronic revenue for the first quarter of 2016 was $3.5 million, compared with $3.6 million for the fourth quarter of 2015.
Non-GAAP gross margin for the first quarter of 2016 was 28.4%, a decrease when compared with the fourth quarter of 2015, reflecting lower factory utilization and a decline in high-voltage revenue.
Adjusted EBITDA, Operating Expense, Operating Loss & Net Loss
- Adjusted EBITDA for the first quarter of 2016 was $(1.3) million, compared with $3.9 million for the fourth quarter of 2015. The quarter-over-quarter decrease was primarily driven by lower gross margins and higher operating expenses.
- Operating expense for the first quarter of 2016 was $15.9 million, compared with $15.8 million for the fourth quarter of 2015, primarily driven by higher payroll costs due to annual payroll tax resets, legal expenses associated with the sale of the Microelectronics product line, and executive transition costs.
- Non-GAAP operating expense for the first quarter of 2016 was $13.7 million compared with $13.2 million for the fourth quarter of 2015 and excludes stock-based compensation, legal expenses associated with SEC and FCPA matters, and other non-standard charges not reflective of the on-going costs to run the business.
- Operating loss for the first quarter of 2016 was $6.2 million, compared with an operating loss of $1.5 million for the fourth quarter of 2015. The quarter-over-quarter increase was primarily driven by lower gross margins and higher operating expenses.
- Non-GAAP operating loss for the first quarter of 2016 was $3.7 million compared with non-GAAP operating income of $1.2 million for the fourth quarter of 2015.
- Net loss for the first quarter of 2016 was $6.8 million, or $(0.22) per share, compared with a net loss of $2.2 million, or $(0.07) per share, for the fourth quarter of 2015.
- Non-GAAP net loss for the first quarter of 2016 was $4.3 million compared with non-GAAP net income of $0.6 million for the fourth quarter of 2015.
Capital Expenditures
Capital expenditures during the first quarter of 2016 were $2.2 million, compared with $1.4 million for the fourth quarter of 2015. Capital expenditures of $1.6 million in the first quarter of 2016 related to the consolidation of the two U.S. manufacturing facilities completed during the quarter.
Business Outlook
- The business outlook for the second quarter of 2016 reflects expected results for Maxwell, excluding the Microelectronics product line, except for the 27 days during the quarter in which it was still owned by Maxwell.
- Total revenue for the second quarter of 2016 is expected to be in the range of $34 million to $36 million.
- Non-GAAP gross margin for the second quarter of 2016 is expected to be in the range of 30-32%.
- Non-GAAP operating expense for the second quarter of 2016 is expected to be in the range of $13 million to $13.5 million.
Other Business & Operational Highlights
- Maxwell ultracapacitors selected as the core component of the first megawatt-scale, ultracapacitor-based wind farm energy storage system in the world by China Guodian Corporation's Beijing Huadian Tianren Electric Power Control Technology Co.
- Introduced the 3V, 3,000-farad ultracapacitor cell as the newest addition to the K2 product family, giving customers the flexibility to increase power and energy at the same time or to significantly cost-optimize system designs utilizing fewer cells or modules without compromising power or energy.
- Welcomed automotive industry veterans, Jörg Buchheim, as senior vice president and chief sales officer, and Dr. Henning Hauenstein, as vice president, strategy & marketing.
