Maxwell Technologies, Inc. (



Q1 2011 Earnings Call

April 28, 2011 5:00 pm ET


Michael W. Sund – Vice President, Communications and Investor Relations

David J. Schramm – President and Chief Executive Officer

Kevin S. Royal – Senior Vice President, Chief Financial Officer, Treasurer and Secretary


Michael Lew – Needham & Company

Matthew Crews – Noble Financial

Walter Nasdeo – Ardour Capital Investments

Dilip Warrier – Stifel Nicolaus

Philip Shen – Roth Capital Partners

Craig Irwin – Wedbush Securities

Ben Kallo – Robert W. Baird & Co.

Zack Orkin – Stephens

Bryce Dille – JMP Securities


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Good day ladies and gentlemen, all sites are now online in listen-only mode. Please note there will be a question-and-answer session later on in the call. (Operator Instructions) I will now turn the program over to our moderator for today, Mike Sund. Please go ahead, sir.

Michael W. Sund

Good afternoon. In a few moments, you'll hear from David Schramm, Maxwell’s President and CEO; and Kevin Royal, our Chief Financial Officer.

First, we need to advise you that the following discussion will include forward-looking statements that are based on our current expectations and assumptions, which are subject to numerous risks and uncertainties. Actual results could differ materially because of factors such as risk related to our international operations. These include our ability to comply with rules and regulations in countries where we conduct business, our ability to oversee and control our foreign subsidiaries and their operations, our ability to effectively manage foreign currency exchange rate fluctuations, and our ability to comply with U.S. Foreign Corrupt Practices Act, anti-bribery laws, foreign jurisdictions and the terms and conditions of our settlement agreements with the U.S. Securities and Exchange Commission and Department of Justice; also our ability to remain competitive and stimulate customer demand by introducing new products and match our production capacity to customer demand; dependence on the sale of our products to a small number of customers and vertical markets, some of which depend heavily on government funding and subsidies, reliance on certain suppliers of key materials and specialty equipment, and our ability to obtain sufficient capital to meet our operating or other needs.

Many of these factors are beyond our control, and there can be no assurance that we will not incur additional unseen costs in the conduct of our business. Forward-looking statements included herein do not purport to be predictions of future events or circumstances and may not be realized. For further information regarding such risks and uncertainties please refer to the MD&A and risk factors sections of our SEC filings, including our most recent Form 10-Q and our annual report on Form 10-K.

Electronic copies of these filings may be accessed by visiting the investor section of our website and hard copies maybe obtained by contacting the company. Some of you are listening to this call via the Internet and an archived replay of the call will be available on our website. All information in today’s call is as of April 28, 2011. The company undertakes no duty to update our forward-looking statements to conform the statements to actual results or changes in the company's expectations.

It is now my pleasure to introduce David Schramm, Maxwell’s President and CEO.

David J. Schramm

Good afternoon, everybody. We are pleased to report that Maxwell recorded total revenue of $35.3 million for the first quarter ended March 31, 2011. That’s up 32% from the $26.6 million reported in the same period a year ago, that growth was driven mainly by strong ultracapacitor sales of $21.4 million, which is up 55% from the $13.8 million recorded in Q1 of 2010.

Sales of microelectronics and high-voltage capacitor products came in at $13.9 million for the quarter, up 8% from last year’s last year's first quarter. In both of these legacy product lines continue to make important contributions to the Maxwell bottom line.

That sales growth across all three product lines along with continuing costs and efficiency improvements enable the company to show a small net profit for the quarter; that’s a modest but encouraging step toward our goal of sustainable and increasing profitability. Kevin will provide more details on those and other financial items in a few minutes.

As has been the case for the past several quarters, sales of ultracapacitor products into wind turbine, blade pitch and power quality applications and for hybrid and electric drive systems for public transit vehicles continue to be the primary drivers of ultracap’s sales growth.

We estimate that more than 15,000 Maxwell ultracapacitor equipped wind turbines are now operating around the clock worldwide. A significant portion of wind related sales continue to go into China, some directly to Chinese wind turbine OEMs and some through European pitch system integrators serving the customer in China.

China’s veracious appetite for electrical energy and concerns about urban air quality and greenhouse gas emissions from coal-fired power plants have been driving rapid expansion of wind generation capacity there. And the recently released five-year plan indicates that growth will continue.

Although, we’ve heard of concerns about a global slowdown in deployment of wind energy systems. We’ve added new customers during the past couple of year and that increase market share has driven significant sales gains for Maxwell ultracaps. The energy storage and power delivery systems for recuperative braking and torque-assist systems in low emission hybrid electric transit buses and zero-emission electric rail vehicles continue to be the other principal driver of ultracapacitor sales.

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