Maxwell Technologies, Inc. (MXWL) Q3 2011 Earnings Call November 3, 2011 5:00 p.m. ET Executives Mike Sund – Investor Relations David Schramm – President and Chief Executive Officer Kevin Royal – Chief Financial Officer Analysts Philip Shen – Roth Capital Michael Lew – Needham and Company Zach Larkin- Stephens, Inc. Noah Kaye – Thinkequity Craig Irwin – Wedbush Securities Jody Blurry – Stifel Nicolaus Jeremy Hellman – Divine Capital Ben Keller – Robert W. Baird Ahmar Zaman (Sean) – Piper Jaffray Presentation Operator
Electronic copies of these filings may be accessed by visiting the investor section of our website maxwell.com or via the SEC’s website. Printed copies may be obtained by contacting the company. We encourage all investors to read these reports and our other SEC filings. Some of you are listening via the Internet and an archived replay of the call will be available online at our website. All information in today’s call is as of November 3, 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 Maxwell’s President and CEO, David Schramm. David Schramm Very good Mike, and thank you, and good afternoon, everybody. We are pleased to report that Maxwell recorded total revenue of $41.1 million for the third quarter ending September 30, Now that’s up 31% from the same period a year ago. That growth was mainly driven by strong ultracapacitor sales of $24.9 million. Now that’s up 3% from Q3 of 2010. Sales of microelectronics and the high-voltage capacitor products came in at $16.2 million for the quarter, up 26% from last year’s first quarter. That’s higher than usual for these mature product lines with boats continue to deliver solid contributions to our bottom line. This growth, along with continuing costs and efficiency improvements enable the company to show a non-GAAP net profit of about $1.2 million for the quarter. That’s the sixth consecutive quarter that Maxwell has been profitable on a non-GAAP basis. So our products aren’t just contributing to a greener world, but also delivering another kind of green to the bottom line. Kevin will provide more financial details on all this in a few minutes. Although the wind turban deployments in China and elsewhere have slowed compared with the previous years, hybrid and electric drive systems for public transit vehicles continue to be a primary driver of Ultracap sales growth, along with increasing contributions from the stop-start idle elimination system for automobiles in Europe and various backup power applications.
A significant portion of Maxwell’s wind energy related sales over the past couple of years, have gone into China where renewable energy has been a focus of government policy and funding. While we’re seeing slower sales there, due in part to governments implementation of a more orderly, permitting and siting process, wind order flow continues.Many of you have asked about Maxwell’s exposure to China’s economy. Well to better understand the situation there, we engaged a major global consulting firm with a significant presence in China to analyze the wind, the bus, and several other market opportunities and assess the direction of government policies. The consultant’s report based on dozens of interviews with industry and government sources, reinforces our belief that China’s ever-growing appetite for electrical energy along with concerns about urban air pollution and greenhouse gas emissions from coal fired power plants will drive significant expansion of wind energy capacity there. Our contacts with wind customer at the recent wind energy trade show Beijing, indicate that wind projects likely will return to a more normal growth pace by mid-2012. The size of Maxwell’s opportunity also is growing beyond blade pitch systems, with a Chinese government mandate that new turbines must incorporate a feature called low voltage ride through. This addresses utility grid connectivity problems caused by the variability of energy output from wind farms. A number of leading turbine OEMs in China and Europe are now using ultracapacitors to support this ride-through function. In addition, China’s leading wind turban OEMs are now targeting export markets as evidence by a recent contract win to install a large wind farm here in the United States. Energy storage system for recuperative breaking and torque-assist and fuel efficient, low emission, hybrid electric transit buses, and zero-emission electric rail vehicles drove our highest ever sales for public transit vehicles in Q3 of 2011.
In September we announced a new supply agreement with Yutong, this is China’s largest bus producer, and more recently with Voith Turbo, a leading European heavy vehicle drive system integrator. And they announced that they’re introducing a ultracapacitor based hybrid system for buses in the North American market where we have historically had limited sales.Read the rest of this transcript for free on seekingalpha.com