Maxwell Technologies' CEO Discusses Q4 2011 Results - Earnings Call Transcript

Maxwell Technologies, Inc. ( MXWL)

Q4 2011 Earnings Call

February 16, 2012 5:00 pm ET

Executives

Mike Sund - VP, IR

David Schramm - President and CEO

Kevin Royal - CFO

Analysts

Philip Shen - Roth Capital

David Giesecke - Wedbush Securities

Zach Larkin- Stephens, Inc.

Colin Rusch - Thinkequity

Jed Dorsheimer - Canaccord

Ahmar Zaman - Piper Jaffray

Chris Kovacs - Robert Baird

Tom Daniels - Stifel Nicolaus

Jeremy Hellman - Divine Capital

Presentation

Operator

Good day, everyone, and welcome to today's program. (Operator Instructions) It is now my pleasure to introduce today's speaker, Mike Sund, Vice President of Investor Relations.

Mike Sund

Good afternoon. In a few moments, you will 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 and changes in circumstances and assumptions. Forward-looking statements in the following discussion do not purport to be predictions of future events or circumstances and may not be realized. For further information regarding 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 Investors 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 February 16, 2012. 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, thank you very much, and good afternoon, everybody. We're really pleased to report that Maxwell reported total revenue of $42.5 million for the fourth quarter ended December 31, 2011. Now, that's up 24% from the same period a year ago.

That growth was driven mainly by strong ultracapacitor sales of $26.2 million. That's up 30% from Q4 of 2010. Sales of our microelectronics and high-voltage capacitor products came in at $16.3 million for the quarter, up 16% from last year's fourth quarter. That's higher than usual for these mature product lines, which both continue to deliver solid contributions to the Maxwell bottomline.

This growth along with continuing cost and efficiency improvements enable the company to show a net profit of about $1.5 million for the quarter. On a non-GAAP basis, net profit for Q4 was $1.7 million, and this was the seventh consecutive quarter that Maxwell has been profitable on a non-GAAP basis. Total sales for the year came in at $157.3 million, up 29% from fiscal 2010. GAAP net income for the full year was nearly $0.75 million and the net was nearly $5 million on a non-GAAP basis. Kevin will provide a little more detail on that in a few minutes.

Looking at key ultracapacitor markets, wind turbine deployments in China and elsewhere continued to be well below level seen in previous years. So wind related sales continued to be down. However, sales for hybrid bus drive systems were our highest ever. And increasing contributions from a stop-start idle elimination system for autos in Europe and various backup power applications enable us to sustain rapid growth overall.

Looking ahead, we've received intelligence from various sources in China, including indications from several of our customers, that wind farm installations both on and offshore can be expected to return to a more normal level within the next couple of quarters.

The current level was predicted last year by the consulting firm we engaged to assess business conditions and the direction of government policy in China, particularly as they relate to the wind and the bus markets. What we're hearing now is that issues relating to wind farm siting and permitting abuses have been addressed and technical fixes mandated to solve low voltage ride through problems have been implemented, clearing the way for return to more normal activity.

The new Chinese five-year plan sets forth aggressive targets for wind farm installations to help to satisfy China's ever growing appetite for electrical energy and Chinese wind turbine OEMs are now marketing their systems globally. So we've got a good reason to anticipate a significant upturn later in the year.

Turning to public transit vehicles, energy storage systems for recuperative braking and torque assist in fuel efficient, low emission hybrid electric transit buses were the primary drivers of ultracapacitor sales growth in Q4.

Last fall, we announced a new supply agreement with Yutong, China's largest bus producer. Voith Turbo, a leading European heavy vehicle drive system integrator announced that it is introducing a Maxwell ultracapacitor-based hybrid system for buses in the North American market where we've had limited sales in the past. Obviously, this never keeps growing, but we now estimate that there are about 5,000 hybrid buses that are powered by Maxwell ultracapacitors in daily service around the world.

According to our consultants, all of the 25 Chinese cities that are eligible for government subsidies for purchases of hybrid and electric transit vehicles are running behind their new energy vehicle deployment schedules. So we're seeing bus OEMs and drive system integrators continue to gear up to deliver more hybrid vehicles.

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