Maxwell Technologies' CEO Discusses Q1 2012 Results - Earnings Call Transcript

Maxwell Technologies (MXWL)

Q1 2012 Earnings Call

April 26, 2012 5:00 p.m. ET


Mike Sund - VP, IR

David Schramm - President and CEO

Kevin Royal - CFO


Philip Shen - Roth Capital

Chris Godby - Stephens, Inc.

Michael Lew - Needham

Ahmar Zaman - Piper Jaffray

Ben Callow - Robert W. Baird

Colin Rusch - Thinkequity

Craig Irwin - Wedbush Securities

Jed Dorsheimer - Canaccord

Jeremy Hellman - Divine Capital Partners



Good day, and welcome to Maxwell Technologies’ first quarter financial results conference call. [Operator instructions.] It is now my pleasure to turn the conference over to Mr. Mike Sund. Please go ahead.

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, or via the SEC's website. Hard 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 April 26, 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.

I should also mention the company’s annual meeting of stockholders will be conducted here in San Diego on May 9, and we look forward to seeing some of you there.

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

David Schramm

Thank you Mike, and good afternoon. I’ve been travelling in the last few weeks, and I’ve developed some hoarseness, so please bear with me as we report our Q1 2012 results.

Maxwell recorded total revenue of $39.2 million for the first quarter ended March 31, 2012. Now, that’s up 11% from the same period a year ago. That growth was driven not only by ultracapacitor sales of $22 million, which is up 3% from Q1 ’11, but also by unusually strong sales of microelectronics and high-voltage capacitor products, which came in at $17.2 million, which is up 24% from last year’s first quarter.

This growth, along with continuing cost and efficiency improvements, enabled the company to show a net profit of about $500,000 for the quarter. On a non-GAAP basis, net profit for Q1 was $1.8 million.

Now, this was the eight consecutive quarter that Maxwell has been profitable on a non-GAAP basis. Kevin’s going to provide some more financial details on this in a few minutes. As noted in our press release, ultracapacitor sales were lower sequentially compared with the fourth quarter. This was mainly due to normal seasonal factors including the Chinese New Year observance, which effectively shuts down business across much of Asia for two to three weeks every year.

Looking at key ultracapacitor markets, wind turbine deployments in China and elsewhere continue to be well below levels seen in previous years, so wind-related ultracapacitor sales were lower than a year ago. However, our sales in the hybrid bus drive systems in China continue to be steady, and contributions from a stop-start idle elimination system for autos in Europe and various backup power applications enabled us to sustain our year over year growth.

Looking ahead, an increase in recent order activity and intelligence from various sources in China, including forecasts from several of our customers, indicate that wind farm installations, both on and off shore, can be expected to move toward a more normal level over the next few quarters.

The current lull was predicted last year by the consulting firm that we engaged last year to assess business conditions and the direction of government policy in China, particularly as they related to the wind and the bus markets. China’s new five-year plan includes targets for increasing wind farm installations to help to satisfy the country’s ever-growing appetite for electrical energy and Chinese wind turbine OEMs are now marketing their systems globally, so we’ve got good reason to anticipate an upturn.

Energy storage systems for recuperative breaking and torque assist in fuel efficient, low emission hybrid electric transit buses for China continued to be the single largest ultracapacitor sales driver in Q1.

Last fall we announced a new supply agreement with Yutong, China’s largest bus producer, and we continue to supply ultracapacitor products to several other bus OEMs and hybrid drive system integrators. There are more than 5,000 hybrid buses powered by Maxwell ultracapacitors in daily service around the world, and their performance continues to validate the performance, quality, and the value proposition of our products.

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 bus OEMs and drive system integrators continue to gear up to deliver more hybrid vehicles.

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