Maxwell's Better-than-Expected Q1 Earnings

Maxwell Technologies, Inc. (MXWL) posted first quarter 2014 earnings of 4 cents per share, comfortably surpassing the Zacks Consensus Estimate of a loss of 8 cents. The quarterly figure also jumped 100% from earnings of 2 cents a year ago.

This bottom-line improvement is directly attributable to higher sales volume.

Revenue

In first quarter 2014, the company’s total revenue came in at $46.0 million, 17.9% above the Zacks Consensus Estimate of $39.0 million. However, the reported figure was down 3.7% from the prior-year amount of $47.7 million.

Operational Highlights

Ultracapacitor revenue in the first quarter was $32.0 million, down almost 5.3% year over year. On the other hand, revenue from high voltage capacitor and microelectronics products was $14.0 million, remaining flat year over year.

Operating expenses incurred were $16.6 million, down 1.2% from the year-ago figure of $16.8 million.

On a GAAP basis, operating expenses incurred during the quarter were $17.1 million, down 2.4% year over year due to a decline in selling, general and administrative expenses (down 4.9%). This was partly offset by increased research and development expenses (up 2.5%).

Financial Highlights

Cash and cash equivalents as of Mar 31, 2014 were $32.6 million versus $30.6 million at the end of Dec 31, 2013. Long-term debt was $0.083 million versus $0.1 million as of Dec 2013.

Guidance

The company expects total revenue in the second quarter of 2014 to remain flat sequentially. The company provides an optimistic outlook for its ultracapacitor product but also predicts weak growth in its high voltage products primarily due to reduced electric utility infrastructure spending.

Other Releases

AU Optronics Corp. (AUO) announced first quarter 2014 earnings of 1 cent per share, surpassing the Zacks Consensus Estimate of a loss of 6 cents by 116.67%.

Ballard Power Systems Inc. (BLDP) announced first quarter 2014 loss of 3 cents per share, narrower than the Zacks Consensus Estimate of a loss of 4 cents by 25.00%.

Littelfuse Inc. (LFUS) announced first quarter 2014 earnings of $1.16 per share, surpassing the Zacks Consensus Estimate of $1.15 per share by 0.87%.

Our Take

Maxwell Technologies markets and sells its products in North America, Europe and Asia. Maxwell recorded consistent growth in its top line over the last couple of years. The company has a strong order backlog of $28.1 million as of Dec 31, 2013. Hence, the trend of rising demand for its products will likely persist primarily from the utility infrastructure, renewable energy, public transportation and space programs.

Last year, the Chinese government had declared a subsidy policy on all electric buses and plug-in hybrid buses which incorporate ultracapacitor modules. Hence, Maxwell Technologies previously expected strong demand for ultracapacitor modules in 2014 driven by high plug-in hybrid demand. However, presently the company though looking forward to the strong demand in ultracapacitor markets, expects limited demand in China.

The company plans to allocate around 60% of its capital spending budget for the expansion of ultracapacitor production capacity as well as upgrading its manufacturing processes in 2014. In the near term, sales of ultracapacitors to support efficient, cost-effective energy storage for recuperative braking systems in low-emission, hybrid electric transit buses, zero-emission electric rail vehicles and wind turbine blade fit systems will drive Maxwell’s growth.

However, some causes for concern remain like over-reliance on third parties for manufacturing and logistics operations, foreign currency risks and over-dependence on macro-economic factors.

The company presently holds a short term Zacks Rank #3 (Hold).

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