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Maxwell Beats on Q3 Earnings

Zacks Equity Research

Maxwell Technologies, Inc.’s (MXWL) solid third quarter 2013 results had a positive effect on the stock market, driving its share price 10.7% on Oct 25 to $8.19 on daily trading. The company reported third quarter 2013 earnings of 21 cents per share, far ahead of the Zacks Consensus Estimate of a loss of 16 cents. The company’s earnings were also up 16.7% from the year-ago profit level of 18 cents, buoyed by robust ultracapacitor revenue growth.

The company’s total revenue came in at $51.2 million, up 19.9% from the year-earlier number of $42.7 million and 46.2% from the Zacks Consensus Estimate of $35.0 million.

Operating Highlights

Ultracapacitor revenue in the third quarter was $37.0 million, up 30% year over year while revenue from high voltage capacitor and microelectronics products was $14.2 million, down marginally by 1% year over year.

Operating expenses incurred during the quarter were $14.9 million, up 20.0% year over year due to an increase in selling, general and administrative expenses (up 28.8%) and research and development expenses (up 7.2%).

Financial Highlights

Cash and cash equivalents as of Sep 30, 2013 were $37.0 million versus $28.7 million at the end of Dec 2012. Long-term debt was $0.086 million versus $0.083 million as of Dec 2012.

Our Take

Maxwell Technologies continues to be the market leader in the growing ultracapacitor market. Overall, the company posted strong results, driven mainly by hybrid bus and wind energy applications in China, and a European automotive program.

Recently, the Chinese government declared a subsidy policy on all electric buses and plug-in hybrid buses. These buses qualify for the announced government subsidies, and incorporate ultracapacitor modules.

As a result, Maxwell Technologies expects sales of several thousand ultracapacitor modules in the fourth quarter driven by high plug-in hybrid demand.

However, the company’s dependency on third parties for manufacturing and logistics operations, foreign currency risks and licensing law hurdles keep us concerned. The company presently retains a short-term Zacks Rank #3 (Hold).

Stocks to look out for in the space are Nidec Corporation (NJ), CalAmp Corp. (CAMP) and Ballard Power Systems Inc. (BLDP). While Nidec holds a Zacks Rank #1 (Strong Buy), CalAmp and Ballard Power carry a Zacks Rank #2 (Buy).
 

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