Maxwell Technologies, Inc. (NASDAQ:MXWL) Q3 2018 Earnings Conference Call Transcript

Nov 06, 2018 • 05:00 pm ET

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Maxwell Technologies, Inc. (NASDAQ:MXWL) Q3 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good afternoon. My name is Gabriel, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Maxwell Technologies Q3 2018 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions). Thank you.

Ms. Kimberly Tom, you may begin your conference.

Executive
Kimberly Tom

Good afternoon, everyone, and welcome to Maxwell's Third Quarter 2018 Conference Call. This call is being webcast live and, together with the earnings release, is available on the Investor Relations section of our corporate website. We also have a replay available for those who are unable to join us.

Speaking from management will be Dr. Franz Fink, Maxwell's President and CEO; and David Lyle, Maxwell's CFO. Following our prepared remarks, we will open the call for questions and answers.

(Forward-Looking Cautionary Statements)

Additionally, during today's call, management will reference both GAAP and non-GAAP financial measures. Please refer to our press release and financial tables therein, which included GAAP to non-GAAP reconciliation and other supplemental financial information.

I would like to thank you for your interest. And at this time, I would like to turn the call over to Franz.

Executive
Dr. Franz Fink

Thank you, Kim, and thank you to all who are joining us this afternoon. Overall, in Q3, our results met the prior guidance we had set. Our focus over the past quarter was on research and development, customer implementations, new alliances and successful proof-of-concept validations.

In addition, the results we are seeing from our dry battery electrode technology are excellent, and our strategic collaboration discussions are going well. Further, we believe that initial ramps in product sales in several of our key markets in 2019 will set the stage for the next phase of our growth and corporate evolution.

Our third quarter revenue of $33.7 million was up 14.5% sequentially and roughly at the midpoint of our top line guidance. This growth was driven primarily by a 17% increase in our energy storage product revenue. Non-GAAP gross margin came in at 20%, also right at the midpoint, and non-GAAP operating expense was $12.7 million, $200,000 better than the midpoint. Dave will provide more details on our financial results and outlook later in the call.

Before I dive into each of our business markets, let me provide a quick update from our last earnings call during which we discussed plans to strengthen our balance sheet by pursuing additional financing. In August, we raised net proceeds of approximately $23 million through a public offering of common stock which included participation by certain members of the Maxwell's Board of Directors and management. The funds from this raise have alleviated any near-term funding concerns. Nevertheless, the current geopolitical environment suggests that there's potential for a protracted US-China tension, which could continue to impede our business over the short term. To that end, we are focused on tightly managing our expenditures and generating efficiencies across our organization and throughout our global footprint. Concurrently,