Maxwell Technologies Inc. (NASDAQ:MXWL) filed Quarterly Report for the period ended 2011-09-30.
Maxwell Technologies Inc. has a market cap of $593.13 million; its shares were traded at around $21.2 with a P/E ratio of 424 and P/S ratio of 4.87.
Highlight of Business Operations:Gross Profit. In the third quarter of 2011, gross profit increased $4.2 million or 34% compared with the third quarter of 2010. As a percentage of revenue, gross profit increased to 40% compared with 39% in the same quarter one year ago. Of the increase in gross profit in absolute dollars, $3.8 million related to an increase in the volume of sales, and $1.3 million was due to net reductions in product costs. Offsetting this increase was a decrease in gross profit in absolute dollars of $815,000 related to decreased net foreign exchange gains recorded in the three months ended September 30, 2011 compared with the same quarter one year ago. We hedge intercompany and third-party asset and liability balances denominated in currencies other than the local currency. The net foreign exchange gains or losses recognized are the transaction gains and losses incurred on the hedged assets and liabilities, net of the gains and losses realized on the hedge contracts.
Net loss reported for the nine months ended September 30, 2011 was $723,000, or $0.03 per share, compared with a net loss of $3.7 million, or $0.14 per share, in the same quarter one year ago. During the nine months ended September 30, 2011 and 2010, we recorded accruals for settlements of legal matters of $2.4 million and $5.1 million, respectively. Further, during the nine months ended September 30, 2011 and 2010, we recorded gains on embedded derivatives and warrants of $1.1 million and $3.7 million, respectively. During the nine months ended September 30, 2011, we continued to achieve improved operating results due to revenue growth combined with improvements in gross profit and operating margins.
Selling, general and administrative expenses were 25% of revenue for the nine months ended September 30, 2011, down from 31% in the same period one year ago, and total expenses increased $2.1 million, or 8%, from the same period one year ago. This increase was driven primarily by an increase of $2.1 million in labor costs primarily due to headcount growth in our sales and marketing operations, and an increase in legal fees of $1.3 million. The remainder of the increase in selling, general and administrative expenses is due to increases in various expense categories, primarily recruiting, information technology expenses and selling expenses, to support our revenue growth. These increases were offset by a decrease associated with a $1.7 million charge in Q3 2010 related to settlement of the FCPA matter. In addition, these increases were offset by a decrease in net foreign exchange losses of $1.4 million. In the nine months ended September 30, 2011, we recorded net foreign exchange losses of $229,000 compared with $1.6 million in net foreign exchange losses in the same quarter one year ago. Increased legal fees during the nine months ended September 30, 2011 related to certain ongoing legal matters, including indemnification of certain past officers concerning the FCPA matter, efforts related to protection of our intellectual property, and other corporate matters. Due to the ongoing nature of these matters, we anticipate incurring legal fees in excess of historical levels for the remainder of 2011.
Research and development expenses were 15% of revenue for the nine months ended September 30, 2011, consistent with the same period one year ago, while total expenses increased by $4.0 million, or 31%. The increase was driven by the continued expansion of our research and development activities, including an increase of $2.9 million in labor expense due to headcount additions, an increase of $1.3 million in facilities and information technology expenses related to expansion of our research and development facilities, and an increase of $884,000 related to outsourced product development activities. These increases were offset by additional government funding of our research and development activities of $2.0 million.
Net cash used in operating activities was $7.1 million for the nine months ended September 30, 2011. This usage of cash related primarily to increased inventory levels of $8.6 million and an increase in accounts receivable balances of $4.4 million. The increase in accounts receivable was due to revenue growth as well as significant sales in the last month of the quarter. The increase in inventories was related to anticipated product demand. In addition, we made settlement payments totaling $6.7 million to the SEC and DOJ during the first quarter of 2011. Excluding this impact, and the reclassification of $5.4 million from other long-term liabilities, cash flows were positively impacted by a $5.8 million increase in accounts payable and accrued liabilities, which correlates to the increase in inventory. In addition, included in net cash used in operating activities are net non-cash charges of $6.4 million which negatively impact the statement of operations but do not impact cash. Net cash provided by operating activities was $8.5 million for the nine months ended September 30, 2010, which related primarily to an increase in accounts payable and accrued liabilities, offset by an increase in accounts receivable.
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