Maxwell Technologies Inc. Reports Operating Results (10-Q)
Maxwell Technologies Inc. has a market cap of $194.3 million; its shares were traded at around $6.72 with a P/E ratio of 47.6 and P/S ratio of 1.2.
Highlight of Business Operations:Net income reported for the six months ended June 30, 2012 was $3.2 million, or $0.11 per diluted share, compared with a net loss of $1.0 million, or $0.04 per share, in the same quarter one year ago. During the six months ended June 30, 2011, we recorded an accrual for the settlement of a legal matter of $2.6 million, and a gain on embedded derivatives and warrants of $1.1 million. During the six months ended June 30, 2012, we continued to achieve improved operating results due to revenue growth combined with improvements in gross profit and operating margins.
Gross Profit. During the six months ended June 30, 2012, gross profit increased $3.8 million or 13% compared with the same period one year ago. As a percentage of revenue, gross profit margin increased to 41% compared with 40% in the same period one year ago. Of the increase in gross profit in absolute dollars, $3.1 million related to an increase in the volume of sales and $1.2 million was due to net reductions of product costs. Offsetting this increase was a decrease in gross profit in absolute dollars of $526,000 related to the impact of changes in foreign currency exchange rates, primarily changes between the Swiss Franc and the U.S. Dollar.
Selling, general and administrative expenses were 22% of revenue for the six months ended June 30, 2012, down from 27% in the same period one year ago, and total expenses decreased $2.3 million, or 11%, from the same period one year ago. The decrease in absolute dollars was primarily attributable to a $2.6 million expense recorded in Q2 2011 related to the settlement of a legal matter, as well as a settlement gain of $667,000 recorded in Q1 2012. In addition, labor costs increased by $576,000, primarily due to headcount growth in both our sales and marketing and general and administrative operations to support the continued expansion of our operations, as well as severance costs incurred in connection with the departure of our chief operating officer. Advertising costs increased by $452,000, primarily related to the roll out of a new ultracapacitor product, the ESM.
Research and development expenses were 13% of revenue for the six months ended June 30, 2012, down from 15% in the same period one year ago, while total expenses decreased by $379,000, or 3%. The decrease in absolute dollars was driven primarily by a $235,000 decrease in labor costs related to a decrease in head count and a $156,000 decrease in engineering development expenses primarily due to the completion of the design of a new ultracapacitor product, the ESM, in 2011, as well as the completion of a funded development program with a government contractor.
Net cash used in operating activities was $14.0 million for the six months ended June 30, 2012. This usage of cash related primarily to an increase in accounts receivable of $12.2 million and a decrease in accounts payable and accrued liabilities and other long-term liabilities of $6.9 million. The increase in accounts receivable was due to significant sales in the last month of the quarter. The decrease in accounts payable and accrued liabilities and other long-term liabilities was primarily due to $5.1 million in settlement payments to the SEC and DOJ in the first quarter of 2012 related to the Foreign Corrupt Practices Act matter. Net cash used in operating activities was $12.8 million for the six months ended June 30, 2011, which related primarily to increases in accounts receivable and inventories associated with growth in our business, offset by settlement payments of $6.7 million related to the Foreign Corrupt Practices Act matter.
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