Maxwell Technologies, Inc. 

Maxwell is a global leader in the development and manufacture of innovative, cost-effective energy and power delivery solutions. (NASDAQ: MXWL) has developed and transformed its patented, proprietary and fundamental dry electrode manufacturing technology that it has historically used to make ultracapacitors to create a breakthrough technology that can be applied to the manufacturing of batteries.

The company’ ultracapacitor products provide safe and reliable power solutions for applications in consumer and industrial electronics, transportation, renewable energy, and information technology.

On 4th Feb 2019, the company announced it has entered into a definitive agreement to be acquired by Tesla, Inc.  Tesla will commence an all-stock exchange offer for all the issued and outstanding shares of the Company, after which the Company will be merged with a Tesla subsidiary and become a wholly owned subsidiary of Tesla.

Key takeaways/Synergies:

• Tesla CEO Elon Musk has said that ultracapacitors could be a relatively better bet for an electric tech breakthrough.
• The all-stock deal would value Maxwell at about $218 million, a 55 percent premium over its market value on Friday 2^nd Feb.
• The takeover was announced at a very crucial time for Tesla, as it advances the manufacturing of its lower cost Model 3 
•  The investor community sees robust demand for a power application targeted at capturing the hybrid electric vehicles market with revenue potential of above $1 billion.
• Maxwell’s range of automotive solutions including dry battery electrode technology, peak power, autonomous driving, and E-active suspension applications are expected to derive strong synergies from the deal and will position Maxwell as an extremely strong player in the industry.
• The sale of Maxwell was approved unanimously by the company’s board of directors, who expect the deal to be completed in the second quarter of 2019.
• Maxwell will now become a wholly owned subsidiary of Tesla (subject to completion of acquisition).

Management Commentary:

“We are very excited with today’s announcement that Tesla has agreed to acquire Maxwell. Tesla is a well-respected and world-class innovator that shares a common goal of building a more sustainable future,” said Dr. Franz Fink, President and Chief Executive Officer of Maxwell. “We believe this transaction is in the best interests of Maxwell stockholders and offers investors the opportunity to participate in Tesla’s mission of accelerating the advent of sustainable transport and energy.”

Investor tracking Maxwell believes this takeover is of immense value for Maxwell and will help fuel its mission of development and manufacture of innovative, cost-effective energy and power delivery solutions.

Other recent announcements/highlights:

On Feb 1st, the company announced that it would be exhibiting at two key grid and utility conferences this quarter.  Maxwell will showcase two ultracapacitor subsystems for grid energy storage: the Grid Energy Storage System (GESS) and the Grid Cell Pack (GCP). These highly scalable products deliver reliable, fast-responding, long lifetime storage in grids and microgrids. Both products address the growing need for power-intense grid services and are designed to stabilize voltage and frequency, firm renewable power output, provide bridging and ramping services and improve generator response.

When and Where:

• DistribuTECH – February 5-7, Ernest N. Morial Convention Center, Booth #10829, New Orleans, Louisiana
• Energy Storage Europe – March 12-14, Messe Dusseldorf, Hall 08B, Stand # 8BC16, Dusseldorf, Germany

On Jan 9th, the company announced the launch of a new full-featured 3.0-volt (3.0V) product platform. With the introduction of these next-generation ultracapacitors, users have the ability to increase energy and power in the same form factor as the 2.7-volt product line and can significantly cost-optimize their system designs by using fewer ultracapacitor cells or modules. Alternatively, users can upgrade to a 3.0V solution to extend the expected life of their products. The 3.0V platform is designed for single-cell applications as well as multi-cell complex module systems.

On December 19th, the company announced it has simultaneously signed and closed a definitive agreement to sell its High Voltage (HV) product line to Renaissance Investment Foundation. Maxwell sold all shares of its Swiss subsidiary, Maxwell Technologies SA, and its CONDIS®  line of high voltage capacitors for $55.1 million in cash and up to $15 million in potential future milestone payments to a special purpose holding entity and affiliate of Renaissance. This action was taken to put the necessary resources in place so Maxwell can better focus on its key initiatives.

About the Company:

Financial results (in thousands):

Revenue and Gross Margin

Total revenue for the third quarter of 2018 was $33.7 million, compared with $29.5 million for the second quarter of 2018. Energy storage revenue for the third quarter of 2018 was $26.5 million, compared with $22.7 million for the second quarter of 2018, driven by seasonal growth in wind and sequential growth in the non-China bus. High voltage capacitor revenue was $7.2 million for the third quarter of 2018, compared with $6.8 million for the second quarter of 2018.

Gross margin for the third quarter of 2018 was 18.9% compared with 18.4% in the second quarter of 2018, driven primarily by the slight increase in high voltage capacitor product sales, which generally have higher gross margins than the corporate average.

Liquidity: As of September 30, 2018, Maxwell had approximately $23.6 million in cash, in addition to a Revolving Line of Credit for up to $25.0 million. As of September 30, 2018, no borrowings were outstanding on the Revolving Line of Credit and the amount available, based on borrowing base limitations, was $16.3 million.

Maxwell’s operating plan for the next 12 months takes into account existing cash resources and funding requirements, and management is currently evaluating avenues to reduce operating cash outflows and to potentially defer certain capital expenditures given the current state of its high voltage product line, including delays in various infrastructure projects and uncertainty from tax reform legislation and tariffs.

Fourth Quarter 2018 Business Outlook

• Total revenue is expected to be in the range of $25 million to $27 million.
• Gross margin is expected to be 17.3%, plus or minus 100 basis points.
• Non-GAAP gross margin is expected to be 19.0%, plus or minus 100 basis points.
• GAAP operating expense is expected to be in the range of $14.6 million to $15.0 million.
• Non-GAAP operating expense is expected to be in the range of $12.6 million to $13.0 million.

Risk Factors & Stock Influences:

1. Growth in overall cash generation and the company’ ability to maintain liquidity/financial flexibility to support its ongoing and upcoming ventures.
2. Successful completion of the acquisition mentioned above leading to the materialization of expected synergies.
3. Company’ upcoming performance especially with ultracapacitors that is likely to provide growth in 2H19.
4. The overall performance of the economy and more importantly China market along with the impact of the US-China trade dispute.
5. Company’ performance in several of its key markets in 2019 will continue to remain key operating parameter and will set the stage for the next phase of MXWL’ growth.
6. The company operates in a rapidly changing fast paced industry.  Therefore, it must continue to launch, innovate and enhance products to enhance its market share.

Stock Performance

• On Monday, Feb 4th, 2019, MXWL is trading at $4.61 (up 50%), with a robust volume of 7.5 million shares exchanging hands. Market capitalization is $211.231 million. The current RSI is 85.02
• In the past 52 weeks, shares of MXWL have traded as low as $1.77 and as high as $6.27
• At $4.61, shares of MXWL are trading above its 50-day moving average (MA) at $2.46 and above its 200-day moving average (MA) at $3.81
• The present support and resistance levels for the stock are at $2.92 & $3.16 respectively.  

Disclaimer

Traders News Source is a wholly owned subsidiary of Traders News Source LLC, herein referred to as TNS LLC.
Traders News Source has not been compensated for this report by anyone and the opinions if any are that of the author Vikas Agrawal, CFA. Author’s Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I, wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in the article.
This web site, published by TNS LLC, and is an investment newsletter that is built on the premise of assisting individual investors in learning about investing. Our goal as publishers of financial information is to provide research and analysis of investments to our subscribers. TNS LLC does not give buy or sell recommendations. We do purchase distribution rights from analyst, financial writers and bloggers for a fee that may be licensed to issue price targets and recommendations. Furthermore, we encourage you to speak to a licensed professional prior to making an investment in any type of publicly traded security.
We do sell advertising to other companies including brokerage firms, web sites, publicly traded issuers, investor relations firms, and investment publications, among others. TNS LLC makes no warranty as to the policies of these organizations, and in no way endorses their offers, services, or the content of their advertisements.
When an advertiser is a publicly traded company or a third party acting on behalf of a public company, we fully disclose all compensation in the email advertisement. Such disclosure is included in a disclosure statement in each of the advertisements sent via email.
17B Disclosure
Our reports/releases are a commercial advertisement and are for general information purposes ONLY. We are engaged in the business of marketing and advertising companies for monetary compensation. Never invest in any stock featured on our site or emails unless you can afford to lose your entire investment. The disclaimer is to be read and fully understood before using our services, joining our site or our email/blog list as well as any social networking platforms we may use.
PLEASE NOTE WELL: TNS LLC and its employees are not a Registered Investment Advisor, Broker Dealer or a member of any association for other research providers in any jurisdiction whatsoever.
Release of Liability: Through use of this website viewing or using you agree to hold TNS LLC, its operator’s owners and employees harmless and to completely release them from any and all liability due to any and all loss (monetary or otherwise), damage (monetary or otherwise), or injury (monetary or otherwise) that you may incur. The information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of the available data. TNS LLC encourages readers and investors to supplement the information in these reports with independent research and other professional advice. All information on featured companies is provided by the companies profiled or is available from public sources and TNS LLC makes no representations, warranties or guarantees as to the accuracy or completeness of the disclosure by the profiled companies. None of the materials or advertisements herein constitute offers or solicitations to purchase or sell securities of the companies profiled herein and any decision to invest in any such company or other financial decisions should not be made based upon the information provide herein. Instead TNS LLC strongly urges you conduct a complete and independent investigation of the respective companies and consideration of all pertinent risks. Readers are advised to review SEC periodic reports: Forms 10-Q, 10K, Form 8-K, insider reports, Forms 3, 4, 5 Schedule 13D.
TNS LLC is compliant with the Can Spam Act of 2003. TNS LLC does not offer such advice or analysis, and TNS LLC further urges you to consult your own independent tax, business, financial and investment advisors. Investing in micro-cap and growth securities is highly speculative and carries an extremely high degree of risk. It is possible that an investor’s investment may be lost or impaired due to the speculative nature of the companies profiled.
The Private Securities Litigation Reform Act of 1995 provides investors a ‘safe harbor’ in regard to forward-looking statements. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, goals, assumptions or future events or performance are not statements of historical fact may be “forward looking statements”. Forward looking statements are based on expectations, estimates, and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. Forward looking statements in this action may be identified through use of words such as “projects”, “foresee”, “expects”, “will”, “anticipates”, “estimates”, “believes”, “understands”, or that by statements indicating certain actions & quote; “may”, “could”, or “might” occur.
Understand there is no guarantee past performance will be indicative of future results. In preparing this publication, TNS LLC has relied upon information supplied by its customers, publicly available information and press releases which it believes to be reliable; however, such reliability cannot be guaranteed. Investors should not rely on the information contained in this website. Rather, investors should use the information contained in this website as a starting point for doing additional independent research on the featured companies. The advertisements in this website are believed to be reliable, however, TNS LLC and its owners, affiliates, subsidiaries, officers, directors, representatives and agents disclaim any liability as to the completeness or accuracy of the information contained in any advertisement and for any omissions of materials facts from such advertisement. TNS LLC is not responsible for any claims made by the companies advertised herein, nor is TNS LLC responsible for any other promotional firm, its program or its structure.