Maxwell Technologies, Inc. reported operational and financial results for the three months ended March 31, 2017. Total revenues for the first quarter of 2017 were $26.7 million, compared with $26.4 million for the fourth quarter of 2016 and $35.2 million for the prior year quarter. Net loss for the first quarter of 2016 was $10.4 million, compared with a net loss of $12.2 million for the fourth quarter of 2016 and a net loss of $6.8 million for the prior year quarter. The Company reported $(3.9) million of adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) for the first quarter of 2017, compared with $(3.9) million for the fourth quarter of 2016 and $(1.3) million for the prior year quarter.
"We came in favorably on all fronts versus our previous guidance, coming in at the top end of the range for revenue and gross margin and the bottom end of the range on operating expense," said Dr. Franz Fink, Maxwell's President and Chief Executive Officer. "Additionally, we recently achieved two important milestones. We closed the acquisition of the Nesscap Energy business and our team is working diligently on the integration.
“We also announced the signing of a highly strategic partnership with SDIC that we believe will enable better access to key China battery companies and will significantly strengthen our balance sheet, allowing us to further invest in strategic development programs such as our revolutionary dry battery electrode technology.
“The Maxwell team has been working diligently to put the pieces of our strategy in place and now our focus turns to executing on that strategy to ultimately drive long-term, profitable growth and shareholder value. Looking to Q2, we are experiencing increased demand for our products, especially in the China wind market, and we are forecasting strong quarter over quarter revenue growth in the 30% range,†Fink continued.
During the recent period, Maxwell completed the acquisition of substantially all of the assets and business, including the operating entities, of Nesscap Energy, Inc. pursuant to the arrangement agreement that was announced on February 28, 2017. Maxwell issued approximately 4.1 million shares and assumed ordinary course liabilities of the business in consideration for the purchase of the Nesscap business. As a market leader in innovative small cell format ultracapacitor products and technologies, the Nesscap business includes research, development and manufacturing of energy storage and power delivery solutions with operations in Korea, Germany, and China.
The key benefits of the transaction include expanded and solidified opportunities in the Wind, Automotive, and Industrials Markets that are expected to accelerate top-line growth, diversify revenue, accelerate innovation, and reduce product time to market with an expanded portfolio, improved cost competitiveness through manufacturing efficiencies, and financial results that are expected to be accretive to Maxwell's non-GAAP earnings per share in Q2 and contribute positive adjusted EBITDA in 2017.
The company also signed a strategic equity investment agreement with China's SDIC Fund Management Co., Ltd. Following the closing of the transaction, expected in the third quarter of 2017, SDIC Fund Management's ownership stake in Maxwell's common stock is anticipated to represent approximately 19.9% of Maxwell's total issued and outstanding shares of common stock on a pre-issuance basis. The investment is expected to bring approximately $46.6 million in cash to Maxwell before transaction costs. The closing of the transaction is subject to usual and customary conditions and is subject to approval by the Committee on Foreign Investment in the United States ("CFIUS") and, if required, relevant Chinese governmental authorities.
The partnership is expected to enhance Maxwell's access to China's largest automotive battery companies through SDIC Fund Management's investments in two leading Chinese battery companies and to deepen Maxwell's existing China localization strategy in one of the largest and fastest growing energy storage markets for transportation and grid. Additionally, it is expected to significantly strengthen Maxwell's balance sheet, providing the opportunity for solid investment in strategic technology development programs.
The following outlook includes Nesscap beginning May 1, 2017: Total revenue for the second quarter of 2017 is expected to be in the range of $34 million to $37 million. Gross margin for the second quarter of 2017 is expected to be 21.6%, plus or minus 200 basis points. GAAP operating expense for the second quarter of 2017 is expected to be in the range of $16.6 million to $17.0 million.
