PC Panasonic Corp.

Maxwell Technologies, Inc. (MXWL) announced that its production capacity for ultracapacitor electrode, cells and modules has more than doubled versus 2010. Since the set up of the initial high-volume production, the company has produced more than 15.0 million cells of all types.

Ultracapacitor sales have increased by more than 50.0% in each of the past two years. In order to satisfy rapidly increasing demand for its BOOSTCAP ultracapacitor products, Maxwell plans to expand by adding production capacity. In a focused effort to stay ahead of demand, the company brought on line a new assembly line for its redesigned, high-volume, 350-farad "D-cell" ultracapacitor in 3Q10 while working with a contract assembly partner.

Maxwell, in coalition with another contract assembly partner, has recently completed installation of a second assembly line for its K-2 family of large cell products. The third line is scheduled to be installed later in 2011. The company produced its 2-millionth 3,000-farad large cell in January 2011, and expects to deliver a third million by the end of fiscal 2011.  Additionally, it is supplying a 1,200-farad large cell to Continental AG, a global Tier 1 auto parts supplier, for a stop-start idle elimination system.

In a third contract, a manufacturer assembles Maxwell's HC family of small cell products, which range from 1 to 150 farads, and are used mainly in industrial electronics applications.

In December 2009, the company had also announced that it is expanding production capacity for its postage stamp-size, 10-farad PC-10 ultracapacitor cell to satisfy rapidly increasing demand generated by a new backup power application in solid state disk drives for enterprise computing systems.

Maxwell's BOOSTCAP ultracapacitor products store energy in an electric field. The proprietary electrode material used in all BOOSTCAP cell types is produced only in the company's San Diego facility.  Electrode capacity has been doubled over the past 12 months and will be re-doubled by mid-2012.  Maxwell is also evaluating proposals from economic development agencies in several adjacent states for location of a second electrode facility, which it is panning to outfit and bring online in the second half of 2012.

Looking ahead, Maxwell will see increasing demand for its products arising from utility infrastructure, renewable energy, public transportation and space programs. In the near term, growth for the company will be powered by sales of ultracapacitors to support efficient, cost-effective energy storage for recuperative braking systems in low-emission, hybrid electric transit buses and zero-emission electric rail vehicles.

However, downside risks include the rate of penetration for ultracapacitor technology into broader markets, a higher cost structure for ultracapacitor production, R&D overheads and earnings dilutive equity issuances. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.

Headquartered in San Diego, California, Maxwell Technologies is a leading developer and manufacturer of innovative, cost-effective energy storage and power delivery solutions. The company’s BOOSTCAP ultracapacitor cells and multi-cell modules provide safe and reliable power solutions for applications in consumer and industrial electronics, transportation and telecommunications. Maxwell offers ultracapacitor cells ranging in capacitance from 1 to 3,000 farads and multi-cell modules ranging from 16 to 125 volts. The company mainly competes with National Semiconductor Corporation (NSM) and Panasonic Corporation (PC).

 
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