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AXT, Inc. Announces First Quarter 2016 Financial Results

FREMONT, CA -- (Marketwired) -- 05/02/16 -- AXT, Inc. (NASDAQ: AXTI), a leading manufacturer of compound semiconductor substrates, today reported financial results for the first quarter, ended March 31, 2016.

First Quarter 2016 Results

Revenue for the first quarter of 2016 was $18.7 million, compared with $18.1 million in the fourth quarter of 2015.

Gross margin was 28.1 percent of revenue for the first quarter of 2016, compared with 17.1 percent of revenue in the fourth quarter of 2015.

Operating expenses were $4.8 million in the first quarter of 2016, compared with $4.8 million in the fourth quarter of 2015.

Operating profit for the first quarter of 2016 was $0.5 million compared with an operating loss of $1.7 million in the fourth quarter of 2015.

Net interest and other income for the first quarter of 2016 was a loss of $0.2 million, compared with a gain of $0.1 million in the fourth quarter of 2015.

Net profit in the first quarter of 2016 was $42,000, or $0.00 per share, compared with a net loss of $1.2 million or a loss of $0.04 per diluted share in the fourth quarter of 2015.

Management Qualitative Comments
"Q1 was a strong quarter for AXT in which we exceeded our revenue and profitability guidance, and posted a strong increase in both our gross and operating margins from the prior quarter," said Morris Young, chief executive officer. "Our indium phosphide revenue was our strongest in recent years. In addition, our manufacturing team continues to work on efficiency and yield improvement, and these efforts along with our product mix helped improve our gross margin in the quarter."

Conference Call
The company will host a conference call to discuss these results today at 1:30 p.m. PT. The conference call can be accessed at (719) 325-2469 (passcode 4866670). The call will also be simulcast on the Internet at www.axt.com. Replays will be available at (719) 457-0820 (passcode 4866670) until May 8, 2016. Financial and statistical information to be discussed in the call will be available on the company's website immediately prior to commencement of the call. Additional investor information can be accessed at http://www.axt.com or by calling the company's Investor Relations Department at (510) 438-4700.

About AXT, Inc.
AXT designs, develops, manufactures and distributes high-performance compound and single element semiconductor substrates comprising indium phosphide (InP), gallium arsenide (GaAs) and germanium (Ge) through its manufacturing facilities in Beijing, China. In addition, AXT maintains its sales, administration and customer service functions at its headquarters in Fremont, California. The company's substrate products are used primarily in lighting display applications, wireless communications, fiber optic communications and solar cell applications. Its vertical gradient freeze (VGF) technique for manufacturing semiconductor substrates provides significant benefits over other methods and enabled AXT to become a leading manufacturer of such substrates. AXT has manufacturing facilities in China and invests in joint ventures in China producing raw materials. For more information, see AXT's website at http://www.axt.com.

Safe Harbor Statement
The foregoing paragraphs contain forward-looking statements within the meaning of the Federal securities laws, including, for example, statements regarding the market demand for our products, our market opportunity, and our expectations with respect to our business prospects. These forward-looking statements are based upon assumptions that are subject to uncertainties and factors relating to the company's operations and business environment, which could cause actual results to differ materially from those expressed or implied in the forward-looking statements contained in the foregoing discussion. These uncertainties and factors include but are not limited to: overall conditions in the markets in which the company competes; global financial conditions and uncertainties; policies and regulations in China; market acceptance and demand for the company's products; the impact of factory closures or other events causing delays by our customers on the timing of sales of our products; our ability to control costs, our ability to utilize our manufacturing capacity; product yields and their impact on gross margins; and other factors as set forth in the company's annual report on Form 10-K, quarterly reports on Form 10-Q and other filings made with the Securities and Exchange Commission. Each of these factors is difficult to predict and many are beyond the company's control. The company does not undertake any obligation to update any forward-looking statement, as a result of new information, future events or otherwise.

FINANCIAL TABLES TO FOLLOW

AXT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share data)
Three Months Ended
March 31,
2016 2015
Revenue $ 18,713 $ 20,064
Cost of revenue 13,460 15,315
Gross profit 5,253 4,749
Operating expenses:
Selling, general and administrative 3,374 5,251
Research and development 1,381 1,241
Total operating expenses 4,755 6,492
Income (loss) from operations 498 (1,743 )
Interest income, net 98 97
Equity in earnings of unconsolidated joint ventures (456 ) 200
Other income (expense), net 190 633
Income (loss) before provision for income taxes 330 (813 )
Provision for (benefit from) income taxes 397 86
Net income (loss) (67 ) (899 )
Less: Net income (loss) attributable to noncontrolling interest 109 (125 )
Net income (loss) attributable to AXT, Inc. $ 42 $ (1,024 )
Net income (loss) attributable to AXT, Inc. per common share:
Basic $ (0.00 ) $ (0.03 )
Diluted $ (0.00 ) $ (0.03 )
Weighted average number of common shares outstanding:
Basic 32,002 32,553
Diluted 32,002 32,553
AXT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
March 31, December 31,
2016 2015
Assets:
Current assets
Cash and cash equivalents $ 25,067 $ 24,875
Short-term investments 9,053 11,437
Accounts receivable, net 19,711 18,468
Inventories 38,822 38,012
Related party notes receivable - current - -
Prepaid expenses and other current assets 4,386 4,096
Total current assets 97,039 96,888
Long-term investments 9,211 7,691
Property, plant and equipment, net 31,141 31,422
Related party notes receivable - long-term 1,792 1,781
Other assets 13,544 14,114
Total assets $ 152,727 $ 151,896
Liabilities and stockholders' equity:
Current liabilities
Accounts payable $ 8,034 $ 6,460
Accrued liabilities 5,357 6,381
Total current liabilities 13,391 12,841
Long-term portion of royalty payments 1,006 1,150
Other long-term liabilities 308 344
Total liabilities 14,705 14,335
Stockholders' equity:
Preferred stock 3,532 3,532
Common stock 32 32
Additional paid-in capital 194,899 194,646
Accumulated deficit (70,579 ) (70,621 )
Accumulated other comprehensive income 4,665 4,382
Total AXT, Inc. stockholders' equity 132,549 131,971
Noncontrolling interest 5,473 5,590
Total stockholders' equity 138,022 137,561
Total liabilities and stockholders' equity $ 152,727 $ 151,896

Contacts:
Gary Fischer
Chief Financial Officer
(510) 438-4700

Leslie Green
Green Communications Consulting, LLC
(650) 312-9060

Source: AXT, Inc.