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AXT, Inc. Announces Fourth Quarter and Fiscal Year 2016 Financial Results

FREMONT, Calif, Feb. 22, 2017 (GLOBE NEWSWIRE) --  AXT, Inc. (NASDAQ:AXTI), a leading manufacturer of compound semiconductor substrates, today reported financial results for the fourth quarter and fiscal year, ended December 31, 2016.

Fourth Quarter 2016 Results

Revenue for the fourth quarter of 2016 was $20.3 million, compared with $21.9 million in the third quarter of 2016.

Gross margin was 37.1 percent of revenue for the fourth quarter of 2016, compared with 34.6 percent of revenue in the third quarter of 2016.

Operating expenses were $5.2 million in the fourth quarter of 2016, compared with $4.9 million in the third quarter of 2016. 

Operating profit for the fourth quarter of 2016 was $2.3 million compared with operating profit of $2.7 million in the third quarter of 2016. 

Net interest and other income for the fourth quarter of 2016 was a loss of $0.3 million, compared with a loss of $0.3 million in the third quarter of 2016.

Net profit in the fourth quarter of 2016 was $2.2 million, or $0.06 per diluted share, compared with a net profit of $2.2 million or $0.07 per diluted share in the third quarter of 2016.

Fiscal Year 2016 Results (January 1 to December 31)

Revenue for fiscal year 2016 was $81.3 million, compared with $77.5 million in fiscal year 2015.

Gross margin for fiscal year 2016 was 32.4%, compared with 21.7% in fiscal year 2015.

Operating expenses for fiscal year 2016 were $20.0 million, compared with $21.7 million in fiscal year 2015.

Net interest and other income for fiscal year 2016 was a charge of ($0.7), compared with a gain of $2.9 million in fiscal year 2015.

Net profit in fiscal year 2016 was $5.6 million, or $0.17 per diluted share, compared with a net loss of ($2.2) million, or ($0.07) per basic share, in fiscal year 2015.

Management Qualitative Comments

“Our positive Q4 results capped off a year of growth and diversification for AXT,” said Morris Young, chief executive officer. “We saw healthy demand across our substrate product portfolio, driven by a growing number of exciting technology applications. In addition, we continued to demonstrate improvement in our business model, achieving meaningful gross margin expansion and delivering solid profitability and positive cash flow. As we look ahead in 2017, we believe sales of indium phosphide substrates will continue to be a key driver for our business, and we hope to see traction in the 3-D sensing market later this year.”

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 (844) 892-6598 (passcode 70205575). The call will also be simulcast on the Internet at Replays will be available at (855) 859-2056 (passcode 70205575) until February 28, 2017. 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 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 can be used primarily in fiber optic communications, 3-D sensing, solar cell, lighting display applications and wireless communications. 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, as part of it’s supply chain strategy, has partial ownership in ten companies in China producing raw materials. For more information, see AXT’s website at

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.


(Unaudited, in thousands, except per share data)  
    Three Month Ended              
    December 31,   Year Ended December 31,   
    2016     2015     2016     2015    
Revenue   $  20,269     $  18,057     $  81,349     $  77,502    
Cost of revenue      12,746        14,967        54,968        60,673    
Gross profit      7,523        3,090        26,381        16,829    
Operating expenses:                          
Selling, general, and administrative      3,774        3,379        13,880        16,064    
Research and development      1,431        1,377        5,850        5,664    
Restructuring charge      —        —        226        —    
Total operating expenses      5,205        4,756        19,956        21,728    
Income (loss) from operations      2,318        (1,666 )      6,425        (4,899 )  
Interest income, net      106        105        409        412    
Equity in earnings (loss) of unconsolidated joint ventures      (558 )      (315 )      (1,995 )      462    
Other income, net      178        268        860        2,023    
Income (loss) before provision for income taxes      2,044        (1,608 )      5,699        (2,002 )  
Provision for income taxes      20        197        733        531    
Net income (loss)      2,024        (1,805 )      4,966        (2,533 )  
Less: Net (income) loss attributable to noncontrolling interests      190        562        670        305    
Net income (loss) attributable to AXT, Inc.   $  2,214     $  (1,243 )   $  5,636     $  (2,228 )  
Net income (loss) attributable to AXT, Inc. per common share:                          
Basic   $  0.07     $  (0.04 )   $  0.17     $  (0.07 )  
Diluted   $  0.06     $  (0.04 )   $  0.17     $  (0.07 )  
Weighted average number of common shares outstanding:                          
Basic      32,431        31,951        32,139        32,183    
Diluted      33,734        31,951        32,894        32,183    

(Unaudited, in thousands)  
    December 31,   
    2016     2015    
Current assets:              
Cash and cash equivalents   $  36,152     $  24,875    
Short-term investments      11,415        11,437    
Accounts receivable, net      14,453        18,468    
Inventories      40,152        38,012    
Prepaid expenses and other current assets      5,114        4,096    
Total current assets      107,286        96,888    
Long-term investments      6,156        7,691    
Property, plant and equipment, net      27,805        31,422    
Related party notes receivable – long-term      157        166    
Other assets      12,842        15,729    
Total assets   $  154,246     $  151,896    
Current liabilities:              
Accounts payable   $  6,691     $  6,460    
Accrued liabilities      6,359        6,381    
Total current liabilities      13,050        12,841    
Long-term portion of royalty payments      575        1,150    
Other long-term liabilities      330        344    
Total liabilities      13,955        14,335    
Stockholders’ equity:              
Preferred stock      3,532        3,532    
Common stock      32        32    
Additional paid-in-capital      197,079        194,646    
Accumulated deficit      (64,985 )      (70,621 )  
Accumulated other comprehensive income      253        4,382    
Total AXT, Inc. stockholders’ equity      135,911        131,971    
Noncontrolling interests      4,380        5,590    
Total stockholders’ equity      140,291        137,561    
Total liabilities and stockholders’ equity   $  154,246     $  151,896    
Gary Fischer
Chief Financial Officer
(510) 438-4700

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