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AXT, Inc. Announces Second Quarter 2016 Financial Results

FREMONT, Calif., July 27, 2016 (GLOBE NEWSWIRE) -- AXT, Inc. (Nasdaq:AXTI), a leading manufacturer of compound semiconductor substrates, today reported financial results for the second quarter, ended June 30, 2016.

Second Quarter 2016 Results

Revenue for the second quarter of 2016 was $20.5 million, compared with $18.7 million in the first quarter of 2016.

Gross margin was 29.4 percent of revenue for the second quarter of 2016, compared with 28.1 percent of revenue in the first quarter of 2016.

Operating expenses were $5.1 million in the second quarter of 2016, compared with $4.8 million in the first quarter of 2016.  The increase in operating expenses was primarily the result of a onetime restructuring charge of $226,000 related to a reduction in force at one of the Company’s consolidated subsidiaries.

Operating profit for the second quarter of 2016 was $0.9 million compared with operating profit of $0.5 million in the first quarter of 2016. 

Net interest and other income for the second quarter of 2016 was $0.0 million, compared with a loss of $0.2 million in the first quarter of 2016.

Net profit in the second quarter of 2016 was $1.2 million, or $0.03 per diluted share, compared with a net profit of $42,000 or a gain of $0.00 per diluted share in the first quarter of 2016.

Management Qualitative Comments

“We continued to show meaningful progress in our business, achieving revenue at the high end of our guidance range, and exceeding our profitability expectations. In addition, we further expanded the gross margin to 29.4% through yield improvements, manufacturing efficiency, and higher production volume. We also generated positive cash flow.  Cash, cash equivalents and investments increased by $1.6 million. AXT remains focused on maximizing opportunities in strategic emerging areas, such as indium phosphide substrates, where we are solidly positioned with the expertise, technology and manufacturing capability to support further growth.”

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) 325-2463 (passcode 2438457). The call will also be simulcast on the Internet at www.axt.com. Replays will be available at (719) 457-0820 (passcode 2438457) until August 2, 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    Six Months Ended 
    June 30,    June 30, 
    2016   2015   2016   2015
                         
Revenue   $   20,495     $   21,010     $   39,208     $   41,074  
Cost of revenue       14,468         16,625         27,928         31,940  
Gross profit       6,027         4,385         11,280         9,134  
Operating expenses:                        
Selling, general, and administrative       3,419         3,775         6,793         9,026  
Research and development       1,472         1,389         2,853         2,630  
Restructuring charge       226               226        
Total operating expenses       5,117         5,164         9,872         11,656  
Income (loss) from operations       910         (779 )       1,408         (2,522 )
Interest income, net       100         108         198         205  
Equity in (loss) earnings of unconsolidated joint ventures       (400 )       410         (856 )       610  
Other income, net       328         626         518         1,259  
Income (loss) before provision for income taxes       938         365         1,268         (448 )
Provision for income taxes       140         241         537         327  
Net income (loss)       798         124         731         (775 )
Less: Net (income) loss attributable to noncontrolling interests       353         (127 )       462         (252 )
Net income (loss) attributable to AXT, Inc.   $   1,151     $   (3 )   $   1,193     $   (1,027 )
Net income (loss) attributable to AXT, Inc. per common share:                        
Basic   $   0.03     $   (0.00 )   $   0.03     $   (0.03 )
Diluted   $   0.03     $   (0.00 )   $   0.03     $   (0.03 )
Weighted average number of common shares outstanding:                        
Basic       32,020         32,242         32,011         32,399  
Diluted       32,451         32,242         32,354         32,399  
                         
             

 

AXT, INC.  
CONDENSED CONSOLIDATED BALANCE SHEETS  
(Unaudited, in thousands)  
                 
    June 30,    December 31,     
    2016   2015  
                 
ASSETS                
Current assets:                
Cash and cash equivalents   $   26,115     $   24,875      
Short-term investments       10,460         11,437      
Accounts receivable, net       18,036         18,468      
Inventories       38,625         38,012      
Related party notes receivable – current                
Prepaid expenses and other current assets       5,101         4,096      
Total current assets       98,337         96,888      
Long-term investments       8,387         7,691      
Property, plant and equipment, net       30,178         31,422      
Related party notes receivable – long-term       1,741         1,781      
Other assets       12,787         14,114      
Total assets   $   151,430     $   151,896      
LIABILITIES AND STOCKHOLDERS’ EQUITY                
Current liabilities:                
Accounts payable   $   7,848     $   6,460      
Accrued liabilities       5,371         6,381      
Total current liabilities       13,219         12,841      
Long-term portion of royalty payments       863         1,150      
Other long-term liabilities       307         344      
Total liabilities       14,389         14,335      
Stockholders’ equity:                
Preferred stock       3,532         3,532      
Common stock       32         32      
Additional paid-in-capital       195,156         194,646      
Accumulated deficit       (69,428 )       (70,621 )    
Accumulated other comprehensive income       2,844         4,382      
Total AXT, Inc. stockholders’ equity       132,136         131,971      
Noncontrolling interests       4,905         5,590      
Total stockholders’ equity       137,041         137,561      
Total liabilities and stockholders’ equity   $   151,430     $   151,896      
                 
Contacts:

Gary Fischer
Chief Financial Officer
(510) 438-4700

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

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AXT, Inc.