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AXT, Inc. Announces Second Quarter 2017 Financial Results

FREMONT, Calif., July 26, 2017 (GLOBE NEWSWIRE) -- AXT, Inc. (Nasdaq:AXTI), a leading manufacturer of compound semiconductor substrates, today reported financial results for the second quarter, ended June 30, 2017.

Second Quarter 2017 Results

Revenue for the second quarter of 2017 was $23.6 million, compared with $20.6 million in the first quarter of 2017.

Gross margin was 30.8 percent of revenue for the second quarter of 2017, compared with 30.5 percent of revenue in the first quarter of 2017.  Second quarter substrate gross margin was higher than the total company gross margin and was offset by lower gross margin on raw materials.

Operating expenses were $5.0 million in the second quarter of 2017, compared with $4.9 million in the first quarter of 2017. 

Operating profit was $2.3 million for the second quarter of 2017, compared with $1.4 million in the first quarter of 2017. 

Interest and other, net was a loss of $0.2 million for the second quarter of 2017, compared with a loss of $0.8 million in the first quarter of 2017.  Tax expense in the second quarter of 2017 was $0.3 million compared to $0.2 million in the first quarter of 2017.

Net profit was $1.9 million, or $0.05 per diluted share, in the second quarter of 2017 compared with a net profit of $0.7 million, or $0.02 per diluted share, in the first quarter of 2017.  

Management Qualitative Comments

“2017 is shaping up to be a solid year of growth for AXT,” said Morris Young, chief executive officer. “Across our portfolio, we are seeing emerging technologies and strengthening demand from established applications that are driving growth in each of our substrate product categories. As a result, we achieved record revenue in indium phosphide substrates in Q2, and posted solid improvement in semi-insulating gallium arsenide, semi-conducting gallium arsenide, and germanium substrates. Our customer and revenue base continues to diversify, giving us a broad-based opportunity for continued business expansion.” 

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 50482889). The call will also be simulcast on the Internet at www.axt.com. Replays will be available at (855) 859-2056 (passcode 50482889) until August 1, 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 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 growth prospects and opportunities for continued business expansion, 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,   
    2017
  2016
  2017
  2016
 
                           
Revenue   $ 23,557     $ 20,495     $ 44,173     $ 39,208    
Cost of revenue     16,301       14,468       30,629       27,928    
Gross profit     7,256       6,027       13,544       11,280    
Operating expenses:                          
Selling, general and administrative     3,942       3,419       7,735       6,793    
Research and development     1,019       1,472       2,143       2,853    
Restructuring charge           226             226    
Total operating expenses     4,961       5,117       9,878       9,872    
Income from operations     2,295       910       3,666       1,408    
Interest income, net     114       100       212       198    
Equity in loss of unconsolidated joint ventures     (188 )     (400 )     (1,121 )     (856 )  
Other (expense) income, net     (102 )     328       (54 )     518    
Income before provision for income taxes     2,119       938       2,703       1,268    
Provision for income taxes     321       140       480       537    
Net income     1,798       798       2,223       731    
Less: Net loss attributable to noncontrolling interests     132       353       372       462    
Net income attributable to AXT, Inc.   $ 1,930     $ 1,151     $ 2,595     $ 1,193    
Net income attributable to AXT, Inc. per common share:                          
Basic   $ 0.05     $ 0.03     $ 0.07     $ 0.03    
Diluted   $ 0.05     $ 0.03     $ 0.07     $ 0.03    
Weighted average number of common shares outstanding:                          
Basic     38,306       32,020       36,238       32,011    
Diluted     39,706       32,451       37,645       32,354    



AXT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
 
    June 30,    December 31,   
    2017    2016   
               
ASSETS              
Current assets:              
Cash and cash equivalents   $  56,483     $  36,152    
Short-term investments      22,463        11,415    
Accounts receivable, net      18,262        14,453    
Inventories      40,627        40,152    
Related party notes receivable – current      109        —    
Prepaid expenses and other current assets      5,301        5,114    
Total current assets      143,245        107,286    
Long-term investments      8,578        6,156    
Property, plant and equipment, net      27,945        27,805    
Related party notes receivable – long-term      —        157    
Other assets      12,004        12,842    
Total assets   $  191,772     $  154,246    
LIABILITIES AND STOCKHOLDERS’ EQUITY              
Current liabilities:              
Accounts payable   $  8,189     $  6,691    
Accrued liabilities      9,363        9,260    
Total current liabilities      17,552        15,951    
Long-term portion of royalty payments      287        575    
Other long-term liabilities      220        330    
Total liabilities      18,059        16,856    
Stockholders’ equity:              
Preferred stock      3,532        3,532    
Common stock      39        33    
Additional paid-in-capital      227,539        194,177    
Accumulated deficit      (62,390 )      (64,985 )  
Accumulated other comprehensive income      1,293        253    
Total AXT, Inc. stockholders’ equity      170,013        133,010    
Noncontrolling interests      3,700        4,380    
Total stockholders’ equity      173,713        137,390    
Total liabilities and stockholders’ equity   $  191,772     $  154,246    

 

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

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AXT, Inc.