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AXT, Inc. Announces Third Quarter 2016 Financial Results

FREMONT, Calif., Oct. 26, 2016 (GLOBE NEWSWIRE) -- AXT, Inc. (NasdaqGS:AXTI), a leading manufacturer of compound semiconductor substrates, today reported financial results for the third quarter, ended September 30, 2016.

Third Quarter 2016 Results

Revenue for the third quarter of 2016 was $21.9 million, compared with $20.5 million in the second quarter of 2016.

Gross margin was 34.6 percent of revenue for the third quarter of 2016, compared with 29.4 percent of revenue in the second quarter of 2016.

Operating expenses were $4.9 million in the third quarter of 2016, compared with $5.1 million in the second quarter of 2016. 

Operating profit for the third quarter of 2016 was $2.7 million compared with operating profit of $0.9 million in the second quarter of 2016. 

Net interest and other income for the third quarter of 2016 was a loss of $0.3 million, compared with $0.0 million in the second quarter of 2016.

Net profit in the third quarter of 2016 was $2.2 million, or $0.07 per diluted share, compared with a net profit of $1.2 million or $0.03 per diluted share in the second quarter of 2016.

Management Qualitative Comments

“We are pleased to again show meaningful progress in our business, achieving revenue and profits that exceeded our guidance range. In addition, our gross margin was 34.6% as a result yield improvements, manufacturing efficiencies, and higher production volume. We also generated positive cash flow.  Cash, cash equivalents and investments increased by $2.4 million.  We continue to seek out interesting market opportunities where our substrates can provide value to our customers.”

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 96094142). The call will also be simulcast on the Internet at www.axt.com. Replays will be available at (855) 859-2056 (passcode 96094142) until October 31, 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    Nine Months Ended 
      September 30,    September 30, 
      2016   2015   2016   2015
                           
Revenue     $   21,872     $   18,371     $   61,080     $   59,445  
Cost of revenue         14,294         13,766         42,222         45,706  
Gross profit         7,578         4,605         18,858         13,739  
Operating expenses:                          
Selling, general, and administrative         3,313         3,659         10,106         12,685  
Research and development         1,566         1,657         4,419         4,287  
Restructuring charge                         226          
Total operating expenses         4,879         5,316         14,751         16,972  
Income (loss) from operations         2,699         (711 )       4,107         (3,233 )
Interest income, net         105         102         303         307  
Equity in (loss) earnings of unconsolidated joint ventures         (581 )       167         (1,437 )       777  
Other income, net         164         496         682         1,755  
Income (loss) before provision for income taxes         2,387         54         3,655         (394 )
Provision for income taxes         176         7         713         334  
Net income (loss)         2,211         47         2,942         (728 )
Less: Net (income) loss attributable to noncontrolling interests         18         (5 )       480         (257 )
Net income (loss) attributable to AXT, Inc.     $   2,229     $   42     $   3,422     $   (985 )
Net income (loss) attributable to AXT, Inc. per common share:                          
Basic     $   0.07     $   (0.00 )   $   0.10     $   (0.03 )
Diluted     $   0.07     $   (0.00 )   $   0.10     $   (0.03 )
Weighted average number of common shares outstanding:                          
Basic         32,110         31,988         32,043         32,262  
Diluted         33,138         31,988         32,615         32,262  
                           
    - more -          

 

AXT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
               
      September 30,    December 31, 
      2016   2015
               
ASSETS              
Current assets:              
Cash and cash equivalents     $   29,661     $   24,875  
Short-term investments         9,563         11,437  
Accounts receivable, net         18,380         18,468  
Inventories         38,731         38,012  
Related party notes receivable – current                  
Prepaid expenses and other current assets         5,265         4,096  
Total current assets         101,600         96,888  
Long-term investments         8,124         7,691  
Property, plant and equipment, net         29,385         31,422  
Related party notes receivable – long-term         1,735         1,781  
Other assets         12,084         14,114  
Total assets     $   152,928     $   151,896  
LIABILITIES AND STOCKHOLDERS’ EQUITY              
Current liabilities:              
Accounts payable     $   7,277     $   6,460  
Accrued liabilities         5,011         6,381  
Total current liabilities         12,288         12,841  
Long-term portion of royalty payments         719         1,150  
Other long-term liabilities         307         344  
Total liabilities         13,314         14,335  
Stockholders’ equity:              
Preferred stock         3,532         3,532  
Common stock         32         32  
Additional paid-in-capital         195,863         194,646  
Accumulated deficit         (67,199 )       (70,621 )
Accumulated other comprehensive income         2,529         4,382  
Total AXT, Inc. stockholders’ equity         134,757         131,971  
Noncontrolling interests         4,857         5,590  
Total stockholders’ equity         139,614         137,561  
Total liabilities and stockholders’ equity     $   152,928     $   151,896  
               

 

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

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AXT, Inc.