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AXT, Inc. Announces Third Quarter 2018 Financial Results

FREMONT, Calif., Oct. 31, 2018 (GLOBE NEWSWIRE) -- AXT, Inc. (NasdaqGS: AXTI), a leading  material science company manufacturing single crystal compound semiconductor substrates, today reported financial results for the third quarter, ended September 30, 2018.

Third Quarter 2018 Results

Revenue in the third quarter of 2018 was $28.6 million, compared with $27.1 million in the second quarter of 2018 and $28.2 million in the third quarter of 2017.   

Gross margin was 37.1 percent of revenue in the third quarter of 2018, compared with 40.6 percent of revenue in the second quarter of 2018 and 39.5 percent in the third quarter of 2017.

Operating expenses were $6.3 million in the third quarter of 2018, compared with $6.5 million in the second quarter of 2018 and $5.9 million in the third quarter of 2017. 

Operating profit in the third quarter of 2018 was $4.3 million, compared with operating profit of $4.5 million in the second quarter of 2018 and $5.2 million in the third quarter of 2017.  

Interest and other, net was a gain of $0.2 million in the third quarter of 2018, compared with a gain of $0.4 million in the second quarter of 2018, and a loss of $0.5 million in the third quarter of 2017.  Interest and other, net for the third quarter of 2018 included interest income and other of $0.1 million and a foreign exchange gain of $0.1 million. Our seven partially owned companies in the company’s supply chain, accounted for under the equity method, were breakeven.

Income tax expense in the third quarter of 2018 was $0.4 million, compared with $0.4 million in the second quarter of 2018 and $0.2 million in the third quarter of 2017.

Net income in the third quarter of 2018 was $3.9 million, or $0.10 per diluted share, compared with a net income of $3.9 million or $0.10 per diluted share in the second quarter of 2018, and $4.4 million or $0.11 per diluted share in the third quarter of 2017.

Management Qualitative Comments

“Our revenue and earnings in Q3 came in at the high end of our expectations, reflecting continued solid demand for our products,” said Morris Young, chief executive officer. “Our wafers are being used in a number of applications for which the lifecycle is long and promising. We are also encouraged to see new emerging applications that could contribute to our growth for years to come. As such, the relocation of our gallium arsenide manufacturing line is providing us the opportunity to plan for growth in our industry and to prepare our business to meet increasing customer demand. We continue to make good progress on the new facilities and are pleased by our success to date.”

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 1372149). The call will also be simulcast on the Internet at Replays will be available at (855) 859-2056 (passcode 1372149) until November 6, 2018. 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. AXT’s worldwide headquarters are in Fremont, California where the company maintains its sales, administration and customer service functions. 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) process technology 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 its 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 growth prospects and opportunities for continued business expansion, our market opportunity, our relocation 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: the timing and receipt of significant orders; the cancellation of orders and return of product; emerging applications using chips or devices fabricated on our substrates; end-user acceptance of products containing chips or devices fabricated on our substrates; the ability of the Company to bring new products to market; product announcements by our competitors; the ability to control costs and improve efficiency; the ability to utilize our manufacturing capacity; product yields and their impact on gross margins; the relocation of manufacturing lines; possible factory shutdowns as a result of air pollution in China; tariffs and other trade war issues; policies and regulations in China 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.

Gary Fischer
Chief Financial Officer
(510) 438-4700

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


(Unaudited, in thousands, except per share data)

    Three Months Ended   Nine Months Ended
    September 30,    September 30, 
    2018     2017     2018     2017  
Revenue   $  28,626     $  28,168     $  80,165     $  72,341  
Cost of revenue      18,012        17,035        48,968        47,664  
Gross profit      10,614        11,133        31,197        24,677  
Operating expenses:                        
Selling, general and administrative      4,615        4,484        13,824        12,219  
Research and development      1,668        1,410        4,588        3,553  
Total operating expenses      6,283        5,894        18,412        15,772  
Income from operations      4,331        5,239        12,785        8,905  
Interest income, net      133        122        414        334  
Equity in earnings (loss) of unconsolidated joint ventures      6        (266 )      (21 )      (1,387 )
Other income (expense), net      87        (349 )      (179 )      (403 )
Income before provision for income taxes      4,557        4,746        12,999        7,449  
Provision for income taxes      410        181        1,111        661  
Net income      4,147        4,565        11,888        6,788  
Less: Net (income) loss attributable to noncontrolling interests      (208 )      (146 )      (1,173 )      226  
Net income attributable to AXT, Inc.   $  3,939     $  4,419     $  10,715     $  7,014  
Net income attributable to AXT, Inc. per common share:                        
Basic   $  0.10     $  0.11     $  0.27     $  0.19  
Diluted   $  0.10     $  0.11     $  0.26     $  0.18  
Weighted-average number of common shares outstanding:                        
Basic      39,008        38,499        39,000        36,999  
Diluted      40,331        40,095        40,320        38,469  

(Unaudited, in thousands)

    September 30,    December 31,   
    2018    2017   
Current assets:              
Cash and cash equivalents   $  18,035     $  44,352    
Short-term investments      21,910        20,032    
Accounts receivable, net      23,308        22,778    
Inventories      58,717        45,840    
Prepaid expenses and other current assets      10,625        7,519    
Total current assets      132,595        140,521    
Long-term investments      1,906        12,576    
Property, plant and equipment, net      74,754        46,530    
Other assets      11,194        11,573    
Total assets   $  220,449     $  211,200    
Current liabilities:              
Accounts payable   $  12,344     $  11,445    
Accrued liabilities      12,776        11,149    
Current portion of bank loan      291        —    
Total current liabilities      25,411        22,594    
Other long-term liabilities      320        289    
Total liabilities      25,731        22,883    
Stockholders’ equity:              
Preferred stock      3,532        3,532    
Common stock      39        39    
Additional paid-in capital      233,522        231,679    
Accumulated deficit      (44,122 )      (54,837 )  
Accumulated other comprehensive income (loss)      (1,846 )      3,407    
Total AXT, Inc. stockholders’ equity      191,125        183,820    
Noncontrolling interests      3,593        4,497    
Total stockholders’ equity      194,718        188,317    
Total liabilities and stockholders’ equity   $  220,449     $  211,200    


Source: AXT, Inc.