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AXT, Inc. Announces First Quarter 2021 Financial Results

Revenue Passes $30 Million per Quarter Mark

FREMONT, Calif., April 28, 2021 (GLOBE NEWSWIRE) -- AXT, Inc. (NasdaqGS: AXTI), a leading manufacturer of compound semiconductor wafer substrates, today reported financial results for the first quarter, ended March 31, 2021.

Management Qualitative Comments

“Q1 was an important milestone quarter for AXT,” said Morris Young, chief executive officer. “We met and exceeded the $30 million dollar quarterly revenue threshold. Our performance surpassed our expectations with growth in nearly all of our strategic products. Likewise, we drove significant improvement in our gross margin and achieved strong growth in profitability. We continue to see a convergence of major technology trends across our portfolio, and these are beginning to have a meaningful impact on the demand for our products. With our new facilities ramping and our successful development of 8-inch gallium arsenide substrates, we believe we are in a strong position to enable some of the most exciting new and emerging applications for specialty materials today.”

First Quarter 2021 Results

  • Revenue for the first quarter of 2021 was $31.4 million, compared with $27.0 million in the fourth quarter of 2020 and $20.7 million for the first quarter of 2020. This is sequential growth of 16 percent over the fourth quarter of 2020 and more than 51 percent growth over Q1 of 2020.

  • Gross margin was 36.8 percent of revenue for the first quarter of 2021, up from 33.9 percent of revenue in the fourth quarter of 2020 and 26.6 percent for the first quarter of 2020.

  • Operating expenses were $8.0 million in the first quarter of 2021, compared with $7.2 million in the fourth quarter of 2020, and $6.2 million for the first quarter of 2020.

  • Operating profit for the first quarter of 2021 was $3.6 million, compared with an operating profit of $1.9 million in the fourth quarter of 2020, and an operating loss of $0.6 million for the first quarter of 2020.

  • Other income, net for the first quarter of 2021 was $1.0 million, compared with $0.6 million in the fourth quarter of 2020 and $1.2 million for the first quarter of 2020.

  • Net income in the first quarter of 2021 was $3.4 million, or $0.08 per share, compared with net income of $2.1 million or $0.05 per share in the fourth quarter of 2020, and a net loss of $0.2 million or $0.01 per share for the first quarter of 2020.

STAR Market Listing Update  

AXT previously announced on November 16, 2020 a strategic plan to access China’s capital markets and progress to an initial public offering by Beijing Tongmei Xtal Technology Co., Ltd. (“Tongmei”), its wafer manufacturing company in China, on the Shanghai Stock Exchange’s Sci-Tech innovAtion boaRd (the “STAR Market”). The first major step in this process is engaging reputable private equity firms in China to invest funds in Tongmei.

In January 2021, AXT completed the private equity investment funding in Tongmei. A number of private equity firms have invested approximately $49 million in exchange for an approximately 7.28 percent minority interest in Tongmei.

The process of going public on the STAR Market includes several periods of review and, therefore, is a lengthy process. Tongmei expects to accomplish this goal in mid-2022. AXT has posted a brief summary of the plan and the process on its website at www.axt.com.

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 2989288). The call will also be simulcast at www.axt.com. Replays will be available at (855) 859-2056 (passcode 2989288) until May 4, 2021. 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 is a material science company that develops and manufactures high-performance compound and single element semiconductor substrate wafers comprising indium phosphide (InP), gallium arsenide (GaAs) and germanium (Ge).  The company’s substrate wafers are used when a typical silicon substrate wafer cannot meet the performance requirements of a semiconductor or optoelectronic device. End markets include 5G infrastructure, data center connectivity (silicon photonics), passive optical networks, LED lighting, lasers, sensors, power amplifiers for wireless devices and satellite solar cells. AXT’s worldwide headquarters are in Fremont, California where the company maintains sales, administration and customer service functions.  AXT has its Asia headquarters in Beijing, China and manufacturing facilities in three separate locations in China. In addition, as part of its supply chain strategy, the Company has partial ownership in ten companies in China producing raw materials for its manufacturing process. For more information, see AXT’s website at http://www.axt.com.

Forward-Looking Statements

The foregoing paragraphs contain forward-looking statements within the meaning of the Federal securities laws, including, for example, statements regarding completing other preliminary steps in connection with the proposed listing of shares of Tongmei on the STAR Market, being accepted to list shares of Tongmei on the STAR Market and the timing and completion of such listing of shares of Tongmei on the STAR Market. Additional examples of forward-looking statements include statements regarding the market demand for our products, our growth prospects and opportunities for continued business expansion, including technology trends and new applications, our market opportunity, our ability to lead our industry, our relocation and our expectations with respect to our business prospects and financial results. 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 withdrawal, cancellations or requests for redemptions by private equity funds in China of investments in Tongmei, the administrative challenges in satisfying the requirements of various government agencies in China in connection with the investments in Tongmei and the listing of shares of Tongmei on the STAR Market, continued open access to companies to list shares on the STAR Market, investor enthusiasm for new listings of shares on the STAR Market and geopolitical tensions between China and the United States. Additional 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; our ability 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 and ramping of production; possible factory shutdowns as a result of air pollution in China; COVID-19 or other outbreaks of a contagious disease; tariffs and other trade war issues; the financial performance of our partially owned supply chain companies; 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.

Contacts:
  Gary Fischer
  Chief Financial Officer
  (510) 438-4700
   
  Leslie Green
  Green Communications Consulting, LLC
  (650) 312-9060


AXT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share data)

             
  Three Months Ended  
  March 31,  
  2021
     2020
    
             
Revenue $ 31,350     $ 20,723    
Cost of revenue   19,814       15,201    
Gross profit   11,536       5,522    
Operating expenses:            
Selling, general and administrative   5,570       4,749    
Research and development   2,405       1,407    
Total operating expenses   7,975       6,156    
Income (loss) from operations   3,561       (634 )  
Interest expense, net   (50 )     (29 )  
Equity in income (loss) of unconsolidated joint ventures   1,111       (120 )  
Other income (expense), net   (111 )     1,366    
Income before provision for income taxes   4,511       583    
Provision for income taxes   746       366    
Net income   3,765       217    
Less: Net income attributable to noncontrolling interests   (340 )     (395 )  
Net income (loss) attributable to AXT, Inc. $ 3,425     $ (178 )  
Net income (loss) attributable to AXT, Inc. per common share:            
Basic $ 0.08     $ (0.01 )  
Diluted $ 0.08     $ (0.01 )  
Weighted-average number of common shares outstanding:            
Basic   41,004       39,812    
Diluted   42,726       39,812    

AXT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)

             
  March 31,      December 31  
  2021   2020  
             
ASSETS            
Current assets:            
Cash and cash equivalents $ 61,206     $ 72,602    
Short-term investments   240       240    
Accounts receivable, net   28,423       24,558    
Inventories   54,681       51,515    
Prepaid expenses and other current assets   18,400       15,603    
Total current assets   162,950       164,518    
Long-term investments   5,463       5,726    
Property, plant and equipment, net   119,878       115,825    
Operating lease right-of-use assets   2,576       2,683    
Other assets   11,039       10,110    
Total assets $ 301,906     $ 298,862    
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY            
Current liabilities:            
Accounts payable $ 13,399     $ 12,669    
Accrued liabilities   15,698       15,995    
Bank loan   10,376       10,411    
Total current liabilities   39,473       39,075    
Noncurrent operating lease liabilities   2,249       2,374    
Other long-term liabilities   1,510       1,881    
Total liabilities   43,232       43,330    
             
Redeemable noncontrolling interests   48,212       47,563    
             
Stockholders’ equity:            
Preferred stock   3,532       3,532    
Common stock   42       42    
Additional paid-in capital   229,617       230,381    
Accumulated deficit   (41,120 )     (44,545 )  
Accumulated other comprehensive income   3,078       3,209    
Total AXT, Inc. stockholders’ equity   195,149       192,619    
Noncontrolling interests   15,313       15,350    
Total stockholders’ equity   210,462       207,969    
Total liabilities, redeemable noncontrolling interests and stockholders’ equity $ 301,906     $ 298,862    

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Source: AXT, Inc.