FREMONT, CA--(Marketwire - October 25, 2007) - AXT, Inc. (
NASDAQ:
AXTI), a leading
manufacturer of compound semiconductor substrates, today reported financial
results for the third quarter ended September 30, 2007.
Third Quarter 2007 Results
Revenue for the third quarter of 2007 was $14.5 million, compared with
$13.6 million in the second quarter of 2007, and $12.5 million in the third
quarter of 2006. Total gallium arsenide (GaAs) substrate revenue was $9.9
million for the third quarter of 2007, compared with $9.3 million in the
second quarter of 2007, and $10.6 million in the third quarter of 2006.
Indium phosphide (InP) revenue was $408,000 for the third quarter of 2007,
compared with $660,000 in the second quarter of 2007, which included sales
of approximately $250,000 in InP scrap metal, and compared with $340,000 in
the third quarter of 2006. Germanium (Ge) substrate revenue was $536,000,
compared with $402,000 in the second quarter of 2007, and $387,000 in the
third quarter of 2006. Raw materials sales were $3.6 million for the third
quarter of 2007, compared with $3.3 million in the second quarter of 2007,
and $1.3 million in the third quarter of 2006.
Gross margin was 31.3 percent of revenue for the third quarter of 2007.
This included a benefit from the sale of approximately $556,000 in fully
reserved wafers, which positively affected the quarterly gross margin by
3.8 percentage points. By comparison, gross margin in the second quarter
of 2007 was 36.9 percent. This included a benefit from the sales of
approximately $387,000 in fully reserved wafers, which positively affected
second quarter gross margin by 2.8 percentage points. Gross margin in the
third quarter of 2006 was 27.7 percent, including a benefit from the sale
of approximately $802,000 in fully reserved wafers, which positively
affected the quarterly gross margins by 6.4 percentage points.
Operating expenses were $3.5 million in the third quarter of 2007, compared
with $3.6 million in the second quarter of 2007, and $4.5 million in the
third quarter of 2006.
Income from operations for the third quarter of 2007 was $1.1 million
compared with income from operations of $1.4 million in the second quarter
of 2007, and loss from operations of $971,000 in the third quarter of 2006.
Net interest and other expense for the third quarter of 2007 was $54,000,
compared with net interest and other expense of $47,000 for the second
quarter of 2007, and net interest and other income of $744,000 in the third
quarter of 2006, which included a gain on sale of Finisar stock of
$650,000.
Net income in the third quarter of 2007 was $858,000 or $0.03 per diluted
share, compared with a net income of $1.2 million or $0.04 per diluted
share in the second quarter of 2007, and a net income of $639,000, or $0.02
per diluted share in the third quarter of 2006.
AXT Announces Appointment of Philip C.S. Yin, CEO, to Chairman of the
Board; Jesse Chen Becomes Lead Independent Director
The company also announced that Philip C.S. Yin, AXT's chief executive
officer, has been named chairman of its Board of Directors, effective
October 19, 2007. Jesse Chen, AXT's former chairman of the Board, will
continue to serve on the Board and has been appointed Lead Independent
Director.
Management Qualitative Comments
"This is an exciting time for the company," said Phil Yin, chief executive
officer. "As we have discussed throughout the year, there are several
important industry trends that are driving the increasing demand for our
products, such as the rapid replacement cycles of cellular handsets, the
emergence of a new market for low cost handsets, the proliferation of
applications for LED lighting and the increasing focus on solar energy.
Further, our own internal competencies are expanding into complementary
technologies, such as standard Czochralski and Liquid Encapsulated
Czochralski crystal growth, allowing us to offer a comprehensive product
portfolio spanning a wide variety of applications. As a result, we believe
we are coming to another inflection point in our business as the
convergence of these increasing market opportunities, coupled with the
completion of the industry BiFET transition and leverages within our
business model create opportunities for growth in the coming years."
Outlook for Fourth Quarter, Ending December 31, 2007
AXT estimates revenue for the fourth quarter will increase to between $15.3
million and $15.8 million. The company estimates that net income per
diluted share will be between $0.03 and $0.05, which takes into account our
diluted weighted average share count of approximately 31.5 million shares.
Conference Call
The company will also host a conference call today to discuss these results
at 1:30 p.m. PT. The conference call can be accessed at (416) 641-6125
(conference ID 3237726). The call will also be simulcast on the Internet at
www.axt.com. Replays will be available at (416) 695-5800 until November 1,
2007. 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) 683-5900.
About AXT, Inc.
AXT designs, develops, manufactures and distributes high-performance
compound and single element semiconductor substrates comprising gallium
arsenide (GaAs), indium phosphide (InP) 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, and fiber optic
communications. 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, particularly in optoelectronics applications. AXT has
manufacturing facilities in China and invests in five joint ventures
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 statements regarding
industry trends that are driving increasing demand for our products, the
rapid replacement cycles of cellular handsets, the emergence of a new
market for low cost handsets, the proliferation of applications for LED
lighting, the increasing focus on solar energy, our expansion into
complementary technologies, such as standard Czochralski and Liquid
Encapsulated Czochralski crystal growth, allowing us to increase our
product portfolio, the completion of the industry BiFET transition, and
opportunities for growth in the coming years. These forward-looking
statements are based upon specific assumptions that are subject to
uncertainties and factors relating to the company's operations and business
environment, which could cause actual results of the company 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; market acceptance and demand for the company's
products; and other factors as set forth in the company's annual report on
Form 10-K 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 publicly any forward-looking statement, as a result of new
information, future events or otherwise.
AXT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
2007 2006 2007 2006
======== ======== ======== ========
Revenue $ 14,474 $ 12,547 $ 40,639 $ 31,373
Cost of revenue 9,944 9,068 25,672 23,625
-------- -------- -------- --------
Gross profit 4,530 3,479 14,967 7,748
-------- -------- -------- --------
Operating expenses:
Selling, general and
administrative 3,083 2,641 10,529 9,724
Research and development 382 392 1,190 1,497
Impairment (recovery) on assets
held for sale - 1,417 (481) 1,417
Restructuring benefit - - - (2)
-------- -------- -------- --------
Total operating expenses 3,465 4,450 11,238 12,636
-------- -------- -------- --------
Income (loss) from continuing
operations 1,065 (971) 3,729 (4,888)
Interest income, net 102 103 551 342
Other income (expense), net (156) 641 (439) 1,693
-------- -------- -------- --------
Income (loss) from continuing
operations before provision
for income taxes 1,011 (227) 3,841 (2,853)
Provision (benefit) for income
taxes 153 (862) 426 (406)
-------- -------- -------- --------
Income (loss) from continuing
operations 858 635 3,415 (2,447)
Discontinued operations:
Gain from discontinued
operations, net of tax - 4 - 7
-------- -------- -------- --------
Net income (loss) $ 858 $ 639 $ 3,415 $ (2,440)
======== ======== ======== ========
Basic income (loss) per share:
Income (loss) from continuing
operations $ 0.03 $ 0.03 $ 0.11 $ (0.11)
Gain (loss) from discontinued
operations, net of tax - - - -
-------- -------- -------- --------
Net income (loss) per share - basic $ 0.03 $ 0.03 $ 0.11 $ (0.11)
======== ======== ======== ========
Shares used in computing basic
income (loss) per share 30,150 23,158 29,940 23,066
======== ======== ======== ========
Diluted income (loss) per share:
Income (loss) from continuing
operations $ 0.03 $ 0.02 $ 0.10 $ (0.11)
Gain (loss) from discontinued
operations, net of tax - - - -
-------- -------- -------- --------
Net income (loss) per share -
diluted $ 0.03 $ 0.02 $ 0.10 $ (0.11)
======== ======== ======== ========
Shares used in computing diluted
income (loss) per share 31,464 24,378 31,287 23,066
======== ======== ======== ========
AXT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
September 30, December 31,
2007 2006
============= =============
Assets:
Current assets
Cash and cash equivalents $ 17,067 $ 16,116
Short-term investments 18,174 19,428
Accounts receivable, net 11,948 9,658
Inventories, net 25,124 20,263
Prepaid expenses and other current assets 3,590 3,985
Assets held for sale 5,140 4,659
------------- -------------
Total current assets 81,043 74,109
Property, plant and equipment, net 15,072 12,775
Other assets 5,036 4,298
Restricted deposits 6,700 7,150
------------- -------------
Total assets $ 107,851 $ 98,332
============= =============
Liabilities and stockholders' equity:
Current liabilities
Accounts payable $ 2,770 $ 3,764
Accrued liabilities 4,323 3,536
Current portion of long-term debt 450 450
------------- -------------
Total current liabilities 7,543 7,750
Long-term debt, net of current portion 6,295 6,839
Other long-term liabilities 3,129 2,543
------------- -------------
Total liabilities 16,967 17,132
------------- -------------
Stockholders' equity:
Preferred stock 3,532 3,532
Common stock 185,696 180,965
Accumulated deficit (100,417) (103,832)
Other comprehensive income 2,073 535
------------- -------------
Total stockholders' equity 90,884 81,200
------------- -------------
Total liabilities and stockholders'
equity $ 107,851 $ 98,332
============= =============
Contact Information: Contacts:
Wilson W. Cheung
Chief Financial Officer
(510) 683-5900
Leslie Green
Green Communications Consulting, LLC
(650) 312-9060