SOURCE: AXT, Inc.

AXT, Inc.

April 30, 2014 16:10 ET

AXT, Inc. Announces First Quarter 2014 Financial Results

FREMONT, CA--(Marketwired - Apr 30, 2014) - AXT, Inc. (NASDAQ: AXTI), a leading manufacturer of compound semiconductor substrates, today reported financial results for the first quarter ended March 31, 2014.

First Quarter 2014 Results
Revenue for the first quarter of 2014 was $19.3 million compared with $18.6 million in the fourth quarter of 2013. Total gallium arsenide (GaAs) substrate revenue was $8.5 million for the first quarter of 2014, compared with $8.9 million in the fourth quarter of 2013. Indium phosphide (InP) substrate revenue was $2.2 million for the first quarter of 2014, compared with $1.8 million in the fourth quarter of 2013. Germanium (Ge) substrate revenue was $3.2 million for the first quarter of 2014, compared with $3.6 million in the fourth quarter of 2013. Raw materials sales were $5.4 million for the first quarter of 2014, compared with $4.3 million in the fourth quarter of 2013.

Gross margin was 14.1 percent of revenue for the first quarter of 2014, compared with 15.1 percent of revenue in the fourth quarter of 2013.

Operating expenses were $5.1 million in the first quarter of 2014, compared with $4.4 million in the fourth quarter of 2013. The increase in operating expenses was primarily the result of a onetime restructuring charge of $907,000 related to the company's cost-reduction initiatives.

Loss from operations for the first quarter of 2014 was $2.4 million compared with a loss from operations of $1.6 million in the fourth quarter of 2013. 

Net interest and other income for the first quarter of 2014 was $624,000, which was primarily attributable to $487,000 from equity earnings of the company's unconsolidated joint ventures, and $127,000 from interest income. This compares with net interest and other income of $293,000 in the fourth quarter of 2013, which was mainly attributable to $278,000 equity earnings of our unconsolidated joint ventures, and $272,000 from interest income partially offset by $289,000 foreign exchange losses.

Net loss in the first quarter of 2014 was $2.0 million or $0.06 per diluted share compared with net loss of $1.2 million or $0.04 per diluted share in the fourth quarter of 2013. 

Management Qualitative Comments
"Despite normal seasonality, our results exceeded our expectations in the first quarter, led by higher than anticipated revenues in semi-conducting gallium arsenide and indium phosphide substrates, as well as strength in raw material sales," said Morris Young, chief executive officer. "In addition to revenue growth, we began to see the benefit of cost-saving measures implemented during the quarter, which contributed to improvement in our earnings per share. Our goal is to improve in both our gross margins and our operating margins in the coming quarters as the full benefit of these measures take affect. We are highly committed to returning the company to profitability."

Conference Call
The company will host a conference call to discuss these results today at 1:30 p.m. PDT. The conference call can be accessed at (719) 325-2420 (passcode 2855105). The call will also be simulcast on the Internet at www.axt.com. Replays will be available at (719) 457-0820 (passcode 2855105) until May 6, 2014. 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.

AXT will provide highlights of its first quarter results on today's conference call, but investors can find the full financial summary on the investor relations portion of the company's website at www.axt.com

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, fiber optic communications and solar cell. 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 statements regarding the market demand for our products, our market opportunity, our business planning and management approach and our expectations with respect to our business prospects. 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; global financial conditions and uncertainties; 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; 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 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  
    March 31,  
    2014     2013  
                 
Revenue   $ 19,345     $ 22,380  
Cost of revenue     16,627       18,896  
Gross profit     2,718       3,484  
                 
Operating expenses:                
  Selling, general and administrative     3,436       3,925  
  Research and development     775       822  
  Restructuring charge     907       0  
    Total operating expenses     5,118       4,747  
Income (loss) from operations     (2,400 )     (1,263 )
Interest income, net     127       31  
Equity in earnings of unconsolidated joint ventures     487       282  
Other expense, net     10       (825 )
                 
Income (loss) before provision for income taxes     (1,776 )     (1,775 )
Provision (benefit) for income taxes     59       184  
Net income (loss)     (1,835 )     (1,959 )
                 
Less: Net income attributable to noncontrolling interest     (205 )     (441 )
Net income (loss) attributable to AXT, Inc.   $ (2,040 )   $ (2,400 )
                 
Net income (loss) attributable to AXT, Inc. per common share:                
  Basic   $ (0.06 )   $ (0.08 )
  Diluted   $ (0.06 )   $ (0.08 )
                 
Weighted average number of common shares outstanding:                
  Basic     32,364       32,297  
  Diluted     32,364       32,297  
                 
                 
   
AXT, INC.  
CONDENSED CONSOLIDATED BALANCE SHEETS  
(Unaudited, in thousands)  
             
    March 31,     December 31,  
    2014     2013  
Assets:                
Current assets                
  Cash and cash equivalents   $ 22,760     $ 24,961  
  Short-term investments     22,375       12,499  
  Accounts receivable, net     16,364       14,943  
  Inventories     38,040       39,127  
  Related party notes receivable - current     0       0  
  Prepaid expenses and other current assets     6,401       8,010  
    Total current assets     105,940       99,540  
                 
Long-term investments     1,678       10,145  
Property, plant and equipment, net     36,179       37,621  
Related party notes receivable - long-term     1,701       1,715  
Other assets     14,752       14,801  
                 
    Total assets   $ 160,250     $ 163,822  
                 
Liabilities and stockholders' equity:                
Current liabilities                
  Accounts payable   $ 7,618     $ 8,140  
  Accrued liabilities     6,646       7,286  
    Total current liabilities     14,264       15,426  
                 
Long-term portion of royalty payments     2,325       2,525  
Other long-term liabilities     272       325  
    Total liabilities     16,861       18,276  
                 
Stockholders' equity:                
  Preferred stock     3,532       3,532  
  Common stock     32       32  
  Additional paid-in capital     194,448       194,156  
  Accumulated deficit     (69,045 )     (67,005 )
  Accumulated other comprehensive income     8,500       8,953  
    Total AXT, Inc. stockholders' equity     137,467       139,668  
                   
  Noncontrolling interest     5,922       5,878  
    Total stockholders' equity     143,389       145,546  
                   
    Total liabilities and stockholders' equity   $ 160,250     $ 163,822  
                 
                 

Contact Information

  • Contacts:
    Morris S. Young
    Chief Executive Officer
    (510) 683-5900

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