SOURCE: AXT, Inc.

AXT, Inc.

February 23, 2015 16:10 ET

AXT, Inc. Announces Fourth Quarter and Fiscal 2014 Financial Results

FREMONT, CA--(Marketwired - Feb 23, 2015) - AXT, Inc. (NASDAQ: AXTI), a leading manufacturer of compound semiconductor substrates, today reported financial results for the fourth quarter and fiscal year ended Dec. 31, 2014.

Fourth Quarter 2014 Results
Revenue for the fourth quarter of 2014 was $19.6 million compared with $23.1 million in the third quarter of 2014.

Gross margin was 25.4 percent of revenue for the fourth quarter of 2014, compared with 23.0 percent of revenue in the third quarter of 2014.

Operating expenses were $5.6 million in the fourth quarter of 2014, up from $4.7 million in the third quarter of 2014. The increase was largely the result of professional fees associated with a recently completed internal investigation, initiated during the fourth quarter, of certain potential related-party transactions. 

Operating loss for the fourth quarter of 2014 was $592,000 compared with an operating profit of $653,000 in the third quarter of 2014. 

Net interest and other income for the fourth quarter of 2014 was $260,000. This was primarily attributable to $26,000 from equity earnings of the company's unconsolidated joint ventures, $637,000 from the sale of IntelliEpi stock, $618,000 from a loss on foreign exchange and $123,000 from interest income.

Net loss in the fourth quarter of 2014 was $311,000 or a loss of $0.01 per diluted share compared with a net income of $644,000 or a profit of $0.02 per diluted share in the third quarter of 2014.

Fiscal Year 2014 Results
Revenue for fiscal 2014 was $83.5 million, down slightly from $85.3 million in fiscal year 2013.

Gross margin for fiscal year 2014 was 20.6 percent of revenue, a significant improvement from 13.9 percent of revenue for fiscal year 2013.

Net loss for fiscal year 2014 also improved to $1.4 million or $0.05 per share compared with net loss of $8.0 million or $0.25 per diluted share for fiscal year 2013. 

Management Qualitative Comments
"While the fourth quarter demand weakness contributed to a modest decline in our annual revenue from the prior year, meaningful improvements in our cost structure early in the year, coupled with ongoing discipline in our spending throughout the year, and a positive shift in our revenue mix resulted in a significant improvement year-over-year to our bottom line," said Morris Young, chief executive officer. "Further, we grew our cash and investments by $1.3 million, ending the year with a balance of $48.9 million. As we enter 2015, we are well positioned to drive growth in our business and to continue executing on our strategic priorities."

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 (719) 457-2664 (passcode 8715677). The call will also be simulcast on the Internet at www.axt.com. Replays will be available at (719) 457-0820 (passcode 8715677) until March 1, 2015. 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, 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, 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.

   
   
AXT, INC.  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(Unaudited, in thousands, except per share data)  
                         
    Three Months Ended     Twelve Months Ended  
    December 31,     December 31,  
    2014     2013     2014     2013  
                                 
Revenue   $ 19,567     $ 18,603     $ 83,499     $ 85,335  
Cost of revenue     14,596       15,790       66,332       73,507  
Gross profit     4,971       2,813       17,167       11,828  
                                 
Operating expenses:                                
  Selling, general and administrative     4,341       3,631       14,970       16,066  
  Research and development     1,222       797       4,144       3,424  
  Restructuring charge     0       0       907       0  
    Total operating expenses     5,563       4,428       20,021       19,490  
Income (loss) from operations     (592 )     (1,615 )     (2,854 )     (7,662 )
Interest income, net     123       272       483       408  
Equity in earnings of unconsolidated joint ventures     26       278       1,528       1,377  
Other income (expense), net     111       (257 )     361       (748 )
                                 
Income (loss) before provision for income taxes     (332 )     (1,322 )     (482 )     (6,625 )
Provision for (benefit from) income taxes     (39 )     (134 )     215       188  
Net income (loss)     (293 )     (1,188 )     (697 )     (6,813 )
                                 
Less: Net income (loss) attributable to noncontrolling interest     (18 )     (40 )     (691 )     (1,145 )
Net income (loss) attributable to AXT, Inc.   $ (311 )   $ (1,228 )   $ (1,388 )   $ (7,958 )
                                 
Net income (loss) attributable to AXT, Inc. per common share:                                
  Basic   $ (0.01 )   $ (0.04 )   $ (0.05 )   $ (0.25 )
  Diluted   $ (0.01 )   $ (0.04 )   $ (0.05 )   $ (0.25 )
                                 
Weighted average number of common shares outstanding:                                
  Basic     32,558       32,628       32,452       32,700  
  Diluted     32,558       32,628       32,452       32,700  
                                 
                                 
   
AXT, INC.  
CONDENSED CONSOLIDATED BALANCE SHEETS  
(Unaudited, in thousands)  
             
    December 31,     December 31,  
    2,014     2013  
Assets:                
Current assets                
  Cash and cash equivalents   $ 28,814     $ 24,961  
  Short-term investments     12,340       12,499  
  Accounts receivable, net     17,864       14,943  
  Inventories     38,574       39,127  
  Related party notes receivable - current     171       0  
  Prepaid expenses and other current assets     5,430       8,010  
    Total current assets     103,193       99,540  
                 
Long-term investments     7,783       10,145  
Property, plant and equipment, net     33,862       37,621  
Related party notes receivable - long-term     1,704       1,715  
Other assets     14,975       14,801  
                 
    Total assets   $ 161,517     $ 163,822  
                 
Liabilities and stockholders' equity:                
Current liabilities                
  Accounts payable   $ 7,137     $ 8,140  
  Accrued liabilities     7,634       7,286  
    Total current liabilities     14,771       15,426  
                 
Long-term portion of royalty payments     1,725       2,525  
Other long-term liabilities     333       325  
    Total liabilities     16,829       18,276  
                 
Stockholders' equity:                
  Preferred stock     3,532       3,532  
  Common stock     32       32  
  Additional paid-in capital     195,419       194,156  
  Accumulated deficit     (68,393 )     (67,005 )
  Accumulated other comprehensive income     7,673       8,953  
    Total AXT, Inc. stockholders' equity     138,263       139,668  
                 
Noncontrolling interest     6,425       5,878  
    Total stockholders' equity     144,688       145,546  
                 
    Total liabilities and stockholders' equity   $ 161,517     $ 163,822  

Contact Information

  • Contacts:
    Gary Fischer
    Chief Financial Officer
    (510) 683-5900

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