AXT, Inc. Announces Second Quarter 2015 Financial Results

FREMONT, CA--(Marketwired - Jul 30, 2015) -  AXT, Inc. (NASDAQ: AXTI), a leading manufacturer of compound semiconductor substrates, today reported financial results for the second quarter ended June 30, 2015.

Second Quarter 2015 Results
Revenue for the second quarter of 2015 was $21.0 million compared with $20.1 million in the first quarter of 2015.

Gross margin was 20.9 percent of revenue for the second quarter of 2015, compared with 23.7 percent of revenue in the first quarter of 2015.

Operating expenses were $5.2 million in the second quarter of 2015, compared with $6.5 million in the first quarter of 2015. The decrease was largely the result of professional fees in the first quarter totaling $1.2 million. 

Operating loss for the second quarter of 2015 was $0.8 million compared with $1.7 million in the first quarter of 2015. 

Net interest and other income for the second quarter of 2015 was $1.1 million, compared with $0.9 million in the first quarter of 2015.

Net loss in the second quarter of 2015 was $3,000 or a loss of $0.00 per diluted share compared with a net loss of $1.0 million or $0.03 per diluted share in the first quarter of 2015.

Management Qualitative Comments
"Our financial results in the second quarter were in line with our expectations and we continue to invest and build for the future," said Morris Young, chief executive officer. "We were delighted to welcome Dr. Hong Hou to our executive team as chief operating officer and view our acquisition of Crystacomm's indium phosphide technology and equipment as a strategic building block for our indium phosphide substrate product line."

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) 325-2458 (passcode 8519289). The call will also be simulcast on the Internet at www.axt.com. Replays will be available at (719) 457-0820 (passcode 8519289) until August 6, 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) 438-4700.

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.

FINANCIAL TABLES TO FOLLOW

AXT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share data)
				Three Months Ended								Six Months Ended
				June 30,								June 30,
				2015				2014				2015				2014
Revenue				$	21,010			$	21,449			$	41,074			$	40,794
Cost of revenue					16,625				17,289				31,940				33,916
Gross profit					4,385				4,160				9,134				6,878
Operating expenses:
	Selling, general and administrative				3,775				3,688				9,026				7,124
	Research and development				1,389				987				2,630				1,762
	Restructuring charge				-				-				-				907
		Total operating expenses			5,164				4,675				11,656				9,793
Income (loss) from operations					(779	)			(515	)			(2,522	)			(2,915	)
Interest income, net					108				127				205				254
Equity in earnings of unconsolidated joint ventures					410				625				610				1,112
Other income (expense), net					626				476				1,259				486
Income (loss) before provision for income taxes					365				713				(448	)			(1,063	)
Provision (benefit) for income taxes					241				152				327				211
Net income (loss)					124				561				(775	)			(1,274	)
Less: Net income (loss) attributable to noncontrolling interest					(127	)			(242	)			(252	)			(447	)
Net income (loss) attributable to AXT, Inc.				$	(3	)		$	319			$	(1,027	)		$	(1,721	)
Net income (loss) attributable to AXT, Inc. per common share:
	Basic			$	(0.00	)		$	0.01			$	(0.03	)		$	(0.06	)
	Diluted			$	(0.00	)		$	0.01			$	(0.03	)		$	(0.06	)
Weighted average number of common shares outstanding:
	Basic				32,242				32,381				32,399				32,407
	Diluted				32,242				32,597				32,399				32,407

AXT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
				June 30,				December 31,
				2015				2014
Assets:
Current assets
	Cash and cash equivalents			$	28,640			$	28,814
	Short-term investments				3,932				12,340
	Accounts receivable, net				19,312				17,864
	Inventories				38,901				38,574
	Related party notes receivable - current				174				171
	Prepaid expenses and other current assets				3,481				5,430
		Total current assets			94,440				103,193
Long-term investments					13,699				7,783
Property, plant and equipment, net					33,366				33,862
Related party notes receivable - long-term					1,711				1,704
Other assets					15,000				14,975
		Total assets		$	158,216			$	161,517
Liabilities and stockholders' equity:
Current liabilities
	Accounts payable			$	7,323			$	7,137
	Accrued liabilities				6,043				7,634
		Total current liabilities			13,366				14,771
Long-term portion of royalty payments					1,438				1,725
Other long-term liabilities					332				333
		Total liabilities			15,136				16,829
Stockholders' equity:
	Preferred stock				3,532				3,532
	Common stock				32				32
	Additional paid-in capital				194,714				195,419
	Accumulated deficit				(69,420	)			(68,393	)
	Accumulated other comprehensive income				7,586				7,673
		Total AXT, Inc. stockholders' equity			136,444				138,263
	Noncontrolling interest				6,636				6,425
		Total stockholders' equity			143,080				144,688
		Total liabilities and stockholders' equity		$	158,216			$	161,517