SOURCE: AXT, Inc.

AXT, Inc.

October 30, 2014 16:10 ET

AXT, Inc. Announces Third Quarter 2014 Financial Results

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

Third Quarter 2014 Results
Revenue for the third quarter of 2014 was $23.1 million compared with $21.4 million in the second quarter of 2014.

Gross margin was 23.0 percent of revenue for the third quarter of 2014, compared with 19.4 percent of revenue in the second quarter of 2014.

Operating expenses were $4.7 million in the third quarter of 2014, unchanged from $4.7 million in the second quarter of 2014. 

Profit from operations for the third quarter of 2014 was $653,000 compared with a loss from operations of $515,000 in the second quarter of 2014. 

Net interest and other income for the third quarter of 2014 was $260,000. This was primarily attributable to $390,000 from equity earnings of the company's unconsolidated joint ventures, $302,000 from the sale of IntelliEpi stock, $556,000 from a loss on foreign exchange and $106,000 from interest income. By comparison, net interest and other income for the second quarter of 2014 was $1.2 million. This was primarily attributable to $625,000 from equity earnings of the company's unconsolidated joint ventures, $324,000 from the sale of IntelliEpi stock, $158,000 from a gain on foreign exchange and $127,000 from interest income.

Net income in the third quarter of 2014 was $644,000 or $0.02 per diluted share compared with a net income of $319,000 or $0.01 per diluted share in the second quarter of 2014. 

Management Qualitative Comments
"The third quarter was a positive quarter for AXT," said Morris Young, chief executive officer. "Revenue came in ahead of our expectations, and we achieved another quarter of profitability through improved gross margins and tight expense control. Further, we are diversifying our customer base throughout our product portfolio and are pleased to be gaining traction in several areas that have been a strong focus of our sales efforts. The changes in the gallium arsenide landscape over the past two years have had an adverse impact on our business. However, these changes are finally beginning to settle and new applications for our products are emerging across our substrate portfolio. I am very pleased to have a strong team in place with the expertise to maximize our potential as we evolve our business to meet new opportunities."

Conference Call
The company will host a conference call to discuss these results on Oct. 30, 2014 at 1:30 p.m. PT. The conference call can be accessed at (719) 457-2645 (passcode 2872393). The call will also be simulcast on the Internet at www.axt.com. Replays will be available at (719) 457-0820 (passcode 2872393) until Nov. 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.

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     Nine Months Ended  
    September 30,     September 30,  
    2014     2013     2014     2013  
                                 
Revenue   $ 23,138     $ 20,521     $ 63,932     $ 66,732  
Cost of revenue     17,820       18,075       51,736       57,717  
Gross profit     5,318       2,446       12,196       9,015  
                                 
Operating expenses:                                
  Selling, general and administrative     3,505       4,303       10,629       12,435  
  Research and development     1,160       766       2,922       2,627  
  Restructuring charge                     907          
    Total operating expenses     4,665       5,069       14,458       15,062  
Income (loss) from operations     653       (2,623 )     (2,262 )     (6,047 )
Interest income, net     106       55       360       136  
Equity in earnings of unconsolidated joint ventures     390       346       1,502       1,099  
Other income (expense), net     (236 )     (47 )     250       (491 )
                                 
Income (loss) before provision for income taxes     913       (2,269 )     (150 )     (5,303 )
Provision for (benefit from) income taxes     43       (204 )     254       322  
Net income (loss)     870       (2,065 )     (404 )     (5,625 )
                                 
Less: Net income (loss) attributable to noncontrolling interest     (226 )     (230 )     (673 )     (1,105 )
Net income (loss) attributable to AXT, Inc.   $ 644     $ (2,295 )   $ (1,077 )   $ (6,730 )
                                 
Net income (loss) attributable to AXT, Inc. per common share:                                
  Basic   $ 0.02     $ (0.07 )   $ (0.04 )   $ (0.21 )
  Diluted   $ 0.02     $ (0.07 )   $ (0.04 )   $ (0.21 )
                                 
Weighted average number of common shares outstanding:                                
  Basic     32,504       32,366       32,416       32,407  
  Diluted     32,738       32,366       32,416       32,407  
                                 
                                 
   
AXT, INC.  
CONDENSED CONSOLIDATED BALANCE SHEETS  
(Unaudited, in thousands)  
             
    September 30,     December 31,  
    2014     2013  
Assets:                
Current assets                
  Cash and cash equivalents   $ 25,793     $ 24,961  
  Short-term investments     15,366       12,499  
  Accounts receivable, net     21,079       14,943  
  Inventories     36,648       39,127  
  Related party notes receivable - current     0       0  
  Prepaid expenses and other current assets     5,914       8,010  
    Total current assets     104,800       99,540  
                 
Long-term investments     7,332       10,145  
Property, plant and equipment, net     34,663       37,621  
Related party notes receivable - long-term     1,874       1,715  
Other assets     15,216       14,801  
                 
    Total assets   $ 163,885     $ 163,822  
                 
Liabilities and stockholders' equity:                
Current liabilities                
  Accounts payable   $ 9,480     $ 8,140  
  Accrued liabilities     6,790       7,286  
    Total current liabilities     16,270       15,426  
                 
Long-term portion of royalty payments     1,925       2,525  
Other long-term liabilities     323       325  
    Total liabilities     18,518       18,276  
                 
Stockholders' equity:                
  Preferred stock     3,532       3,532  
  Common stock     32       32  
  Additional paid-in capital     195,151       194,156  
  Accumulated deficit     (68,082 )     (67,005 )
  Accumulated other comprehensive income     8,333       8,953  
    Total AXT, Inc. stockholders' equity     138,966       139,668  
                 
  Noncontrolling interest     6,401       5,878  
    Total stockholders' equity     145,367       145,546  
                 
    Total liabilities and stockholders' equity   $ 163,885     $ 163,822  
                 
                 

Contact Information

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

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