SOURCE: AXT, Inc.

AXT, Inc.

October 29, 2015 16:10 ET

AXT, Inc. Announces Third Quarter 2015 Financial Results

FREMONT, CA--(Marketwired - Oct 29, 2015) - AXT, Inc. (NASDAQ: AXTI), a leading manufacturer of compound semiconductor substrates, today reported financial results for the third quarter ended September 30, 2015.

Third Quarter 2015 Results

Revenue for the third quarter of 2015 was $18.4 million compared with $21.0 million in the second quarter of 2015.

Gross margin was 25.1 percent of revenue for the third quarter of 2015, compared with 20.9 percent of revenue in the second quarter of 2015.

Operating expenses were $5.3 million in the third quarter of 2015, compared with $5.2 million in the second quarter of 2015. 

Operating loss for the third quarter of 2015 was $0.7 million compared with $0.8 million in the second quarter of 2015. 

Net interest and other income for the third quarter of 2015 was $0.8 million, compared with $1.1 million in the second quarter of 2015.

Net profit in the third quarter of 2015 was $42,000 compared with a net loss of $3,000 the second quarter of 2015.

Management Qualitative Comments

"Our business has continued to evolve as a direct reflection of the transformation in our industry," said Morris Young, chief executive officer. "We are seeing a growing shift within our revenue base towards indium phosphide, which has surpassed both semi-insulating gallium arsenide and semi-conducting gallium arsenide as the single largest segment of substrates in our sales composition. Its growth as a percentage of our revenues has had a favorable effect on our results. This was evident in Q3 as softness in other parts of our business caused us to fall short of our revenue guidance, but we outperformed our bottom line guidance to achieve break even profitability. We continue to actively invest in our future through focused R&D, technology M&A and the upgrade of our manufacturing infrastructure. We believe we are making the right investments to maximize our business opportunity and drive increased value for our shareholders."

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) 457-2083 (passcode 968071). The call will also be simulcast on the Internet at www.axt.com. Replays will be available at (719) 457-0820 (passcode 968071) until November 5, 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     Nine Months Ended  
    September 30,     September 30,  
    2015     2014     2015     2014  
                                 
Revenue   $ 18,371     $ 23,138     $ 59,445     $ 63,932  
Cost of revenue     13,766       17,820       45,706       51,736  
Gross profit     4,605       5,318       13,739       12,196  
                                 
Operating expenses:                                
  Selling, general and administrative     3,659       3,505       12,685       10,629  
  Research and development     1,657       1,160       4,287       2,922  
  Restructuring charge     --       --       --       907  
    Total operating expenses     5,316       4,665       16,972       14,458  
Income (loss) from operations     (711 )     653       (3,233 )     (2,262 )
Interest income, net     102       106       307       360  
Equity in earnings of unconsolidated joint ventures     167       390       777       1,502  
Other income (expense), net     496       (236 )     1,755       250  
                                 
Income (loss) before provision for income taxes     54       913       (394 )     (150 )
Provision for income taxes     7       43       334       254  
Net income (loss)     47       870       (728 )     (404 )
                                 
Less: Net income attributable to noncontrolling interest     (5 )     (226 )     (257 )     (673 )
Net income (loss) attributable to AXT, Inc.   $ 42     $ 644     $ (985 )   $ (1,077 )
                                 
Net income (loss) attributable to AXT, Inc. per common share:                                
  Basic   $ (0.00 )   $ 0.02     $ (0.03 )   $ (0.04 )
  Diluted   $ (0.00 )   $ 0.02     $ (0.03 )   $ (0.04 )
                                 
Weighted average number of common shares outstanding:                                
  Basic     31,988       32,504       32,262       32,416  
  Diluted     31,988       32,738       32,262       32,416  
                                   
                                   
 
AXT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
   
    September 30,     December 31,  
    2015     2014  
Assets:                
Current assets                
  Cash and cash equivalents   $ 26,185     $ 28,814  
  Short-term investments     8,551       12,340  
  Accounts receivable, net     17,110       17,864  
  Inventories     38,087       38,574  
  Related party notes receivable - current     --       171  
  Prepaid expenses and other current assets     3,619       5,430  
    Total current assets     93,552       103,193  
                 
Long-term investments     10,713       7,783  
Property, plant and equipment, net     32,346       33,862  
Related party notes receivable - long-term     1,813       1,704  
Other assets     14,721       14,975  
                 
    Total assets   $ 153,145     $ 161,517  
                 
Liabilities and stockholders' equity:                
Current liabilities                
  Accounts payable   $ 5,959     $ 7,137  
  Accrued liabilities     5,513       7,634  
    Total current liabilities     11,472       14,771  
                 
Long-term portion of royalty payments     1,294       1,725  
Other long-term liabilities     345       333  
    Total liabilities     13,111       16,829  
                 
Stockholders' equity:                
  Preferred stock     3,532       3,532  
  Common stock     32       32  
  Additional paid-in capital     194,381       195,419  
  Accumulated deficit     (69,378 )     (68,393 )
  Accumulated other comprehensive income     5,166       7,673  
    Total AXT, Inc. stockholders' equity     133,733       138,263  
                 
Noncontrolling interest     6,301       6,425  
    Total stockholders' equity     140,034       144,688  
                 
    Total liabilities and stockholders' equity   $ 153,145     $ 161,517  
                     
                     

Contact Information

  • Contacts:
    Gary Fischer
    Chief Financial Officer
    (510) 438-4700

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