AXT, Inc. Announces First Quarter 2017 Financial Results

Print
| Source: AXT, Inc.

FREMONT, Calif., April 26, 2017 (GLOBE NEWSWIRE) -- AXT, Inc. (Nasdaq:AXTI), a leading manufacturer of compound semiconductor substrates, today reported financial results for the first quarter, ended March 31, 2017.

First Quarter 2017 Results

Revenue for the first quarter of 2017 was $20.6 million, compared with $20.3 million in the fourth quarter of 2016.

Gross margin was 30.5 percent of revenue for the first quarter of 2017, compared with 37.1 percent of revenue in the fourth quarter of 2016.  This decline was largely the result of product mix, foreign exchange and recovery efforts from the short circuit electrical fire in March of 2017.

Operating expenses were $4.9 million in the first quarter of 2017, compared with $5.2 million in the fourth quarter of 2016. 

Operating profit for the first quarter of 2017 was $1.4 million compared with operating profit of $2.3 million in the fourth quarter of 2016. 

Interest and other, net for the first quarter of 2017 was a loss of $0.8 million, compared with a loss of $0.3 million in the fourth quarter of 2016.

Net profit in the first quarter of 2017 was $0.7 million, or $0.02 per diluted share, compared with a net profit of $2.2 million or $0.06 per diluted share in the fourth quarter of 2016.

Management Qualitative Comments

“Q1 was a busy and productive quarter,” said Morris Young, chief executive officer. “We are seeing encouraging progress in the adoption of several emerging technologies and are continuing to invest in our product development, production capacity, and customer engagement and support capabilities in order to position ourselves for coming business opportunities. In addition, we recently completed a successful secondary offering, helping to ensure that AXT is well capitalized for both business expansion and the future relocation of our gallium arsenide production line. And finally, we experienced, and then quickly and effectively recovered from, a short-circuit electrical fire at our Beijing facility. I am proud of the way our team pulled together with a shared sense of purpose to support all of our key stakeholders, including our customers, investors, and fellow employees. 2017 will likely be an important year for AXT, and I believe we are taking the correct steps to ready our business for our next phase of growth.” 

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 (844) 892-6598 (passcode 95615587). The call will also be simulcast on the Internet at www.axt.com. Replays will be available at (855) 859-2056 (passcode 95615587) until May 2, 2017. 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 indium phosphide (InP), gallium arsenide (GaAs) 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 applications. 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 
  March 31, 
  2017  2016  
      
Revenue $20,616  $18,713  
Cost of revenue  14,328   13,460  
Gross profit  6,288   5,253  
Operating expenses:       
Selling, general, and administrative  3,793   3,374  
Research and development  1,124   1,381  
Total operating expenses  4,917   4,755  
Income from operations  1,371   498  
Interest income, net  98   98  
Equity in loss of unconsolidated joint ventures  (933)  (456) 
Other income, net  48   190  
Income before provision for income taxes  584   330  
Provision for income taxes  159   397  
Net income (loss)  425   (67) 
Less: Net loss attributable to noncontrolling interests  240   109  
Net income attributable to AXT, Inc. $665  $42  
Net income (loss) attributable to AXT, Inc. per common share:       
Basic $0.02  $(0.00)*
Diluted $0.02  $(0.00)*
Weighted average number of common shares outstanding:       
Basic  34,210   32,002  
Diluted  35,624   32,002  
          

__________________________

* Net loss to AXT, Inc. per common share resulted due to the accrual of preferred dividend liquidation preference during the three months ended March 31, 2016

 
AXT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
     
  March 31,  December 31, 
  2017   2016  
     
ASSETS      
Current assets:      
Cash and cash equivalents $56,512  $36,152 
Short-term investments  20,483   11,415 
Accounts receivable, net  17,649   14,453 
Inventories  39,195   40,152 
Related party notes receivable – current  159    
Prepaid expenses and other current assets  4,663   5,114 
Total current assets  138,661   107,286 
Long-term investments  9,762   6,156 
Property, plant and equipment, net  27,141   27,805 
Related party notes receivable – long-term     157 
Other assets  11,853   12,842 
Total assets $187,417  $154,246 
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current liabilities:      
Accounts payable $8,159  $6,691 
Accrued liabilities  7,906   9,260 
Total current liabilities  16,065   15,951 
Long-term portion of royalty payments  431   575 
Other long-term liabilities  232   330 
Total liabilities  16,728   16,856 
Stockholders’ equity:      
Preferred stock  3,532   3,532 
Common stock  38   33 
Additional paid-in-capital  227,159   194,177 
Accumulated deficit  (64,320)  (64,985)
Accumulated other comprehensive income  550   253 
Total AXT, Inc. stockholders’ equity  166,959   133,010 
Noncontrolling interests  3,730   4,380 
Total stockholders’ equity  170,689   137,390 
Total liabilities and stockholders’ equity $187,417  $154,246 
         


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