AXT, Inc. Announces Second Quarter 2017 Financial Results

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| Source: AXT, Inc.

FREMONT, Calif., July 26, 2017 (GLOBE NEWSWIRE) -- AXT, Inc. (Nasdaq:AXTI), a leading manufacturer of compound semiconductor substrates, today reported financial results for the second quarter, ended June 30, 2017.

Second Quarter 2017 Results

Revenue for the second quarter of 2017 was $23.6 million, compared with $20.6 million in the first quarter of 2017.

Gross margin was 30.8 percent of revenue for the second quarter of 2017, compared with 30.5 percent of revenue in the first quarter of 2017.  Second quarter substrate gross margin was higher than the total company gross margin and was offset by lower gross margin on raw materials.

Operating expenses were $5.0 million in the second quarter of 2017, compared with $4.9 million in the first quarter of 2017. 

Operating profit was $2.3 million for the second quarter of 2017, compared with $1.4 million in the first quarter of 2017. 

Interest and other, net was a loss of $0.2 million for the second quarter of 2017, compared with a loss of $0.8 million in the first quarter of 2017.  Tax expense in the second quarter of 2017 was $0.3 million compared to $0.2 million in the first quarter of 2017.

Net profit was $1.9 million, or $0.05 per diluted share, in the second quarter of 2017 compared with a net profit of $0.7 million, or $0.02 per diluted share, in the first quarter of 2017.  

Management Qualitative Comments

“2017 is shaping up to be a solid year of growth for AXT,” said Morris Young, chief executive officer. “Across our portfolio, we are seeing emerging technologies and strengthening demand from established applications that are driving growth in each of our substrate product categories. As a result, we achieved record revenue in indium phosphide substrates in Q2, and posted solid improvement in semi-insulating gallium arsenide, semi-conducting gallium arsenide, and germanium substrates. Our customer and revenue base continues to diversify, giving us a broad-based opportunity for continued business expansion.” 

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 50482889). The call will also be simulcast on the Internet at www.axt.com. Replays will be available at (855) 859-2056 (passcode 50482889) until August 1, 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 growth prospects and opportunities for continued business expansion, 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,  
  2017
 2016
 2017
 2016
 
              
Revenue $23,557  $20,495  $44,173  $39,208  
Cost of revenue  16,301   14,468   30,629   27,928  
Gross profit  7,256   6,027   13,544   11,280  
Operating expenses:             
Selling, general and administrative  3,942   3,419   7,735   6,793  
Research and development  1,019   1,472   2,143   2,853  
Restructuring charge     226      226  
Total operating expenses  4,961   5,117   9,878   9,872  
Income from operations  2,295   910   3,666   1,408  
Interest income, net  114   100   212   198  
Equity in loss of unconsolidated joint ventures  (188)  (400)  (1,121)  (856) 
Other (expense) income, net  (102)  328   (54)  518  
Income before provision for income taxes  2,119   938   2,703   1,268  
Provision for income taxes  321   140   480   537  
Net income  1,798   798   2,223   731  
Less: Net loss attributable to noncontrolling interests  132   353   372   462  
Net income attributable to AXT, Inc. $1,930  $1,151  $2,595  $1,193  
Net income attributable to AXT, Inc. per common share:             
Basic $0.05  $0.03  $0.07  $0.03  
Diluted $0.05  $0.03  $0.07  $0.03  
Weighted average number of common shares outstanding:             
Basic  38,306   32,020   36,238   32,011  
Diluted  39,706   32,451   37,645   32,354  



AXT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
 
  June 30,  December 31,  
  2017  2016  
        
ASSETS       
Current assets:       
Cash and cash equivalents $ 56,483  $ 36,152  
Short-term investments   22,463    11,415  
Accounts receivable, net   18,262    14,453  
Inventories   40,627    40,152  
Related party notes receivable – current   109    —  
Prepaid expenses and other current assets   5,301    5,114  
Total current assets   143,245    107,286  
Long-term investments   8,578    6,156  
Property, plant and equipment, net   27,945    27,805  
Related party notes receivable – long-term   —    157  
Other assets   12,004    12,842  
Total assets $ 191,772  $ 154,246  
LIABILITIES AND STOCKHOLDERS’ EQUITY       
Current liabilities:       
Accounts payable $ 8,189  $ 6,691  
Accrued liabilities   9,363    9,260  
Total current liabilities   17,552    15,951  
Long-term portion of royalty payments   287    575  
Other long-term liabilities   220    330  
Total liabilities   18,059    16,856  
Stockholders’ equity:       
Preferred stock   3,532    3,532  
Common stock   39    33  
Additional paid-in-capital   227,539    194,177  
Accumulated deficit   (62,390)   (64,985) 
Accumulated other comprehensive income   1,293    253  
Total AXT, Inc. stockholders’ equity   170,013    133,010  
Noncontrolling interests   3,700    4,380  
Total stockholders’ equity   173,713    137,390  
Total liabilities and stockholders’ equity $ 191,772  $ 154,246  

 

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