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AXT, Inc. Announces Second Quarter 2018 Financial Results

1226 Days ago

FREMONT, Calif., July 25, 2018 (GLOBE NEWSWIRE) -- AXT, Inc. (Nasdaq:AXTI), a leading manufacturer of compound semiconductor substrates, today reported financial results for the second quarter, ended June 30, 2018.

Second Quarter 2018 Results

Revenue in the second quarter of 2018 was $27.1 million, compared with $24.4 million in the first quarter of 2018 and $23.6 million in the second quarter of 2017.    

Gross margin was 40.6 percent of revenue in the second quarter of 2018, compared with 39.2 percent of revenue in the first quarter of 2018 and 30.8 percent in the second quarter of 2017.

Operating expenses were $6.5 million in the second quarter of 2018, compared with $5.6 million in the first quarter of 2018 and $5.0 million in the second quarter of 2017. 

Operating profit in the second quarter of 2018 was $4.5 million, compared with operating profit of $3.9 million in the first quarter of 2018 and $2.3 million in the second quarter of 2017.  

Interest and other, net was a gain of $0.4 million in the second quarter of 2018, compared with a loss of $0.4 million in the first quarter of 2018, and a loss of $0.2 million in the second quarter of 2017.  Interest and other, net for the second quarter of 2018 included interest income and other of $0.2 million, a foreign exchange loss of $0.1 million and a net gain of $0.3 million from the seven partially owned companies in the company’s supply chain, accounted for under the equity method.

Income tax expense in the second quarter of 2018 was $0.4 million, compared with $0.3 million in the first quarter of 2018 and $0.3 million in the second quarter of 2017.

Net income in the second quarter of 2018 was $3.9 million, or $0.10 per diluted share, compared with a net income of $2.9 million or $0.07 per diluted share in the first quarter of 2018, and $1.9 million or $0.05 per diluted share in the second quarter of 2017.

Management Qualitative Comments

“Our financial results for Q2 reflect solid demand in each of our primary product categories,” said Morris Young, chief executive officer.  “Broadly, the demand environment for our wafers remains strong, and we continue to focus on producing high-quality products that meet rigorous application requirements, as well as achieving greater efficiency in our manufacturing process.  We have also seen an uptick in the price of raw materials, and this has enabled a financial improvement in some of the raw material companies in which we have partial ownership.  We are making good progress in the relocation of our gallium arsenide manufacturing line and are encouraged by our success to date.”

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 2293858). The call will also be simulcast on the Internet at www.axt.com. Replays will be available at (855) 859-2056 (passcode 2293858) until July 31, 2018. 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.   AXT’s worldwide headquarters are in Fremont, California where the company maintains its sales, administration and customer service functions.  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) process technology 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, as part of its supply chain strategy, has partial ownership in ten companies 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, our relocation 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: the timing and receipt of significant orders; the cancellation of orders and return of product; emerging applications using chips or devices fabricated on our substrates; end-user acceptance of products containing chips or devices fabricated on our substrates; the ability of the Company to bring new products to market; product announcements by our competitors; the ability to control costs and improve efficiency; the ability to utilize our manufacturing capacity; product yields and their impact on gross margins; the relocation of manufacturing lines; possible factory shutdowns as a result of air pollution in China; policies and regulations in China 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.


(Unaudited, in thousands, except per share data)

    Three Months Ended   Six Months Ended  
    June 30,    June 30,   
    2018   2017   2018   2017  
Revenue   $ 27,120     $ 23,557     $ 51,539     $ 44,173    
Cost of revenue     16,110       16,301       30,956       30,629    
Gross profit     11,010       7,256       20,583       13,544    
Operating expenses:                          
Selling, general and administrative     4,987       3,942       9,209       7,735    
Research and development     1,500       1,019       2,920       2,143    
Total operating expenses     6,487       4,961       12,129       9,878    
Income from operations     4,523       2,295       8,454       3,666    
Interest income, net     139       114       281       212    
Equity in earnings (loss) of unconsolidated joint ventures     307       (188 )     (27 )     (1,121 )  
Other expense, net     (51 )     (102 )     (266 )     (54 )  
Income before provision for income taxes     4,918       2,119       8,442       2,703    
Provision for income taxes     367       321       701       480    
Net income     4,551       1,798       7,741       2,223    
Less: Net (income) loss attributable to noncontrolling interests     (650 )     132       (965 )     372    
Net income attributable to AXT, Inc.   $ 3,901     $ 1,930     $ 6,776     $ 2,595    
Net income attributable to AXT, Inc. per common share:                          
Basic   $ 0.10     $ 0.05     $ 0.17     $ 0.07    
Diluted   $ 0.10     $ 0.05     $ 0.17     $ 0.07    
Weighted-average number of common shares outstanding:                          
Basic     39,001       38,306       38,970       36,238    
Diluted     40,216       39,706       40,289       37,645    

(Unaudited, in thousands)

    June 30,   December 31,   
Current assets:              
Cash and cash equivalents   $ 29,698     $ 44,352    
Short-term investments     18,802       20,032    
Accounts receivable, net     22,434       22,778    
Inventories     57,038       45,840    
Prepaid expenses and other current assets     9,416       7,519    
Total current assets     137,388       140,521    
Long-term investments     5,714       12,576    
Property, plant and equipment, net     65,174       46,530    
Other assets     11,323       11,573    
Total assets   $ 219,599     $ 211,200    
Current liabilities:              
Accounts payable   $ 14,059     $ 11,445    
Accrued liabilities     11,711       11,149    
Total current liabilities     25,770       22,594    
Other long-term liabilities     296       289    
Total liabilities     26,066       22,883    
Stockholders’ equity:              
Preferred stock     3,532       3,532    
Common stock     39       39    
Additional paid-in capital     232,984       231,679    
Accumulated deficit     (48,061 )     (54,837 )  
Accumulated other comprehensive income     1,172       3,407    
Total AXT, Inc. stockholders’ equity     189,666       183,820    
Noncontrolling interests     3,867       4,497    
Total stockholders’ equity     193,533       188,317    
Total liabilities and stockholders’ equity   $ 219,599     $ 211,200    

Gary Fischer
Chief Financial Officer
(510) 683-5900

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

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