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FREMONT, Calif., July 24, 2019 (GLOBE NEWSWIRE) -- AXT, Inc. (NasdaqGS: AXTI), a leading material science company manufacturing single crystal compound semiconductor substrates, today reported financial results for the second quarter ended June 30, 2019.
Second Quarter 2019 Results
Revenue for the second quarter of 2019 was $24.8 million, compared with $20.2 million in the first quarter of 2019 and $27.1 million for the second quarter of 2018.
Gross margin was 34.3 percent of revenue for the second quarter of 2019, compared with 33.1 percent of revenue in the first quarter of 2019 and 40.6 percent for the second quarter of 2018.
Operating expenses were $6.2 million in the second quarter of 2019, compared with $6.1 million in the first quarter of 2019 and $6.5 million for the second quarter of 2018.
Income from operations for the second quarter of 2019 was $2.3 million, compared with an operating profit of $0.6 million in the first quarter of 2019 and an operating profit of $4.5 million for the second quarter of 2018.
Interest income and other, net was a loss of $3,000 for the second quarter of 2019, compared with a loss of $1.5 million in the first quarter of 2019 and a gain of $0.4 million for the second quarter of 2018. Interest income and other, net for the second quarter of 2019 included interest income of $0.1 million, a foreign exchange loss and other expenses totaling $0.1 million and a net gain of $8,000 from the partially owned companies in AXT’s supply chain, accounted for under the equity method.
Income tax expense in the second quarter of 2019 was $0.6 million, compared with income tax expense of $0.2 million in the first quarter of 2019 and income tax expense of $0.4 million for the second quarter of 2018.
Net income in the second quarter of 2019 was $1.5 million, or $0.04 per diluted share, compared with a net loss of $1.1 million or $0.03 per share in the first quarter of 2019 and net income of $3.9 million or $0.10 per diluted share for the second quarter of 2018.
Management Qualitative Comments
“Amidst a backdrop of turbulent geopolitical and global economic conditions, AXT posted a solid quarter,” said Morris Young, chief executive officer. "Revenue came in just ahead of our expectations and our indium phosphide sales achieved an all-time high. In addition, we reduced our inventory, increased our cash and improved our gross margin. We are continuing to execute on the relocation of our facility and believe that we are laying a solid foundation for the significant technology trends that are likely to drive growth in our business over time."
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 9726809). The call will also be simulcast on the Internet at www.axt.com. Replays will be available at (855) 859-2056 (passcode 9726809) until July 30, 2019. 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 and financial results. 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; our ability 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; tariffs and other trade war issues; the financial performance of our partially owned supply chain companies; 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.
FINANCIAL TABLES TO FOLLOW
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share data)
|Three Months Ended||Six Months Ended|
|June 30,||June 30,|
|Cost of revenue||16,291||16,110||29,804||30,956|
|Selling, general and administrative||4,769||4,987||9,492||9,209|
|Research and development||1,399||1,500||2,745||2,920|
|Total operating expenses||6,168||6,487||12,237||12,129|
|Income from operations||2,338||4,523||2,964||8,454|
|Interest income, net||79||139||174||281|
|Equity in income (loss) of unconsolidated joint ventures||8||307||(1,446||)||(27||)|
|Other (expense), net||(90||)||(51||)||(224||)||(266||)|
|Income (loss) before provision for income taxes||2,335||4,918||1,468||8,442|
|Provision for income taxes||597||367||753||701|
|Net income (loss)||1,738||4,551||715||7,741|
|Less: Net income attributable to noncontrolling interests||(287||)||(650||)||(368||)||(965||)|
|Net income (loss) attributable to AXT, Inc.||$||1,451||$||3,901||$||347||$||6,776|
|Net income (loss) attributable to AXT, Inc. per common share:|
|Weighted-average number of common shares outstanding:|
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
|June 30,||December 31,|
|Cash and cash equivalents||$||28,732||$||16,526|
|Accounts receivable, net||18,275||19,586|
|Prepaid expenses and other current assets||6,853||11,728|
|Total current assets||111,703||128,540|
|Property, plant and equipment, net||87,613||82,280|
|Operating lease right-of-use assets||986||—|
|LIABILITIES AND STOCKHOLDERS’ EQUITY|
|Total current liabilities||16,949||28,709|
|Noncurrent operating lease liabilities||895||—|
|Other long-term liabilities||391||283|
|Additional paid-in capital||235,702||234,418|
|Accumulated other comprehensive loss||(3,130||)||(1,972||)|
|Total AXT, Inc. stockholders’ equity||191,308||190,835|
|Total stockholders’ equity||195,655||194,532|
|Total liabilities and stockholders’ equity||$||213,890||$||223,524|
Chief Financial Officer
Green Communications Consulting, LLC