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AXT, Inc. Announces Second Quarter 2019 Financial Results

913 Days ago

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."

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 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.


(Unaudited, in thousands, except per share data)

    Three Months Ended   Six Months Ended  
    June 30,   June 30,  
    2019     2018     2019     2018    
Revenue   $ 24,797     $ 27,120     $ 45,005     $ 51,539    
Cost of revenue     16,291       16,110       29,804       30,956    
Gross profit     8,506       11,010       15,201       20,583    
Operating expenses:                          
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:                          
Basic   $ 0.04     $ 0.10     $ 0.01     $ 0.17    
Diluted   $ 0.04     $ 0.10     $ 0.01     $ 0.17    
Weighted-average number of common shares outstanding:                          
Basic     39,447       39,001       39,399       38,970    
Diluted     40,123       40,216       40,045       40,289    

(Unaudited, in thousands)

    June 30,   December 31, 
    2019     2018  
Current assets:            
Cash and cash equivalents   $ 28,732     $ 16,526  
Short-term investments     7,517       22,129  
Accounts receivable, net     18,275       19,586  
Inventories     50,326       58,571  
Prepaid expenses and other current assets     6,853       11,728  
Total current assets     111,703       128,540  
Long-term investments     1,260       717  
Property, plant and equipment, net     87,613       82,280  
Operating lease right-of-use assets     986        
Other assets     12,328       11,987  
Total assets   $ 213,890     $ 223,524  
Current liabilities:            
Accounts payable   $ 6,004     $ 13,338  
Accrued liabilities     10,945       15,371  
Total current liabilities     16,949       28,709  
Noncurrent operating lease liabilities     895        
Other long-term liabilities     391       283  
Total liabilities     18,235       28,992  
Stockholders’ equity:            
Preferred stock     3,532       3,532  
Common stock     40       40  
Additional paid-in capital     235,702       234,418  
Accumulated deficit     (44,836 )     (45,183 )
Accumulated other comprehensive loss     (3,130 )     (1,972 )
Total AXT, Inc. stockholders’ equity     191,308       190,835  
Noncontrolling interests     4,347       3,697  
Total stockholders’ equity     195,655       194,532  
Total liabilities and stockholders’ equity   $ 213,890     $ 223,524  

Gary Fischer
Chief Financial Officer
(510) 438-4700

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

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