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AXT, Inc. Announces Third Quarter 2019 Financial Results

815 Days ago

FREMONT, Calif., Oct. 30, 2019 (GLOBE NEWSWIRE) -- AXT, Inc. (NasdaqGS: AXTI), a leading material science company manufacturing single crystal compound semiconductor substrates, today reported financial results for the third quarter ended September 30, 2019.

Third Quarter 2019 Results

Revenue for the third quarter of 2019 was $19.8 million, compared with $24.8 million in the second quarter of 2019 and $28.6 million for the third quarter of 2018.

Gross margin was 29.0 percent of revenue for the third quarter of 2019, compared with 34.3 percent of revenue in the second quarter of 2019 and 37.1 percent for the third quarter of 2018.

Operating expenses were $6.2 million in the third quarter of 2019, compared with $6.2 million in the second quarter of 2019 and $6.3 million for the third quarter of 2018.

Income/loss from operations for the third quarter of 2019 was a loss of $0.5 million, compared with an operating profit of $2.3 million in the second quarter of 2019 and an operating profit of $4.3 million for the third quarter of 2018.  

Interest income, net for the third quarter of 2019 included interest income of $41,000, a net loss of $0.2 million from the partially owned companies in AXT’s supply chain accounted for under the equity method and a foreign exchange gain and other income totaling $0.2 million. 

Income tax expense in the third quarter of 2019 was $23,000, compared with income tax expense of $0.6 million in the second quarter of 2019 and income tax expense of $0.4 million for the third quarter of 2018.

Net loss in the third quarter of 2019 was $0.9 million, or $0.02 per basic share, compared with a net income of $1.5 million or $0.04 per diluted share in the second quarter of 2019 and net income of $3.9 million or $0.10 per diluted share for the third quarter of 2018.

Management Qualitative Comments

“Q3 was a difficult quarter in a challenging market environment,” said Morris Young, chief executive officer. “But despite the near-term market softness, we are confident that the underlying technology trends fueling the applications that drive our success are intact. In the meantime, we are taking the opportunity to effectively execute our relocation, and are pleased to have met significant milestones with permitting and volume-production readiness. These will allow us to support the expected customer volume ramp over the coming quarters, as well as new business opportunities when the demand environment strengthens.”

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 5191303). The call will also be simulcast on the Internet at www.axt.com. Replays will be available at (855) 859-2056 (passcode 5191303) until November 5, 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   Nine Months Ended  
    September 30,   September 30,  
    2019     2018     2019     2018    
Revenue   $  19,841     $  28,626     $  64,846     $  80,165    
Cost of revenue      14,082        18,012        43,886        48,968    
Gross profit      5,759        10,614        20,960        31,197    
Operating expenses:                          
Selling, general and administrative      4,755        4,615        14,247        13,824    
Research and development      1,482        1,668        4,227        4,588    
Total operating expenses      6,237        6,283        18,474        18,412    
Income (loss) from operations      (478 )      4,331        2,486        12,785    
Interest income, net      41        133        215        414    
Equity in income (loss) of unconsolidated joint ventures      (204 )      6        (1,650 )      (21 )  
Other income (expense), net      169        87        (55 )      (179 )  
Income (loss) before provision for income taxes      (472 )      4,557        996        12,999    
Provision for income taxes      23        410        776        1,111    
Net income (loss)      (495 )      4,147        220        11,888    
Less: Net income attributable to noncontrolling interests      (403 )      (208 )      (771 )      (1,173 )  
Net income (loss) attributable to AXT, Inc.   $  (898 )   $  3,939     $  (551 )   $  10,715    
Net income (loss) attributable to AXT, Inc. per common
   Basic   $  (0.02 )   $  0.10     $  (0.02 )   $  0.27    
   Diluted   $  (0.02 )   $  0.10     $  (0.02 )   $  0.26    
Weighted-average number of common shares outstanding:                          
   Basic      39,466        39,008        39,438        39,000    
   Diluted      39,466        40,331        39,438        40,320    


(Unaudited, in thousands)

    September 30,   December 31,   
    2019     2018    
Current assets:              
Cash and cash equivalents   $  27,837     $  16,526    
Short-term investments      6,116        22,129    
Accounts receivable, net      17,450        19,586    
Inventories      49,071        58,571    
Prepaid expenses and other current assets      8,249        11,728    
Total current assets      108,723        128,540    
Long-term investments      4,519        717    
Property, plant and equipment, net      89,680        82,280    
Operating lease right-of-use assets      2,981        —    
Other assets      11,807        11,987    
Total assets   $  217,710     $  223,524    
Current liabilities:              
Accounts payable   $  8,147     $  13,338    
Accrued liabilities      9,432        15,371    
Bank loan      5,609        —    
Total current liabilities      23,188        28,709    
Noncurrent operating lease liabilities      2,744        —    
Other long-term liabilities      324        283    
Total liabilities      26,256        28,992    
Stockholders’ equity:              
Preferred stock      3,532        3,532    
Common stock      40        40    
Additional paid-in capital      236,320        234,418    
Accumulated deficit      (45,734 )      (45,183 )  
Accumulated other comprehensive loss      (7,240 )      (1,972 )  
Total AXT, Inc. stockholders’ equity      186,918        190,835    
Noncontrolling interests      4,536        3,697    
Total stockholders’ equity      191,454        194,532    
Total liabilities and stockholders’ equity   $  217,710     $  223,524    

  Gary Fischer
  Chief Financial Officer
  (510) 438-4700
  Leslie Green
  Green Communications Consulting, LLC
  (650) 312-9060

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