AXT, Inc. Announces Second Quarter 2016 Financial Results
July 27 2016 - 4:10PM
AXT, Inc. (Nasdaq:AXTI), a leading manufacturer of compound
semiconductor substrates, today reported financial results for the
second quarter, ended June 30, 2016.
Second Quarter 2016 Results
Revenue for the second quarter of 2016 was $20.5
million, compared with $18.7 million in the first quarter of
2016.
Gross margin was 29.4 percent of revenue for the
second quarter of 2016, compared with 28.1 percent of revenue in
the first quarter of 2016.
Operating expenses were $5.1 million in the
second quarter of 2016, compared with $4.8 million in the first
quarter of 2016. The increase in operating expenses was
primarily the result of a onetime restructuring charge of $226,000
related to a reduction in force at one of the Company’s
consolidated subsidiaries.
Operating profit for the second quarter of 2016
was $0.9 million compared with operating profit of $0.5 million in
the first quarter of 2016.
Net interest and other income for the second quarter of 2016 was
$0.0 million, compared with a loss of $0.2 million in the first
quarter of 2016.
Net profit in the second quarter of 2016 was
$1.2 million, or $0.03 per diluted share, compared with a net
profit of $42,000 or a gain of $0.00 per diluted share in the first
quarter of 2016.
Management Qualitative
Comments
“We continued to show meaningful progress in our
business, achieving revenue at the high end of our guidance range,
and exceeding our profitability expectations. In addition, we
further expanded the gross margin to 29.4% through yield
improvements, manufacturing efficiency, and higher production
volume. We also generated positive cash flow. Cash, cash
equivalents and investments increased by $1.6 million. AXT remains
focused on maximizing opportunities in strategic emerging areas,
such as indium phosphide substrates, where we are solidly
positioned with the expertise, technology and manufacturing
capability to support further growth.”
Conference CallThe company will
host a conference call to discuss these results today at 1:30 p.m.
PT. The conference call can be accessed at (719) 325-2463 (passcode
2438457). The call will also be simulcast on the Internet at
www.axt.com. Replays will be available at (719) 457-0820 (passcode
2438457) until August 2, 2016. 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 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, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
|
20,495 |
|
|
$ |
|
21,010 |
|
|
$ |
|
39,208 |
|
|
$ |
|
41,074 |
|
Cost of
revenue |
|
|
|
14,468 |
|
|
|
|
16,625 |
|
|
|
|
27,928 |
|
|
|
|
31,940 |
|
Gross
profit |
|
|
|
6,027 |
|
|
|
|
4,385 |
|
|
|
|
11,280 |
|
|
|
|
9,134 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general, and
administrative |
|
|
|
3,419 |
|
|
|
|
3,775 |
|
|
|
|
6,793 |
|
|
|
|
9,026 |
|
Research and development |
|
|
|
1,472 |
|
|
|
|
1,389 |
|
|
|
|
2,853 |
|
|
|
|
2,630 |
|
Restructuring charge |
|
|
|
226 |
|
|
|
— |
|
|
|
|
226 |
|
|
|
— |
|
Total operating expenses |
|
|
|
5,117 |
|
|
|
|
5,164 |
|
|
|
|
9,872 |
|
|
|
|
11,656 |
|
Income
(loss) from operations |
|
|
|
910 |
|
|
|
|
(779 |
) |
|
|
|
1,408 |
|
|
|
|
(2,522 |
) |
Interest
income, net |
|
|
|
100 |
|
|
|
|
108 |
|
|
|
|
198 |
|
|
|
|
205 |
|
Equity
in (loss) earnings of unconsolidated joint ventures |
|
|
|
(400 |
) |
|
|
|
410 |
|
|
|
|
(856 |
) |
|
|
|
610 |
|
Other
income, net |
|
|
|
328 |
|
|
|
|
626 |
|
|
|
|
518 |
|
|
|
|
1,259 |
|
Income
(loss) before provision for income taxes |
|
|
|
938 |
|
|
|
|
365 |
|
|
|
|
1,268 |
|
|
|
|
(448 |
) |
Provision for income taxes |
|
|
|
140 |
|
|
|
|
241 |
|
|
|
|
537 |
|
|
|
|
327 |
|
Net
income (loss) |
|
|
|
798 |
|
|
|
|
124 |
|
|
|
|
731 |
|
|
|
|
(775 |
) |
Less: Net (income) loss
attributable to noncontrolling interests |
|
|
|
353 |
|
|
|
|
(127 |
) |
|
|
|
462 |
|
|
|
|
(252 |
) |
Net
income (loss) attributable to AXT, Inc. |
|
$ |
|
1,151 |
|
|
$ |
|
(3 |
) |
|
$ |
|
1,193 |
|
|
$ |
|
(1,027 |
) |
Net
income (loss) attributable to AXT, Inc. per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
|
0.03 |
|
|
$ |
|
(0.00 |
) |
|
$ |
|
0.03 |
|
|
$ |
|
(0.03 |
) |
Diluted |
|
$ |
|
0.03 |
|
|
$ |
|
(0.00 |
) |
|
$ |
|
0.03 |
|
|
$ |
|
(0.03 |
) |
Weighted
average number of common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
32,020 |
|
|
|
|
32,242 |
|
|
|
|
32,011 |
|
|
|
|
32,399 |
|
Diluted |
|
|
|
32,451 |
|
|
|
|
32,242 |
|
|
|
|
32,354 |
|
|
|
|
32,399 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AXT, INC. |
|
CONDENSED CONSOLIDATED BALANCE
SHEETS |
|
(Unaudited, in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
|
|
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
|
26,115 |
|
|
$ |
|
24,875 |
|
|
|
Short-term investments |
|
|
|
10,460 |
|
|
|
|
11,437 |
|
|
|
Accounts receivable, net |
|
|
|
18,036 |
|
|
|
|
18,468 |
|
|
|
Inventories |
|
|
|
38,625 |
|
|
|
|
38,012 |
|
|
|
Related party notes receivable –
current |
|
|
— |
|
|
|
— |
|
|
|
Prepaid expenses and other current
assets |
|
|
|
5,101 |
|
|
|
|
4,096 |
|
|
|
Total current assets |
|
|
|
98,337 |
|
|
|
|
96,888 |
|
|
|
Long-term investments |
|
|
|
8,387 |
|
|
|
|
7,691 |
|
|
|
Property, plant and equipment, net |
|
|
|
30,178 |
|
|
|
|
31,422 |
|
|
|
Related
party notes receivable – long-term |
|
|
|
1,741 |
|
|
|
|
1,781 |
|
|
|
Other
assets |
|
|
|
12,787 |
|
|
|
|
14,114 |
|
|
|
Total assets |
|
$ |
|
151,430 |
|
|
$ |
|
151,896 |
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
|
7,848 |
|
|
$ |
|
6,460 |
|
|
|
Accrued liabilities |
|
|
|
5,371 |
|
|
|
|
6,381 |
|
|
|
Total current liabilities |
|
|
|
13,219 |
|
|
|
|
12,841 |
|
|
|
Long-term portion of royalty payments |
|
|
|
863 |
|
|
|
|
1,150 |
|
|
|
Other
long-term liabilities |
|
|
|
307 |
|
|
|
|
344 |
|
|
|
Total liabilities |
|
|
|
14,389 |
|
|
|
|
14,335 |
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
Preferred stock |
|
|
|
3,532 |
|
|
|
|
3,532 |
|
|
|
Common stock |
|
|
|
32 |
|
|
|
|
32 |
|
|
|
Additional paid-in-capital |
|
|
|
195,156 |
|
|
|
|
194,646 |
|
|
|
Accumulated deficit |
|
|
|
(69,428 |
) |
|
|
|
(70,621 |
) |
|
|
Accumulated other comprehensive
income |
|
|
|
2,844 |
|
|
|
|
4,382 |
|
|
|
Total AXT, Inc. stockholders’
equity |
|
|
|
132,136 |
|
|
|
|
131,971 |
|
|
|
Noncontrolling interests |
|
|
|
4,905 |
|
|
|
|
5,590 |
|
|
|
Total stockholders’ equity |
|
|
|
137,041 |
|
|
|
|
137,561 |
|
|
|
Total liabilities and stockholders’
equity |
|
$ |
|
151,430 |
|
|
$ |
|
151,896 |
|
|
|
|
|
|
|
|
|
|
|
|
Contacts:
Gary Fischer
Chief Financial Officer
(510) 438-4700
Leslie Green
Green Communications Consulting, LLC
(650) 312-9060
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