AXT, Inc. Announces Second Quarter 2017 Financial Results
July 26 2017 - 4:10PM
AXT, Inc. (Nasdaq:AXTI), a leading manufacturer of compound
semiconductor substrates, today reported financial results for the
second quarter, ended June 30, 2017.
Second Quarter 2017 Results
Revenue for the second quarter of 2017 was $23.6
million, compared with $20.6 million in the first quarter of
2017.
Gross margin was 30.8 percent of revenue for the
second quarter of 2017, compared with 30.5 percent of revenue in
the first quarter of 2017. Second quarter substrate gross
margin was higher than the total company gross margin and was
offset by lower gross margin on raw materials.
Operating expenses were $5.0 million in the
second quarter of 2017, compared with $4.9 million in the first
quarter of 2017.
Operating profit was $2.3 million for the second
quarter of 2017, compared with $1.4 million in the first quarter of
2017.
Interest and other, net was a loss of $0.2 million for the
second quarter of 2017, compared with a loss of $0.8 million in the
first quarter of 2017. Tax expense in the second quarter of
2017 was $0.3 million compared to $0.2 million in the first quarter
of 2017.
Net profit was $1.9 million, or $0.05 per
diluted share, in the second quarter of 2017 compared with a net
profit of $0.7 million, or $0.02 per diluted share, in the first
quarter of 2017.
Management Qualitative
Comments
“2017 is shaping up to be a solid year of growth for AXT,” said
Morris Young, chief executive officer. “Across our
portfolio, we are seeing emerging technologies and strengthening
demand from established applications that are driving growth in
each of our substrate product categories. As a result, we achieved
record revenue in indium phosphide substrates in Q2, and posted
solid improvement in semi-insulating gallium arsenide,
semi-conducting gallium arsenide, and germanium substrates. Our
customer and revenue base continues to diversify, giving us a
broad-based opportunity for continued business
expansion.”
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 50482889). The call will also be simulcast on
the Internet at www.axt.com. Replays will be available at (855)
859-2056 (passcode 50482889) until August 1, 2017. 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 growth prospects and opportunities for continued
business expansion, 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, |
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
23,557 |
|
|
$ |
20,495 |
|
|
$ |
44,173 |
|
|
$ |
39,208 |
|
|
Cost of revenue |
|
|
16,301 |
|
|
|
14,468 |
|
|
|
30,629 |
|
|
|
27,928 |
|
|
Gross profit |
|
|
7,256 |
|
|
|
6,027 |
|
|
|
13,544 |
|
|
|
11,280 |
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
general and administrative |
|
|
3,942 |
|
|
|
3,419 |
|
|
|
7,735 |
|
|
|
6,793 |
|
|
Research
and development |
|
|
1,019 |
|
|
|
1,472 |
|
|
|
2,143 |
|
|
|
2,853 |
|
|
Restructuring charge |
|
|
— |
|
|
|
226 |
|
|
|
— |
|
|
|
226 |
|
|
Total
operating expenses |
|
|
4,961 |
|
|
|
5,117 |
|
|
|
9,878 |
|
|
|
9,872 |
|
|
Income from
operations |
|
|
2,295 |
|
|
|
910 |
|
|
|
3,666 |
|
|
|
1,408 |
|
|
Interest income,
net |
|
|
114 |
|
|
|
100 |
|
|
|
212 |
|
|
|
198 |
|
|
Equity in loss of
unconsolidated joint ventures |
|
|
(188 |
) |
|
|
(400 |
) |
|
|
(1,121 |
) |
|
|
(856 |
) |
|
Other (expense) income,
net |
|
|
(102 |
) |
|
|
328 |
|
|
|
(54 |
) |
|
|
518 |
|
|
Income before provision
for income taxes |
|
|
2,119 |
|
|
|
938 |
|
|
|
2,703 |
|
|
|
1,268 |
|
|
Provision for income
taxes |
|
|
321 |
|
|
|
140 |
|
|
|
480 |
|
|
|
537 |
|
|
Net income |
|
|
1,798 |
|
|
|
798 |
|
|
|
2,223 |
|
|
|
731 |
|
|
Less: Net
loss attributable to noncontrolling interests |
|
|
132 |
|
|
|
353 |
|
|
|
372 |
|
|
|
462 |
|
|
Net income attributable
to AXT, Inc. |
|
$ |
1,930 |
|
|
$ |
1,151 |
|
|
$ |
2,595 |
|
|
$ |
1,193 |
|
|
Net income attributable
to AXT, Inc. per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.05 |
|
|
$ |
0.03 |
|
|
$ |
0.07 |
|
|
$ |
0.03 |
|
|
Diluted |
|
$ |
0.05 |
|
|
$ |
0.03 |
|
|
$ |
0.07 |
|
|
$ |
0.03 |
|
|
Weighted average number
of common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
38,306 |
|
|
|
32,020 |
|
|
|
36,238 |
|
|
|
32,011 |
|
|
Diluted |
|
|
39,706 |
|
|
|
32,451 |
|
|
|
37,645 |
|
|
|
32,354 |
|
|
AXT, INC. |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(Unaudited, in thousands) |
|
|
|
June 30, |
|
December 31, |
|
|
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
56,483 |
|
|
$ |
36,152 |
|
|
Short-term investments |
|
|
22,463 |
|
|
|
11,415 |
|
|
Accounts
receivable, net |
|
|
18,262 |
|
|
|
14,453 |
|
|
Inventories |
|
|
40,627 |
|
|
|
40,152 |
|
|
Related
party notes receivable – current |
|
|
109 |
|
|
|
— |
|
|
Prepaid
expenses and other current assets |
|
|
5,301 |
|
|
|
5,114 |
|
|
Total
current assets |
|
|
143,245 |
|
|
|
107,286 |
|
|
Long-term
investments |
|
|
8,578 |
|
|
|
6,156 |
|
|
Property, plant and
equipment, net |
|
|
27,945 |
|
|
|
27,805 |
|
|
Related party notes
receivable – long-term |
|
|
— |
|
|
|
157 |
|
|
Other assets |
|
|
12,004 |
|
|
|
12,842 |
|
|
Total
assets |
|
$ |
191,772 |
|
|
$ |
154,246 |
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
8,189 |
|
|
$ |
6,691 |
|
|
Accrued
liabilities |
|
|
9,363 |
|
|
|
9,260 |
|
|
Total
current liabilities |
|
|
17,552 |
|
|
|
15,951 |
|
|
Long-term portion of
royalty payments |
|
|
287 |
|
|
|
575 |
|
|
Other long-term
liabilities |
|
|
220 |
|
|
|
330 |
|
|
Total
liabilities |
|
|
18,059 |
|
|
|
16,856 |
|
|
Stockholders’
equity: |
|
|
|
|
|
|
|
Preferred
stock |
|
|
3,532 |
|
|
|
3,532 |
|
|
Common
stock |
|
|
39 |
|
|
|
33 |
|
|
Additional paid-in-capital |
|
|
227,539 |
|
|
|
194,177 |
|
|
Accumulated deficit |
|
|
(62,390 |
) |
|
|
(64,985 |
) |
|
Accumulated other comprehensive income |
|
|
1,293 |
|
|
|
253 |
|
|
Total
AXT, Inc. stockholders’ equity |
|
|
170,013 |
|
|
|
133,010 |
|
|
Noncontrolling interests |
|
|
3,700 |
|
|
|
4,380 |
|
|
Total
stockholders’ equity |
|
|
173,713 |
|
|
|
137,390 |
|
|
Total
liabilities and stockholders’ equity |
|
$ |
191,772 |
|
|
$ |
154,246 |
|
|
Contact:
Gary Fischer
Chief Financial Officer
(510) 438-4700
AXT (NASDAQ:AXTI)
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