AXT, Inc. (NASDAQ: AXTI), a leading manufacturer of compound
semiconductor substrates, today reported financial results for the
fourth quarter and fiscal year ended Dec. 31, 2009.
Fourth Quarter 2009 Results
Revenue for the fourth quarter of 2009 was $17.8 million,
compared with $16.8 million in the third quarter of 2009, and $15.6
million in the fourth quarter of 2008. Total gallium arsenide
(GaAs) substrate revenue was $12.6 million for the fourth quarter
of 2009, compared with $13.3 million in the third quarter of 2009,
and $9.1 million in the fourth quarter of 2008.
Indium phosphide (InP) substrate revenue was $513,000 for the
fourth quarter of 2009, compared with $688,000 in the third quarter
of 2009 and $473,000 in the fourth quarter of 2008. Germanium (Ge)
substrate revenue was $1.9 million for the fourth quarter of 2009
compared with $1.8 million in the third quarter of 2009 and
$684,000 in the fourth quarter of 2008. Raw materials sales were
$2.8 million for the fourth quarter of 2009 compared with $1.0
million in the third quarter of 2009 and $5.3 million in the fourth
quarter of 2008.
Gross margin was 33.9 percent of revenue for the fourth quarter
of 2009. This included a benefit from the net sale of approximately
$727,000 in fully reserved wafers, which positively affected the
quarterly gross margin by 4.1 percentage points. By comparison,
gross margin in the third quarter of 2009 was 32.9 percent. This
included a benefit from the net sales of approximately $94,000 in
fully reserved wafers, which positively affected third quarter
gross margin by 0.6 percentage points. Gross margin in the fourth
quarter of 2008 was 4.8 percent, including a benefit from the net
sale of approximately $663,000 in fully reserved wafers, which
positively affected the quarterly gross margins by 4.2 percentage
points.
Operating expenses were $3.0 million in the fourth quarter of
2009, compared with $3.7 million in the third quarter of 2009, and
$4.1 million in the fourth quarter of 2008.
Income from operations for the fourth quarter of 2009 was $3.1
million compared with income from operations of $1.9 million in the
third quarter of 2009. In the fourth quarter of 2008, the company
recorded a loss from operations of $3.4 million.
Net income in the fourth quarter of 2009 was $2.8 million or
$0.09 per diluted share, compared with net income of $2.1 million
or $0.07 per diluted share in the third quarter of 2009, and net
loss of $2.4 million, or a loss of $0.08 per diluted share in the
fourth quarter of 2008.
Fiscal Year 2009 Results
Revenue for fiscal year 2009 was $55.4 million, compared with
$73.1 million in fiscal year 2008. Gross margin for fiscal year
2009 was 25.1 percent of revenue compared with 24.6 percent of
revenue for fiscal year 2008.
Net loss for fiscal year 2009 was $1.9 million or a loss of
$0.07 per diluted share compared with net loss of $689,000 or a
loss of $0.03 per diluted share for fiscal year 2008.
Management Qualitative Comments
"The fourth quarter was another positive quarter for AXT," said
Morris Young, chief executive officer. "Our successful
restructuring efforts and ongoing manufacturing efficiency
improvements, coupled with stronger than expected raw materials
revenue, resulted in solid financial results that were ahead of our
expectations. Further, our qualifications with new and returning
customers continued to progress well as we have committed increased
funding to our engineering and customer support efforts. We are
also seeing positive long-term trends in each of our key markets
that are likely to support our growth in 2010 and beyond. AXT is
well-positioned to accommodate this increasing demand with minimal
capital requirements, and we believe that our unique structure will
further separate our capabilities from our competitors as all of
these markets develop."
Outlook for First Quarter, Ending March 31, 2010
AXT estimates that the positive demand environment for
substrates will offset normal seasonality resulting in revenue of
between $17.8 million and $18.5 million. The company estimates that
net income per diluted share will be between $0.04 and $0.07, which
takes into account its weighted average share count of
approximately 31.7 million shares.
Conference Call
The company will also host a conference call today to discuss
these results at 1:30 p.m. Pacific Time. The conference call can be
accessed at (719) 325-2223 (passcode 1457411). The call will also
be simulcast on the Internet at www.axt.com. Replays will be
available at (719) 457-0820 (passcode 1457411) until March 3, 2010.
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) 683-5900.
About AXT, Inc.
AXT designs, develops, manufactures and distributes
high-performance compound and single element semiconductor
substrates comprising gallium arsenide (GaAs), indium phosphide
(InP) 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. 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 five joint ventures 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
statements regarding our outlook for the first quarter of 2010, our
manufacturing efficiency improvements, our commitment to increased
funding for our engineering and customer support efforts, trends in
our key markets, our ability to accommodate demand for our
products, our capital requirements and our business structures.
These forward-looking statements are based upon specific
assumptions that are subject to uncertainties and factors relating
to the company's operations and business environment, which could
cause actual results of the company 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, market acceptance and demand for the company's
products; the impact of the factory closures or other delays by our
customers on the timing of sales of products; and other factors as
set forth in the company's annual report on Form 10-K 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 publicly 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 Twelve Months Ended
December 31, December 31,
---------------------- ----------------------
2009 2008 2009 2008
---------- ---------- ---------- ----------
Revenue $ 17,836 $ 15,646 $ 55,364 $ 73,075
Cost of revenue 11,784 14,888 41,495 55,115
---------- ---------- ---------- ----------
Gross profit 6,052 758 13,869 17,960
---------- ---------- ---------- ----------
Operating expenses:
Selling, general and
administrative 2,574 3,605 13,389 15,751
Research and development 394 529 1,569 2,164
Impairment on assets held
for sale - - - 83
Restructuring charge - - 507 -
---------- ---------- ---------- ----------
Total operating
expenses 2,968 4,134 15,465 17,998
---------- ---------- ---------- ----------
Income (loss) from
operations 3,084 (3,376) (1,596) (38)
Interest income, net 60 80 177 513
Other income (expense), net (152) 583 385 1,290
---------- ---------- ---------- ----------
Income (loss) before
provision for income taxes 2,992 (2,713) (1,034) 1,765
Provision (benefit) for
income taxes (42) (349) 471 1,023
---------- ---------- ---------- ----------
Net income (loss) 3,034 (2,364) (1,505) 742
Less: Net income (loss)
attributable to
noncontrolling interest (257) (7) (393) (1,431)
---------- ---------- ---------- ----------
Net income (loss)
attributable to AXT, Inc. $ 2,777 $ (2,371) $ (1,898) $ (689)
========== ========== ========== ==========
Net income (loss)
attributable to AXT, Inc.
per common share:
Basic $ 0.09 $ (0.08) $ (0.07) $ (0.03)
========== ========== ========== ==========
Diluted $ 0.09 $ (0.08) $ (0.07) $ (0.03)
========== ========== ========== ==========
Weighted average number of
common shares outstanding:
Basic 30,647 30,434 30,500 30,400
========== ========== ========== ==========
Diluted 31,322 30,434 30,500 30,400
========== ========== ========== ==========
AXT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
December 31, December 31,
2009 2008
------------ ------------
Assets:
Current assets
Cash and cash equivalents $ 16,934 $ 13,566
Short-term investments 18,469 17,756
Accounts receivable, net 15,362 11,497
Inventories, net 27,718 35,082
Prepaid expenses and other current assets 2,411 3,131
------------ ------------
Total current assets 80,894 81,032
Property, plant and equipment, net 20,853 22,184
Restricted deposits 0 3,013
Other assets 6,199 5,433
------------ ------------
Total assets $ 107,946 $ 111,662
============ ============
Liabilities and stockholders' equity:
Current liabilities
Accounts payable $ 5,571 $ 6,657
Accrued liabilities 4,566 4,453
Line of credit 0 3,013
Current portion of long-term debt 76 73
------------ ------------
Total current liabilities 10,213 14,196
Long-term debt, net of current portion 420 496
Other long-term liabilities 62 94
------------ ------------
Total liabilities 10,695 14,786
------------ ------------
Stockholders' equity:
Preferred stock 3,532 3,532
Common stock 187,901 186,784
Accumulated deficit (101,130) (99,232)
Other comprehensive income 4,300 2,580
------------ ------------
Total AXT, Inc. stockholders' equity 94,603 93,664
Noncontrolling interest 2,648 3,212
------------ ------------
Total stockholders' equity 97,251 96,876
------------ ------------
Total liabilities and stockholders'
equity $ 107,946 $ 111,662
============ ============
Contacts: Raymond A. Low Chief Financial Officer (510) 683-5900
Leslie Green Green Communications Consulting, LLC (650)
312-9060
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