AXT, Inc. (NASDAQ: AXTI), a leading manufacturer of compound
semiconductor substrates, today reported financial results for the
first quarter ended March 31, 2010.
First Quarter 2010 Results
Revenue for the first quarter of 2010 was $18.6 million,
compared with $17.8 million in the fourth quarter of 2009, and $7.7
million in the first quarter of 2009. Total gallium arsenide (GaAs)
substrate revenue was $13.4 million for the first quarter of 2010,
compared with $12.6 million in the fourth quarter of 2009, and $5.0
million in the first quarter of 2009.
Indium phosphide (InP) substrate revenue was $875,000 for the
first quarter of 2010, compared with $513,000 in the fourth quarter
of 2009, and $490,000 in the first quarter of 2009. Germanium (Ge)
substrate revenue was $1.64 million compared with $1.85 million in
the fourth quarter of 2009 and $622,000 in the first quarter of
2009. Raw materials sales were $2.7 million for the first quarter
of 2010, compared with $2.8 million in the fourth quarter of 2009
and $1.5 million in the first quarter of 2009.
Gross margin was 36.1 percent of revenue for the first quarter
of 2010. By comparison, gross margin in the fourth quarter of 2009
was 33.9 percent of revenue. Gross margin was negative 3.1 percent
of revenue for the first quarter of 2009.
Operating expenses were $3.9 million in the first quarter of
2010, compared with $3.0 million in the fourth quarter of 2009,
which included approximately $500,000 in one-time favorable
year-end adjustments for professional fees, China pension funds and
China union fees. Operating expenses in the first quarter of 2009
were $5.0 million, and included approximately $629,000 severance
and stock compensation accrual for the company's former chief
executive officer, and a $507,000 restructuring charge as a result
of its reduction in force.
Income from operations for the first quarter of 2010 was $2.9
million compared with income from operations of $3.1 million in the
fourth quarter of 2009, and loss from operations of $5.2 million in
the first quarter of 2009.
Net interest and other income for the first quarter of 2010 was
$94,000, which included $120,000 gain on investment notes that
matured and an unrealized foreign exchange loss of $68,000. This
compares with net interest and other expense of $92,000 in the
fourth quarter of 2009, which included an unrealized foreign
exchange loss of $140,000, and net interest and other expense of
$378,000 in the first quarter of 2009, which included an unrealized
foreign exchange loss of $409,000.
Net income in the first quarter of 2010 was $2.6 million or
$0.08 per diluted share, compared with net income of $2.8 million
or $0.09 per diluted share in the fourth quarter of 2009, and with
a net loss of $5.5 million, or loss of $0.18 per diluted share in
the first quarter of 2009.
Management Qualitative Comments
"This was another very good quarter for AXT," said Morris Young,
chief executive officer. "We have continued to experience solid
demand for our products across all of our primary markets, driven
by significant and extended market trends, such as the rapid
expansion of wireless devices and subscribers, the increasing
momentum in the adoption of LED technology and the growing interest
in solar energy. Further, our own execution has been strong
throughout our engineering, manufacturing, sales and administrative
functions. We have had tremendous success in continuing to develop
our valuable, long-term customer relationships as well as
penetrating new customers and new opportunities to drive our growth
and diversify our base. In addition, our efforts to restructure and
refocus our organization over the past nine months are resulting in
tangible benefits in our efficiency, productivity and profitability
-- creating a solid foundation for our success in quarters to
come."
Outlook for Second Quarter, Ending June 30, 2010
AXT estimates revenue for the second quarter will increase to
between $20.7 million and $21.5 million. The company estimates that
net income per share will be between $0.08 and $0.09, which takes
into account our weighted average share count of approximately 31.9
million shares.
Conference Call
The Company will also host a conference call to discuss these
results on April 28, 2010 at 1:30 p.m. PDT. The conference call can
be accessed at (719) 457-2705 (passcode 8474153). The call will
also be simulcast on the Internet at www.axt.com. Replays will be
available at (719) 457-0820 (passcode 8474153) until May 5, 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 second 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
March 31,
----------------------
2010 2009
---------- ----------
Revenue $ 18,641 $ 7,654
Cost of revenue 11,909 7,891
---------- ----------
Gross profit (loss) 6,732 (237)
---------- ----------
Operating expenses:
Selling, general and administrative 3,419 4,006
Research and development 451 460
Restructuring charge - 507
---------- ----------
Total operating expenses 3,870 4,973
---------- ----------
Income (loss) from operations 2,862 (5,210)
Interest income, net 15 44
Other income (loss), net 79 (422)
---------- ----------
Income (loss) before provision (benefit) for income
taxes 2,956 (5,588)
Provision (benefit) for income taxes 246 4
---------- ----------
Net income (loss) 2,710 (5,592)
Less: Net income (loss) attributable to
noncontrolling interest (130) 76
---------- ----------
Net income (loss) attributable to AXT, Inc. $ 2,580 $ (5,516)
========== ==========
Net income (loss) attributable to AXT, Inc. per
common share:
Basic $ 0.08 $ (0.18)
========== ==========
Diluted $ 0.08 $ (0.18)
========== ==========
Weighted average number of common shares
outstanding:
Basic 30,743 30,434
========== ==========
Diluted 31,792 30,434
========== ==========
AXT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
March 31, December 31,
2010 2009
---------- ----------
Assets:
Current assets
Cash and cash equivalents $ 20,607 $ 16,934
Short-term investments 18,734 18,469
Accounts receivable, net 15,166 15,362
Inventories, net 28,141 27,718
Prepaid expenses and other current assets 3,067 2,411
---------- ----------
Total current assets 85,715 80,894
Property, plant and equipment, net 20,293 20,853
Other assets 6,160 6,199
---------- ----------
Total assets $ 112,168 $ 107,946
========== ==========
Liabilities and stockholders' equity:
Current liabilities
Accounts payable $ 6,894 $ 5,571
Accrued liabilities 4,976 4,566
Current portion of long-term debt 77 76
---------- ----------
Total current liabilities 11,947 10,213
Long-term debt, net of current portion 401 420
Other long-term liabilities 29 62
---------- ----------
Total liabilities 12,377 10,695
---------- ----------
Stockholders' equity:
Preferred stock 3,532 3,532
Common stock 188,148 187,901
Accumulated deficit (98,551) (101,130)
Other comprehensive income 4,076 4,300
---------- ----------
Total AXT, Inc. stockholders' equity 97,205 94,603
Noncontrolling interest 2,586 2,648
---------- ----------
Total stockholders' equity 99,791 97,251
---------- ----------
Total liabilities and stockholders' equity $ 112,168 $ 107,946
========== ==========
Contacts: Raymond A. Low Chief Financial Officer (510) 683-5900
Leslie Green Green Communications Consulting, LLC (650)
312-9060
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