AXT, Inc. (NASDAQ: AXTI)
-- Q3 FY 2010 Net Revenues: $26.8 million
-- Q3 FY 2010 GAAP Gross Margin: 39.3 percent
-- Q3 FY 2010 GAAP Net Income: $5.6 million; $0.17 per share (diluted)
AXT, Inc. (NASDAQ: AXTI), a leading manufacturer of compound
semiconductor substrates, today reported financial results for the
third quarter ended September 30, 2010.
Third Quarter 2010 Results
Revenue for the third quarter of 2010 was $26.8 million,
compared with $23.2 million in the second quarter of 2010, and
$16.8 million in the third quarter of 2009.
Total gallium arsenide (GaAs) substrate revenue was $19.2
million for the third quarter of 2010, compared with $16.2 million
in the second quarter of 2010, and $13.3 million in the third
quarter of 2009. Indium phosphide (InP) substrate revenue was
$955,000 for the third quarter of 2010, compared with $1.1 million
in the second quarter of 2010, and $688,000 in the third quarter of
2009. Germanium (Ge) substrate revenue was $2.3 million for the
third quarter of 2010 compared with $1.6 million in the second
quarter of 2010 and $1.8 million in the third quarter of 2009. Raw
materials sales were $4.4 million for the third quarter of 2010,
compared with $4.2 million in the second quarter of 2010 and $1.0
million in the third quarter of 2009.
Gross margin was 39.3 percent of revenue for the third quarter
of 2010. By comparison, gross margin in the second quarter of 2010
was 36.8 percent of revenue. Gross margin was 32.9 percent of
revenue for the third quarter of 2009.
Operating expenses were $3.8 million in the third quarter of
2010, compared with $3.6 million in the second quarter of 2010.
Operating expenses in the third quarter of 2009 were $3.7
million.
Income from operations for the third quarter of 2010 was $6.7
million compared with income from operations of $5.0 million in the
second quarter of 2010, and income from operations of $1.9 million
in the third quarter of 2009.
Net interest and other income for the third quarter of 2010 was
$442,000, which included an unrealized foreign exchange gain of
$210,000. This compares with net interest and other income of $1.6
million in the second quarter of 2010, which included $1.2 million,
net, sales tax refund and an unrealized foreign exchange gain of
$230,000, and net interest and other income of $677,000 in the
third quarter of 2009, which included an unrealized foreign
exchange gain of $302,000.
Net income in the third quarter of 2010 was $5.6 million or
$0.17 per diluted share compared with net income of $5.5 million or
$0.17 per diluted share in the second quarter of 2010, and with a
net income of $2.1 million or $0.07 per diluted share in the third
quarter of 2009. Excluding the $1.2 million, net, sales tax refund
or $0.04 per diluted share, our net income in the second quarter of
2010 was $4.3 million or $0.13 per diluted share.
Management Qualitative Comments
"Q3 was another strong quarter for AXT," said Morris Young,
chief executive officer. "Solid demand in all of our key end
markets coupled with great execution across our organization
allowed us to deliver outstanding financial results and continued
increases in our market share and customer penetration. Not only
did we exceed our revenue expectations, our gross margin
performance was the highest it has been in many years. We continue
to see growing momentum in the long-term secular trends that are
fueling our growth, including the adoption of smartphones and other
intelligent wireless devices, the proliferation of LED applications
and the expansion of photovoltaic technology. These trends are
opening up exciting opportunities for our business that we believe
will extend for years to come."
Outlook for Fourth Quarter, Ending December 31, 2010
AXT estimates revenue for the fourth quarter will increase to
between $28.0 million and $29.0 million. The company estimates that
net income per share will be between $0.15 and $0.17, which takes
into account our weighted average share count of approximately 32.4
million shares.
Conference Call
The company will also host a conference call to discuss these
results on October 28, 2010 at 1:30 p.m. PDT. The conference call
can be accessed at (719) 325-4760 (passcode 6968854). The call will
also be simulcast on the Internet at www.axt.com. Replays will be
available at (719) 457-0820 (passcode 6968854) until November 4,
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 fourth quarter of 2010,
the current and long-term growth and trends in the demand for our
products, the outlook for sales of wireless devices and the
adoption of and investment in LED technology, the change in the
composition of our revenues by product, and the positioning of the
company in terms of capacity, raw material access and
cost-structure within the industry. 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 factory
closures or other events causing delays by our customers on the
timing of sales of our 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 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 Nine Months Ended
September 30, September 30,
------------------ ------------------
2010 2009 2010 2009
-------- -------- -------- --------
Revenue $ 26,809 $ 16,819 $ 68,627 $ 37,528
Cost of revenue 16,278 11,281 42,829 29,711
-------- -------- -------- --------
Gross profit 10,531 5,538 25,798 7,817
-------- -------- -------- --------
Operating expenses:
Selling, general and
administrative 3,347 3,323 9,805 10,815
Research and development 462 360 1,428 1,175
Restructuring charge - - - 507
-------- -------- -------- --------
Total operating expenses 3,809 3,683 11,233 12,497
-------- -------- -------- --------
Income (loss) from operations 6,722 1,855 14,565 (4,680)
Interest income (expense), net 26 39 16 117
Other income (expense), net 442 638 2,077 537
-------- -------- -------- --------
Income (loss) before provision for
income taxes 7,190 2,532 16,658 (4,026)
Provision for income taxes 871 201 1,677 513
-------- -------- -------- --------
Net income (loss) 6,319 2,331 14,981 (4,539)
Less: Net income (loss)
attributable to noncontrolling
interest (680) (210) (1,227) (136)
-------- -------- -------- --------
Net income (loss) attributable to
AXT, Inc. $ 5,639 $ 2,121 $ 13,754 $ (4,675)
======== ======== ======== ========
Net income (loss) attributable to
AXT, Inc. per common share:
Basic $ 0.18 $ 0.07 $ 0.44 $ (0.16)
======== ======== ======== ========
Diluted $ 0.17 $ 0.07 $ 0.42 $ (0.16)
======== ======== ======== ========
Weighted average number of common
shares outstanding:
Basic 30,944 30,475 30,853 30,449
======== ======== ======== ========
Diluted 32,509 30,911 32,170 30,449
======== ======== ======== ========
AXT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
September 30, December 31,
2010 2009
------------- -------------
Assets:
Current assets
Cash and cash equivalents $ 23,393 $ 16,934
Short-term investments 17,606 18,469
Accounts receivable, net 18,977 15,362
Inventories, net 33,153 27,718
Prepaid expenses and other current assets 3,451 2,411
------------- -------------
Total current assets 96,580 80,894
Property, plant and equipment, net 22,709 20,853
Other assets 6,313 6,199
------------- -------------
Total assets $ 125,602 $ 107,946
============= =============
Liabilities and stockholders' equity:
Current liabilities
Accounts payable $ 5,979 $ 5,571
Accrued liabilities 6,557 4,566
Current portion of long-term debt - 76
------------- -------------
Total current liabilities 12,536 10,213
Long-term debt, net of current portion 0 420
Other long-term liabilities 30 62
------------- -------------
Total liabilities 12,566 10,695
------------- -------------
Stockholders' equity:
Preferred stock 3,532 3,532
Common stock 189,140 187,901
Accumulated deficit (87,376) (101,130)
Other comprehensive income 4,276 4,300
------------- -------------
Total AXT, Inc. stockholders' equity 109,572 94,603
Noncontrolling interest 3,464 2,648
------------- -------------
Total stockholders' equity 113,036 97,251
------------- -------------
Total liabilities and stockholders'
equity $ 125,602 $ 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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