AXT, Inc. (NASDAQ: AXTI)
- Q3 FY 2011 Net Revenues: $28.3 million
- Q3 FY 2011 GAAP Gross Margin: 43.2 percent
- Q3 FY 2011 GAAP Net Income: $6.5 million; $0.19 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, 2011.
Third Quarter 2011 Results Revenue for the
third quarter of 2011 was $28.3 million, down 5.7 percent from
$30.0 million in the second quarter of 2011, and up 5.6 percent
from $26.8 million in the third quarter of 2010.
Total gallium arsenide (GaAs) substrate revenue was $18.7
million for the third quarter of 2011, compared with $18.0 million
in the second quarter of 2011, and $19.2 million in the third
quarter of 2010. Indium phosphide (InP) substrate revenue was $1.5
million for the third quarter of 2011, compared with $1.6 million
in the second quarter of 2011, and $1.0 million in the third
quarter of 2010. Germanium (Ge) substrate revenue was $3.0 million
for the third quarter of 2011 compared with $2.7 million in the
second quarter of 2011 and $2.3 million in the third quarter of
2010. Raw materials sales were $5.1 million for the third quarter
of 2011, compared with $7.7 million in the second quarter of 2011
and $4.4 million in the third quarter of 2010.
Gross margin was 43.2 percent of revenue for the third quarter
of 2011. By comparison, gross margin in the second quarter of 2011
was 46.7 percent of revenue. Gross margin was 39.3 percent of
revenue for the third quarter of 2010.
Operating expenses were $4.2 million in the third quarter of
2011, compared with $4.4 million in the second quarter of 2011.
Operating expenses in the third quarter of 2010 were $3.8
million.
Income from operations for the third quarter of 2011 was $8.1
million compared with income from operations of $9.6 million in the
second quarter of 2011, and income from operations of $6.7 million
in the third quarter of 2010.
Net interest and other income for the third quarter of 2011 was
$459,000, which included a foreign exchange gain of $180,000. This
compares with net interest and other income of $519,000 in the
second quarter of 2011, which included a foreign exchange gain of
$65,000, and net interest and other income of $468,000 in the third
quarter of 2010, which included a foreign exchange gain of
$210,000.
Net income in the third quarter of 2011 was $6.5 million or
$0.19 per diluted share compared with net income of $7.1 million or
$0.21 per diluted share in the second quarter of 2011, and with a
net income of $5.6 million or $0.17 per diluted share in the third
quarter of 2010.
Management Qualitative Comments "The
current environment is presenting both great challenges and great
opportunities for AXT," said Morris Young, chief executive officer.
"While we are heading into a challenging quarter, we believe that
we have established a solid foundation to build upon when markets
improve. In all of our key markets, we are in a great competitive
position and are actively engaged with new potential customers that
can help us to broaden and deepen our footprint in the markets we
serve. Our engineering, manufacturing and operations teams continue
to execute well against our goals to provide a broad portfolio of
high-quality products and strong customer support. Further, we have
a solid business model that is allowing us to weather near-term
weakness, while generating cash and delivering profitability. We
believe that these factors will provide tremendous opportunity for
us as the demand environment improves."
Outlook for Fourth Quarter, Ending December 31,
2011 AXT estimates revenue for the fourth quarter for 2011
will be between $20 million and $23 million. The company estimates
that net income per share will be between $0.08 and $0.12, which
takes into account our weighted average share count of
approximately 33.2 million shares.
Conference Call The company will also host
a conference call to discuss these results on October 26, 2011 at
1:30 p.m. PDT. The conference call can be accessed at (719)
325-4929 (passcode 8433592). The call will also be simulcast on the
Internet at www.axt.com. Replays will be available at (719)
457-0820 (passcode 8433592) until November 3, 2011. 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 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 statements regarding our
outlook for the fourth quarter of 2011, the current and long-term
growth and trends in the demand for our products, our progress in
our strategic plans, and the positioning of the company. 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.
AXT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
2011 2010 2011 2010
---------- ---------- ---------- ----------
Revenue $ 28,305 $ 26,809 $ 82,902 $ 68,627
Cost of revenue 16,068 16,278 45,979 42,829
---------- ---------- ---------- ----------
Gross profit 12,237 10,531 36,923 25,798
---------- ---------- ---------- ----------
Operating expenses:
Selling, general and
administrative 3,555 3,347 10,959 9,805
Research and development 612 462 1,816 1,428
---------- ---------- ---------- ----------
Total operating expenses 4,167 3,809 12,775 11,233
---------- ---------- ---------- ----------
Income from operations 8,070 6,722 24,148 14,565
Interest income, net 103 26 259 16
Other income, net 356 442 443 2,077
---------- ---------- ---------- ----------
Income before provision for
income taxes 8,529 7,190 24,850 16,658
Provision for income taxes 667 871 2,633 1,677
---------- ---------- ---------- ----------
Net income 7,862 6,319 22,217 14,981
Less: Net income
attributable to
noncontrolling interest (1,378) (680) (4,463) (1,227)
---------- ---------- ---------- ----------
Net income attributable to
AXT, Inc. $ 6,484 $ 5,639 $ 17,754 $ 13,754
========== ========== ========== ==========
Net income attributable to
AXT, Inc. per common share:
Basic $ 0.20 $ 0.18 $ 0.55 $ 0.44
========== ========== ========== ==========
Diluted $ 0.19 $ 0.17 $ 0.53 $ 0.42
========== ========== ========== ==========
Weighted average number of
common shares outstanding:
Basic 31,944 30,944 31,832 30,853
========== ========== ========== ==========
Diluted 33,126 32,509 33,140 32,170
========== ========== ========== ==========
AXT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
September 30, December 31,
2011 2010
------------- -------------
Assets:
Current assets
Cash and cash equivalents $ 24,401 $ 23,724
Short-term investments 14,758 17,251
Accounts receivable, net 21,990 23,076
Inventories, net 44,335 35,986
Prepaid expenses and other current assets 7,155 4,090
------------- -------------
Total current assets 112,639 104,127
Property, plant and equipment, net 31,619 24,240
Other assets 16,781 11,884
------------- -------------
Total assets $ 161,039 $ 140,251
============= =============
Liabilities and stockholders' equity:
Current liabilities
Accounts payable $ 6,598 $ 7,094
Accrued liabilities 7,077 7,745
------------- -------------
Total current liabilities 13,675 14,839
Other long-term liabilities 4,545 5,608
------------- -------------
Total liabilities 18,220 20,447
------------- -------------
Stockholders' equity:
Preferred stock 3,532 3,532
Common stock 191,328 190,053
Accumulated deficit (64,723) (82,477)
Other comprehensive income 5,530 4,652
------------- -------------
Total AXT, Inc. stockholders' equity 135,667 115,760
Noncontrolling interest 7,152 4,044
------------- -------------
Total stockholders' equity 142,819 119,804
------------- -------------
Total liabilities and stockholders'
equity $ 161,039 $ 140,251
============= =============
Contacts: Raymond A. Low Chief Financial Officer (510) 683-5900
Leslie Green Green Communications Consulting, LLC (650)
312-9060
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