AXT, Inc. Announces First Quarter 2019 Financial Results
April 24 2019 - 4:05PM
AXT, Inc. (NasdaqGS: AXTI), a leading material science
company manufacturing single crystal compound semiconductor
substrates, today reported financial results for the first quarter,
ended March 31, 2019.
First Quarter 2019 Results
Revenue for the first quarter of 2019 was $20.2
million, compared with $22.2 million in the fourth quarter of 2018
and $24.4 million for the first quarter of
2018.
Gross margin was 33.1 percent of revenue for the
first quarter of 2019, compared with 26.3 percent of revenue in the
fourth quarter of 2018 and 39.2 percent for the first quarter of
2018.
Operating expenses were $6.1 million in the
first quarter of 2019, compared with $6.5 million in the fourth
quarter of 2018 and $5.6 million for the first quarter of
2018.
Operating profit for the first quarter of 2019
was $0.6 million, compared with an operating loss of $0.6 million
in the fourth quarter of 2018 and an operating profit of $3.9
million for the first quarter of 2018.
Interest and other, net was a loss of $1.5
million for the first quarter of 2019, compared with a loss of $0.4
million in the fourth quarter of 2018 and a loss of $0.4 million
for the first quarter of 2018. Interest and other, net for
the first quarter of 2019 included interest income of $0.1 million,
a foreign exchange loss and other expenses totaling $0.1 million
and a net loss of $1.5 million from the seven partially owned
companies in AXT’s supply chain, accounted for under the equity
method. The net loss of $1.5 million for these companies
includes a $1.7 million charge for one of the companies in which
AXT has 25% ownership and combines a charge of approximately $0.6
million for AXT’s portion of that company’s quarterly loss plus an
impairment charge by AXT for that company of $1.1 million.
Income tax expense in the first quarter of 2019
was $0.2 million, compared with a positive benefit of $0.2 million
in the fourth quarter of 2018 and expense of $0.3 million for the
first quarter of 2018.
Net loss in the first quarter of 2019 was $1.1
million, or $0.03 per share, compared with a net loss of $1.1
million or $0.03 per share in the fourth quarter of 2018 and a net
profit of $2.9 million or $0.07 per diluted share for the first
quarter of 2018.
Management Qualitative
Comments
“With a strong performance in our indium
phosphide business in Q1, we are building a solid foundation for
its growth this year,” said Morris Young,
CEO. “In addition, we continue to execute the relocation
of our facility on schedule and with positive customer
qualification results. We are also taking the opportunity to
strengthen our financial structure by controlling inventory,
applying discipline to our spending, focusing on gross margin
improvement, and making appropriate adjustments in our joint
venture portfolio. We are encouraged by the significant technology
trends that are likely to drive demand for our products over time,
and we believe that our focus on the fundamentals of our model
today will provide positive returns as the economic environment
improves.”
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 9726809). The call will
also be simulcast on the Internet at www.axt.com. Replays will be
available at (855) 859-2056 (passcode 9726809) until April 29,
2019. 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. AXT’s worldwide
headquarters are in Fremont, California where the company maintains
its sales, administration and customer service functions. 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)
process technology 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, as part of its
supply chain strategy, has partial ownership in ten companies 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, our relocation and our
expectations with respect to our business prospects and financial
results. 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: the timing and receipt of significant orders;
the cancellation of orders and return of product; emerging
applications using chips or devices fabricated on our substrates;
end-user acceptance of products containing chips or devices
fabricated on our substrates; our ability to bring new products to
market; product announcements by our competitors; the ability to
control costs and improve efficiency; the ability to utilize our
manufacturing capacity; product yields and their impact on gross
margins; the relocation of manufacturing lines; possible factory
shutdowns as a result of air pollution in China; tariffs and other
trade war issues; the financial performance of our partially owned
supply chain companies; policies and regulations in China 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 |
|
|
|
March 31, |
|
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
20,208 |
|
|
$ |
24,419 |
|
|
Cost of revenue |
|
|
13,513 |
|
|
|
14,846 |
|
|
Gross profit |
|
|
6,695 |
|
|
|
9,573 |
|
|
Operating
expenses: |
|
|
|
|
|
|
|
Selling,
general and administrative |
|
|
4,723 |
|
|
|
4,222 |
|
|
Research
and development |
|
|
1,346 |
|
|
|
1,420 |
|
|
Total
operating expenses |
|
|
6,069 |
|
|
|
5,642 |
|
|
Income from
operations |
|
|
626 |
|
|
|
3,931 |
|
|
Interest income,
net |
|
|
95 |
|
|
|
142 |
|
|
Equity in loss of
unconsolidated joint ventures |
|
|
(1,454 |
) |
|
|
(334 |
) |
|
Other (expense),
net |
|
|
(134 |
) |
|
|
(215 |
) |
|
Income (loss) before
provision for income taxes |
|
|
(867 |
) |
|
|
3,524 |
|
|
Provision for income
taxes |
|
|
156 |
|
|
|
334 |
|
|
Net income (loss) |
|
|
(1,023 |
) |
|
|
3,190 |
|
|
Less: Net
(income) attributable to noncontrolling interests |
|
|
(81 |
) |
|
|
(315 |
) |
|
Net income (loss)
attributable to AXT, Inc. |
|
$ |
(1,104 |
) |
|
$ |
2,875 |
|
|
Net income (loss)
attributable to AXT, Inc. per common share: |
|
|
|
|
|
|
|
Basic |
|
$ |
(0.03 |
) |
|
$ |
0.07 |
|
|
Diluted |
|
$ |
(0.03 |
) |
|
$ |
0.07 |
|
|
Weighted-average number
of common shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
|
39,352 |
|
|
|
38,941 |
|
|
Diluted |
|
|
39,352 |
|
|
|
40,364 |
|
|
|
|
|
|
|
|
|
|
|
|
AXT, INC.CONDENSED
CONSOLIDATED BALANCE SHEETS(Unaudited, in
thousands)
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash
equivalents |
$ |
21,060 |
|
|
$ |
16,526 |
|
|
Short-term investments |
|
13,085 |
|
|
|
22,129 |
|
|
Accounts
receivable, net |
|
19,605 |
|
|
|
19,586 |
|
|
Inventories |
|
53,025 |
|
|
|
58,571 |
|
|
Prepaid
expenses and other current assets |
|
11,367 |
|
|
|
11,728 |
|
|
Total
current assets |
|
118,142 |
|
|
|
128,540 |
|
|
Long-term
investments |
|
— |
|
|
|
717 |
|
|
Property, plant and
equipment, net |
|
84,975 |
|
|
|
82,280 |
|
|
Operating lease
right-of-use assets |
|
1,036 |
|
|
|
— |
|
|
Other assets |
|
10,405 |
|
|
|
11,987 |
|
|
Total
assets |
$ |
214,558 |
|
|
$ |
223,524 |
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
Accounts
payable |
$ |
7,882 |
|
|
$ |
13,338 |
|
|
Accrued
liabilities |
|
9,556 |
|
|
|
15,371 |
|
|
Total
current liabilities |
|
17,438 |
|
|
|
28,709 |
|
|
Noncurrent operating
lease liabilities |
|
926 |
|
|
|
— |
|
|
Other long-term
liabilities |
|
213 |
|
|
|
283 |
|
|
Total
liabilities |
|
18,577 |
|
|
|
28,992 |
|
|
|
|
|
|
|
|
|
Stockholders’
equity: |
|
|
|
|
|
|
Preferred
stock |
|
3,532 |
|
|
|
3,532 |
|
|
Common
stock |
|
40 |
|
|
|
40 |
|
|
Additional paid-in capital |
|
234,976 |
|
|
|
234,418 |
|
|
Accumulated deficit |
|
(46,287 |
) |
|
|
(45,183 |
) |
|
Accumulated other comprehensive income (loss) |
|
(733 |
) |
|
|
(1,972 |
) |
|
Total
AXT, Inc. stockholders’ equity |
|
191,528 |
|
|
|
190,835 |
|
|
Noncontrolling interests |
|
4,453 |
|
|
|
3,697 |
|
|
Total
stockholders’ equity |
|
195,981 |
|
|
|
194,532 |
|
|
Total
liabilities and stockholders’ equity |
$ |
214,558 |
|
|
$ |
223,524 |
|
|
|
|
|
|
|
|
|
|
|
Contacts:
Gary FischerChief Financial Officer(510)
438-4700
Leslie
Green
Green Communications Consulting, LLC(650) 312-9060
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