AXT, Inc. Announces Second Quarter 2019 Financial Results
July 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 second quarter
ended June 30, 2019.
Second Quarter 2019 Results
Revenue for the second quarter of 2019 was $24.8
million, compared with $20.2 million in the first quarter of 2019
and $27.1 million for the second quarter of
2018.
Gross margin was 34.3 percent of revenue for the
second quarter of 2019, compared with 33.1 percent of revenue in
the first quarter of 2019 and 40.6 percent for the second quarter
of 2018.
Operating expenses were $6.2 million in the
second quarter of 2019, compared with $6.1 million in the first
quarter of 2019 and $6.5 million for the second quarter of
2018.
Income from operations for the second quarter of
2019 was $2.3 million, compared with an operating profit of $0.6
million in the first quarter of 2019 and an operating profit of
$4.5 million for the second quarter of 2018.
Interest income and other, net was a loss of
$3,000 for the second quarter of 2019, compared with a loss of $1.5
million in the first quarter of 2019 and a gain of $0.4 million for
the second quarter of 2018. Interest income and other, net
for the second quarter of 2019 included interest income of $0.1
million, a foreign exchange loss and other expenses totaling $0.1
million and a net gain of $8,000 from the partially owned companies
in AXT’s supply chain, accounted for under the equity
method.
Income tax expense in the second quarter of 2019
was $0.6 million, compared with income tax expense of $0.2 million
in the first quarter of 2019 and income tax expense of $0.4 million
for the second quarter of 2018.
Net income in the second quarter of 2019 was
$1.5 million, or $0.04 per diluted share, compared with a net loss
of $1.1 million or $0.03 per share in the first quarter of 2019 and
net income of $3.9 million or $0.10 per diluted share for the
second quarter of 2018.
Management Qualitative
Comments
“Amidst a backdrop of turbulent geopolitical and
global economic conditions, AXT posted a solid quarter,” said
Morris Young, chief executive officer. "Revenue came in just ahead
of our expectations and our indium phosphide sales achieved an
all-time high. In addition, we reduced our inventory, increased our
cash and improved our gross margin. We are continuing to
execute on the relocation of our facility and believe that we are
laying a solid foundation for the significant technology trends
that are likely to drive growth in our business over time."
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 July 30, 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 |
|
Six Months Ended |
|
|
|
June 30, |
|
June 30, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
24,797 |
|
|
$ |
27,120 |
|
|
$ |
45,005 |
|
|
$ |
51,539 |
|
|
Cost of revenue |
|
|
16,291 |
|
|
|
16,110 |
|
|
|
29,804 |
|
|
|
30,956 |
|
|
Gross profit |
|
|
8,506 |
|
|
|
11,010 |
|
|
|
15,201 |
|
|
|
20,583 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
4,769 |
|
|
|
4,987 |
|
|
|
9,492 |
|
|
|
9,209 |
|
|
Research and development |
|
|
1,399 |
|
|
|
1,500 |
|
|
|
2,745 |
|
|
|
2,920 |
|
|
Total operating expenses |
|
|
6,168 |
|
|
|
6,487 |
|
|
|
12,237 |
|
|
|
12,129 |
|
|
Income from operations |
|
|
2,338 |
|
|
|
4,523 |
|
|
|
2,964 |
|
|
|
8,454 |
|
|
Interest income, net |
|
|
79 |
|
|
|
139 |
|
|
|
174 |
|
|
|
281 |
|
|
Equity in income (loss) of
unconsolidated joint ventures |
|
|
8 |
|
|
|
307 |
|
|
|
(1,446 |
) |
|
|
(27 |
) |
|
Other (expense), net |
|
|
(90 |
) |
|
|
(51 |
) |
|
|
(224 |
) |
|
|
(266 |
) |
|
Income (loss) before provision
for income taxes |
|
|
2,335 |
|
|
|
4,918 |
|
|
|
1,468 |
|
|
|
8,442 |
|
|
Provision for income
taxes |
|
|
597 |
|
|
|
367 |
|
|
|
753 |
|
|
|
701 |
|
|
Net income (loss) |
|
|
1,738 |
|
|
|
4,551 |
|
|
|
715 |
|
|
|
7,741 |
|
|
Less: Net income attributable to noncontrolling interests |
|
|
(287 |
) |
|
|
(650 |
) |
|
|
(368 |
) |
|
|
(965 |
) |
|
Net income (loss) attributable
to AXT, Inc. |
|
$ |
1,451 |
|
|
$ |
3,901 |
|
|
$ |
347 |
|
|
$ |
6,776 |
|
|
Net income (loss) attributable
to AXT, Inc. per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.04 |
|
|
$ |
0.10 |
|
|
$ |
0.01 |
|
|
$ |
0.17 |
|
|
Diluted |
|
$ |
0.04 |
|
|
$ |
0.10 |
|
|
$ |
0.01 |
|
|
$ |
0.17 |
|
|
Weighted-average number of
common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
39,447 |
|
|
|
39,001 |
|
|
|
39,399 |
|
|
|
38,970 |
|
|
Diluted |
|
|
40,123 |
|
|
|
40,216 |
|
|
|
40,045 |
|
|
|
40,289 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AXT, INC.CONDENSED
CONSOLIDATED BALANCE SHEETS(Unaudited, in
thousands)
|
|
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
28,732 |
|
|
$ |
16,526 |
|
Short-term investments |
|
|
7,517 |
|
|
|
22,129 |
|
Accounts receivable, net |
|
|
18,275 |
|
|
|
19,586 |
|
Inventories |
|
|
50,326 |
|
|
|
58,571 |
|
Prepaid expenses and other current assets |
|
|
6,853 |
|
|
|
11,728 |
|
Total current assets |
|
|
111,703 |
|
|
|
128,540 |
|
Long-term investments |
|
|
1,260 |
|
|
|
717 |
|
Property, plant and equipment,
net |
|
|
87,613 |
|
|
|
82,280 |
|
Operating lease right-of-use
assets |
|
|
986 |
|
|
|
— |
|
Other assets |
|
|
12,328 |
|
|
|
11,987 |
|
Total assets |
|
$ |
213,890 |
|
|
$ |
223,524 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
6,004 |
|
|
$ |
13,338 |
|
Accrued liabilities |
|
|
10,945 |
|
|
|
15,371 |
|
Total current liabilities |
|
|
16,949 |
|
|
|
28,709 |
|
Noncurrent operating lease
liabilities |
|
|
895 |
|
|
|
— |
|
Other long-term
liabilities |
|
|
391 |
|
|
|
283 |
|
Total liabilities |
|
|
18,235 |
|
|
|
28,992 |
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
Preferred stock |
|
|
3,532 |
|
|
|
3,532 |
|
Common stock |
|
|
40 |
|
|
|
40 |
|
Additional paid-in capital |
|
|
235,702 |
|
|
|
234,418 |
|
Accumulated deficit |
|
|
(44,836 |
) |
|
|
(45,183 |
) |
Accumulated other comprehensive loss |
|
|
(3,130 |
) |
|
|
(1,972 |
) |
Total AXT, Inc. stockholders’ equity |
|
|
191,308 |
|
|
|
190,835 |
|
Noncontrolling interests |
|
|
4,347 |
|
|
|
3,697 |
|
Total stockholders’ equity |
|
|
195,655 |
|
|
|
194,532 |
|
Total liabilities and stockholders’ equity |
|
$ |
213,890 |
|
|
$ |
223,524 |
|
|
|
|
|
|
|
|
|
|
Contacts: Gary Fischer Chief Financial Officer
(510) 438-4700
Leslie
Green
Green Communications Consulting, LLC(650) 312-9060
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