AXT, Inc. Announces First Quarter 2020 Financial Results
April 22 2020 - 4:05PM
AXT, Inc. (NasdaqGS: AXTI), a leading manufacturer of compound
semiconductor substrates, today reported financial results for the
first quarter, ended March 31, 2020.
Management Qualitative
Comments“For much of the first quarter, our manufacturing
facilities in China were operating at reduced staffing levels to
limit the risk of COVID-19 exposure for our employees,” said Morris
Young, chief executive officer. “We adopted a number of protective
measures and thankfully none of our employees have contracted the
virus so far. Despite the impact to productivity, we were able to
meet customer demand in the first quarter, posting revenue and
earnings results that were slightly ahead of our expectations.
Further, we were pleased to announce in March that one of our
largest gallium arsenide customers completed its site qualification
of our new facilities for volume production, an important milestone
for our manufacturing relocation.
“As we enter Q2, visibility remains limited and we are taking an
appropriately conservative view of our markets. However, demand for
our substrates is holding fairly steady amidst the difficult global
conditions. We are seeing pockets of strength in wireless, data
center connectivity and solar cell applications. In recent weeks,
the government mandates have evolved, allowing us to return to full
staffing levels at all three manufacturing locations. As such, we
believe we are well positioned to support improved demand in the
quarters ahead.
“In this environment, we continue to prioritize
the well-being of our employees, the support of our customers, and
accessibility to our investors. We believe AXT continues to have a
healthy balance sheet and we will continue to emphasize strong
fiscal discipline as we navigate these unusual times, and plan and
prepare for better days ahead.”
First Quarter 2020 Results
Revenue for the first quarter of 2020 was $20.7
million, compared with $18.4 million in the fourth quarter of 2019
and $20.2 million for the first quarter of
2019.
Gross margin was 26.6 percent of revenue for the
first quarter of 2020, compared with 21.0 percent of revenue in the
fourth quarter of 2019 and 33.1 percent for the first quarter of
2019.
Operating expenses were $6.2 million in the
first quarter of 2020, compared with $6.7 million in the fourth
quarter of 2019, and $6.1 million for the first quarter of
2019.
Operating loss for the first quarter of 2020 was
$0.6 million, compared with an operating loss of $2.8 million in
the fourth quarter of 2019, and an operating profit of $0.6 million
for the first quarter of 2019.
Other income, net for the first quarter of 2020
is a gain of $1.2 million. This includes a grant of $1.4 million
from a provincial government agency as an award for relocating to
its province.
Net loss in the first quarter of 2020 was $0.2
million, or $0.01 per share, compared with a net loss of $2.0
million or $0.05 per share in the fourth quarter of 2019, and a net
loss of $1.1 million or $0.03 per share for the first quarter of
2019.
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 2074409). The call will
also be simulcast at www.axt.com. Replays will be available at
(855) 859-2056 (passcode 2074409) until April 29, 2020. 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 is a material science company that develops and manufactures
high-performance compound and single element semiconductor
substrate wafers comprising indium phosphide (InP), gallium
arsenide (GaAs) and germanium (Ge). The company’s
substrate wafers are used when a typical silicon substrate wafer
cannot meet the performance requirements of a semiconductor or
optoelectronic device. End markets include 5G infrastructure,
data center connectivity (silicon photonics), passive optical
networks, LED lighting, lasers, sensors, power amplifiers for
wireless devices and satellite solar cells. AXT’s worldwide
headquarters are in Fremont, California where the company maintains
its sales, administration and customer service
functions. 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.
Forward-Looking
Statements
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; COVID-19 or other
outbreaks of a contagious disease; 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, |
|
|
2020 |
|
2019 |
|
|
|
|
|
|
|
Revenue |
|
$ |
20,723 |
|
|
$ |
20,208 |
|
Cost of revenue |
|
|
15,201 |
|
|
|
13,513 |
|
Gross profit |
|
|
5,522 |
|
|
|
6,695 |
|
Operating expenses: |
|
|
|
|
|
|
Selling, general and administrative |
|
|
4,749 |
|
|
|
4,723 |
|
Research and development |
|
|
1,407 |
|
|
|
1,346 |
|
Total operating expenses |
|
|
6,156 |
|
|
|
6,069 |
|
Income (loss) from
operations |
|
|
(634 |
) |
|
|
626 |
|
Interest income (expense),
net |
|
|
(29 |
) |
|
|
95 |
|
Equity in loss of
unconsolidated joint ventures |
|
|
(120 |
) |
|
|
(1,454 |
) |
Other income (expense),
net |
|
|
1,366 |
|
|
|
(134 |
) |
Income (loss) before provision
for income taxes |
|
|
583 |
|
|
|
(867 |
) |
Provision for income
taxes |
|
|
366 |
|
|
|
156 |
|
Net income (loss) |
|
|
217 |
|
|
|
(1,023 |
) |
Less: Net income attributable to noncontrolling interests |
|
|
(395 |
) |
|
|
(81 |
) |
Net loss attributable to AXT,
Inc. |
|
$ |
(178 |
) |
|
$ |
(1,104 |
) |
Net loss attributable to
AXT, Inc. per common share: |
|
|
|
|
|
|
Basic and diluted |
|
$ |
(0.01 |
) |
|
$ |
(0.03 |
) |
Weighted-average number of
common shares outstanding: |
|
|
|
|
|
|
Basic and diluted |
|
|
39,812 |
|
|
|
39,352 |
|
|
|
|
|
|
|
|
|
|
AXT, INC.CONDENSED
CONSOLIDATED BALANCE SHEETS(Unaudited, in
thousands)
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
|
2020 |
|
2019 |
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
20,061 |
|
|
$ |
26,892 |
|
Short-term investments |
|
|
8,697 |
|
|
|
9,427 |
|
Accounts receivable, net |
|
|
23,613 |
|
|
|
19,031 |
|
Inventories |
|
|
48,253 |
|
|
|
49,152 |
|
Prepaid expenses and other current assets |
|
|
10,638 |
|
|
|
8,703 |
|
Total current assets |
|
|
111,262 |
|
|
|
113,205 |
|
Property, plant and equipment,
net |
|
|
97,490 |
|
|
|
97,403 |
|
Operating lease right-of-use
assets |
|
|
2,810 |
|
|
|
2,938 |
|
Other assets |
|
|
11,078 |
|
|
|
9,803 |
|
Total assets |
|
$ |
222,640 |
|
|
$ |
223,349 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
9,518 |
|
|
$ |
10,098 |
|
Accrued liabilities |
|
|
10,371 |
|
|
|
11,681 |
|
Bank loan |
|
|
6,071 |
|
|
|
5,747 |
|
Total current liabilities |
|
|
25,960 |
|
|
|
27,526 |
|
Long-term portion of royalty
payments |
|
|
1,445 |
|
|
|
— |
|
Noncurrent operating lease
liabilities |
|
|
2,542 |
|
|
|
2,695 |
|
Other long-term
liabilities |
|
|
503 |
|
|
|
366 |
|
Total liabilities |
|
|
30,450 |
|
|
|
30,587 |
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
Preferred stock |
|
|
3,532 |
|
|
|
3,532 |
|
Common stock |
|
|
41 |
|
|
|
41 |
|
Additional paid-in capital |
|
|
238,041 |
|
|
|
236,957 |
|
Accumulated deficit |
|
|
(47,961 |
) |
|
|
(47,783 |
) |
Accumulated other comprehensive loss |
|
|
(6,637 |
) |
|
|
(4,862 |
) |
Total AXT, Inc. stockholders’ equity |
|
|
187,016 |
|
|
|
187,885 |
|
Noncontrolling interests |
|
|
5,174 |
|
|
|
4,877 |
|
Total stockholders’ equity |
|
|
192,190 |
|
|
|
192,762 |
|
Total liabilities and stockholders’ equity |
|
$ |
222,640 |
|
|
$ |
223,349 |
|
|
|
|
|
|
|
|
|
|
Contacts:
Gary FischerChief Financial Officer(510)
438-4700
Leslie
Green
Green Communications Consulting, LLC(650) 312-9060
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