AXT, Inc. Announces Third Quarter 2020 Financial Results
October 28 2020 - 4:05PM
AXT, Inc. (NasdaqGS: AXTI), a leading manufacturer of compound
semiconductor substrates, today reported financial results for the
third quarter, ended September 30, 2020.
Management Qualitative
Comments
“We are pleased to report 28 percent year-over-year revenue
growth in Q3 and earnings above our guidance range,” said Morris
Young, chief executive officer. “These results were driven by
meaningful contribution from strategic applications such as 5G
telecommunications, passive optical networks, and data center
connectivity, where our indium phosphide substrates play an
important role in enabling ongoing technological advancement. We
are excited to see so many of the applications and customer
opportunities for which we have been preparing over the last two
years beginning to take shape. With our gallium arsenide
manufacturing relocation largely complete and the success of our
efforts visible in customer acceptance, our new facilities are
poised to be a cornerstone of our growth and market
differentiation.”
Third Quarter 2020 Results
Revenue for the third quarter of 2020 was $25.5
million, compared with $22.1 million in the second quarter of 2020
and $19.8 million for the third quarter of 2019.
Gross margin was 34.6 percent of revenue for the
third quarter of 2020, compared with 30.6 percent of revenue in the
second quarter of 2020 and 29.0 percent for the third quarter of
2019.
Operating expenses were $6.6 million in the
third quarter of 2020, compared with $6.3 million in the second
quarter of 2020, and $6.2 million for the third quarter of
2019.
Operating profit for the third quarter of 2020
was $2.2 million, compared with an operating profit of $0.5 million
in the second quarter of 2020, and an operating loss of $0.5
million for the third quarter of 2019.
Other expense, provision for income taxes and
income attributable to noncontrolling interests, net for the third
quarter of 2020 was a charge of $1.2 million. This includes a gain
from our unconsolidated joint ventures and other income, together
totaling $0.1 million, a foreign exchange charge of $0.1 million,
$0.7 million for taxes and $0.5 million attributable to
noncontrolling interests.
Net income in the third quarter of 2020 was $1.0
million, or $0.02 per diluted share, compared with net income of
$0.4 million or $0.01 per diluted share in the second quarter of
2020, and a net loss of $0.9 million or $0.02 per basic share for
the third 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 7497220). The call will
also be simulcast at www.axt.com. Replays will be available at
(855) 859-2056 (passcode 7497220) until November 3, 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 and ramping of
production; 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 |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
25,469 |
|
|
$ |
19,841 |
|
|
$ |
68,326 |
|
|
$ |
64,846 |
|
Cost of revenue |
|
|
16,646 |
|
|
|
14,082 |
|
|
|
47,213 |
|
|
|
43,886 |
|
Gross profit |
|
|
8,823 |
|
|
|
5,759 |
|
|
|
21,113 |
|
|
|
20,960 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
4,623 |
|
|
|
4,755 |
|
|
|
14,119 |
|
|
|
14,247 |
|
Research and development |
|
|
2,023 |
|
|
|
1,482 |
|
|
|
4,973 |
|
|
|
4,227 |
|
Total operating expenses |
|
|
6,646 |
|
|
|
6,237 |
|
|
|
19,092 |
|
|
|
18,474 |
|
Income (loss) from
operations |
|
|
2,177 |
|
|
|
(478 |
) |
|
|
2,021 |
|
|
|
2,486 |
|
Interest income (expense),
net |
|
|
(70 |
) |
|
|
41 |
|
|
|
(138 |
) |
|
|
215 |
|
Equity in income (loss) of
unconsolidated joint ventures |
|
|
45 |
|
|
|
(204 |
) |
|
|
(243 |
) |
|
|
(1,650 |
) |
Other income (expense),
net |
|
|
(34 |
) |
|
|
169 |
|
|
|
2,940 |
|
|
|
(55 |
) |
Income (loss) before provision
for income taxes |
|
|
2,118 |
|
|
|
(472 |
) |
|
|
4,580 |
|
|
|
996 |
|
Provision for income
taxes |
|
|
637 |
|
|
|
23 |
|
|
|
1,923 |
|
|
|
776 |
|
Net income (loss) |
|
|
1,481 |
|
|
|
(495 |
) |
|
|
2,657 |
|
|
|
220 |
|
Less: Net income attributable to noncontrolling interests |
|
|
(490 |
) |
|
|
(403 |
) |
|
|
(1,483 |
) |
|
|
(771 |
) |
Net income (loss) attributable
to AXT, Inc. |
|
$ |
991 |
|
|
$ |
(898 |
) |
|
$ |
1,174 |
|
|
$ |
(551 |
) |
Net income (loss) attributable
to AXT, Inc. per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.02 |
|
|
$ |
(0.02 |
) |
|
$ |
0.03 |
|
|
$ |
(0.02 |
) |
Diluted |
|
$ |
0.02 |
|
|
$ |
(0.02 |
) |
|
$ |
0.03 |
|
|
$ |
(0.02 |
) |
Weighted-average number of
common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
40,152 |
|
|
|
39,466 |
|
|
|
39,978 |
|
|
|
39,438 |
|
Diluted |
|
|
40,979 |
|
|
|
39,466 |
|
|
|
40,688 |
|
|
|
39,438 |
|
AXT, INC.CONDENSED
CONSOLIDATED BALANCE SHEETS(Unaudited, in
thousands)
|
|
|
|
|
|
|
|
|
September 30, |
|
December 31, |
|
|
2020 |
|
2019 |
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
22,384 |
|
|
$ |
26,892 |
|
Short-term investments |
|
|
4,505 |
|
|
|
9,427 |
|
Accounts receivable, net |
|
|
22,653 |
|
|
|
19,031 |
|
Inventories |
|
|
48,357 |
|
|
|
49,152 |
|
Prepaid expenses and other current assets |
|
|
10,649 |
|
|
|
8,703 |
|
Total current assets |
|
|
108,548 |
|
|
|
113,205 |
|
Long-term investments |
|
|
2,884 |
|
|
|
— |
|
Property, plant and equipment,
net |
|
|
108,295 |
|
|
|
97,403 |
|
Operating lease right-of-use
assets |
|
|
2,702 |
|
|
|
2,938 |
|
Other assets |
|
|
10,308 |
|
|
|
9,803 |
|
Total assets |
|
$ |
232,737 |
|
|
$ |
223,349 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
12,271 |
|
|
$ |
10,098 |
|
Accrued liabilities |
|
|
10,842 |
|
|
|
11,681 |
|
Bank loan |
|
|
3,380 |
|
|
|
5,747 |
|
Total current liabilities |
|
|
26,493 |
|
|
|
27,526 |
|
Long-term portion of royalty
payments |
|
|
1,193 |
|
|
|
— |
|
Noncurrent operating lease
liabilities |
|
|
2,415 |
|
|
|
2,695 |
|
Other long-term
liabilities |
|
|
744 |
|
|
|
366 |
|
Total liabilities |
|
|
30,845 |
|
|
|
30,587 |
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
Preferred stock |
|
|
3,532 |
|
|
|
3,532 |
|
Common stock |
|
|
41 |
|
|
|
41 |
|
Additional paid-in capital |
|
|
240,422 |
|
|
|
236,957 |
|
Accumulated deficit |
|
|
(46,609 |
) |
|
|
(47,783 |
) |
Accumulated other comprehensive loss |
|
|
(1,992 |
) |
|
|
(4,862 |
) |
Total AXT, Inc. stockholders’ equity |
|
|
195,394 |
|
|
|
187,885 |
|
Noncontrolling interests |
|
|
6,498 |
|
|
|
4,877 |
|
Total stockholders’ equity |
|
|
201,892 |
|
|
|
192,762 |
|
Total liabilities and stockholders’ equity |
|
$ |
232,737 |
|
|
$ |
223,349 |
|
Contacts: |
|
|
|
|
Gary Fischer |
|
|
Chief Financial Officer |
|
|
(510) 438-4700 |
|
|
|
|
|
Leslie Green |
|
|
Green Communications Consulting, LLC |
|
|
(650) 312-9060 |
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