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AXT, Inc. Announces Second Quarter 2017 Financial Results

FREMONT, Calif., July 26, 2017 (GLOBE NEWSWIRE) -- AXT, Inc. (Nasdaq:AXTI), a leading manufacturer of compound semiconductor substrates, today reported financial results for the second quarter, ended June 30, 2017.

Second Quarter 2017 Results

Revenue for the second quarter of 2017 was $23.6 million, compared with $20.6 million in the first quarter of 2017.

Gross margin was 30.8 percent of revenue for the second quarter of 2017, compared with 30.5 percent of revenue in the first quarter of 2017. Second quarter substrate gross margin was higher than the total company gross margin and was offset by lower gross margin on raw materials.

Operating expenses were $5.0 million in the second quarter of 2017, compared with $4.9 million in the first quarter of 2017.

Operating profit was $2.3 million for the second quarter of 2017, compared with $1.4 million in the first quarter of 2017.

Interest and other, net was a loss of $0.2 million for the second quarter of 2017, compared with a loss of $0.8 million in the first quarter of 2017. Tax expense in the second quarter of 2017 was $0.3 million compared to $0.2 million in the first quarter of 2017.

Net profit was $1.9 million, or $0.05 per diluted share, in the second quarter of 2017 compared with a net profit of $0.7 million, or $0.02 per diluted share, in the first quarter of 2017.

Management Qualitative Comments

“2017 is shaping up to be a solid year of growth for AXT,” said Morris Young, chief executive officer. “Across our portfolio, we are seeing emerging technologies and strengthening demand from established applications that are driving growth in each of our substrate product categories. As a result, we achieved record revenue in indium phosphide substrates in Q2, and posted solid improvement in semi-insulating gallium arsenide, semi-conducting gallium arsenide, and germanium substrates. Our customer and revenue base continues to diversify, giving us a broad-based opportunity for continued business expansion.”

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 50482889). The call will also be simulcast on the Internet at www.axt.com. Replays will be available at (855) 859-2056 (passcode 50482889) until August 1, 2017. 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. 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 applications. 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, for example, statements regarding the market demand for our products, our growth prospects and opportunities for continued business expansion, our market opportunity, and our expectations with respect to our business prospects. 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: overall conditions in the markets in which the company competes; global financial conditions and uncertainties; policies and regulations in China; 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; our ability to control costs, our ability to utilize our manufacturing capacity; product yields and their impact on gross margins; 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,
2017
2016
2017
2016
Revenue $23,557 $20,495 $44,173 $39,208
Cost of revenue 16,301 14,468 30,629 27,928
Gross profit 7,256 6,027 13,544 11,280
Operating expenses:
Selling, general and administrative 3,942 3,419 7,735 6,793
Research and development 1,019 1,472 2,143 2,853
Restructuring charge 226 226
Total operating expenses 4,961 5,117 9,878 9,872
Income from operations 2,295 910 3,666 1,408
Interest income, net 114 100 212 198
Equity in loss of unconsolidated joint ventures (188) (400) (1,121) (856)
Other (expense) income, net (102) 328 (54) 518
Income before provision for income taxes 2,119 938 2,703 1,268
Provision for income taxes 321 140 480 537
Net income 1,798 798 2,223 731
Less: Net loss attributable to noncontrolling interests 132 353 372 462
Net income attributable to AXT, Inc. $1,930 $1,151 $2,595 $1,193
Net income attributable to AXT, Inc. per common share:
Basic $0.05 $0.03 $0.07 $0.03
Diluted $0.05 $0.03 $0.07 $0.03
Weighted average number of common shares outstanding:
Basic 38,306 32,020 36,238 32,011
Diluted 39,706 32,451 37,645 32,354



AXT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
June 30, December 31,
2017 2016
ASSETS
Current assets:
Cash and cash equivalents $ 56,483 $ 36,152
Short-term investments 22,463 11,415
Accounts receivable, net 18,262 14,453
Inventories 40,627 40,152
Related party notes receivable – current 109
Prepaid expenses and other current assets 5,301 5,114
Total current assets 143,245 107,286
Long-term investments 8,578 6,156
Property, plant and equipment, net 27,945 27,805
Related party notes receivable – long-term 157
Other assets 12,004 12,842
Total assets $ 191,772 $ 154,246
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 8,189 $ 6,691
Accrued liabilities 9,363 9,260
Total current liabilities 17,552 15,951
Long-term portion of royalty payments 287 575
Other long-term liabilities 220 330
Total liabilities 18,059 16,856
Stockholders’ equity:
Preferred stock 3,532 3,532
Common stock 39 33
Additional paid-in-capital 227,539 194,177
Accumulated deficit (62,390) (64,985)
Accumulated other comprehensive income 1,293 253
Total AXT, Inc. stockholders’ equity 170,013 133,010
Noncontrolling interests 3,700 4,380
Total stockholders’ equity 173,713 137,390
Total liabilities and stockholders’ equity $ 191,772 $ 154,246


Contact: Gary Fischer Chief Financial Officer (510) 438-4700

Source:AXT, Inc.