AXT, Inc. Announces Second Quarter 2018 Financial Results
FREMONT, Calif., July 25, 2018 (GLOBE NEWSWIRE) -- AXT, Inc. (Nasdaq: AXTI), a leading manufacturer of compound semiconductor substrates, today reported financial results for the second quarter, ended June 30, 2018.
Second Quarter 2018 Results
Revenue in the second quarter of 2018 was $27.1 million, compared with $24.4 million in the first quarter of 2018 and $23.6 million in the second quarter of 2017.
Gross margin was 40.6 percent of revenue in the second quarter of 2018, compared with 39.2 percent of revenue in the first quarter of 2018 and 30.8 percent in the second quarter of 2017.
Operating expenses were $6.5 million in the second quarter of 2018, compared with $5.6 million in the first quarter of 2018 and $5.0 million in the second quarter of 2017.
Operating profit in the second quarter of 2018 was $4.5 million, compared with operating profit of $3.9 million in the first quarter of 2018 and $2.3 million in the second quarter of 2017.
Interest and other, net was a gain of $0.4 million in the second quarter of 2018, compared with a loss of $0.4 million in the first quarter of 2018, and a loss of $0.2 million in the second quarter of 2017. Interest and other, net for the second quarter of 2018 included interest income and other of $0.2 million, a foreign exchange loss of $0.1 million and a net gain of $0.3 million from the seven partially owned companies in the company’s supply chain, accounted for under the equity method.
Income tax expense in the second quarter of 2018 was $0.4 million, compared with $0.3 million in the first quarter of 2018 and $0.3 million in the second quarter of 2017.
Net income in the second quarter of 2018 was $3.9 million, or $0.10 per diluted share, compared with a net income of $2.9 million or $0.07 per diluted share in the first quarter of 2018, and $1.9 million or $0.05 per diluted share in the second quarter of 2017.
Management Qualitative Comments
“Our financial results for Q2 reflect solid demand in each of our primary product categories,” said Morris Young, chief executive officer. “Broadly, the demand environment for our wafers remains strong, and we continue to focus on producing high-quality products that meet rigorous application requirements, as well as achieving greater efficiency in our manufacturing process. We have also seen an uptick in the price of raw materials, and this has enabled a financial improvement in some of the raw material companies in which we have partial ownership. We are making good progress in the relocation of our gallium arsenide manufacturing line and are encouraged by our success to date.”
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 2293858). The call will also be simulcast on the Internet at www.axt.com. Replays will be available at (855) 859-2056 (passcode 2293858) until July 31, 2018. 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. 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; the ability of the Company 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; 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, | ||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||||
| Revenue | $ | 27,120 | $ | 23,557 | $ | 51,539 | $ | 44,173 | |||||||||
| Cost of revenue | 16,110 | 16,301 | 30,956 | 30,629 | |||||||||||||
| Gross profit | 11,010 | 7,256 | 20,583 | 13,544 | |||||||||||||
| Operating expenses: | |||||||||||||||||
| Selling, general and administrative | 4,987 | 3,942 | 9,209 | 7,735 | |||||||||||||
| Research and development | 1,500 | 1,019 | 2,920 | 2,143 | |||||||||||||
| Total operating expenses | 6,487 | 4,961 | 12,129 | 9,878 | |||||||||||||
| Income from operations | 4,523 | 2,295 | 8,454 | 3,666 | |||||||||||||
| Interest income, net | 139 | 114 | 281 | 212 | |||||||||||||
| Equity in earnings (loss) of unconsolidated joint ventures | 307 | (188 | ) | (27 | ) | (1,121 | ) | ||||||||||
| Other expense, net | (51 | ) | (102 | ) | (266 | ) | (54 | ) | |||||||||
| Income before provision for income taxes | 4,918 | 2,119 | 8,442 | 2,703 | |||||||||||||
| Provision for income taxes | 367 | 321 | 701 | 480 | |||||||||||||
| Net income | 4,551 | 1,798 | 7,741 | 2,223 | |||||||||||||
| Less: Net (income) loss attributable to noncontrolling interests | (650 | ) | 132 | (965 | ) | 372 | |||||||||||
| Net income attributable to AXT, Inc. | $ | 3,901 | $ | 1,930 | $ | 6,776 | $ | 2,595 | |||||||||
| Net income attributable to AXT, Inc. per common share: | |||||||||||||||||
| Basic | $ | 0.10 | $ | 0.05 | $ | 0.17 | $ | 0.07 | |||||||||
| Diluted | $ | 0.10 | $ | 0.05 | $ | 0.17 | $ | 0.07 | |||||||||
| Weighted-average number of common shares outstanding: | |||||||||||||||||
| Basic | 39,001 | 38,306 | 38,970 | 36,238 | |||||||||||||
| Diluted | 40,216 | 39,706 | 40,289 | 37,645 | |||||||||||||
AXT, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited, in thousands)
| June 30, | December 31, | ||||||||
| 2018 | 2017 | ||||||||
| ASSETS | |||||||||
| Current assets: | |||||||||
| Cash and cash equivalents | $ | 29,698 | $ | 44,352 | |||||
| Short-term investments | 18,802 | 20,032 | |||||||
| Accounts receivable, net | 22,434 | 22,778 | |||||||
| Inventories | 57,038 | 45,840 | |||||||
| Prepaid expenses and other current assets | 9,416 | 7,519 | |||||||
| Total current assets | 137,388 | 140,521 | |||||||
| Long-term investments | 5,714 | 12,576 | |||||||
| Property, plant and equipment, net | 65,174 | 46,530 | |||||||
| Other assets | 11,323 | 11,573 | |||||||
| Total assets | $ | 219,599 | $ | 211,200 | |||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
| Current liabilities: | |||||||||
| Accounts payable | $ | 14,059 | $ | 11,445 | |||||
| Accrued liabilities | 11,711 | 11,149 | |||||||
| Total current liabilities | 25,770 | 22,594 | |||||||
| Other long-term liabilities | 296 | 289 | |||||||
| Total liabilities | 26,066 | 22,883 | |||||||
| Stockholders’ equity: | |||||||||
| Preferred stock | 3,532 | 3,532 | |||||||
| Common stock | 39 | 39 | |||||||
| Additional paid-in capital | 232,984 | 231,679 | |||||||
| Accumulated deficit | (48,061 | ) | (54,837 | ) | |||||
| Accumulated other comprehensive income | 1,172 | 3,407 | |||||||
| Total AXT, Inc. stockholders’ equity | 189,666 | 183,820 | |||||||
| Noncontrolling interests | 3,867 | 4,497 | |||||||
| Total stockholders’ equity | 193,533 | 188,317 | |||||||
| Total liabilities and stockholders’ equity | $ | 219,599 | $ | 211,200 | |||||
Contacts:Gary FischerChief Financial Officer(510) 683-5900
Leslie Green Green Communications Consulting, LLC(650) 312-9060