EX-99.1 2 a10-20112_1ex99d1.htm EX-99.1

Exhibit 99.1

 

FOR IMMEDIATE RELEASE

 

 

Contacts:

 

Raymond A. Low

Chief Financial Officer

(510) 683-5900

 

Leslie Green

Green Communications Consulting, LLC

(650) 312-9060

 

AXT, Inc. Announces Third Quarter 2010 Financial Results

 

·      Q3 FY 2010 Net Revenues: $26.8 million

 

·      Q3 FY 2010 GAAP Gross Margin: 39.3 percent

 

·      Q3 FY 2010 GAAP Net Income: $5.6 million; $0.17 per share (diluted)

 

FREMONT, Calif., Oct 28, 2010 — AXT, Inc. (NasdaqGM: AXTI), a leading manufacturer of compound semiconductor substrates, today reported financial results for the third quarter ended September 30, 2010.

 

Third Quarter 2010 Results

Revenue for the third quarter of 2010 was $26.8 million, compared with $23.2 million in the second quarter of 2010, and $16.8 million in the third quarter of 2009.

 

Total gallium arsenide (GaAs) substrate revenue was $19.2 million for the third quarter of 2010, compared with $16.2 million in the second quarter of 2010, and $13.3 million in the third quarter of 2009. Indium phosphide (InP) substrate revenue was $955,000 for the third quarter of 2010, compared with $1.1 million in the second quarter of 2010, and $688,000 in the third quarter of 2009. Germanium (Ge) substrate revenue was $2.3 million for the third quarter of 2010 compared with $1.6 million in the second quarter of 2010 and $1.8 million in the third quarter of 2009. Raw materials sales were $4.4 million for the third quarter of 2010, compared with $4.2 million in the second quarter of 2010 and $1.0 million in the third quarter of 2009.

 

Gross margin was 39.3 percent of revenue for the third quarter of 2010. By comparison, gross margin in the second quarter of 2010 was 36.8 percent of revenue. Gross margin was 32.9 percent of revenue for the third quarter of 2009.

 

Operating expenses were $3.8 million in the third quarter of 2010, compared with $3.6 million in the second quarter of 2010. Operating expenses in the third quarter of 2009 were $3.7 million.

 

 

 

AXT, Inc.

4281 Technology Drive

Fremont, CA 94538

Tel: 510.683.5900

Fax: 510.353.0668

www.axt.com.

 

 


 

Income from operations for the third quarter of 2010 was $6.7 million compared with income from operations of $5.0 million in the second quarter of 2010, and income from operations of $1.9 million in the third quarter of 2009.

 

Net interest and other income for the third quarter of 2010 was $442,000, which included an unrealized foreign exchange gain of $210,000. This compares with net interest and other income of $1.6 million in the second quarter of 2010, which included $1.2 million, net, sales tax refund and an unrealized foreign exchange gain of $230,000, and net interest and other income of $677,000 in the third quarter of 2009, which included an unrealized foreign exchange gain of $302,000.

 

Net income in the third quarter of 2010 was $5.6 million or $0.17 per diluted share compared with net income of $5.5 million or $0.17 per diluted share in the second quarter of 2010, and with a net income of $2.1 million or $0.07 per diluted share in the third quarter of 2009. Excluding the $1.2 million, net, sales tax refund or $0.04 per diluted share, our net income in the second quarter of 2010 was $4.3 million or $0.13 per diluted share

 

Management Qualitative Comments

“Q3 was another strong quarter for AXT,” said Morris Young, chief executive officer.  “Solid demand in all of our key end markets coupled with great execution across our organization allowed us to deliver outstanding financial results and continued increases in our market share and customer penetration.  Not only did we exceed our revenue expectations, our gross margin performance was the highest it has been in many years. We continue to see growing momentum in the long-term secular trends that are fueling our growth, including the adoption of smartphones and other intelligent wireless devices, the proliferation of LED applications and the expansion of photovoltaic technology.  These trends are opening up exciting opportunities for our business that we believe will extend for years to come.”

 

Outlook for Fourth Quarter, Ending December 31, 2010

AXT estimates revenue for the fourth quarter will increase to between $28.0 million and $29.0 million. The company estimates that net income per share will be between $0.15 and $0.17, which takes into account our weighted average share count of approximately 32.4 million shares.

 

Conference Call

The company will also host a conference call to discuss these results on October 28, 2010 at 1:30 p.m. PDT. The conference call can be accessed at (719) 325-4760 (passcode 6968854). The call will also be simulcast on the Internet at www.axt.com. Replays will be available at (719) 457-0820 (passcode 6968854) until November 4, 2010. 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) 683-5900.

 

About AXT, Inc.

AXT designs, develops, manufactures and distributes high-performance compound and single element semiconductor substrates comprising gallium arsenide (GaAs), indium phosphide (InP) 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

 

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communications and solar cell. 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 five joint ventures 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 statements regarding our outlook for the fourth quarter of 2010, the current and long-term growth and trends in the demand for our products, the outlook for sales of wireless devices and the adoption of and investment in LED technology, the change in the composition of our revenues by product, and the positioning of the company in terms of capacity, raw material access and cost-structure within the industry.  These forward-looking statements are based upon specific assumptions that are subject to uncertainties and factors relating to the company’s operations and business environment, which could cause actual results of the company 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; 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; and other factors as set forth in the company’s annual report on Form 10-K 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

 

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AXT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share data)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

 

2010

 

2009

 

2010

 

2009

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

26,809

 

$

16,819

 

$

68,627

 

$

37,528

 

Cost of revenue

 

16,278

 

11,281

 

42,829

 

29,711

 

Gross profit

 

10,531

 

5,538

 

25,798

 

7,817

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

3,347

 

3,323

 

9,805

 

10,815

 

Research and development

 

462

 

360

 

1,428

 

1,175

 

Restructuring charge

 

—

 

—

 

—

 

507

 

Total operating expenses

 

3,809

 

3,683

 

11,233

 

12,497

 

Income (loss) from operations

 

6,722

 

1,855

 

14,565

 

(4,680

)

Interest income (expense), net

 

26

 

39

 

16

 

117

 

Other income (expense), net

 

442

 

638

 

2,077

 

537

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before provision for income taxes

 

7,190

 

2,532

 

16,658

 

(4,026

)

Provision for income taxes

 

871

 

201

 

1,677

 

513

 

Net income (loss)

 

6,319

 

2,331

 

14,981

 

(4,539

)

 

 

 

 

 

 

 

 

 

 

Less: Net income (loss) attributable to noncontrolling interest

 

(680

)

(210

)

(1,227

)

(136

)

Net income (loss) attributable to AXT, Inc.

 

$

5,639

 

$

2,121

 

$

13,754

 

$

(4,675

)

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to AXT, Inc. per common share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.18

 

$

0.07

 

$

0.44

 

$

(0.16

)

Diluted

 

$

0.17

 

$

0.07

 

$

0.42

 

$

(0.16

)

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

30,944

 

30,475

 

30,853

 

30,449

 

Diluted

 

32,509

 

30,911

 

32,170

 

30,449

 

 

- more -

 


 

AXT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands)

 

 

 

September 30,

 

December 31,

 

 

 

2010

 

2009

 

Assets:

 

 

 

 

 

Current assets

 

 

 

 

 

Cash and cash equivalents

 

$

23,393

 

$

16,934

 

Short-term investments

 

17,606

 

18,469

 

Accounts receivable, net

 

18,977

 

15,362

 

Inventories, net

 

33,153

 

27,718

 

Prepaid expenses and other current assets

 

3,451

 

2,411

 

Total current assets

 

96,580

 

80,894

 

 

 

 

 

 

 

Property, plant and equipment, net

 

22,709

 

20,853

 

Other assets

 

6,313

 

6,199

 

 

 

 

 

 

 

Total assets

 

$

125,602

 

$

107,946

 

 

 

 

 

 

 

Liabilities and stockholders’ equity:

 

 

 

 

 

Current liabilities

 

 

 

 

 

Accounts payable

 

$

5,979

 

$

5,571

 

Accrued liabilities

 

6,557

 

4,566

 

Current portion of long-term debt

 

—

 

76

 

Total current liabilities

 

12,536

 

10,213

 

 

 

 

 

 

 

Long-term debt, net of current portion

 

0

 

420

 

Other long-term liabilities

 

30

 

62

 

Total liabilities

 

12,566

 

10,695

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Preferred stock

 

3,532

 

3,532

 

Common stock

 

189,140

 

187,901

 

Accumulated deficit

 

(87,376

)

(101,130

)

Other comprehensive income

 

4,276

 

4,300

 

Total AXT, Inc. stockholders’ equity

 

109,572

 

94,603

 

 

 

 

 

 

 

Noncontrolling interest

 

3,464

 

2,648

 

Total stockholders’ equity

 

113,036

 

97,251

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

125,602

 

$

107,946