EX-99.1 2 ex99_1.htm EXHIBIT 99.1
Exhibit 99.1
 
FOR IMMEDIATE RELEASE
 
Contacts:
Morris S. Young
Chief Executive Officer
(510) 683-5900

Leslie Green
Green Communications Consulting, LLC
(650) 312-9060

AXT, Inc. Announces Second Quarter 2014 Financial Results

FREMONT, Calif., July 31, 2014 – AXT, Inc. (NasdaqGS: AXTI), a leading manufacturer of compound semiconductor substrates, today reported financial results for the second quarter ended June 30, 2014.

Second Quarter 2014 Results
Revenue for the second quarter of 2014 was $21.4 million compared with $19.3 million in the first quarter of 2014. Total gallium arsenide (GaAs) substrate revenue was $11.3 million for the second quarter of 2014, compared with $8.5 million in the first quarter of 2014. Indium phosphide (InP) substrate revenue was $3.0 million for the second quarter of 2014, compared with $2.2 million in the first quarter of 2014. Germanium (Ge) substrate revenue was $1.7 million for the second quarter of 2014, compared with $3.2 million in the first quarter of 2014. Raw materials sales were $5.4 million for the second quarter of 2014, consistent with $5.4 million in the first quarter of 2014.

Gross margin was 19.4 percent of revenue for the second quarter of 2014, compared with 14.1 percent of revenue in the first quarter of 2014.

Operating expenses were $4.7 million in the second quarter of 2014, compared with $5.1 million in the first quarter of 2014. The decrease in operating expenses was primarily the result of cost-savings initiatives that were implemented during the first quarter of 2014.

Loss from operations for the second quarter of 2014 was $515,000 compared with a loss from operations of $2.4 million in the first quarter of 2014.

Net interest and other income for the second quarter of 2014 was $1.2 million, which was primarily attributable to $625,000 from equity earnings of the company’s unconsolidated joint ventures, $324,000 from the sale of IntelliEpi stock, $158,000 from a gain on foreign exchange and $127,000 from interest income. This compares with net interest and other income of $624,000 in the first quarter of 2014, which was mainly attributable to $487,000 equity earnings of our unconsolidated joint ventures, and $127,000 from interest income.

Net income in the second quarter of 2014 was $319,000 or $0.01 per diluted share compared with net loss of $2.0 million or $0.06 per diluted share in the first quarter of 2014.
AXT, Inc.
4281 Technology Drive
Fremont, CA 94538
Tel: 510.683.5900
Fax: 510.353.0668
www.axt.com.
AXT, Inc. Announces Second Quarter 2014 Results
July 31, 2014
Page 2 of 5

Management Qualitative Comments
“Q2 was a positive quarter for AXT,” said Morris Young, chief executive officer. “Through a combination of higher revenues, positive sales mix, other income and the first full quarter of benefit from our cost-savings measures, we achieved profitability ahead of our plan. In addition, with continued focus on cash management, we drove improvement in our balance sheet, growing our cash position and reducing inventory. While the business environment remains challenging, during the second quarter we experienced stronger demand in both our semi-insulating and semi-conducting gallium arsenide substrates as well as continued strength in indium phosphide. Looking forward, we remain cautiously optimistic about our opportunities to drive further growth in our business.”

Conference Call
The company will host a conference call to discuss these results today at 1:30 p.m. PDT. The conference call can be accessed at (719) 325-2393 (passcode 1988577). The call will also be simulcast on the Internet at www.axt.com. Replays will be available at (719) 457-0820 (passcode 1988577) until August 7, 2014. 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.

AXT will provide highlights of its second quarter results on today’s conference call, but investors can find the full financial summary on the investor relations portion of the company’s website at www.axt.com.

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 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 joint ventures in China producing raw materials. For more information, see AXT’s website at http://www.axt.com.
AXT, Inc. Announces Second Quarter 2014 Results
July 31, 2014
Page 3 of 5

Safe Harbor Statement
The foregoing paragraphs contain forward-looking statements within the meaning of the Federal Securities laws, including statements regarding the market demand for our products, our market opportunity, our business planning and management approach and our expectations with respect to our business prospects. 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
AXT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share data)

 
  
Three Months Ended
    
Six Months Ended
  
 
  
June 30,
    
June 30,
  
 
  
2014
    
2013
    
2014
    
2013
  
 
  
   
   
   
 
Revenue
  
$
21,449
    
$
23,831
    
$
40,794
    
$
46,211
  
Cost of revenue
    
17,289
      
20,746
      
33,916
      
39,642
  
Gross profit
    
4,160
      
3,085
      
6,878
      
6,569
  
 
                                
Operating expenses:
                                
Selling, general and administrative
    
3,688
      
4,207
      
7,124
      
8,132
  
Research and development
    
987
      
1,039
      
1,762
      
1,861
  
Restructuring charge
                    
907
          
Total operating expenses
    
4,675
      
5,246
      
9,793
      
9,993
  
Income (loss) from operations
    
(515
)
    
(2,161
)
    
(2,915
)
    
(3,424
)
Interest income, net
    
127
      
50
      
254
      
81
  
Equity in earnings of unconsolidated joint ventures
    
625
      
471
      
1,112
      
753
  
Other income (expense), net
    
476
      
381
      
486
      
(444
)
 
                                
Income (loss) before provision for income taxes
    
713
      
(1,259
)
    
(1,063
)
    
(3,034
)
Provision (benefit) for income taxes
    
152
      
342
      
211
      
526
  
Net income (loss)
    
561
      
(1,601
)
    
(1,274
)
    
(3,560
)
 
                                
Less: Net income (loss) attributable to noncontrolling interest
    
(242
)
    
(434
)
    
(447
)
    
(875
)
Net income (loss) attributable to AXT, Inc.
  
$
319
    
$
(2,035
)
  
$
(1,721
)
  
$
(4,435
)
 
                                
Net income (loss) attributable to AXT, Inc. per common share:
                                
Basic
  
$
0.01
    
$
(0.06
)
  
$
(0.06
)
  
$
(0.14
)
Diluted
  
$
0.01
    
$
(0.06
)
  
$
(0.06
)
  
$
(0.14
)
 
                                
Weighted average number of common shares outstanding:
                                
Basic
    
32,381
      
32,382
      
32,407
      
32,340
  
Diluted
    
32,597
      
32,382
      
32,407
      
32,340
  

- more -
AXT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)

 
  
June 30,
    
December 31,
  
 
  
2014
    
2013
  
Assets:
  
   
 
Current assets
  
   
 
Cash and cash equivalents
  
$
26,307
    
$
24,961
  
Short-term investments
    
22,097
      
12,499
  
Accounts receivable, net
    
19,288
      
14,943
  
Inventories
    
35,263
      
39,127
  
Related party notes receivable - current
    
0
      
0
  
Prepaid expenses and other current assets
    
4,695
      
8,010
  
Total current assets
    
107,650
      
99,540
  
 
                
Long-term investments
    
959
      
10,145
  
Property, plant and equipment, net
    
35,226
      
37,621
  
Related party notes receivable - long-term
    
1,703
      
1,715
  
Other assets
    
15,170
      
14,801
  
 
                
Total assets
  
$
160,708
    
$
163,822
  
 
                
Liabilities and stockholders' equity:
                
Current liabilities
                
Accounts payable
  
$
6,612
    
$
8,140
  
Accrued liabilities
    
7,122
      
7,286
  
Total current liabilities
    
13,734
      
15,426
  
 
                
Long-term portion of royalty payments
    
2,125
      
2,525
  
Other long-term liabilities
    
366
      
325
  
Total liabilities
    
16,225
      
18,276
  
 
                
Stockholders' equity:
                
Preferred stock
    
3,532
      
3,532
  
Common stock
    
32
      
32
  
Additional paid-in capital
    
194,751
      
194,156
  
Accumulated deficit
    
(68,726
)
    
(67,005
)
Accumulated other comprehensive income
    
8,722
      
8,953
  
Total AXT, Inc. stockholders' equity
    
138,311
      
139,668
  
 
                
Noncontrolling interest
    
6,172
      
5,878
  
Total stockholders' equity
    
144,483
      
145,546
  
 
                
Total liabilities and stockholders' equity
  
$
160,708
    
$
163,822