EX-99.1 2 ex-99d1.htm EX-99.1 axti_Ex99_1

 

 

Picture 1

Exhibit 99.1

 

AXT, Inc. Second Quarter 2019 Results

 

July 24, 2019

 

Page 1 of 5

 

AXT, Inc. Announces Second Quarter 2019 Financial Results

 

 

FREMONT, Calif., July 24, 2019 – AXT, Inc. (NasdaqGS: AXTI), a leading  material science company manufacturing single crystal compound semiconductor substrates, today reported financial results for the second quarter ended June 30, 2019.

 

Second Quarter 2019 Results

 

Revenue for the second quarter of 2019 was $24.8 million, compared with $20.2 million in the first quarter of 2019 and $27.1 million for the second quarter of 2018.   

 

Gross margin was 34.3 percent of revenue for the second quarter of 2019, compared with 33.1 percent of revenue in the first quarter of 2019 and 40.6 percent for the second quarter of 2018.

 

Operating expenses were $6.2 million in the second quarter of 2019, compared with $6.1 million in the first quarter of 2019 and $6.5 million for the second quarter of 2018. 

 

Income from operations for the second quarter of 2019 was $2.3 million, compared with an operating profit of $0.6 million in the first quarter of 2019 and an operating profit of $4.5 million for the second quarter of 2018.  

 

Interest income and other, net was a loss of $3,000 for the second quarter of 2019, compared with a loss of $1.5 million in the first quarter of 2019 and a gain of $0.4 million for the second quarter of 2018.  Interest income and other, net for the second quarter of 2019 included interest income of $0.1 million, a foreign exchange loss and other expenses totaling $0.1 million and a net gain of $8,000 from the partially owned companies in AXT’s supply chain, accounted for under the equity method. 

 

Income tax expense in the second quarter of 2019 was $0.6 million, compared with income tax expense of $0.2 million in the first quarter of 2019 and income tax expense of $0.4 million for the second quarter of 2018.

 

Net income in the second quarter of 2019 was $1.5 million, or $0.04 per diluted share, compared with a net loss of $1.1 million or $0.03 per share in the first quarter of 2019 and net income of $3.9 million or $0.10 per diluted share for the second quarter of 2018.

 

 

 

 

AXT, Inc. Second Quarter 2019 Results

 

July 24, 2019

 

Page 2 of 5

 

Management Qualitative Comments

 

“Amidst a backdrop of turbulent geopolitical and global economic conditions, AXT posted a solid quarter,” said Morris Young, chief executive officer. "Revenue came in just ahead of our expectations and our indium phosphide sales achieved an all-time high. In addition, we reduced our inventory, increased our cash and improved our gross margin.  We are continuing to execute on the relocation of our facility and believe that we are laying a solid foundation for the significant technology trends that are likely to drive growth in our business over time."

 

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 9726809). The call will also be simulcast on the Internet at www.axt.com. Replays will be available at (855) 859-2056 (passcode 9726809) until July 30, 2019. 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 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

 

 

 

AXT, Inc. Second Quarter 2019 Results

 

July 24, 2019

 

Page 3 of 5

 

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; possible factory shutdowns as a result of air pollution in China; 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.

 

 

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FINANCIAL TABLES TO FOLLOW

 

 

 

AXT, Inc. Second Quarter 2019 Results

 

July 24, 2019

 

Page 4 of 5

 

AXT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Three Months Ended

    

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2019

    

2018

 

2019

    

2018

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

24,797

 

$

27,120

 

$

45,005

 

$

51,539

 

Cost of revenue

 

 

16,291

 

 

16,110

 

 

29,804

 

 

30,956

 

Gross profit

 

 

8,506

 

 

11,010

 

 

15,201

 

 

20,583

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

4,769

 

 

4,987

 

 

9,492

 

 

9,209

 

Research and development

 

 

1,399

 

 

1,500

 

 

2,745

 

 

2,920

 

Total operating expenses

 

 

6,168

 

 

6,487

 

 

12,237

 

 

12,129

 

Income from operations

 

 

2,338

 

 

4,523

 

 

2,964

 

 

8,454

 

Interest income, net

 

 

79

 

 

139

 

 

174

 

 

281

 

Equity in income (loss) of unconsolidated joint ventures

 

 

 8

 

 

307

 

 

(1,446)

 

 

(27)

 

Other (expense), net

 

 

(90)

 

 

(51)

 

 

(224)

 

 

(266)

 

Income (loss) before provision for income taxes

 

 

2,335

 

 

4,918

 

 

1,468

 

 

8,442

 

Provision for income taxes

 

 

597

 

 

367

 

 

753

 

 

701

 

Net income (loss)

 

 

1,738

 

 

4,551

 

 

715

 

 

7,741

 

Less: Net income attributable to noncontrolling interests

 

 

(287)

 

 

(650)

 

 

(368)

 

 

(965)

 

Net income (loss) attributable to AXT, Inc.

 

$

1,451

 

$

3,901

 

$

347

 

$

6,776

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.04

 

$

0.10

 

$

0.01

 

$

0.17

 

Diluted

 

$

0.04

 

$

0.10

 

$

0.01

 

$

0.17

 

Weighted-average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

39,447

 

 

39,001

 

 

39,399

 

 

38,970

 

Diluted

 

 

40,123

 

 

40,216

 

 

40,045

 

 

40,289

 

 

 

 

 

 

AXT, Inc. Second Quarter 2019 Results

 

July 24, 2019

 

Page 5 of 5

 

AXT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands)

 

 

 

 

 

 

 

 

 

 

    

June 30,

    

December 31, 

 

 

 

2019

 

2018

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

28,732

 

$

16,526

 

Short-term investments

 

 

7,517

 

 

22,129

 

Accounts receivable, net

 

 

18,275

 

 

19,586

 

Inventories

 

 

50,326

 

 

58,571

 

Prepaid expenses and other current assets

 

 

6,853

 

 

11,728

 

Total current assets

 

 

111,703

 

 

128,540

 

Long-term investments

 

 

1,260

 

 

717

 

Property, plant and equipment, net

 

 

87,613

 

 

82,280

 

Operating lease right-of-use assets

 

 

986

 

 

 —

 

Other assets

 

 

12,328

 

 

11,987

 

Total assets

 

$

213,890

 

$

223,524

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

6,004

 

$

13,338

 

Accrued liabilities

 

 

10,945

 

 

15,371

 

Total current liabilities

 

 

16,949

 

 

28,709

 

Noncurrent operating lease liabilities

 

 

895

 

 

 —

 

Other long-term liabilities

 

 

391

 

 

283

 

Total liabilities

 

 

18,235

 

 

28,992

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

Preferred stock

 

 

3,532

 

 

3,532

 

Common stock

 

 

40

 

 

40

 

Additional paid-in capital

 

 

235,702

 

 

234,418

 

Accumulated deficit

 

 

(44,836)

 

 

(45,183)

 

Accumulated other comprehensive loss

 

 

(3,130)

 

 

(1,972)

 

Total AXT, Inc. stockholders’ equity

 

 

191,308

 

 

190,835

 

Noncontrolling interests

 

 

4,347

 

 

3,697

 

Total stockholders’ equity

 

 

195,655

 

 

194,532

 

Total liabilities and stockholders’ equity

 

$

213,890

 

$

223,524