AXT, Inc. Announces Fourth Quarter and Fiscal Year 2021 Financial Results

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FREMONT, Calif., Feb. 16, 2022 (GLOBE NEWSWIRE) -- AXT, Inc. AXTI, a leading manufacturer of compound semiconductor substrates, today reported financial results for the fourth quarter and fiscal year, ended December 31, 2021.

Management Qualitative Comments

"2021 was a pivotal year for our business," said Morris Young, chief executive officer. "We achieved 44 percent revenue growth, driven by market expansion and strategic customer wins, and delivered a more than 350 percent increase in our profitability. We believe we are hitting an inflection point in which applications that were once considered early stage technologies are now moving to mainstream adoption. And as we look ahead, we expect our momentum to continue. With our current growth drivers, we believe we can deliver healthy double-digit revenue growth in 2022. Our investments in capacity, R&D for larger diameter substrates, and the STAR Market IPO of our Tongmei subsidiary give us significant competitive advantages in our ability to scale our business, and meet the needs of Tier-1 customers and emerging high-volume applications. We have a strong foundation in place and believe that the stage is set for another year of meaningful achievement in 2022."

Fourth Quarter 2021 Results

  • Revenue for the fourth quarter of 2021 was $37.7 million, compared with $34.6 million in the third quarter of 2021 and $27.0 million for the fourth quarter of 2020.   This is 40% quarterly growth over the fourth quarter of 2020.

  • GAAP gross margin was 32.2 percent of revenue for the fourth quarter of 2021, compared with 33.3 percent of revenue in the third quarter of 2021 and 33.9 percent for the fourth quarter of 2020.

  • Non-GAAP gross margin, after eliminating charges for stock compensation, was 32.4 percent of revenue for the fourth quarter of 2021, compared with 33.8 percent of revenue in the third quarter of 2021 and 34.0 percent for the fourth quarter of 2020.

  • GAAP operating expenses were $9.1 million in the fourth quarter of 2021. This compares with $9.1 million in the third quarter of 2021 and $7.2 million for the fourth quarter of 2020.  

  • Non-GAAP operating expenses were $8.1 million in the fourth quarter of 2021. This compares with $7.7 million in the third quarter of 2021 and $6.6 million for the fourth quarter of 2020.

  • GAAP operating profit for the fourth quarter of 2021 was $3.0 million, compared with operating profit of $2.4 million in the third quarter of 2021 and an operating profit of $1.9 million for the fourth quarter of 2020.

  • Non-GAAP operating profit for the fourth quarter of 2021 was $4.1 million, compared with operating profit of $4.0 million in the third quarter of 2021 and an operating profit of $2.6 million for the fourth quarter of 2020.

  • Non-operating income and expense, net (including income attributable to noncontrolling interests and redeemable noncontrolling interests) for the fourth quarter of 2021 was an expense of $0.1 million, compared with income of $1.4 million in the third quarter of 2021 and income of $0.1 million for the fourth quarter of 2020.

  • GAAP net income in the fourth quarter of 2021 was $3.0 million, or $0.07 per share, compared with net income of $3.8 million or $0.09 per share in the third quarter of 2021, and net income of $2.1 million or $0.05 per share for the fourth quarter of 2020.

  • Non-GAAP net income in the fourth quarter of 2021 was $4.1 million, or $0.09 per share, compared with net income of $5.4 million or $0.13 per share in the third quarter of 2021, and net income of $2.8 million or $0.06 per share for the fourth quarter of 2020.

Fiscal Year 2021 Results (January 1 to December 31, 2021)

  • Revenue for fiscal year 2021 was $137.4 million, an increase of 44 percent from $95.4 million in fiscal year 2020.  

  • GAAP gross margin for fiscal year 2021 was 34.5 percent of revenue, up from 31.7 percent of revenue in fiscal year 2020.

  • Non-GAAP gross margin for fiscal year 2021 was 34.8 percent of revenue, up from 31.9 percent of revenue in fiscal year 2020.

  • GAAP operating expenses for fiscal year 2021 were $34.5 million, compared with $26.3 million in fiscal year 2020.

  • Non-GAAP operating expenses for fiscal year 2021 were $30.4 million, compared with $23.8 million in fiscal year 2020.

  • GAAP operating income for fiscal year 2021 was $12.9 million compared with $3.9 million in fiscal 2020.

  • Non-GAAP operating income for fiscal year 2021 was $17.4 million compared with $6.6 million in fiscal 2020.

  • GAAP net income for fiscal 2021 was $14.6 million, or $0.34 per share, compared with $3.2 million, or $0.07 per share for fiscal 2020.

  • Non-GAAP net income for fiscal 2021 was $19.1 million, or $0.44 per share, compared with $5.9 million, or $0.14 per share for fiscal 2020.
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STAR Market Listing Update

On January 10, 2022 AXT announced that Tongmei, their subsidiary in Beijing, China, submitted to the Shanghai Stock Exchange in late December 2021 their application to go public on the STAR Market. The application was accepted for consideration on January 10, 2022. The process of going public on the STAR Market includes several periods of review and, therefore, is a lengthy process. Tongmei expects to accomplish this goal in the second half of 2022. AXT has posted a brief summary of the plan and the process on its website at http://www.axt.com.

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 7427708). The call will also be simulcast on the Internet at www.axt.com. Replays will be available at (855) 859-2056 (passcode 7427708) until February 24, 2022. 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 is a material science company that develops and manufactures high-performance compound and single element semiconductor substrate wafers comprising indium phosphide (InP), gallium arsenide (GaAs) and germanium (Ge). The company's substrate wafers are used when a typical silicon substrate wafer cannot meet the performance requirements of a semiconductor or optoelectronic device. End markets include 5G infrastructure, data center connectivity (silicon photonics), passive optical networks, LED lighting, lasers, sensors, power amplifiers for wireless devices and satellite solar cells. AXT's worldwide headquarters are in Fremont, California where the company maintains sales, administration and customer service functions. AXT has its Asia headquarters in Beijing, China and manufacturing facilities in three separate locations in China. In addition, as part of its supply chain strategy, the company has partial ownership in ten companies in China producing raw materials for its manufacturing process. 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, our belief that we can deliver healthy double-digit revenue growth in 2022, statements regarding completing other preliminary steps in connection with the proposed listing of shares of Tongmei on the STAR Market, being accepted to list shares of Tongmei on the STAR Market and the timing and completion of such listing of shares of Tongmei on the STAR Market. Additional examples of forward-looking statements include statements regarding the market demand for our products, our growth prospects and opportunities for continued business expansion, including technology trends and new applications, our market opportunity, our ability to lead our industry, 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 expressed or implied in the forward-looking statements contained in the foregoing discussion. These uncertainties and factors include but are not limited to: the withdrawal, cancellations or requests for redemptions by private equity funds in China of investments in Tongmei, the administrative challenges in satisfying the requirements of various government agencies in China in connection with the investments in Tongmei and the listing of shares of Tongmei on the STAR Market, continued open access to companies to list shares on the STAR Market, investor enthusiasm for new listings of shares on the STAR Market and geopolitical tensions between China and the United States. Additional 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 and ramping of production; possible factory shutdowns as a result of air pollution in China; COVID-19 or other outbreaks of a contagious disease; 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.


FINANCIAL TABLES TO FOLLOW

AXT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share data)

              
     Three Months Ended     Year Ended 
  December 31, December 31, 
  2021     2020  2021     2020     
              
Revenue $37,732  $27,035  $137,393  $95,361  
Cost of revenue  25,593   17,873   89,979   65,086  
Gross profit  12,139   9,162   47,414   30,275  
Operating expenses:             
Selling, general and administrative  6,348   5,081   24,189   19,200  
Research and development  2,757   2,162   10,328   7,135  
Total operating expenses  9,105   7,243   34,517   26,335  
Income from operations  3,034   1,919   12,897   3,940  
Interest expense, net  (158)  (41)  (213)  (179) 
Equity in income of unconsolidated joint ventures  735   354   4,409   111  
Other income (expense), net  (389)  260   509   3,200  
Income before provision for (benefit from) income taxes  3,222   2,492   17,602   7,072  
Provision for (benefit from) income taxes  (411)  108   1,093   2,031  
Net income  3,633   2,384   16,509   5,041  
Less: Net income attributable to noncontrolling interests and redeemable noncontrolling interests  (668)  (320)  (1,934)  (1,803) 
Net income attributable to AXT, Inc. $2,965  $2,064  $14,575  $3,238  
Net income attributable to AXT, Inc. per common share:             
Basic $0.07  $0.05  $0.35  $0.08  
Diluted $0.07  $0.05  $0.34  $0.07  
Weighted-average number of common shares outstanding:             
Basic  41,758   40,678   41,367   40,152  
Diluted  42,750   42,042   42,720   41,025  

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

        
     December 31,    December 31,  
  2021  2020  
        
ASSETS       
Current assets:       
Cash and cash equivalents $36,763  $72,602  
Short-term investments  5,419   240  
Accounts receivable, net  34,839   24,558  
Inventories  65,912   51,515  
Prepaid expenses and other current assets  17,252   15,603  
Total current assets  160,185   164,518  
Long-term investments  9,576   5,726  
Property, plant and equipment, net  142,415   115,825  
Operating lease right-of-use assets  2,324   2,683  
Other assets  17,941   10,110  
Total assets $332,441  $298,862  
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS' EQUITY       
Current liabilities:       
Accounts payable $16,649  $12,669  
Accrued liabilities  17,057   15,995  
Short-term loan, related party  1,887     
Bank loan  12,229   10,411  
Total current liabilities  47,822   39,075  
Noncurrent operating lease liabilities  1,935   2,374  
Other long-term liabilities  2,453   1,881  
Total liabilities  52,210   43,330  
        
Redeemable noncontrolling interests  50,385   47,563  
        
Stockholders' equity:       
Preferred stock  3,532   3,532  
Common stock  43   42  
Additional paid-in capital  231,622   230,381  
Accumulated deficit  (29,970)  (44,545) 
Accumulated other comprehensive income  6,302   3,209  
Total AXT, Inc. stockholders' equity  211,529   192,619  
Noncontrolling interests  18,317   15,350  
Total stockholders' equity  229,846   207,969  
Total liabilities, redeemable noncontrolling interests and stockholders' equity $332,441  $298,862  

       

AXT, INC.
Reconciliation of Statements of Operations Under GAAP and Non-GAAP
(Unaudited, in thousands)

             
     Three Months Ended     Year Ended
  December 31, December 31,
  2021    2020 2021    2020
GAAP gross profit $12,139 $9,162 $47,414 $30,275
Stock compensation expense  105  33  368  116
Non-GAAP gross profit $12,244 $9,195 $47,782 $30,391
             
GAAP operating expenses $9,105 $7,243 $34,517 $26,335
Stock compensation expense  983  659  4,151  2,507
Non-GAAP operating expenses $8,122 $6,584 $30,366 $23,828
             
GAAP income from operations $3,034 $1,919 $12,897 $3,940
Stock compensation expense  1,088  692  4,519  2,623
Non-GAAP income from operations $4,122 $2,611 $17,416 $6,563
             
GAAP net income $2,965 $2,064 $14,575 $3,238
Stock compensation expense  1,088  692  4,519  2,623
Non-GAAP net income $4,053 $2,756 $19,094 $5,861
             
GAAP net income per diluted share $0.07 $0.05 $0.34 $0.07
Stock compensation expense per diluted share $0.03 $0.02 $0.11 $0.06
Non-GAAP net income per diluted share $0.09 $0.06 $0.44 $0.14
             
Shares used to compute diluted net income per share  42,750  42,042  42,720  41,025


Contacts:

Gary Fischer
Chief Financial Officer
(510) 438-4700

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


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