Skip to main content

Market Overview

AXT, Inc. Announces Third Quarter 2020 Financial Results

Share:

FREMONT, Calif., Oct. 28, 2020 (GLOBE NEWSWIRE) -- AXT, Inc. (NASDAQ:AXTI), a leading manufacturer of compound semiconductor substrates, today reported financial results for the third quarter, ended September 30, 2020.

Management Qualitative Comments

"We are pleased to report 28 percent year-over-year revenue growth in Q3 and earnings above our guidance range," said Morris Young, chief executive officer. "These results were driven by meaningful contribution from strategic applications such as 5G telecommunications, passive optical networks, and data center connectivity, where our indium phosphide substrates play an important role in enabling ongoing technological advancement. We are excited to see so many of the applications and customer opportunities for which we have been preparing over the last two years beginning to take shape. With our gallium arsenide manufacturing relocation largely complete and the success of our efforts visible in customer acceptance, our new facilities are poised to be a cornerstone of our growth and market differentiation."

Third Quarter 2020 Results

Revenue for the third quarter of 2020 was $25.5 million, compared with $22.1 million in the second quarter of 2020 and $19.8 million for the third quarter of 2019.

Gross margin was 34.6 percent of revenue for the third quarter of 2020, compared with 30.6 percent of revenue in the second quarter of 2020 and 29.0 percent for the third quarter of 2019.

Operating expenses were $6.6 million in the third quarter of 2020, compared with $6.3 million in the second quarter of 2020, and $6.2 million for the third quarter of 2019. 

Operating profit for the third quarter of 2020 was $2.2 million, compared with an operating profit of $0.5 million in the second quarter of 2020, and an operating loss of $0.5 million for the third quarter of 2019.

Other expense, provision for income taxes and income attributable to noncontrolling interests, net for the third quarter of 2020 was a charge of $1.2 million. This includes a gain from our unconsolidated joint ventures and other income, together totaling $0.1 million, a foreign exchange charge of $0.1 million, $0.7 million for taxes and $0.5 million attributable to noncontrolling interests.

Net income in the third quarter of 2020 was $1.0 million, or $0.02 per diluted share, compared with net income of $0.4 million or $0.01 per diluted share in the second quarter of 2020, and a net loss of $0.9 million or $0.02 per basic share for the third quarter of 2019.

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 7497220). The call will also be simulcast at www.axt.com. Replays will be available at (855) 859-2056 (passcode 7497220) until November 3, 2020. 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 its sales, administration and customer service functions. 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.

Forward-Looking Statements

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 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 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   Nine Months Ended
    September 30,   September 30,
    2020     2019     2020     2019  
                         
Revenue   $ 25,469     $ 19,841     $ 68,326     $ 64,846  
Cost of revenue     16,646       14,082       47,213       43,886  
Gross profit     8,823       5,759       21,113       20,960  
Operating expenses:                        
Selling, general and administrative     4,623       4,755       14,119       14,247  
Research and development     2,023       1,482       4,973       4,227  
Total operating expenses     6,646       6,237       19,092       18,474  
Income (loss) from operations     2,177       (478 )     2,021       2,486  
Interest income (expense), net     (70 )     41       (138 )     215  
Equity in income (loss) of unconsolidated joint ventures     45       (204 )     (243 )     (1,650 )
Other income (expense), net     (34 )     169       2,940       (55 )
Income (loss) before provision for income taxes     2,118       (472 )     4,580       996  
Provision for income taxes     637       23       1,923       776  
Net income (loss)     1,481       (495 )     2,657       220  
Less: Net income attributable to noncontrolling interests     (490 )     (403 )     (1,483 )     (771 )
Net income (loss) attributable to AXT, Inc.   $ 991     $ (898 )   $ 1,174     $ (551 )
Net income (loss) attributable to AXT, Inc. per common share:                        
Basic   $ 0.02     $ (0.02 )   $ 0.03     $ (0.02 )
Diluted   $ 0.02     $ (0.02 )   $ 0.03     $ (0.02 )
Weighted-average number of common shares outstanding:                        
Basic     40,152       39,466       39,978       39,438  
Diluted     40,979       39,466       40,688       39,438  




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

             
    September 30,   December 31, 
    2020
  2019 
             
ASSETS            
Current assets:            
Cash and cash equivalents   $ 22,384     $ 26,892  
Short-term investments     4,505       9,427  
Accounts receivable, net     22,653       19,031  
Inventories     48,357       49,152  
Prepaid expenses and other current assets     10,649       8,703  
Total current assets     108,548       113,205  
Long-term investments     2,884        
Property, plant and equipment, net     108,295       97,403  
Operating lease right-of-use assets     2,702       2,938  
Other assets     10,308       9,803  
Total assets   $ 232,737     $ 223,349  
LIABILITIES AND STOCKHOLDERS' EQUITY            
Current liabilities:            
Accounts payable   $ 12,271     $ 10,098  
Accrued liabilities     10,842       11,681  
Bank loan     3,380       5,747  
Total current liabilities     26,493       27,526  
Long-term portion of royalty payments     1,193        
Noncurrent operating lease liabilities     2,415       2,695  
Other long-term liabilities     744       366  
Total liabilities     30,845       30,587  
             
Stockholders' equity:            
Preferred stock     3,532       3,532  
Common stock     41       41  
Additional paid-in capital     240,422       236,957  
Accumulated deficit     (46,609 )     (47,783 )
Accumulated other comprehensive loss     (1,992 )     (4,862 )
Total AXT, Inc. stockholders' equity     195,394       187,885  
Noncontrolling interests     6,498       4,877  
Total stockholders' equity     201,892       192,762  
Total liabilities and stockholders' equity   $ 232,737     $ 223,349  



Contacts:    
    Gary Fischer
    Chief Financial Officer
    (510) 438-4700
     
    Leslie Green
    Green Communications Consulting, LLC
    (650) 312-9060

Primary Logo

View Comments and Join the Discussion!
 
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
SPAC
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com