FREMONT, CA--(Marketwire - April 29, 2009) - AXT, Inc. (
NASDAQ:
AXTI), a leading
manufacturer of compound semiconductor substrates, today reported financial
results for the first quarter ended March 31, 2009.
First Quarter 2009 Results
Revenue for the first quarter of 2009 was $7.7 million, compared with $15.6
million in the fourth quarter of 2008, and $19.6 million in the first
quarter of 2008. Total gallium arsenide (GaAs) substrate revenue was $5.0
million for the first quarter of 2009, compared with $9.1 million in the
fourth quarter of 2008, and $13.7 million in the first quarter of 2008. The
decline in GaAs substrate revenue in the first quarter of 2009 was
primarily due to the weaker demand environment and inventory overhang,
affecting sales of all diameters, particularly 4-inch and 6-inch GaAs
substrates.
Indium phosphide (InP) substrate revenue was $490,000 for the first quarter
of 2009, compared with $473,000 in the fourth quarter of 2008, and $477,000
in the first quarter of 2008. Germanium (Ge) substrate revenue was $622,000
compared with $684,000 in the fourth quarter of 2008 and $1.4 million in
the first quarter of 2008. Raw materials sales were $1.5 million for the
first quarter of 2009, compared with $5.3 million in the fourth quarter of
2008 and $4.0 million in the first quarter of 2008. This decline is due to
a weaker demand environment causing our customers to continue to utilize
their excess inventory.
Gross margin was negative 3.1 percent of revenue for the first quarter of
2009. This included a benefit from the sale of approximately $414,000 of
fully reserved wafers, which positively affected the quarterly gross margin
by 5.4 percentage points. By comparison, gross margin in the fourth quarter
of 2008 was 4.8 percent. This included a benefit from the sales of
approximately $703,000 of fully reserved wafers, which positively affected
fourth quarter gross margin by 4.5 percentage points. Gross margin in the
first quarter of 2008 was 31.7 percent, which included a benefit from the
sale of approximately $620,000 of fully reserved wafers, which positively
affected the quarterly gross margin by 3.2 percentage points.
The negative 3.1 percent gross margin in the first quarter of 2009 was
primarily due to the low absorption rates as a result of reduced sales from
the prior quarter and lower production volume given the continued weakness
at our major customers. In addition, our gallium joint venture in China
continued to source finished products from another independent third party
supplier in order to meet customer supply obligations, which also
contributed to our low gross margin.
Operating expenses were $5.0 million in the first quarter of 2009, compared
with $4.1 million in the fourth quarter of 2008, and $4.3 million in the
first quarter of 2008. The $5.0 million operating expenses included an
approximately $629,000 severance and stock compensation accrual for the
Company's former chief executive officer, a $507,000 restructuring charge
as a result of its reduction in force, and approximately $350,000 in
additional legal and professional fees as a result of matters relating to
the change in management in March 2009.
Loss from operations for the first quarter of 2009 was $5.2 million
compared with loss from operations of $3.4 million in the fourth quarter of
2008, and income from operations of $1.9 million in the first quarter of
2008.
Net interest and other loss for the first quarter of 2009 was $302,000,
which included an unrealized foreign exchange loss of $409,000, compared
with net interest and other income of $656,000 in the fourth quarter of
2008, which included an unrealized foreign exchange gain of $505,000, and
net interest and other income of $552,000 in the first quarter of 2008.
Net loss in the first quarter of 2009 was $5.5 million or a loss of $0.18
per diluted share, compared with net loss of $2.4 million or a loss of
$0.08 per diluted share in the fourth quarter of 2008, and net income of
$2.0 million, or $0.06 per diluted share in the first quarter of 2008.
Management Qualitative Comments
"The first quarter continued to be a difficult quarter for our industry,"
said Wilson Cheung, chief financial officer. "Our customers continued to
utilize their excess inventory and made very good progress in the quarter,
but not as quickly as we had hoped. During the first quarter, we continued
to experience push-outs of orders of our highest value products,
particularly 6-inch semi-insulating substrates and 4-inch semi-conducting
substrates, into the balance of the year as our customers continue to use
excess inventory in a weakened demand environment. Our key areas of focus
continue to be research and development of advanced products and
technologies, customer support, quality control, new customer
qualifications and expense management. We believe that a strong focus in
these strategic areas will allow us to emerge in a competitively solid
position when the market improves."
Outlook for Second Quarter, Ending June 30, 2009
AXT estimates revenue for the second quarter will increase to between $10.0
million and $11.0 million. The Company estimates that net loss per share
will be between $0.06 and $0.09, which takes into account our weighted
average share count of approximately 30.5 million shares.
Conference Call
The Company will also host a conference call to discuss these results on
April 29, 2009 at 1:30 p.m. PDT. The conference call can be accessed at
(719) 325-4821 (conference ID 4906752). The call will also be simulcast on
the Internet at
www.axt.com. Replays will be available at (719) 457-0820
until May 6, 2009. 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, and fiber optic
communications. 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, particularly in optoelectronics applications. 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 second quarter of 2009, increase in orders in succeeding
quarters, utilization of excess inventory and the improvement of our
competitive position as the market improves. 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
delays by our customers on the timing of sales of 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 publicly any
forward-looking statement, as a result of new information, future events or
otherwise.
AXT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share data)
Three Months Ended
March 31,
------------------
2009 2008
-------- --------
Revenue $ 7,654 $ 19,634
Cost of revenue 7,891 13,413
-------- --------
Gross profit (loss) (237) 6,221
-------- --------
Operating expenses:
Selling, general and administrative 4,006 3,667
Research and development 460 504
Impairment on assets held for sale - 83
Restructuring charge 507 -
-------- --------
Total operating expenses 4,973 4,254
-------- --------
Income (loss) from operations (5,210) 1,967
Interest income, net 44 124
Other income (loss), net (422) 927
-------- --------
Income (loss) before provision (benefit) for income
taxes (5,588) 3,018
Provision (benefit) for income taxes 4 560
-------- --------
Net income (loss) (5,592) 2,458
Less: Net income (loss) attributable to noncontrolling
interest 76 (499)
-------- --------
Net income (loss) attributable to AXT, Inc. $ (5,516) $ 1,959
======== ========
Net income (loss) attributable to AXT, Inc. per common
share:
Basic $ (0.18) $ 0.06
======== ========
Diluted $ (0.18) $ 0.06
======== ========
Weighted average number of common shares outstanding:
Basic 30,434 30,367
======== ========
Diluted 30,434 31,585
======== ========
AXT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
March 31, December 31,
2009 2008
----------- -----------
Assets:
Current assets
Cash and cash equivalents $ 11,507 $ 13,566
Short-term investments 17,960 17,756
Accounts receivable, net 8,390 11,497
Inventories, net 33,497 35,082
Prepaid expenses and other current assets 2,298 3,131
----------- -----------
Total current assets 73,652 81,032
Property, plant and equipment, net 21,511 22,184
Restricted deposits 3,000 3,013
Other assets 5,375 5,433
----------- -----------
Total assets $ 103,538 $ 111,662
=========== ===========
Liabilities and stockholders' equity:
Current liabilities
Accounts payable $ 4,202 $ 6,657
Accrued liabilities 3,974 4,453
Accrued restructuring 442 -
Line of credit 3,000 3,013
Current portion of long-term debt 74 73
----------- -----------
Total current liabilities 11,692 14,196
Long-term debt, net of current portion 478 496
Other long-term liabilities 64 94
----------- -----------
Total liabilities 12,234 14,786
----------- -----------
Stockholders' equity:
Preferred stock 3,532 3,532
Common stock 187,242 186,784
Accumulated deficit (104,748) (99,232)
Other comprehensive income 2,770 2,580
----------- -----------
Total AXT, Inc. stockholders' equity 88,796 93,664
Noncontrolling interest 2,508 3,212
----------- -----------
Total stockholders' equity 91,304 96,876
----------- -----------
Total liabilities and stockholders' equity $ 103,538 $ 111,662
=========== ===========
Contact Information: Contacts:
Wilson W. Cheung
Chief Financial Officer
(510) 683-5900
Leslie Green
Green Communications Consulting, LLC
(650) 312-9060