FREMONT, CA--(Marketwire - October 29, 2009) - AXT, Inc. (
NASDAQ:
AXTI), a leading
manufacturer of compound semiconductor substrates, today reported financial
results for the third quarter ended Sept. 30, 2009.
Third Quarter 2009 Results
Revenue for the third quarter of 2009 was $16.8 million, compared with
$13.1 million in the second quarter of 2009, and $17.9 million in the third
quarter of 2008. Total gallium arsenide (GaAs) substrate revenue was $13.3
million for the third quarter of 2009, compared with $10.1 million in the
second quarter of 2009, and $13.6 million in the third quarter of 2008. The
increase in GaAs substrate revenue in the third quarter of 2009 compared
with the second quarter of 2009 was primarily due to the overall increased
demand in all diameters, particularly 6-inch substrates.
Indium phosphide (InP) substrate revenue was $688,000 for the third quarter
of 2009, compared with $684,000 in the second quarter of 2009, and $484,000
in the third quarter of 2008. Germanium (Ge) substrate revenue was $1.8
million compared with $1.2 million in the second quarter of 2009 and
$795,000 in the third quarter of 2008. Raw materials sales were $1.0
million for the third quarter of 2009, compared with $1.0 million in the
second quarter of 2009 and $3.0 million in the third quarter of 2008.
Gross margin was 32.9 percent of revenue for the third quarter of 2009.
This included a benefit from the net sale of approximately $94,000 of fully
reserved wafers, which positively affected the quarterly gross margin by
0.6 percentage points. By comparison, gross margin in the second quarter of
2009 was 19.3 percent. That included a benefit from the net sale of
approximately $311,000 of fully reserved wafers, which positively affected
second quarter gross margin by 2.4 percentage points. Gross margin in the
third quarter of 2008 was 25.4 percent, which included a benefit from the
net sale of approximately $708,000 of fully reserved wafers, which
positively affected the quarterly gross margin by 4.0 percentage points. In
the past we reported in our press releases the gross sale of fully reserved
wafers and its effects on gross margin without taking into account the
charge to cost of goods sold and its effect on gross margin for wafers that
were added to fully reserved wafers. We are now reporting in our press
releases the net sale of fully reserved wafers and its effects on gross
margin. The net sale is derived from the gross sale of fully reserved
wafers less the charge to cost of goods sold for wafers that were added to
fully reserved wafers. We have done this retroactively for all prior
periods reported.
Operating expenses were $3.7 million in the third quarter of 2009, compared
with $3.8 million in the second quarter of 2009, and $5.5 million in the
third quarter of 2008.
Income from operations for the third quarter of 2009 was $1.9 million
compared with a loss from operations of $1.3 million in the second quarter
of 2009, and a loss from operations of $0.9 million in the third quarter of
2008.
Net interest and other income for the third quarter of 2009 was $677,000,
which included an unrealized foreign exchange gain of $302,000. This
compared with a net interest and other income of $355,000 in the second
quarter of 2009, which included an unrealized foreign exchange gain of
$212,000, and with a net interest and other income of $366,000 in the third
quarter of 2008, which included an unrealized foreign exchange gain of
$123,000.
Net income attributable to AXT, Inc. in the third quarter of 2009 was $2.1
million or income of $0.07 per diluted share, compared with a net loss
attributable to AXT, Inc. of $1.3 million or a loss of $0.04 per diluted
share in the second quarter of 2009, and a net loss attributable to AXT,
Inc. of $1.0 million, or a loss of $0.03 per diluted share in the third
quarter of 2008.
Cash and equivalents, including restricted deposits, were $37.8 million as
of Sept. 30, 2009, compared with $33.6 million as of June 30, 2009.
Management Qualitative Comments
"This is an encouraging time for AXT," said Morris Young, chief executive
officer. "The continued recovery taking place in our end markets, coupled
with ramping volumes for newer qualifications resulted in revenue growth in
the third quarter of more than 28 percent. Further, improved margin
performance, manufacturing efficiency and cost control allowed us to exceed
our earnings expectations and return the company to profitability. We are
very pleased to see continued diversification of our customer and revenue
base as well as many positive trends in our markets that highlight our
competitive advantages and are likely to provide further growth
opportunities in the quarters ahead."
AXT Announces Executive Promotions
In a separate release, AXT today announced three executive promotions.
First, Raymond Low, formerly AXT's vice president, corporate controller and
acting chief financial officer, has been appointed chief financial officer.
Also, Davis Zhang, formerly AXT's president of joint venture operations,
has been appointed president of AXT China Operations, with responsibility
for managing and developing AXT's joint venture operations, as well as
assisting chief executive officer, Dr. Morris Young, with the management of
AXT's manufacturing facilities in China.
Finally, Bob Ochrym, formerly AXT's vice president of business development,
has been appointed vice president of business development, strategic sales
and marketing. His responsibilities include sales for the North American
East Coast, as well as for Europe, continuing to work closely with John
Cerilli, vice president of global sales and marketing, to maximize customer
support around the world. He will also be responsible for developing sales
and marketing strategies, major sale contract negotiations, major market
identification and other strategic sales and marketing functions.
Outlook for Fourth Quarter, Ending Dec. 31, 2009
AXT estimates revenue for the fourth quarter will increase to between $17.0
million and $17.5 million. The company estimates that net income per share
will be between $0.03 and $0.05, which takes into account a weighted
average share count of approximately 31.7 million shares.
Conference Call
The company will host a conference call today to discuss these results at
1:30 p.m. PDT. The conference call can be accessed at (719) 457-2697
(passcode 7237684). The call will also be simulcast on the Internet at
www.axt.com. Replays will be available at (719) 457-0820 until November 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, 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 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 fourth quarter of 2009, the improvement of our competitive
position as the market improves, the recovery of our markets, the future
growth opportunities available to us, and the impact of our customer
qualifications. 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 or future events.
AXT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
2009 2008 2009 2008
======== ======== ======== ========
Revenue $ 16,819 $ 17,863 $ 37,528 $ 57,429
Cost of revenue 11,281 13,326 29,711 40,227
-------- -------- -------- --------
Gross profit 5,538 4,537 7,817 17,202
-------- -------- -------- --------
Operating expenses:
Selling, general and
administrative 3,323 4,901 10,815 12,146
Research and development 360 562 1,175 1,635
Impairment on assets held for
sale - - - 83
Restructuring charge - - 507 -
-------- -------- -------- --------
Total operating expenses 3,683 5,463 12,497 13,864
-------- -------- -------- --------
Income (loss) from operations 1,855 (926) (4,680) 3,338
Interest income, net 39 68 117 433
Other income (expense), net 638 298 537 707
-------- -------- -------- --------
Income (loss) before provision for
income taxes 2,532 (560) (4,026) 4,478
Provision for income taxes 201 177 513 1,372
-------- -------- -------- --------
Net income (loss) 2,331 (737) (4,539) 3,106
Less: Net income (loss)
attributable to noncontrolling
interest (210) (277) (136) (1,424)
-------- -------- -------- --------
Net income (loss) attributable to
AXT, Inc. $ 2,121 $ (1,014) $ (4,675) $ 1,682
======== ======== ======== ========
Net income (loss) attributable to
AXT, Inc. per common share:
Basic $ 0.07 $ (0.03) $ (0.16) $ 0.05
======== ======== ======== ========
Diluted $ 0.07 $ (0.03) $ (0.16) $ 0.05
======== ======== ======== ========
Weighted average number of common
shares outstanding:
Basic 30,475 30,455 30,449 30,410
======== ======== ======== ========
Diluted 30,911 30,455 30,449 31,502
======== ======== ======== ========
AXT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
September 30, December 31,
2009 2008
============= =============
Assets:
Current assets
Cash and cash equivalents $ 16,042 $ 13,566
Short-term investments 18,737 17,756
Accounts receivable, net 13,983 11,497
Inventories, net 28,642 35,082
Prepaid expenses and other current assets 2,070 3,131
------------- -------------
Total current assets 79,474 81,032
Property, plant and equipment, net 20,808 22,184
Restricted deposits 3,000 3,013
Other assets 5,768 5,433
------------- -------------
Total assets $ 109,050 $ 111,662
============= =============
Liabilities and stockholders' equity:
Current liabilities
Accounts payable $ 7,165 $ 6,657
Accrued liabilities 4,810 4,453
Line of credit 3,000 3,013
Current portion of long-term debt 75 73
------------- -------------
Total current liabilities 15,050 14,196
Long-term debt, net of current portion 440 496
Other long-term liabilities 65 94
------------- -------------
Total liabilities 15,555 14,786
------------- -------------
Stockholders' equity:
Preferred stock 3,532 3,532
Common stock 187,508 186,784
Accumulated deficit (103,907) (99,232)
Other comprehensive income 3,971 2,580
------------- -------------
Total AXT, Inc. stockholders' equity 91,104 93,664
Noncontrolling interest 2,391 3,212
------------- -------------
Total stockholders' equity 93,495 96,876
------------- -------------
Total liabilities and stockholders'
equity $ 109,050 $ 111,662
============= =============
Contact Information: Contacts:
Raymond A. Low
Chief Financial Officer
(510) 683-5900
Leslie Green
Green Communications Consulting, LLC
(650) 312-9060