AXT, Inc. (Nasdaq:AXTI), a leading manufacturer of compound
semiconductor substrates, today reported financial results for the
fourth quarter and fiscal Year 2017, ended December 31, 2017.
Fourth Quarter 2017 Results
Revenue for the fourth quarter of 2017 was $26.3
million, compared with $28.2 million in the third quarter of 2017
and $20.3 million for the fourth quarter of 2016. This is a
30% increase in quarterly revenue as compared to the fourth quarter
of 2016.
Gross margin was 37.2 percent of revenue for the
fourth quarter of 2017, compared with 39.5 percent of revenue in
the third quarter of 2017 and 37.1 percent for the fourth quarter
of 2016.
Operating expenses were $6.1 million in the
fourth quarter of 2017, compared with $5.9 million in the third
quarter of 2017 and $5.2 million for the fourth quarter of
2016.
Operating profit for the fourth quarter of 2017
was $3.7 million compared with operating profit of $5.2 million in
the third quarter of 2017 and $2.3 million for the fourth quarter
of 2016.
Interest and other, net was a loss of $0.3
million for the fourth quarter of 2017, compared with a loss of
$0.5 million in the third quarter of 2017 and a loss of $0.3
million for the fourth quarter of 2016. Interest and other,
net for the fourth quarter of 2017 included interest earnings of
$0.1 million, a foreign exchange loss of $0.1 million and a net
loss of $0.3 million from the seven partially owned companies in
the company’s supply chain accounted for under the equity
method.
Income tax expense in the fourth quarter of 2017 was $0.1
million compared with $0.2 million in the third quarter of 2017 and
$0.0 million for the fourth quarter of 2016.
Net income in the fourth quarter of 2017 was
$3.1 million, or $0.08 per diluted share, compared with a net
income of $4.4 million or $0.11 per diluted share in the third
quarter of 2017 and $2.2 million or $0.06 per diluted share for the
fourth quarter of 2016.
Fiscal Year 2017 Results (January 1 to
December 31)
Revenue for fiscal year 2017 was $98.7 million,
compared with $81.3 million in fiscal year 2016. This is a
21% increase in annual revenue as compared to fiscal year 2016.
Gross margin for fiscal year 2017 was 34.9
percent of revenue, compared with 32.4 percent of revenue in fiscal
year 2016.
Operating expenses for fiscal year 2017 were
$21.8 million, compared with $20.0 million in fiscal year 2016.
Net interest and other income for fiscal year
2017 was a loss of $1.8 million, compared with a loss of $0.7
million in fiscal year 2016.
Income tax expense for fiscal 2017 was $0.8
million compared with $0.7 million in fiscal year 2016.
Net income in fiscal year 2017 was $10.1
million, or $0.26 per diluted share, compared with a net income of
$5.6 million, or $0.17 per diluted share, in fiscal year
2016. This is an 80% increase in net income as compared to
fiscal year 2016.
Management Qualitative
Comments
“Our Q4 results capped off a strong year of
execution for AXT,” said Morris Young, chief executive officer. “We
delivered 21 percent growth in 2017, including record indium
phosphide revenue and solid performance across our product
portfolio. In addition, we achieved meaningful improvement in key
financial metrics, including an 80 percent increase in net profits
from the prior year. We are excited to see a resurgence of demand
for compound semiconductor substrates in new applications that have
the power to reshape the technology landscape over the coming
decades. As such, we continue to invest in the advancement of our
products and customer support capabilities, and believe that we are
positioning the company well for continued growth and new
opportunities in 2018 and beyond.”
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 7887748). The call will also be simulcast on the
Internet at www.axt.com. Replays will be available at (855)
859-2056 (passcode 7887748) until February 27, 2018. 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 schedule and
timelines regarding our relocation plans and our expectations with
respect to our business prospects. 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: overall conditions in the
markets in which the company competes; global financial conditions
and uncertainties; policies and regulations in China; market
acceptance and demand for the company’s products; the impact of
factory closures or other events causing delays by our customers on
the timing of sales of our products; our ability to control costs,
our ability to utilize our manufacturing capacity; product yields
and their impact on gross margins; 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, |
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
26,332 |
|
|
$ |
20,269 |
|
|
$ |
98,673 |
|
|
$ |
81,349 |
|
|
Cost of revenue |
|
|
16,534 |
|
|
|
12,746 |
|
|
|
64,198 |
|
|
|
54,968 |
|
|
Gross profit |
|
|
9,798 |
|
|
|
7,523 |
|
|
|
34,475 |
|
|
|
26,381 |
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
general and administrative |
|
|
4,790 |
|
|
|
3,774 |
|
|
|
17,009 |
|
|
|
13,880 |
|
|
Research
and development |
|
|
1,274 |
|
|
|
1,431 |
|
|
|
4,827 |
|
|
|
5,850 |
|
|
Restructuring charge |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
226 |
|
|
Total
operating expenses |
|
|
6,064 |
|
|
|
5,205 |
|
|
|
21,836 |
|
|
|
19,956 |
|
|
Income from
operations |
|
|
3,734 |
|
|
|
2,318 |
|
|
|
12,639 |
|
|
|
6,425 |
|
|
Interest income,
net |
|
|
127 |
|
|
|
106 |
|
|
|
461 |
|
|
|
409 |
|
|
Equity in loss of
unconsolidated joint ventures |
|
|
(307 |
) |
|
|
(558 |
) |
|
|
(1,694 |
) |
|
|
(1,995 |
) |
|
Other (expense) income,
net |
|
|
(150 |
) |
|
|
178 |
|
|
|
(553 |
) |
|
|
860 |
|
|
Income before provision
for income taxes |
|
|
3,404 |
|
|
|
2,044 |
|
|
|
10,853 |
|
|
|
5,699 |
|
|
Provision for income
taxes |
|
|
131 |
|
|
|
20 |
|
|
|
792 |
|
|
|
733 |
|
|
Net income |
|
|
3,273 |
|
|
|
2,024 |
|
|
|
10,061 |
|
|
|
4,966 |
|
|
Less: Net
(income) loss attributable to noncontrolling interests |
|
|
(139 |
) |
|
|
190 |
|
|
|
87 |
|
|
|
670 |
|
|
Net income attributable
to AXT, Inc. |
|
$ |
3,134 |
|
|
$ |
2,214 |
|
|
$ |
10,148 |
|
|
$ |
5,636 |
|
|
Net income attributable
to AXT, Inc. per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.08 |
|
|
$ |
0.07 |
|
|
$ |
0.27 |
|
|
$ |
0.17 |
|
|
Diluted |
|
$ |
0.08 |
|
|
$ |
0.06 |
|
|
$ |
0.26 |
|
|
$ |
0.17 |
|
|
Weighted average number
of common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
38,766 |
|
|
|
32,431 |
|
|
|
37,444 |
|
|
|
32,139 |
|
|
Diluted |
|
|
40,448 |
|
|
|
33,734 |
|
|
|
38,966 |
|
|
|
32,894 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AXT, INC.CONDENSED
CONSOLIDATED BALANCE SHEETS(Unaudited, in thousands)
|
|
|
|
|
|
|
|
|
|
December 31, |
|
December 31, |
|
|
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
44,352 |
|
|
$ |
36,152 |
|
|
Short-term investments |
|
|
20,032 |
|
|
|
11,415 |
|
|
Accounts
receivable, net |
|
|
22,778 |
|
|
|
14,453 |
|
|
Inventories |
|
|
45,840 |
|
|
|
40,152 |
|
|
Prepaid
expenses and other current assets |
|
|
7,519 |
|
|
|
5,114 |
|
|
Total
current assets |
|
|
140,521 |
|
|
|
107,286 |
|
|
Long-term
investments |
|
|
12,576 |
|
|
|
6,156 |
|
|
Property, plant and
equipment, net |
|
|
46,530 |
|
|
|
27,805 |
|
|
Related party notes
receivable – long-term |
|
|
— |
|
|
|
157 |
|
|
Other assets |
|
|
11,573 |
|
|
|
12,842 |
|
|
Total
assets |
|
$ |
211,200 |
|
|
$ |
154,246 |
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
11,445 |
|
|
$ |
6,691 |
|
|
Accrued
liabilities |
|
|
11,149 |
|
|
|
9,260 |
|
|
Total
current liabilities |
|
|
22,594 |
|
|
|
15,951 |
|
|
Long-term portion of
royalty payments |
|
|
— |
|
|
|
575 |
|
|
Other long-term
liabilities |
|
|
289 |
|
|
|
330 |
|
|
Total
liabilities |
|
|
22,883 |
|
|
|
16,856 |
|
|
Stockholders’
equity: |
|
|
|
|
|
|
|
Preferred
stock |
|
|
3,532 |
|
|
|
3,532 |
|
|
Common
stock |
|
|
39 |
|
|
|
33 |
|
|
Additional paid-in capital |
|
|
231,679 |
|
|
|
194,177 |
|
|
Accumulated deficit |
|
|
(54,837 |
) |
|
|
(64,985 |
) |
|
Accumulated other comprehensive income |
|
|
3,407 |
|
|
|
253 |
|
|
Total
AXT, Inc. stockholders’ equity |
|
|
183,820 |
|
|
|
133,010 |
|
|
Noncontrolling interests |
|
|
4,497 |
|
|
|
4,380 |
|
|
Total
stockholders’ equity |
|
|
188,317 |
|
|
|
137,390 |
|
|
Total
liabilities and stockholders’ equity |
|
$ |
211,200 |
|
|
$ |
154,246 |
|
|
|
|
|
|
|
|
|
|
|
|
Contacts:Gary FischerChief Financial Officer(510) 683-5900
Leslie Green Green Communications Consulting, LLC(650)
312-9060
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