Science & Technology
Science and Technology
Science and Technology
Mon, August 3, 2009
Fri, July 31, 2009
Thu, July 30, 2009 AXT, Inc.: AXT, Inc. Announces Second Quarter 2009 Financial Results
FREMONT, CA--(Marketwire - July 30, 2009) - AXT, Inc. (
Second Quarter 2009 Results
Revenue for the second quarter of 2009 was $13.1 million, compared with $7.7 million in the first quarter of 2009, and $19.9 million in the second quarter of 2008. Total gallium arsenide (GaAs) substrate revenue was $10.1 million for the second quarter of 2009, compared with $5.0 million in the first quarter of 2009, and $13.1 million in the second quarter of 2008. The increase in GaAs substrate revenue in the second quarter of 2009 compared to the first quarter of 2009 was primarily due to the overall increased demand in all diameters, particularly 6-inch substrates.
Indium phosphide (InP) substrate revenue was $684,000 for the second quarter of 2009, compared with $490,000 in the first quarter of 2009, and $500,000 in the second quarter of 2008. As a result of increased production orders from our newly qualified European customer, germanium (Ge) substrate revenue was $1.2 million compared with $622,000 in the first quarter of 2009 and $1.4 million in the second quarter of 2008. Raw materials sales were $1.0 million for the second quarter of 2009, compared with $1.5 million in the first quarter of 2009 and $4.9 million in the second quarter of 2008 as a result of lesser customer demand since late 2008.
Gross margin was 19.3 percent of revenue for the second quarter of 2009. This included a benefit from the sale of approximately $633,000 of fully reserved wafers, which positively affected the quarterly gross margin by 4.8 percentage points. By comparison, gross margin in the first quarter of 2009 was negative 3.1 percent. This included a benefit from the sales of approximately $414,000 of fully reserved wafers, which positively affected first quarter gross margin by 5.4 percentage points. Gross margin in the second quarter of 2008 was 32.3 percent, which included a benefit from the sale of approximately $735,000 of fully reserved wafers, which positively affected the quarterly gross margin by 3.7 percentage points.
Operating expenses were $3.8 million in the second quarter of 2009, compared with $5.0 million in the first quarter of 2009 (which included a $0.5 million restructuring charge), and $4.1 million in the second quarter of 2008.
Loss from operations for the second quarter of 2009 was $1.3 million compared with loss from operations of $5.2 million in the first quarter of 2009, and income from operations of $2.3 million in the second quarter of 2008.
Net interest and other income for the second quarter of 2009 was $355,000, which included an unrealized foreign exchange gain of $212,000, compared with net interest and other loss of $378,000 in the first quarter of 2009, which included an unrealized foreign exchange loss of $409,000, and net interest and other loss of $277,000 in the second quarter of 2008.
Net loss in the second quarter of 2009 was $1.3 million or a loss of $0.04 per diluted share, compared with net loss of $5.5 million or a loss of $0.18 per diluted share in the first quarter of 2009, and net income of $0.7 million, or $0.02 per diluted share in the second quarter of 2008.
Cash and equivalents including restricted deposits were $33.6 million as of June 30, 2009, compared with $32.5 million as of March 31, 2009.
Management Qualitative Comments
"Following very challenging industry conditions early in the year, we are pleased to report that the improvements we began to see at the end of the first quarter continued through the second quarter, resulting in stronger sales and improved gross margins," said Morris Young, chief executive officer. "We believe that inventory levels in the supply chain have improved from the first quarter, with the exception of our gallium raw materials, which are not expected to begin to recover until later in 2009. Our qualification efforts in both gallium arsenide and germanium substrates have been very successful and we are pleased with our increasing diversification in these areas."
Recent Company Highlights
The company announced that the Board of Directors appointed Morris S. Young, Ph.D. as chief executive officer, effective July 16, 2009. Young co-founded AXT in 1986 and served as its chief executive officer from 1989 to 2004. He has been a director of AXT since 1989 and held the position of chairman of the Board from 1998 to 2004.
"We were very pleased to announce the appointment of Morris Young, AXT's founder, as chief executive officer," said Jesse Chen, chairman of AXT's Board of Directors. "Morris' knowledge of AXT and its markets have allowed him to engage very quickly in all aspects of the company's operations and to make an immediate positive contribution. The Board and I strongly believe in his vision for AXT and I look forward to working with him again in this capacity."
Chen continued, "I am also grateful to AXT's dedicated management team, who has continued to work very diligently through this time towards our common goal of ensuring a smooth transition and consistent support for our customers and employees."
Outlook for Third Quarter, Ending September 30, 2009
AXT estimates revenue for the third quarter will increase to between $14.0 million and $15.0 million. The company estimates that net income (loss) per share will be between $(0.03) and $0.00, which takes into account a 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 July 30, 2009 at 1:30 p.m. PST. The conference call can be accessed at (719) 325-4806 (passcode 6879442). The call will also be simulcast on the Internet at [ www.axt.com ]. Replays will be available at (719) 457-0820 until August 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. In addition to our manufacturing facilities in China, we have invested 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 third quarter of 2009, the improvement of our competitive position as the market improves, the recovery of gallium raw materials inventory levels, 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 Six Months Ended June 30, June 30, ---------------------- ---------------------- 2009 2008 2009 2008 ---------- ---------- ---------- ---------- Revenue $ 13,055 $ 19,932 $ 20,709 $ 39,566 Cost of revenue 10,539 13,488 18,430 26,901 ---------- ---------- ---------- ---------- Gross profit 2,516 6,444 2,279 12,665 ---------- ---------- ---------- ---------- Operating expenses: Selling, general and administrative 3,486 3,578 7,492 7,245 Research and development 355 569 815 1,073 Impairment on assets held for sale - - - 83 Restructuring charge - - 507 - ---------- ---------- ---------- ---------- Total operating expenses 3,841 4,147 8,814 8,401 ---------- ---------- ---------- ---------- Income (loss) from operations (1,325) 2,297 (6,535) 4,264 Interest income, net 34 241 78 365 Other income (expense), net 321 (518) (101) 409 ---------- ---------- ---------- ---------- Income (loss) before provision for income taxes (970) 2,020 (6,558) 5,038 Provision for income taxes 308 635 312 1,195 ---------- ---------- ---------- ---------- Net income (loss) (1,278) 1,385 (6,870) 3,843 Less: Net income (loss) attributable to noncontrolling interest (2) (648) 74 (1,147) ---------- ---------- ---------- ---------- Net income (loss) attributable to AXT, Inc. $ (1,280) $ 737 $ (6,796) $ 2,696 ========== ========== ========== ========== Net income (loss) attributable to AXT, Inc. per common share: Basic $ (0.04) $ 0.02 $ (0.23) $ 0.09 ========== ========== ========== ========== Diluted $ (0.04) $ 0.02 $ (0.23) $ 0.08 ========== ========== ========== ========== Weighted average number of common shares outstanding: Basic 30,439 30,421 30,437 30,403 ========== ========== ========== ========== Diluted 30,439 31,562 30,437 31,573 ========== ========== ========== ========== AXT, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited, in thousands) June 30, December 31, 2009 2008 ------------ ------------ Assets: Current assets Cash and cash equivalents $ 12,413 $ 13,566 Short-term investments 18,216 17,756 Accounts receivable, net 12,883 11,497 Inventories, net 28,304 35,082 Prepaid expenses and other current assets 1,734 3,131 ------------ ------------ Total current assets 73,550 81,032 Property, plant and equipment, net 20,957 22,184 Restricted deposits 3,000 3,013 Other assets 5,531 5,433 ------------ ------------ Total assets $ 103,038 $ 111,662 ============ ============ Liabilities and stockholders' equity: Current liabilities Accounts payable $ 4,347 $ 6,657 Accrued liabilities 4,574 4,453 Line of credit 3,000 3,013 Current portion of long-term debt 74 73 ------------ ------------ Total current liabilities 11,995 14,196 Long-term debt, net of current portion 459 496 Other long-term liabilities 64 94 ------------ ------------ Total liabilities 12,518 14,786 ------------ ------------ Stockholders' equity: Preferred stock 3,532 3,532 Common stock 187,403 186,784 Accumulated deficit (106,028) (99,232) Other comprehensive income 3,432 2,580 ------------ ------------ Total AXT, Inc. stockholders' equity 88,339 93,664 Noncontrolling interest 2,181 3,212 ------------ ------------ Total stockholders' equity 90,520 96,876 ------------ ------------ Total liabilities and stockholders' equity $ 103,038 $ 111,662 ============ ============
