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AXT, Inc. Announces Third Quarter 2020 Financial Results

Globe NewsWire - Wed Oct 28, 2020

FREMONT, Calif., Oct. 28, 2020 (GLOBE NEWSWIRE) -- AXT, Inc. (NasdaqGS: 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 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 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

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.


(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 

(Unaudited, in thousands)

  September 30, December 31, 
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 
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 

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

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