EX-99.1 2 ex99_1.htm EXHIBIT 99.1
Exhibit 99.1
 
FOR IMMEDIATE RELEASE
 
Contacts:
Morris S. Young
Chief Executive Officer
(510) 683-5900

Leslie Green
Green Communications Consulting, LLC
(650) 312-9060
 
 
AXT, Inc. Announces First Quarter 2014 Financial Results

FREMONT, Calif., April 30, 2014 – AXT, Inc. (NasdaqGS: AXTI), a leading manufacturer of compound semiconductor substrates, today reported financial results for the first quarter ended March 31, 2014.

First Quarter 2014 Results
Revenue for the first quarter of 2014 was $19.3 million compared with $18.6 million in the fourth quarter of 2013. Total gallium arsenide (GaAs) substrate revenue was $8.5 million for the first quarter of 2014, compared with $8.9 million in the fourth quarter of 2013. Indium phosphide (InP) substrate revenue was $2.2 million for the first quarter of 2014, compared with $1.8 million in the fourth quarter of 2013.  Germanium (Ge) substrate revenue was $3.2 million for the first quarter of 2014, compared with $3.6 million in the fourth quarter of 2013.   Raw materials sales were $5.4 million for the first quarter of 2014, compared with $4.3 million in the fourth quarter of 2013.

Gross margin was 14.1 percent of revenue for the first quarter of 2014, compared with 15.1 percent of revenue in the fourth quarter of 2013.

Operating expenses were $5.1 million in the first quarter of 2014, compared with $4.4 million in the fourth quarter of 2013. The increase in operating expenses was primarily the result of a onetime restructuring charge of $907,000 related to the company’s cost-reduction initiatives.

Loss from operations for the first quarter of 2014 was $2.4 million compared with a loss from operations of $1.6 million in the fourth quarter of 2013.

Net interest and other income for the first quarter of 2014 was $624,000, which was primarily attributable to $487,000 from equity earnings of the company’s unconsolidated joint ventures, and $127,000 from interest income. This compares with net interest and other income of $293,000 in the fourth quarter of 2013, which was mainly attributable to $278,000 equity earnings of our unconsolidated joint ventures, and $272,000 from interest income partially offset by $289,000 foreign exchange losses.

Net loss in the first quarter of 2014 was $2.0 million or $0.06 per diluted share compared with net loss of $1.2 million or $0.04 per diluted share in the fourth quarter of 2013.
 
AXT, Inc.
4281 Technology Drive
Fremont, CA 94538
Tel: 510.683.5900
Fax: 510.353.0668
www.axt.com.

AXT, Inc. Announces First Quarter 2014 Results
April 30, 2014
Page 2 of 5
 
Management Qualitative Comments
“Despite normal seasonality, our results exceeded our expectations in the first quarter, led by higher than anticipated revenues in semi-conducting gallium arsenide and indium phosphide substrates, as well as strength in raw material sales,” said Morris Young, chief executive officer.  “In addition to revenue growth, we began to see the benefit of cost-saving measures implemented during the quarter, which contributed to improvement in our earnings per share.  Our goal is to improve in both our gross margins and our operating margins in the coming quarters as the full benefit of these measures take affect.  We are highly committed to returning the company to profitability.”

Conference Call
The company will host a conference call to discuss these results today at 1:30 p.m. PDT. The conference call can be accessed at (719) 325-2420 (passcode 2855105). The call will also be simulcast on the Internet at www.axt.com. Replays will be available at (719) 457-0820 (passcode 2855105) until May 6, 2014. 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.

AXT will provide highlights of its first quarter results on today’s conference call, but investors can find the full financial summary on the investor relations portion of the company’s website at www.axt.com.

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 joint ventures in China producing raw materials. For more information, see AXT’s website at http://www.axt.com.

AXT, Inc. Announces First Quarter 2014 Results
April 30, 2014
Page 3 of 5
 
Safe Harbor Statement
The foregoing paragraphs contain forward-looking statements within the meaning of the Federal Securities laws, including statements regarding the market demand for our products, our market opportunity, our business planning and management approach and our expectations with respect to our business prospects. 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 factory closures or other events causing delays by our customers on the timing of sales of our 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 any forward-looking statement, as a result of new information, future events or otherwise.

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FINANCIAL TABLES TO FOLLOW
AXT, Inc. Announces First Quarter 2014 Results
April 30, 2014
Page 4 of 5


AXT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share data)

 
  
Three Months Ended
  
 
  
March 31,
  
 
  
2014
    
2013
  
 
  
   
 
Revenue
  
$
19,345
    
$
22,380
  
Cost of revenue
    
16,627
      
18,896
  
Gross profit
    
2,718
      
3,484
  
 
                
Operating expenses:
                
Selling, general and administrative
    
3,436
      
3,925
  
Research and development
    
775
      
822
  
Restructuring charge
    
907
      
0
  
Total operating expenses
    
5,118
      
4,747
  
Income (loss) from operations
    
(2,400
)
    
(1,263
)
Interest income, net
    
127
      
31
  
Equity in earnings of unconsolidated joint ventures
    
487
      
282
  
Other expense, net
    
10
      
(825
)
 
                
Income (loss) before provision for income taxes
    
(1,776
)
    
(1,775
)
Provision (benefit) for income taxes
    
59
      
184
  
Net income (loss)
    
(1,835
)
    
(1,959
)
 
                
Less: Net income attributable to noncontrolling interest
    
(205
)
    
(441
)
Net income (loss) attributable to AXT, Inc.
  
$
(2,040
)
  
$
(2,400
)
 
                
Net income (loss) attributable to AXT, Inc. per common share:
                
Basic
  
$
(0.06
)
  
$
(0.08
)
Diluted
  
$
(0.06
)
  
$
(0.08
)
 
                
Weighted average number of common shares outstanding:
                
Basic
    
32,364
      
32,297
  
Diluted
    
32,364
      
32,297
  

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AXT, Inc. Announces First Quarter 2014 Results
April 30, 2014
Page 5 of 5


AXT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)

 
  
March 31,
    
December 31,
  
 
  
2014
    
2013
  
Assets:
  
   
 
Current assets
  
   
 
Cash and cash equivalents
  
$
22,760
    
$
24,961
  
Short-term investments
    
22,375
      
12,499
  
Accounts receivable, net
    
16,364
      
14,943
  
Inventories
    
38,040
      
39,127
  
Related party notes receivable - current
    
0
      
0
  
Prepaid expenses and other current assets
    
6,401
      
8,010
  
Total current assets
    
105,940
      
99,540
  
 
                
Long-term investments
    
1,678
      
10,145
  
Property, plant and equipment, net
    
36,179
      
37,621
  
Related party notes receivable - long-term
    
1,701
      
1,715
  
Other assets
    
14,752
      
14,801
  
 
                
Total assets
  
$
160,250
    
$
163,822
  
 
                
Liabilities and stockholders' equity:
                
Current liabilities
                
Accounts payable
  
$
7,618
    
$
8,140
  
Accrued liabilities
    
6,646
      
7,286
  
Total current liabilities
    
14,264
      
15,426
  
 
                
Long-term portion of royalty payments
    
2,325
      
2,525
  
Other long-term liabilities
    
272
      
325
  
Total liabilities
    
16,861
      
18,276
  
 
                
Stockholders' equity:
                
Preferred stock
    
3,532
      
3,532
  
Common stock
    
32
      
32
  
Additional paid-in capital
    
194,448
      
194,156
  
Accumulated deficit
    
(69,045
)
    
(67,005
)
Accumulated other comprehensive income
    
8,500
      
8,953
  
Total AXT, Inc. stockholders' equity
    
137,467
      
139,668
  
 
                
Noncontrolling interest
    
5,922
      
5,878
  
Total stockholders' equity
    
143,389
      
145,546
  
 
                
Total liabilities and stockholders' equity
  
$
160,250
    
$
163,822