8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8‑K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 24, 2019

AXT, INC.

(Exact name of registrant as specified in its charter)

Delaware	000‑24085	94‑3031310
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

4281 Technology Drive

Fremont, California 94538

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code:  (510) 438‑4700

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8‑K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

◻ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

◻ Soliciting material pursuant to Rule 14a‑12 under the Exchange Act (17 CFR 240.14a‑12)

◻ Pre-commencement communications pursuant to Rule 14d‑2(b) under the Exchange Act (17 CFR 240.14d‑2(b))

◻ Pre-commencement communications pursuant to Rule 13e‑4(c) under the Exchange Act (17 CFR 240.13e‑4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company◻

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Item 2.02 Results of Operations and Financial Condition

On April 24, 2019, AXT, Inc. issued a press release announcing its financial results for the quarter ended March 31, 2019.  A copy of the Company’s press release, announcing the results, is attached hereto as Exhibit 99.1 and incorporated herein by reference.

The information in Exhibit 99.1 hereto discussing the Company’s results of operations and financial condition for the quarter ended March 31, 2019, is being “furnished” in accordance with General Instruction B.2 of Form 8‑K and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended.  The information contained herein and in the accompanying exhibit shall not be incorporated by reference into any filing of the Registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference to such filing.

Item 9.01 Financial Statements and Exhibits

(d)       Exhibits

99.1     Press release dated April 24, 2019, regarding the financial results of AXT, Inc. for the quarter ended March 31, 2019.

EXHIBIT INDEX

Eptem
Exhibit Number	Description
99.1	Press release dated April 24, 2019, regarding the financial results of AXT, Inc. for the quarter ended March 31, 2019.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	AXT, INC.
Date:  April 24, 2019	By:	/s/ Gary L. Fischer
		Gary L. Fischer
		Chief Financial Officer and Corporate Secretary

EX-99.1

	Exhibit 99.1
	AXT, Inc. First Quarter 2019 Results
	April 24, 2019
	Page 1 of 5

AXT, Inc. Announces First Quarter 2019 Financial Results

FREMONT, Calif., April 24, 2019 – AXT, Inc. (NasdaqGS: AXTI), a leading  material science company manufacturing single crystal compound semiconductor substrates, today reported financial results for the first quarter, ended March 31, 2019.

First Quarter 2019 Results

Revenue for the first quarter of 2019 was $20.2 million, compared with $22.2 million in the fourth quarter of 2018 and $24.4 million for the first quarter of 2018.   

Gross margin was 33.1 percent of revenue for the first quarter of 2019, compared with 26.3 percent of revenue in the fourth quarter of 2018 and 39.2 percent for the first quarter of 2018.

Operating expenses were $6.1 million in the first quarter of 2019, compared with $6.5 million in the fourth quarter of 2018 and $5.6 million for the first quarter of 2018. 

Operating profit for the first quarter of 2019 was $0.6 million, compared with an operating loss of $0.6 million in the fourth quarter of 2018 and an operating profit of $3.9 million for the first quarter of 2018.  

Interest and other, net was a loss of $1.5 million for the first quarter of 2019, compared with a loss of $0.4 million in the fourth quarter of 2018 and a loss of $0.4 million for the first quarter of 2018.  Interest and other, net for the first quarter of 2019 included interest income of $0.1 million, a foreign exchange loss and other expenses totaling $0.1 million and a net loss of $1.5 million from the seven partially owned companies in AXT’s supply chain, accounted for under the equity method.  The net loss of $1.5 million for these companies includes a $1.7 million charge for one of the companies in which AXT has 25% ownership and combines a charge of approximately $0.6 million for AXT’s portion of that company’s quarterly loss plus an impairment charge by AXT for that company of $1.1 million.

Income tax expense in the first quarter of 2019 was $0.2 million, compared with a positive benefit of $0.2 million in the fourth quarter of 2018 and expense of $0.3 million for the first quarter of 2018.

Net loss in the first quarter of 2019 was $1.1 million, or $0.03 per share, compared with a net loss of $1.1 million or $0.03 per share in the fourth quarter of 2018 and a net profit of $2.9 million or $0.07 per diluted share for the first quarter of 2018.

AXT, Inc. First Quarter 2019 Results
	April 24, 2019
	Page 2 of 5

Management Qualitative Comments

“With a strong performance in our indium phosphide business in Q1, we are building a solid foundation for its growth this year,” said Morris Young, CEO. “In addition, we continue to execute the relocation of our facility on schedule and with positive customer qualification results. We are also taking the opportunity to strengthen our financial structure by controlling inventory, applying discipline to our spending, focusing on gross margin improvement, and making appropriate adjustments in our joint venture portfolio. We are encouraged by the significant technology trends that are likely to drive demand for our products over time, and we believe that our focus on the fundamentals of our model today will provide positive returns as the economic environment improves.”

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 9726809). The call will also be simulcast on the Internet at www.axt.com. Replays will be available at (855) 859-2056 (passcode 9726809) until April 29, 2019. 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 relocation and our expectations with respect to our business prospects and financial results. These forward-looking statements are based upon

AXT, Inc. First Quarter 2019 Results
	April 24, 2019
	Page 3 of 5

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; possible factory shutdowns as a result of air pollution in China; 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. 

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FINANCIAL TABLES TO FOLLOW

AXT, Inc. First Quarter 2019 Results
	April 24, 2019
	Page 4 of 5

AXT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share data)

	Three Months Ended
	March 31,
	2019		2018
Revenue	$	20,208	$	24,419
Cost of revenue		13,513		14,846
Gross profit		6,695		9,573
Operating expenses:
Selling, general and administrative		4,723		4,222
Research and development		1,346		1,420
Total operating expenses		6,069		5,642
Income from operations		626		3,931
Interest income, net		95		142
Equity in loss of unconsolidated joint ventures		(1,454)		(334)
Other (expense), net		(134)		(215)
Income (loss) before provision for income taxes		(867)		3,524
Provision for income taxes		156		334
Net income (loss)		(1,023)		3,190
Less: Net (income) attributable to noncontrolling interests		(81)		(315)
Net income (loss) attributable to AXT, Inc.	$	(1,104)	$	2,875
Net income (loss) attributable to AXT, Inc. per common share:
Basic	$	(0.03)	$	0.07
Diluted	$	(0.03)	$	0.07
Weighted-average number of common shares outstanding:
Basic		39,352		38,941
Diluted		39,352		40,364

AXT, Inc. First Quarter 2019 Results
	April 24, 2019
	Page 5 of 5

AXT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands)

	March 31,		December 31,
	2019		2018
ASSETS
Current assets:
Cash and cash equivalents	$	21,060	$	16,526
Short-term investments		13,085		22,129
Accounts receivable, net		19,605		19,586
Inventories		53,025		58,571
Prepaid expenses and other current assets		11,367		11,728
Total current assets		118,142		128,540
Long-term investments		—		717
Property, plant and equipment, net		84,975		82,280
Operating lease right-of-use assets		1,036		—
Other assets		10,405		11,987
Total assets	$	214,558	$	223,524
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	7,882	$	13,338
Accrued liabilities		9,556		15,371
Total current liabilities		17,438		28,709
Noncurrent operating lease liabilities		926		—
Other long-term liabilities		213		283
Total liabilities		18,577		28,992
Stockholders’ equity:
Preferred stock		3,532		3,532
Common stock		40		40
Additional paid-in capital		234,976		234,418
Accumulated deficit		(46,287)		(45,183)
Accumulated other comprehensive income (loss)		(733)		(1,972)
Total AXT, Inc. stockholders’ equity		191,528		190,835
Noncontrolling interests		4,453		3,697
Total stockholders’ equity		195,981		194,532
Total liabilities and stockholders’ equity	$	214,558	$	223,524