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): October 27, 2021

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. ☐

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:	Trading Symbol	Name of each exchange on which registered:
Common Stock, $0.001 par value	AXTI	The NASDAQ Stock Market LLC

Item 2.02 Results of Operations and Financial Condition

On October 27, 2021, AXT, Inc. issued a press release announcing its financial results for the quarter ended September 30, 2021.  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 September 30, 2021, 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 October 27, 2021, regarding the financial results of AXT, Inc. for the quarter ended September 30, 2021.

EXHIBIT INDEX

Eptem
Exhibit Number	Description
99.1	Press release dated October 27, 2021, regarding the financial results of AXT, Inc. for the quarter ended September 30, 2021.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

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: October 27, 2021	By:	/s/ Gary L. Fischer
		Gary L. Fischer
		Chief Financial Officer and Corporate Secretary

EX-99.1

Y
	Exhibit 99.1
	AXT, Inc. Third Quarter 2021 Results
	October 27, 2021
	Page 1 of 7

AXT, Inc. Announces Third Quarter 2021 Financial Results

Year-to-Date Revenue Grows 46% from the Prior Year

FREMONT, Calif., October 27, 2021 – AXT, Inc. (NasdaqGS: AXTI), a leading manufacturer of compound semiconductor wafer substrates, today reported financial results for the third quarter, ended September 30, 2021.

Management Qualitative Comments

“Our third quarter and year-to-date revenue results continue to underscore the gathering momentum of the technology mega trends that our substrates help to enable – trends such as 5G telecommunications, data center upgrades, health monitoring, the internet of everything, and the proliferation of LED lighting and display,” said Morris Young, chief executive officer.  “Year to date, we have increased revenue by 46% over the same period in 2020. With our new, expanded manufacturing facilities, we are able to accommodate increasing demand across these applications and others, while meeting the stringent technical requirements of Tier-1 customers. As such, 2021 is unfolding to be a pivotal year for our business. And as we look ahead, we believe 2022 will be another year of strong growth, with existing applications continuing to mature, and new ones being layered on to the current demand.”

Third Quarter 2021 Results

In order to provide better clarity on its operational and financial results, AXT will begin reporting its financial results on both a GAAP and non-GAAP basis. Non-GAAP results exclude stock-based compensation. Investors can find GAAP to non-GAAP reconciliation tables in the financial statements in this press release.  

● Revenue for the third quarter of 2021 was $34.6 million, compared with $33.7 million in the second quarter of 2021 and $25.5 million for the third quarter of 2020. This is approximately 35 percent growth over the third quarter of 2020.

● GAAP gross margin was 33.3 percent of revenue for the third quarter of 2021, compared with 36.3 percent of revenue in the second quarter of 2021 and 34.6 percent for the third quarter of 2020.

● Non-GAAP gross margin was 33.8 percent of revenue for the third quarter of 2021, compared with 36.4 percent of revenue in the second quarter of 2021 and 34.8 percent for the third quarter of 2020.

● GAAP operating expenses were $9.1 million in the third quarter of 2021, compared with $8.3 million in the second quarter of 2021 and $6.6 million for the third quarter of 2020.  

AXT, Inc. Third Quarter 2021 Results
	October 27, 2021
	Page 2 of 7

● Non-GAAP operating expenses were $7.7 million in the third quarter of 2021, compared with $7.4 million in the second quarter of 2021 and $6.0 million for the third quarter of 2020.  

● GAAP operating profit for the third quarter of 2021 was $2.4 million, compared with $3.9 million in the second quarter of 2021 and $2.2 million for the third quarter of 2020.

● Non-GAAP operating profit for the third quarter of 2021 was $4.0 million, compared with $4.9 million in the second quarter of 2021 and $2.8 million for the third quarter of 2020.

● Non-operating income and expense, net and net income attributable to noncontrolling interests for the third quarter of 2021 was a gain of $1.4 million, compared with a gain of $0.5 million in the second quarter of 2021 and a loss of $1.2 million for the third quarter of 2020.

● GAAP net income in the third quarter of 2021 was $3.8 million, or $0.09 per share, compared with net income of $4.4 million or $0.10 per share in the second quarter of 2021 and net income of $1.0 million or $0.02 per share for the third quarter of 2020.

● Non-GAAP net income in the third quarter of 2021 was $5.4 million, or $0.13 per share, compared with net income of $5.4 million or $0.12 per share in the second quarter of 2021 and net income of $1.6 million or $0.04 per share for the third quarter of 2020.

STAR Market Listing Update

AXT previously announced on November 16, 2020 a strategic plan to access China’s capital markets and progress to an initial public offering by Beijing Tongmei Xtal Technology Co., Ltd. (“Tongmei”), its  company in China, on the Shanghai Stock Exchange’s Sci-Tech innovAtion boaRd (the “STAR Market”).  The company is currently preparing required documents for submission to the STAR Market authorities.  

The process of going public on the STAR Market includes several periods of review and, therefore, is a lengthy process. Tongmei expects to accomplish this goal in mid-2022. AXT has posted a brief summary of the plan and the process on its website at www.axt.com.

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 8289338). The call will also be simulcast at www.axt.com. Replays will be available at (855) 859-2056 (passcode 8289338) until November 3, 2021. 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.

AXT, Inc. Third Quarter 2021 Results
	October 27, 2021
	Page 3 of 7

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 and includes sales, administration and customer service functions.  AXT has its Asia headquarters in Beijing, China and manufacturing facilities in three separate locations in China. In addition, as part of its supply chain strategy, the Company has partial ownership in ten companies in China producing raw materials for its manufacturing process. For more information, see AXT’s website at http://www.axt.com.

Note Regarding Use of Non-GAAP Financial Measures

As discussed above, in addition to the company’s condensed consolidated financial statements, which are presented according to GAAP, the company provides certain non-GAAP financial information that excludes stock-based compensation.  We believe that non-GAAP measures provide better comparability with our peer companies, many of which also use similar non-GAAP financial measures.  Further, the company believes that these non-GAAP measures offer an important analytical tool to help investors understand the company’s core operating results and trends. These non-GAAP measures have certain limitations and are not meant to be considered in isolation or as a substitute for GAAP financial information. Please note that other companies may calculate non-GAAP financial measures differently.  A reconciliation of our GAAP consolidated financial statements to our non-GAAP consolidated financial statements is provided below.

Forward-Looking Statements

The foregoing paragraphs contain forward-looking statements within the meaning of the Federal securities laws, including, for example, statements regarding completing other preliminary steps in connection with the proposed listing of shares of Tongmei on the STAR Market, being accepted to list shares of Tongmei on the STAR Market and the timing and completion of such listing of shares of Tongmei on the STAR Market. Additional examples of forward-looking statements include statements regarding the market demand for our products, our growth prospects and opportunities for continued business expansion, including technology trends and new applications, our market opportunity, our ability to lead our industry, 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 withdrawal, cancellations or requests for redemptions by private equity funds in China of investments in Tongmei, the

AXT, Inc. Third Quarter 2021 Results
	October 27, 2021
	Page 4 of 7

administrative challenges in satisfying the requirements of various government agencies in China in connection with the investments in Tongmei and the listing of shares of Tongmei on the STAR Market, continued open access to companies to list shares on the STAR Market, investor enthusiasm for new listings of shares on the STAR Market and geopolitical tensions between China and the United States. Additional 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.

###

FINANCIAL TABLES TO FOLLOW

AXT, Inc. Third Quarter 2021 Results
	October 27, 2021
	Page 5 of 7

AXT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share data)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Revenue	$	34,576	$	25,469	$	99,661	$	68,326
Cost of revenue		23,075		16,646		64,386		47,213
Gross profit		11,501		8,823		35,275		21,113
Operating expenses:
Selling, general and administrative		6,476		4,623		17,841		14,119
Research and development		2,629		2,023		7,571		4,973
Total operating expenses		9,105		6,646		25,412		19,092
Income from operations		2,396		2,177		9,863		2,021
Interest expense, net		(44)		(70)		(55)		(138)
Equity in income (loss) of unconsolidated joint ventures		1,061		45		3,674		(243)
Other income (expense), net		948		(34)		898		2,940
Income before provision for (benefit from) income taxes		4,361		2,118		14,380		4,580
Provision for (benefit from) income taxes		(135)		637		1,504		1,923
Net income		4,496		1,481		12,876		2,657
Less: Net income attributable to noncontrolling interests and redeemable noncontrolling interests		(696)		(490)		(1,266)		(1,483)
Net income attributable to AXT, Inc.	$	3,800	$	991	$	11,610	$	1,174
Net income attributable to AXT, Inc. per common share:
Basic	$	0.09	$	0.02	$	0.28	$	0.03
Diluted	$	0.09	$	0.02	$	0.27	$	0.03
Weighted-average number of common shares outstanding:
Basic		41,460		40,152		41,237		39,978
Diluted		42,678		40,979		42,710		40,688

AXT, Inc. Third Quarter 2021 Results
	October 27, 2021
	Page 6 of 7

AXT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands)

	September 30,		December 31,
	2021		2020
ASSETS
Current assets:
Cash and cash equivalents	$	43,608	$	72,602
Short-term investments		5,681		240
Accounts receivable, net		36,584		24,558
Inventories		60,683		51,515
Prepaid expenses and other current assets		13,062		15,603
Total current assets		159,618		164,518
Long-term investments		6,680		5,726
Property, plant and equipment, net		131,617		115,825
Operating lease right-of-use assets		2,401		2,683
Other assets		15,347		10,110
Total assets	$	315,663	$	298,862
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	11,384	$	12,669
Accrued liabilities		12,670		15,995
Bank loan		13,285		10,411
Total current liabilities		37,339		39,075
Long-term loan, related party		929		—
Noncurrent operating lease liabilities		2,035		2,374
Other long-term liabilities		1,628		1,881
Total liabilities		41,931		43,330
Redeemable noncontrolling interests		50,178		47,563
Stockholders’ equity:
Preferred stock		3,532		3,532
Common stock		43		42
Additional paid-in capital		230,517		230,381
Accumulated deficit		(32,935)		(44,545)
Accumulated other comprehensive income		4,583		3,209
Total AXT, Inc. stockholders’ equity		205,740		192,619
Noncontrolling interests		17,814		15,350
Total stockholders’ equity		223,554		207,969
Total liabilities, redeemable noncontrolling interests and stockholders’ equity	$	315,663	$	298,862

AXT, Inc. Third Quarter 2021 Results
	October 27, 2021
	Page 7 of 7

AXT, INC.

Reconciliation of Statements of Operations Under GAAP and Non-GAAP

(Unaudited, in thousands)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
GAAP gross profit	$	11,501	$	8,823	$	35,275	$	21,113
Stock compensation expense		188		28		263		83
Non-GAAP gross profit	$	11,689	$	8,851	$	35,538	$	21,196
GAAP operating expenses	$	9,105	$	6,646	$	25,412	$	19,092
Stock compensation expense		1,451		619		3,168		1,847
Non-GAAP operating expenses	$	7,654	$	6,027	$	22,244	$	17,245
GAAP income from operations	$	2,396	$	2,177	$	9,863	$	2,021
Stock compensation expense		1,639		647		3,431		1,930
Non-GAAP income from operations	$	4,035	$	2,824	$	13,294	$	3,951
GAAP net income	$	3,800	$	991	$	11,610	$	1,174
Stock compensation expense		1,639		647		3,431		1,930
Non-GAAP net income	$	5,439	$	1,638	$	15,041	$	3,104
GAAP net income per diluted share	$	0.09	$	0.02	$	0.27	$	0.03
Stock compensation expense		0.04		0.02		0.08		0.05
Non-GAAP net income per diluted share	$	0.13	$	0.04	$	0.35	$	0.07
Shares used to compute diluted net income per share		42,678		40,979		42,710		40,688

XML

Document and Entity Information	Oct. 27, 2021
Document and Entity Information [Abstract]
Document Type	8-K
Document Period End Date	Oct. 27, 2021
Entity File Number	000-24085
Entity Registrant Name	AXT, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	94-3031310
Entity Address, Address Line One	4281 Technology Drive
Entity Address, City or Town	Fremont
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94538
City Area Code	510
Local Phone Number	438-4700
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, $0.001 par value
Trading Symbol	AXTI
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false
Entity Central Index Key	0001051627
Amendment Flag	false