Exhibit 99.1
FOR IMMEDIATE RELEASE |
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Contacts:
Raymond A. Low
Chief Financial Officer
(510) 683-5900
Leslie Green
Green Communications Consulting, LLC
(650) 312-9060
AXT, Inc. Announces Third Quarter 2010 Financial Results
· Q3 FY 2010 Net Revenues: $26.8 million
· Q3 FY 2010 GAAP Gross Margin: 39.3 percent
· Q3 FY 2010 GAAP Net Income: $5.6 million; $0.17 per share (diluted)
FREMONT, Calif., Oct 28, 2010 — AXT, Inc. (NasdaqGM: AXTI), a leading manufacturer of compound semiconductor substrates, today reported financial results for the third quarter ended September 30, 2010.
Third Quarter 2010 Results
Revenue for the third quarter of 2010 was $26.8 million, compared with $23.2 million in the second quarter of 2010, and $16.8 million in the third quarter of 2009.
Total gallium arsenide (GaAs) substrate revenue was $19.2 million for the third quarter of 2010, compared with $16.2 million in the second quarter of 2010, and $13.3 million in the third quarter of 2009. Indium phosphide (InP) substrate revenue was $955,000 for the third quarter of 2010, compared with $1.1 million in the second quarter of 2010, and $688,000 in the third quarter of 2009. Germanium (Ge) substrate revenue was $2.3 million for the third quarter of 2010 compared with $1.6 million in the second quarter of 2010 and $1.8 million in the third quarter of 2009. Raw materials sales were $4.4 million for the third quarter of 2010, compared with $4.2 million in the second quarter of 2010 and $1.0 million in the third quarter of 2009.
Gross margin was 39.3 percent of revenue for the third quarter of 2010. By comparison, gross margin in the second quarter of 2010 was 36.8 percent of revenue. Gross margin was 32.9 percent of revenue for the third quarter of 2009.
Operating expenses were $3.8 million in the third quarter of 2010, compared with $3.6 million in the second quarter of 2010. Operating expenses in the third quarter of 2009 were $3.7 million.
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| AXT, Inc. 4281 Technology Drive Fremont, CA 94538 Tel: 510.683.5900 Fax: 510.353.0668 www.axt.com.
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Income from operations for the third quarter of 2010 was $6.7 million compared with income from operations of $5.0 million in the second quarter of 2010, and income from operations of $1.9 million in the third quarter of 2009.
Net interest and other income for the third quarter of 2010 was $442,000, which included an unrealized foreign exchange gain of $210,000. This compares with net interest and other income of $1.6 million in the second quarter of 2010, which included $1.2 million, net, sales tax refund and an unrealized foreign exchange gain of $230,000, and net interest and other income of $677,000 in the third quarter of 2009, which included an unrealized foreign exchange gain of $302,000.
Net income in the third quarter of 2010 was $5.6 million or $0.17 per diluted share compared with net income of $5.5 million or $0.17 per diluted share in the second quarter of 2010, and with a net income of $2.1 million or $0.07 per diluted share in the third quarter of 2009. Excluding the $1.2 million, net, sales tax refund or $0.04 per diluted share, our net income in the second quarter of 2010 was $4.3 million or $0.13 per diluted share
Management Qualitative Comments
“Q3 was another strong quarter for AXT,” said Morris Young, chief executive officer. “Solid demand in all of our key end markets coupled with great execution across our organization allowed us to deliver outstanding financial results and continued increases in our market share and customer penetration. Not only did we exceed our revenue expectations, our gross margin performance was the highest it has been in many years. We continue to see growing momentum in the long-term secular trends that are fueling our growth, including the adoption of smartphones and other intelligent wireless devices, the proliferation of LED applications and the expansion of photovoltaic technology. These trends are opening up exciting opportunities for our business that we believe will extend for years to come.”
Outlook for Fourth Quarter, Ending December 31, 2010
AXT estimates revenue for the fourth quarter will increase to between $28.0 million and $29.0 million. The company estimates that net income per share will be between $0.15 and $0.17, which takes into account our weighted average share count of approximately 32.4 million shares.
Conference Call
The company will also host a conference call to discuss these results on October 28, 2010 at 1:30 p.m. PDT. The conference call can be accessed at (719) 325-4760 (passcode 6968854). The call will also be simulcast on the Internet at www.axt.com. Replays will be available at (719) 457-0820 (passcode 6968854) until November 4, 2010. 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, 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 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 fourth quarter of 2010, the current and long-term growth and trends in the demand for our products, the outlook for sales of wireless devices and the adoption of and investment in LED technology, the change in the composition of our revenues by product, and the positioning of the company in terms of capacity, raw material access and cost-structure within the industry. 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.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share data)
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| Three Months Ended |
| Nine Months Ended |
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| September 30, |
| September 30, |
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| 2010 |
| 2009 |
| 2010 |
| 2009 |
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Revenue |
| $ | 26,809 |
| $ | 16,819 |
| $ | 68,627 |
| $ | 37,528 |
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Cost of revenue |
| 16,278 |
| 11,281 |
| 42,829 |
| 29,711 |
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Gross profit |
| 10,531 |
| 5,538 |
| 25,798 |
| 7,817 |
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Operating expenses: |
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Selling, general and administrative |
| 3,347 |
| 3,323 |
| 9,805 |
| 10,815 |
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Research and development |
| 462 |
| 360 |
| 1,428 |
| 1,175 |
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Restructuring charge |
| — |
| — |
| — |
| 507 |
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Total operating expenses |
| 3,809 |
| 3,683 |
| 11,233 |
| 12,497 |
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Income (loss) from operations |
| 6,722 |
| 1,855 |
| 14,565 |
| (4,680 | ) | ||||
Interest income (expense), net |
| 26 |
| 39 |
| 16 |
| 117 |
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Other income (expense), net |
| 442 |
| 638 |
| 2,077 |
| 537 |
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Income (loss) before provision for income taxes |
| 7,190 |
| 2,532 |
| 16,658 |
| (4,026 | ) | ||||
Provision for income taxes |
| 871 |
| 201 |
| 1,677 |
| 513 |
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Net income (loss) |
| 6,319 |
| 2,331 |
| 14,981 |
| (4,539 | ) | ||||
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Less: Net income (loss) attributable to noncontrolling interest |
| (680 | ) | (210 | ) | (1,227 | ) | (136 | ) | ||||
Net income (loss) attributable to AXT, Inc. |
| $ | 5,639 |
| $ | 2,121 |
| $ | 13,754 |
| $ | (4,675 | ) |
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Net income (loss) attributable to AXT, Inc. per common share: |
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Basic |
| $ | 0.18 |
| $ | 0.07 |
| $ | 0.44 |
| $ | (0.16 | ) |
Diluted |
| $ | 0.17 |
| $ | 0.07 |
| $ | 0.42 |
| $ | (0.16 | ) |
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Weighted average number of common shares outstanding: |
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Basic |
| 30,944 |
| 30,475 |
| 30,853 |
| 30,449 |
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Diluted |
| 32,509 |
| 30,911 |
| 32,170 |
| 30,449 |
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AXT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
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| September 30, |
| December 31, |
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| 2010 |
| 2009 |
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Assets: |
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Current assets |
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Cash and cash equivalents |
| $ | 23,393 |
| $ | 16,934 |
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Short-term investments |
| 17,606 |
| 18,469 |
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Accounts receivable, net |
| 18,977 |
| 15,362 |
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Inventories, net |
| 33,153 |
| 27,718 |
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Prepaid expenses and other current assets |
| 3,451 |
| 2,411 |
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Total current assets |
| 96,580 |
| 80,894 |
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Property, plant and equipment, net |
| 22,709 |
| 20,853 |
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Other assets |
| 6,313 |
| 6,199 |
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Total assets |
| $ | 125,602 |
| $ | 107,946 |
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Liabilities and stockholders’ equity: |
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Current liabilities |
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Accounts payable |
| $ | 5,979 |
| $ | 5,571 |
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Accrued liabilities |
| 6,557 |
| 4,566 |
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Current portion of long-term debt |
| — |
| 76 |
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Total current liabilities |
| 12,536 |
| 10,213 |
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Long-term debt, net of current portion |
| 0 |
| 420 |
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Other long-term liabilities |
| 30 |
| 62 |
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Total liabilities |
| 12,566 |
| 10,695 |
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Stockholders’ equity: |
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Preferred stock |
| 3,532 |
| 3,532 |
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Common stock |
| 189,140 |
| 187,901 |
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Accumulated deficit |
| (87,376 | ) | (101,130 | ) | ||
Other comprehensive income |
| 4,276 |
| 4,300 |
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Total AXT, Inc. stockholders’ equity |
| 109,572 |
| 94,603 |
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Noncontrolling interest |
| 3,464 |
| 2,648 |
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Total stockholders’ equity |
| 113,036 |
| 97,251 |
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Total liabilities and stockholders’ equity |
| $ | 125,602 |
| $ | 107,946 |
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