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