AXT, Inc. Announces Second Quarter 2023 Financial Results
August 03 2023 - 4:05PM
AXT, Inc. (NasdaqGS: AXTI), a leading manufacturer of compound
semiconductor wafer substrates, today reported financial results
for the second quarter, ended June 30, 2023.
Management Qualitative
Comments
“Though the macro environment continues to
impact our growth near-term, the trends that have driven our
revenue and customer expansion remain very much intact,” said
Morris Young, chief executive officer. “We continue to excel in our
technical capabilities and are readying our business to support new
applications in data center, consumer, and other high growth areas.
Further, we continue to expand our recycling program and are
focused on improving our efficiency and accelerating our return to
profitability.”
Second Quarter 2023 Results
- Revenue for the second quarter of
2023 was $18.6 million, compared with $19.4 million for the first
quarter of 2023 and $39.5 million for the second quarter of
2022.
- GAAP gross margin was 9.2 percent
of revenue for the second quarter of 2023, compared with 26.3
percent of revenue for the first quarter of 2023 and 39.1 percent
for the second quarter of 2022.
- Non-GAAP gross margin was 9.8
percent of revenue for the second quarter of 2023, compared with
26.9 percent of revenue for the first quarter of 2023 and 39.4
percent for the second quarter of 2022.
- GAAP operating expenses were $8.6
million for the second quarter of 2023, compared with $9.5 million
for the first quarter of 2023 and $10.1 million for the second
quarter of 2022.
- Non-GAAP operating expenses were
$7.8 million for the second quarter of 2023, compared with $8.7
million for the first quarter of 2023 and $9.1 million for the
second quarter of 2022.
- GAAP operating profit/(loss) for
the second quarter of 2023 was an operating loss of ($6.8) million,
compared with an operating loss of ($4.4) million for the first
quarter of 2023 and an operating profit of $5.3 million for the
second quarter of 2022.
- Non-GAAP operating profit/(loss)
for the second quarter of 2023 was an operating loss of ($5.9)
million, compared with an operating loss of ($3.5) million for the
first quarter of 2023 and an operating profit of $6.4 million for
the second quarter of 2022.
- Non-operating income and expense,
taxes and minority interest for the second quarter of 2023 was a
net gain of $1.8 million, compared with a net gain of $1.1 million
in the first quarter of 2023 and a net gain of $0.3 million for the
second quarter of 2022.
- GAAP net income, after minority
interests, for the second quarter of 2023 was a net loss of ($5.1)
million, or ($0.12) per share, compared with a net loss of ($3.3)
million, or ($0.08) per share, for the first quarter of 2023 and a
net income of $5.5 million, or $0.13 per share, for the second
quarter of 2022.
- Non-GAAP net income for the second
quarter of 2023 was a net loss of ($4.2) million, or ($0.10) per
share, compared with a net loss of ($2.4) million, or ($0.06) per
share, for the first quarter of 2023 and a net income of $6.7
million, or $0.16 per share, for the second quarter of 2022.
STAR Market Listing Update
On January 10, 2022, AXT announced that Beijing
Tongmei Xtal Technology Co., Ltd. (“Tongmei”), its subsidiary in
Beijing, China, submitted to the Shanghai Stock Exchange (the
“SSE”) its application to list its shares in an initial public
offering (the “IPO”) on the SSE’s Sci-Tech innovAtion boaRd (the
“STAR Market”) and the application was accepted for review.
Subsequently, Tongmei responded to several rounds of questions
received from the SSE. On July 12, 2022, the SSE approved the
listing of Tongmei’s shares in an IPO on the STAR Market. On August
1, 2022, the China Securities Regulatory Commission (the “CSRC”)
accepted for review Tongmei’s IPO application. The STAR Market IPO
remains subject to review and approval by the CSRC and other
authorities. The process of going public on the STAR Market
includes several periods of review and, therefore, is a lengthy
process. Subject to review and approval by the CSRC and other
authorities, Tongmei hopes to accomplish this goal in the coming
months. AXT has posted a brief summary of the plan and the process
on its website at http://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 (888) 300-4150 (passcode 7175811). The call will
also be simulcast at www.axt.com. Replays will be available at
(800) 770-2030 (passcode 7175811) until August 17, 2023. 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 where the company maintains 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.
Safe Harbor Statement
The foregoing paragraphs contain forward-looking
statements within the meaning of the Federal securities laws,
including, for example, statements regarding the timing and
completion of the proposed 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
product mix, our growth prospects and opportunities for continued
business expansion, including trends, new applications and the
ramping of Tier-1 customers, our market opportunity, our ability to
lead our industry, our relocation, our expectations with respect to
our business prospects and financial results, including our gross
margin performance, and our development of larger diameter
substrates that we believe will enable the next generation of
technology innovation across a number of end-markets. 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
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 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 or COVID-19; 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 |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
18,595 |
|
|
$ |
39,487 |
|
|
$ |
38,000 |
|
|
$ |
79,140 |
|
Cost of revenue |
|
16,880 |
|
|
|
24,052 |
|
|
|
31,175 |
|
|
|
50,397 |
|
Gross profit |
|
1,715 |
|
|
|
15,435 |
|
|
|
6,825 |
|
|
|
28,743 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
5,820 |
|
|
|
6,693 |
|
|
|
11,772 |
|
|
|
13,143 |
|
Research and development |
|
2,740 |
|
|
|
3,453 |
|
|
|
6,335 |
|
|
|
6,612 |
|
Total operating expenses |
|
8,560 |
|
|
|
10,146 |
|
|
|
18,107 |
|
|
|
19,755 |
|
Income (loss) from
operations |
|
(6,845 |
) |
|
|
5,289 |
|
|
|
(11,282 |
) |
|
|
8,988 |
|
Interest expense, net |
|
(365 |
) |
|
|
(188 |
) |
|
|
(762 |
) |
|
|
(371 |
) |
Equity in income of
unconsolidated joint ventures |
|
941 |
|
|
|
2,177 |
|
|
|
1,975 |
|
|
|
3,302 |
|
Other income, net |
|
777 |
|
|
|
294 |
|
|
|
1,059 |
|
|
|
285 |
|
Income (loss) before provision
(benefit) for income taxes |
|
(5,492 |
) |
|
|
7,572 |
|
|
|
(9,010 |
) |
|
|
12,204 |
|
Provision (benefit) for income
taxes |
|
(139 |
) |
|
|
1,027 |
|
|
|
9 |
|
|
|
1,687 |
|
Net income (loss) |
|
(5,353 |
) |
|
|
6,545 |
|
|
|
(9,019 |
) |
|
|
10,517 |
|
Less: Net (income) loss attributable to noncontrolling interests
and redeemable noncontrolling interests |
|
264 |
|
|
|
(999 |
) |
|
|
582 |
|
|
|
(1,806 |
) |
Net income (loss) attributable
to AXT, Inc. |
$ |
(5,089 |
) |
|
$ |
5,546 |
|
|
$ |
(8,437 |
) |
|
$ |
8,711 |
|
Net income (loss) attributable
to AXT, Inc. per common share: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
(0.12 |
) |
|
$ |
0.13 |
|
|
$ |
(0.20 |
) |
|
$ |
0.21 |
|
Diluted |
$ |
(0.12 |
) |
|
$ |
0.13 |
|
|
$ |
(0.20 |
) |
|
$ |
0.20 |
|
Weighted-average number of
common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
42,586 |
|
|
|
42,001 |
|
|
|
42,542 |
|
|
|
41,935 |
|
Diluted |
|
42,586 |
|
|
|
42,511 |
|
|
|
42,542 |
|
|
|
42,586 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AXT, INC.CONDENSED
CONSOLIDATED BALANCE SHEETS(Unaudited, in
thousands)
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
30,092 |
|
|
$ |
34,948 |
|
Restricted cash |
|
10,794 |
|
|
|
6,400 |
|
Short-term investments |
|
7,088 |
|
|
|
9,339 |
|
Accounts receivable, net |
|
19,857 |
|
|
|
29,252 |
|
Inventories |
|
87,063 |
|
|
|
89,629 |
|
Prepaid expenses and other current assets |
|
10,576 |
|
|
|
13,977 |
|
Total current assets |
|
165,470 |
|
|
|
183,545 |
|
Long-term investments |
|
1,641 |
|
|
|
2,118 |
|
Property, plant and equipment,
net |
|
158,672 |
|
|
|
161,017 |
|
Operating lease right-of-use
assets |
|
1,473 |
|
|
|
1,761 |
|
Other assets |
|
18,946 |
|
|
|
21,631 |
|
Total assets |
$ |
346,202 |
|
|
$ |
370,072 |
|
LIABILITIES,
REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’
EQUITY |
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Accounts payable |
$ |
4,692 |
|
|
$ |
10,084 |
|
Accrued liabilities |
|
16,949 |
|
|
|
18,164 |
|
Bank loans |
|
45,622 |
|
|
|
47,078 |
|
Total current liabilities |
|
67,263 |
|
|
|
75,326 |
|
Noncurrent operating lease
liabilities |
|
1,157 |
|
|
|
1,322 |
|
Other long-term
liabilities |
|
3,398 |
|
|
|
3,678 |
|
Total liabilities |
|
71,818 |
|
|
|
80,326 |
|
|
|
|
|
|
|
Redeemable noncontrolling
interests |
|
41,393 |
|
|
|
44,846 |
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
Preferred stock |
|
3,532 |
|
|
|
3,532 |
|
Common stock |
|
44 |
|
|
|
44 |
|
Additional paid-in capital |
|
236,988 |
|
|
|
235,308 |
|
Accumulated deficit |
|
(22,596 |
) |
|
|
(14,159 |
) |
Accumulated other comprehensive loss |
|
(8,175 |
) |
|
|
(3,118 |
) |
Total AXT, Inc. stockholders’ equity |
|
209,793 |
|
|
|
221,607 |
|
Noncontrolling interests |
|
23,198 |
|
|
|
23,293 |
|
Total stockholders’ equity |
|
232,991 |
|
|
|
244,900 |
|
Total liabilities, redeemable noncontrolling interests and
stockholders’ equity |
$ |
346,202 |
|
|
$ |
370,072 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AXT, INC.Reconciliation
of Statements of Operations Under GAAP and
Non-GAAP(Unaudited, in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
2023 |
|
|
2022 |
|
2023 |
|
|
2022 |
GAAP gross profit |
$ |
1,715 |
|
|
$ |
15,435 |
|
$ |
6,825 |
|
|
$ |
28,743 |
Stock-based compensation
expense |
|
103 |
|
|
|
113 |
|
|
208 |
|
|
|
226 |
Non-GAAP gross profit |
$ |
1,818 |
|
|
$ |
15,548 |
|
$ |
7,033 |
|
|
$ |
28,969 |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating expenses |
$ |
8,560 |
|
|
$ |
10,146 |
|
$ |
18,107 |
|
|
$ |
19,755 |
Stock-based compensation
expense |
|
809 |
|
|
|
1,021 |
|
|
1,619 |
|
|
|
1,996 |
Non-GAAP operating
expenses |
$ |
7,751 |
|
|
$ |
9,125 |
|
$ |
16,488 |
|
|
$ |
17,759 |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP income (loss) from
operations |
$ |
(6,845 |
) |
|
$ |
5,289 |
|
$ |
(11,282 |
) |
|
$ |
8,988 |
Stock-based compensation
expense |
|
912 |
|
|
|
1,134 |
|
|
1,827 |
|
|
|
2,222 |
Non-GAAP income (loss) from
operations |
$ |
(5,933 |
) |
|
$ |
6,423 |
|
$ |
(9,455 |
) |
|
$ |
11,210 |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income (loss) |
$ |
(5,089 |
) |
|
$ |
5,546 |
|
$ |
(8,437 |
) |
|
$ |
8,711 |
Stock-based compensation
expense |
|
912 |
|
|
|
1,134 |
|
|
1,827 |
|
|
|
2,222 |
Non-GAAP net income
(loss) |
$ |
(4,177 |
) |
|
$ |
6,680 |
|
$ |
(6,610 |
) |
|
$ |
10,933 |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income (loss) per
diluted share |
$ |
(0.12 |
) |
|
$ |
0.13 |
|
$ |
(0.20 |
) |
|
$ |
0.20 |
Stock-based compensation
expense per diluted share |
$ |
0.02 |
|
|
$ |
0.03 |
|
$ |
0.04 |
|
|
$ |
0.05 |
Non-GAAP net income (loss) per
diluted share |
$ |
(0.10 |
) |
|
$ |
0.16 |
|
$ |
(0.16 |
) |
|
$ |
0.25 |
|
|
|
|
|
|
|
|
|
|
|
|
Shares used to compute diluted
net income per share |
|
42,586 |
|
|
|
42,511 |
|
|
42,542 |
|
|
|
42,586 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contacts: |
|
|
Gary
FischerChief Financial Officer(510) 438-4700Leslie GreenGreen
Communications Consulting, LLC(650) 312-9060 |
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