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AXT, Inc. Announces Second Quarter 2022 Financial Results
Source: Nasdaq GlobeNewswire / 28 Jul 2022 15:05:01 America/Chicago
Year-Over-Year Revenue Growth of 22% in 1H22; Gross Margin Expands
FREMONT, Calif., July 28, 2022 (GLOBE NEWSWIRE) -- AXT, Inc. (NasdaqGS: AXTI), a leading manufacturer of compound semiconductor wafer substrates, today reported financial results for the second quarter, ended June 30, 2022.
Management Qualitative Comments
“This is an exciting time in our business,” said Morris Young, chief executive officer. “Our strong execution on a number of fronts has set the stage for great opportunities in the coming quarters. We continue to achieve strong growth in highly strategic applications, and are currently ramping several Tier-1 customers. We are also achieving notable success in the development of larger diameter substrates that we believe will enable the next generation of technology innovation across a number of end-markets. This strong execution has driven first half revenue growth of 22% over the previous year and continues to enable us to outperform our market, with emerging opportunities that will layer on over the coming quarters.”
Second Quarter 2022 Results
- Revenue for the second quarter of 2022 was $39.5 million, compared with $39.7 million for the first quarter of 2022 and $33.7 million for the second quarter of 2021.
- GAAP gross margin was 39.1 percent of revenue for the second quarter of 2022, compared with 33.6 percent of revenue for the first quarter of 2022 and 36.3 percent for the second quarter of 2021.
- Non-GAAP gross margin was 39.4 percent of revenue for the second quarter of 2022, compared with 33.8 percent of revenue for the first quarter of 2022 and 36.4 percent for the second quarter of 2021.
- GAAP operating expenses were $10.1 million for the second quarter of 2022, compared with $9.6 million for the first quarter of 2022 and $8.3 million for the second quarter of 2021.
- Non-GAAP operating expenses were $9.1 million for the second quarter of 2022, compared with $8.6 million for the first quarter of 2022 and $7.4 million for the second quarter of 2021.
- GAAP operating profit for the second quarter of 2022 was $5.3 million, compared with $3.7 million for the first quarter of 2022 and $3.9 million for the second quarter of 2021.
- Non-GAAP operating profit for the second quarter of 2022 was $6.4 million, compared with $4.8 million for the first quarter of 2022 and $4.9 million for the second quarter of 2021.
- Non-operating income and expense, taxes and minority interest for the second quarter of 2022 was an income of $0.3 million, compared with an expense of $0.5 million in the first quarter of 2022 and an income of $0.5 million for the second quarter of 2021.
- GAAP net income, after minority interests, for the second quarter of 2022 was $5.5 million, or $0.13 per share, compared with net income of $3.2 million or $0.07 per share for the first quarter of 2022 and net income of $4.4 million or $0.10 per share for the second quarter of 2021.
- Non-GAAP net income for the second quarter of 2022 was $6.7 million, or $0.16 per share, compared with net income of $4.3 million or $0.10 per share for the first quarter of 2022 and net income of $5.4 million or $0.12 per share for the second quarter of 2021.
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. The STAR Market IPO remains subject to review and approval by the China Securities Regulatory Commission (“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 expects to accomplish this goal in the second half of 2022, probably in Q4 2022. 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 on July 28, 2022 at 1:30 p.m. PT. To access the call by phone, please go to this link to register and you will be provided with dial in details:
https://register.vevent.com/register/BI845e5e766e5542c4807cba2ad13e21f8. A webcast link for the call will also be available on the investor relations page at www.axt.com. 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.
Forward-Looking Statements
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 growth prospects and opportunities for continued business expansion, including technology 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 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.
Contacts:
Gary Fischer
Chief Financial Officer
(510) 438-4700Leslie Green
Green Communications Consulting, LLC
(650) 312-9060FINANCIAL 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, 2022 2021 2022 2021 Revenue $ 39,487 $ 33,735 $ 79,140 $ 65,085 Cost of revenue 24,052 21,497 50,397 41,311 Gross profit 15,435 12,238 28,743 23,774 Operating expenses: Selling, general and administrative 6,693 5,795 13,143 11,365 Research and development 3,453 2,537 6,612 4,942 Total operating expenses 10,146 8,332 19,755 16,307 Income from operations 5,289 3,906 8,988 7,467 Interest income (expense), net (188 ) 39 (371 ) (11 ) Equity in income of unconsolidated joint ventures 2,177 1,502 3,302 2,613 Other income (expense), net 294 61 285 (50 ) Income before provision for income taxes 7,572 5,508 12,204 10,019 Provision for income taxes 1,027 893 1,687 1,639 Net income 6,545 4,615 10,517 8,380 Less: Net income attributable to noncontrolling interests and redeemable noncontrolling interests (999 ) (230 ) (1,806 ) (570 ) Net income attributable to AXT, Inc. $ 5,546 $ 4,385 $ 8,711 $ 7,810 Net income attributable to AXT, Inc. per common share: Basic $ 0.13 $ 0.11 $ 0.21 $ 0.19 Diluted $ 0.13 $ 0.10 $ 0.20 $ 0.18 Weighted-average number of common shares outstanding: Basic 42,001 41,248 41,935 41,124 Diluted 42,511 42,727 42,586 42,725 AXT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)June 30, December 31, 2022 2021 ASSETS Current assets: Cash and cash equivalents $ 41,043 $ 36,763 Restricted cash 3,900 — Short-term investments 4,471 5,419 Accounts receivable, net 38,751 34,839 Inventories 77,280 65,912 Prepaid expenses and other current assets 11,935 17,252 Total current assets 177,380 160,185 Long-term investments 7,760 9,576 Property, plant and equipment, net 152,882 142,415 Operating lease right-of-use assets 2,021 2,324 Other assets 21,222 17,941 Total assets $ 361,265 $ 332,441 LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 23,317 $ 16,649 Accrued liabilities 14,581 17,057 Short-term loan, related party — 1,887 Bank loan 32,973 12,229 Total current liabilities 70,871 47,822 Noncurrent operating lease liabilities 1,596 1,935 Other long-term liabilities 2,069 2,453 Total liabilities 74,536 52,210 Redeemable noncontrolling interests 48,265 50,385 Stockholders’ equity: Preferred stock 3,532 3,532 Common stock 43 43 Additional paid-in capital 233,364 231,622 Accumulated deficit (21,259 ) (29,970 ) Accumulated other comprehensive income 637 6,302 Total AXT, Inc. stockholders’ equity 216,317 211,529 Noncontrolling interests 22,147 18,317 Total stockholders’ equity 238,464 229,846 Total liabilities, redeemable noncontrolling interests and stockholders’ equity $ 361,265 $ 332,441 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, 2022 2021 2022 2021 GAAP gross profit $ 15,435 $ 12,238 $ 28,743 $ 23,774 Stock compensation expense 113 36 226 75 Non-GAAP gross profit $ 15,548 $ 12,274 $ 28,969 $ 23,849 GAAP operating expenses $ 10,146 $ 8,332 $ 19,755 $ 16,307 Stock compensation expense 1,021 939 1,996 1,716 Non-GAAP operating expenses $ 9,125 $ 7,393 $ 17,759 $ 14,591 GAAP income from operations $ 5,289 $ 3,906 $ 8,988 $ 7,467 Stock compensation expense 1,134 975 2,222 1,791 Non-GAAP income from operations $ 6,423 $ 4,881 $ 11,210 $ 9,258 GAAP net income $ 5,546 $ 4,385 $ 8,711 $ 7,810 Stock compensation expense 1,134 975 2,222 1,791 Non-GAAP net income $ 6,680 $ 5,360 $ 10,933 $ 9,601 GAAP net income per diluted share $ 0.13 $ 0.10 $ 0.20 $ 0.18 Stock compensation expense per diluted share $ 0.03 $ 0.02 $ 0.05 $ 0.04 Non-GAAP net income per diluted share $ 0.16 $ 0.12 $ 0.25 $ 0.22 Shares used to compute diluted net income per share 42,511 42,727 42,586 42,725
- Revenue for the second quarter of 2022 was $39.5 million, compared with $39.7 million for the first quarter of 2022 and $33.7 million for the second quarter of 2021.