2013/2/25 - AXT, Inc. Announces Fourth Quarter and Fiscal 2012 Financial Results

• FY 2012 Net Revenues: $88.4 million
  
  
• FY 2012 GAAP Net Income: $3.1 million; $0.09 per share (diluted)
  
  

AXT, Inc. (NASDAQ: AXTI), a leading manufacturer of compound semiconductor substrates, today reported financial results for the fourth quarter and fiscal year ended December 31, 2012.

Fourth Quarter 2012 Results
Revenue for the fourth quarter of 2012 was $18.9 million compared with $20.8 million in the third quarter of 2012. Total gallium arsenide (GaAs) substrate revenue was $11.3 million for the fourth quarter of 2012, compared with $12.9 million in the third quarter of 2012. Indium phosphide (InP) substrate revenue was $1.6 million for the fourth quarter of 2012, compared with $1.6 million in the third quarter of 2012. Germanium (Ge) substrate revenue was $1.7 million for the fourth quarter of 2012 compared with $2.0 million in the third quarter of 2012. Raw materials sales were $4.3 million for the fourth quarter of 2012, compared with $4.3 million in the third quarter of 2012.

Gross margin was 19.5 percent of revenue for the fourth quarter of 2012. By comparison, gross margin in the third quarter of 2012 was 26.3 percent of revenue.

Operating expenses were $4.6 million in the fourth quarter of 2012, compared with $4.8 million in the third quarter of 2012.

Loss from operations for the fourth quarter of 2012 was $0.9 million compared with income from operations of $0.7 million in the third quarter of 2012.

Net interest and other income for the fourth quarter of 2012 was $522,000, which included a foreign exchange loss of $499,000. This compares with net interest and other income of $544,000 in the third quarter of 2012, which included a foreign exchange gain of $114,000.

Net loss in the fourth quarter of 2012 was $0.8 million or $0.02 per diluted share compared with net income of $0.9 million or $0.03 per diluted share in the third quarter of 2012.

Fiscal 2012 Results
For the fiscal year 2012, revenue was $88.4 million, a 15 percent decrease from $104.1 million in fiscal year 2011. Gross margin for fiscal year 2012 was 28.1 percent of revenue compared with 43.0 percent of revenue for fiscal year 2011.

Net income for fiscal year 2012 was $3.1 million or $0.09 per diluted share compared with net income of $20.3 million or $0.61 per diluted share for fiscal year 2011.

Management Qualitative Comments
"While we are coming off of a tough year in our industry, we believe that we have been able to weather the environment reasonably well, remaining profitable for the year and generating nearly $10 million in cash," said Morris Young, chief executive officer. "As we enter 2013, we are seeing signs of market improvement in several of our product categories and believe that the current customer landscape holds interesting opportunity for AXT. We are approaching the year with cautious optimism and will continue to exercise tight expense control and careful financial planning. We believe that AXT is a strong competitor and we are focused on delivering growth and shareholder value in 2013."

Conference Call
The company will also host a conference call to discuss these results on February 25, 2013 at 1:30 p.m. PST. The conference call can be accessed at (719) 325-2215 (passcode 3780034). The call will also be simulcast on the Internet at www.axt.com. Replays will be available at (719) 457-0820 (passcode 3780034) until March 3, 2013. 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 joint ventures in China 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 current and long-term growth and trends in the demand for our products, our progress in our strategic plans, and the positioning of the company. 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.

FINANCIAL TABLES TO FOLLOW

                                 AXT, INC.
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
              (Unaudited, in thousands, except per share data)

                                  Three Months Ended    Twelve Months Ended
                                     December 31,          December 31,
                                 --------------------  --------------------
                                    2012       2011       2012       2011
                                 ---------  ---------  ---------  ---------

Revenue                          $  18,927  $  21,219  $  88,374  $ 104,121
Cost of revenue                     15,243     13,386     63,522     59,339
                                 ---------  ---------  ---------  ---------
Gross profit                         3,684      7,833     24,852     44,782
                                 ---------  ---------  ---------  ---------

Operating expenses:
  Selling, general and
   administrative                    3,710      3,851     15,419     14,836
  Research and development             875        657      3,468      2,473
                                 ---------  ---------  ---------  ---------
    Total operating expenses         4,585      4,508     18,887     17,309
                                 ---------  ---------  ---------  ---------
Income (loss) from operations         (901)     3,325      5,965     27,473
Interest income, net                   316        190        518        449
Other income, net                      206        253        520        696
                                 ---------  ---------  ---------  ---------

Income (loss) before provision
 for income taxes                     (379)     3,768      7,003     28,618
Provision for income taxes             294        162        853      2,795
                                 ---------  ---------  ---------  ---------
Net income (loss)                     (673)     3,606      6,150     25,823

Less: Net income attributable to
 noncontrolling interest               (83)    (1,040)    (3,040)    (5,503)
                                 ---------  ---------  ---------  ---------
Net income (loss) attributable
 to AXT, Inc.                    $    (756) $   2,566  $   3,110  $  20,320
                                 =========  =========  =========  =========

Net income (loss) attributable
 to AXT, Inc. per common share:
  Basic                          $   (0.02) $    0.08  $    0.09  $    0.63
                                 =========  =========  =========  =========
  Diluted                        $   (0.02) $    0.08  $    0.09  $    0.61
                                 =========  =========  =========  =========

Weighted average number of
 common shares outstanding:
  Basic                             32,220     31,992     32,144     31,872
                                 =========  =========  =========  =========
  Diluted                           32,220     32,822     32,865     33,061
                                 =========  =========  =========  =========



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                                 AXT, INC.
                   CONDENSED CONSOLIDATED BALANCE SHEETS
                         (Unaudited, in thousands)

                                                 December 31,  December 31,
                                                     2012          2011
                                                 ------------  ------------
Assets:
Current assets
  Cash and cash equivalents                      $     30,634  $     26,156
  Short-term investments                               10,270         5,505
  Accounts receivable, net                             17,912        17,966
  Inventories                                          40,352        46,012
  Related party notes receivable - current              2,036           412
  Prepaid expenses and other current assets             5,268         7,052
                                                 ------------  ------------
    Total current assets                              106,472       103,103

Long-term investments                                   9,191         8,981
Property, plant and equipment, net                     37,235        34,282
Related party notes receivable - long-term                416         2,021
Other assets                                           14,275        14,101

                                                 ------------  ------------
    Total assets                                 $    167,589  $    162,488
                                                 ============  ============

Liabilities and stockholders' equity:
Current liabilities
  Accounts payable                               $      5,894  $      3,286
  Accrued liabilities                                   7,202         7,597
                                                 ------------  ------------
    Total current liabilities                          13,096        10,883

Long-term portion of royalty payments                   3,325         4,125
Other long-term liabilities                               254           431
                                                 ------------  ------------
    Total liabilities                                  16,675        15,439
                                                 ------------  ------------

Stockholders' equity:
  Preferred stock                                       3,532         3,532
  Common stock                                             32            32
  Additional paid-in capital                          193,063       191,554
  Accumulated deficit                                 (59,047)      (62,157)
  Accumulated other comprehensive income                6,033         5,818
                                                 ------------  ------------
    Total AXT, Inc. stockholders' equity              143,613       138,779

  Noncontrolling interest                               7,301         8,270
                                                 ------------  ------------
    Total stockholders' equity                        150,914       147,049

                                                 ------------  ------------
    Total liabilities and stockholders' equity   $    167,589  $    162,488
                                                 ============  ============