FREMONT, Calif, Feb. 22, 2017 (GLOBE NEWSWIRE) --  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, 2016.

Fourth Quarter 2016 Results

Revenue for the fourth quarter of 2016 was $20.3 million, compared with $21.9 million in the third quarter of 2016.

Gross margin was 37.1 percent of revenue for the fourth quarter of 2016, compared with 34.6 percent of revenue in the third quarter of 2016.

Operating expenses were $5.2 million in the fourth quarter of 2016, compared with $4.9 million in the third quarter of 2016. 

Operating profit for the fourth quarter of 2016 was $2.3 million compared with operating profit of $2.7 million in the third quarter of 2016. 

Net interest and other income for the fourth quarter of 2016 was a loss of $0.3 million, compared with a loss of $0.3 million in the third quarter of 2016.

Net profit in the fourth quarter of 2016 was $2.2 million, or $0.06 per diluted share, compared with a net profit of $2.2 million or $0.07 per diluted share in the third quarter of 2016.

Fiscal Year 2016 Results (January 1 to December 31)

Revenue for fiscal year 2016 was $81.3 million, compared with $77.5 million in fiscal year 2015.

Gross margin for fiscal year 2016 was 32.4%, compared with 21.7% in fiscal year 2015.

Operating expenses for fiscal year 2016 were $20.0 million, compared with $21.7 million in fiscal year 2015.

Net interest and other income for fiscal year 2016 was a charge of ($0.7), compared with a gain of $2.9 million in fiscal year 2015.

Net profit in fiscal year 2016 was $5.6 million, or $0.17 per diluted share, compared with a net loss of ($2.2) million, or ($0.07) per basic share, in fiscal year 2015.

Management Qualitative Comments

“Our positive Q4 results capped off a year of growth and diversification for AXT,” said Morris Young, chief executive officer. “We saw healthy demand across our substrate product portfolio, driven by a growing number of exciting technology applications. In addition, we continued to demonstrate improvement in our business model, achieving meaningful gross margin expansion and delivering solid profitability and positive cash flow. As we look ahead in 2017, we believe sales of indium phosphide substrates will continue to be a key driver for our business, and we hope to see traction in the 3-D sensing market later this year.”

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 70205575). The call will also be simulcast on the Internet at www.axt.com. Replays will be available at (855) 859-2056 (passcode 70205575) until February 28, 2017. 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 designs, develops, manufactures and distributes high-performance compound and single element semiconductor substrates comprising indium phosphide (InP), gallium arsenide (GaAs) 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 can be used primarily in fiber optic communications, 3-D sensing, solar cell, lighting display applications and wireless communications. 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, as part of it’s supply chain strategy, has partial ownership in ten companies 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, for example, statements regarding the market demand for our products, our market opportunity, and our expectations with respect to our business prospects. 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: overall conditions in the markets in which the company competes; global financial conditions and uncertainties; policies and regulations in China; 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; our ability to control costs, our ability to utilize our manufacturing capacity; product yields and their impact on gross margins; 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 Month Ended
		December 31,								Year Ended December 31,
		2016				2015				2016				2015
Revenue		$	20,269			$	18,057			$	81,349			$	77,502
Cost of revenue			12,746				14,967				54,968				60,673
Gross profit			7,523				3,090				26,381				16,829
Operating expenses:
Selling, general, and administrative			3,774				3,379				13,880				16,064
Research and development			1,431				1,377				5,850				5,664
Restructuring charge			—				—				226				—
Total operating expenses			5,205				4,756				19,956				21,728
Income (loss) from operations			2,318				(1,666	)			6,425				(4,899	)
Interest income, net			106				105				409				412
Equity in earnings (loss) of unconsolidated joint ventures			(558	)			(315	)			(1,995	)			462
Other income, net			178				268				860				2,023
Income (loss) before provision for income taxes			2,044				(1,608	)			5,699				(2,002	)
Provision for income taxes			20				197				733				531
Net income (loss)			2,024				(1,805	)			4,966				(2,533	)
Less: Net (income) loss attributable to noncontrolling interests			190				562				670				305
Net income (loss) attributable to AXT, Inc.		$	2,214			$	(1,243	)		$	5,636			$	(2,228	)
Net income (loss) attributable to AXT, Inc. per common share:
Basic		$	0.07			$	(0.04	)		$	0.17			$	(0.07	)
Diluted		$	0.06			$	(0.04	)		$	0.17			$	(0.07	)
Weighted average number of common shares outstanding:
Basic			32,431				31,951				32,139				32,183
Diluted			33,734				31,951				32,894				32,183

AXT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
		December 31,
		2016				2015
ASSETS
Current assets:
Cash and cash equivalents		$	36,152			$	24,875
Short-term investments			11,415				11,437
Accounts receivable, net			14,453				18,468
Inventories			40,152				38,012
Prepaid expenses and other current assets			5,114				4,096
Total current assets			107,286				96,888
Long-term investments			6,156				7,691
Property, plant and equipment, net			27,805				31,422
Related party notes receivable – long-term			157				166
Other assets			12,842				15,729
Total assets		$	154,246			$	151,896
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	6,691			$	6,460
Accrued liabilities			6,359				6,381
Total current liabilities			13,050				12,841
Long-term portion of royalty payments			575				1,150
Other long-term liabilities			330				344
Total liabilities			13,955				14,335
Stockholders’ equity:
Preferred stock			3,532				3,532
Common stock			32				32
Additional paid-in-capital			197,079				194,646
Accumulated deficit			(64,985	)			(70,621	)
Accumulated other comprehensive income			253				4,382
Total AXT, Inc. stockholders’ equity			135,911				131,971
Noncontrolling interests			4,380				5,590
Total stockholders’ equity			140,291				137,561
Total liabilities and stockholders’ equity		$	154,246			$	151,896

Contacts:
Gary Fischer
Chief Financial Officer
(510) 438-4700

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