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AXTI - AXT Inc News Story

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Last Trade - 17/05/21

Sector
Technology
Size
Small Cap
Market Cap £284.1m
Enterprise Value £295.5m
Revenue £75.0m
Position in Universe 3796th / 6846

AXT, Inc. Announces Fourth Quarter and Fiscal Year 2020 Financial Results

Thu 18th February, 2021 9:05pm
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FREMONT, Calif., Feb. 18, 2021 (GLOBE NEWSWIRE) -- AXT, Inc. (NasdaqGS: AXTI),
a leading manufacturer of compound semiconductor substrates, today reported
financial results for the fourth quarter and fiscal year, ended December 31,
2020.

Management Qualitative Comments

“2020 was a year of solid improvement for AXT, capped off by strong indium
phosphide growth, particularly in 5G, in Q4, which is typically a seasonally
down quarter,” said Morris Young, chief executive officer. “We completed
the relocation of our gallium arsenide manufacturing, elevated our business
and manufacturing processes to meet Tier-1 standards, and expanded capacity in
response to increasing demand. Now, with the gathering momentum of 5G and its
related technologies, the technology progression in data center connectivity,
and new applications emerging in healthcare and consumer devices, we believe
AXT is in a strong position to lead our industry and enable many of the
defining trends of the coming decade.”

Fourth Quarter 2020 Results
* Revenue for the fourth quarter of 2020 was $27.0 million, compared with
$25.5 million in the third quarter of 2020 and $18.4 million for the fourth
quarter of 2019.   


* Gross margin was 34 percent of revenue for the fourth quarter of 2020,
compared with 35 percent of revenue in the third quarter of 2020 and 21
percent for the fourth quarter of 2019. 


* Operating expenses were $7.2 million in the fourth quarter of 2020,
primarily due to substantial investment in R&D and year-end employee bonuses.
This compares with $6.6 million in the third quarter of 2020 and $6.7 million
for the fourth quarter of 2019.   


* Operating income for the fourth quarter of 2020 was $1.9 million, compared
with operating income of $2.2 million in the third quarter of 2020 and an
operating loss $2.8 million for the fourth quarter of 2019.

* Net income in the fourth quarter of 2020 was $2.1 million, or $0.05 per
share, compared with net income of $1.0 million or $0.02 per share in the
third quarter of 2020, and a net loss of $2.0 million or $0.05 per share for
the fourth quarter of 2019.
Fiscal Year 2020 Results (January 1 to December 31, 2020)
* Revenue for fiscal year 2020 was $95.4 million, an increase of 15 percent
from $83.3 million in fiscal year 2019.   


* Gross margin for fiscal year 2020 was 32 percent of revenue, up from 30
percent of revenue in fiscal year 2019.


* Operating expenses for fiscal year 2020 were $26.3 million, compared with
$25.1 million in fiscal year 2019.


* Operating income for fiscal year 2020 was $3.9 million compared with an
operating loss in fiscal 2019 of $0.3 million.


* Net income for fiscal 2020 was $3.2 million, or $0.07 per share, compared
with a net loss of $2.6 million, or $0.07 per share for fiscal 2019.
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 wafer
manufacturing company in China, on the Shanghai Stock Exchange’s Sci-Tech
innovAtion boaRd (the “STAR Market”). The first major step in this process
is engaging reputable private equity firms in China to invest funds in
Tongmei.

In January 2021, AXT completed the private equity investment funding in
Tongmei. A number of private equity firms have invested approximately $49
million in exchange for an approximately 7.28 percent minority interest in
Tongmei.

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
5773028). The call will also be simulcast on the Internet at www.axt.com.
Replays will be available at (855) 859-2056 (passcode 5773028) until February
24, 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 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
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                         Twelve Months Ended                        
                                                                   December 31,                               December 31,                               
                                                                   2020                   2019                2020                   2019                
                                                                                                                                                         
 Revenue                                                           $    27,035            $    18,410         $    95,361            $    83,256         
 Cost of revenue                                                        17,873                 14,545              65,086                 58,431         
 Gross profit                                                           9,162                  3,865               30,275                 24,825         
 Operating expenses:                                                                                                                                     
 Selling, general and administrative                                    5,081                  5,058               19,200                 19,305         
 Research and development                                               2,162                  1,607               7,135                  5,834          
 Total operating expenses                                               7,243                  6,665               26,335                 25,139         
 Income (loss) from operations                                          1,919                  (2,800  )           3,940                  (314    )      
 Interest income (expense), net                                         (41     )              2                   (179    )              217            
 Equity in income (loss) of unconsolidated joint ventures               354                    (226    )           111                    (1,876  )      
 Other income, net                                                      260                    1,002               3,200                  947            
 Income (loss) before provision for (benefit from) income taxes         2,492                  (2,022  )           7,072                  (1,026  )      
 Provision for (benefit from) income taxes                              108                    (214    )           2,031                  562            
 Net income (loss)                                                      2,384                  (1,808  )           5,041                  (1,588  )      
 Less: Net income attributable to noncontrolling interests              (320    )              (241    )           (1,803  )              (1,012  )      
 Net income (loss) attributable to AXT, Inc.                       $    2,064             $    (2,049  )      $    3,238             $    (2,600  )      
 Net income (loss) attributable to AXT, Inc. per common share:                                                                                           
 Basic                                                             $    0.05              $    (0.05   )      $    0.08              $    (0.07   )      
 Diluted                                                           $    0.05              $    (0.05   )      $    0.07              $    (0.07   )      
 Weighted-average number of common shares outstanding:                                                                                                   
 Basic                                                                  40,678                 39,636              40,152                 39,487         
 Diluted                                                                42,042                 39,636              41,025                 39,487         



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

                                                                                      December 31,             December 31,             
                                                                                      2020                     2019                     
                                                                                                                                        
 ASSETS                                                                                                                                 
 Current assets:                                                                                                                        
 Cash and cash equivalents                                                            $      72,602            $      26,892            
 Short-term investments                                                                      240                      9,427             
 Accounts receivable, net                                                                    24,558                   19,031            
 Inventories                                                                                 51,515                   49,152            
 Prepaid expenses and other current assets                                                   15,603                   8,703             
 Total current assets                                                                        164,518                  113,205           
 Long-term investments                                                                       5,726                    —                 
 Property, plant and equipment, net                                                          115,825                  97,403            
 Operating lease right-of-use assets                                                         2,683                    2,938             
 Other assets                                                                                10,110                   9,803             
 Total assets                                                                         $      298,862           $      223,349           
 LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY                                                              
 Current liabilities:                                                                                                                   
 Accounts payable                                                                     $      12,669            $      10,098            
 Accrued liabilities                                                                         15,995                   11,681            
 Bank loan                                                                                   10,411                   5,747             
 Total current liabilities                                                                   39,075                   27,526            
 Long-term portion of royalty payments                                                       1,209                    —                 
 Noncurrent operating lease liabilities                                                      2,374                    2,695             
 Other long-term liabilities                                                                 672                      366               
 Total liabilities                                                                           43,330                   30,587            
                                                                                                                                        
 Redeemable noncontrolling interests                                                         47,563                   —                 
                                                                                                                                        
 Stockholders’ equity:                                                                                                                  
 Preferred stock                                                                             3,532                    3,532             
 Common stock                                                                                42                       41                
 Additional paid-in capital                                                                  230,381                  236,957           
 Accumulated deficit                                                                         (44,545  )               (47,783  )        
 Accumulated other comprehensive income (loss)                                               3,209                    (4,862   )        
 Total AXT, Inc. stockholders’ equity                                                        192,619                  187,885           
 Noncontrolling interests                                                                    15,350                   4,877             
 Total stockholders’ equity                                                                  207,969                  192,762           
 Total liabilities, redeemable noncontrolling interests and stockholders’ equity      $      298,862           $      223,349           

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

                Leslie Green                
                Green Communications Consulting, LLC
                (650) 312-9060

(https://www.globenewswire.com/NewsRoom/AttachmentNg/12a18ceb-1a74-4680-877d-51ef04e3f5bc)



GlobeNewswire, Inc. 2021
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