AXT, Inc. Reports Record First Quarter Financial Results

Revenue Up 80 Percent and EPS Up 120 Percent From Q100



Apr 25, 2001, 01:00 ET from AXT, Inc.

    FREMONT, Calif., April 25 /PRNewswire/ -- AXT, Inc. (Nasdaq:   AXTI) today
 reported record financial results for the first quarter ended March 31, 2001.
     Revenue for the first quarter of 2001 was a record $40.1 million, up
 80 percent from $22.3 million in the first quarter of 2000, and up 8 percent
 from $37.3 million in the fourth quarter of 2000 for continuing products.
     Revenue from the substrate division, which represented approximately
 97 percent of total revenue from continuing operations in the first quarter of
 2001, was $38.8 million, up 103 percent from $19.1 million in the first
 quarter of 2000, and up 7 percent from $36.3 million in the fourth quarter of
 2000.
     Revenue from the company's visible emitter division, which represented
 3 percent of the total revenue in the first quarter of 2001, was $1.3 million,
 compared with no revenue in the first quarter of 2000 and compared with
 $1.0 million in the fourth quarter of 2000 for continuing products.
     Net income for the first quarter of 2001 was $5.0 million, up 150 percent
 from $2 million in the first quarter of 2000, and up 9 percent from
 $4.6 million for the fourth quarter of 2000, excluding the Finisar gain of
 $16.9 million, net of taxes, the restructuring charge of $5.1 million, net of
 taxes, loss from discontinued operations of $721 thousand, net of taxes, and
 loss on disposal of $1.3 million, net of taxes.
     Earnings per share on a diluted basis for the first quarter of 2001 were
 $0.22 per share on approximately 22.8 million shares outstanding.  This
 compares with earnings per share of $0.10 on approximately 20.1 million shares
 outstanding in the first quarter of 2000 and with $0.20 per share on
 approximately 23.0 million shares outstanding in the fourth quarter of 2000,
 excluding the one-time Finisar gain, restructuring charges resulting from the
 discontinuation of the company's 650 nm laser diode product line, loss from
 discontinued operations and loss on disposal.
     "I am very pleased with our record results, especially given the current
 challenging economic climate," said Morris Young, president and chief
 executive officer.  "We believe that our continued growth is primarily the
 result of our earlier investments in large diameter gallium arsenide and
 indium phosphide substrate technology that have allowed us to become the
 market leader in both substrates.
     "In the first quarter, indium phosphide revenues grew approximately
 36 percent sequentially and now represent nearly 20 percent of our total
 substrate sales.  Indium phosphide has become an essential material in many of
 today's active fiber optic components.  We believe that demand will continue
 to increase as next generation fiber optic components currently under
 development require even higher power and higher frequency capabilities.
     "Continuing product revenues from our visible emitter division grew 28
 percent sequentially.  The VCSEL market continues to grow rapidly, fueled by
 the ever-increasing demand for higher data transmission rates in fiber optic
 communications.  AXT's unique epi growth technology allows us to produce
 complicated epi structures with excellent uniformity.  Furthermore, our strong
 engineering design and development capability allows us to tailor our standard
 products to meet specific customer requirements and gives us competitive
 advantages.
     "This is an exciting time for AXT.  Our GaAs business is solid and we
 continue to make preparations for the next round of growth in the market
 including building capacity, enhancing our supply of raw materials and
 reducing our costs.  Our InP sales are increasing steadily and we are working
 to further strengthen our industry-leading position.  Finally, we are excited
 about the new products being developed by our visible emitter division and
 believe that this division is poised for healthy growth in the coming
 quarters.   We expect to continue our overall revenue and profit expansion
 throughout 2001 and believe we are on track for another record year," he said.
 
     Outlook for the Second Quarter 2001
     -- The company expects that second quarter 2001 revenue will be 2 to
        6 percent higher than first quarter 2001 revenue.
     -- Gross margins for the second quarter of 2001 are expected to be between
        39 and 41 percent.
     -- Pre-tax income is projected to be between 19 to 21 percent of revenue
        for the second quarter 2001.
     -- Earnings per share for the second quarter 2001 are expected to grow by
        2 to 6 percent over the first quarter 2001.
 
     Conference Call
     A conference call will be held today at 1:30 p.m. PDT to discuss this
 announcement and to provide further discussion of the quarter and outlook for
 the next quarter. To participate in the call, please dial 773-756-4786.  The
 passcode is AXT.  A replay of the call will be available through May 9, 2001
 by dialing 402-220-3026.  A live webcast of the conference call will be
 offered on AXT's website at www.axt.com and on www.prnewswire.com.  A replay
 of the webcast will be available through May 24, 2001.
 
     About AXT, Inc.
     AXT designs, develops, manufactures and markets high-performance compound
 substrates for the fiber optics and communications industries.  The company's
 proprietary Vertical Gradient Freeze (VGF) crystal growth technology produces
 low-defect, semi-insulating and semi-conducting gallium arsenide, indium
 phosphide and germanium wafers.  AXT is also a leading producer of
 light-emitting diodes (LEDs), such as blue, cyan and green LEDs, for the
 display and lighting industries, and vertical cavity surface emitting lasers
 (VCSELs) for the fiber optics industry and diodes for laser pointers.   For
 more information, see AXT's website at www.axt.com.  The company can also be
 reached at 4281 Technology Drive, Fremont, California 94538 or by calling
 510-683-5900.  AXT is traded on the Nasdaq National Market under the symbol
 AXTI.
 
     Safe Harbor
     This press release may contain forward-looking statements regarding the
 future direction of the company and its outlook for 2001. Forward-looking
 statements address matters that are subject to a number of risks and
 uncertainties, including but not limited to:  unpredictable fluctuations in
 our operating results due, among other factors, to the expansion of our China
 operations which may be costlier or take more time than expected; the limited
 availability and increased cost of critical raw materials, particularly
 gallium and arsenic, where we depend on a limited number of suppliers; the
 timing, volume, and pricing of orders from customers; an inability to expand
 our manufacturing capacity to meet demand for our products; failure to achieve
 anticipated sales of our new HB LED and VCSEL products; potential slowdowns in
 the wireless handset and fiber optics markets which may cause our customers to
 reduce or delay orders of our products; if we do not comply with environmental
 and other regulations we may incur large fines and delays in manufacturing our
 products; and if we experience frequent electrical power outages our
 production could be reduced and we may incur costs related to interrupted
 productions runs. Reference is made to AXT's filings with the Securities and
 Exchange Commission, including AXT's Form 10-K for the year ended
 December 31, 1999 and its Form 10-Qs filed for each of the subsequent
 quarters, and to AXT's Form S-3, for further discussion of risks and
 uncertainties regarding AXT's business.
 
                                     AXT, INC.
                           CONSOLIDATED INCOME STATEMENTS
                   (Amounts in thousands, except per share data)
 
 
 
                                          Three Months Ended    Year Ended
                                              March 31,         December 31,
                                            2001     2000      2000     1999
 
     Revenue                               $40,103  $22,265  $121,503  $75,372
     Cost of revenue                        23,810   13,294    71,840   50,026
     Restructuring costs                         --      --     1,844       --
     Gross profit                           16,293    8,971    47,819   25,346
 
     Operating expenses:
       Selling, general and administrative   5,867    3,207    18,041   10,474
       Research and development              2,703    1,909     8,769    2,566
       Restructuring costs                      --       --     6,409       --
       Acquisition costs                        --       --        --    2,810
         Total operating expenses            8,570    5,116    33,219   15,850
     Income (loss) from operations           7,723    3,855    14,600    9,496
     Interest expense                          629      769     3,616    2,201
     Other (income) and expense               (709)    (186)  (28,432)  (1,423)
     Income from continuing operations
      before provision for income taxes      7,803    3,272    39,416    8,718
     Provision for income taxes              2,809    1,244    14,978    4,380
     Income from continuing operations       4,994    2,028    24,438    4,338
     Discontinued operations:
       Loss from discontinued operations,
        net of income tax benefit               --      (56)   (1,487)  (3,658)
       Loss on disposal, net of income tax
        benefit                                 --       --    (1,341)      --
     Extraordinary item, net of income tax
      benefit                                   --       --        --     (508)
     Net income                             $4,994   $1,972   $21,610     $172
 
 
     Basic income (loss) per share:
       Income from continuing operations     $0.23    $0.11     $1.24    $0.23
       Loss from discontinued operations        --     0.00     (0.14)   (0.19)
       Extraordinary item, net of income
        tax benefit                             --       --        --    (0.03)
       Net income                             0.23     0.11      1.10     0.01
 
     Diluted income (loss) per share:
       Income from continuing operations     $0.22    $0.10     $1.16    $0.22
       Loss from discontinued operations        --     0.00     (0.13)   (0.18)
       Extraordinary item, net of income
        tax benefit                             --       --        --    (0.03)
       Net income                             0.22     0.10      1.03     0.01
 
     Shares used in per share
      calculations:
       Basic                                22,097   18,596    19,677   18,655
       Diluted                              22,790   20,074    21,059   19,771
 
                                     AXT, INC.
                            CONSOLIDATED BALANCE SHEETS
                              (Amounts in thousands)
 
                                                   March 31,       December 31,
                                                     2001               2000
     Assets:
     Current assets
       Cash and cash equivalents                    $52,638           $68,585
       Short term investments                        20,205            30,852
       Accounts receivable, net                      26,383            27,773
       Inventories                                   57,887            51,846
       Prepaid expenses and other current
        assets                                        6,374             3,603
       Deferred income taxes                          3,947                --
              Total current assets                  167,434           182,659
 
     Property, plant and equipment, net              70,280            63,401
     Investments                                      7,899                --
     Other assets                                     2,198             3,312
     Goodwill                                           777               848
 
             Total assets                          $248,588          $250,220
 
     Liabilities and stockholders' equity:
     Current liabilities
       Short-term bank borrowing                     $1,474            $1,353
       Accounts payable                              11,874            10,009
       Accrued liabilities                           22,450            16,651
       Deferred income taxes                             --             3,847
       Current portion of long-term debt              2,365             4,355
       Current portion of capital lease
        obligation                                    4,611             6,057
            Total current liabilities                42,774            42,272
 
     Long-term debt, net of current
      portion                                        16,232            15,123
     Long-term capital lease, net of
      current portion                                 9,454             7,278
     Other long-term liabilities                        250               200
     Minority interests                                 580                --
            Total liabilities                        69,290            64,873
 
     Stockholders' equity:
       Preferred stock                                3,532             3,532
       Common stock                                 147,981           145,748
       Deferred Compensation                            (79)             (107)
       Retained earnings                             38,974            33,980
       Other comprehensive income                   (11,110)            2,194
            Total Stockholders' equity              179,298           185,347
 
            Total Liabilities and
             stockholders' equity                  $248,588          $250,220
 
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SOURCE AXT, Inc.
    FREMONT, Calif., April 25 /PRNewswire/ -- AXT, Inc. (Nasdaq:   AXTI) today
 reported record financial results for the first quarter ended March 31, 2001.
     Revenue for the first quarter of 2001 was a record $40.1 million, up
 80 percent from $22.3 million in the first quarter of 2000, and up 8 percent
 from $37.3 million in the fourth quarter of 2000 for continuing products.
     Revenue from the substrate division, which represented approximately
 97 percent of total revenue from continuing operations in the first quarter of
 2001, was $38.8 million, up 103 percent from $19.1 million in the first
 quarter of 2000, and up 7 percent from $36.3 million in the fourth quarter of
 2000.
     Revenue from the company's visible emitter division, which represented
 3 percent of the total revenue in the first quarter of 2001, was $1.3 million,
 compared with no revenue in the first quarter of 2000 and compared with
 $1.0 million in the fourth quarter of 2000 for continuing products.
     Net income for the first quarter of 2001 was $5.0 million, up 150 percent
 from $2 million in the first quarter of 2000, and up 9 percent from
 $4.6 million for the fourth quarter of 2000, excluding the Finisar gain of
 $16.9 million, net of taxes, the restructuring charge of $5.1 million, net of
 taxes, loss from discontinued operations of $721 thousand, net of taxes, and
 loss on disposal of $1.3 million, net of taxes.
     Earnings per share on a diluted basis for the first quarter of 2001 were
 $0.22 per share on approximately 22.8 million shares outstanding.  This
 compares with earnings per share of $0.10 on approximately 20.1 million shares
 outstanding in the first quarter of 2000 and with $0.20 per share on
 approximately 23.0 million shares outstanding in the fourth quarter of 2000,
 excluding the one-time Finisar gain, restructuring charges resulting from the
 discontinuation of the company's 650 nm laser diode product line, loss from
 discontinued operations and loss on disposal.
     "I am very pleased with our record results, especially given the current
 challenging economic climate," said Morris Young, president and chief
 executive officer.  "We believe that our continued growth is primarily the
 result of our earlier investments in large diameter gallium arsenide and
 indium phosphide substrate technology that have allowed us to become the
 market leader in both substrates.
     "In the first quarter, indium phosphide revenues grew approximately
 36 percent sequentially and now represent nearly 20 percent of our total
 substrate sales.  Indium phosphide has become an essential material in many of
 today's active fiber optic components.  We believe that demand will continue
 to increase as next generation fiber optic components currently under
 development require even higher power and higher frequency capabilities.
     "Continuing product revenues from our visible emitter division grew 28
 percent sequentially.  The VCSEL market continues to grow rapidly, fueled by
 the ever-increasing demand for higher data transmission rates in fiber optic
 communications.  AXT's unique epi growth technology allows us to produce
 complicated epi structures with excellent uniformity.  Furthermore, our strong
 engineering design and development capability allows us to tailor our standard
 products to meet specific customer requirements and gives us competitive
 advantages.
     "This is an exciting time for AXT.  Our GaAs business is solid and we
 continue to make preparations for the next round of growth in the market
 including building capacity, enhancing our supply of raw materials and
 reducing our costs.  Our InP sales are increasing steadily and we are working
 to further strengthen our industry-leading position.  Finally, we are excited
 about the new products being developed by our visible emitter division and
 believe that this division is poised for healthy growth in the coming
 quarters.   We expect to continue our overall revenue and profit expansion
 throughout 2001 and believe we are on track for another record year," he said.
 
     Outlook for the Second Quarter 2001
     -- The company expects that second quarter 2001 revenue will be 2 to
        6 percent higher than first quarter 2001 revenue.
     -- Gross margins for the second quarter of 2001 are expected to be between
        39 and 41 percent.
     -- Pre-tax income is projected to be between 19 to 21 percent of revenue
        for the second quarter 2001.
     -- Earnings per share for the second quarter 2001 are expected to grow by
        2 to 6 percent over the first quarter 2001.
 
     Conference Call
     A conference call will be held today at 1:30 p.m. PDT to discuss this
 announcement and to provide further discussion of the quarter and outlook for
 the next quarter. To participate in the call, please dial 773-756-4786.  The
 passcode is AXT.  A replay of the call will be available through May 9, 2001
 by dialing 402-220-3026.  A live webcast of the conference call will be
 offered on AXT's website at www.axt.com and on www.prnewswire.com.  A replay
 of the webcast will be available through May 24, 2001.
 
     About AXT, Inc.
     AXT designs, develops, manufactures and markets high-performance compound
 substrates for the fiber optics and communications industries.  The company's
 proprietary Vertical Gradient Freeze (VGF) crystal growth technology produces
 low-defect, semi-insulating and semi-conducting gallium arsenide, indium
 phosphide and germanium wafers.  AXT is also a leading producer of
 light-emitting diodes (LEDs), such as blue, cyan and green LEDs, for the
 display and lighting industries, and vertical cavity surface emitting lasers
 (VCSELs) for the fiber optics industry and diodes for laser pointers.   For
 more information, see AXT's website at www.axt.com.  The company can also be
 reached at 4281 Technology Drive, Fremont, California 94538 or by calling
 510-683-5900.  AXT is traded on the Nasdaq National Market under the symbol
 AXTI.
 
     Safe Harbor
     This press release may contain forward-looking statements regarding the
 future direction of the company and its outlook for 2001. Forward-looking
 statements address matters that are subject to a number of risks and
 uncertainties, including but not limited to:  unpredictable fluctuations in
 our operating results due, among other factors, to the expansion of our China
 operations which may be costlier or take more time than expected; the limited
 availability and increased cost of critical raw materials, particularly
 gallium and arsenic, where we depend on a limited number of suppliers; the
 timing, volume, and pricing of orders from customers; an inability to expand
 our manufacturing capacity to meet demand for our products; failure to achieve
 anticipated sales of our new HB LED and VCSEL products; potential slowdowns in
 the wireless handset and fiber optics markets which may cause our customers to
 reduce or delay orders of our products; if we do not comply with environmental
 and other regulations we may incur large fines and delays in manufacturing our
 products; and if we experience frequent electrical power outages our
 production could be reduced and we may incur costs related to interrupted
 productions runs. Reference is made to AXT's filings with the Securities and
 Exchange Commission, including AXT's Form 10-K for the year ended
 December 31, 1999 and its Form 10-Qs filed for each of the subsequent
 quarters, and to AXT's Form S-3, for further discussion of risks and
 uncertainties regarding AXT's business.
 
                                     AXT, INC.
                           CONSOLIDATED INCOME STATEMENTS
                   (Amounts in thousands, except per share data)
 
 
 
                                          Three Months Ended    Year Ended
                                              March 31,         December 31,
                                            2001     2000      2000     1999
 
     Revenue                               $40,103  $22,265  $121,503  $75,372
     Cost of revenue                        23,810   13,294    71,840   50,026
     Restructuring costs                         --      --     1,844       --
     Gross profit                           16,293    8,971    47,819   25,346
 
     Operating expenses:
       Selling, general and administrative   5,867    3,207    18,041   10,474
       Research and development              2,703    1,909     8,769    2,566
       Restructuring costs                      --       --     6,409       --
       Acquisition costs                        --       --        --    2,810
         Total operating expenses            8,570    5,116    33,219   15,850
     Income (loss) from operations           7,723    3,855    14,600    9,496
     Interest expense                          629      769     3,616    2,201
     Other (income) and expense               (709)    (186)  (28,432)  (1,423)
     Income from continuing operations
      before provision for income taxes      7,803    3,272    39,416    8,718
     Provision for income taxes              2,809    1,244    14,978    4,380
     Income from continuing operations       4,994    2,028    24,438    4,338
     Discontinued operations:
       Loss from discontinued operations,
        net of income tax benefit               --      (56)   (1,487)  (3,658)
       Loss on disposal, net of income tax
        benefit                                 --       --    (1,341)      --
     Extraordinary item, net of income tax
      benefit                                   --       --        --     (508)
     Net income                             $4,994   $1,972   $21,610     $172
 
 
     Basic income (loss) per share:
       Income from continuing operations     $0.23    $0.11     $1.24    $0.23
       Loss from discontinued operations        --     0.00     (0.14)   (0.19)
       Extraordinary item, net of income
        tax benefit                             --       --        --    (0.03)
       Net income                             0.23     0.11      1.10     0.01
 
     Diluted income (loss) per share:
       Income from continuing operations     $0.22    $0.10     $1.16    $0.22
       Loss from discontinued operations        --     0.00     (0.13)   (0.18)
       Extraordinary item, net of income
        tax benefit                             --       --        --    (0.03)
       Net income                             0.22     0.10      1.03     0.01
 
     Shares used in per share
      calculations:
       Basic                                22,097   18,596    19,677   18,655
       Diluted                              22,790   20,074    21,059   19,771
 
                                     AXT, INC.
                            CONSOLIDATED BALANCE SHEETS
                              (Amounts in thousands)
 
                                                   March 31,       December 31,
                                                     2001               2000
     Assets:
     Current assets
       Cash and cash equivalents                    $52,638           $68,585
       Short term investments                        20,205            30,852
       Accounts receivable, net                      26,383            27,773
       Inventories                                   57,887            51,846
       Prepaid expenses and other current
        assets                                        6,374             3,603
       Deferred income taxes                          3,947                --
              Total current assets                  167,434           182,659
 
     Property, plant and equipment, net              70,280            63,401
     Investments                                      7,899                --
     Other assets                                     2,198             3,312
     Goodwill                                           777               848
 
             Total assets                          $248,588          $250,220
 
     Liabilities and stockholders' equity:
     Current liabilities
       Short-term bank borrowing                     $1,474            $1,353
       Accounts payable                              11,874            10,009
       Accrued liabilities                           22,450            16,651
       Deferred income taxes                             --             3,847
       Current portion of long-term debt              2,365             4,355
       Current portion of capital lease
        obligation                                    4,611             6,057
            Total current liabilities                42,774            42,272
 
     Long-term debt, net of current
      portion                                        16,232            15,123
     Long-term capital lease, net of
      current portion                                 9,454             7,278
     Other long-term liabilities                        250               200
     Minority interests                                 580                --
            Total liabilities                        69,290            64,873
 
     Stockholders' equity:
       Preferred stock                                3,532             3,532
       Common stock                                 147,981           145,748
       Deferred Compensation                            (79)             (107)
       Retained earnings                             38,974            33,980
       Other comprehensive income                   (11,110)            2,194
            Total Stockholders' equity              179,298           185,347
 
            Total Liabilities and
             stockholders' equity                  $248,588          $250,220
 
                      MAKE YOUR OPINION COUNT - Click Here
                http://tbutton.prnewswire.com/prn/11690X61331781
 
 SOURCE  AXT, Inc.