/EINPresswire.com/ -- FREMONT, CA -- (Marketwired) -- 10/29/15 -- AXT, Inc. (NASDAQ: AXTI), a leading manufacturer of compound semiconductor substrates, today reported financial results for the third quarter ended September 30, 2015.

Third Quarter 2015 Results

Revenue for the third quarter of 2015 was $18.4 million compared with $21.0 million in the second quarter of 2015.

Gross margin was 25.1 percent of revenue for the third quarter of 2015, compared with 20.9 percent of revenue in the second quarter of 2015.

Operating expenses were $5.3 million in the third quarter of 2015, compared with $5.2 million in the second quarter of 2015.

Operating loss for the third quarter of 2015 was $0.7 million compared with $0.8 million in the second quarter of 2015.

Net interest and other income for the third quarter of 2015 was $0.8 million, compared with $1.1 million in the second quarter of 2015.

Net profit in the third quarter of 2015 was $42,000 compared with a net loss of $3,000 the second quarter of 2015.

Management Qualitative Comments

"Our business has continued to evolve as a direct reflection of the transformation in our industry," said Morris Young, chief executive officer. "We are seeing a growing shift within our revenue base towards indium phosphide, which has surpassed both semi-insulating gallium arsenide and semi-conducting gallium arsenide as the single largest segment of substrates in our sales composition. Its growth as a percentage of our revenues has had a favorable effect on our results. This was evident in Q3 as softness in other parts of our business caused us to fall short of our revenue guidance, but we outperformed our bottom line guidance to achieve break even profitability. We continue to actively invest in our future through focused R&D, technology M&A and the upgrade of our manufacturing infrastructure. We believe we are making the right investments to maximize our business opportunity and drive increased value for our shareholders."

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 (719) 457-2083 (passcode 968071). The call will also be simulcast on the Internet at www.axt.com. Replays will be available at (719) 457-0820 (passcode 968071) until November 5, 2015. 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 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, 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 Months Ended   Nine Months Ended
                                        September 30,       September 30,
                                     ------------------  ------------------
                                       2015      2014      2015      2014
                                     --------  --------  --------  --------

Revenue                              $ 18,371  $ 23,138  $ 59,445  $ 63,932
Cost of revenue                        13,766    17,820    45,706    51,736
                                     --------  --------  --------  --------
Gross profit                            4,605     5,318    13,739    12,196
                                     --------  --------  --------  --------

Operating expenses:
  Selling, general and
   administrative                       3,659     3,505    12,685    10,629
  Research and development              1,657     1,160     4,287     2,922
  Restructuring charge                     --        --        --       907
                                     --------  --------  --------  --------
    Total operating expenses            5,316     4,665    16,972    14,458
                                     --------  --------  --------  --------
Income (loss) from operations            (711)      653    (3,233)   (2,262)
Interest income, net                      102       106       307       360
Equity in earnings of unconsolidated
 joint ventures                           167       390       777     1,502
Other income (expense), net               496      (236)    1,755       250
                                     --------  --------  --------  --------

Income (loss) before provision for
 income taxes                              54       913      (394)     (150)
Provision for income taxes                  7        43       334       254
                                     --------  --------  --------  --------
Net income (loss)                          47       870      (728)     (404)

Less: Net income attributable to
 noncontrolling interest                   (5)     (226)     (257)     (673)
                                     --------  --------  --------  --------
Net income (loss) attributable to
 AXT, Inc.                           $     42  $    644  $   (985) $ (1,077)
                                     ========  ========  ========  ========

Net income (loss) attributable to
 AXT, Inc. per common share:
  Basic                              $  (0.00) $   0.02  $  (0.03) $  (0.04)
                                     ========  ========  ========  ========
  Diluted                            $  (0.00) $   0.02  $  (0.03) $  (0.04)
                                     ========  ========  ========  ========

Weighted average number of common
 shares outstanding:
  Basic                                31,988    32,504    32,262    32,416
                                     ========  ========  ========  ========
  Diluted                              31,988    32,738    32,262    32,416
                                     ========  ========  ========  ========



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

                                               September 30,   December 31,
                                                    2015           2014
                                               -------------  -------------
Assets:
Current assets
  Cash and cash equivalents                    $      26,185  $      28,814
  Short-term investments                               8,551         12,340
  Accounts receivable, net                            17,110         17,864
  Inventories                                         38,087         38,574
  Related party notes receivable - current                --            171
  Prepaid expenses and other current assets            3,619          5,430
                                               -------------  -------------
    Total current assets                              93,552        103,193

Long-term investments                                 10,713          7,783
Property, plant and equipment, net                    32,346         33,862
Related party notes receivable - long-term             1,813          1,704
Other assets                                          14,721         14,975

                                               -------------  -------------
    Total assets                               $     153,145  $     161,517
                                               =============  =============

Liabilities and stockholders' equity:
Current liabilities
  Accounts payable                             $       5,959  $       7,137
  Accrued liabilities                                  5,513          7,634
                                               -------------  -------------
    Total current liabilities                         11,472         14,771

Long-term portion of royalty payments                  1,294          1,725
Other long-term liabilities                              345            333
                                               -------------  -------------
    Total liabilities                                 13,111         16,829
                                               -------------  -------------

Stockholders' equity:
  Preferred stock                                      3,532          3,532
  Common stock                                            32             32
  Additional paid-in capital                         194,381        195,419
  Accumulated deficit                                (69,378)       (68,393)
  Accumulated other comprehensive income               5,166          7,673
                                               -------------  -------------
    Total AXT, Inc. stockholders' equity             133,733        138,263

Noncontrolling interest                                6,301          6,425
                                               -------------  -------------
    Total stockholders' equity                       140,034        144,688

                                               -------------  -------------
    Total liabilities and stockholders' equity $     153,145  $     161,517
                                               =============  =============

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

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

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