Exhibit 99.1
Contact:
Don Tatzin
Chief Financial Officer
(510) 683-5900
AXT, INC. REPORTS FIRST QUARTER 2003 RESULTS
Net Loss Lower Than Expected Due to Cost Management
FREMONT, Calif.- April 23, 2003 - AXT, Inc. (Nasdaq: AXTI), a leading
manufacturer of compound semiconductor substrates and opto-electronic devices,
today reported financial results for the first quarter ended March 31, 2003.
Revenue for the first quarter of 2003 was $12.7 million compared with $12.3
million in the fourth quarter of 2002 and with $16.8 million in the first
quarter of 2002.
Revenue for the substrate division, which represented 67 percent of total
revenue for the first quarter of 2003, was $8.5 million, compared with $8.5
million in the fourth quarter of 2002. Substrate revenue in the first quarter of
2002 was $11.7 million. Revenue from the opto-electronics division, which
represented 33 percent of total revenue for the first quarter of 2003, was $4.1
million, compared with $3.8 million in the fourth quarter of 2002.
Opto-electronics revenue in the first quarter of 2002 was $5.0 million.
The company reported a net loss for the first quarter of 2003 of $4.3 million,
or $0.19 per diluted share, compared with a net loss of $17.5 million, or $0.78
per diluted share, for the fourth quarter of 2002, and with a net loss of $3.6
million, or $0.16 per diluted share, for the first quarter of 2002. The net loss
in the fourth quarter of 2002 included a non-cash charge to write-down excess
inventory of $9.7 million, $3.1 million to write-down real estate held for sale
and $1.7 million to write-down investments to market value.
"Our performance improved during the first quarter in three critical areas: cash
balances increased, sales of our two leading products, GaAs substrates and high
brightness LEDs, rose and gross and operating margins were above expectations,"
said Morris Young, president and CEO.
"Cash and equivalents, short- and long-term investments, and restricted cash
balances increased by $5.9 million from the end of the third quarter as we
executed the key elements of our cash management plan. During the first quarter
we sold one of our buildings and netted $5.2 million from the sale.
"Driven by increased demand for 2-inch diameter substrates used for red and
yellow light emitting diodes, our substrate division reported the highest sales
of gallium arsenide products since the third quarter of 2002. We continue to see
aggressive competition from other manufacturers offering VGF-like substrates. To
offset these developments, we
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AXT Inc. Reports First Quarter 2003 Results
April 23, 2003
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committed most of our substrate R&D during the past two quarters to improving
our customers' yields. Several customers report that our defect rate has
declined during the past two quarters.
"In our opto-electronics division, costs per LED declined as the process
improvements launched during the fourth quarter continued to pay dividends", Dr.
Young explained. "We experienced a significant price reduction for LEDs that
began in late February, particularly for low end chips. The price decline is
responsible for the decline in gross margins recorded by our opto-electronics
division in the first quarter and may delay achievement of profitability in this
division.
"Looking forward, we see opportunities to improve performance in both of our
businesses, although we think the upcoming quarter will be challenging. Our
recent declines in defect densities in our substrates are attracting more orders
and manufacturing costs are declining. While our opto-electronic business faces
significant price pressure, we have been making steady progress in reducing
costs. As we move more of our production effort to China and bring more
efficient equipment on-line, our costs should decline further."
OUTLOOK FOR SECOND QUARTER ENDING JUNE 30, 2003
At this time, no cases of SARS have been reported in our facilities. The
following outlook is predicated on an assumption that neither we nor our major
customers and suppliers will be affected by SARS-related plant closures or other
activity. We will update our guidance if necessary during the quarter.
- The company anticipates that consolidated total revenue will be
between $12.4 and $13.2 million.
- Consolidated gross margin is expected to be between negative 2
percent and negative 6 percent.
- Consolidated Sales, General and Administrative expense is expected
to be approximately $3.4 million.
- Consolidated Research and Development expense is expected to be
approximately $800,000.
- Consolidated net loss, utilizing our effective tax rate of 0
percent, is expected to be between $4.5 and $5.0 million, or between
$0.20 and $0.23 per diluted share.
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AXT Inc. Reports First Quarter 2003 Results
April 23, 2003
Page 3 of 4
CONFERENCE CALL
A conference call will be held today at 1:30 p.m. PDT to discuss these
announcements and to provide further discussion of the quarter and outlook for
the next quarter. To participate in the call, please dial (785) 832 2041. The
passcode is AXT. A live webcast of the conference call will be offered on AXT's
website at www.axt.com and on www.prnewswire.com. Financial and statistical
information to be discussed on the call will be available on the company's
website immediately prior to commencement of the call. A replay of the webcast
will be available through May 23, 2003 on our website.
ABOUT AXT, INC.
AXT designs, develops, manufactures and markets high-performance compound
semiconductor substrates for the fiber optics and communications industries. AXT
also is a leading producer of light-emitting diodes (LEDs), such as green, cyan
and blue LEDs, for the display and lighting industries, and vertical-cavity
surface-emitting lasers (VCSELs) for the fiber optics industry. 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 substrates. For more information, see AXT's website at
http://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 contains forward-looking statements regarding AXT's financial
performance and preliminary results for the first quarter of 2003, our outlook
for the second quarter, and improvements in our product performance and quality
and manufacturing processes. Forward-looking statements address matters that are
subject to a number of risks and uncertainties that can cause actual results to
differ materially. Changes in the business might not match management's
forecasts. In addition to the general risks associated with the slowdown in our
industry and development of complex technology, our future results will depend
on a variety of factors, including an economic climate that includes a high
degree of uncertainty; the continued expansion of our China operations which may
be costlier or take more time than expected; the failure to obtain qualification
of our China operations by our customers; the effect that SARS may have on our
production facilities, customers, and suppliers including possible plant
closures; the performance of our products and our ability to manufacture
products at high volume in accordance with strict quality control standards;
our ability to manufacture products without infringing on the intellectual
property of others; the timing, volume, and pricing of orders from customers;
declines in our cash balances; increases in our cash burn rate and our ability
to decrease our cash burn rate or raise additional cash; our ability to make
successful product improvements on a timely basis; and war or terrorist
activity that disrupt our manufacturing capabilities or interrupt the sale of
our products. Reference is made to AXT's filings with the Securities and
Exchange Commission, including the company's 8-K, 10-K for the year ended
December 31, 2002, and 10-Q for the period ending March 31, 2003 filings made
with the Securities and Exchange Commission and available online by link from
our website for further discussion of risks and uncertainties
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AXT Inc. Reports First Quarter 2003 Results
April 23, 2003
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regarding AXT's business. The Company assumes no obligation to update the
information in this press release.
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AXT, INC.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
MARCH 31, DECEMBER 31,
2003 2002
--------- ------------
ASSETS:
Current assets
Cash and cash equivalents $ 18,335 $ 13,797
Short-term investments 9,107 8,205
Accounts receivable, net 7,947 7,195
Inventories 34,487 37,598
Prepaid expenses and other current assets 2,979 4,002
Income tax receivable 8,220 8,783
Assets held for sale -- 5,957
--------- ---------
Total current assets 81,075 85,537
Property, plant and equipment 39,178 39,982
Other assets 5,936 5,341
Restricted deposits 10,722 11,150
Long-term investments 2,197 3,657
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TOTAL ASSETS $ 139,108 $ 145,667
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LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities
Accounts payable $ 4,221 $ 4,228
Accrued liabilities 7,436 8,344
Income tax payable 3,063 3,063
Current portion of long-term debt 944 965
Current portion of capital lease obligation 3,411 3,562
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Total current liabilities 19,075 20,162
Long-term debt, net of current portion 13,062 13,289
Long-term capital lease, net of current portion 3,990 4,847
Other long-term liabilities 1,746 1,712
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Total liabilities 37,873 40,010
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Stockholders' equity:
Preferred stock 3,532 3,532
Common stock 154,670 154,485
Retained earnings (56,514) (52,197)
Other comprehensive income (453) (163)
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Total Stockholders' equity 101,235 105,657
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 139,108 $ 145,667
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AXT, INC.
CONSOLIDATED INCOME STATEMENTS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED
MARCH 31,
---------------------------------
2003 2002
-------- --------
Revenue $ 12,657 $ 16,777
Cost of revenue 12,938 16,484
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Gross profit (loss) (281) 293
Operating expenses:
Selling, general and administrative 3,286 5,202
Research and development 744 1,353
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Total operating expenses 4,030 6,555
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Income (loss) from operations (4,311) (6,262)
Interest expense 237 385
Other (income) and expense (231) (717)
-------- --------
Income (loss) before provision for income taxes (4,317) (5,930)
Provision for income taxes -- (2,372)
-------- --------
Net income (loss) $ (4,317) $ (3,558)
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Basic income (loss) per share (0.19) (0.16)
Diluted income (loss) per share (0.19) (0.16)
Shares used in per share calculations:
Basic 22,628 22,414
Diluted 22,628 22,414