3 May 2012

AXT’s revenue rebounds by 10.7% in Q1

For first-quarter 2012, AXT Inc of Fremont, CA, USA, which makes gallium arsenide, indium phosphide and germanium substrates as well as raw materials, has reported revenue of $23.5m, up 10.7% on $21.2m last quarter (rebounding from a 25% decline in Q4/2011) but still down 4.4% on $24.6m a year ago.

Gallium arsenide (GaAs) substrate revenue was $12.2m, up 10% on $11.1m last quarter (rebounding from a 41% decline in Q4/2011) but still down 23% on $15.9m a year ago. Indium phosphide (InP) substrate revenue was $1.5m, doubling from $724,000 last quarter (returning to the level of Q3/2011) and up 15% on $1.3m a year ago. Germanium (Ge) substrate revenue was $2.6m, down 13% on $3m both last quarter and a year ago. Raw materials sales have continued to rise, up 64% on $4.4m a year ago and up 12.5% on $6.4m last quarter to $7.2m.

“After a difficult start to the year, the demand environment in March showed steady improvement and appears to be holding as we move into the second quarter,” says CEO Morris Young. “We were pleased to see a strong increase in our semi-insulating [GaAs] substrates for wireless devices after two challenging quarters in the second half of 2011,” he adds. “We saw similar rebounds in the markets for semi-conducting [GaAs] and indium phosphide substrates, placing us at the high end of our revenue guidance range [of $21-24m].”

However, gross margin has fallen further, from 43.4% a year ago and 36.9% last quarter to 34.9% (at the bottom of the target model) as a result of a strong decrease in raw material pricing as well as a strategic decision to leverage profit margins in order to strengthen competitive positioning for certain business opportunities.

Operating expenses have risen further, from $4.2m a year ago and $4.5m last quarter to $4.6m. Nevertheless, income from operations has risen from $3.3m last quarter to $3.6m (though still down on $6.5m a year ago). Net income has fallen further, from $4.2m ($0.13 per diluted share) a year ago and $2.6m ($0.08 per diluted share) last quarter to $1.6m ($0.05 per diluted share). Despite this, during the quarter, cash and cash equivalents rose from $26.2m to $31.2m.

“While we did underperform our earnings per share expectation, we remained profitable, cash-positive and well-positioned to take advantage of market growth as the demand environment improves over the balance of the year,” Young notes.

For second-quarter 2012, AXT expects revenue of $23-25m. Net income per share should be steady at $0.04-0.06.

See related items:

AXT reports revenue up 9% for full-year 2011, but down 25% in Q4

AXT’s revenue falls 5.7% in Q3 to $28.3m

AXT Q2 revenue rebounds by 22% sequentially to $30m

AXT’s Q1 revenue falls 8.6% to $24.6m

Tags: AXT GaAs GaAs substrate InP Germanium

Visit: www.axt.com