8-K - AXTI - Equibles

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 22, 2020

AXT, INC.

(Exact name of registrant as specified in its charter)

| Delaware | 000‑24085 | 94‑3031310 |

| --- | --- | --- | | (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |

4281 Technology Drive

Fremont, California 94538

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (510) 438‑4700

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8‑K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

◻ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

◻ Soliciting material pursuant to Rule 14a‑12 under the Exchange Act (17 CFR 240.14a‑12)

◻ Pre-commencement communications pursuant to Rule 14d‑2(b) under the Exchange Act (17 CFR 240.14d‑2(b))

◻ Pre-commencement communications pursuant to Rule 13e‑4(c) under the Exchange Act (17 CFR 240.13e‑4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ◻

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Securities registered pursuant to Section 12(b) of the Act:

| Title of each class: | Trading Symbol | Name of each exchange on which registered: |

| --- | --- | --- | | Common Stock, $0.001 par value | AXTI | The NASDAQ Stock Market LLC |

Item 2.02 Results of Operations and Financial Condition

On April 22, 2020, AXT, Inc. issued a press release announcing its financial results for the quarter ended March 31, 2020. A copy of the Company’s press release, announcing the results, is attached hereto as Exhibit 99.1 and incorporated herein by reference.

The information in Exhibit 99.1 hereto discussing the Company’s results of operations and financial condition for the quarter ended March 31, 2020, is being “furnished” in accordance with General Instruction B.2 of Form 8‑K and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. The information contained herein and in the accompanying exhibit shall not be incorporated by reference into any filing of the Registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference to such filing.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

99.1 Press release dated April 22, 2020, regarding the financial results of AXT, Inc. for the quarter ended March 31, 2020.

EXHIBIT INDEX

| Eptem |  |

| --- | --- | | Exhibit<br>Number | Description | | 99.1 | Press release dated April 22, 2020, regarding the financial results of AXT, Inc. for the quarter ended March 31, 2020. |

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

|  | AXT, INC. |  |

| --- | --- | --- | | Date: April 22, 2020 | By: | /s/ Gary L. Fischer | | | | Gary L. Fischer | | | | Chief Financial Officer and Corporate Secretary |

		axti\_Ex99\_1

<br> Exhibit 99.1
<br> AXT, Inc. First Quarter 2020 Results
<br> April 22, 2020
<br> Page 1 of 5

AXT, Inc. Announces First Quarter 2020 Financial Results

FREMONT, Calif., April 22, 2020 – AXT, Inc. (NasdaqGS: AXTI), a leading manufacturer of compound semiconductor substrates, today reported financial results for the first quarter, ended March 31, 2020.

Management Qualitative Comments

“For much of the first quarter, our manufacturing facilities in China were operating at reduced staffing levels to limit the risk of COVID-19 exposure for our employees,” said Morris Young, chief executive officer. “We adopted a number of protective measures and thankfully none of our employees have contracted the virus so far. Despite the impact to productivity, we were able to meet customer demand in the first quarter, posting revenue and earnings results that were slightly ahead of our expectations. Further, we were pleased to announce in March that one of our largest gallium arsenide customers completed its site qualification of our new facilities for volume production, an important milestone for our manufacturing relocation.

“As we enter Q2, visibility remains limited and we are taking an appropriately conservative view of our markets. However, demand for our substrates is holding fairly steady amidst the difficult global conditions. We are seeing pockets of strength in wireless, data center connectivity and solar cell applications. In recent weeks, the government mandates have evolved, allowing us to return to full staffing levels at all three manufacturing locations. As such, we believe we are well positioned to support improved demand in the quarters ahead.

“In this environment, we continue to prioritize the well-being of our employees, the support of our customers, and accessibility to our investors. We believe AXT continues to have a healthy balance sheet and we will continue to emphasize strong fiscal discipline as we navigate these unusual times, and plan and prepare for better days ahead.”

First Quarter 2020 Results

Revenue for the first quarter of 2020 was $20.7 million, compared with $18.4 million in the fourth quarter of 2019 and $20.2 million for the first quarter of 2019.

Gross margin was 26.6 percent of revenue for the first quarter of 2020, compared with 21.0 percent of revenue in the fourth quarter of 2019 and 33.1 percent for the first quarter of 2019.

Operating expenses were $6.2 million in the first quarter of 2020, compared with $6.7 million in the fourth quarter of 2019, and $6.1 million for the first quarter of 2019.

<br> AXT, Inc. First Quarter 2020 Results
	<br> April 22, 2020
	<br> Page 2 of 5

Operating loss for the first quarter of 2020 was $0.6 million, compared with an operating loss of $2.8 million in the fourth quarter of 2019, and an operating profit of $0.6 million for the first quarter of 2019.

Other income, net for the first quarter of 2020 is a gain of $1.2 million. This includes a grant of $1.4 million from a provincial government agency as an award for relocating to its province.

Net loss in the first quarter of 2020 was $0.2 million, or $0.01 per share, compared with a net loss of $2.0 million or $0.05 per share in the fourth quarter of 2019, and a net loss of $1.1 million or $0.03 per share for the first quarter of 2019.

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 2074409). The call will also be simulcast at www.axt.com. Replays will be available at (855) 859-2056 (passcode 2074409) until April 29, 2020. 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 its sales, administration and customer service functions. AXT has manufacturing facilities in China and, as part of its supply chain strategy, has partial ownership in ten companies in China producing raw materials. For more information, see AXT’s website at http://www.axt.com.

Forward-Looking Statements

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 growth prospects and opportunities for continued business expansion, our market opportunity, 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

<br> AXT, Inc. First Quarter 2020 Results
	<br> April 22, 2020
	<br> Page 3 of 5

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; 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

<br> AXT, Inc. First Quarter 2020 Results
	<br> April 22, 2020
	<br> Page 4 of 5

AXT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share data)

|  | Three Months Ended |  |  |  |

| --- | --- | --- | --- | --- | | | March 31, | | | | | | 2020 | | 2019 | | | Revenue | $ | 20,723 | $ | 20,208 | | Cost of revenue | | 15,201 | | 13,513 | | Gross profit | | 5,522 | | 6,695 | | Operating expenses: | | | | | | Selling, general and administrative | | 4,749 | | 4,723 | | Research and development | | 1,407 | | 1,346 | | Total operating expenses | | 6,156 | | 6,069 | | Income (loss) from operations | | (634) | | 626 | | Interest income (expense), net | | (29) | | 95 | | Equity in loss of unconsolidated joint ventures | | (120) | | (1,454) | | Other income (expense), net | | 1,366 | | (134) | | Income (loss) before provision for income taxes | | 583 | | (867) | | Provision for income taxes | | 366 | | 156 | | Net income (loss) | | 217 | | (1,023) | | Less: Net income attributable to noncontrolling interests | | (395) | | (81) | | Net loss attributable to AXT, Inc. | $ | (178) | $ | (1,104) | | Net loss attributable to AXT, Inc. per common share: | | | | | | Basic and diluted | $ | (0.01) | $ | (0.03) | | Weighted-average number of common shares outstanding: | | | | | | Basic and diluted | | 39,812 | | 39,352 | | <br> AXT, Inc. First Quarter 2020 Results | | | --- | --- | | | <br> April 22, 2020 | | | <br> Page 5 of 5 |

AXT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands)

|  | March 31, |  | December 31, |  |

| --- | --- | --- | --- | --- | | | 2020 | | 2019 | | | ASSETS | | | | | | Current assets: | | | | | | Cash and cash equivalents | $ | 20,061 | $ | 26,892 | | Short-term investments | | 8,697 | | 9,427 | | Accounts receivable, net | | 23,613 | | 19,031 | | Inventories | | 48,253 | | 49,152 | | Prepaid expenses and other current assets | | 10,638 | | 8,703 | | Total current assets | | 111,262 | | 113,205 | | Property, plant and equipment, net | | 97,490 | | 97,403 | | Operating lease right-of-use assets | | 2,810 | | 2,938 | | Other assets | | 11,078 | | 9,803 | | Total assets | $ | 222,640 | $ | 223,349 | | LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | Current liabilities: | | | | | | Accounts payable | $ | 9,518 | $ | 10,098 | | Accrued liabilities | | 10,371 | | 11,681 | | Bank loan | | 6,071 | | 5,747 | | Total current liabilities | | 25,960 | | 27,526 | | Long-term portion of royalty payments | | 1,445 | | — | | Noncurrent operating lease liabilities | | 2,542 | | 2,695 | | Other long-term liabilities | | 503 | | 366 | | Total liabilities | | 30,450 | | 30,587 | | Stockholders’ equity: | | | | | | Preferred stock | | 3,532 | | 3,532 | | Common stock | | 41 | | 41 | | Additional paid-in capital | | 238,041 | | 236,957 | | Accumulated deficit | | (47,961) | | (47,783) | | Accumulated other comprehensive loss | | (6,637) | | (4,862) | | Total AXT, Inc. stockholders’ equity | | 187,016 | | 187,885 | | Noncontrolling interests | | 5,174 | | 4,877 | | Total stockholders’ equity | | 192,190 | | 192,762 | | Total liabilities and stockholders’ equity | $ | 222,640 | $ | 223,349 |