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IQE

23 February 2015

AXT's margins grow despite inventory-driven dip in revenue in Q4

For fourth-quarter 2014, AXT Inc of Fremont, CA, USA, which makes gallium arsenide, indium phosphide and germanium substrate and raw materials, has reported revenue of $19.6m, up 5.4% on $18.6m a year ago but down 15% on $23.1m last quarter (and below its initial guidance of $20.5-21.5m). The revenue shortfall is attributed primarily to reduced sales as customers worked down their substrate inventory levels at year end. For full-year 2014, revenue was $83.5m, down 2% on 2013's $85.3m.

Fiscal Q4/2013 Q1/2014 Q2/2014 Q3/2014 Q4/2014
Revenue $18.6m $19.3m $21.4m $23.1m $19.6m

"While the fourth quarter demand weakness contributed to a modest decline in our annual revenue from the prior year, meaningful improvements in our cost structure early in the year - coupled with ongoing discipline in our spending throughout the year - and a positive shift in our revenue mix resulted in a significant improvement year-over-year to our bottom line," says CEO Morris Young.

Gross margin has risen further, from 15.1% a year ago and 23% last quarter to 25.4% in Q4. Full-year gross margin has improved significantly, from 13.9% in 2013 to 20.6% in 2014.

Full-year operating expenses increased from $19.5m in 2013 to $20m in 2014. In particular, quarterly operating expenses have risen from $4.4m a year ago and $4.7m last quarter to $5.6m, due largely to professional fees associated with a recently completed internal investigation (initiated during Q4) of certain potential related-party transactions.

Compared with net income of $644,000 ($0.02 per diluted share) last quarter, the higher expenses have contributed to a quarterly net loss of $311,000 ($0.01 per diluted share), although this is still less than the net loss of $1.2m ($0.04 per diluted share) a year ago. Full-year net loss has also improved from $8m ($0.25 per diluted share) for 2013 to $1.4m ($0.05 per share) for 2014. During the year, cash and investments grew by $1.3m, yielding a year-end balance of $48.9m.

"As we enter 2015, we are well positioned to drive growth in our business and to continue executing on our strategic priorities," says Young. 

See related items:

AXT's revenue grows a more-than-expected 8% in Q3 as new applications emerge

AXT returns to quarterly profitability ahead of plan

AXT reports higher-than-expected GaAs and InP revenue in Q1

AXT's revenue falls 9% in Q4 to $18.6m, but decline in GaAs levels out

Tags: AXT GaAs GaAs substrate InP Germanium

Visit: www.axt.com

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