AXT posts a solid Q1
Q2 demand for substrates holding fairly steady amidst difficult global conditions
AXT, a manufacturer of compound semiconductor substrates, has reported financial results for the first quarter, ended March 31, 2020.
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. 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.
“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 GaAs 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 centre 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 prioritise 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 emphasise strong fiscal discipline as we navigate these unusual times, and plan and prepare for better days ahead.”
