FREMONT, CA, Oct. 29, 2009 (Marketwire) --
FREMONT, CA -- (Marketwire) -- 10/29/09 -- AXT, Inc. (NASDAQ: AXTI), a leading manufacturer of compound semiconductor substrates, today reported financial results for the third quarter ended Sept. 30, 2009.
Third Quarter 2009 Results
Revenue for the third quarter of 2009 was $16.8 million, compared with $13.1 million in the second quarter of 2009, and $17.9 million in the third quarter of 2008. Total gallium arsenide (GaAs) substrate revenue was $13.3 million for the third quarter of 2009, compared with $10.1 million in the second quarter of 2009, and $13.6 million in the third quarter of 2008. The increase in GaAs substrate revenue in the third quarter of 2009 compared with the second quarter of 2009 was primarily due to the overall increased demand in all diameters, particularly 6-inch substrates.
Indium phosphide (InP) substrate revenue was $688,000 for the third quarter of 2009, compared with $684,000 in the second quarter of 2009, and $484,000 in the third quarter of 2008. Germanium (Ge) substrate revenue was $1.8 million compared with $1.2 million in the second quarter of 2009 and $795,000 in the third quarter of 2008. Raw materials sales were $1.0 million for the third quarter of 2009, compared with $1.0 million in the second quarter of 2009 and $3.0 million in the third quarter of 2008.
Gross margin was 32.9 percent of revenue for the third quarter of 2009. This included a benefit from the net sale of approximately $94,000 of fully reserved wafers, which positively affected the quarterly gross margin by 0.6 percentage points. By comparison, gross margin in the second quarter of 2009 was 19.3 percent. That included a benefit from the net sale of approximately $311,000 of fully reserved wafers, which positively affected second quarter gross margin by 2.4 percentage points. Gross margin in the third quarter of 2008 was 25.4 percent, which included a benefit from the net sale of approximately $708,000 of fully reserved wafers, which positively affected the quarterly gross margin by 4.0 percentage points. In the past we reported in our press releases the gross sale of fully reserved wafers and its effects on gross margin without taking into account the charge to cost of goods sold and its effect on gross margin for wafers that were added to fully reserved wafers. We are now reporting in our press releases the net sale of fully reserved wafers and its effects on gross margin. The net sale is derived from the gross sale of fully reserved wafers less the charge to cost of goods sold for wafers that were added to fully reserved wafers. We have done this retroactively for all prior periods reported.
Operating expenses were $3.7 million in the third quarter of 2009, compared with $3.8 million in the second quarter of 2009, and $5.5 million in the third quarter of 2008.
Income from operations for the third quarter of 2009 was $1.9 million compared with a loss from operations of $1.3 million in the second quarter of 2009, and a loss from operations of $0.9 million in the third quarter of 2008.
Net interest and other income for the third quarter of 2009 was $677,000, which included an unrealized foreign exchange gain of $302,000. This compared with a net interest and other income of $355,000 in the second quarter of 2009, which included an unrealized foreign exchange gain of $212,000, and with a net interest and other income of $366,000 in the third quarter of 2008, which included an unrealized foreign exchange gain of $123,000.
Net income attributable to AXT, Inc. in the third quarter of 2009 was $2.1 million or income of $0.07 per diluted share, compared with a net loss attributable to AXT, Inc. of $1.3 million or a loss of $0.04 per diluted share in the second quarter of 2009, and a net loss attributable to AXT, Inc. of $1.0 million, or a loss of $0.03 per diluted share in the third quarter of 2008.
Cash and equivalents, including restricted deposits, were $37.8 million as of Sept. 30, 2009, compared with $33.6 million as of June 30, 2009.
Management Qualitative Comments
"This is an encouraging time for AXT," said Morris Young, chief executive officer. "The continued recovery taking place in our end markets, coupled with ramping volumes for newer qualifications resulted in revenue growth in the third quarter of more than 28 percent. Further, improved margin performance, manufacturing efficiency and cost control allowed us to exceed our earnings expectations and return the company to profitability. We are very pleased to see continued diversification of our customer and revenue base as well as many positive trends in our markets that highlight our competitive advantages and are likely to provide further growth opportunities in the quarters ahead."
AXT Announces Executive Promotions
In a separate release, AXT today announced three executive promotions. First, Raymond Low, formerly AXT's vice president, corporate controller and acting chief financial officer, has been appointed chief financial officer.
Also, Davis Zhang, formerly AXT's president of joint venture operations, has been appointed president of AXT China Operations, with responsibility for managing and developing AXT's joint venture operations, as well as assisting chief executive officer, Dr.
