AXT, a manufacturer of compound semiconductor substrates, has reported financial results for the third quarter, ended September 30, 2017.
Revenue for the third quarter of 2017 was $28.2 million, compared with $23.6 million in the second quarter of 2017 and $21.9 million for the third quarter of 2016. Year over year, this is a 29 percent increase in quarterly revenue.
Gross margin was 39.5 percent for the third quarter of 2017, compared with 30.8 percent in the second quarter of 2017 and 34.6 percent for the third quarter of 2016. The improvement in gross margin in the third quarter of 2017 was largely the result of favourable product mix, higher sales volume, and greater manufacturing efficiency.
Operating expenses were $5.9 million in the third quarter of 2017, including one-time expenses of approximately $500,000. By comparison, operating expenses in the second quarter of 2017 were $5.0 million and $4.9 million in the third quarter of 2016.
Operating income was $5.2 million for the third quarter of 2017, compared with $2.3 million in the second quarter of 2017 and $2.7 million for the third quarter of 2016. Year over year, this is a 94 percent increase in quarterly operating profit.
Interest and other, net was a loss of $0.5 million for the third quarter of 2017, compared with a loss of $0.2 million in the second quarter of 2017 and a loss of $0.3 million for the third quarter of 2016. Interest and other, net for the third quarter of 2017 included a foreign exchange loss of $0.3 million and a net loss of $0.3 million from the seven partially owned companies in the company’s supply chain accounted for under the equity method.
Income tax expense in the third quarter of 2017 was $0.2 million compared with $0.3 million in the second quarter of 2017 and $0.2 million for the third quarter of 2016.
Net income was $4.4 million, or $0.11 per diluted share, in the third quarter of 2017 compared with a net income of $1.9 million, or $0.05 per diluted share, in the second quarter of 2017 and a net profit of $2.2 million or $0.07 per diluted share for the third quarter of 2016. Year over year this is a 98 percent increase in quarterly net profit and a 57 percent increase in earnings per share.
“The third quarter was another solid quarter in which we posted revenue growth in all of our product categories, including record revenue in InP,” said Morris Young, chief executive officer.
“We also achieved strong gross margin improvement and outperformed our profitability expectations for the quarter. These results demonstrate that our products are well positioned in strategic, growing markets, and that we are seeing the benefit of the operational efficiencies and improvements that we began successfully implementing more than a year ago.
“In addition, during the quarter we finalised the purchase of our new facility in the city of Dingxing, China. We are on schedule with our relocation plans and are pleased with our progress to date.”
