21 December 2012

GT expect revenue down 10% in Q4/2012, and 23% below guidance for full year

GT Advanced Technologies Inc of Nashua, NH, USA (a provider of polysilicon production technology as well as sapphire and silicon crystalline growth systems and materials for the solar, LED and other specialty markets) says that it expects revenue of $95-102m in fourth-quarter 2012 (down about 10% on Q3’s $110.1m). For full-year 2012, revenue should total $726-733m (23% below the guidance of $925-975m reiterated in September), with about 62% of 2012 revenue from polysilicon, 31% from sapphire, and 7% from photovoltaics (PV). 

The firm expects to take a charge of $80-90m related to the write-down of the majority of its DSS (Directional Solidification System) inventory and other inventory-related charges. Excluding this charge, gross margin should be 34-36% in Q4/2012 and 38-40% in 2012. 

The firm is also evaluating potential impairment related to goodwill, long-lived assets & other intangibles for the PV business that could impact Q4/2012. Excluding this, operating expenses should be $49-51m in Q4/2012 (including $23-25m in R&D), and $151-153m in full-year 2012 (including $71-73m in R&D).

On a non-GAAP basis, GT expects a loss per share (on a fully diluted basis) of $0.05-0.10 in Q4/2012 and $0.77-0.82 in 2012, excluding the inventory charges and any impairment charges, as well as restructuring charges (of about $4.2m), stock compensation expense, contingent consideration, non-cash interest expense, amortization of intangible assets and acquisition expenses.

Capital expenditures should be $5-7m in Q4/2012 and $41-43m in 2012. During Q4/2012, cash & cash equivalents should fall from $479.2m to something over $400m (including total debt of about $300m).

Order backlog is expected to fall from $1.5bn to $1.2bn at the end of Q4. Based on current market conditions and uncertainty related to the delivery timing of certain orders in backlog, GT expects that about 25% of this backlog is at risk.

The firm will report final Q4 and full-year 2012 results in February.

For 2013, GT’s preliminary outlook indicates revenue falling to $500-600m, with only about 1% from the PV segment, and 42% from polysilicon and 57% from sapphire.  Gross margin should fall to 35-37%. Operating expenses are expected to be $152-158m (including $75-80m for R&D).

“Our outlook reflects the soft market conditions and very tight lending environment in the solar and LED industries that we serve, as well as the overall challenging macroeconomic environment,” says president & CEO Tom Gutierrez. “We have taken actions to size our business in accordance with the environment and expect to remain profitable in 2013,” he adds.

At the end of October, GT said that it was streamlining global operations to better align its cost structure with market conditions and enhance its ability to pursue strategic growth initiatives. This includes the consolidation of existing business units into a single Crystal Growth Systems (CGS) group and cost-reduction actions (including a reduction in staffing of about 25% that is expected to cut annualized expenses by about $13m).

After capital expenditure of just $11-13m in full-year 2013, non-GAAP earnings per share (on a fully diluted basis) should be $0.25-0.45. Nevertheless, the year-end cash balance should still fall to $225-275m.

“While current market conditions are unlikely to improve over the next 12 months, we remain confident about our long-term future, and we expect to exit this downturn as a stronger more diversified company with market-leading positions in several growth industries,” concludes Gutierrez. 

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