6 February 2012

GT’s sapphire furnaces counteract dip in polysilicon equipment revenue

For its fiscal third-quarter 2012 (to end-December 2011), GT Advanced Technologies Inc of Merrimack, 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) has reported revenue of $153m, down 30% on $217.7m last quarter and down 42% on $262.9m a year ago.

Revenue by business segment was $87.4m in polysilicon (down from $98m) and $34.4m in photovoltaic (down from $111.2m) but $31.2m in sapphire (up from $8.5m), which included revenue for ASF (Advanced Sapphire Furnace) equipment as well as sapphire materials.

Gross margin has fallen further, from 46.4% a year ago and 43.7% last quarter to 43.1%, while operating margin has fallen from 36.1% a year ago and 24.7% last quarter to 20.7%. Net income was $15.3m, down from $36.9m last quarter and $63.6m a year ago.

“We performed at the top end of our guidance for revenue and above our gross profit and earnings per share guidance, sustaining our track record of meeting or exceeding expectations,” notes president & CEO Tom Gutierrez.

During the quarter, cash, cash equivalents and restricted cash fell from $494m (including $10.2m of restricted cash and $90.9m of borrowing) to $303.1m (including $96.2m of restricted cash and zero debt), reflecting the use of $75m for the accelerated share repurchase initiated during the quarter plus $90.9m to pay down the firm’s remaining debt facility.

Compared with just $65.4m last quarter, new orders totalled $228.9m ($218.1m in polysilicon, $0.9m in PV and $10m in sapphire). Also, $27.2m of adjustments to backlog yielded net orders of $201.7m. Order backlog has hence risen from $2.1bn to $2.2bn ($1.1bn polysilicon, $212.1m PV and $908.2m sapphire) including $431.1m of deferred revenue.

“We saw continued success in our polysilicon business, including our first ever reactor booking with an incumbent manufacturer. This helped drive a positive book-to-bill ratio and strengthened our overall backlog,” says Gutierrez.

“In our sapphire business, we completed installation, received acceptance and recorded revenue on a significant number of sapphire furnaces,” Gutierrez notes. “We continue to believe that our ASF solution offers the most viable path to low-cost, high-quality sapphire production,” he adds.

“In PV, while we saw some pockets of improvement, on balance we continue to believe a broad-based turnaround is unlikely in the near to mid-term,” Gutierrez says. “With less than 10% of our current backlog coming from PV, our current exposure in this space is limited. Longer term, as the PV industry’s well-financed technology leader, we are well positioned to drive our customers’ critical move to higher-efficiency and lower-cost products with our DSS450 MonoCast and HiCz products,” he believes.

“We continue to have one of the strongest balance sheets in the industry. This enables us to continue to invest strategically in new product technology and initiatives to further diversify the company and add new growth opportunities,” Gutierrez concludes.

On 31 January, the firm and certain subsidiaries entered into a senior secured credit agreement with Bank of America N.A., RBS Citizens and certain other lenders. The credit agreement consists of a term loan facility of $75m and a revolving credit facility of $175m, both with a final maturity date of end-January 2016.

For fiscal 2012 (to end-March), GT still expects revenue of $950m to $1.05bn and gross margin of 43-45%, but it now expects fully diluted earnings per share of $1.45-1.60 rather than $1.45-1.65.

GT anticipates entering fiscal 2013 (beginning 1 April 2012) with a total backlog of more than $1.7bn. For the fiscal year, the firm expects revenue to show modest growth over fiscal 2012, gross margin to remain stable, R&D spending to continue to increase, and EPS (earnings per share) to expand.

See related items:

GT lowers guidance after drop in orders

GT Solar’s quarterly revenue rises 71% year-on-year

GT Solar’s full-year income doubles as revenue grows 65%

Tags: GT Advanced Technologies Sapphire crystallization furnaces

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