GT Advanced Technologies reports another rise in profits

GT Advanced Technologies’ revenue and profits keep on growing, albeit at a slower rate, but there are concerns about the future if economic troubles in the alternative energy field and increasing trade tensions with China continue, according to the firm’s year-ending filing with the U.S. Securities and Exchange Commission.For now, however, the Merrimack-based company is doing just fine, and the recent decision to add LED lighting to its manufacturing portfolio is paying off exponentially.GT Solar ended its fiscal year on March 31 with $79 million in net income (65 cents a diluted share), compared to $52 million the previous, bring its annual profit to $183 million ($1.45 a diluted share), topping the $175 million the company made last year.Revenues also rose, with $354 million and $996 million for the fourth quarter and fiscal year, respectively, compared to $272 million and $899 million for the previous last quarter and fiscal year.Especially heartening was the $169 million quarterly in revenue in the company’s sapphire furnace segment, topping for the first time revenue in each of its solar segments. The former GT Solar just entered into the sapphire business during July of 2010 when it acquired Crystal Systems Inc. While Crystal Systems sold the sapphire materials used to produce LED lighting, GTAT has primarily been selling furnaces to produce the sapphire.GTAT was already selling furnaces to make silicon material for solar cells (its polysilicon segment) and to make the solar nuggets themselves (photovoltaic segment), which accounted for quarterly revenue of $154 million and $31 million, respectively. But a solar cell glut hurt sales. total annual revenues from both solar segments fell by $146 million (though they did go up in the polysilicon segment) while sapphire revenues increased more than $200 million.All this is good news for employment. At the end of March, GTAT employed the equivalent of 663 workers, including 257 in New Hampshire and 98 in Salem, Mass. And GTAT said it would increase top executives’ cash bonus from 34.7 to 84.7 percent of target because the company has done so well.For CEO Thomas Gutierrez, that will mean a bonus of $767,594.However, the company warned, there are few ominous clouds hanging over the company’s sunny forecast.First, a glut in both the solar and sapphire market has already led the company to terminate $136 million in its backlog this fiscal year (compared to only $10.7 million in reduction of the backlog the previous fiscal year.)”The consequence of this oversupply is that those who sell into these markets (many of whom are customers for our equipment) are either required to sell at very low prices (sometimes selling at a loss) or are unable to sell at all. As a consequence of these conditions, demand for our equipment … has dropped significantly in the past six months,” the company warned.This has been and could be exacerbated by several factors, including decreased government funding for energy incentive programs and increased trade tensions with China, which accounts for 52 percent of the company’s revenue in the last fiscal year.On May 17 the US Department of Commerce made a preliminary determination that China was dumping solar products in the United States in violation of fair trade practices, and slapped a preliminary 31 percent duty against them. It already imposed preliminary single duties in March against Chinese solar panels, and Congress was considering imposing some more general sanctions in response to supposed Chinese currency manipulation. Since this would slow sales of GTAT’s Chinese customers in the U.S. , it could backfire and hurt GTAT sales.On May 24, the company issued a statement saying that while it still believes that the decision was “not in the best interest of the overall solar industry” it was largely expected, and factored in the company’s guidance.GTAT is changing its fiscal year to the calendar year, so the next fiscal year, ending on December 31 2012, will be a nine month transition year. — BOB SANDERS/NEW HAMPSHIRE BUSINESS REVIEWClarificationAn April 23, 2012, article on NHBR.com reported that GT Advanced Technology’s change in fiscal year to a calendar year might result in the company’s top executives receiving their bonuses earlier as a result of the switch. There was no intention to imply that the company changed its fiscal year in order for executives to receive their bonuses earlier.In addition, GTAT informed NHBR the awards would not be distributed earlier and that the stock incentive extends beyond the company’s top executives to other employees.The awards are tied to the company’s performance and its stock price and are approved by the GTAT board’s compensation committee.