GTAT back in the black in 2Q, but barely

GTAT mainly lived off its backlog last quarter, with only $14 million of new orders

GT Advanced Technologies is back in the black this quarter, though not by much. The Nashua provider of equipment for solar and other industries posted a profit of nearly $12 million (a dime per share) for the second quarter. That’s better than the $18.7 million loss in the first quarter, but it does mean the company still has a $6.7 million net loss for the year thus far, compared to a profit of $93.8 million for the first half of 2012.

GTAT mainly lived off its backlog last quarter, with only $14 million of new orders. The good news, however, is it still has $702 million in backlog (with 26 percent of that pretty solid) and it is expecting new orders to pick up.  

While GTAT – which went public in 2008 as GT Solar – still made most of its quarterly revenue (some $151 of $168 million) selling equipment that produces polysilicon, a material used to forge solar cells, most of its future revenue will be in furnaces that crystallize sapphire, both for the LED lighting market, as well as for durable screens for the mobile communication industry. Sapphire accounts for $359 million of the company’s backlog.

GTAT moved into the sapphire business in 2010 by acquiring Crystal Systems, a Massachusetts company that produced sapphire wafers itself. It turned the factory into a demonstration facility in order to sell the technology.

Key driver

The company wanted to diversify because of a worldwide glut of solar cells, as well as looming trade war with China, where GTAT sold most of its equipment.

But GTAT positioned itself to take advantage of the trade war as well. When China retaliated by cutting off much of Europe and the United States, GTAT’s customers in other Asian countries – like Korea – benefited.

“We're also encouraged by recent announcements by the Chinese government with respect to their commitment to increase domestic consumption,” said GTAT CEO Thomas Gutierrez, in a conference call following Monday’s earning release. Gutierrez has been an outspoken critic of sanctions against China for allegedly “dumping” cheap solar cells and undercutting the domestic U.S. solar cell industry.

But, he said, “The key driver of our overall business for the balance of this year and through 2014 will be our sapphire business.”

Gutierrez said that LED production – which was also experiencing a glut shortly after the Thermal acquisition – has picked up, with plants running at 80 percent capacity.  He also said that his company has made progress on convincing its customers to use GTAT equipment for mobile device screens.  

All this should come together in the fourth quarter. The company is predicting that it will finish the year with more than a half billion dollars in revenue and a non-GAAP earnings per share in the range of $0.25 to $0.45, which doesn’t include various one-time expenses, such as restructuring charges. (For comparison purposes, the company’s non-GAAP net income for the first half of the year is eight cents to date.)


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