GT Advanced Technologies Inc. Announces Results for Quarter and Year Ending December 31, 2012

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GT Advanced Technologies Inc. Announces Results for Quarter and Year Ending December 31, 2012

NASHUA, N.H.--(BUSINESS WIRE)-- GT Advanced Technologies Inc. (NAS: GTAT) today reported results for the fourth quarter and calendar year 2012, which ended December 31, 2012.

"Our Q4 results came in largely as expected as we continue to face challenging conditions in the solar and LED markets," said Tom Gutierrez, president and chief executive officer. "We have taken steps to resize the business and manage our balance sheet and believe 2013 will be a year during which we continue to strengthen our foundation and further diversify the business.


"We are positioned to continue making R&D investments in new technologies to enhance our product offerings and market position. Coupled with our leadership in currently served markets, we believe our participation in growth areas such as cover and touch screen sapphire applications, power electronics and next generation solar will provide a path to resumed growth and cash generation in the years ahead."

Summary of Fourth Quarter Actions and Related Charges

In the fourth quarter of calendar 2012, the company took actions to better align the business with current and expected market conditions, as described in its December 18, 2012 conference call with the investment community. As a result the company recorded several one-time charges, which are described below and excluded from non-GAAP results.

The one-time charges included a cash-charge of $3.1 million for restructuring related to the workforce reduction announced in October and the idling of the company's St. Louis pilot manufacturing facility as well as the following non-cash charges: $30.3 million of asset impairment charges related to the workforce reduction and idling of the St. Louis facility; $71.8 million for the write down of inventory and related charges, primarily related to DSS inventory as a result of prevailing poor PV market conditions; $57.0 million of charges related to the impairment of goodwill related to the PV business and $2.5 million of charges primarily related to certain sapphire materials assets acquired with the acquisition of the business which are now obsolete. For a complete reconciliation of non-GAAP measures to measures presented in accordance with generally accepted accounting principles in the United States ("GAAP"), please see tables below.

As previously indicated, the company's non-GAAP EPS guidance range issued on December 18, 2012 excluded the impact of goodwill impairment charges related to the PV business, restructuring and asset impairment charges related to the idling of the St. Louis facility and the related tax effect of these adjustments, which represented an additional $0.08 non-GAAP EPS loss. The adjusted non-GAAP EPS guidance range to account for these charges is a $0.13 loss to a $0.18 loss and the company's Q4 non-GAAP earnings per share performance of a $0.15 loss is within this adjusted guidance range.

Q4 and CY12 Results Highlights

Revenue for the fourth quarter of calendar 2012 came in at $102.3 million including $89.3 million in polysilicon, $6.5 million in photovoltaic (PV), and $6.5 million in sapphire. This compares to revenue in the third quarter of calendar 2012 of $110.1 million and $153.0 million in the fourth quarter of calendar 2011. For calendar 2012, revenue was $733.5 million including $460.6 million in polysilicon, $48.9 million in PV, and $224.0 million in sapphire. This compares to $873.4 million of revenue for calendar 2011.

Non-GAAP gross profit for the fourth quarter of calendar 2012 was $33.1 million, or 32.4 percent of revenue, compared to $35.0 million, or 31.8 percent of revenue in the third quarter of calendar 2012 and $66.0 million, or 43.1 percent of revenue for the fourth quarter of calendar 2011. For calendar 2012, non-GAAP gross profit was $280.7 million, or 38.3 percent of revenue, compared to $391.3 million, or 44.8 percent of revenue in calendar 2011.

Gross profit for the fourth quarter of calendar 2012 was a loss of $41.2 million, or a loss of 40.2 percent of revenue, compared to $35.0 million, or 31.8 percent of revenue in the third quarter of calendar 2012 and $66.0 million, or 43.1 percent of revenue for the fourth quarter of calendar 2011. For calendar 2012, gross profit was $206.4 million, or 28.1 percent of revenue, compared to $391.3 million, or 44.8 percent of revenue in calendar 2011.

Non-GAAP net income was a loss of $18.1 million in the fourth quarter of calendar 2012, compared to $0.7 million in the third quarter of calendar 2012 and $23.8 million for the fourth quarter of calendar 2011. For calendar 2012, non-GAAP net income was $87.9 million, compared to $181.7 million in calendar 2011.

Net income in the fourth quarter of calendar 2012 was a loss of $159.4 million, compared to $2.3 million in the third quarter of calendar 2012 and $15.3 million for fourth quarter of calendar 2011. For calendar 2012, net income was a loss of $63.2 million, compared to $156.2 million in calendar 2011.

Non-GAAP earnings per share on a fully-diluted basis, including the additional $0.08 non-GAAP EPS loss described above, was a $0.15 loss in the fourth quarter of calendar 2012 and $0.73 for calendar 2012. This compares to non-GAAP EPS of $0.01 in the third quarter of calendar 2012, $0.19 in the fourth quarter of calendar 2011 and $1.41 in calendar 2011.

Earnings per share on a fully-diluted basis was a $1.34 loss in the fourth quarter of calendar 2012, compared to $0.02 for the third quarter of calendar 2012 and $0.12 for the fourth quarter of calendar 2011. For calendar 2012, earnings per share on a fully-diluted basis was a $0.53 loss, compared to $1.21 for calendar 2011.

Cash, Backlog, Orders

At the end of the fourth quarter of calendar 2012, the balance sheet had cash and cash equivalents totaling $418.1 million and total debt of $297.0 million. This compares to $479.2 million of cash and cash equivalents at the end of the third quarter of calendar 2012 which included $298.1 million of total debt and $206.9 million of cash and cash equivalents at the end of the fourth quarter of calendar 2011 which included zero debt.

As of December 31, 2012, the company's backlog was $1.25 billion. This included $528.9 million in the polysilicon segment, $3.3 million in the PV segment and $716.5 million in the sapphire segment. Included in the total backlog was approximately $121.9 million of deferred revenue.

New orders for the fourth quarter of calendar 2012 were $6.5 million. The company had $132.2 million of negative adjustments to backlog primarily related to the company's decision to debook the vast majority of its DSS backlog as the company had previously indicated it expected to do.

Amendment to Credit Facility

On February 27, 2013 the company entered into an amendment to its Credit Facility with Bank of America. The Amendment provides, among other things, that certain financial covenants be waived for the six quarter period beginning with the quarter ending March 31, 2013 and ending with the quarter ending June 30, 2014. Through this action the company avoids the possibility of a breach to these covenants and bolsters its ability to continue to execute on its growth programs. In connection with this amendment, the company will also pay down $40 million of the term loan, has reduced its total revolver availability by $50 million (and restricted the use of the revolving credit facility to letters of credit) and the company agreed to additional covenants relating to minimum liquidity and EBITDA levels.

Business Outlook

The company is reiterating the following guidance for FY 2013, which ends December 31, 2013: revenue in the range of $500 to $600 million, non-GAAP gross margin in the range of 35% to 37% and non-GAAP EPS in the range of $0.25 to $0.45. Non-GAAP EPS and non-GAAP gross margin guidance excludes potential purchase order cancellation fees. Non-GAAP EPS guidance also excludes approximately $2 to $4 million in lease exit costs for the St. Louis facility, restructuring charges and any gain/loss associated with the disposition of this facility.

The company will provide additional guidance details on its webcasted conference call. See below for details.

Conference Call, Webcast

Tomorrow morning, Thursday, February 28, 2013, at 8:00am ET the company will host a live conference call with Tom Gutierrez, president and chief executive officer, and Richard Gaynor, chief financial officer, to discuss its fourth quarter and CY2012 results and CY2013 outlook.

The call will be webcast live and can be accessed by logging on to the "Investors" section of GT Advanced Technologies' website, http://investor.gtat.com/. A slide presentation will accompany the call. The live call can also be accessed by dialing 631-291-4543. No password is required to access the webcast or call.

A replay of the call will be available. To access the replay, please go to http://investor.gtat.com/ and select the webcast replay link on the 'Events and Presentations' page. Or, please dial 404- 537-3406. The telephone replay will be available through March 14, 2013 and requires the passcode 96009462.

Investor Financial Summary Document

A comprehensive summary of the company's financial performance can be found on the Investor Relations section of its website on the "Q4 CY12 Earnings Call" webcast page. To access: http://investor.gtat.com.

About GT Advanced Technologies Inc.

GT Advanced Technologies Inc. is a diversified technology company with innovative crystal growth equipment and solutions for the global solar, LED and electronics industries. Our products accelerate the adoption of new advanced materials that improve performance and lower the cost of manufacturing. For additional information about GT Advanced Technologies, please visit www.gtat.com.

 
GT Advanced Technologies Inc.
Condensed Consolidated Balance Sheets
(in thousands, except per share data)
(Unaudited)
    
December 31,December 31,
 2012 2011 
 
Assets
Current assets:
Cash and cash equivalents$418,095$206,878
Restricted cash-96,202
Accounts receivable, net23,82951,468
Inventories133,286198,624
Deferred costs30,248221,919
Vendor advances32,44055,226
Deferred income taxes28,30931,698
Refundable income taxes1,5161,516
Prepaid expenses and other current assets 9,168 16,681 
Total current assets676,891880,212
 
Property, plant and equipment, net77,98081,904
Other assets86,92032,740
Intangible assets, net90,51688,903
Deferred cost24,4237,801
Goodwill 46,052 102,152 
Total assets$1,002,782$1,193,712 
 
Liabilities and stockholders' equity
Current liabilities:
Current portion of long-term debt$7,250$-
Accounts payable44,84869,854
Accrued expenses30,92835,679
Contingent consideration4,90117,511
Customer deposits111,777307,879
Deferred revenue86,098408,032
Accrued income taxes 21,716 6,897 
Total current liabilities307,518845,852
 
Long-term debt132,313-
Convertible notes157,440-
Deferred income taxes22,57352,008
Customer deposits71,340-
Deferred revenue35,84823,021
Contingent consideration5,4146,202
Other non-current liabilities2,323687
Accrued income taxes 25,762 19,491 
Total liabilities760,531947,261
 
Commitments and contingencies
Stockholders' equity:
Preferred stock, 10,000 shares authorized, none issued and outstanding--
Common stock, $0.01 par value; 500,000 shares authorized, 119,293 and

119,704 shares issued and outstanding as of December 31, 2012 and

December 31, 2011, respectively

1,1931,197
Additional paid-in capital183,565113,627
Accumulated other comprehensive loss806(1,514)
Retained earnings 56,687 133,141 
Total stockholders' equity 242,251 246,451 
Total liabilities and stockholders' equity$1,002,782$1,193,712 
 

 
GT Advanced Technologies Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
      
Three Months EndedTwelve Months Ended
December 31,September 29,December 31,December 31,December 31,
2012 2012 2011 2012 2011 
 
Revenue$102,333$110,061$153,028$733,536$873,442
Cost of revenue143,491 75,033 87,030 527,132 482,106 
Gross profit(41,158)35,02865,998206,404391,336
Operating expenses:
Research and development22,69518,76713,34470,64942,601
Selling and marketing5,4583,1233,78915,11523,330
General and administrative13,80115,42813,83759,53266,588
Contingent consideration (income) expense296(9,943)464(8,965)5,193
Impairment of goodwill57,037--57,037-
Restructuring charges and asset impairments33,441--33,441-
Amortization of intangible assets2,534 2,538 2,822 10,165 6,630 
Total operating expenses135,262 29,913 34,256 236,974 144,342 
Income from operations(176,420)5,11531,742(30,570)246,994
Other income (expense):
Interest income13127224181564
Interest expense(5,957)(1,620)(6,827)(9,355)(14,128)
Other, net(34)(431)2,036 (1,002)1,818 
Income before income taxes(182,280)3,09127,175(40,746)235,248
Provision for income taxes(22,871)747 11,835 22,489 79,030 
Net income($159,409)$2,344 $15,340 ($63,235)$156,218 
 
Net income per share:
Basic($1.34)$0.02$0.12($0.53)$1.25
Diluted($1.34)$0.02$0.12($0.53)$1.21
 
Weighted-average number of shares used in per share calculations:
Basic119,109118,769123,628118,931125,402
Diluted119,109119,874124,946118,931128,680
 

Reconciliation of Non-GAAP Financial Measures

In accordance with the requirements of Regulation G issued by the Securities and Exchange Commission, we are presenting the most directly comparable GAAP financial measures and reconciling the non-GAAP financial metrics to the comparable GAAP measures.

 
GT Advanced Technologies Inc.
Reconciliation of GAAP to non-GAAP results
(In thousands, except per share data)
(Unaudited)
      
Three Months EndedTwelve Months Ended
December 31,September 29,December 31,December 31,December 31,
2012 2012 2011 2012 2011 
 
Non-GAAP Gross Profit and Gross Margin
 
Revenue$102,333$110,061$153,028$733,536$873,442

Cost of revenue

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