GT Advanced Technologies Inc. Announces Results for Quarter and Year Ending December 31, 2012
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, net | 23,829 | 51,468 | |||||||
Inventories | 133,286 | 198,624 | |||||||
Deferred costs | 30,248 | 221,919 | |||||||
Vendor advances | 32,440 | 55,226 | |||||||
Deferred income taxes | 28,309 | 31,698 | |||||||
Refundable income taxes | 1,516 | 1,516 | |||||||
Prepaid expenses and other current assets | 9,168 | 16,681 | |||||||
Total current assets | 676,891 | 880,212 | |||||||
Property, plant and equipment, net | 77,980 | 81,904 | |||||||
Other assets | 86,920 | 32,740 | |||||||
Intangible assets, net | 90,516 | 88,903 | |||||||
Deferred cost | 24,423 | 7,801 | |||||||
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 payable | 44,848 | 69,854 | |||||||
Accrued expenses | 30,928 | 35,679 | |||||||
Contingent consideration | 4,901 | 17,511 | |||||||
Customer deposits | 111,777 | 307,879 | |||||||
Deferred revenue | 86,098 | 408,032 | |||||||
Accrued income taxes | 21,716 | 6,897 | |||||||
Total current liabilities | 307,518 | 845,852 | |||||||
Long-term debt | 132,313 | - | |||||||
Convertible notes | 157,440 | - | |||||||
Deferred income taxes | 22,573 | 52,008 | |||||||
Customer deposits | 71,340 | - | |||||||
Deferred revenue | 35,848 | 23,021 | |||||||
Contingent consideration | 5,414 | 6,202 | |||||||
Other non-current liabilities | 2,323 | 687 | |||||||
Accrued income taxes | 25,762 | 19,491 | |||||||
Total liabilities | 760,531 | 947,261 | |||||||
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 | 1,193 | 1,197 | |||||||
Additional paid-in capital | 183,565 | 113,627 | |||||||
Accumulated other comprehensive loss | 806 | (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 Ended | Twelve 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 revenue | 143,491 | 75,033 | 87,030 | 527,132 | 482,106 | |||||||||||
Gross profit | (41,158 | ) | 35,028 | 65,998 | 206,404 | 391,336 | ||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 22,695 | 18,767 | 13,344 | 70,649 | 42,601 | |||||||||||
Selling and marketing | 5,458 | 3,123 | 3,789 | 15,115 | 23,330 | |||||||||||
General and administrative | 13,801 | 15,428 | 13,837 | 59,532 | 66,588 | |||||||||||
Contingent consideration (income) expense | 296 | (9,943 | ) | 464 | (8,965 | ) | 5,193 | |||||||||
Impairment of goodwill | 57,037 | - | - | 57,037 | - | |||||||||||
Restructuring charges and asset impairments | 33,441 | - | - | 33,441 | - | |||||||||||
Amortization of intangible assets | 2,534 | 2,538 | 2,822 | 10,165 | 6,630 | |||||||||||
Total operating expenses | 135,262 | 29,913 | 34,256 | 236,974 | 144,342 | |||||||||||
Income from operations | (176,420 | ) | 5,115 | 31,742 | (30,570 | ) | 246,994 | |||||||||
Other income (expense): | ||||||||||||||||
Interest income | 131 | 27 | 224 | 181 | 564 | |||||||||||
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 | ) | 3,091 | 27,175 | (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: | ||||||||||||||||
Basic | 119,109 | 118,769 | 123,628 | 118,931 | 125,402 | |||||||||||
Diluted | 119,109 | 119,874 | 124,946 | 118,931 | 128,680 | |||||||||||
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 Ended | Twelve 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 |