GT Advanced Technologies Inc. reported results for the fourth quarter and fiscal year 2013, which ended December 31, 2013.
Management Commentary
"Our results for the December quarter were in line with our guidance and the anticipated growth trajectory of our business remains unchanged," said Tom Gutierrez, president and chief executive officer. "We expect to return to profitability during the second half of 2014.
"Our arrangement to supply sapphire materials to Apple is progressing well and we started to build out the facility in Arizona and staff the operation during the quarter," said Gutierrez. "We are pleased to have Apple as a sapphire customer and to be in a position to leverage our proprietary know-how to enable the supply of this versatile material. While our primary focus during the balance of the year is to continue to execute on our commitments in Arizona, our aim is to position GT not only as an exceptional sapphire supplier to Apple but also as an unparalleled world-class supplier of sapphire material and equipment to a variety of customers.
"Although we have significant opportunities in sapphire, the GT story is not only about our emerging sapphire materials business. In fact, our entry into sapphire materials may enable us to expand into other materials segments once we have fully ramped the operation in Arizona. The many diversification and investment seeds we have planted over the last several years in the LED, power electronics, advanced solar and industrial markets are expected to begin to bear fruit over the next 18 months. We are seeing significant interest in our new products and now expect equipment orders from these initiatives to be received during the latter part of 2014, with meaningful revenue recognition beginning in early 2015.
"During the last year, we worked to ensure that our balance sheet continues to provide us with the strategic and operational flexibility necessary to take advantage of the many growth opportunities that we have identified," concluded Gutierrez.
Fourth Quarter and Full Year 2013 Financial Results
During 2013, the company made the strategic decision to forego ASF equipment sales while building out its new sapphire materials capacity. This decision has had, and will have, a clear negative impact on the company's fourth quarter and full year results for 2013 and near term future results.
Revenue for the fourth quarter came in at $32.6 million including $2.5 million in polysilicon, $11.3 million in photovoltaic (PV), and $18.8 million in sapphire. This compares to revenue in the third quarter of $40.3 million and $102.3 million in the fourth quarter of fiscal 2012. Revenue for the year ended December 31, 2013 was $299.0 million compared to $733.5 million for the year ended December 31, 2012.
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Summary results for the quarter and year are presented in the table below:
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Three-Months Ended
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Full Year
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Dec 31st,
2013
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Sept 28th,
2013
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Dec 31st,
2012
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Dec 31st,
2013
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Dec 31st,
2012
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Revenue
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$32.6
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$40.3
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$102.3
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$299.0
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$733.5
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Gross Margin
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9.3%
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44.1%
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(40.2%)
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31.1%
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28.1%
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GAAP EPS
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($0.33)
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($0.31)
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($1.34)
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($0.71)
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($0.53)
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Non-GAAP EPS
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($0.26)
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($0.16)
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($0.15)
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($0.35)
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$0.73
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Cash, Backlog and Orders
At the end of the fourth quarter, the balance sheet had cash, cash equivalents and restricted cash of $593.0 million and debt of $283.9 million. This compares to $418.1 million of cash and cash equivalents at the end of the fourth quarter of calendar 2012 which included $297.0 million of total debt. During the fourth quarter, the company received the first of a series of prepayments under its multi-year sapphire material supply agreement with Apple. Additionally, the company completed a concurrent common stock and convertible debt offering in December 2013 that resulted in net proceeds of approximately $290.0 million. The company also paid off an outstanding term loan of $96.0 million.
As of December 31, 2013, the company's total backlog was $602.2 million comprised of equipment orders only. This included $298.7 million in the polysilicon segment, $11.3 million in the PV segment and $292.1 million in the sapphire segment. New orders during the fourth quarter of calendar 2013 were $23.8 million. The company adjusted backlog down by approximately $47.3 million during the quarter primarily related to an arrangement with an ASF customer that was modified. All orders for sapphire material have been and will continue to be excluded from backlog going forward.
Business Outlook
The company expects that 2014 will be a transformational year, one in which it builds a sapphire materials business while continuing to invest in the new technologies that will drive its equipment business in 2015 and beyond.
The company expects that revenue and profitability will be back end loaded, with its sapphire materials business ramping as the year progresses, and with improving financial performance during the second half of 2014.
On an annualized basis, during 2014, the company expects revenues to range from $600 million to $800 million, with approximately 15% of total revenues occurring in the first half of the year. The company expects that its sapphire segment will account for more than 80% of total revenue in 2014. The sapphire segment includes the company's equipment and materials businesses in the LED, industrial and consumer electronics markets.
During the first quarter of 2014, the company expects to generate revenues in the range of $20 million to $30 million with a non-GAAP loss per share of $0.20 to $0.25.
Consolidated gross margins for 2014 are expected to be in the range of 25% to 27%, reflecting lower margin material shipments during the year, inefficiencies related to the ramp up of the sapphire materials business and underutilization of the company's equipment operations.
The company expects that 2014 non-GAAP earnings per share will be in the range of $0.02 to $0.18. This assumes an average outstanding share count of 148 million shares.
The company's cash balance at year end is currently expected to be in the range of $400 million to $500 million.
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