Monday, May 17, 2010

GT Solar (NASDAQ: SOLR): Q4 Earnings Preview

GT Solar International, Inc. (NASDAQ: SOLR) is scheduled to release fiscal fourth-quarter earnings after the market close on Wednesday, May 19, 2010. Analysts, on average, expect the company to report earnings of 19 cents per share on revenue of $183.01 million. In the year-ago period, the company reported earnings of 8 cents per share on revenue of $138.54 million.

GT Solar International, Inc. engages in the design and manufacture of manufacturing equipment; and provision of services for the production of photovoltaic, wafers, cells and modules, and polysilicon worldwide.

In the preceding fiscal-third quarter, the Merrimack, New Hampshire-based company reported net income was $36.77 million or $0.25 per share, compared to $43.12 million or $0.30 per share in the year-ago period. Revenue for the third quarter totaled $173.56 million, compared to $205.21 million in the prior year period.  Analysts, on average, expected the company to report earnings of 15 cents per share on revenue of $145.40 million. Gross margin improved sequentially to 44.2% from 32.9% in prior quarter.

For the fiscal year 2010, the solar equipment maker expects to report revenue in the range of $500 million to $550 million and earnings per share in the range of $0.52 to $0.60. GT Solar said in February that it is on track to achieve gross margin for the fiscal year of approximately 39%.

For fiscal 2011, the company expects revenue in the range of $400 million to $600 million and earnings per share in the range of $0.30 to $0.60.

Late in April, the company released a new high performance ingot growth furnace for the solar industry providing 15% increased throughput, energy efficiency and higher quality.

The solar industry has undergone significant changes in the past few years. The industry suffered heavily during recession as turmoil in the credit market forced financial players to abandon U.S. solar energy projects. The 2008 collapse of top solar financier Lehman Brothers and the freeze-up in the global credit markets drove nearly all banks to halt funding for major new solar projects, forcing the makers of systems that turn sunlight into electricity to cut prices for their products and sending their stocks crashing. The problems of solar companies had been further compounded by an oversupply of polysilicon, a material used in solar panels. Moreover heightened competition from Chinese solar companies too has impacted the US solar industry.

Globally, solar industry depends upon government subsidies and incentives and support to remain competitive. However, recent developments suggest that subsidies will inevitably be reduced or phased out. Evergreen Solar sells bulk of its panels in key European markets like Germany and Spain, where generous federal subsidies ensured high electricity rates for solar energy system. In Germany, Solar subsidies for rooftop-installed solar power will see a one-off cut of 16 percent from July, while most open-field installations will be cut by 15 percent.Support for farmland solar systems is to be scrapped completely, according to media reports.

However, the industry as a whole is likely to benefit from growing attention to global warming, skyrocketing oil prices, cheap financing and technological advances. At the Copenhagen Summit held in December 2009, the five major polluters of the world agreed to take action to reduce CO2 aggressively, with $100B per year pledged to help developing nations adopt green energy technology to cut greenhouse gas. Meanwhile, the US, China, Brazil and India continue to invest heavily in wind and solar energy with China's $454B in the next 5 year period as the most aggressive one. As part of the stimulus bill signed last year, the federal government approved around $60 billion in loan guarantee authority and $30 billion in energy grants for renewable energy and transmission companies. Congress has also granted a 30% renewable-investment tax credit to help expand the development of alternative sources of energy. As of February this year, the industry had gotten Treasury grants worth $81 million. That grant program is scheduled to end Dec. 31. The industry is still hoping that Congress will approve further policies to aid solar.

In terms of stock performance, GT Solar shares have gained 1% over the past year.

Disclosure: Author doesn’t own any of the stocks discussed here.
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