Monday, January 31, 2011

GT Solar International Inc. (NASDAQ: SOLR): Q3 Earnings Preview 2010

GT Solar International, Inc. (NASDAQ: SOLR) is scheduled to release its third-quarter earnings after the closing bell on Wednesday, February 2, 2011. Analysts, on average, expect the company to report earnings of 38 cents per share on revenue of $251.91 million. In the year ago period, the company reported earnings of 25 cents per share on revenue of $173.56 million.

The company has 3 business segments - Polysilicon business, Photovoltaic business and Sapphire business. China accounts for a major part of the company's revenue - making up 62%, followed by Europe's 17% share, Korea's 13%, other Asian countries make up 6% while the U.S. accounts for 2%. ( data according to fiscal 2010 Annual Report).

In the preceding fiscal second-quarter, the Merrimack, New Hampshire-based company's net income was$42.78 million or $0.28 per share compared to $9.43 million or $0.06 per share in the previous year. Revenue more than doubled to $229.29 million from $104.19 million a year ago. Analysts, on average, expected the company to report earnings of $0.24 per share on revenue of  $199.18 million. As of October 2, 2010, the company's backlog was $1.16 billion, with $544.6 million in the polysilicon segment, $601.1 million in the PV segment and $13.0 million in sapphire materials. Included in the total backlog was $296.8 million of deferred revenue.

In December,  the company boosted its full-year earnings and agreed to repurchase shares from private investors for about $203 million. The supplier of equipment to solar manufacturers agreed to buyback 26.5 million shares of its common stock held by GT Solar Holdings, which is controlled by the co.’s private equity investors, GFI Energy Group and Oaktree Capital Management. GT Solar lifted its earnings per share guidance for fiscal year 2011 to a range of $1.08 to $1.18, up from the range of $1.00 to $1.10.  Full year revenues are expected to range from $775 million to $850 million.

Also in December, the company said that it continues to talk with other potential customers in the Asia region and believes it is on track to meet its projected $100 million in revenue for its fiscal year 2012 from sapphire crystallization equipment sales.

The company has benefited from robust demand from photovoltaic customers and the buildup of potential orders in its newly acquired sapphire busines. GT Solar has won a flurry of orders in recent months, and the firm had said in December it expects the sapphire business to be one of its key drivers in 2011.

Last month, GT Solar received an order worth $47.3 million for its current generation SDR400 CVD reactors from OCI Company Ltd., a South Korean polysilicon producer. The order was included in GT Solar's backlog for its fiscal 2011 third quarter, which ended on January 1.

Earlier this month, the company was awarded a contract valued at $37.5 million by Korea-based PV manufacturer Nexolon Company, Ltd. for the new DSS650 multicrystalline ingot growth systems. The contract will be included in GT Solar's backlog for the fiscal 2011 fourth quarter, which ends on April 2.

On January 20, GT Solar received yet another order worth $33.3 million for sapphire crystallization furnaces from OCI Company Ltd. This order will also be included in the fiscal 2011 fourth quarter backlog.

The solar industry is expected to experience a year of slowing growth in 2011, and while equipment makers like GT Solar are viewed by many as defensive plays for a period of uncertainty, it's a positive that GT Solar is having initial success in the LED market, and with a major customer, demonstrating the cross-selling potential.

Full Disclosure: None.

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