GT Advanced Technologies Tops Expectations in Q2, Reiterates 2013 Guidance

Andrew Klips |

Solar and LED equipment maker GT Advanced Technologies Inc. (GTAT) , one of the most heavily shorted stocks on the Nasdaq, posted second-quarter earnings after Monday’s closing bell that surpassed analyst expectations, pushing the stock to its highest level since last September.  Heading into the report, the short interest on GTAT accounted for more than 40 percent of the total number of shares outstanding, potential putting the stock in a prime position for a massive short squeeze.

For the quarter ended June 29, the Merrimack, New Hampshire-based company reported revenue of $168.3 million, up modestly from $167.3 million in the year prior quarter and a vast improvement from the $57.8 million posted in the first quarter of 2013.  GAAP net income was $11.95 million, or 10 cents per share, compared to a $14.76 million, or 12 cents per share in the year prior quarter.  On an adjusted basis, which excludes non-recurring items, net profit was $18.09 million, or 15 cents per share, versus $19.34 million, or 16 cents per share, in last year’s quarter.

Wall Street was expecting adjusted earnings of 9 cents per share on sales of $169.01 million.

The $168.3 million in second-quarter sales was comprised of $150.7 million in polysilicon, $11.4 million in photovoltaic (PV), and $6.2 million in sapphire.  Backlog at the end of the quarter was $702 million, including $340 million in the polysilicon segment, $3 million in the PV segment and $359 million in the sapphire segment.  Included in the total backlog was about $68 million of deferred revenue.

Gross profit was $58.62 million, or 34.8 percent of revenue, beating the company’s prior guidance and a vast improvement of only $13.6 million in the first quarter (23.6% of revenue), although lower than the $60.2 million, or 36.0 percent of revenue for the second quarter of 2012.

Operating expenses rose to $37.49 million in the lastest quarter from $35.6 million in last year's quarter as the company spend more on research and development.

"We were pleased with our performance in the second quarter. Against the backdrop of continuing challenges in our served markets, we delivered on-target revenue and outperformed with earnings, gross margin and cash," said Tom Gutierrez, president and chief executive at GT Advanced Technologies.

Looking ahead, the company backed its wide guidance for the full year.  Revenue is expected between $500 million and $600 million.  Adjusted profits are guided in the range of 25 cents to 45 cents per share.

While still sporting a long list of short sellers that were expecting a weak earnings report, the percentage of short interest has dropped from June, likely in part because of China’s recently announced commitments to essentially quadruple its solar engineering capacity by 2015.

Shares of GTAT closed on Monday at $5.18, up about 2 percent during the regular session.  With the better-than-expected earnings, shares have climbed to $5.55 in extended trading to put the stock ahead 9 percent.  Shares are up about 85 percent so far in 2013.

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