GT Advanced Technologies expects major revenue recovery with new products in 2014



Although its major sapphire materials business win with iconic consumer electronics firm, Apple continues to generate headlines, GT Advanced Technologies (GTAT) has suggested new order wins for new products for the polysilicon and PV segment in the second-half of the year could be even greater.

In discussing fourth quarter and full-year results management had to remind investors that GTAT was not just a sapphire materials business but had a rapidly expanding and varied industry footprint that spanned LED manufacturing to power electronics.

Importantly, the company strongly reiterated its presence in the PV industry, which will help fuel a return to revenue growth in 2015 that is expected to exceed US$1 billion and support an order backlog in excess of that figure.

GTAT’s president and CEO, Tom Gutierrez described in detail in the earnings call why the company was expecting a major recovering in sales to the PV sector, citing the expected global end-market demand of 49GW in 2014, recently projected by NPD Solarbuzz as a precursor. 

“Reflecting these projections and the positive financial performance of some of the key players, the PV sector is showing signs of improvement and we continue to have success in converting our inventory of DSS furnaces to cash,” noted Gutierrez in the earnings call. “Customers are now indicating an interest in larger size multicrystalline ingots. Accordingly, we are targeting the release of next generation DSS technology in 2015.”

GTAT has previously announced that it was exiting the DSS furnace business for ingot production due to the chronic wafer production overcapacity and cited that a recovery in sales of DSS furnaces was a long-way out.

However, the company had noted in previous earnings calls that it was still selling DSS furnaces from its inventory base when possible. The DSS segment had been a key revenue generator for GTAT before and after its IPO and had been the technology and market leader, globally.

“Customers are now indicating an interest in larger size multicrystalline ingots,” added Gutierrez. “Accordingly, we are targeting the release of [our] next generation DSS technology in 2015.

The other key historical product and revenue base for the company has been Siemens-based polysilicon production equipment and turnkey plant capabilities. However, overcapacity in the polysilicon segment has also seen order intake slow and its backlog whittled down over the last two years.

However, Gutierrez also said that the polysilicon landscape was also changing, which would mean a significant recovery in orders, backlog and revenue for the company.

“Driven by changes in the tariff structures, closures of uneconomical supply, and end market growth, polysilicon prices have started to improve and the need for new low cost capacity is becoming more apparent. In fact, one of our key customers in Asia recently announced that they are restarting their capacity expansion plans in order to meet the expected demand. In addition, our opportunities in the Middle East continue to solidify and we remain well positioned on several projects of substantial size,” commented the CEO.

The customer in Asia, Gutierrez referenced was Korean-based OCI, which had placed orders with GTAT for CVD reactors and other equipment for an expansion phase that was put on hold when polysilicon overcapacity was at it its peak and ASPs fell below production costs for the majority of polysilicon producers.

In reference to the Middle East, GTAT was one of a group of preferred bidders for a major new polysilicon plant in Saudi Arabia, which would be built in phases over several years. The successful bid for that plant was originally expected to have been announced at the end of 2013, which suggests a decision is imminent.

Recently, SunEdison announced it was undertaking a feasibility study with Saudi partners to build a major PV manufacturing complex that would include polysilicon production through to PV module assembly.

Though it is unclear at this time whether the two polysilicon plants are connected or not, GTAT could benefit from both regardless.

However, Gutierrez didn’t end there, as he went on to explain that the company was preparing to launch a new PV product in a sector it has yet been active in.

“While solar is not expected to contribute meaningfully to revenues over the next year, it remains an important part of our portfolio. However, we continue to believe that for the solar industry to fully reach its potential, cost must come down dramatically. To this end, we have a deployed a new technology that we expect will significantly impact the economics of producing solar cells and modules. This technology was developed and comes out of a research operation we established in the Bay Area over a year ago to focus on advancing the state of the art and the design and assembly of solar cells and modules,” added Gutierrez.

Despite follow-up questions from financial analysts on the call, Gutierrez highlighted that the company would be holding a special new product event on March 14 to launch new products for the PV sector.

PV Tech has it on good authority that the major new product announcement on March 14 in not related to its Twin Creeks acquired Hyperion wafer technology, nor the HiCz low-cost monocrystalline polysilicon technology, previously touted to enter the market in 2014.  

Financial results

GTAT also reported fourth quarter results that included total revenue of US$33 million, which included approximately US$14 million from polysilion and PV product segments. Total revenues for the year were approximately US$299 million, which included US$220 million from its polysilicon segment and US$31 million from its PV business, primarily DSS furnace sales.

The company reported an order backlog of US$602 million at the end of 2013, which included US$299 million of polysilicon and US$11 million of PV related orders.

The company said that it expected to return to profitability in the second-half of 2014 as revenue recognition on a guided US$600 million to US$800 million for the year would be back-end loaded to the tune of around 85% of revenue.

“We expect that 2014 will be a transformational year for GT, a year in which we build a sapphire materials business while continuing to invest in the new technologies that will drive our equipment revenues in 2015 and beyond,” concluded Gutierrez.

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