GT Advanced Technologies Inc. Announces Results for Quarter and Year Ending December 31, 2012 Business Wire NASHUA, N.H. -- February 27, 2013 GT Advanced Technologies Inc. (NASDAQ: GTAT) today reported results for the fourth quarter and calendar year 2012, which ended December 31, 2012. “Our Q4 results came in largely as expected as we continue to face challenging conditions in the solar and LED markets,” said Tom Gutierrez, president and chief executive officer. “We have taken steps to resize the business and manage our balance sheet and believe 2013 will be a year during which we continue to strengthen our foundation and further diversify the business. “We are positioned to continue making R&D investments in new technologies to enhance our product offerings and market position. Coupled with our leadership in currently served markets, we believe our participation in growth areas such as cover and touch screen sapphire applications, power electronics and next generation solar will provide a path to resumed growth and cash generation in the years ahead.” Summary of Fourth Quarter Actions and Related Charges In the fourth quarter of calendar 2012, the company took actions to better align the business with current and expected market conditions, as described in its December 18, 2012 conference call with the investment community. As a result the company recorded several one-time charges, which are described below and excluded from non-GAAP results. The one-time charges included a cash-charge of $3.1 million for restructuring related to the workforce reduction announced in October and the idling of the company’s St. Louis pilot manufacturing facility as well as the following non-cash charges: $30.3 million of asset impairment charges related to the workforce reduction and idling of the St. Louis facility; $71.8 million for the write down of inventory and related charges, primarily related to DSS inventory as a result of prevailing poor PV market conditions; $57.0 million of charges related to the impairment of goodwill related to the PV business and $2.5 million of charges primarily related to certain sapphire materials assets acquired with the acquisition of the business which are now obsolete. For a complete reconciliation of non-GAAP measures to measures presented in accordance with generally accepted accounting principles in the United States (“GAAP”), please see tables below. As previously indicated, the company’s non-GAAP EPS guidance range issued on December 18, 2012 excluded the impact of goodwill impairment charges related to the PV business, restructuring and asset impairment charges related to the idling of the St. Louis facility and the related tax effect of these adjustments, which represented an additional $0.08 non-GAAP EPS loss. The adjusted non-GAAP EPS guidance range to account for these charges is a $0.13 loss to a $0.18 loss and the company’s Q4 non-GAAP earnings per share performance of a $0.15 loss is within this adjusted guidance range. Q4 and CY12 Results Highlights Revenue for the fourth quarter of calendar 2012 came in at $102.3 million including $89.3 million in polysilicon, $6.5 million in photovoltaic (PV), and $6.5 million in sapphire. This compares to revenue in the third quarter of calendar 2012 of $110.1 million and $153.0 million in the fourth quarter of calendar 2011. For calendar 2012, revenue was $733.5 million including $460.6 million in polysilicon, $48.9 million in PV, and $224.0 million in sapphire. This compares to $873.4 million of revenue for calendar 2011. Non-GAAP gross profit for the fourth quarter of calendar 2012 was $33.1 million, or 32.4 percent of revenue, compared to $35.0 million, or 31.8 percent of revenue in the third quarter of calendar 2012 and $66.0 million, or 43.1 percent of revenue for the fourth quarter of calendar 2011. For calendar 2012, non-GAAP gross profit was $280.7 million, or 38.3 percent of revenue, compared to $391.3 million, or 44.8 percent of revenue in calendar 2011. Gross profit for the fourth quarter of calendar 2012 was a loss of $41.2 million, or a loss of 40.2 percent of revenue, compared to $35.0 million, or 31.8 percent of revenue in the third quarter of calendar 2012 and $66.0 million, or 43.1 percent of revenue for the fourth quarter of calendar 2011. For calendar 2012, gross profit was $206.4 million, or 28.1 percent of revenue, compared to $391.3 million, or 44.8 percent of revenue in calendar 2011. Non-GAAP net income was a loss of $18.1 million in the fourth quarter of calendar 2012, compared to $0.7 million in the third quarter of calendar 2012 and $23.8 million for the fourth quarter of calendar 2011. For calendar 2012, non-GAAP net income was $87.9 million, compared to $181.7 million in calendar 2011. Net income in the fourth quarter of calendar 2012 was a loss of $159.4 million, compared to $2.3 million in the third quarter of calendar 2012 and $15.3 million for fourth quarter of calendar 2011. For calendar 2012, net income was a loss of $63.2 million, compared to $156.2 million in calendar 2011. Non-GAAP earnings per share on a fully-diluted basis, including the additional $0.08 non-GAAP EPS loss described above, was a $0.15 loss in the fourth quarter of calendar 2012 and $0.73 for calendar 2012. This compares to non-GAAP EPS of $0.01 in the third quarter of calendar 2012, $0.19 in the fourth quarter of calendar 2011 and $1.41 in calendar 2011. Earnings per share on a fully-diluted basis was a $1.34 loss in the fourth quarter of calendar 2012, compared to $0.02 for the third quarter of calendar 2012 and $0.12 for the fourth quarter of calendar 2011. For calendar 2012, earnings per share on a fully-diluted basis was a $0.53 loss, compared to $1.21 for calendar 2011. Cash, Backlog, Orders At the end of the fourth quarter of calendar 2012, the balance sheet had cash and cash equivalents totaling $418.1 million and total debt of $297.0 million. This compares to $479.2 million of cash and cash equivalents at the end of the third quarter of calendar 2012 which included $298.1 million of total debt and $206.9 million of cash and cash equivalents at the end of the fourth quarter of calendar 2011 which included zero debt. As of December 31, 2012, the company’s backlog was $1.25 billion. This included $528.9 million in the polysilicon segment, $3.3 million in the PV segment and $716.5 million in the sapphire segment. Included in the total backlog was approximately $121.9 million of deferred revenue. New orders for the fourth quarter of calendar 2012 were $6.5 million. The company had $132.2 million of negative adjustments to backlog primarily related to the company’s decision to debook the vast majority of its DSS backlog as the company had previously indicated it expected to do. Amendment to Credit Facility On February 27, 2013 the company entered into an amendment to its Credit Facility with Bank of America. The Amendment provides, among other things, that certain financial covenants be waived for the six quarter period beginning with the quarter ending March 31, 2013 and ending with the quarter ending June 30, 2014. Through this action the company avoids the possibility of a breach to these covenants and bolsters its ability to continue to execute on its growth programs.In connection with this amendment, the company will also pay down $40 million of the term loan, has reduced its total revolver availability by $50 million (and restricted the use of the revolving credit facility to letters of credit) and the company agreed to additional covenants relating to minimum liquidity and EBITDA levels. Business Outlook The company is reiterating the following guidance for FY 2013, which ends December 31, 2013: revenue in the range of $500 to $600 million, non-GAAP gross margin in the range of 35% to 37% and non-GAAP EPS in the range of $0.25 to $0.45. Non-GAAP EPS and non-GAAP gross margin guidance excludes potential purchase order cancellation fees. Non-GAAP EPS guidance also excludes approximately $2 to $4 million in lease exit costs for the St. Louis facility, restructuring charges and any gain/loss associated with the disposition of this facility. The company will provide additional guidance details on its webcasted conference call. See below for details. Conference Call, Webcast Tomorrow morning, Thursday, February 28, 2013, at 8:00am ET the company will host a live conference call with Tom Gutierrez, president and chief executive officer, and Richard Gaynor, chief financial officer, to discuss its fourth quarter and CY2012 results and CY2013 outlook. The call will be webcast live and can be accessed by logging on to the "Investors" section of GT Advanced Technologies’ website, http://investor.gtat.com/. A slide presentation will accompany the call. The live call can also be accessed by dialing 631-291-4543. No password is required to access the webcast or call. A replay of the call will be available. To access the replay, please go to http://investor.gtat.com/ and select the webcast replay link on the ‘Events and Presentations’ page. Or, please dial 404- 537-3406. The telephone replay will be available through March 14, 2013 and requires the passcode 96009462. Investor Financial Summary Document A comprehensive summary of the company’s financial performance can be found on the Investor Relations section of its website on the “Q4 CY12 Earnings Call” webcast page. To access: http://investor.gtat.com. About GT Advanced Technologies Inc. GT Advanced Technologies Inc. is a diversified technology company with innovative crystal growth equipment and solutions for the global solar, LED and electronics industries. Our products accelerate the adoption of new advanced materials that improve performance and lower the cost of manufacturing. For additional information about GT Advanced Technologies, please visit www.gtat.com. GT Advanced Technologies Inc. Condensed Consolidated Balance Sheets (in thousands, except per share data) (Unaudited) December 31, December 31, 2012 2011 Assets Current assets: Cash and cash equivalents $ 418,095 $ 206,878 Restricted cash - 96,202 Accounts receivable, net 23,829 51,468 Inventories 133,286 198,624 Deferred costs 30,248 221,919 Vendor advances 32,440 55,226 Deferred income taxes 28,309 31,698 Refundable income taxes 1,516 1,516 Prepaid expenses and other current assets 9,168 16,681 Total current assets 676,891 880,212 Property, plant and equipment, net 77,980 81,904 Other assets 86,920 32,740 Intangible assets, net 90,516 88,903 Deferred cost 24,423 7,801 Goodwill 46,052 102,152 Total assets $ 1,002,782 $ 1,193,712 Liabilities and stockholders’ equity Current liabilities: Current portion of long-term debt $ 7,250 $ - Accounts payable 44,848 69,854 Accrued expenses 30,928 35,679 Contingent consideration 4,901 17,511 Customer deposits 111,777 307,879 Deferred revenue 86,098 408,032 Accrued income taxes 21,716 6,897 Total current liabilities 307,518 845,852 Long-term debt 132,313 - Convertible notes 157,440 - Deferred income taxes 22,573 52,008 Customer deposits 71,340 - Deferred revenue 35,848 23,021 Contingent consideration 5,414 6,202 Other non-current liabilities 2,323 687 Accrued income taxes 25,762 19,491 Total liabilities 760,531 947,261 Commitments and contingencies Stockholders’ equity: Preferred stock, 10,000 shares authorized, - - none issued and outstanding Common stock, $0.01 par value; 500,000 shares authorized, 119,293 and 119,704 shares issued and outstanding as of 1,193 1,197 December 31, 2012 and December 31, 2011, respectively Additional paid-in capital 183,565 113,627 Accumulated other comprehensive loss 806 (1,514 ) Retained earnings 56,687 133,141 Total stockholders' equity 242,251 246,451 Total liabilities and stockholders' equity $ 1,002,782 $ 1,193,712 GT Advanced Technologies Inc. Condensed Consolidated Statements of Operations (In thousands, except per share data) (Unaudited) Three Months Ended Twelve Months Ended December September December December December 31, 29, 31, 31, 31, 2012 2012 2011 2012 2011 Revenue $102,333 $110,061 $153,028 $733,536 $873,442 Cost of revenue 143,491 75,033 87,030 527,132 482,106 Gross profit (41,158 ) 35,028 65,998 206,404 391,336 Operating expenses: Research and 22,695 18,767 13,344 70,649 42,601 development Selling and 5,458 3,123 3,789 15,115 23,330 marketing General and 13,801 15,428 13,837 59,532 66,588 administrative Contingent consideration 296 (9,943 ) 464 (8,965 ) 5,193 (income) expense Impairment of 57,037 - - 57,037 - goodwill Restructuring charges and 33,441 - - 33,441 - asset impairments Amortization of intangible 2,534 2,538 2,822 10,165 6,630 assets Total operating 135,262 29,913 34,256 236,974 144,342 expenses Income from (176,420 ) 5,115 31,742 (30,570 ) 246,994 operations Other income (expense): Interest 131 27 224 181 564 income Interest (5,957 ) (1,620 ) (6,827 ) (9,355 ) (14,128 ) expense Other, net (34 ) (431 ) 2,036 (1,002 ) 1,818 Income before (182,280 ) 3,091 27,175 (40,746 ) 235,248 income taxes Provision for (22,871 ) 747 11,835 22,489 79,030 income taxes Net income ($159,409 ) $2,344 $15,340 ($63,235 ) $156,218 Net income per share: Basic ($1.34 ) $0.02 $0.12 ($0.53 ) $1.25 Diluted ($1.34 ) $0.02 $0.12 ($0.53 ) $1.21 Weighted-average number of shares used in per share calculations: Basic 119,109 118,769 123,628 118,931 125,402 Diluted 119,109 119,874 124,946 118,931 128,680 Reconciliation of Non-GAAP Financial Measures In accordance with the requirements of Regulation G issued by the Securities and Exchange Commission, we are presenting the most directly comparable GAAP financial measures and reconciling the non-GAAP financial metrics to the comparable GAAP measures. GT Advanced Technologies Inc. Reconciliation of GAAP to non-GAAP results (In thousands, except per share data) (Unaudited) Three Months Ended Twelve Months Ended December September December December December 31, 29, 31, 31, 31, 2012 2012 2011 2012 2011 Non-GAAP Gross Profit and Gross Margin Revenue $102,333 $110,061 $153,028 $733,536 $873,442 Cost of 143,491 75,033 87,030 527,132 482,106 revenue Gross profit (41,158 ) 35,028 65,998 206,404 391,336 Non-GAAP adjustments: Write-down of inventory 71,754 - - 71,754 - and vendor advances Accelerated depreciation for early 2,520 - - 2,520 - retirement of fixed assets Non-GAAP gross $33,116 $35,028 $65,998 $280,678 $391,336 profit Non-GAAP gross 32.4 % 31.8 % 43.1 % 38.3 % 44.8 % margin GT Advanced Technologies Inc. Reconciliation of GAAP to non-GAAP results (In thousands, except per share data) (Unaudited) Three Months Ended Twelve Months Ended December September December December December 31, 29, 31, 31, 31, 2012 2012 2011 2012 2011 Non-GAAP Net Income & Earnings per Share Net income ($159,409 ) $2,344 $15,340 ($63,235 ) $156,218 Non-GAAP adjustments: Amortization of acquired 2,534 2,538 2,822 10,165 6,630 intangible assets Share-based compensation 2,084 4,818 3,660 15,176 13,118 expense Third party acquisition 945 136 240 1,550 3,574 related expenses Write-down of inventory and 71,754 - - 71,754 - vendor advances Accelerated depreciation for early 2,520 - - 2,520 - retirement of fixed assets Impairment of 57,037 - - 57,037 - goodwill Restructuring charges and 33,441 - - 33,441 - asset impairments Contingent consideration 296 (9,943 ) 464 (8,965 ) 5,193 (income) expense Non-cash portion of 3,042 342 6,360 3,799 9,942 interest expense Income tax effect of non-GAAP (32,354 ) 457 (5,127 ) (35,349 ) (12,989 ) adjustments (1) Non-GAAP net ($18,110 ) $692 $23,759 $87,893 $181,686 income Non-GAAP earnings per diluted share ($0.15 ) $0.01 $0.19 $0.73 $1.41 ("Non-GAAP EPS") Diluted weighted 119,109 119,874 124,946 120,067 128,680 average shares outstanding (1) The Company utilized the with and without method to determine the income tax effect on non-GAAP adjustments. Use of Non-GAAP Financial Measures In addition to providing financial measurements based on generally accepted accounting principles in the United States of America (GAAP), GT Advanced Technologies is providing additional financial metrics that are not prepared in accordance with GAAP (non-GAAP). We believe that the inclusion of these non-GAAP financial measures helps investors to gain a meaningful understanding of our past performance and future prospects, consistent with how management measures and forecasts company performance, especially when comparing such results to previous periods or forecasts. Our management uses these non-GAAP measures, in addition to GAAP financial measures, as the basis for measuring our core operating performance and comparing our performance to prior periods and to the performance of our competitors. Management also uses these measures in its financial and operational decision-making. We define “non-GAAP gross profit” as GAAP gross profit excluding inventory and vendor advance write-downs and the accelerated depreciation for early retirement of fixed assets. We consider non-GAAP gross profit to be an important indicator of our operational strength and performance of our business because it eliminates the effects of events that are not part of the Company's core operations. We define "non-GAAP net income" as GAAP net income excluding share-based compensation expense, amortization of acquired intangible assets, acquisition and acquisition related expenses, contingent consideration, inventory and vendor advance write-downs, goodwill impairment, restructuring and asset impairment, and the non-cash portion of interest expense. We consider non-GAAP net income to be an important indicator of our operational strength and performance of our business because it eliminates the effects of events that are not part of the Company's core operations. We define "non-GAAP earnings per share on a fully-diluted basis" as our non-GAAP net income divided by our weighted average shares outstanding on a fully-diluted basis. Forward-Looking Statements Some of the information in this press release relate to future expectations, plans and prospects for our business and industry that constitute “forward-looking statements” for the purposes of the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, all statements under the caption “Business Outlook,” the company’s estimates for future periods (including for twelve month period ending December 31, 2013) with respect to revenue, non-GAAP gross margin, and non-GAAP fully diluted earnings per share; that the Company continues to face challenging conditions in the solar and LED markets; the belief that 2013 will be a year during which the Company continues to strengthen its foundation and further diversify the business; the Company expects to continue making R&D investments in new technologies to enhance its product offerings and market position; and the Company believes that its participation in growth areas such as cover and touch screen sapphire applications, power electronics and next generation solar will provide a path to resumed growth and cash generation in the years ahead. . These forward-looking statements are not a guarantee of performance and are subject to a number of uncertainties and other factors, many of which are outside the company’s control, which could cause actual events to differ materially from those expressed or implied by the statements. These factors may include the possibility that the company is unable to recognize revenue on contracts in its order backlog. Although the company’s backlog is based on signed purchase orders or other written contractual commitments in effect as of the end of our fiscal quarter ended December 31, 2012, we cannot guarantee that our bookings or order backlog will result in actual revenue in the originally anticipated period or at all, which could reduce our revenue, profitability and liquidity. Other factors that may cause actual events to differ materially from those expressed or implied by our forward-looking statements include the impact of continued decreased demand and/or excess capacity in the markets for the output of our solar and sapphire equipment, general economic conditions and the tightening credit market for having an adverse impact on demand for our products, the possibility that changes in government incentives may reduce demand for solar products, which would, in turn, reduce demand for our equipment, technological changes could render existing products or technologies obsolete, the company may be unable to protect its intellectual property rights, competition from other manufacturers may increase, exchange rate fluctuations and conditions in the credit markets and economy may reduce demand for the company’s products and various other risks as outlined in GT Advanced Technologies Inc.’s filings with the Securities and Exchange Commission, including the statements under the heading “Risk Factors” in the company’s quarterly report on Form 10-Q for the fiscal quarter ended September 29, 2012. Statements in this press release should be evaluated in light of these important factors. The statements in this press release represent GT Advanced Technologies Inc.’s expectations and beliefs as of the date of this press release. GT Advanced Technologies Inc. anticipates that subsequent events and developments may cause these expectations and beliefs to change. GT Advanced Technologies Inc. is under no obligation to, and expressly disclaims any such obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise. Contact: GT Advanced Technologies Inc. Media Jeff Nestel-Patt, 603-204-2883 firstname.lastname@example.org or Investors/Analysts Ryan Flaim, 603-681-3869 Ryan.email@example.com
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GT Advanced Technologies Inc. Announces Results for Quarter and Year Ending December 31, 2012
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