GT Solar Finds Redemption (SOLR)

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GT Solar International, Inc. (NASDAQ: SOLR) posted strong earnings and mixed guidance, but shares are recovering handily after the report since its stock has been beaten down so much since coming public this summer.  Net income was $27.9 million, or $0.19 EPS; Revenues were $140 million, which was up 71% year-over-year.  Thomson Reuters (First Call) had estimates of $0.14 EPS and $127.33 million in revenues.

The company’ is changing the low end of its revenue guidance range in light of macroeconomic uncertainty.

  • For the third quarter of fiscal 2009 ending December 27, guidanceis $0.23 to $0.25 EPS and revenues of $190 million to$200 million.  Estimates are $0.27 EPS and $227.9 million in revenues.
  • For the fiscal year ending March 28, 2009 guidance is $0.70to $0.75 EPS on revenues of $575 to $650 million. Previously, it expectedrevenues of $600 million to $650 million. 

The company said that its gross margins were 43.8%, with anoperating margin of 31%.  GT Solar seesoperating margins for the fiscal year 27% to 30% versus prior guidanceof 25% to 28%.  The change is due to stronger gross andoperating margins and controls on spending.

The solar supplier also said that its new bookings were $292 millionand its backlog grew to $1.4 billion with new customers and installedbase expansions.  Its backlog one quarter back was $1.26 billion.   Itfurther said that much of the backlog is supported by cash deposits andletters of credit.  Operating cash flow,balance sheet, and cash position are all strong give the company amplesources to fund operations and growth initiatives.

The market cap for the manufacturing equipment and turnkeymanufacturing solutions for the photovoltaic industry is now only $637million before the after-hours change.  Shares closed down 14% at $4.48in regular trading, and this stock is up over 10% at $4.48 inafter-hours trading (on 32,000 shares) based upon the coming quarterestimates and valuations.  If the company just hits its the low-end ofits target for the year ended in march-2009, then even at thenear-$5.00 mark from after-hours trading it has a 7.14 forward P/Eratio. 

There had been many concerns on this name since its IPO, and it couldnot have picked a worse to come public with woes in the stock market onspeculative and recent IPO and with woes in the alternative energymarkets and lower fuel prices.

Jon C. Ogg
November 6, 2008