GT Solar International, Inc. (SOLR) reported earnings after the close Tuesday.  This was the company’s first earnings announcement since becoming a public company on July 24^th.  The numbers looked very attractive with the company realizing revenues of $57.1 million, good for a 171% increase over the same quarter last year.  Net income was $5.1 million compared to a loss of $5 million last year and this equates to earnings per share of $0.03.  Gross margins were also strong coming in at 42.6% versus margins of 34.7% last year. 

As is the case with most growth companies, the most important part of this release is the forward guidance given by management.  CEO Tom Zarrella stated that he expects the current quarter revenue to more than double sequentially coming in at $120-130 million.  Guidance for the full year (ending March 31, 2009) was also released with expected revenue of $600 to 650 million.  On the earnings side, the company is expecting 12 to 15 cents for the second quarter and full year earnings of $0.70 to 0.75.

In the case of GT Solar, future revenue expectations are relatively stable due to the company’s backlog of orders.  In fact, many equipment installations have already taken place and the company is waiting on a few ancillary items to be completed before actually recognizing the revenue for that particular contract.  So the revenue expectations for the next few quarters should remain relatively stable and investors should instead look to backlog information for a better view of the long-term growth of the company. 

The order backlog appears to be in great shape with roughly $1.5 billion in pending orders.  Apparently the ink was still dry on some of the contracts as management stated that they have received $70 million of new orders since the end of the first quarter.  Of particular note, more than half of these new orders were from new customers which should help to assuage fears that the company has a customer base that is too concentrated.  Management made a note of pointing out customer loyalty as well, with a specific mention of a $177 million order from DC Chemical which represents the customer’s third order.

Management had some interesting commentary on the industry as a whole.  As Zachstocks mentioned prior to the offering, GT Solar is essentially a supplier to many of the large players in the solar energy market.  This position gives them the vantage point of seeing many industry trends before they become fully disseminated to the broader market.  Zarrella noted that cost pressures are beginning to decline which allows solar energy to come closer to competing with traditional energy head to head.  This should spark even more investment in solar manufacturing capacity which would in turn benefit GT Solar’s growing backlog of orders.  

The company is nearing completion on their facility expansion which should allow for significant increases in production capabilities.  This will allow them to work through their backlog more quickly thus increasing the revenue trends.  Gross margin may be somewhat pressured as the product mix can cause swings, but the operating margin should see improvement as expanding top-line revenue is paired off against the company’s fixed costs.  In short, the growth prospects for GT Solar look very attractive.

The stock is off a bit immediately following the report as many IPO buyers were likely waiting for this first report for a chance to sell.  While the IPO was definitely a disappointment due to CSFB’s mis-handling of the syndicate pool, the fundamentals should drive the stock price higher over the coming months.

SOLR Notes

FD: Author has a long position in SOLR

Additional Reading:

TechTrader Daily dives into the announcement

ZachStocks – Pre IPO report