Monday July 21, 6:06 pm ET
Kevin Harlin
Investor’s Business Daily
GT Solar International Inc.
Merrimack, N.H.
(603) 883-5200
GTSolar.com
Lead underwriters:
Credit Suisse and UBS Investment Bank
Offering price: $15.50-$17.50
Expected date: week of July 21
Ticker: SOLR
THE BUZZ
It’s a tough time for a company wanting to float some shares. But GT Solar International might just find the sweet spot.
The company makes capital equipment bought by some of the world’s top solar manufacturers. Solar has cooled some in the past few months. But sky-high energy prices and continued political pushes around the globe for alternative energies is keeping capital spending flowing.
GT Solar supplies industry players such as BP Solar International, LDK Solar (LDK), Yingli Green Energy (YGE), and Trina Solar (TSL).
There are some competitors out there, though Scott Sweet, principal researcher at IPO Boutique, says this will be the first pure-play solar capital equipment maker to go public. Still, as a green-focused company, there’s some precedent for success. Though there’s been an IPO drought this year, firms with a patina of green have found more traction with investors.
Sweet says he’s hearing significant interest from both institutional and retail investors.
THE COMPANY
The company formed as GT Equipment Technologies in 1994. In 2006, investment firms GFI Energy Ventures and Oaktree Capital Management bought the company. They renamed it GT Solar.
GT makes specialized reactors used to produce polysilicon, the main material used in making solar cells. It also makes special furnaces and other equipment that solar companies use to make photovoltaic wafers, cells and modules.
GT farms the bulk of its manufacturing out, focusing on the key proprietary components and final assembly.
It also sells turnkey solutions, where it bundles its photovoltaic making equipment with other vendors’ pieces to complete a full manufacturing line.
“We’ve been an enabler of some of the fastest growing companies in the business,” Thomas Zarrella, president and chief executive, said during the investor’s roadshow.
The company already has deep relationships with the world’s top solar wafer and panel makers. Most of the major solar players do their manufacturing in China. So GT Solar has had operations there since 2002. It’s expanding its sales and service operations there now.
RISKS/CHALLENGES
The solar industry is growing quickly, thanks to high oil and natural gas prices. But if those traditional energy sources fall in price, much of the industry’s support would fall with it.
GT Solar relies heavily on just a few large customers. In the fiscal year that ended on March 31, 2007, three customers accounted for 70% of revenue. By the following year, one customer — LDK Solar — made up 62% of revenue. Three customers also make up most of its $1.3 billion backlog as of March 31. Sweet doesn’t like to see such a concentration of business, though he thinks the company could make similar deals with other solar companies if there’s ever trouble with LDK or other major customers.
Another problem could be with ownership. Venture funds GFI Energy Ventures and Oaktree Capital Management would still control 75% of the shares after the IPO. In fact, proceeds from the IPO are going to those two funds.
And then there are risks of doing business in China. Since so many solar wafer and panel makers are there, GT Solar can’t afford not to be. But the country has complex tax laws, ownership rules and regulatory hurdles.
THE RESULTS
GT Solar had sales of $60.1 million in fiscal 2007, up 29% from the previous year. In fiscal 2008, revenue shot up 306%, to $244.1 million. The company recorded a 13-cents-per-share loss in 2007. But it posted a 25-cents-per-share profit in the most recent fiscal year.
USE OF PROCEEDS
GT Solar won’t profit from the sale of the 30.3 million shares. GFI and Oaktree will get the proceeds.
THE MANAGEMENT
Thomas M. Zarrella
President, chief executive and director
Joined GT Solar in 2004. From 1998 through 2004, he oversaw manufacturing at RWE Schott Solar of Billerica, Mass., a GT Solar customer. Before that, he served in various management and engineering positions at the North American operations of Instron Corp., Revere Corp., Sprague Meter and Sikorsky Aircraft. He holds a B.S. in Mechanical Engineering from the University of Connecticut and an MBA from the University of Bridgeport.
Robert W. Woodbury, Jr.
Chief financial officer
Appointed CFO in January. From 2003 until the end of ‘06, Woodbury was executive vice president and CFO of Brooks Automation (NasdaqGS:BRKS – News), a semiconductor industry supplier. From 1996 through ‘02, he served as vice president of communications equipment company Acterna. Woodbury holds a B.A. in economics from St. Anselm College and an MBA from the University of Miami.
Edwin L. Lewis
Vice president and General Counsel
Joined GT Solar in November. From 2003 until ‘07, Lewis was senior vice president and general counsel of Photronics (NasdaqGS:PLAB – News), a semiconductor and flat panel display industries supplier. Before that, he was vice president and general counsel for X-ray screening machine maker American Science and Engineering (NasdaqGS:ASEI – News). He has a B.A. in international affairs from Lafayette College and a J.D. from the Temple University.
Capital Goods Maker For Solar Energy Steps Into Sunlight
Monday July 21, 6:06 pm ET
Kevin Harlin
Investor’s Business Daily
GT Solar International Inc.
Merrimack, N.H.
(603) 883-5200
GTSolar.com
Lead underwriters:
Credit Suisse and UBS Investment Bank
Offering price: $15.50-$17.50
Expected date: week of July 21
Ticker: SOLR
THE BUZZ
It’s a tough time for a company wanting to float some shares. But GT Solar International might just find the sweet spot.
The company makes capital equipment bought by some of the world’s top solar manufacturers. Solar has cooled some in the past few months. But sky-high energy prices and continued political pushes around the globe for alternative energies is keeping capital spending flowing.
GT Solar supplies industry players such as BP Solar International, LDK Solar (LDK), Yingli Green Energy (YGE), and Trina Solar (TSL).
There are some competitors out there, though Scott Sweet, principal researcher at IPO Boutique, says this will be the first pure-play solar capital equipment maker to go public. Still, as a green-focused company, there’s some precedent for success. Though there’s been an IPO drought this year, firms with a patina of green have found more traction with investors.
Sweet says he’s hearing significant interest from both institutional and retail investors.
THE COMPANY
The company formed as GT Equipment Technologies in 1994. In 2006, investment firms GFI Energy Ventures and Oaktree Capital Management bought the company. They renamed it GT Solar.
GT makes specialized reactors used to produce polysilicon, the main material used in making solar cells. It also makes special furnaces and other equipment that solar companies use to make photovoltaic wafers, cells and modules.
GT farms the bulk of its manufacturing out, focusing on the key proprietary components and final assembly.
It also sells turnkey solutions, where it bundles its photovoltaic making equipment with other vendors’ pieces to complete a full manufacturing line.
“We’ve been an enabler of some of the fastest growing companies in the business,” Thomas Zarrella, president and chief executive, said during the investor’s roadshow.
The company already has deep relationships with the world’s top solar wafer and panel makers. Most of the major solar players do their manufacturing in China. So GT Solar has had operations there since 2002. It’s expanding its sales and service operations there now.
RISKS/CHALLENGES
The solar industry is growing quickly, thanks to high oil and natural gas prices. But if those traditional energy sources fall in price, much of the industry’s support would fall with it.
GT Solar relies heavily on just a few large customers. In the fiscal year that ended on March 31, 2007, three customers accounted for 70% of revenue. By the following year, one customer — LDK Solar — made up 62% of revenue. Three customers also make up most of its $1.3 billion backlog as of March 31. Sweet doesn’t like to see such a concentration of business, though he thinks the company could make similar deals with other solar companies if there’s ever trouble with LDK or other major customers.
Another problem could be with ownership. Venture funds GFI Energy Ventures and Oaktree Capital Management would still control 75% of the shares after the IPO. In fact, proceeds from the IPO are going to those two funds.
And then there are risks of doing business in China. Since so many solar wafer and panel makers are there, GT Solar can’t afford not to be. But the country has complex tax laws, ownership rules and regulatory hurdles.
THE RESULTS
GT Solar had sales of $60.1 million in fiscal 2007, up 29% from the previous year. In fiscal 2008, revenue shot up 306%, to $244.1 million. The company recorded a 13-cents-per-share loss in 2007. But it posted a 25-cents-per-share profit in the most recent fiscal year.
USE OF PROCEEDS
GT Solar won’t profit from the sale of the 30.3 million shares. GFI and Oaktree will get the proceeds.
THE MANAGEMENT
Thomas M. Zarrella
President, chief executive and director
Joined GT Solar in 2004. From 1998 through 2004, he oversaw manufacturing at RWE Schott Solar of Billerica, Mass., a GT Solar customer. Before that, he served in various management and engineering positions at the North American operations of Instron Corp., Revere Corp., Sprague Meter and Sikorsky Aircraft. He holds a B.S. in Mechanical Engineering from the University of Connecticut and an MBA from the University of Bridgeport.
Robert W. Woodbury, Jr.
Chief financial officer
Appointed CFO in January. From 2003 until the end of ‘06, Woodbury was executive vice president and CFO of Brooks Automation (NasdaqGS:BRKS – News), a semiconductor industry supplier. From 1996 through ‘02, he served as vice president of communications equipment company Acterna. Woodbury holds a B.A. in economics from St. Anselm College and an MBA from the University of Miami.
Edwin L. Lewis
Vice president and General Counsel
Joined GT Solar in November. From 2003 until ‘07, Lewis was senior vice president and general counsel of Photronics (NasdaqGS:PLAB – News), a semiconductor and flat panel display industries supplier. Before that, he was vice president and general counsel for X-ray screening machine maker American Science and Engineering (NasdaqGS:ASEI – News). He has a B.A. in international affairs from Lafayette College and a J.D. from the Temple University.