GT Advanced Posts Loss In Q3, Signs Deal With Apple; Stock Climbs

(RTTNews) - Shares of GT Advanced Technologies Inc. (GTAT) climbed around 15 percent in the extended trading on Monday after the company announced a multi-year supply agreement with Apple Inc. (AAPL) to provide sapphire material for a consideration of $578 million. Further, the company reported a loss in its third quarter as revenues plunged from last year mainly due to a shift in its strategy.

Under its deal with Apple, GT will own and operate ASF furnaces and related equipment to produce the material at an Apple facility in Arizona where GT expects to employ over 700 people. GT will reimburse Apple for the prepayment over five years, starting in 2015.

GT said it will be subject to certain exclusivity terms during the duration of the agreement. The company expects this arrangement to be cash positive and accretive to earnings starting in 2014, while gross margins from this new materials business would be substantially lower than GT's historical equipment margins.

Tom Gutierrez, GT's president and chief executive officer, said, "We are very excited about this agreement with Apple as it represents a significant milestone in GT's long term diversification strategy."

In its third quarter, the company recorded a net loss of $38.1 million or $0.31 per share, compared to a profit of $2.3 million or $0.02 per share in the same period last year.

Adjusted loss for the quarter was $19.4 million or $0.16 per share. On average, nine analysts polled by Thomson Reuters expected the company to report a loss of $0.01 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues declined to $40.3 million from $110.1 million last year. Analysts expected revenues of $92.50 million.

The company said its third-quarter results reflect its shift in strategy as it has dedicated the vast majority of its ASF capacity in the second half to expanding its own materials capacity to service the sapphire material agreement. The company said this shift in business model has effectively precluded it from shipping significant levels of ASF units to other customers during the second half.

Looking ahead, the company currently projects full-year loss in the range of $0.40 to $0.50 per share, with revenues ranging between $290 million and $320 million. Analysts currently expect the company to report full-year earnings of $0.32 per share on revenues of $525.80 million.

The outlook reflects the impact of its shift from ASF equipment sales to building ASF capacity for its own internal use as the company prepares to service the Apple agreement.

GT shares closed Monday's trading at $8.38, up $0.31 or 3.78 percent. In the after-hours trading, shares gained $1.27 or 15.16 percent, and traded at $9.65.