Q1 2014 Conference Call Minutes
Wording may not be perfect
· Market dynamics for our sapphire and solar segments continue to trend in a positive direction $1.B 2015 and over $1.50 in 2016
· GT added 450+ employees in Q1 2014 bringing total headcount to 1,000 up from 541 employees as of 12/31/14
· Expect sapphire materials business to provide recurring revenues once the build-out in Arizona is complete
· Salem, MA facility is being converted to a dedicated sapphire materials business and is expected to be completed by Q2
· Merrimack – sapphire production capacity, pilot production capacity for LED space
· Poly prices exceeded $20 kg for the first time since 2012 and is expected to hit $24 by the end of 2014
· GT expects Poly Silicon shortage beginning in 2015
· GT sees the need for significant cost reductions and improvements need to be achieved in solar HiCZ and Merlin expect orders in the latter part of 2014 and expect significant revenue recognition in 2015
· Q1 2014 R&D expenses of $20m and Administrative expenses of $23m
· GT sees opportunity to further expand its current footprint
· Merlin – GT is seeing “significant interest from leaders in solar industry”, commercial production to be launched in 2015 and due to interest GT is evaluating the need to expand its production
· GT composite glass and sapphire lamina is expected to allow GT to go after markets “where cost is paramount”
· First Hyperion order is expected in 2014
· Cap expenditures expected to be $600m, at the top end of the 2014 range of $500-600m. Capital expenditures also include the expansion in Merrimack and is expected to occur mostly over 1H’2014
· We announced 165kg commercial furnace earlier than we had assumed and customers are quite excited about it and that will have and it could push ASF revenue from Q2 to Q3 to Q4.
· Not signaling any changes in our trajectory or changes for 2014
· Deferred revenue growth (highest level since 2012) is due to the fair value of goods associated with the Apple agreement.
· Apple Sapphire is expected to be a book and ship business moving forward
· Split between deferred revenue and prepayment
· ASF furnaces sapphire is sapphire can be used in any application, our existing base of customers have the ability to operate in any market place. Certain applications are excluded and certain applications are not. There are many areas that we can operate on with our new technology. The ASF 165kg is not the top end of what we have been able to accomplishment from a technology perspective.
· What are the Aluminum Oxide opportunities outside of sapphire? Solid sapphire makes sense and size it makes sense for an alternative solution makes sense. Sapphire coating at one extreme, sapphire composites, plastics and ultimately the best of the best is pure sapphire.
· The “captive” ASF furnaces are they are being used in the current materials business? How much greater than 165kg? It is significant bigger and is production ready right now.
· We are producing sapphire and the sapphire we produce will be fully utilized by Apple; however GT was unable to comment on timing of Apple products or use in Apple products.
· PV pricing is not likely to go above the mid $20s but it makes life difficult for the module makers. Project decision making for Poly expansion will be accelerated. Margin pressure will help aid the adoption of Merlin to alleviate margin pressure.
· We expect a HicZ order in 2014 but the delivery of HiCZ it could be delivered in 2014 but could have an extended revenue time table (into 2015)
· Tom Gutierrez remains incredibly optimistic about sapphire applications and Merlin low-cap ex technology.
Full Disclosure: I am long GTAT