IPO Watch: GT Solar

www.gtsolar.com
(Nasdaq:SOLR)
Scheduled for week of July 21
$500 million estimated proceeds
$2432 million estimated post-money valuation

I’m starting to think that solar power deals are on par with special-purpose acquisition companies (or SPACs) and dry bulk shipping this year. After all, there have been two others to date: Real Goods Solar (Nasdaq:RSOL), which raised $55 million in May, and ReneSola (NYSE:SOL), which brought in $130 million in January. In a year with only 35 IPOs, that makes solar power a bona fide hot spot.

GT Solar makes equipment used to fabricate photovoltaic cells, which collect sunlight and convert it into electricity. These are big machines needed to produce solar cells but sold to only a handful of buyers worldwide. For the fiscal year ended March 31, 2008, 62% of the company’s revenue came from just one customer. In years past, the customer base has been more diversified, but just barely. In fiscal 2007, for example, three customers contributed 70% of revenue. No matter how big the solar power industry becomes, GT Solar will always face a concentrated customer base. A good analogy is semiconductors, which are in everything these days but are fabricated by just a few companies.

The company made $36.1 million in net income on $244.1 million in revenue for the March 31, 2008 fiscal year, its first profit ever. The year before, it had a net loss of $18.4 million on revenue of $60.1 million. The outlook for fiscal 2009 is good; the company has an order backlog of about $1.3 billion and deferred revenue from equipment shipped but not yet billed of $164.2 million. Profits should stay . . .

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