Hoku Scientific posts profit
The company got a boost from gains in currency contracts
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Hoku Scientific Inc. said yesterday it posted a profit for the first quarter following six quarters of consecutive losses.
The Kapolei-based alternative energy developer said yesterday that gains related to foreign currency contracts gave net income a boost to $178,000, or 1 cent per diluted share, compared to a loss of $653,000, or 4 cents a share, a year earlier.
That beat an average estimate of a loss of 11 cents from five analysts surveyed by Thomson Financial.
Revenue came in at $2.2 million from photovoltaic system installation and related service contracts, double the $1.1 million from fuel cell contracts with the Navy a year earlier. The company completed the installation of more than 250 kilowatts for Paradise Beverage Inc. in the quarter, as well as announcing a contract with Young Brothers Ltd. on a 224-kilowatt system.
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Hoku Scientific Inc.
posted its first quarterly profit in a year and a half yesterday, but warned that it expects losses for the foreseeable future.
The isle alternative energy company also said it plans to raise funds for its planned $390 million Idaho polysilicon plant through continuing a sale of its stock, as well as using available cash and leasing equipment.
Net income for the first quarter ending June 30 was $178,000, or 1 cent per diluted share, compared to a loss of $653,000, or 4 cents a share, a year earlier. The company said it had a $500,000 boost from gains related to currency contracts to protect itself from fluctuations between the dollar and the euro.
Revenue came in at the low end of guidance given in May at $2.2 million from photovoltaic system installation and related service contracts, double the $1.1 million from fuel cell contracts with the Navy a year earlier. It had deferred revenue of $24,000 as of June 30. Hoku phased out its fuel cell business last year and expects revenue from solar operations for the quarter ending Sept. 30 at between $1.6 million and $2 million.
At the end of last month, the company had raised $58 million of the $111 million in payments needed to complete pilot production at the Idaho plant by the fourth quarter, with shipments expected in early 2009.
"We have substantially completed the technology integration engineering phase, the excavation and installation of the foundations for underground utility racks, the reactor building, and the vent gas recovery system have been completed, and the erection of structural steel is in progress," Dustin Shindo, president and CEO, said in a conference call with investors and analysts. "The next significant construction milestone is the first delivery of the first set of polysilicon reactors planned for August."
Last month, the company entered into an agreement with UBS Securities LLC to offer up to $54 million in stock sales. Starting on June 12 through June 30, the company sold 527,815 shares, with gross proceeds of $3.3 million. Hoku suspended the program on July 1 until the release of first-quarter financial information, and expects to resume it within the next two weeks.
The decision to issue securities came in May following a financial setback when an agreement to borrow up to $185 million through Merrill Lynch & Co. fell through.
"We have a financing plan in place that we believe will allow us to generate the cash necessary to meet our goal," Shindo said. "We are looking toward alternative non-equity financing options to reduce the number of shares sold."
Hoku said Monday it is selling its Kapolei headquarters to the Operating Engineers Local Union Number 3, District 17 (Hawaii), subject to the union's sale of its current facility within four months, for $5.8 million. Hoku is looking for alternative warehouse and office space on Oahu to house its solar operations. Shindo said lease payments on a future property "would not be a very large number," but did not elaborate.
The company is also in discussions to sell unallocated polysilicon production capacity. Up to 500 metric tons out of 3,500 in annual production are unallocated, along with capacity from a potential expansion to up to 8,000 metric tons a year.
Contracts for two of the four buyers, Sanyo Electric Co. and Global Expertise Wafer Division, expired May 31, leaving Hoku open to be "materially harmed" if one of the companies pulled out, Shindo said.
Suntech Power Co. and Solarfun Power Hong Kong Ltd., Hoku's other two buyers, have extended their contracts through Dec. 31. The contracts are expected to bring total revenues of up to $1.7 billion.
Shindo said he expects to meet a fiscal year 2009 revenue forecast of $15 million to $18 million, although losses will continue with the buildout of the polysilicon business. The last quarter Hoku posted a profit ended Sept. 30, 2006.