Hoku may delay shipments
POSTED: Thursday, January 29, 2009
Hoku Scientific Inc. said yesterday that it widened its third-quarter loss and is expecting to delay polysilicon shipments out of its Idaho plant as a sagging economy weighed on photovoltaic system installations and customer prepayments.
The company had a net loss of $863,000, or 4 cents a diluted share, compared to $538,000, or 3 cents a diluted share, a year earlier, for the quarter ended Dec. 31.
That was better than an average estimate of a loss of 6 cents a share from four analysts surveyed by Thomson Reuters. In the past nine quarters, Hoku has posted one quarterly profit, which was in the first quarter of this fiscal year on gains from foreign currency contracts.
Revenue for the quarter was $767,000, derived primarily from photovoltaic installations, down 41 percent from $1.3 million last year. The company said it expects revenue of $5 million in fiscal 2009, down by about two-thirds from its forecast of $15 million to $18 million given at the end of October.
"Broader economic conditions had some effect on our PV system installation business during the third quarter of fiscal 2009 and are expected to continue to affect our sales in the quarter to come," Dustin Shindo, chief executive officer, said in a statement. "Viewed in terms of market conditions and expected customer prepayments, this has been a challenging quarter."
The Honolulu-based alternative-energy company is expecting to shift its planned production demonstration to the second quarter of this calendar year from the first quarter. That delay also may push back the first commercial shipment to the second half of the year from the first half, as initially planned.
"We expect this revised schedule will still allow us to meet all delivery obligations to our current customers," Shindo said.
Hoku said it has received $106 million in prepayment deposits from its five polysilicon customers, including $7.5 million this month from China-based silicon product manufacturer Jiangxi Jinko Solar Co.
The company said earlier this month that Wealthy Rise International Ltd., a subsidiary of China-based ingot and wafer producer Solargiga Energy Holdings Ltd., had not yet paid $43 million of its total $68 million in prepayments, due by the end of December.
Depending in part on a resolution of that 10-year, $455 million contract signed in September, the amount of additional funding needed for plant construction could reach up to $83 million.
Shindo said again yesterday Hoku may defer about $40 million in capital expenditures by delaying construction of its on-site facility to produce trichlorosilane, a chemical compound used to make polysilicon.
As of Dec. 31, construction-in-progress spending for the $390 million Pocatello, Idaho, plant was $140.2 million.
Hoku has received the plant's first six reactors, and expects the remaining 10 from the initial order to arrive in the first half this calendar year. The second order of 12 reactors is expected to arrive beginning in the second half of the year. The plant is expected to produce 4,000 metric tons of polysilicon a year.
In Hoku's solar installation segment, Shindo said the company plans to complete the installation of more than 1.4 megawatts of photovoltaic systems in fiscal 2009, compared with 0.2 megawatts a year earlier.
In the third quarter, Hoku started the installation of the first two of seven projects at isle airports under a deal announced in early October with the state Department of Transportation. The project is expected to be completed early this year.
Hoku previously had expected to sell the turnkey photovoltaic systems directly to a third-party investor, who would have assumed ownership of the associated power purchase agreements. Instead, the company said yesterday that it will retain the project, biting into expected revenue.
The transportation department had agreed to buy up to an aggregate of 779 kilowatts of photovoltaic power from the systems.