SOURCE: Hoku Corporation
August 05, 2010 16:10 ET
Hoku Corporation Reports First Quarter Fiscal Year 2011 Results
HONOLULU, HI--(Marketwire - August 5, 2010) - Hoku Corporation (NASDAQ: HOKU), a clean
energy products and services company, today announced its financial results
for the first quarter ended June 30, 2010 and provided a general update on
its business.
Financial Results
Revenue for the quarters ended June 30, 2010 and 2009 was $930,000 and
$74,000, respectively. Revenues for both periods derived primarily from
photovoltaic, or PV, system installation and related service contracts. As
of June 30, 2010 deferred revenue of $854,000 was attributable to PV system
installations and related service contracts.
Net loss for the quarter ended June 30, 2010, computed in accordance with
U.S. generally accepted accounting principles, or GAAP, was $2.7 million,
or $0.05 per diluted share, compared to $905,000, or $0.04 per diluted
share, for the same period in fiscal 2010.
Non-GAAP net loss for the quarter ended June 30, 2010, which excludes the
effect of stock-based compensation, was $2.4 million, or $0.04 per diluted
share, compared to $741,000, or $0.03 per diluted share, for the same
period in fiscal 2010. Non-GAAP net loss for the quarters ended June 30,
2010 and 2009 excludes non-cash stock-based compensation of $321,000 and
$164,000, respectively. The accompanying schedules provide a reconciliation
of net loss per share computed on a GAAP basis to net loss per share
computed on a non-GAAP basis.
Comparing the quarter ended June 30, 2010 to the same quarter in 2009,
Scott Paul, president and chief executive officer of Hoku Corporation,
said, "At this time last year, we had substantially curtailed engineering,
procurement, and construction of our polysilicon plant to preserve cash
while we looked for opportunities to reposition the business. One year
later, I am pleased to report that we are substantially stronger, thanks to
the support of Tianwei New Energy Holdings Co., Ltd. Since December 2009,
Tianwei has become our majority shareholder, and has enabled us to secure
nearly $100 million in debt financing, which allowed us to reduce our
accounts payable and accrued expenses substantially and resume activities
at our polysilicon facility. In recent days, they have offered to provide
us with additional capital to reach our initial polysilicon production
goals for calendar year 2010."
"Looking specifically at last quarter's financial results, our higher loss
can be attributed to the cost of successfully completing our reactor
production demonstration in April," continued Mr. Paul. "Having completed
this critical step in validating our systems, processes and training, we
are moving ahead with preparations for our planned production ramp-up and
expect to initiate commercial operations this calendar year. To that end,
J.H. Kelly has confirmed that it will increase its onsite workforce in
Pocatello from the present level of more than 100 workers, up to
approximately 300 individuals over the next couple of weeks."
Business Updates
Hoku Materials Polysilicon Plant Update
Commenting on the Company's polysilicon subsidiary, Hoku Materials, Inc.,
Mr. Paul said, "Having closed $28.3 million in debt financing on June 30,
2010, in addition to the $20 million of debt financing we secured in May
2010, we continue to make significant progress on the remaining
construction. However, the precise schedule of this construction will be
driven by the timing of receipt of additional capital from Tianwei or other
sources, including remaining customer prepayments. Our plans for
commissioning and start-up of our first 2,500 metric tons of capacity are
still intact for the end of this calendar year. To support this ramp up, we
recently hired more than 40 additional staff members, including experienced
polysilicon production process managers."
Mr. Paul continued, "We expect subsequent financing to support the first
phase of operations to come primarily from tranches of Tianwei-supported
debt, under terms and conditions very similar to the recent facilities we
announced with China Merchants Bank and China Construction Bank. While we
move forward with these arrangements, we are also in discussions with our
current customers with whom we have near-term deliveries scheduled. In
these cases, we expect to either coordinate the interim delivery of
third-party product, or mutually agree to delay first shipment until our
plant is online."
"In the meantime, we are refining our engineering and procurement plan,
including the equipment selection, schedule and budget to efficiently
increase our annual production capacity in calendar year 2011 from 2,500
metric tons to the full, planned 4,000 metric tons with on-site
trichlorosilane, or TCS, production," explained Mr. Paul. "Taking that
next step will enable us to reduce our polysilicon production costs to a
very competitive level."
Hoku Solar Update
Commenting on Hoku Solar, Inc., Mr. Paul said, "As the solar market
continues to mature in Hawaii and elsewhere, we are optimistic about the
number of viable projects in the commercial and industrial sector, as well
as the number of sizeable public solicitations for solar power services
being issued by municipal, State and Federal institutions. We believe that
we are well positioned to compete for this business."
Mr. Paul continued, "With these improvements in market conditions, we are
proactively addressing the procedural and technical challenges that remain
for prospective solar investors and PV system hosts. For example, Hoku has
developed a comprehensive PV project design and development service
offering to guide our customers through the process and help them make good
business decisions about solar energy before committing substantial capital
to a project."
"This project developer approach is aimed primarily at large-scale
commercial real estate portfolio owners, and it is specifically designed to
address the remaining risks associated with major solar projects," said Mr.
Paul. "In Hawaii, for example, these risks include grid saturation limits,
Feed-in Tariff uncertainty, and a mandatory third party engineering study
required by the utility prior to final engineering and interconnection of
any large PV system."
"This is a natural evolution for our business," concluded Mr. Paul. "It
combines the benefits of our unique access to the global solar industry
with our strong vendor and supplier relationships, and our demonstrated
experience with large scale and financed PV systems in Hawaii. We believe
it is also a scalable business model, and have already commenced business
development activities in markets beyond Hawaii."
Corporate and Board Update
Hoku also announced the appointment of Mr. Zhengfei Gao and Dr. Tao Zhang
to serve as directors of the Company until its next annual meeting of
stockholders. Mr. Gao and Dr. Zhang were designated by Tianwei as nominees
for directors according to the terms of Tianwei's investment in the
Company. Mr. Gao and Dr. Zhang were appointed to replace Mr. Yu Wen and
Mr. Zhong Li, the two previous designees of Tianwei who have resigned as
members of the Board effective as of July 30, 2010.
Mr. Gao has served as the General Manager of Tianwei New Energy Holdings
Co., Ltd. since 2009. From 2007 to 2009, he served as the Vice President of
China Electric Equipment Group Co., Ltd., a power equipment and PV products
manufacturer in China, and Board Chairman of Jiangxi Jingde Semiconductor
New Material Co., Ltd., a polysilicon manufacturer. From 2003 to 2007, he
served as the Vice President of Shanghai Dongdeng Group Co., Ltd. and
General Manager of Shanghai Dongdeng Information Technology Co., Ltd., an
information technology company. From 2001 to 2002, Mr. Gao served as
Director and Chief Financial Officer of Shanghai United Gene Technology
Group Co., Ltd., a biotechnology company. From 1999 to 2001, he served as
General Manager of the Finance Department of China for Asia Pulp & Paper, a
producer of pulp, paper, and packaging. Mr. Gao holds a Bachelor's degree
in Industrial Management Engineering from Xi'an Jiaotong University.
Dr. Zhang has served since 2009 as the Corporate Vice President of Tianwei
New Energy Holdings Co., Ltd. From 2007 to 2009, he served as the Senior
Manager/Director of Spansion Inc., a provider of flash memory products.
From 2005 to 2007, he served as a Staff Technologist for Intel. From 2003
to 2005, he was a Department Manager, Flash Factory IE Manager, and Systems
IE Manager for Intel. From 2002 to 2003, Dr. Zhang served as Senior
Automation Engineer for Intel. Dr. Zhang holds a Bachelor's degree in
Mechatronics from Zhejiang University, a Master's degree in Mechanical and
Aerospace Engineering (Automation) from North Carolina State University,
and both Master's and Doctoral degrees in Industrial Engineering and
Operations Research from the University of California, Berkeley.
Commenting on the appointments, Mr. Paul said, "We are very grateful for
Mr. Wen and Mr. Li's guidance and service during the past six months, and
we look forward to benefiting from the respective resources, insights and
experience of both Mr. Gao and Dr. Zhang."
Summary
Mr. Paul summarized the Company's prospects saying, "We are encouraged by
progress in our solar business, and we remain both focused and confident
that we will bring our polysilicon plant online as planned during calendar
year 2010. We expect positive growth in both our polysilicon and PV
installation businesses during the current fiscal year and beyond."
Conference Call Information
Hoku Corporation has scheduled a conference call on Thursday, August 5,
2010 at 5:00 p.m., Eastern Time, to discuss results for the Company's first
quarter fiscal year 2011 ended June 30, 2010 and the Company's business
outlook. All interested parties are invited to call-in. To participate,
please call (253) 237-1188. A live webcast can also be accessed by going
directly to the Company's website at www.hokucorp.com and selecting the
conference call link on the home page. A playback of the webcast will be
available on the Company's website until the Company's conference call to
discuss its financial results for its second quarter fiscal year 2011.
About Hoku Corporation
Hoku Corporation (NASDAQ: HOKU) is a diversified clean energy products and
services company with three business units: Hoku Materials, Hoku Solar and
Hoku Fuel Cells. Hoku Materials plans to manufacture, market and sell
polysilicon for the solar market from its plant currently under
construction in Pocatello, Idaho. Hoku Solar markets and installs turnkey
photovoltaic systems and provides related services. Hoku Fuel Cells has
developed proprietary fuel cell membranes and membrane electrode assemblies
for stationary and automotive proton exchange membrane fuel cells. For more
information, visit www.hokucorp.com.
Hoku, Hoku Solar, and the Hoku Corporation logo are trademarks of Hoku
Corporation, and Hoku Materials is the trademark of Hoku Materials, Inc.,
all rights reserved. All other trademarks, trade names and service marks
appearing in this press release are the property of their respective
holders.
© Copyright 2010, Hoku Corporation, all rights reserved.
Forward-Looking Statements
This press release contains forward-looking statements that involve many
risks and uncertainties. In some cases, you can identify forward-looking
statements by terms such as "anticipate," "believe," "can," "continue,"
"could," "estimate," "expect," "intend," "may," "plan," "potential,"
"predict," "project," "should," "will," "would" and similar expressions
intended to identify forward-looking statements. These forward-looking
statements include, but are not limited to, statements about the Company's
future growth, financing of the completion and operations of its
polysilicon facility, financing support from Tianwei, the timing and
completion of polysilicon facility milestones, and the timing of the
commencement and ramping up of commercial production of polysilicon, and
the Company's ability to develop PV systems and compete in emerging solar
markets. These statements involve known and unknown risks, uncertainties
and other factors that may cause the Company's actual results, performance,
time frames or achievements to be materially different from any future
results, performance, time frames or achievements expressed or implied by
the forward-looking statements. These risks, uncertainties and other
factors include, but are not limited to, the Company's ability to secure
additional financing necessary to complete its planned polysilicon
production facility in Pocatello, Idaho; the Company's receipt, if at all,
of additional customer prepayments based on agreed-upon schedules and
contingent upon the Company meeting certain milestones under its current
polysilicon supply agreements; the Company's ability to meet its
polysilicon delivery commitments under its supply agreements; the Company's
ability to ramp its production capacity for manufacturing in calendar year
2010 in accordance with its operating plan; the Company's ability to
install PV systems in Hawaii, including securing financing for such
installations; and the risks, uncertainties and other factors disclosed in
the Company's most recent Form 10-K and Form 10-Q filed with the Securities
and Exchange Commission. Given these risks, uncertainties and other
factors, you should not place undue reliance on these forward-looking
statements. In evaluating these statements, you should specifically
consider the risks described in the Company's filings with the Securities
and Exchange Commission, as applicable. Except as required by law, the
Company assumes no obligation to update these forward-looking statements
publicly, or to update the reasons actual results could differ materially
from those anticipated in these forward-looking statements, even if new
information becomes available in the future.
Use of Non-GAAP Financial Information
To supplement its financial statements presented on a GAAP basis, the
Company uses non-GAAP measures of net loss and net loss per share, which
are each adjusted to exclude expenses relating to non-cash stock-based
compensation, which the Company believes is appropriate to enhance an
overall understanding of its past financial performance and its future
prospects. As the Company uses FASB ASC 718 to calculate its non-cash
stock-based compensation expense, it believes that it is useful to
investors to understand how the expenses associated with the application of
FASB ASC 718 are reflected on its statements of operations. The Company
further believes that where the adjustments used in calculating non-GAAP
net loss and non-GAAP net loss per share are based on specific, identified
charges that impact different line items in the statements of operations
(including cost of service and license revenue, and sales, general and
administrative expense), it is useful to investors to know how these
specific line items in the statements of operations are affected by these
adjustments. For its internal budgets and forecasting, the Company uses
financial statements that do not include non-cash stock-based compensation
expense. Our use of non-GAAP financial measures has limitations that
include that the non-GAAP financial measures we use may not be directly
comparable to those reported by other companies. For example, the terms
used in this press release, non-GAAP net loss and non-GAAP net loss per
share, do not have standardized meanings. Other companies may use the same
or similarly named measures, but exclude different items, which may not
provide investors with a comparable view of our performance in relation to
other companies. We seek to compensate for this limitation by providing a
detailed reconciliation of the non-GAAP financial measures to the most
directly comparable GAAP measures in the tables attached to this press
release. The presentation of this additional information is not meant to
be considered in isolation or as a substitute for net loss or net loss per
share prepared in accordance with GAAP. Whenever the Company uses such
non-GAAP financial measures, it provides a reconciliation of non-GAAP
financial measures to the most closely applicable GAAP financial measure.
Investors are encouraged to review the related GAAP financial measures and
the reconciliation of these non-GAAP financial measures to their most
directly comparable GAAP financial measure.
HOKU CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except share and per share data)
Three Months Ended
June 30,
2010 2009
---------- ----------
Service and license revenue $ 930 $ 74
Cost of service and license revenue (1) 565 14
---------- ----------
Gross margin 365 60
Operating expenses:
Selling, general and administrative (1) 3,206 1,064
---------- ----------
Total operating expenses 3,206 1,064
---------- ----------
Loss from operations (2,841) (1,004)
Interest and other income 187 84
---------- ----------
Net loss (2,654) (920)
Net income (loss) attributable to the
noncontrolling interest 28 (15)
---------- ----------
Net loss attributable to Hoku Corporation $ (2,682) $ (905)
========== ==========
Basic net loss per share attributable to Hoku
Corporation $ (0.05) $ (0.04)
========== ==========
Diluted net loss per share attributable to Hoku
Corporation $ (0.05) $ (0.04)
========== ==========
Shares used in computing above basic net loss per
share 54,607,060 21,009,383
========== ==========
Shares used in computing above diluted net loss per
share 54,607,060 21,009,383
========== ==========
(1) Includes stock-based compensation as follows:
Cost of service and license revenue $ -- $ 4
Selling, general and administrative 321 160
HOKU CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
June 30, March 31,
2010 2010
---------- ----------
Assets (unaudited)
Cash and cash equivalents $ 8,344 $ 6,962
Inventory 726 249
Accounts receivable 489 894
Costs of uncompleted contracts 915 93
Other current assets 255 856
---------- ----------
Total current assets 10,729 9,054
---------- ----------
Deferred cost of debt financing 1,095 1,175
Property, plant and equipment, net 311,817 287,975
---------- ----------
Total assets $ 323,641 $ 298,204
========== ==========
Liabilities and Equity
Accounts payable and accrued expenses $ 24,269 $ 22,660
Deferred revenue 854 6
Deposits - Hoku Materials 16,652 11,134
Other current liabilities 215 204
---------- ----------
Total current liabilities 41,990 34,004
Notes payable- net 59,058 37,709
Long-term debt (Deposits - Hoku Materials) 116,948 115,866
---------- ----------
Total liabilities 217,996 187,579
---------- ----------
Commitments and Contingencies
Equity:
Preferred stock, $0.001 par value. Authorized
5,000,000 shares; no shares issued and
outstanding as of June 30, 2010 and March 31,
2010
Common stock, $0.001 par value. Authorized
100,000,000 shares; issued and outstanding
55,087,121 and 54,853,677 shares as of June 30,
2010 and March 31, 2010, respectively 54 54
Warrant to purchase 10,000,000 shares of
common stock 12,884 12,884
Additional paid-in capital 115,031 114,748
Accumulated deficit (23,283) (20,601)
---------- ----------
Total Hoku Corporation shareholders' equity 104,686 107,085
---------- ----------
Noncontrolling interest 959 3,540
---------- ----------
Total equity 105,645 110,625
---------- ----------
Total liabilities and equity $ 323,641 $ 298,204
========== ==========
HOKU CORPORATION AND SUBSIDIARIES
Reconciliations from GAAP Net Loss and GAAP Net Loss per share to Non-GAAP
Net Loss and Non-GAAP Net Loss per share
(Unaudited)
(in thousands, except share and per share data)
Three Months Ended
June 30,
----------------------
2010 2009
---------- ----------
GAAP net loss $ (2,682) $ (905)
Stock-based compensation expense 321 164
---------- ----------
Non-GAAP net loss $ (2,361) $ (741)
========== ==========
GAAP basic net loss per share $ (0.05) $ (0.04)
Basic stock-based compensation expense per share 0.01 0.01
---------- ----------
Non-GAAP basic net loss per share $ (0.04) $ (0.03)
========== ==========
GAAP diluted net loss per share $ (0.05) $ (0.04)
Diluted stock-based compensation expense per share 0.01 0.01
---------- ----------
Non-GAAP diluted net loss per share $ (0.04) $ (0.03)
========== ==========