Financial Results
Revenue for the quarters ended
Net loss for the quarter ended
Non-GAAP net loss for the quarter ended
Summarizing the Company's progress during the quarter,
Business Updates
Hoku Materials Polysilicon Plant Update
Commenting on the Company's polysilicon subsidiary,
Mr. Paul continued, "Our engineering and construction contracts were originally structured as fully reimbursable, cost plus percentage fee agreements. These were signed in calendar year 2007 when engineering and construction were booming, specifically in polysilicon, and contractors had much stronger bargaining power. At the time, our third party process technology license packages were incomplete, so it was not possible to provide sufficiently detailed information for any engineering or construction company to develop a fixed cost and a guaranteed schedule. As a result, our budget and schedule estimates throughout the project have been based on the best estimates we have received from our vendors. These estimates were, in turn, based on a series of assumptions regarding design, equipment specifications, and the timing of receipt of engineering drawings and equipment deliveries. In the end, our assumptions have proven to be overly optimistic, and as a result, our estimates of budget and schedule have also proven to be overly optimistic. Now that the engineering work is substantially complete and most of the equipment is on site, we are in a better position to estimate the total cost and schedule for completing the construction of our polysilicon plant."
Hoku reported that its construction in progress investment in the
Commenting further on the budget, Mr. Paul continued, "Having completed our budgetary analysis, we are revising our cost estimates. We now expect to incur approximately
The Company said that the budget increases also reflected the fact that the construction schedule was originally expected to be approximately two years, but has instead been spread over four years with numerous starts and stops as a result of earlier financing-related challenges. Furthermore, commencing construction before detailed engineering was complete caused countless changes, which resulted in additional engineering and construction costs, and schedule delays. Hoku explained it was now at a stage where the budgetary impact of these delays and changes could be determined with a higher degree of clarity.
The Company noted that planning for future growth has also substantially increased the cost to design and build the current 4,000 metric ton plant, further skewing the overall costs upward. Hoku said it had pre-invested in the infrastructure required for a potential future expansion to 8,000 metric tons per year, including underground piping that can support this additional capacity, and steel utility racks which have been built to correspondingly higher weight load tolerances.
In an effort to control costs, the Company stated that it has strengthened its internal management team to enable more detailed reviews and audits of all project expenses, and that it has engaged an independent engineer to assist with the monitoring and control of schedule and budget. To ensure that the final costs are fair and consistent with the Company's contractual commitments to its vendors, the Company said that it expects to complete a thorough audit of all expenses after the project is complete.
The Company said in addition to updating its budget, it had also revised its schedule for completion.
Hoku Materials reported that it now expected to begin selectively commissioning certain areas of the plant as they become available, and it expects to commence shipment of its own material in the second half of calendar year 2011. Hoku confirmed that initial production runs would be conducted using third party trichlorosilane, or TCS, but noted that the Company had resumed engineering work on its TCS plant, and had taken delivery of a majority of the TCS production equipment. Construction of the TCS plant is expected to commence in the first half of fiscal 2012.
Mr. Paul outlined the approach, saying, "We will experience approximately three to six months of delays in completing construction of the first 2,500 metric tons of capacity. Because of this, we will work with our customers to determine how to handle our near-term polysilicon delivery requirements."
Mr. Paul continued, "After commissioning our first phase of installed equipment, we expect to pursue three objectives in parallel. First, we will manufacture and ship polysilicon using 2,500 metric tons of operational production capacity. Second, we will continue construction activities at our on-site chemical plant with the goal of manufacturing our own TCS on-site by the end of calendar year 2011. Finally, we will continue with our second phase of construction, installing deposition reactors and support equipment until we reach our full, planned 4,000 metric tons of production capacity."
Regarding new financing for the project, during the quarter ended
"In terms of additional financing," continued Mr. Paul, "We believe that we can continue to rely on Tianwei and its resources to finance our remaining construction and operating expenses; however, we expect to compensate Tianwei for its collateral support. The amount and type of compensation has not been determined, but we expect that it will include equity. We are also in discussions with other lenders and investors, and we have not ruled out the possibility of raising additional equity through an investor other than Tianwei."
The Company provided an update on staffing in
Hoku Solar Update
Commenting on
The Company said it continued recruiting and adding staff in
"We continue to build our track record in PV integration and solar project development, and firmly believe that
Summary
Mr. Paul summarized the Company's prospects saying, "We are encouraged by the steady progress in our solar and polysilicon businesses, and we feel that we have much better clarity on our schedule and budget for initiating commercial production of polysilicon in
Conference Call Information
Hoku Corporation has scheduled a conference call on
About Hoku Corporation
Hoku Corporation (NASDAQ: HOKU) is a solar energy products and services company with two business units: Hoku Materials and
Hoku,
© Copyright 2011, 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
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 selling, 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 Nine months Ended
December 31, December 31,
------------------------ ------------------------
2010 2009 2010 2009
Service and license
revenue $ 1,242 $ 259 $ 3,357 $ 1,831
----------- ----------- ----------- -----------
Total revenue 1,242 259 3,357 1,831
----------- ----------- ----------- -----------
Cost of service and
license revenue (1) 948 65 2,365 1,489
----------- ----------- ----------- -----------
Total cost of revenue 948 65 2,365 1,489
----------- ----------- ----------- -----------
Gross margin 294 194 992 342
Operating expenses:
Selling, general and
administrative (1) 3,344 1,492 8,801 4,095
----------- ----------- ----------- -----------
Total operating
expenses 3,344 1,492 8,801 4,095
----------- ----------- ----------- -----------
Loss from continuing
operations (3,050) (1,298) (7,809) (3,753)
Interest and other
income 27 16 166 267
----------- ----------- ----------- -----------
Net loss from continuing
operations (3,023) (1,282) (7,643) (3,486)
----------- ----------- ----------- -----------
Discontinued operations:
Income from
discontinued
operations -- -- -- 51
----------- ----------- ----------- -----------
Net loss (3,023) (1,282) (7,643) (3,435)
Net income (loss)
attributable to the
noncontrolling interest 23 (17) 97 (35)
----------- ----------- ----------- -----------
Net loss attributable to
Hoku Corporation $ (3,046) $ (1,265) $ (7,740) $ (3,400)
=========== =========== =========== ===========
Basic net loss per share
attributable to Hoku
Corporation $ (0.06) $ (0.06) $ (0.14) $ (0.16)
=========== =========== =========== ===========
Diluted net loss per
share attributable to
Hoku Corporation $ (0.06) $ (0.06) $ (0.14) $ (0.16)
=========== =========== =========== ===========
Shares used in computing
basic net loss per
share 54,724,354 21,448,922 54,641,657 21,062,417
=========== =========== =========== ===========
Shares used in computing
diluted net loss per
share 54,724,354 21,448,922 54,641,657 21,062,417
=========== =========== =========== ===========
(1) Includes stock-based
compensation as
follows:
Cost of service and
license revenue $ -- $ 1 $ -- $ 8
Selling, general and
administrative 175 295 755 723
HOKU CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share and per share data)
December 31, March 31,
2010 2010
------------- -------------
Assets
Cash and cash equivalents $ 10,249 $ 6,962
Accounts receivable 800 249
Inventory 661 894
Costs of uncompleted contracts 437 93
Other current assets 309 856
------------- -------------
Total current assets 12,456 9,054
------------- -------------
Deferred cost of debt financing 922 1,175
Property, plant and equipment, net 442,898 287,975
------------- -------------
Total assets $ 456,276 $ 298,204
============= =============
Liabilities and Equity
Accounts payable and accrued liabilities $ 32,008 $ 22,660
Deferred revenue 65 6
Deposits - Hoku Materials 16,194 11,134
Other current liabilities 211 204
------------- -------------
Total current liabilities 48,478 34,004
------------- -------------
Notes payable, net 182,819 37,709
Long-term deposits - Hoku Materials 124,006 115,866
------------- -------------
Total liabilities 355,303 187,579
============= =============
Commitments and Contingencies
Equity:
Preferred stock, $0.001 par value.
Authorized 5,000,000 shares; no shares
issued and outstanding as of December 31,
2010 and March 31, 2010
Common stock, $0.001 par value. Authorized
100,000,000 shares; issued and outstanding
55,043,254 and 54,853,677 shares as of
December 31, 2010 and March 31, 2010 ,
respectively 55 54
Warrant to purchase common stock 12,884 12,884
Additional paid-in capital 115,417 114,748
Accumulated deficit (28,341) (20,601)
------------- -------------
Total Hoku Corporation shareholders' equity 100,015 107,085
------------- -------------
Noncontrolling interest 958 3,540
------------- -------------
Total equity 100,973 110,625
------------- -------------
Total liabilities and equity $ 456,276 $ 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 Nine Months
Ended Ended
December 31, December 31,
---------------- ----------------
2010 2009 2010 2009
------- ------- ------- -------
GAAP net loss attributable to Hoku
Corporation $(3,046) $(1,265) $(7,740) $(3,400)
Stock-based compensation expense 175 296 755 731
------- ------- ------- -------
Non-GAAP net loss attributable to Hoku
Corporation $(2,871) $ (969) $(6,985) $(2,669)
======= ======= ======= =======
GAAP basic net loss per share
attributable to Hoku Corporation $ (0.06) $ (0.06) $ (0.14) $ (0.16)
Basic stock-based compensation expense
per share 0.01 0.01 0.01 0.03
------- ------- ------- -------
Non-GAAP basic net loss per share
attributable to Hoku Corporation $ (0.05) $ (0.05) $ (0.13) $ (0.13)
======= ======= ======= =======
GAAP diluted net loss per share
attributable to Hoku Corporation $ (0.06) $ (0.06) $ (0.14) $ (0.16)
Diluted stock-based compensation expense
per share 0.01 0.01 0.01 0.03
------- ------- ------- -------
Non-GAAP diluted net loss per share,
attributable to Hoku Corporation $ (0.05) $ (0.05) $ (0.13) $ (0.13)
======= ======= ======= =======
Contacts for Hoku Corporation: Hoku Corporation Tel: 808-682-7800 Email: Email Contact
Source: Hoku Corporation
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