Hoku Scientific, Inc. (HOKU), a materials science company focused on clean energy technologies, today announced its financial results for the second quarter ended September 30, 2008 and provided a general update on its business.
Over the last year, the company has been working to arrange funding for a polysilicon production facility in Pocatello, Idaho.
Revenue for the quarter was $1.9 million, derived primarily from photovoltaic (PV) system installation contracts and the resale of solar inventory, compared to revenue of $239,000 from fuel cell contracts in the same period in fiscal 2008.
Net loss for the quarter was $1.4 million, or $0.07 per diluted share, compared to a net loss of $1.0 million, or $0.06 per diluted share, for the same period in fiscal 2008.
Commenting on the Company’s polysilicon subsidiary, Hoku Materials, Inc., Mr. Shindo said, "In the past quarter, Hoku Materials secured an aggregate of more than $1.2 billion in new polysilicon purchase commitments and realigned its polysilicon allocation. We now have contracted future revenue with five leading solar companies for the sale of up to $2.3 billion of polysilicon over a ten year period and have customer prepayment commitments for $306 million, which will be used towards the construction of our polysilicon plant and for working capital."
The Company also reported that installation of the plant’s
underground cooling water loops had been completed, and that
construction was proceeding according to schedule for all major
functional areas of its planned production facility.
"Hoku and its project team remain on track to support a planned initial delivery of polysilicon in the first half of 2009," Mr. Shindo said. "Further, we have made detailed preparations for the upcoming Winter season and feel well prepared to maintain our planned construction schedule."
Hoku confirmed that five Siemens-process reactors had been completed by GEC/MSA, and that the completed reactors are expected to arrive at its Idaho plant in the next several weeks. The remaining eleven reactors from the Company’s first order of 16 reactors are expected to arrive at the project site before the end of December 2008. A second order of twelve reactors is planned for November 2008, with delivery expected in the second quarter of calendar year 2009.
This reactor delivery timeline is consistent with Hoku’s plant construction schedule and supports Hoku’s plans to commence shipments in the first half of calendar year 2009. Hoku then plans to ramp-up production throughout 2009 and into 2010, when the Company expects to reach full production capability.
Polysilicon Plant Financing Update
Hoku reported that Wealthy Rise International, Ltd. (Solargiga) had not yet made its initial deposit of $22 million, which, according to the terms of its contract, was due to Hoku in September 2008. Hoku reported that the two companies were in discussions to resolve the late payment. The company confirmed the receipt of scheduled prepayments from its other new customers, Kinko Energy and Tianwei New Energy.
Hoku also reported that Solarfun agreed to pay a total prepayment deposit of $21 million in October 2008. The payment would consist of its $19 million second deposit that was originally planned for September 30, and an accelerated payment of $2 million from Solarfun’s $20 million prepayment scheduled for March 2009. Together with its initial deposit of $11 million, this $21 million deposit will bring Solarfun’s aggregate disbursements to $32 million, or nearly 60% of its total prepayment commitment of $55 million.
"Given the long-term nature of our contracts, and Hoku’s partner-driven approach, some changes to our existing polysilicon supply agreements are not unexpected," Mr. Shindo said. "While these changes may include amendments to current contract terms and conditions, redistribution of production capacity, or, possibly, Hoku electing to terminate one or more of its existing polysilicon sales contracts, Hoku expects to maintain roughly the same level of customer prepayment commitments and contracted future revenue through the sale of available polysilicon capacity to new or existing customers."
Hoku had received $48 million in prepayment deposits from its current customers as of September 30, 2008, and in October 2008, expects to receive subsequent prepayments from Solarfun in the aggregate amount of $21 million, for an aggregate total of $69 million in customer prepayments to be received through October. Subsequent to October 2008, the Company expects to receive an additional $237 million in customer prepayments according to the terms of its existing polysilicon supply agreements.
Mr. Shindo commented: "We remain confident in our strategy to finance the majority of the plant costs through customer prepayments. We have continued to stay on track through a combination of good planning, and the on-going support of our engineers, contractors and equipment providers."
About Hoku Scientific, Inc.
Hoku Scientific is a diversified clean energy technologies 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 related services in Hawaii. Hoku Fuel Cells has developed proprietary fuel cell membranes and membrane electrode assemblies for stationary and automotive proton exchange membrane fuel cells.
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