Hoku Scientific (HOKU) reported earnings results after the bell and traders aren’t impressed.  While the company matched analyst estimates with a .03/share loss, they missed badly on revenues reporting just $776K vs the analyst estimate of $1.4 million.  Granted, it’s a big improvement over the 112K they reported in the year ago quarter, but when you miss that badly, the stock will get hit.  It’s off about 10% in after hours trading.

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Commenting on the reduction in revenues this year over last, CEO Scott Paul said that it has to do with the ownership structure of the nearly 1MW project completed earlier in the year for the Hawaiian DOT.  Since it was constructed under a series of power purchase agreements and Hoku is part owner, they weren’t able to recognize revenue right away.  They plan to recognize revenues on the sale of electricity over the course of the 20 year agreement.

Commenting on the higher EPS loss during the year, he attributed it to preparations for the recently completed pilot runs in Idaho and payments to Idaho Power for reserve power capacity in advance of the plant startup.

Liquidity has been an ongoing issue for Hoku, but much of that was relieved a few months ago when Tianwei infused a big chunk of cash.  He commented on this as well:  “To date, Tianwei has invested more than $129 million of its own capital in Hoku. In addition, they provided collateral support for the $20 million in debt financing from China Merchants Bank we announced earlier today. During the past fiscal year, this investment by Tianwei helped address much of the immediate financing risk for our Hoku Materials polysilicon plant, and it allowed us to work with our vendors and partners to develop payment plans which were both achievable and fair. As a result, we have systematically improved our balance sheet, reducing our payables by two-thirds over the last quarter alone.”

Without the Tianwei rescue, Hoku would probably be out of business by now, so this is still a company on a bit of shaky ground.  They don’t expect to commence commercial production again at its Idaho plant until the 3rd quarter and that’s if financing goes well.  The company believes it needs an additional $81 million in financing to meet production goals this year.  The CEO said “we can’t rule out the sale of equity” to raise funds.  Take that to mean they likely will announce a secondary. 

With the revenue miss, the need for more financing and a likely secondary coming, it’s not surprising the stock is down 10% AH.  Technically, the key support areas for the stock are the 2.80 (50 day moving average) and 2.50 (200 day moving average) levels.  The stock has actually been quite strong in recent months, but this will report will likely weigh on it for awhile.