Raser Technologies Is Steadily Improving

Mar.21.10 | About: Raser Technologies, (RZTIQ)

Raser Technologies Inc. (RZ) reported a quarterly loss per share of 7 cents, less than the Zacks Consensus loss per share of 11 cents and 39 cents in the fourth quarter of fiscal 2008. The improvement in earnings came despite shares outstanding increasing to 70.9 million in the reported quarter from 57.7 million in the year-ago quarter.

The trend was reflected in fiscal 2009 results also where loss per share of 28 cents was less than the loss of 79 cents in fiscal 2008.

Raser Technologies clocked quarterly revenues of approximately $942,000 compared to approximately $5,900 in the year-ago quarter. The improvement was due to the initiation of a revenue stream from selling electricity generated by its geothermal power plant for the city of Anaheim in California .

The electricity plant was operational from the second quarter of 2009. In fiscal 2009 the plant generated approximately 25,200 MW hours of electricity, which was sold at an approximate price of $79.5 per MWh. Overall in fiscal 2009 the company reported revenues of approximately $2.2 million compared to approximately $172,000 in fiscal 2008.

Cost of sales for the reported quarter was $2 million compared to the absence of cost of sales in the year-ago quarter. Total operating expenses decreased to $5.2 million for the fourth quarter of 2009 compared to $19.8 million for the fourth quarter of 2008. Raser Technologies’ cost of sales in fiscal 2009 was approximately $6.5 million compared to approximately $74,000 in fiscal 2008.

Total operating expenses in fiscal 2009 were $21.2 million, a decrease of 45% from $38.6 million in fiscal 2008. The increase in the cost of sales was primarily due to sale of electricity from the geothermal power plant and annual property tax assessments.

Raser reported cash and cash equivalents of $0.04 million and restricted cash of approximately $0.08 million at fiscal-end 2009. At fiscal-end 2008, the company had $1.5 million in cash and cash equivalents and $0.08 million of restricted cash.

The company used $23.5 million of cash in operating activities in fiscal 2009, compared to $22.9 million in fiscal 2008. Long term liabilities decreased to $79.8 million at fiscal-end 2009 from $80.1 million at fiscal-end 2008.

Raser, like its peers UQM Technologies Inc. (NYSEMKT:UQM), and Plug Power Inc. (NASDAQ:PLUG), is currently valued entirely on very optimistic future expectations. However in the near term, limited revenue potential, mounting losses, dependence on external funds continue to weigh on the cash-strapped company. In the first quarter of 2010 we expect the company to digest a loss of 12 cents per share.

The trend is expected to buck in fiscal 2011 where we expect the company to break-even. Fiscal 2011 would see the commencement of production at its multiple geothermal plants, PPAs, federal grants, and Symetron’s progress in SUV demonstration vehicle and heavy duty alternators, which will transform the barren financials of Raser Technologies.

Accordingly, in view of a mixed outlook we rate the Zacks Rank #3 stock as Neutral.