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Ocean Power Technologies, Inc. (OPTT)

F1Q2011 Earnings Call Transcript

September 9, 2010 10:00 am ET


Brian Posner – CFO

Charles Dunleavy – CEO



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Good day, everyone, and welcome to the Ocean Power Technologies first quarter 2011 audio webcast. Today's conference is being recorded and webcast. At this time, for opening remarks, I would like to turn the call over to the chief financial officer of Ocean Power Technologies, Mr. Brian Posner.

Brian Posner

Thank you. Good morning, and welcome to Ocean Power Technologies audio webcast for the first quarter, ended July 31st, 2010 of our fiscal year ending April 30th, 2011. Today, we issued our earnings press release and will file our quarterly report on Form 10-Q with the Securities and Exchange Commission. Our public filings can be viewed on the SEC Web site at or you may go to our Web site, I will be joined on today's webcast by Charles Dunleavy, our chief executive officer.

Please advance to slide two. During the course of this conference call, management may make projections or other forward-looking statements regarding future events or financial performance of the company within the meaning of the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. As indicated in the slide, these forward-looking statements are subject to numerous assumptions made by management regarding future circumstances over which the company may have little or no control, and involve risks and uncertainties and other factors that may cause the actual results to be materially different from any future results expressed or implied by such forward-looking statements. We refer you to the company's Form 10-K and other recent filings with the Securities and Exchange Commission for description of these and other risk factors.

I'll now turn the call over to Charles Dunleavy.

Charles Dunleavy

Thank you, Brian. And thanks to everyone who has joined us for today's webcast. On slide number three, I'd like to note the highlights of our first quarter. OPT made a strong start for this fiscal year with an increase in revenue, compared to the same period last year as well as an increase in contract order backlog to $6.5 million, which is higher than both the previous quarter and the same period last year.

In addition, we continued to make important advancements in our core PowerBuoy technology. The system's integration of our first PB150 PowerBuoy in Scotland is approaching completion, while the manufacturing of our second PB150 for our project in Reedsport, Oregon is on schedule.

Just after the end of the quarter, OPT signed a significant agreement with a broad array stakeholders for our utility scale 10-PowerBuoy wave power project we expect to be grid-connected in Reedsport, Oregon. This agreement marks an important step towards the granting of the first-ever Federal Energy Regulatory Commission license for a commercial scale wave power project in the US. The development of our next generation PB500 device also gained momentum with our receipt of new funding from the Southwest of England Regional Development Agency or SWRDA. Our 40-kilowatt rated PowerBuoy in Hawaii continued to perform well in the ocean and reflects the strength of our engineering capability and core PowerBuoy technology.

We also strengthened our management team with the appointments of Brian Posner as chief financial officer and Michael Kelly as vice president of operations. These appointments served to broaden our capability for commercial execution of our business strategy. Further, the new vice president of operations role at OPT underscores our transition to commercial status by separating manufacturing and marine operations from engineering.

Let me now take you through these developments in more detail. Turning to slide four, much of this quarter's operational activity was focused on the development of our PB150 PowerBuoys. Our first 150-kilowatt rated PowerBuoy in Scotland is nearing completion. The integration of the energy conversion and power take-off subassemblies with the main buoy structure is underway at a dockside facility. I'm pleased to say that we remain on track to be ready for deployment off the coast of Scotland for in-ocean trials by the end of this calendar year. We are also seeking additional funding for the next stage of the buoy's development after this initial ocean trial phase.

The completion of the PB150 in Scotland is a major milestone for the company. It's the first test system for our PB150 product line. And as we have progressed during construction phase, it has already provided valuable data for the advancement of our technology and its manufacturability.

We also had benefited from this experience in the development of our second PB150 FERC project in Reedsport, Oregon. The project remains on schedule. And ocean testing off Oregon is expected to commence in 2011. OPT intends for these PowerBuoy to be – is the first of a 10-PowerBuoy 1.5-megawatt wave power station at the Reedsport site, which will be America's first commercial scale, grid-connected wave power station.

In August 2010, we announced the signing of a significant agreement with 11 federal and state agencies and three different non-governmental stakeholders to support the responsible, safe development by OPT of the 10-PowerBuoy wave power station. This agreement represents a key step towards the granting of the license by the Federal Energy Regulatory Commission or FERC, which will be the first such license to be issued for a commercial scale wave power project in the US. The 10-PowerBuoy wave power station is expected to be connected to the grid after receipt of the FERC license and additional funding for the project.

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