Ocean Power Technologies, Inc's CEO Discusses Q3 2012 Results - Earnings Call Transcript

Ocean Power Technologies, Inc (OPTT)

Q3 2012 Earnings Call

March 09, 2012 10:00 am ET


Brian M. Posner - Chief Financial Officer, Principal Accounting Officer, Secretary and Treasurer

Charles Frederick Dunleavy - Chief Executive Officer and Director


Jason Feldman - UBS Investment Bank, Research Division

Robert W. Stone - Cowen and Company, LLC, Research Division

Jeremy Hellman



Good day, ladies and gentlemen, and welcome to the Ocean Power Technologies' Fiscal Year 2012 Third Quarter Conference Call. [Operator Instructions] As a reminder, this conference is being recorded and webcast. I would now like to turn the conference over to the Chief Financial Officer of Ocean Power Technologies, Mr. Brian Posner. Please proceed, sir.

Brian M. Posner

Thank you. Welcome to Ocean Power Technologies' earnings conference call for the third quarter ended January 31, 2012. OPT issued its earnings press release earlier today, and this coming Monday, we will file the company's quarterly report on Form 10-Q with the Securities and Exchange Commission. All public filings can be viewed on the SEC website at sec.gov, or you may go to the OPT website, oceanpowertechnologies.com.

With me on today's call is Chuck Dunleavy, our Chief Executive Officer. Please advance to Slide 2 of our presentation. 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 this 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 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 a description of these and other risk factors.

I'll now turn the call over to Chuck Dunleavy, OPT's CEO.

Charles Frederick Dunleavy

Thank you, Brian, and thanks to everyone for being with us today. Brian and I will be available to answer questions following our prepared remarks.

Turning to Slide 3. Let me briefly provide an update on recent accomplishments. We are very pleased with the results of the Ocean operations of our Littoral Expeditionary Autonomous PowerBuoy or LEAP unit developed for the U.S. Navy. The Autonomous PowerBuoy performed much better than the project specifications. At the same time, we have marked progress on advancing the PowerBuoy's energy conversion capability as part of our WavePort project in Spain, and are taking the steps to expedite development of our planned 19-megawatt project in Australia.

With those projects, the PB150 project in Reedsport, Oregon and our ongoing business development efforts, we remain clearly focused on getting more PowerBuoys in the water. Our intellectual property position continues to strengthen as we optimize our PowerBuoy technology. Since our fiscal year began on May 1, 2011, we've been granted 4 patents and applied for 3 new patents covering a broad range of applications. From the new wave energy power take-off system to improved buoy mooring and anchoring, electrical efficiency innovations and patents on our Undersea Substation or Pod. In total, we have now 64 patents issued and pending. Quite impressive for a company of our size and really serves as witness to the creativity and technical innovation of our employees.

Our operating loss for the fiscal third quarter and 9 months decline as compared to the comparable, prior year period. This primarily reflects a greater-than-30% decrease in product development costs for both the quarter and the 9-month periods. In addition, our net cash used in operations decreased for the 9-month period versus a year ago.

We ended the quarter with a backlog of nearly $8 million and cash on hand of approximately $38 million. We believe we are well-positioned for continued success with a number of exciting initiatives. Now let me go into more detail on some of our latest developments. Please turn to Slide 4. Early last month, we reported operating data, which we accumulated and analyzed in connection with the Ocean deployment of our LEAP autonomous PowerBuoy off New Jersey. This buoy, which is significantly smaller and more compact than our utility PowerBuoys, exceeded the project specification for payload power delivery during ocean operations last fall. The buoy was designed by OPT to provide persistent energy for the Navy's radar and communications payload, which called for continuous power of 150 watts. The actual results showed that the PowerBuoy supplied constant power in excess of 400 watts throughout the entire deployment period, and produced peak sustained electrical power of 1,500 watts. Such performance more than supported the 150 watt payload 24 hours a day 7 days a week for the duration of the ocean operations. In fact, the onboard power management and storage system allowed the payload to be operational even during extended periods of 0 wave activity. The PowerBuoy operated on a fully autonomous basis implementing the requisite power management and self protection functions without the need for human intervention.

It's always maintained, even as the autonomous PowerBuoy withstood Hurricane Irene, which hit the New Jersey coastal on August 27, 2011, and had waves of up to 53 feet. These results demonstrate strong performance under our contract with the U.S. Navy for the maritime security mission. More broadly, the fact that we can offer the unique ability to supply persistent levels of power in deep ocean, during extended no-wave periods, represents an entirely new offering to satisfy offshore power needs for a multitude of applications.

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