Ocean Power Technologies, Inc Management Discusses Q4 2012 Results - Earnings Call Transcript

Ocean Power Technologies, Inc (OPTT)

Q4 2012 Earnings Call

July 13, 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

George Santana - New Earth Capital Group



Good morning, ladies and gentlemen, and welcome to the Ocean Power Technologies Fiscal 2012 Fourth 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 Chief Financial Officer of Ocean Power Technologies, Mr. Brian Posner.

Brian M. Posner

Thank you. Welcome to Ocean Power Technologies' earnings conference call for the fourth quarter ended April 30, 2012. OPT issued its earnings press release earlier today and we will soon file the company's annual report on Form 10-K 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, everyone, for being with us today. Brian and I will be available to answer questions following our prepared remarks. First, turning to Slide 3, let me provide an update on fiscal 2012 and other recent developments in a very productive time here at Ocean Power Technologies. As I'll discuss further in a moment, we just signed an agreement with Lockheed Martin to enhance our efforts to bring a large-scale wave power station to Australia that leverages a AUD 66.5 million grant, which we have received from the Commonwealth. This is very exciting, and we're gratified to have the support of a strong company such as Lockheed Martin behind the initiative.

In addition, building on the successful completion of ocean testing of OPT's first utility-scale PB150 off Scotland, we recently completed testing of the company's new advanced power take-off system for our PB150 PowerBuoy in Oregon. We're also making progress towards deployment of that system. We continue to work on our WavePort project in Spain and are accelerating our business development efforts in the autonomous PowerBuoy market after the very successful operation of the U.S. Navy's Littoral Expeditionary Autonomous PowerBuoy. At the same time, we reduced our annual operating loss and our cash usage as well during fiscal 2012. Now, let me go into more detail on some of our latest developments.

Turning to Slide 4. A very important milestone for OPT in fiscal year 2012 was 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's specification for payload power delivery during ocean operations last fall. Our partners for this effort included Rutgers University's Institute of Marine and Coastal Sciences, CODAR Ocean Sensors and Mikros Systems Corporation. The buoy was designed by OPT to provide persistent energy for the U.S. Navy's radar and communications payloads, which call 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 8 sustained electrical power of 1,500 watts. Such performance more than supported the payload 24 hours a day, 7 days a week for the duration of the ocean operation. In fact, the onboard power management 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 for self perfection functions without the need for human intervention. It's always maintained, even as the autonomous PowerBuoy withstood Hurricane Irene, which hit the New Jersey coastline on August 27, 2011, and had waves of up to 53 feet.

These results demonstrated strong performance under our contract with the U.S. Navy for their maritime security mission. More broadly, the fact that we can offer the unique ability to supply persistent levels of power in deep ocean, even during extended no-wave periods, represents an entirely new offering to satisfy offshore power needs for a multitude of applications. We're currently in active dialogue for other potential commercial applications of the autonomous PowerBuoy by the oil and gas industry as well as by oceanographic, data-gathering initiatives and desalination companies, all which could replace diesel generators that are costly, dirty and require frequent maintenance. We're placing more resources into developing these attractive end markets for our autonomous PowerBuoy.

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