Ocean Power Technologies Inc (OPTT) 2016 Q3 法說會逐字稿

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the third-quarter 2016 Ocean Power Technologies' earnings conference call. At this time, all participants are in a listen-only mode. (Operator Instructions) Later, we will have a question-and-answer session, and the instructions will follow at that time. As a reminder, this comment is being recorded.

Now I would like to welcome Mr. Andrew Barwicki, Investor Relations. Please go ahead.

Thank you and good afternoon. Thank you for joining us on Ocean Power Technologies' conference call and webcast to discuss the financial results for the three-month period ended January 31, 2016.

On the call with me today are George Kirby, President and CEO; and Mark Featherstone, Chief Financial Officer. George will provide an update on the Company's highlights for the quarter, key activities, and strategy. Mark will then proceed to review the financial results for the third quarter.

Following our prepared remarks, we will open the call to questions. The call is being webcast on our website at oceanpowertechnologies.com. It will also be available for replay later today. The replay will stay on the site for on-demand review over the next several months.

This morning, Ocean Power Technologies issued its earnings press release and filed its Quarterly Report on Form 10-Q with the Securities and Exchange Commission. All of our public filings can be viewed on the SEC website at www.SEC.gov, or you may go to the OPT website, which is oceanpowertechnologies.com.

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 provisions of the Private Securities Litigation Reform Act of 1995. 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, that involve risk 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 our Company's Form 10-K and other recent filings with the Securities and Exchange Commission for the description of these and other risk factors.

And now, I would like to turn the call over to George to begin the discussion.

Thank you, Andrew. Good afternoon, everyone. I appreciate your interest in this conference call and I'm encouraged by your participation. Today, I will review our business operations and provide an update on key activities and developments in the quarter. Mark will then briefly review our financial results, after which both Mark and I will be available to answer any questions.

I assume that most of you have seen our earnings news that was released this morning. If you do not have a copy of the news release, you can access it on the Web. First and foremost, as part of our overall strategy and the business plan that we implemented in 2015, I would be remiss if I didn't mention how far along we have come with some of our partners and customers -- for instance, the National Data Buoy Center, Gardline Environmental, Mitsui Engineering and Shipbuilding, the Office of Naval Research, as well as other organizations and companies within the public and private sector.

Wave power is progressing as a viable source of renewable energy, and with our partners, we are moving forward in an aggressive manner. Just this past Tuesday, we announced a partnership with the National Data Buoy Center.

An initial ocean demonstration of our APB350 PowerBuoy with a self-contained ocean-observing payload will be conducted off the coast of New Jersey, with additional demonstrations to be announced in the future. We believe our advanced PowerBuoy technology is well-suited to meet all of the National Data Buoy Center requirements, and we are looking forward to a successful demonstration in the coming months.

We also announced the signing of a Letter of Intent with Mitsui Engineering and Shipbuilding, or MES, which is intended to reach a definitive agreement under which OPT would lease an APB350 PowerBuoy to MES for deployment in Japan. The OPT project scope would also include associated deployment planning and logistics, ocean performance data, collection, and processing. OPT and MES anticipate jointly developing and testing an advanced control algorithm with the goal of assessing increasing ocean wave capture and electric power generation.

We believe that this project and the anticipated first PowerBuoy lease represents the strength of our long-standing relationship with MES, and is a major step toward assessing a potentially large market in Japan and throughout surrounding geographic areas. Under the Letter of Intent, OPT will begin initial work while working to achieve a definitive agreement for the remaining project scope.

While most of these recent announcements and activities center around ocean-observing, we see many more unique opportunities in the oil and gas and defense and security markets, as well as other industries upon which we believe we can capitalize in the future. The APB350 PowerBuoy this year exceeded 125 days of deployment, and the energy generated surpassed 1,000 kilowatt hours or more than 1 megawatt hour.

We continue to collect market input in order to improve the system with our next-generation PowerBuoy, which will feature an enhanced electrical storage system, a higher efficiency power management system, onboard processing, and real-time communication of customer sensor data, and a user-friendly interface, providing even more flexibility to end-users. Additionally, we anticipate that power can be provided to offshore, subsea, and sea surface equipment, such as a docking station for charging and data collection and communication from unmanned underwater vehicles, or UUVs.

UUVs are currently used by each of our target markets, and the addition of remote charging and data communication capabilities could be a real game-changer for end-users. Our PowerBuoy system generates power even in low to moderate wave environments, and it contains space for additional battery capacity, if required, to ensure power can be stored and provided to an application even under extended low to no wave conditions.

I am excited by the progress that our team has made, and we continue to explore opportunities to apply more resources to grow our markets. We are considering numerous business initiatives in the US and Asia marketplaces. We believe we have in place the platform to continue to strengthen and grow our business.

Our first lease to MES would be a significant accomplishment and a sign that our strategy is working. We also believe that our value proposition, coupled with the diverse market segments that we intend to serve, will allow us to improve our operating results regardless of market conditions.

I am also very happy to announce that, during the third quarter, we received approximately $1.7 million through the state of New Jersey's Business Tax Certificate Transfer Program. This particular program enables companies to raise cash to finance their growth in operations by selling net operating losses, and research and development tax credits, to unaffiliated corporations up to a maximum lifetime benefit of $15 million per business.

I will now turn it over to Mark, who will review our financial results for the quarter.

Thanks, George. And good afternoon, everyone. I will now review results for the third fiscal quarter of 2016 before we open up the call to questions.

For the three months ended July 31, 2016, OPT reported revenue of $5,000 as compared to revenue of $0.3 million for the three months ended January 31, 2015. The decrease in revenues compared with the prior year was primarily related to decreased billable costs on a previous project with Mitsui Engineering and Shipbuilding, or MES, and with our contract with the US Department of Energy. As George just mentioned, we have recently signed a Letter of Intent with MES related to the potential leads and deployment of an APB350 off the coast of Japan.

The net loss for the three months ended January 31, 2016 was $2.0 million as compared to a net loss of $2.2 million for the three months ended January 31, 2015. The decrease in net loss is primarily due to an increase in income tax benefits and lower selling, general and administrative expenses, offset in part due to a higher product development cost.

Selling, general and administrative costs were lower, due to reduced third-party consulting, certain employee-related costs, and patent amortization costs. For the nine months ended January 31, 2016, OPT reported revenue of $0.6 million as compared to revenue of $3.6 million for the nine months ended January 31, 2015. The net loss for the nine months ended January 31, 2016 was $9.1 million as compared to a net loss of $9.9 million for the nine months ended January 31, 2015.

Turning now to the balance sheet, as of January 31, 2016, total cash, cash equivalents and marketable securities were $9.5 million, down from $17.4 million on April 30, 2015. As of January 31, 2016 and April 30, 2015, restricted cash was $0.4 million and $0.5 million, respectively. Net cash used in operating activities was $8.1 million during the nine months ended January 31, 2016 compared to $14.8 million for the nine months ended January 31, 2015. The prior year reflects the return of $4.7 million related to an advanced payment received from ARENA, while the current year reflects costs related to increased deployment activities.

As discussed in our prior conference calls, we have taken a number of steps over the last several months to reduce our cash burn rate while focusing our technical operating and business development resources on key initiatives, particularly the APB350. As such, we continue to project that our operating cash burn in fiscal 2016 will be lower than that in fiscal 2015, despite increased deployment activity this year.

We remain confident in our cash position, and we expect to have sufficient cash to maintain operations into at least the quarter ended October 31, 2016. We also continue to explore alternatives to raise additional capital.

With that, I will turn it back to George before we open up the call for questions.

Thanks, Mark. Before we move on to Q&A, I want to mention that there are thousands of offshore devices currently collecting a wide range of data in the oceans around the world. These devices mostly run on solar or battery power, all of which require numerous services on a continuous basis.

In a recent report compared for NOAA's Integrated Ocean Observing System's Program Office, Zdenka Willis, Director of the Program Office discusses, and I quote, that the ocean enterprise, the blue economy and blue tech. In the report, NOAA's chief scientist, Dr. Richard Spinrad, states that we are on the cusp of a new blue economy. The sustainable growth of existing ocean uses and the emergence of entirely new economic opportunities associated with our oceans, coasts and Great Lakes.

Ocean information underpins this rapidly developing blue economy, and is becoming a big business in its own right. He goes on to say that NOAA produces 20 terabytes of data every day. And he says this report is a first map of a key component of the new dynamic blue economy, and it points us to the future of environmental intelligence as an exciting growth industry.

We believe that our PowerBuoy is posed to be the data collection platform for the blue economy because it is capable of supplying continuous power and real-time data communications, which we anticipate will allow end-users to potentially consolidate applications into one platform, create new game-changing applications which leverages this power, and to reduce operational costs of these marine applications. We believe our PowerBuoy will enable more, better, lower cost and real-time data for the blue economy.

Thank you for your support and time today. And, operator, we are now ready to take questions.

(Operator Instructions) And I am not showing any questions in the queue, sir.

Okay, thank you. And thank you all once again for attending today's call. If you have any further questions, please don't hesitate to contact us. Otherwise, we look forward to speaking with you next quarter.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program and you may all disconnect. Have a wonderful day, everyone.