Ocean Power Technologies Inc (OPTT) 2020 Q4 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Ocean Power Technologies' Fourth Quarter and Full Fiscal Year 2020 Conference Call. This call is being webcast on the company's website at www.oceanpowertechnologies.com.

As a reminder, this conference call is being recorded and will be available for replay after its completion. On the call today are George Kirby, President and Chief Executive Officer; and Matthew Shafer, Chief Financial Officer and Treasurer. Following prepared remarks, we will open the call to questions. On June 29, 2020, OPT issued its earnings press release and filed its annual report on Form 10-K for the fiscal year ended April 30, 2020, with the Securities and Exchange Commission.

All OPT public filings could be viewed on the SEC website at sec.gov or in the Investor Relations section of the OPT website. Please note that management's prepared remarks may contain forward-looking statements that are within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are identified by certain words or phrases such as may, will, aim, will likely result, believe, expect, will continue, anticipate, estimate, intend, plan, contemplate, seek to, future, objective, goal, project, should, will pursue and similar expressions or variations of such expressions. These forward-looking statements are based on assumptions made by management regarding future circumstances over which the company may have little or no control and involve risks, 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.

Some of these factors include, among others, the following: future financial performance, expected cash flow, ability to reduce costs and improve operational efficiencies, revenue growth and increased sales volume, success in key markets, competition, ability to enter into relationships with partners and other third parties, delivery and deployment of PowerBuoys, increasing the power output of PowerBuoys, hiring new key employees, expected cost of PowerBuoys products and building customer relationships.

Please refer to our most recent Forms 10-Q and 10-K and subsequent filings with the SEC for a further discussion of these risks and uncertainties. We disclaim any obligation or intent to update the forward-looking statements in order to reflect events or circumstances discussed in this call. Now I am pleased to introduce Mr. George Kirby.

Thank you, and good morning, everyone. I'm going to review our business operations and provide an update on our commercialization activities and developments during the fourth quarter fiscal year 2020 and up to today. Then, Matt will provide a review of our financials. And after that, we'll open the line for questions.

I'm happy to report that OPT continued its commercial progress in fiscal 2020 with the sale of a PB3 PowerBuoy, the conclusion of our first autonomous PowerBuoy deployment in the North Sea with Premier Oil and an 18-month PowerBuoy lease extension for our project with Eni in the Adriatic Sea, and the completed construction of OPT's hybrid PowerBuoy. The hybrid complements our PB3 PowerBuoy by providing customers with a quick deployment option and flexible power generation across a myriad of sea states, including low to no wave conditions. We recently conducted in-water tests of our hybrid PowerBuoy in Coastal New Jersey waters that included towing and stability measurements and power generation through the operation of its solar panels and its Stirling engine. We were happy with our results, and we're excited to offer this new product to customers that are seeking an easily deployable, economical and reliable source of offshore power and communications.

Applications and solutions for our PowerBuoys include subsea power and battery charging, surface surveillance, subsea monitoring and connectivity for offshore oil and gas, defense and security, science and research and other offshore markets. We're very excited about this new product, and we've aligned our PowerBuoy products with these market-driven solutions that we believe will provide long-term value for our existing and future customers.

Our passion for innovation, quality, safety and outstanding service has led us to these commercial successes over the past year. Like many companies, we've had to be flexible and to adapt to new ways of working, given the challenges of the global COVID-19 pandemic. Given the pandemic, earlier this year, OPT quickly pivoted to embrace distance working for our office staff, while our production staff safely kept internal and customer projects on schedule at our New Jersey production facility.

We've been participating in virtual conferences to continue to market our solutions. And like us, our current and future customers have embraced video conferencing to maintain momentum of existing projects and potential new projects. We're very excited to carry this momentum through this new fiscal year to continue to grow OPT.

Now let me turn the call over to Matt to discuss the financials.

Thank you, George, and good morning, everyone.

We recorded revenue of $600,000 for the fourth quarter of fiscal 2020, an increase of $400,000 over the prior year period, which is mainly attributable to a new contract signed with Enel Green Power. The net loss for the fourth quarter of fiscal 2020 decreased by $1.3 million, which was mainly attributable to a decrease in general and administrative costs and the receipt of the New Jersey net operating loss proceeds in the current year quarter, which offset expenses. We recorded revenue of $1.7 million for the full year of fiscal 2020, an improvement over fiscal 2019, primarily due to a new contract signed with Enel Green Power. The fiscal 2020 net loss decreased by $1.8 million to $10.4 million, primarily due to lower spending on general and administrative-related expenses.

Turning now to the balance sheet. Total cash, cash equivalents, restricted cash and marketable securities was $10.9 million as of April 30, 2020. Net cash used in operating activities decreased by $1.5 million from the fiscal year ended April 30, 2019, to $10.6 million, which is primarily related to lower spending and general and administrative expenses.

With that, I'll turn it back to George.

Thanks, Matt. Operator, we're now ready to open the call up for questions.

(Operator Instructions) Our first question comes from the line of Peter Ruggiere with Dawson James.

I had several questions. I saw on the 10-K that this year you're going to spend $14 million, which is going to be up from $12 million pretty much last year. I'm wondering, why? Maybe that is attributed to sales or...

Matt? Any thoughts?

Yes, Peter. Can you be more specific?

Yes.

Well, usually, you guys just spend about $1 million a month and that's usually $12 million a year, and the guidance for the following year is more money. So I was wondering if it's because of a lot more orders or something like that in nature.

Yes. No, Peter, our spending for the current fiscal year that we just completed was actually lower. Our net cash used in operating activities last year was $12.1 million and this year was $10.6 million.

Right. And the guidance you're giving forward is $14 million, which I guess you estimated, so that's -- usually means spending more money, it's for...

Peter, we haven't given any guidance, not in the K or really any place.

I saw it somewhere. All right. And with -- maybe I read something incorrect. And I'm just wondering where we're standing on orders across the board? Because they got to fan the Asian islands, government funding, you're dealing with Modus and Saab Seaeye. What's Premier Oil doing next? And the company in the Gulf of Mexico, where does that stand? I'm wondering about Eni in the -- off the coast of Italy, if they're going to buy a buoy because you've extended the one for 18 months in the Adriatic Sea.

Right. All good questions. The one thing that I will say is with regards to Premier Oil, they have actually publicly said that they want to move forward with future work with OPT. So we're aggressively moving forward in that direction. With regards to any other commercial activity, as much as I would like to share where we are and what we're working on right now, we -- as you know, we can't talk about that until it actually materializes.

Right. There's something interesting with the cube that Eni is producing or they take this cube, it's sticking to the bottom of the ocean and the PB3 powers it? And I guess, it ends the -- if gases excrete from what they're doing down there. Can you go into that? Because I saw that on their -- I saw it out there a couple months ago?

What's great about Eni as a partner is they have a number of different applications that they're looking at us for. This deployment in the Adriatic is a continuation to prove out for the AUV applications while they're working to basically implement our technologies into their operations. That's an ongoing discussion. But there are a number of opportunities with Eni that we're looking at.

In the call you had a couple weeks back in Washington for Ocean Week, that came across very well.

Thank you.

At least you mentioned partners and possible partners. I'm just waiting for a lot of sales from you guys, personally speaking.

Yes. And we understand that all shareholders are waiting on that, and that's why we're working so aggressively towards that.

Okay. That's the couple questions I had for you, guys.

Our next question comes from the line of Robert Silvera with R.E. Silvera & Associates.

Congratulations on a good job. You're in a very difficult phase, obviously, going from development to production. And that's a difficult transition for any company, I know, because I've been through it in my own company years ago. My question deals with your applications. You are selling a single buoy most of the time for an application to a customer or do you see multiple buoys in use, so to speak, in series in the application?

That's a great question. As a matter of commercial activities, we are seeing more and more multi-buoy opportunities. Whether it be for emergency power on an umbilical that's failing for an oil and gas operator, we're seeing that, or whether it's for surface surveillance for governments and to be able to provide multiple buoys that actually talk within each other while they're surveilling the oceans and providing that data back to land. We're seeing more and more multi-buoy opportunities. And we recognize that our lowest transaction cost, if you will, or the lowest cost in order to get to an order will be multi-buoys. We need more multi-buoy orders right now, and that's what we're incredibly focused on. The entire organization, not just our expanded sales team, but our engineering team as well, that's job #1 is to help us secure these types of orders.

Okay. So most of the applications then, would you say the majority of them would, if built out completely, would be using multiple buoys as opposed to a single buoy?

I can tell you this, that we're seeing more and more multi-buoy opportunities, and we are pursuing them. And many of the single buoy opportunities start off single but have the ability to expand to multi-buoy opportunities in future phases.

In that particular location. Great. Okay. That's all I have. Keep up the good work. I can see that you're working under difficult circumstances simply by dealing with the pandemic, communications and all the rest of the problems that exist out there, and you're doing a wonderful job to grow as you've grown and keep your costs in line. Thanks for the good efforts.

Thank you very much, Robert. We'll continue to aggressively pursue sales.

Our next question comes from [Ken Smith] with -- a private investor.

I'm a big fan of the company and the concept of your technologies. I think it is revolutionary. And I think it will help to sustain our environment for the future. I do -- I have -- I think it's -- what I have is a question and a comment. I'm an investor in also electronic vehicles. And there is a company that is recently planning to produce EV vehicles that rely on hydrogen power.

And from what I understand, hydrogen power would be the cleanest renewable energy out there once this -- or if this happens. But the problem with hydrogen power is that in order to accumulate it, it needs a power plant to separate the hydrogen atom from the oxygen atom. And so these power plants, they produce a lot of carbon emissions. So it's counterproductive to use a power plant that would potentially make a product that would be renewable and sustainable. So I was looking at a Youtube video. And there is a man that lives in Europe, and he says that there is potential that wave power could be the alternative energy source to supply a power plant with energy to then create the hydrogen power for the e-vehicles. So my question is, how aware of you -- how aware are you of this concept? And how interested would you be in pursuing such a venture, if you haven't already?

That's a great question, sir. And our entire team is very aware of hydrogen power and its efficiencies and so forth. Right now, the markets that we're pursuing for autonomous power are acutely focused on electrification of their operations. So right now, we are likewise focused on -- with our PB3 using wave power to convert that to electricity to contribute to this movement within our industries, as well as our new hybrid PowerBuoy which uses primarily solar with a Stirling engine backup. Stirling engines, as you know, can be run off multiple fuel sources. But right now, we're very focused on generating electricity using those means. We're keeping an eye on that industry because it is still somewhat nascent due to the reasons that you outlined. And it's a really good point. But right now, we are staying very, very focused on where we see the biggest opportunities in front of us to get to revenues.

Okay. Yes. I appreciate the feedback because I think that definitely will be a long-term investment to pursue. I think it's going to be very profitable. And I appreciate your feedback and insights.

(Operator Instructions) Our next question comes from the line of Robert Littlehale with JPMorgan.

George, could you bring us up to date, given what's been going on in the oil markets, what the trends are in terms of offshore oil well decommissioning? Could you give us a little bit of perspective in terms of what you see going on there?

Sure. And that's a great question. Specifically, with regards to decommissioning, where there are regulatory requirements to decommission within a certain time frame, those must and are moving forward. And examples of that are in the North Sea, such as some of the work that we've done in the past with Premier Oil and hope to do in the future. Areas such as the Gulf of Mexico may be slowing down somewhat with decommissioning because the regulations are less stringent than what we've seen in the North Sea. So I think overall, it's pretty mixed. What we're -- also just to add on to that, what we're seeing is there's -- there continues to be expenditure in areas of production -- producing wells today. But again, where decommissioning is slowing down -- or I'm sorry, where decommissioning is less regulated, it's slowing down a bit as well as exploration is obviously slowing down a bit.

I would like to turn the floor back over to management for any further or closing comments.

Thank you, operator. And thank you, everyone, for joining today's call.

Thank you for your participation today. This concludes today's teleconference and webcast. You may disconnect your line at this time.