Nine Months 2021 Ocean Power Technologies Inc Earnings Call

Good morning, ladies and gentlemen, and welcome to the Ocean power technologies third quarter fiscal year 2021 conference call.

A webcast of this call is also available on the company's website at Www Dot for Ocean power technologies Dotcom.

As a reminder, this conference call is being recorded and will be available for replay after its completion.

Today on the call 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 March five 2021 O P. T issued its earnings press release and filed its quarterly report on form 10-Q for the quarter ended January 31, 2021, with the security and Exchange Commission.

All O P. T public filings are available on the SEC website at SEC Gov G O V or the O P. T investors website's Investor Relations section.

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 that 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.

For a further discussion of these risks and uncertainties. Please refer to our most recent form 10-K and subsequent filings with the SEC.

We disclaim any obligation or intent to update the forward looking statements in order to reflect events or circumstances discussed on this call.

No I am pleased to introduce your host for today's event Mr. George Kirby. Thank you Sir Please go ahead.

Thank you and good morning.

Today, I'll review, our business operations and provide an update on activities and developments during the third quarter of fiscal year, 'twenty, one and up to each day.

Matt will review our financials and then we'll open the line for questions.

Opt's third quarter broad dramatic change to our company.

The recent acquisition of <unk> technology is the company's first.

And it brings both expertise and accretive revenue from three dense work in offshore engineering.

Concept design stimulation vessel monitoring.

In the past three done has been a strategic partner to O P T and helping us to develop our hybrid power buoy on subsea battery system.

Synergies between Opt's target customers and <unk> clients are readily apparent and the nature of their services strengthen <unk> value proposition.

Yes.

Three dense deep offshore engineering expertise expanse of opt's capabilities and opportunities within the lifecycle of a complex customer projects.

And we believe they are experienced team.

We will enhance the development commercialization and quality of Opt's clean power and data solutions.

<unk> technology will operate under its current brand name as a wholly owned subsidiary of O P. T from its office in Houston, Texas.

We continue to prepare for our first remote installation of an autonomous turnkey wave energy powered subsea data system in Chile.

This is the first commercial installation of its kind, which will continuously collect real time subsea data through a dedicated subsea two way network and communicate back to assure station, which will also allow for remote command and control of the system.

We believe remote some installations can offer flexibility and cost reduction to our customers.

And despite continued delays linked to the global pandemic.

We're working to complete the system installation as soon as possible.

We also welcome three new directors to our board.

Slide Hewlett Diana per cell and Peach flavor.

Each of these new directors bring deep and valuable expertise in offshore energy Marine and subsea systems safety financing governance.

We're extremely happy to have them join our board and we're looking forward to growing our company together.

Yeah.

A key goal for us this year was to bolster our financial position improve our liquidity and reduce our capital risk and we believe that we've made great strides towards those efforts.

During the fiscal year the company put in place cost cutting measures and has generated over $76 million in net proceeds through utilization of our ATM.

And equity line common stock purchase facilities.

This includes $66 $7 million in net proceeds raised during the third quarter.

We believe our current cash balance in addition to continued prudent cost management will provide us with the financial flexibility to execute our clean ocean power and data growth strategy.

<unk> of market expansion sales cycle acceleration development of new solutions as well as strategic acquisitions.

With that let me turn the call over to Matt to discuss the financials Matt. Thank.

Thank you George and good morning, everyone.

Revenue for the third quarter of fiscal year, 'twenty 'twenty, one was $300000 compared to $700000 for the same period in the prior year and the net loss for the third quarter of fiscal 2021 increased by $300000 as compared to the third quarter of fiscal 2020.

Revenue for the first nine months of fiscal year 2021.

With $600000 compared to $1 $1 million for the same period in the prior year and the net loss for the first nine months of fiscal year 2021 increased by $500000 as compared to the same period in the prior year.

The decrease revenue and increase in net loss for the third quarter and the first nine months of fiscal year 2021 were mainly attributable to pandemic related delays of the companys remedies revenue generating projects.

Turning now to the balance sheet.

Total cash cash equivalents and restricted cash was $84 million as of January 31, 2021, net cash used in operating activities decreased by $100000. During the first nine months of fiscal year 2021 to $8 5 million.

As compared to the first nine months of fiscal year 2020.

This decrease is mainly the result of lower cash spending on customer projects and product development costs in the current fiscal year period as compared to the same period in the prior fiscal year.

During the nine months ended January 31 2021.

The companys at the market agreement and its equity line agreements generated net proceeds.

Of 70 point.

$76 $1 million.

With that I'll turn it back to George Thanks, Matt Operator, we're ready to open up the call for questions.

Thank you ladies and gentlemen, the floor is now opened for questions. If you would like to ask a question. Please press star one on your telephone keypad at this time.

A confirmation tone will indicate your line is on the question queue.

You May press star two if he would like to remove your question from the queue.

From participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Once again that is star one to register questions at this time.

Our first question is coming from Peter with Jerry I've Dawson James. Please go ahead.

Good morning.

Good morning.

I have a whole bunch of questions.

Yeah.

Guys raised 80 million, we got $80 million of cash.

And he doesn't burn on basically 12 million a year.

Now you have $600 million of cash is there any more.

Reasoning of money necessary.

Well Peter I'll take this first and then Matt you can jump in we're not looking at it is we have 60 months of cash far from it were.

Aggressively looking to move forward with our strategy and our first our primary.

Focus area is acquiring new revenues, we're securing new revenues. So we're focused on getting buoys in the water we're focused on.

Getting on planes and getting in front of customers just as soon as borders open up.

That's really what we're focused on but.

We're not looking at it as though we have 60 months of cash burn left no actually kicks in other years of cash if you weren't running those numbers, but here's the other thing you mentioned data growth. So Microsoft has these underwater data centers to go.

Which run cleaner and west power is there any possible deal on the background I know you can't really go into it just kind of curious.

I can't go into specifics about deals, but what I will tell you is that we are broadening our focus we have broadened our focus from.

Only clean energy and power to truly going after the data space.

The reason is we found from our customers that that's really where the value lies for them. It's not just simply on providing power it's in providing ocean intelligence.

Is that more day to have you.

Go ahead, no I was going I was going to ask sorry, apologize and Oh, it's quantum glass batteries. These new battery systems out there are you using them and he's on or.

Like experimenting with them and they always are.

Today, we are using our own batteries for batteries that we have been using but I will tell you. This there's.

Some some great battery manufacturers around the world that we talk to and somewhat collaborate with and.

I'll leave it at that.

Okay.

That's what you issued are Bang on your question of debt back to your question about data centers, Microsoft Microsoft Aside there's a number of companies out there that are looking to put data centers on the ocean floor and that's something that we're taking very seriously we're looking at.

That would be a power and communications play.

If you understand what I mean, it would be probably higher powers power than what we're looking at today are what we have available.

So we're looking also at how can we scale up our technology rapidly in order to get to higher power levels to address these markets. That's part of the strategy that we're putting together moving forward.

Question on something I don't know if you followed up with Google was doing this project Loon and they got when the stratosphere when you're out and they were doing islands that couldn't get on for G and stuff like that but they canceled the project have you been talking with them about they havent always around there to do the forgery or five year round islands.

Yeah, I'm not I'm not able to talk about specific discussions with customers because as you know oftentimes, we're under NDA and we're precluded from discussing names or details, but I will tell you that.

On the past island nations have come to us.

Asking us about the feasibility of displacing their diesel generators on island and using our clean power.

That's something that we've kept our eye on we've really been hyper focused on commercializing our current solutions that are lower power than maybe what some of these island nations need, but moving forward again with our eye on rapid scale up to higher power.

And evaluating what that would take that.

Market segment, if you will is definitely on our crosshairs.

Another one on in the Gulf of Mexico, you had debt.

Project, a year and a half ago or so and on.

Europe Houston Office opened.

Where does that stand.

Yes. The study that we did I believe we kicked that off around April 2019 is complete it was a successful study, meaning the Ah <unk>.

Results in deliverables were favorable.

Towards feasibility of using our solutions to solve their customers' problems, we continue to talk to that customer.

As you know with the pandemic face to face meetings are difficult. So we've had to use just like everybody digital means to communicate with our customers.

Those discussions are actually still ongoing.

Right well when as far as that is concerned it's something that we're doing to decommission like.

Cube that you were power in the bottom of the two handle the carbons or whatever emitted from them.

I knew you were supposed to do something in Italy, which was held back from the pandemic.

What's the next process with them.

Yeah. Another great question, we continue to communicate with with Eni and.

We're actually expecting that unit back in the United States to be refurbished and hopefully redeployed here soon but our discussions with Eni around next steps are continuing.

Okay.

And then the other those other couples or the navy or the project going on with the Navy for.

Yeah, Washington, what's.

Or when do we get an update on what that where that where does that come into the project is.

Are you referring to the Slammer facility project that we're conducting a study on right now in Monterey Bay.

Yes.

Yes, that's a really exciting opportunity because it really plays into our future strategy of both power and data the whole premise of the study is to evaluate.

Using the power buoy.

<unk> power and data solution as a node in the water if you will as a hub.

We're both subsea.

On <unk> drones, as well as aerial drones can communicate through that central hub.

And then we would use <unk> communication back to lab <unk> allows better latency better bandwidth.

It's a it's a good terrestrial solution for communicating data in a rapid manner for decision, making command control.

The other I only have two more like premier oil on the in the North Sea.

Is there any other project about to happen. There. So you got to believe one was going to be set up there as a backup.

Yes, like Eni, we also continue to speak with Premier oil on a regular basis as you know we have.

An individual sales person positioned in Aberdeen, which is in the same town that premier oil's located so they speak often.

Just like we have an individual in southern Europe, who speaks with Eni on a regular basis, we're talking about next steps.

We're looking for the right opportunity to be able to study and then move into a.

Possible next steps.

There's another thing on the on the illegal fishing I guess on that around the world.

I know youre doing something south in the islands of Asia somewhere over there, but where does that stand because you had somebody you hired.

From Indonesia or something.

Yeah, we have a gentleman located on the ground in Jakarta, and he's not just addressing the Indonesian market, but he is also helping us with our <unk>.

Several of the other jurisdictions there in southeast Asia.

This is what we consider to be a major opportunity market opportunity that is for OTT using our marine surveillance solution and the idea is.

This surface surveillance solution would be able to.

Take the place of man's vessels on the Ocean.

By putting these systems throughout strategic locations of for instance, the South China Sea to look for vessels that may be involved in illegal fishing.

They may be encroaching on.

On a net.

The sovereign territory and not only does the system have the ability to detect but also the idea is to provide evidence for interdiction.

So we see this as a really big opportunity not just even in that region, but in other regions of the world and we're really moving forward on discussions in those other regions around potentially using this system. This system is something that we have.

Put on our hybrid power buoy off the coast of New Jersey for initial testing we've done a lot of land based tests and collected a lot of information that allows us to really improve the system.

To deliver a lot of value for our potential customers and likewise I would point out. We also are really making a push on U S government sales and marketing we're hiring a dedicated government sales person to be located in the.

Metro Washington, D C area, Baltimore, or maybe down through Virginia that can really focus on building our brand on Capitol Hill positioning us for appropriations working with debt.

Department of defense contractors.

So that would all be for direct sales to organizations like the U S Coast Guard the Navy no debt.

Apartment of energy, but also to help us indirectly with some of these foreign jurisdictions, where we're trying to for instance.

Put marine surveillance solutions in place and to see how the U S government could help us with that as well. So this is part of our our strategy moving forward and we're aggressively.

<unk>.

Sounds great. So on a go.

Thank you.

Thank you Peter.

Once again, ladies and gentlemen that is star one to register questions at this time.

Pause for a moment for any additional questions.

Okay.

Yes.

Mr. Kirby I'm showing no additional questions in queue did you have any closing comments today.

Yes. Thank you operator, as we've discussed here today.

Despite the impacts of the global pandemic to our company in many ways. This fiscal year has been a remarkable period for obesity.

Earlier this year, our employees found a way to give back to our community by manufacturing and donating thousands of protective face shields to first responders and health care workers throughout New Jersey.

In December many of our employees invested time at our local food banks to help our neighbors in need during this unprecedented time.

We continue to drive opportunities with our customers oftentimes without the ability to travel for face to face meetings.

And we're continuing to develop and commercialize what we believe are world class solutions into high growth markets, such as clean energy and Ocean data.

We're well capitalized and we're expanding our expertise capabilities and partnerships, allowing us to bring additional value to our customers on genuinely excited about the future for OTT.

For joining.

Ladies and gentlemen, thank you for your interest and participation in today's Ocean Power Technologies Conference. You may disconnect your lines or log off the webcast at this time and have a wonderful day.

Okay.

Yes.

Yes.

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