Q1 2024 Ocean Power Technologies Inc Earnings Call

Good morning, and welcome to the Ocean power technologies first quarter of fiscal year 2024 earnings Conference call.

A webcast of this call is also available and can be accessed via the link on the company's website at Www Dot Ocean power technologies Dot com.

This conference call is being recorded and will be available for replay shortly after its completion on the.

The call today are Dr. Phillip Stratman, President and Chief Executive Officer, Bob Powers, Senior Vice President and Chief Financial Officer, and Joseph Tpa, Trop controller, Treasurer, and principal accounting officer. Following the prepared remarks there'll be a question and answer session. It's now my pleasure to turn the call over to Joseph Tpa Trop. Please go ahead Sir.

Thank you and good morning after the market close yesterday, we issued our earnings press release and filed our report on Form 10-Q for the quarter ended July 31 2023.

Our public filings are available on the SEC website within the Investor Relations section of the O P T website.

During this call we will make forward looking statements that are within the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.

Forward looking statements may include financial projections or other statements of the company's plans objectives expectations or intentions. These 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.

Additional information about these risks and uncertainties can be found in the company's Form 10-K, and subsequent filings within the SEC. The company disclaims any obligation or intention to update the forward looking statements made on this call.

Finally, we posted an updated investor presentation on our IR website. Please take a moment to review it as it provides a nice overview of our company's strategies now.

Now I am pleased to introduce Dr. Philip stripes.

Thank you Joe and good morning, everyone. We're pleased to have you join us on this call and your continued support is greatly valued before we delve into the numbers I would like to highlight that I am pleased with our quarterly results and the positive momentum. We are building the market is sending clear signals our customers are looking for more assets that protect marine environments.

Collect essential ocean data and enhance national security.

We are converting our pipeline of opportunities into backlog and revenues as seen with recent wins like the NOAA ITI <unk>. We believe we are well positioned to translate this momentum into profitable growth and value for our shareholders.

Let's talk about some recent developments on September one 2023, we secured three significant three year indefinite delivery indefinite quantity contracts with a total contract value you expect it to be in the millions of dollars from the national Oceanic and atmospheric administration.

Projects emphasize our commitment to marine conservation on research in August we celebrated the opening of our Marine robotics production facility in Richmond, California.

Instead and showcased our dedication to innovation, particularly in autonomous vehicles and wave energy buoys supporting America's energy independence and National Security.

In August we achieved a milestone by demonstrating the wave adapters modular vehicle attaching itself remotely to a buoy.

This accomplishment showcases our advanced autonomous capabilities and opens doors to various maritime applications during.

During the quarter, we continued our work with the U S Government agency supporting autonomous vehicle demonstration for a range of services. We also continued our work with the department of energy related to the full scale operations of the Mazor X system.

We are enthusiastic about future partnerships reinforcing our commitment to basic commercial unsecured sectors.

Fifth community pipeline continues to grow in addition to putting down several million dollars Foundation to purchase orders. We've also continued to add to the top of the pipeline with its currently sitting about $78 million for a net gain exceeding $11 million in just the first few months of the fiscal year, we are continuing to grow revenues and our gross profit margin.

We are increasing our strategy is working and we see additional opportunity for multi system orders on the horizon.

Now before we dive into the financial highlights I would like to introduce our CFO Bob Palace, Bob will provide you with more detailed information about our financial performance in Q1 fiscal 'twenty four.

Let's begin with revenue in Q1, 'twenty four our revenues reached $1 3 million, marking a significant increase compared to the $700000 reported in Q1 'twenty trade.

This was our highest quarterly revenue figure in over seven years and it continues the traction gained during fiscal 2023.

This growth can be attributed to our strong performance in <unk> sales revenue generated from our contract and the delivery of our strategic consulting services.

Our gross profit for Q1, 'twenty four stood at $700000 a.

A substantial improvement compared to the Q1, 'twenty three figure, which drove a gross profit of $200000.

This improvement is primarily attributed to our unmanned vehicles business, particularly the higher margin will be leasing business and our strategic consulting services.

I'm enthused about the progress we've made in this area and the expansion of the progress made in fiscal 2023.

Our operating expenses for Q1, 'twenty four amounted to $8 1 million.

<unk> our investments in both personnel and systems to support the growth Philip and I discussed previously.

As for our net result, we reported a net loss of $7 million for Q1 24 compared to a net loss of 5 million $5 9 million for Q1 'twenty three.

We continue to manage our cost tightly.

Making targeted investments in the personnel and structure needed to support our strategy and plans for growth.

On the balance sheet front, our combined cash unrestricted cash cash equivalents and short term investments as of July 31, 2023 totaled $26 $7 million.

Notably we continue to maintain a debt free balance sheet with no bank debt and a financial structure.

In terms of cash flow the net cash used in operating activities for Q1, 'twenty four amounted to $8 million.

This primarily reflects our net loss and the payout of employment bonuses accrued during fiscal year 2023.

In addition, our autonomous vehicles business continues to exceed our expectations, resulting in the payment of the earn out a true during fiscal 2023.

Finally, you will note that our inventory balance increased by approximately $700000 to $1 7 million.

This investment in inventory was necessary in order to satisfy growing backlog as well as our planned growth in revenue for fiscal 2024.

That covers our financial update.

Before we enter Q&A I'd like to remind everyone that the purpose of today's call is to discuss our first quarter of fiscal 2024 results as well as our financial outlook as.

As we head into the Q&A, we ask that you limit your questions to these topics. Thank you.

Thank you well now be conducting a question and answer session if you'd like to be placed in the question queue. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if he'd like to remove your question from the queue for participants using speaker equipment, it may be necessary to pick up her hands.

Before pressing star one one moment, please while we poll for questions. Our first question today is coming from Shawn Severson from water Tower Research. Your line is now live.

Thank you good morning, everyone.

Can you expand a little bit on those NOAA.

Trying to understand the nature of them.

Just very quickly I don't know if they're in the backlog or not.

How does this.

Keith one.

One would be the normal.

Claim revenue I should say for me too.

For other applications with well I mean, it's just timing.

I am Ed or something that you would have.

Long life.

Or was this more of a one off platform.

Yes.

Sure. Thanks.

Thanks for dialing in and thank you for the question, yes the.

The newer contracts are what the government refers to as <unk> indefinite delivery indefinite quantity. These are three year contracts.

I have a feeling attached to them.

In the non governmental commercial well you essentially can consider them very similar to master services agreements with a ceiling that have cooled off otis attached to them as an agreed.

<unk> sheet that we've got in place with NOAA. We've been awarded three of these so these are specifically for vehicles that are provided on leases with day rates and operators.

And the way we framed the statement I think is entirely accurate in these onshore demonstrations. This is for NOAA to use these vehicles within a specific line office to do specific jobs be that around.

Weather observations be that around.

<unk> monitoring or be that around illegal fisheries activities. It is part of the U S government's continued effort.

To increase the number of unmanned and on crude surface vehicles.

And operations around the United States. So we're very excited about this because he's a true commercial contracts with commercial terms.

Give us some clarity over real opportunities over the next three years to provide vehicles on call off basis.

Because first.

Right I understand.

One that's in operation.

Yes.

It is not the pilot.

And if that's the first.

It's nice.

On a region by pinpoint.

Okay.

Yeah.

So I think certainly from a NOAA perspective and from our vehicle perspective. This is the first time that that our vehicles have been under long term commercial contracts with the government.

And governmental terms, they sort of fall under what the government would term cocoa contract to one contractor operated type offerings.

So yeah, we were very excited about this because on the basis of this it enables us to expand the offering provide all vehicles into additional parts of the U S government and monetize the lease fleet on day rates.

Great. Thank you I'll step back in queue.

Yeah.

Thank you we reached end of our question and answer session I'd like to turn the floor back over to management for any further or closing comments.

Thank you for your participation and for being shareholders and our stakeholders I know P. T. We never take any of your for granted and we continue to work towards value enhancement for all of our shareholders and all of our employees. Thank you.

Thank you that does conclude today's teleconference and webcast you may disconnect. Your line at this time and have a wonderful day, we thank you for your participation today.