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Ocean Power Technologies, Inc. (OPTT)
F2Q2011 Earnings Call Transcript
December 10, 2010 10:00 am ET
Brian Posner – Chief Financial Officer
Charles Dunleavy – Chief Executive Officer
Winnie Clark – UBS
George Santana – New Earth Capital Group
Robert Littlehale – JP Morgan
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Thank you. Welcome to Ocean Power Technologies audio webcast for the second quarter, ended October 31st, 2010 of our fiscal year ending April 30th, 2011. Today, we issued our earnings press release and will file our quarterly report on Form 10-Q with the Securities and Exchange Commission. Our public filings can be viewed on the SEC Website at sec.gov or you may go to our Website, oceanpowertechnologies.com. I will be joined on today's webcast by Charles Dunleavy, our Chief Executive Officer.
Please advance to Slide 2. 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 the 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 the 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 will now turn the call over to Charles Dunleavy.
Thank you, Brian, and thanks to everyone who has joined us for today’s webcast. Brian and I will be available to answer questions, following our prepared statements. On Slide Number 3, I would like to note some of the highlights of the first six month of this fiscal year.
Several important technical milestones were achieved during this period. We accomplished the grid connection of our PowerBuoy at the Marine Corps Base in Hawaii in conjunction with the US Navy. This is the first grid connection of a wave energy device in the U.S.
In Scotland, we successfully completed the integration of the energy conversion and power take-off subassemblies with the new PB150 PowerBuoy structure. For our Reedsport, Oregon project, also for our PB150 PowerBuoy, we finished construction of this steel structure. And in connection with that Oregon project, we signed a ground-breaking agreement with 14 different federal, state and local stakeholders.
OPT also made great strides in its two autonomous PowerBuoy projects with the US Navy. OPT achieved strong top line growth, with an increase in revenue for both the three and six months ended October 31, 2010, as well as an increase in contract order backlog to $7.5 million. We announced approximately $10 million of awards from customers in the U.S., UK and Japan, since our current fiscal year 2011 began this past May.
Let me now take you through these developments in more detail. Moving to Slide 4. OPT has identified two application-driven markets for its core PowerBuoy technology, the utility or grid-connected markets, which needs large amounts of power and the non-grid connected autonomous market where lower levels of power output are needed for use out in the deep ocean. Good operational progress is made with our utility PowerBuoy projects during the second quarter.
In September 2010, we completed grid connection to the Oahu power grid of our PowerBuoy at the Marine Corps Base in Hawaii. This is the first grid connection of the wave energy device in the U.S. and demonstrates the ability of OPT’s PowerBuoy to produce utility grade renewable energy that can be transmitted to the grid in a manner fully compliant with national and international standards.
The PowerBuoy has been in operation since December 2009, has withstood a number of severe storms and produces power in accordance with modeled expectations for that location in PowerBuoy configuration. Built under contract from the US Navy, the Hawaii project’s intent is to demonstrate the survivability of OPT’s PowerBuoy as well as the capability of our product to meet design expectations. In addition, significant aspects of the success of the Hawaii PowerBuoy are its delivery of grid quality power and the validation of OPT’s operating and performance models for a scale-up to the PB150 and its progression to the PB500 PowerBuoy products. These highlight the strength of our technical base, which is being leveraged to create valuable intellectual property.
Slide 5 shows a picture of the PowerBuoy deployed off the Marine Corps Base in Oahu. Now, turning to Slide 6. Our other utility projects also continued to move ahead steadily. In 2009, OPT signed a commitment agreement with the South West Regional Development Agency or SWRDA to advance development of Wave Hub, one of the world’s largest proposed renewable marine energy projects, and is located in Cornwall, England.
OPT’s expected participation in the Wave Hub project includes plans to build, install and operate a 5-megawatt wave power station, comprising an array of its patented PowerBuoy systems. SWRDA has now completed the installation of the cabling and subsea infrastructure of the entire Wave Hub site. In July 2010, OPT received support from SWRDA with a grant of 1.5 million British Pound Sterling, this is approximately $2.3 million. This grant from the UK government is for the development of the PB500 and strengthens our commitment to the region.