Ocean Power Technologies, Inc. (OPTT)

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Ocean Power Technologies, Inc (OPTT)

Q3 2011 Earnings Call

March 14, 2011 10:00 am ET


Charles Dunleavy - Chief Executive Officer and Director

Brian Posner - Chief Financial Officer, Principal Accounting Officer, Secretary and Treasurer


Robert Littlehale - Bear Stearns



Good day, everyone, and welcome to Ocean Power Technologies Audio Webcast for the Third Quarter of Fiscal Year 2011. [Operator Instructions] At this time, for opening remarks, I would like to turn the call over to the Chief Financial Officer of Ocean Power Technologies, Mr. Brian Posner. Please proceed.

Brian Posner

Thank you. Welcome to Ocean Power Technologies Audio Webcast for the Third Quarter ended January 31, 2011 of our fiscal year ending April 30, 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 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'll now turn the call over to Charles Dunleavy.

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 3, I'd like to note some of the highlights of the third quarter of this fiscal year. We continued to make significant progress in developing our core PowerBuoy technology and executing our business strategy. We announced the expansion of our relationship with Mitsui Engineering & Shipbuilding; received independent certification from Lloyd's Register for our PB150 PowerBuoy; and just after the end of the third quarter, announced the completion of the first of our new generation utility PowerBuoy, the PB150.

OPT achieved strong top line growth with reported increases of 78% and 73% in revenue for the three and nine months ended January 31, 2011 compared to the respective periods last year. 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 market, which needs large amounts of power; and the non grid-connected autonomous market, where lower levels of power output are needed for various applications out in the deep ocean. Much of this quarter's operational activity was focused on the development of our PB150 utility PowerBuoy system.

Construction of our first 150kW-rated PowerBuoy in Scotland is complete. This is the largest and most powerful device developed and built by us to date. The development of the PB150, built and assembled at Invergordon, Scotland, has utilized the skills of local firms and represents a multi-million pound-sterling investment in the region. It is currently being prepared for ocean trials at a site approximately 33 nautical miles from Invergordon, off Scotland's northeast coast. The sea trials are expected to commence as soon as weather conditions permit deployment.

The ocean trials off Scotland have been fully consented by the Scottish government. In addition, Marine Scotland, the directorate of the Scottish government responsible for regulating marine and fisheries matters, consulted with many interested parties and stakeholder groups, covering areas such as local wildlife, shipping, oil & gas and fishing interests.

The company is seeking additional funding for the commercial utilization of the buoy after the trial phase is completed, including its possible deployment at various potential sites. It is the first test system for our PB150 product line and a significant engineering achievement. As we have progressed during the construction phase, it has already provided valuable data for the advancement of our technology and its manufacturability.

Slide 5 shows the integration of the spar and the first half of the float during the final assembly process. On Slide 6, the picture on the left side shows the buoy with the second half of the float being assembled. The picture on the right side shows the integration of the bridge and the float.

Moving to Slide 7. We see a picture of the assembled PB150 PowerBuoy. It is 135 feet in length and has a maximum diameter of 36 feet near the ocean's surface. For reference, you can see one of our technicians on the far right side of the picture.

Moving to Slide 8. Our second PB150 for our project in Reedsport, Oregon has benefited from the experience of building the Scottish system. Fabrication of the power take-off and control system as well as the steel structure is now complete. Testing of the power take-off, or PTO, and the control system has commenced in OPT's production facility. Following this initial testing of its subassemblies, the complete PTO system will commence cycle testing under simulations of varying wave conditions. Ocean trials of this PB150 are expected to commence off the coast of Oregon in the second half of calendar year 2011.

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