Ocean Power Technologies, Inc.

Q1 2022 Earnings Conference Call


spk_0: good morning and welcome to the ocean power technologies first quarter fiscal year twenty twenty two coppers whole a webcast for this cause also available on the company's website at www that ocean power technologies dot com as a reminder this conference calls being recorded and will be available for replay after it's completion today go threatening president and chief executive officer and matthew shaper senior vice president chief financial officer and treasurer or other call following prepared remarks we will open the corporate questions october thirteenth twenty twenty one opie he issued it's earnings press release and five it's quarterly report on form can queue you the quarter ended july thirty first twenty twenty one with the securities and exchange commission or opie public filings are available on the fcc website and se si dot gov or any investor relations of the opie website please note that manage with prepared remarks may contain forward looking statements that are within the safe harbor provisions of the private securities litigation reform act of back to ninety five forward looking statements are identified by certain words or phrases are based on assumptions made by management regarding peter circumstances over with the company may have good er no control and involved risks and uncertainties and other factors that may cause actual results to differ materially from any future result express or implied by such forward looking statements for further discussion on these risks and uncertainties please refer to our most recent form kincaid in federal court filings with the fcc we describe any obligation or intend to update the forward looking statements in order to reflect events or circumstances discussing this call now i am pleased introduce doctor phillips threatening please
spk_1: sir thank you and good morning today our review a pity business operations and provide an update on activities and development during the first quarter of fiscal year twenty twenty two and up to today then met will review our financial before we open the line for questions i'm proud to say opie to is making excellent progress as we continue to move toward our future as an ocean data and power services and solutions provider a central in our power to be technologies are to are solutions are keenly aware of these products alone will not fully satisfied most customers maybe must provide more than just autonomy lotus zero carbon power platform and we are working to provide meaningful solutions that helps self become so the complex challenges operators are facing a see from the needs of offshore energy developers and providers to defense and security organization and more to the end we're working with experience software and robotics developers and for them five and green the to create a leading edge proprietary cloud based more time domain awareness platform that features both expandable center and a little capabilities as well as military grade cyber security as part of the development process we are reading the initial versions of the solution for and at the trial of the coast of new jersey it received the necessary permits for the locations where we expect to deploy pb three on hybrid power buoys with the equipment that make up our maritime domain awareness solution packages this would allow us to optimize the platforms performance and provide prospective customers with opportunity to see the system at work
spk_2: in addition to our focus on services we will continue to develop pelo beauty products through a small business innovation research award the us department of energy's investment in our next generation of wave energy conversion devices drive the innovation necessary to tackle the challenges facing the operated in the marina
spk_1: baramidze moving our math on spring wave energy conversion almost wake system forward is integral to our competitive strategy we're seeing the benefits of last fiscal years acquisition of three them technologies as our strategic consulting services area is experiencing steady growth and expanding client base is providing a steady stream of diverse consulting projects for are huge debate team and with cultivating additional interest in the services a t has been at the forefront of ocean veggie development and we are continuing to innovate as we anticipate the need of the ever evolving market research on seek to surf will best accomplish that goal by pairing our in our knowledge and expertise with the best available strategic parties and additional in organic growth if when it makes sense with that let me turn the call over to much to discuss the financials
spk_3: thank you it and good morning everyone revenue for the first quarter of fiscal year twenty twenty two with three hundred thousand dollars compared to two hundred thousand dollars in the first quarter of fiscal year twenty twenty one per merrily as a result of the revenue from strategic consulting services from the three then acquisition the net loss for the first quarter of fiscal year twenty twenty two was three point one million dollars compared to three point four million dollars for the first quarter of fiscal year twenty twenty one
spk_1: this decrease was mainly attributable to nine hundred thousand dollar game on the extinguishment of the companies ppp loan after the as be a granted it's forgiveness during the quarter and an income tax benefit of one million dollars received during the quarter these gains were partially offset by increases in the quarter for product development and administrative costs turning out of the balance sheet total cash cash equivalents and restrict the cash was seventy eight point three million dollars as of july thirty one twenty twenty one net cash used in operating activities which five point three million dollars for the first quarter of fiscal twenty twenty two representing an increase of two
spk_4: point six million dollars over the first quarter of fiscal year twenty twenty one mainly as a result of higher project and employee related costs and the settlement of litigation during the quarter
spk_1: with that alternate back to fill it
spk_0: thank that operated we're ready to open the cool for question thank you without conducting a question and answer session to join the question can you please press star one on the telephone keep it at a confirmation told would indicate your line is in the question you you may press start to if you'd like to move or question from the queue for participants using speaker equipment may be necessary to pay get your headset before pressing authorities one moment please what we pulled for questions once again that star one three place in the question you
spk_5: a first question today is coming from lot also vary from our use of area and associates relied is now lol
spk_6: i do oh could you get more clarification on the litigation payable
spk_3: one point two million cloud pollen that
spk_7: yeah so this is matt of good to hear from you again yeah that's basically yeah robert robert by the way not
spk_3: yeah the i knew that on a local company okay i was trying to figure out on that was that i knew your robert robert
spk_1: the and could hear from you again i know you calling each quarter for the past few quarters thank you
spk_3: yeah third from a prior charleston levy who is a prior ceo of the company
spk_6: there was a yeah a settlement that we the company finally had with the former ceo that with disclosed in in all of our path and cave over the past several years by but now i gradually over and killed due to be growing ago know that that was paid until now that's behind us i'll call could rule gold little gone from honorable down like what are we go
spk_5: that a lead against and played soccer like that i'll call that thing as long as it's done with now could you give us some clerical lot of cause
spk_1: that project was posted like
spk_8: show yeah the have a baby happy happy to answer some questions around that not as we mentioned on on our previous cause and gluten or filings the that the duty of the coast of chile is installed
spk_1: the on the buoy as is is operating as as i've designed for for for the ad for the field where wage been deployed and
spk_6: we are doing some maintenance work on some of the and celery equipment that the do is powering are obviously given that i'd say it's winter in the southern hemisphere a film weather delays on on some of these issues but every time when window open up were going out there to do you think is onto the seabed equipment
spk_9: who can call it a functioning as design all the customers happy
spk_1: on the conversation guy with a customer i can't i can't speak for them in i can't predict what they're going to do but in a you buner seen that they've made public statements about the project on that they are highly supportive of of the project and and on what may come next seventy conversation as we are having this is part of our go forward strategy
spk_5: and demonstrating to the industry that the do you can fuel and power a broad range of center to god moving into this whole ocean data other other service market for us
spk_1: good how about other projects
spk_10: that's a not as we've known to be received the the add the ground from the department of energy which is supporting our future future developments in a the effort that we've got underway to shift our strategy to utilize our product out as platforms to glide and i
spk_1: power the service which we can ultimately of lead to corrosion data as a service is leading to several advance discussion that we help with customers around the globe on encouragingly say that that a moving discussions outside of what traditionally would have been the oil and gas and optional market the read and ah in i alluded to and as not mention seeing a steady steady growth and is essentially what excites me it out with read and is heading is that many of that a great and it's a new contract is coming from customers that weren't their traditional fried and bay
spk_6: and a lot over the other work that we've got going on and leading to follow and discussion but often now that we've concluded work that is the eighty eighty indeed custody
spk_1: okay any failing whatsoever guam future sales smokes water
spk_11: oh god i can't give you an exact the number on on where we where where where sales or leases or services will shake out at
spk_1: but i'm very encouraged by where i see discussions going on where the industry is heading writ large
spk_8: preheat grow
spk_6: op's absolutely and specifically with the shift that we're performing toward looking at the power believe that we have as platforms the fuel solutions and services which and engage in a were evident everything through the work we're doing with fun and five and greasy i'm i'm very encouraged by the
spk_12: discussions are occurring around that
spk_0: aka aki go clock on logo
spk_13: now they keep
spk_14: they take your next question today from your computer ruggeri from dawson james realizes valid
spk_15: hi how ya doin
spk_16: good how you don't peter go the questions i am than bargains company for a long long time
spk_17: i would like the status with like stopped in the gulf of mexico the commission or wells
spk_18: where does that stand point
spk_16: i'll give it hundred and fifty
spk_7: that about if you if you want cat
spk_1: if you guys do when you do commissioner oil well how long did it take to do a wow how many wells and out there are you chop them were at what is your position to do this for i would try to turn understand so we don't we don't do decommissioning of wealth we we are not an oilfield services company our efforts around decommissioning of are either it along the lines of what we did for what was then known as premier all now harbor energy and the north sea where are we
spk_16: you can where we will monitor the exclusion zone around such the up at that i've been plugged in london on pre cutting or it can be ones a well as been plugged it will be we will can provide monitoring services for for said wells to ensure that there is no seepage and that that occurs by the actual decommissioning work itself is it is entirely outside of argument okay
spk_3: and i see you're spending is increasing on do that hiring more employees is it gone
spk_16: what is that consisting of get the peter rum that's mainly and especially in the square is really to the settlement and payment of litigation matter but that one time item side we do have some increase than being as it pertains to the maritime dominus awareness both the young the software solution it though op and associate with green see about five as well as some additional personnel to support those efforts
spk_19: our hosts are you to to getting a decent order because we're used to i used to get the thing and show i saw them of billy you who you get settled mississippi engineering with the now you've done suffered from a royal with annie and
spk_16: the stolen have really any revenues from all this and i'm just trying to understand what's taking so long that's yeah
spk_1: i'm just how close you to winning something you need of yet the navy a pretty much know you get involved in this company and long long time you have plenty of money on the bank right now she's great question what are you going to do with that seventy million dollars
spk_8: no they getting wet wet where we are not as i mentioned before a we are we are really pivoting the company away from a pure product play on providing the booth a standalone systems and moving into power as a service and ocean data as a service
spk_1: to that extent we're expanding on the work we've done with he and i with eg p and with with the how their energy and also with the navy and we're we're building upon that in order to put together a solution that we can utilize and and bring into the market and as i mentioned earlier that is leading to some very intriguing discussions are we having with customers around the globe that actually primarily outside of the oil and gas untraditional traditional energy industry and that's where we see the the largest growth
spk_16: i would also say
spk_3: add that as we did with three then we will continue to look at inorganic great opportunities
spk_1: often when they come along make sense in terms of valuation and further add to the execution of the strategy that that that we filled out so say you're using the power billy as
spk_20: my illegal fishing and monitoring services with the data what about the data centers underwater with like a microsoft and stuff like as that what you talking about
spk_1: when i talk about ocean data is really more where we're looking at a square with one thing rebuilding building out if the edge computing capabilities on the movie itself because of leave us were operating far offshore without any other infrastructure we're operating in a in a low bandwidth high latency environment say part of the epithet we've gone the way the moon
spk_8: i'm and with going to fathom five is building out the ability to reconfigure the is to act as a gateway notes for other means of communication to be integrated with a whole range of census
spk_21: the
spk_16: to you question specifically on sit in the edge data centers at the edge
spk_22: we have not looked at polling this because most of those are connected via cable straight back to to i'm sure however similar to decommissioning well if there's an opportunity for monitoring exclusion zones around days to prevent anybody accidentally need putting a
spk_1: dredging fishing nets over over said other than the see that okay you're basically an entirely different strategy right now when it gets of us we asked me to put in as we have and a ten k also had used really build upon the remain side we need a the the ultimate aim that we're pushing into his ocean data other service on providing the solutions around that and what because we have the power believe that enables us to do ocean data is a service hosted on on our buoy platforms which also enables as a secondary leg of the strategy
spk_16: to provide power as a service still as we've done in the past using our platform and and also other platforms integrated into a raise were required what we did in the in the deep does study and then all of the is underpinned by a consulting services which enables of is accompanied to help our customers at a much earlier stage of life cycle before they even know that they may or may not need to me
spk_1: and we firmly believe that and this strategy enabled us to provide services to customers that may not see a need for the do either the probably powerful but it's still enables us to put out substantial numbers of all platforms in order to solve the other need that they have and provide the hyperlocal data collection that they require to in aggregation with the other systems
spk_20: are you still doing stuff with the under worse some this was workshop see i end up
spk_16: that that side the marketer
spk_0: absolutely i think the if looking at the work we've done for the naval postgraduate school a did exactly that that fooled into the ability to do actually believe it is power as a service to provide be charging for stop the asset
spk_23: the it daughter it movie ages move into the ocean data as a set of market the go now you can combine the collection of stop the data
spk_24: with computing capabilities on the movie itself to than from mit said data back to the show bases so yeah absolutely conversations with a you'd be company and us as companies are advancing at a fairly rapid pace for us
spk_6: okay great my thank you
spk_24: thank you
spk_25: they can as question is coming from public with fellow from a private industry airline a lot
spk_26: i guess either
spk_1: so you can change a year you guys your picketing as the company right my question is how has the total address will market changed over the last few months or even year with come to its ocean data service and power to service in touch base on on on how that's changed over the last six six two year sure i think i think the
spk_16: general shift in the industry has been was worn off you know as of of of data as a service and as power as not last gen in addition to that i think the fact that we are in the you a decade off of ocean sign and
spk_6: and the changes in the administration a politically pay in the united states of america
spk_1: is really enabling a major growth spurt for the kind of the ocean data industry read large i'm saying we're we're very encouraged but that were very encouraged by what we're seeing in terms of company's coming into the market with very interesting thing for products and the pivot that we are carrying out enables us to work with be sent the company's armed with other partners the out there and sell through them and with them to the customer base even if that customer base of would have never considered a buoy and the first place i think that that makes for a very interesting addressable market which is not constrained by the nation of metal or steal that fit on the seated
spk_0: like just is beat you seen the total address for marketers content has the school increased considerably because of those because of the stop platforms are like that those weren't thing that was a similar you can push the a year ago now with this with the shift in in in in government and and in new love our here
spk_6: please you seen a disease this is where the growth is going to conquer yeah i think this is exactly when the greatest and i come from i think the i think the the the kind of the ocean data as a service actionable intelligence on predictive analytics based on data that is collected offshore combined with other data that already exists as that that that is where we see the great coming from
spk_1: and to that extent that one of the reasons why we're working with problem five
spk_8: and green not just build out the computing capability on the movie itself
spk_1: but to do to develop a cyber secure cloud platform that unable a combination of hyperlocal ocean data with third party data that comes from other sources in order to provide in a predictive analytics the other people can act upon and then what not wanna question that shirt when it comes to our in the rate of what what would what would you say would be a top reallocations in the are the budget as of now or are we like what would be with with the budget for i knew the next year a year to what would you say up to me i'm after to the business or a reality than that too the i is only one it wanted one minute front and center of everything we're doing is building out and testing and version one point one of our more time domain awareness solution and then pushing out the software update full version two point oh onto those buoy and that doesn't include the
spk_0: life testing of the end a solutions off the coast of new jersey at three sides that we've got permitted already
spk_6: monday's deployment are starting to occur in the next two or three weeks on and on of from from what i have i'm on understand the and it it is a to mention the development of our next generation power conversion system which is he must on spring wave energy converter all or most work which will become an additional platform product that we can use in order to harness wave power in a
spk_1: in a in a different format and what the pv freed us by removing any external moving parts from from the system
spk_20: they that they had totally to all the major items you've you've got going on on and a third item a developing the interfaces so that we can integrate other senses and payload that exist in the industry so we don't have to reinvent the wheel but to the point i'm
spk_1: made in order to grow in the ocean data as a service market we need to be a host platform that can enable plug and play all new senses after being developed and put them in there right near the better than a chance
spk_6: yeah that's too much and and thank you so much are hoping that i'm you got to do to more sales and or in actually was question how how you deal with how your with the higher for another we were looking to hire somebody to start work in government side of the biggest of the biggest how you doing with it yeah say what what we have done we've we've engaged and any any external advisory firm that is helping us navigate the the d c
spk_0: ocean policy specific landscape
spk_27: this this isn't a think tank or our part of him body but but rather a and of a strict policy and failed advisory firm and we are in advance
spk_28: discussion and stages of reconfiguring are thousand and bit of development team to capitalize on the government defend pocket
spk_29: i may not know that was their own did so much for now
spk_1: the people nurse or some some some shareholder value to thank you if you gonna second if questions raised coming from ten or smith for a private event related real life i guess bush what's the typical cell cycle for both a boy
spk_30: data service
spk_1: if there is moot typical cell cycle time a such because it a pen it it's somewhat industry upended a we we we have we have discussions in a if the ignoring it ignoring the consulting seven decide which tends to be primarily a a call on a friday afternoon for somebody that need something by tuesday lunchtime in order to move the reagan location the it and know the conversations on on on and guess that we're having are around hey i've got this project i need to do it on a brownfield side in the north sea can you make something available in the next twelve to sixteen weeks on we'll work through that when it comes to government is more longer term planning along the lines of he is what we're trying to do in terms of a large government procurement hear the study that need to be done in advance of this then qualify as you to participate in to providing the equipped
spk_31: and at a later stage for the psychos can vary from in a a in a
spk_27: i'd say to at two handfuls of weeks to in a to handle the not that that's really what we're seeing we we were somewhat discouraged by the resurgence of the delta very and over the course of the summer wage and pushed back a lot of face to face meeting that we had planned during during july and august on a all that trouble got curtailed again the bear in in generally speaking as headed it's it between weeks and months depending on who the and customers and foreign governments tend to work on slightly different cycles and and we again we're working with advisory firm that we making sure that that we have repeatedly address address day cycles with with about
spk_1: thirty million dollars virtually no sales execute on sales and profits with
spk_8: with the losses
spk_3: on a run rate of minus twenty when you produce just twenty million in profit just to break well i mentioned to me know that one of the one of the reasons way we're executing the strategic shift
spk_0: and we get because the the the nation dad just
spk_32: putting movie after movie after doing out there
spk_33: a is one that for the customer is not that appealing say we are we are working feverishly on on the pivot and moving into know or overhead market for starters a such as ocean data as a service and adding in other said
spk_32: solutions into the put failure to accelerate the growth that that that we that we looking to see
spk_16: no also furthered are tanner you know it's a thought about the the company culture and moving you know transforming our company from you know it research and development product beat company to the data in power service provider
spk_22: so we're we're looking at capitalizing on those areas as we're making the ships and doing a very rapidly or whereas in the past if you may or may not recall in two thousand and fifteen we went through it's strategic pivot where we moved away from large scale
spk_1: the grid connected power to the autonomous power and we see the need to shift
spk_8: the company the way that total addressable market is a shifting to the data in power as a service so we're moving quickly with the markets
spk_1: thanks your next next question today is coming from jeffrey campbell from alliance global partner your line of lot
spk_33: and i'm like a morning
spk_32: two questions one and responses on the to certain that ago you mentioned lower overhead marcus i want to use this imply that you might find the capital costs deployed stories and to strategic locations as a platform to then sell better service after that
spk_20: hey just guy get you get to have a me and a it is not something that is family and our plans right now
spk_1: neither as i mentioned in response to in the earlier question we are working with ever larger partners in the industry that is certainly have an interest in a quick couldn't pre deploying data collection devices in relation to then monetise monetize the date that being collected in putting that out to their customer base so even if we're not looking at financing that directly our self worth it mean discussions to with with with partners in order to to carry out such such measures
spk_26: okay
spk_34: then get my the questions are just wondering you know we gotta
spk_24: a lot of
spk_32: prismatic theoretical discussions about stuff like order it maybe it at all together
spk_1: by giving up an example of a primary use case for your big data service once your capabilities are washed out
spk_16: incidentally tape take for example the issue of illegal fishing and a we we can work with partners in the system you can put out an array off
spk_35: our platforms that host the md a solution you pre deploy them me and know take then in the ocean and you start actively monitoring around those areas you didn't utilize other data that you can pull in from in a satellite providers until on the fourth
spk_0: and and weather data and aren't you know fishing grounds movements
spk_36: to start alerting the platform as to you know how the array that you've got up forward deployed to look in certain quadrants where it is more likely than not that illegal fishery activity they're going to start taking place and you sell that advantage data to the customer at the same time you know we reserve we would reserve the right to also monotype any other data we collect from the issue is worth it out there who does well i mentioned earlier on they can live in canada and approach to sort of with plug and play with senses to get if we got good result and
spk_16: during initial fishery illegal fishery monitoring we can all to measure data that is relevant whole for climate fine and thought monetizing that bartending a to religion contusions and governments say it's it's the ability to use one platform and one device in a in a given location and monetize the data that it collect more
spk_37: time is over with with a range of customers
spk_20: okay and just as a bottle after that should we assume that the primary customer or illegal in data the
spk_1: example would be get government
spk_38: every be government oh hey i kind of government sanctioned security on organizations that the a contract at by government to carry out and forth negativity in to a lesser degree just because of financial constraints on their side it could also be mgh that have been tossed
spk_39: to protect certain marine protected areas in the remote part of the world
spk_20: great like and we look forward to seeing you conference next week
spk_1: they could get that your next question today is joe dirt private events sort your line of life hello
spk_8: ah question we have an update on the i deep star project one and die number two
spk_1: with the bowie asked me out coast of new jersey why she had the parma cherry was that launched that's order to you on your get your on guitar the deep study was completed during during the fiscal quarter on route were not having conversations with the varied operated that were involved on what could possible next steps be i will sleep the his
spk_2: paul me a while i mentioned earlier
spk_36: that have to some extent dependent on the speed of adoption of of can i can have all electric trees an all electric type actually paying the gulf of mexico
spk_40: but there are the use hated are rising from the deep to study about well monitoring etc that that we're looking at
spk_3: in terms of the project off the coast of new jersey
spk_41: it hit the that the that we've got a permit in hand
spk_16: the first test the ottawa to out in in what have dumped has completed and of
spk_0: last week i want to say when they they could have been thursday been on that in about two or three weeks time weather window dependent
spk_1: the first one will go off the coast of new journey to second will follow shortly after that and then a good fit one shortly after that and what that demo deployment is going to do a game anyway they were going to deploying them are time domain awareness version one point no and one point one on those three dewey and then swap in an hour improvements to sit system and in order to further product chi the the approach and will also going to be doing like live water demonstrations and ten with various offered getting posted are to be push out additional software update to those efforts and then also ultimately start swapping in additional power generating doing out there
spk_0: the that that that's kind of what i mentioned earlier with the muffler device on that one of those are going to be something that going to be were tested we think it is absolutely imperative as as a as a provider of offshore services that will have all quit all of our equipment is robustly demoed

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