Ocean Power Technologies: Results for the Fiscal Third Quarter
PENNINGTON, N.J. - Ocean Power Technologies, Inc. announced financial results for its fiscal 2013 third quarter and the nine months ended January 31, 2013.
OPT reported a decreased net loss of $10.6 million for the nine months ended January 31, 2013, versus $11.1 million from the comparable period in fiscal 2012.
The Company announced that it received approximately $1.5 million under the State of New Jersey's Business Tax Certificate Transfer Program. The Program enables companies to raise cash to finance their growth and operations and is administered by the New Jersey Economic Development Authority (NJEDA) and the New Jersey Department of the Treasury's Division of Taxation. Under the Program, New Jersey-based technology or biotechnology companies with fewer than 225 US employees may be eligible to sell NJ state net tax operating losses and research and development tax credits to unaffiliated corporations.
To focus its on-going efforts to target new opportunities in the autonomous market, OPT established a new business unit to assess, target and develop opportunities in the large potential markets for OPT's non-grid connected PowerBuoys. OPT's products for this sector have been developed for off-grid applications such as defense and homeland security, offshore oil and gas operations and oceanographic data gathering. The Company believes that the Autonomous PowerBuoy market represents an important opportunity for profitable growth.
Efforts continued under the award of a ¥70 million (approximately US $0.8 million) contract from Mitsui Engineering & Shipbuilding ("MES"). OPT is teaming with MES to develop PowerBuoy technology enhancements for application in Japanese sea conditions. This analysis and design work is expected to be completed by the end of OPT's fiscal year ending April 30, 2013 after which a decision will be made on the next steps toward ocean trials of a demonstration PowerBuoy system. This would provide the basis for a prospective build-out of a commercial-scale OPT wave power station in Japan.
OPT and Lockheed Martin ("LM") are continuing to develop a planned 19MW wave energy project at Portland, Victoria, Australia, which would be one of the largest wave energy projects in the world. LM is assisting with the design of OPT's PowerBuoy and will lead the production and system integration and support overall program management. Funding for this project includes a grant from the Commonwealth of Australia. The grant is subject to certain terms, including achievement of significant external funding milestones. OPT recently retained Brookfield Financial Australia Securities Limited as financial advisor to assist in structuring and securing the power purchase agreements and appropriate financing for the project. In addition, OPT is working with the Australian Renewable Energy Agency, the Commonwealth's agency that manages the grant, regarding the project.
The Company announced the appointment of Dr. Mike Mekhiche to the position of Vice President, Engineering. Dr. Mekhiche joins OPT from BAE Systems, where he most recently held the position of Director of Programs. Dr. Mekhiche will be responsible for the Company's engineering and advance technology development. This will include technology delivery, continuing enhancements and development of OPT's wave energy technology portfolio, and the development of the next generation of PowerBuoy systems.
OPT has changed the nomenclature of its Utility and Autonomous PowerBuoy products to focus on product classes. Among the utility PowerBuoy products, the PB150, which will be called the Mark 3 PowerBuoy, currently drives a peak rated generator with a maximum power output of 0.86MW. The PB500, which will be called the Mark 4 PowerBuoy, currently drives a peak rated generator with a maximum power output of 2.4MW. This method of power rating is more closely aligned with that utilized by other renewable energy sources such as wind and solar. Among the Autonomous PowerBuoy products, the LEAP system will be called the APB 350, and the OPT MicroBuoy will be called the APB 10.
The Company is planning for deployment of a Mark 3 PowerBuoy off the coast of Oregon. However, deployment and commissioning of this PowerBuoy must take into consideration various regulatory, business, and financial factors, including requirements of regulatory agencies and a significant use of funds. In February 2013, OPT received notification from the staff of the Federal Energy Regulatory Commission (FERC) that it now considers our first Oregon PowerBuoy to be subject to its jurisdiction. If FERC is ultimately determined to have such jurisdiction, significant reporting and other procedures will be necessary to comply with FERC requirements, which will require us to make additional expenditures. These factors may delay deployment of the Oregon PowerBuoy beyond calendar 2013.
Charles F. Dunleavy, Chief Executive Officer of OPT, stated, "Ocean Power Technologies continues to make progress in its utility PowerBuoy markets under contracts with Mitsui Engineering & Shipbuilding, and the European Union. In addition, based on our market outreach, OPT remains optimistic about the potential for the Autonomous PowerBuoy to be a contributor to future growth. We are talking to prospective customers for the Autonomous PowerBuoy primarily in two key sectors – Oil and Gas, as well as defense and government. This marketing and selling activity must address the technology and application-specific needs of the customers. In this dialogue, our product offerings bring to these and other industries the prospect of longer-term, continuous renewable power at higher levels than they had previously envisioned. Despite the macro-economic backdrop, we continue to see strong interest in the core PowerBuoy technology. The Company is actively pursuing a number of opportunities to expand our business within both the utility and autonomous markets." Dunleavy continued, "Finally, during our third quarter we received $1.5 million under the New Jersey's Business Tax Certificate Transfer Program. We greatly appreciate the New Jersey Economic Development Authority's decision to approve our application."
OPT's contract backlog as of January 31, 2013 was $4.3 million, compared to $5.2 million as of October 31, 2012 and $7.8 million as of January 31, 2012. OPT anticipates that the majority of its backlog will be recognized as revenue over a period exceeding 12 months. A portion of OPT's backlog at January 31, 2013 is for its Oregon project, and the Company intends to seek additional funding to complete this project.
Results for the Fiscal Third Quarter Ended January 31, 2013
For the three months ended January 31, 2013 and January 31, 2012, OPT reported revenues of $0.9 million. There was a slight decrease in revenue related to our Mark 4 PowerBuoy project, partially offset by an increase in revenue related to our project with Mitsui Engineering & Shipbuilding.
The net loss for the three months ended January 31, 2013 was $1.5 million as compared to a net loss of $2.2 million for the three months ended January 31, 2012. The decrease in net loss year-over-year was due primarily to lower product development costs relating to a lower level of activity for OPT's project in Oregon and the project in Hawaii, which was completed in FY2012. In addition, there was a gain on foreign currency transactions and a higher recorded income tax benefit due to the sale of New Jersey state net tax operating losses. These decreases in net loss were offset by an increase in selling, general and administrative (SG&A) expenses due primarily to an increase in legal fees, site development expenses related to the planned project in Australia and certain employee-related costs.
Results for the Nine Months Ended January 31, 2013
For the nine months ended January 31, 2013, OPT reported revenues of $3.2 million as compared to revenues of $4.3 million for the nine months ended January 31, 2012. This decrease primarily reflects the completion in the prior fiscal year of the Littoral Expeditionary Autonomous PowerBuoy ("LEAP") project for coastal security and maritime surveillance with the US Navy, in addition to a decrease in billable work related to the Mark 4 PowerBuoy development project. These declines were partially offset by an increase in revenue from the Company's WavePort project in Spain, the project in Oregon and the MES project.
The net loss was $10.6 million for the nine months ended January 31, 2013 compared to $11.1 million for the same period in the prior year. This decrease in net loss was due primarily to lower product development costs relating to the completion of our project in Scotland in the prior fiscal period, a gain on foreign currency transactions and a higher recorded income tax benefit due to the sale of New Jersey state net tax operating losses. These decreases in net loss were offset by an increase in selling, general and administrative (SG&A) expenses due to an increase in legal fees and in site development expenses related to the planned project in Australia.
Cash and Investments
On January 31, 2013, total cash, cash equivalents, restricted cash and investments were $24.5 million, as compared to $26.4 million as of October 31, 2012. The net decrease in cash and investments was $1.9 million for the three months ended January 31, 2013, compared to $2.1 million for the three months ended January 31, 2012. OPT received approximately $1.5 million and $1.1 million from the sale of New Jersey state net tax operating losses for the three months ended January 31, 2013 and 2012, respectively.
Additional information may be found in the Company's Quarterly Report on Form 10-Q that will be filed with the US Securities and Exchange Commission ("SEC"). The Form 10-Q may be accessed at www.sec.gov or at the Company's website in the Investor Relations tab.
Conference Call Details
The Company will host a conference call to review these results at 10:00 a.m. Eastern Time today. The call will be available by telephone at 800.561.2693 (toll free in the U.S.) or + 617.614.3523 (for international callers), using passcode 95501750. Investors may also access a webcast by visiting the Company's website at www.oceanpowertechnologies.com and clicking on the Investor Relations tab, then Webcasts & Presentations. Recorded replays of the conference call will be available on the Company's website and by telephone at 888.286.8010 (toll free in the U.S.) or 617.801.6888 (for international callers), replay passcode 42256362, beginning at 1:00 p.m. Eastern Time on March 14, 2013.
About Ocean Power Technologies
Ocean Power Technologies, Inc. (Nasdaq:OPTT) is a pioneer in wave-energy technology that harnesses ocean wave resources to generate reliable and clean and environmentally-beneficial electricity. OPT has a strong track record in the advancement of wave energy and participates in an estimated $150 billion annual power generation equipment market. OPT's proprietary PowerBuoy® system is based on modular, ocean-going buoys that capture and convert predictable wave energy into clean electricity. The Company is widely recognized as a leading developer of on-grid and autonomous wave-energy generation systems, benefiting from more than 15 years of in-ocean experience. OPT is headquartered in Pennington, New Jersey, USA with an office in Warwick, UK, and operations in Melbourne and Perth, Australia. More information can be found at www.oceanpowertechnologies.com.
CONTACT: Brian M. Posner
Chief Financial Officer
Telephone: +1 609 730 0400