Earnings Call Transcript - OPTT Q1 2021

Operator, Operator

Good morning, everyone, and welcome to the Ocean Power Technologies First Quarter Fiscal Year 2021 Conference Call. A webcast of this call is available on the company's website at www.oceanpowertechnologies.com. This conference call is being recorded and will be accessible for replay afterward. On the call today are George Kirby, President and Chief Executive Officer; and Matthew Shafer, Chief Financial Officer and Treasurer. On September 14, 2020, OPT issued its earnings press release and filed its quarterly report on Form 10-Q for the quarter ending July 31, 2020, with the Securities and Exchange Commission. All OPT public filings can be found on the SEC website or in the Investor Relations section of the OPT website. Management's prepared remarks may include forward-looking statements that fall under the protections of the Private Securities Litigation Reform Act of 1995. These statements can be recognized by words or phrases such as may, will, aim, likely result, believe, expect, continue, anticipate, estimate, intend, plan, seek, future, goal, project, should, pursue and similar expressions. Such forward-looking statements depend on assumptions made by management regarding future events over which the company might have limited control and carry risks, uncertainties, and other factors that could cause actual results to differ significantly from what is projected or suggested. Factors influencing these variations include future financial performance, anticipated cash flow, efforts to reduce costs and enhance operational efficiency, revenue growth, success in key markets, competition, the establishment of partnerships, delivery and deployment of PowerBuoys, increasing the power output of PowerBuoys, expected product costs, recruitment of new key employees, and development of customer relationships. For a more detailed discussion of these risks and uncertainties, please refer to our latest Form 10-K and subsequent SEC filings. We do not commit to update any forward-looking statements based on events or developments discussed in this call.

George Kirby, CEO

Thank you, and good morning, everyone. I'm going to review our business operations and provide an update on our commercialization activities and developments during the first quarter of fiscal year 2021 and up to today. Matt will review our financials. And after that, we'll open the line for questions. In recent months, OPT has made substantial advances in its sales and business development efforts, including the introduction of 3 new products and solutions. The company also saw the addition of an Indonesia-based sales representative and the opening of the Houston, Texas sales office, as well as expansion into additional emerging markets, including fisheries protection and the surveillance and monitoring of marine-protected areas. Our first new product, the hybrid PowerBuoy, uses solar panels and an efficient Stirling engine to power onboard or subsea payloads regardless of wave activity. We believe this makes it an ideal solution for both heavy seas and calm wave environments. In August, we deployed a hybrid PowerBuoy several miles off the New Jersey Coast to accumulate operational data for interested customers. In the coming months, we anticipate outfitting the hybrid PowerBuoy with OPT's marine surveillance solution for live virtual demonstrations to customers in different locations throughout the world. OPT's marine surveillance solution integrates high-definition radar and thermal and optical cameras with state-of-the-art security sensors and software. When installed on PB3 PowerBuoy, the single unit can monitor more than 1,600 square miles of ocean surface to protect isolated marine assets, fisheries, and marine-protected areas. OPT's marine surveillance solution is also scalable by integrating multiple units over larger areas to assist agencies and organizations in securing extensive territorial waters or larger marine-protected areas. The Subsea Battery uses OPT's proprietary and highly efficient battery management system to maximize the amount of energy available for subsea payloads. Its modular design allows multiple units to be linked together to meet more significant energy requirements for a wide range of subsea equipment. The Subsea Battery can be a stand-alone power solution or integrated with the PB3 or hybrid PowerBuoy for on-site charging. The recently established OPT office in Houston, Texas is strategically located adjacent to Houston Energy Corridor. The new office is the base for our regional sales and business development activities in support of opportunities in the Gulf of Mexico and broader U.S. and South American markets. It also provides space for OPT project managers, engineers, and field operations personnel to collaborate more closely with customer project teams. We're happy to welcome Gilar Prakoso as an Indonesia-based member of our commercial team to represent OPT in the Asia Pacific region. This area of the world has vast marine resources and territories and a significant number of older offshore oil wells, which are due to be decommissioned. Mr. Prakoso is well established with industry relationships throughout local maritime agencies that we believe will enable OPT to expand our customer base. As a result, we're identifying new opportunities to apply OPT surveillance, power, and communication solutions to varied markets, including fisheries, marine-protected areas, and maritime border security. During the first quarter of this fiscal year and every day, we continue to navigate challenges created by the global COVID-19 pandemic. Opportunities have proven slower to develop due to the impact of the virus on different geographies and markets. We continue to work with existing customers, cultivate new opportunities and market our solutions through virtual meetings and conferences. Though we're still unable to meet with customers face to face in a world that continues to grapple with COVID-19, the last few months have been a period of substantial activity for OPT. We have new products and solutions, a growing commercial organization and presence, and we're expanding into very promising new markets. I am very proud of our entire team's dedication and hard work to keep our projects on schedule and continue pushing forward despite the personal impacts of the pandemic. We continue to feel demand for proposals from diverse markets, and we believe we are well positioned to deliver on our commitment to grow our revenue. With that, let me turn the call over to Matt to discuss the financials. Matt?

Matthew Shafer, CFO

Thank you, George, and good morning, everyone. We recorded revenue of $200,000 for the first quarter of fiscal 2021, which was essentially flat compared to the same period in the prior year. Revenue for the 3 months ended July 31, 2020, was primarily derived from the Enel Green Power project, while revenue for the same period in the prior year was mainly from projects with Premier Oil and the U.S. Navy. The net loss for the first quarter of fiscal 2021 increased by $400,000 compared to the first quarter of fiscal 2020, which was mainly attributable to new product development and administrative costs. Turning now to the balance sheet. Total cash, cash equivalents, and restricted cash was $12 million as of July 31, 2020. Net cash used in operating activities decreased by $900,000 during the first quarter of fiscal 2021 to $2.7 million compared to the first quarter of fiscal 2020. With that, I'll turn it back to George.

George Kirby, CEO

Thanks, Matt. Operator, we're now ready to open the call for questions.

Operator, Operator

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

George Kirby, CEO

Thank you, operator, and everyone, for your participation today. This concludes today's teleconference and webcast, and we look forward to speaking to you again in the future.

Operator, Operator

Thank you. That does conclude today's teleconference webcast. You may now disconnect your line, and have a wonderful day. We thank you for your participation today.