Earnings call transcript Q4 2023

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Operator

Good morning and welcome to the Ocean Power Technologies Fourth Quarter and Full Fiscal Year 2023 Earnings Conference Call. A webcast of this call is also available and can be accessed by a link on the company's website at www.oceanpowertechnologies.com. This conference call is being recorded and will be available for replay, shortly after its completion.

On the call today are Dr. Philipp Stratmann, President, and Chief Executive Officer; Bob Powers, Senior Vice President, and Chief Financial Officer; and Joseph DiPietro, Controller, Treasurer, and Principal Accounting Officer.

there a remarks, session. prepared the will question-and-answer be Following

DiPietro. to Now, pleased Joseph I am introduce

Joseph DiPietro

Thank morning. the and our XX, you good earnings we closed XXXX. press issued yesterday, release for period April After ended the market

public and the website OPT Investor the the within of filings are section Our on website. SEC available Relations

we of forward-looking provisions statements call, Private Securities XXXX. the of Litigation are within this During Act that will make Reform Harbor the Safe

objectives, expectations, statements Forward-looking plans, statements of projections other include intentions. may the or financial or company’s

These company the little by materially results intention expressed risks, any or implied over statements control statements that disclaims to different assumptions regarding management made update involve factors are results based company the on The may future on future circumstances any from cause to uncertainties and this call. forward-looking obligation or which by and be or made statements. other such have actual may forward-looking no

pleased introduce I Now Stratmann. to am Dr. Philipp

Philipp Stratmann

and The appreciate another step morning. Joe, that revenue and cash for flow year Thank We positive best top year us. company. highlights our our and you Fiscal on XXXX. was our we contracted growth strategy. XXXX executing we were fiscal best since since great are our nice fiscal towards you, of good Those two backlog. XXXX a had generation XXXX over $X profit as us We're continue we gross fiscal entering of joining also generated with million wins for

our I near-term to projects. critical our pipeline, Both our focus older and an will comments key update on on my areas: two success. are

of now this at stages oceans world's We projects monitor company critical ways and and $XX which the main pipeline, customer the Both for two finding and the waterways. continues commercial view to we in use approximately government million industry. to effective know, various U.S. grow you serve As negotiation. cost ocean technology various in our of stands see as order our groups: and

of dollars. across and new dollars current varies orders timing closer of X,XXXs Buoy-based typically offshore the product lines XXXs cycles size customers several by seasons. average installation million by orders Decision budget vehicle-based the and The order influenced with is and to

is I like these get and profitability. to consulting booked, XX% wind related of cover variety activity orders order generate with some investment another to projects cash Approximately will critically with sustain for important revenue, strategic government use remaining a to is XX% you water would XX% farms unpack a our companies. how recent since and to wide orders across agencies, ways. as to and in is to converted such customers understand bring it ultimately are The this that and XX% of range to our energy to of us OpEx businesses

and with target year a $X of past million This that had $XX million signed, moving $X closed macroeconomic between closed cautious strong is time challenging it a to year, order all $XX which significant we slow. takes years, pipeline year and at the million reflects orders, in We to but hovered million. a compared these everyone seems fiscal the where get deal a times recent performance especially it is

eventually proceed degree The of orders we potential not away. they make the be have none yet important I and we continue closed They a high that point have booked. to is that of to went various want confidence at will speeds

great to massive area be This and steady the continues and of to we see realize for a want talking XX% pipeline our of entities Generally costs. way WAMVs. acquisition us. by repeat activity XX% is WAMVs our multiple deal to project. are is are to a pipeline as effective to type stream speaking, we order customers WAMVs at how Another look to minimizing the of related covering

our provide activities. activities new to protection like and to XX% other coverage reasons. includes of of mainly classified strategic governmental for XX% border our MDAS and of fishing, X% This various use is to illegal XX% PowerBuoy’s pipeline monitoring consulting. to is related

one can going ocean assets. comes us customers use to to first it businesses governments turn We us potential are optimizing unfair the the and when experts, with calling their This of an with few of gives advantage needs.

possible. was team XXXX appreciate in as really organization invested activity ramps the Fiscal history. first patience its we significantly I sales year in fast the investors time company's as the our for our as our

and the we defense sales great to [Indiscernible] experts, complement several onboarding With other our recent of have engine. retired a

feasibility orders. activity leases, are We of now drive studies future confident need resources to sales and just execute. right WAMV We that and demonstrations the with to

our XXXX, our pipeline of you contracted degree working we is for have and target is Based fiscal confidence $XX this and the a high with customers outlined will orders we million. more hit hard target urgency booked timely. for a create get For we sense these we're can of to on so

as we open our scalable are and deals. ready are teams close operations Our

for an I key update active our to will now projects. move

surface exercise exercise the is horizon use our WAMVs currently Bahrain XXXX. First second for of U.S. Navy. with for to the vehicles unmanned in the support We're deployment in digital international maritime

of is a the development of Next Department award. program Energy next energy converter for U.S. generation the wave

for a PowerBuoy new and an Energy monitoring ocean next Wave months, developing powering the offering. Phase we'll Converter entirely autonomous X testing our scalable Over XX into complete reliable by of bringing modular PowerBuoy systems, and Mass-on-Spring

demonstration April. deployed offshore in off The the coast of first Jersey was New

nice partner is details. are as And believe projects, come. the we which continue. a we entities share to so to government-related great but have and We we're had expect cannot that many yet always, government classified best ongoing with several a year We

it team not and certainly to of has to but grow it's capable levels portfolio achieving. OPT product the been, the have We

for will more details to on With Bob that, turn financials. I our over

Bob Powers

Thanks, Philip.

Let's start revenue. with

prior years best which the up top seven-plus was fourth For in the our we the year. quarter, continued quarter. line this was It $XXX,XXX, our saw XX% quarter and from traction was

over since last and year our up For is year best XX% the our XXXX. was revenue which $X,X year, is million, fiscal

sales our another Deferred activity. indicator revenue is of

component expected throughout active $X.X revenue to in the fiscal deferred This the started XXXX. related is a MOSWEC be biggest of As project, to PowerBuoy million project which December XXXX. reminder, is

we an X.X% year, since gross gross had the we For first margin. gross had the profit, that pleased This is we which fiscal with. $XXX,XXX profit XXXX time of are and

go hit We ways to targets, our have until but long-term a right long we the direction. a it's in definitely step

to what Moving full-year to were structure, that take expenses in and our here of I'd marketing cost driving well our of leadership to growth Included acquisition related our development in corporate as our related like seconds a ongoing expenses to through few team, sales a to to related our OpEx our you the that. our increases recent team. MAR through to MDAS is midway occurred our investments Included and as staffing fiscal of product related prior in year. walk growth headcount

manage to tightly deliberate business. continue We investments with in cost WAMV sales our our and organization

customers continue strong this will of growing fiscal our our XXXX. momentum we to prospective and to make sales teams with additional talent investment for list inroads sales Our believe be instrumental maintaining

to We in OpEx materially level expect OpEx line of our with for be our fiscal XXXX.

that in notice we up for consideration. contingent value will You the change moved

paid of we the MAR. related earn reminder, that be to estimate obligation is the owners to As to former out a

and resulted purchase the earn first XXth, per in the stock of agreement. April $X.X ended The million out XXXX maximum payment period

final ends XXXX. second The earn period out on XXth, April and

maximum out out. million will As earn be payment of of paid $X.X April that XXth, estimate the XXXX, we

fairly with $XX.X of debt. cash equivalents, use our operate the balance which continuing This to business. with cash, our quarter component a activities plans the no of restricted sheet, for short-term Net million in the The related to used about we WAMV was quarterly debt, investments. building was cash, Moving inventory million cash, cash this used operating stable we $XX.X no cadence. includes bank the down of flow with [Technical year with to million operating ended Difficulty] to and cash $X.X continue is

but a there to need financial We cash book update. for order no sales path generation. us convert covers our keep is celebration. had moving to flow That still on We to positive time our pipeline year, our and nice

happy With your and are that, take Philip I to questions.

Operator

Shawn question is from Tower coming a from Instructions] We'll you. question-and-answer [Operator session. now be Water Our Thank conducting Severson first Research.

is now line live. Your

Shawn Severson

Great. you. gentlemen. morning, Thank Good

Bob Powers

Shawn. morning, are Good How you?

Shawn Severson

doing thank you. I’m well,

the critical is -- the continued in contracts congratulations little I backlog. and to and versus a model dig question a What I over Appreciate the as the there it comes mix all to helpful on mean, what's the service sorry. to that pipeline, that's on will it term is order towards want into longer do more military. strategically that, call First bit the you in the I I on push know as let's is equipment call color your service backlog, like long-term. it sales?

as So see that reflected this today? how is pipeline you being in it

Philipp Stratmann

question. the appreciate I Shawn. Thanks,

$XX opportunities about pipeline, we're on various right the But million I we release deal said, and in press we mentioned, of think that our As that's we have as are our closing. these now in at all real stages structure. working order approximately

to deals In is comes them that us baseline seeing out very we revenues that. as we've -- on a the year that ancillary you're versus those in work revenue Subsea, span million with with that the encouraging the to What's the would component what right provide long-term it. with contracted convert really healthy a vehicles mix these release, backlog now four top we're building I services. and is into that we're and scaling underlying them $X what we're point now us press into out working as fact ability give between multi-year more delivery then is like platform also add it's agreements start of And period. and mentioned more like service Sulmara doing to there where with and are have been with of the I think our that up seeing entering we

the margin platform-as-a-service you're is data-as-a-service we where it, in the component, that's the or whether And bring we're that opportunities improvement service seeing it right, into entirely primarily.

Shawn Severson

those there hate pilot programs, to trying because pilot I to in the the scale of -- I'm them and really not but understand opportunity. scope those call orders, programs, And are

that and you initial on run customer color it and Just little there's would pipeline, some that these be how behind helpful. sort when goes a and more an are that let's that implement this program? programs try and a it of lot opportunity about or you're see talking out in particular then the So very have test

Philipp Stratmann

and case a then be somebody the majority, of Buoys, we is a Sulmara this I in the capability job. and with maritime And agency primarily are initial develop solution platforms undisclosed okay, once initially as multi-platform absolutely. those into will the would No, opportunities. we've the of moment that In a the quickly we've shown supporting know, view we tested varies with at but It discussion the we're a it's of and an because how obviously ongoing is then and to of seen multi-system awareness working you customer, with like And case announced three wanting, one already somewhere of demonstration earlier others, a between in of for government say what those been domain consider case then turn year. do vehicles multi-year calendar it to into vehicles, an then a the there couple months this that order. about by

Shawn Severson

queue. Great. me to the that force it's I'm Can the in and And one sales understand help process. there. the conversion understand more you sales of the the trying question, about and expansion I'll the back effort jump what means? And

just you say were there, and focus on what sales? with that does new What mean to you're the doing doing differently or you incremental I'm you're when adding you're spending people understand expanding the before? change impact versus more. trying So

Philipp Stratmann

Yes. change. incremental an I say wouldn't it's

material think I I a say change… fundamental and would it's

Shawn Severson

Okay.

Philipp Stratmann

OPT years. that in two a with entirely of more almost … have, team entirely not of been team we This than single for new been brought one sales the sales is current that's the sector an either consisting or in environment and security parts DHS, people new solutions high-tech providing to in of all have of and veterans worked other DHS, DoD, DoD the the that government. ocean the and defense has

our that our as is XX% that the with government proud government reflected probably and has we're the we've being work, materially to that change conversation us XX%, What I having very around to enables think pipeline in counterparties to shifted mentioned which support. before we're U.S. is way do

Shawn Severson

works for Is work how and problem, will proactively Are typical know mean, force? application. taking look, know have not looking a And orders that going so you the is and you works? or sales I out? we there or a they the finding creative be sales your to how sales take they’d Are this we that just this solution. not? you're I in sitting have that Is a maybe that actually say, applications process

Philipp Stratmann

into of acquisition of like process, lot seeing to fits a operations how the into earlier so or then the three of their your platforms them initial provide shorter the the them spend of which qualification reasons it, to have figure with statement. fit the reconfigure back why We the to that these new concept then in them which the community operator time quarters helping help to is those systems a then the lot enables with community us Correct. into two That main we're deployments question, might into within coming technologies out operational our enables community. planned working duration, term and platforms team of lead acquisition they that and problem one solve to out of

Shawn Severson

you color Right. for the guys. Thank

Philipp Stratmann

Thank Appreciate you on. you, Shawn. being

Operator

you. Thank

R.E. from Associates. question Next Silvera from & is Silvera Robert coming

now Your line live. is

Robert Silvera

very represented go I'd looks on the for balance the Hi, as mean, short-term about much It just What XX XX bit that you for Phil. investments a changed they into look are pretty from same, by year-over-year instance is What job. done. roughly. investments? cash by to the $X at I clarification it sheet a cash The well and present. type? to Congratulations like equivalents dropped short-terms investments course on And stayed of quite short-term million.

Bob Powers

Robert, part, Hey, use is short-term primarily in that rated the for and T-bills high that Yes, the corporate yes. is quality seeing and drop question. the represents most the AAA that for through investments of driven treasuries, capital so operating bonds, our what you're thanks

Robert Silvera

Okay.

that's then in equivalents? equivalents obviously, cash cash that's the the not cash not and So

Bob Powers

Correct.

Robert Silvera

okay. Yes,

Bob Powers

bank cash The strictly cash accounts. equivalents and in would cash be

Robert Silvera

got it. Right,

Okay.

you're other your And stuff? material of went up that's million. The from saying substantially do the (ph) thing number is to [WAMV] right, because a to purchases I over inventory $X $XXX,XXX heard if the

Philipp Stratmann

before maintain our I absolutely, supply and market us be the in this for for I it's think which customers us we've what No, gain further at they the want able advantage in to mentioned pace with to Yes. order think supply to to space. and

clearing available We or a only just that pace can to of gives enables a are vehicles us building backlog. WAMV's -- up building a a competitive it be And than call start weeks, they it customers rental need to that that lease made that at quicker fleet out for four is us advantage. if

move see further expect in increases as through the would I year. to inventory we So that

Robert Silvera

equipment, right? up Well, Great. building what that's to, you're the generating money it amounts

Philipp Stratmann

Exactly.

Robert Silvera

Okay, what What looking I'm $X are things just substantially. at the are that went assets changed that million. right-of-use -- up basically

Bob Powers

California that Yes, Robert, that's our entered our leases and in particular that pertains where to are into a we Richmond new operations our which is lease office, MIR for headquartered.

So in sheet. of on this as driven more year, treatment that up into a ended new that's why to accounting we April entered balance lease the GAAP

Robert Silvera

see. I

so? where big approximately of good. just the expenses, very the are go or could up and current accrued by in expenses that million that's Okay, Then that portion, through your you accrued deal kind liabilities with $X.X have like ones going the changes

Bob Powers

Yes.

driver FY for is primary our the ‘XX. there So payable bonus

a ‘XX, to given bonus our prior for payout. performance performance mentioned, just strong there. have the our do That's as payout driver Philipp larger the year, we have in bonus But primary FY there, not significant given employee do we So a base. the

Robert Silvera

And that into on continue performance? based Okay. will ’XX on

Bob Powers

that That’s is of the what but we'll fiscal out, so yes, don't end the in the year that be Oh, paying decision until make plan. terms of we the plan.

Robert Silvera

went liabilities up liabilities? are What significantly. those Contract Okay.

Bob Powers

Yes.

that more the along revenue. So you can think of deferred of lines

or haven't actually advance So us we the that yet The even for work. contract we've in DOE. spoken our about with contract DOE the performed though paid

revenue sitting relative what that is to they unrecognized the in So us paid account.

Robert Silvera

want a release good lot should really I would three get clear the And I you, you a made has to why on That Very the public stating think you. be shareholders. got to? current wish I done wants of it able good. people to release outfit job. you've thank this be not I to a very sense. Makes that board, to

of and past and history and the why on know, board basically detrimental quite board to getting you that coming employees their guys giving on future by are members doing. history your over current the the and who company good the everybody based job take on soon, the And is a trying these in are three

of, to going for offer with people the coming thing on see to an over a hate out, making but take suddenly way the kind because what's like that, come Not I'd they anything, I company company. or in trying just are. the

Philipp Stratmann

Robert. you, Thank

the weeks Regarding further be made but other we that this that time, press matter, release. no public months. and need have shareholders coming we refer back releases to and certainly we'll make over comment, to the you all any public At

Robert Silvera

are guys not right? that, favor Because you in Okay. of

Philipp Stratmann

as our very executing a have we release, we're strategy think that public on. I strong stated we in

I executing order pipeline a think subsequently that are we that the against $XX working on track it. contracted results we're speak and converting for on up the into built million Having fact orders revenues.

what I for able deliver. the leadership testament to is the base team think is on employee

Robert Silvera

on based period million, of by what? Over $XX what four-years, is of the is cash two-years, future. that that a Okay time One-year, chunk in good which $XX represented million?

Philipp Stratmann

That $XX or know, type million we timeline of currently quarters, I are five you quarters, you give various an is three can't in six around but discussing four stages. timeframe. orders terms quarters, within that of, is it at quarters it is exact

is negotiating the a not is us is total or Speakers] what going the we're [Multiple out market. saying what and -- this So isn't available this and today actively this This serviceable market

Robert Silvera

That's what I like to hear.

two in you and and it's three could win to million sales reasonable have years, effect revenue? that those assume in the orders within to So $XX

Philipp Stratmann

we as is think on. certainly working the what I we're that pipeline, convert

Robert Silvera

good and where job we Exactly. and million, [item] obviously doing to numbers frame guys, hear. I two of today to horizons wanted three good two you, within are the what job. years. (ph) good $XX Thank to looking Phil. Good then are like That's you're with a compared Very

Philipp Stratmann

Robert, you, and OPT. Thank your for thanks in interest continued

Operator

Our Capital Thank question Tanner you. [Operator Tanner is J Management. Instructions] from R from next coming

now is live. line Your

R J Tanner

returns, comp guys. indicated any I've that and started And two you members? that you any you is board under observed to quarter you booking when the while stock When the your you quarter the growing were Thanks, Hi. over, ago. fees you as shareholders situation should managers? CEO. worse is order and given profitable vote watch years never in Free than hefty company diminishing, and Board restructuring are today seems not been has in to it yet took bonus the target cash Why board a that badly for to announced year. shareholder last missed is losses is paid blind grow? The

Philipp Stratmann

Thanks, R the J. Appreciate question.

pipeline. As order on restructured are We've working and the company. we've we've our strategy profitable a strong We're growth. said, built executing we towards

Operator

Thank you.

Next Severson Shawn question Tower Research. follow-up from a is Water from

now line is Your live.

Shawn Severson

offer what and commercial government into with to another a government military guys. sense when IP application, taking footprint, projects. the and there the industry crosses or Is talk -- the lines or contracts to government up security on that just trying that Thanks is for when Great. question for the -- does to and matter? a again, learn that understand that technology build that, in back is couldn't about the you application? do and anything things other solution or the and say there the are I'm that trying Mine presence you you understand you it similar expansion about this the for application any

Philipp Stratmann

work working mean, been has the I the the under of can't and to said, some of we Other likely out it classified Digital demonstrations some work being headquartered. of we're and on in falls at doing, Defense is in under we've we've more fleet realms obviously, as Horizon been organized about exactly that as by the fifth is fall public programs. what our where Department Bahrain disclose is where As such public efforts stage

time certainly deliver and capability as these So the nation to through the at that our the our able we national to and are that security provide need. enhance to company and the will shareholders work being making to is projects preserved sure same value and services fight the we

Operator

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

Philipp Stratmann

joining Thank you you. We appreciate us.

with look what forward do. We are to-date we pleased and to the our progress need We to know future.

believe time in great the right have first products resources We services. we history, our a and year. For the fiscal XXXX and be right will the

colleagues, and As great vendors. company appreciate day. always, in shareholders the your headed. to Have thank We OPT your shareholders, our direction our of we a our potential you my our confidence are of fellow rest

Operator

Thank and teleconference you. That conclude today's does webcast.

at day. for your disconnect may have today. you participation wonderful line time your a We and You thank this

Ocean Power (OPTT) 13 Jul 232023 Q4 Earnings call transcript