Ocean Power Technologies, Inc. (OPT) has announced a substantial increase in revenue for fiscal year 2024, with a 102% rise to $5.5 million. Despite challenges from a dissident shareholder, the company has made significant technological advancements and formed key strategic alliances.
OPT has outlined a path to profitability, expecting to reach this milestone in the second half of calendar year 2025. However, the company reported a net loss of $27.5 million for the fiscal year, with a Q4 net loss of $6.7 million. Operating expenses were high, partly due to extraordinary expenses related to shareholder activities.
Key Takeaways:
– Revenue soared by 102% in fiscal year 2024, reaching $5.5 million.
– The company reported a net loss of $27.5 million for the fiscal year.
– Gross profit for Q4 ’24 was $0.9 million, with a full-year gross profit of $2.8 million.
– Operating expenses included $3.9 million in extraordinary costs related to litigation and shareholder activities.
– The company’s pipeline is valued at $85 million, with a projected $12.5 million in revenue for the year.
– Gross margins have stabilized at 50-55%.
– A special shareholder meeting is scheduled for August 30 to discuss an increase in authorized shares.
Company Outlook:
– OPT expects to achieve profitability in the second half of calendar year 2025.
– The company’s pipeline stands at $85 million, with contract orders for 2025 projected at $12.5 million.
– Gross margin has stabilized due to a shift from research grants to commercial service offerings.
Bearish Highlights:
– The company faced significant costs from a dissident shareholder.
– A net loss of $6.7 million was reported for Q4 ’24, contributing to the annual net loss of $27.5 million.
– Operating expenses for the fiscal year were $32.2 million, with $3.9 million in extraordinary expenses.
Bullish Highlights:
– Revenue growth was driven by strong WAM-V sales and an increase in orders and pipeline.
– The company formed strategic alliances with Red Cat Holdings, Teledyne Marine, and others.
– OPT launched Merrows, an AI solution for ocean surveillance, and achieved technological breakthroughs with its PowerBuoys.
Misses:
– Although revenue increased, the company’s net loss widened slightly from the previous fiscal year’s $26.3 million.
– The net cash used in operating activities for fiscal 2024 was $29.8 million.
Q&A Highlights:
– Philipp Stratmann discussed the benefits of increased inventory in reducing the sales cycle with new customers.
– Political risk is not a concern for OPT, as its systems support national security and energy demands.
– The company is working with service providers in the oil and gas sector to increase sales and orders, focusing on defense and security markets.
– Design improvements have increased the power of the company’s buoys.
In conclusion, Ocean Power Technologies is navigating through a transformative phase, emphasizing technological innovation and strategic partnerships to drive future growth. With a clear goal of profitability on the horizon and a strong order pipeline, OPT remains focused on executing its long-term strategy despite the current financial losses.
InvestingPro Insights:
Ocean Power Technologies, Inc. (OPT) has shown a mixed financial picture in its recent performance, with substantial revenue growth and market capitalization. The company’s ability to make a profit before expenses and positive balance sheet indicators provide insight into its financial stability. However, concerns regarding cash burn rate and high operating expenses should be considered by investors. Additionally, the recent uptick in investor confidence and stock returns indicate potential growth opportunities for OPT.
For more comprehensive insights and analysis, investors can access additional InvestingPro Tips on Ocean Power Technologies. Using the coupon code PRONEWS24 can provide a discount on yearly Pro and Pro+ subscriptions. These insights, combined with OPT’s strategic focus on innovation and partnerships, offer a comprehensive view of the company’s trajectory and challenges on its path to profitability.
Full transcript – Ocean Power Technologies (OPTT) Q4 2024:
The conference call for Ocean Power Technologies’ Fourth Quarter and Full Fiscal Year 2024 Earnings discussed the company’s financial performance and future outlook. Forward-looking statements were made, highlighting the company’s plans, objectives, and expectations. Risks and uncertainties were acknowledged, with additional information available in public filings. The call provided investors with valuable insights into OPT’s current position and potential growth opportunities. The company does not have any obligation or intention to update the forward-looking statements made on this call. An updated investor presentation has been posted on our IR website for your review, providing a comprehensive overview of our company and strategy. Now, I am pleased to introduce Dr. Philipp Stratmann.
Philipp Stratmann: Thank you, Bob and good morning. Fiscal 2024 was a successful year for us, marking a significant step towards achieving positive cash flow in calendar year 2025. We have made substantial progress in our research and development efforts, leading to increases in revenue, gross margin, pipeline, and backlog. This year, we achieved several technological breakthroughs, including the successful demonstration of the WAM-V’s ability to remotely attach to a buoy for charging, showcasing our commitment to sustainable maritime operations. Additionally, we have reached nearly 15-megawatt hours of renewable energy production from our PowerBuoys, with the deployment of our next-generation PB off the coast of New Jersey significantly boosting energy production capabilities. Our recent launch of “Merrows,” an Artificial Intelligence-enabled ocean surveillance system, further solidifies our position as a leader in maritime security and protection.
Moreover, we have strengthened our strategic partnerships with industry leaders, such as Red Cat Holdings, Inc., Teledyne Marine, and Unique Group, to enhance our product offerings and drive innovation within the maritime industry. These collaborations have allowed us to expand our reach globally and accelerate the adoption of our autonomous maritime solutions. Our recent agreements with Survey Equipment Services, Inc. and AltaSea at the Port of Los Angeles further demonstrate our commitment to growth and innovation in the blue economy.
In conclusion, our continued collaboration with various U.S. government departments and agencies highlights our dedication to supporting national security and advancing maritime technology. We are confident in our ability to achieve further progress in fiscal 2025 and look forward to the opportunities that lie ahead. Thank you. As a company with a strong presence of veterans in our workforce, we take pride in supporting our brave war fighters in various areas such as mine countermeasures, counter unmanned underwater vehicle efforts, and autonomous swarming. Despite facing challenges from a disciplined shareholder during fiscal 2024, who engaged in a proxy battle and initiated lawsuits against the OPT Board and the company, we remained resilient. The dissident shareholder’s attempts to influence the company’s strategic direction were unsuccessful, as his proposals did not gain sufficient support from other shareholders, reflecting their confidence in our leadership and strategy.
The dissident shareholder’s actions, including disseminating misleading information and attempting to undermine the company’s reputation, led to significant costs that impacted our results for fiscal 2024. However, we have taken steps to strengthen our corporate governance and improve shareholder engagement strategies to prevent similar situations in the future. Our focus remains on driving growth and delivering value to all our shareholders through open and constructive communication.
Despite the challenges posed by the dissident shareholder, we have remained focused on our long-term goals and are on track to achieve profitability during the second half of calendar 2025. Through measures such as head count optimization and cost containment, we are working towards sustainable growth and creating long-term value for our shareholders.
In terms of financial performance, our revenue for fiscal 2024 saw a significant increase over the previous year, driven by strong performance in WAM-V sales and growth in orders and pipeline. Our gross profit also improved, particularly in the unmanned vehicle business. Operating expenses increased due to defending litigation and other shareholder-related costs, resulting in a net loss for the year. However, we expect operating expenses to decrease going forward as we work towards achieving profitability.
Our backlog has also increased, driven by expansion into Latin America and recurring revenues from long-term leasing contracts. With a debt-free balance sheet and a focus on strategic growth opportunities, we are confident in our ability to deliver value to our shareholders. Thank you for your support. Due to the strong performance of our unmanned vehicles business in fiscal 2024, we have a payable that represents the completion of the final earnout period from our acquisition of MAR in November 2021. The net cash used in operating activities for fiscal 2024 was $29.8 million, reflecting our net loss, payment of employment bonuses, earnout from fiscal 2023, and expenses related to dissident shareholder activities. Our inventory balance increased to $4.8 million to meet backlog and planned revenue growth for fiscal 2025. Moving forward, we aim to discuss our fiscal year 2024 results and financial outlook during this call. Please limit questions to these topics. Thank you, and now we will open the floor for questions. I am trying to understand if the recent increase in commercialization pace is due to market conditions or increased sales efforts. It seems that the company’s targeted solutions and focused commercial team have played a significant role in pushing the commercialization process forward quickly. The company has also focused on making products that are easy to use and provide cost and carbon emissions savings for customers. The shorter sales cycle with existing customers has been beneficial, and the company is also seeing a reduction in sales cycle with new customers due to having systems deployed and available for demonstration. There doesn’t seem to be a significant political risk affecting the company’s commercialization plans, as they provide technologies that enhance national security and address global energy demands. The company continues to work with oil and gas operators, including projects related to decommissioning in the Gulf of Mexico. As you have seen, much of our recent work has involved collaborating with service providers of large oil and gas operators rather than directly with the operators themselves. This strategy has accelerated our sales and order process significantly. Our partnership with Samara, for example, has allowed our vehicles to operate in the area where Samara provides services to major oil and gas providers. We are currently in discussions with Tier 1 and Tier 2 service providers to explore opportunities for buoy deployments for exclusions and monitoring, wellhead monitoring, and other projects. This shift towards working with service providers rather than directly with oil and gas customers has proven to be more efficient as service providers have a greater need for our systems and can implement them more quickly.
Regarding our buoys, the contract with Premier Oil in the Adriatic Sea has been completed, and the buoy has been refurbished and prepared for other deployments. Our next-generation buoy now features improved power generation capabilities with the integration of solar panels and small wind turbines, enabling us to serve a wider range of regions, including the Middle East where there is limited wave activity. The generated power is stored in battery packs to power the various payloads on the buoys.
As for our market focus, we see defense and security as a significant market, with applications in illegal fishing, offshore energy, and general surveillance and reconnaissance. We are working with larger prime contractors to navigate government contracting mechanisms for defense and security projects. The opportunities in defense and security align with those in offshore energy, where our systems are used for monitoring and inspection purposes.
In terms of our backlog and pipeline, the decrease in size is partly due to the conversion of opportunities into backlog and revenue. Our current pipeline stands at $85 million and includes opportunities under negotiation, submitted proposals, and projects under discussion with customers. Fluctuations in the pipeline are to be expected as we continue to convert opportunities into tangible projects. It is encouraging to see that with the size of our pipeline, we can maintain steady growth by consistently pulling down a small percentage of what we have and refilling the pipeline. This churn will lead to year-on-year growth and a stable revenue baseline.
Peter Ruggiere: Okay. And your gross margins are around 50%, correct?
Philipp Stratmann: Yes, our gross margins have been stable in the 50% to 55% range for the last few quarters.
Peter Ruggiere: It used to be lower, right?
Philipp Stratmann: Yes, that’s correct. We have shifted from demonstrations to providing commercially available solutions, which has improved our margins.
Peter Ruggiere: The contract orders for 2025 guidance are $12.5 million. Is that for total revenue for the year?
Philipp Stratmann: Yes, $12.5 million is our guidance for this year, showing sustainable growth that we can achieve by controlling costs and delivering high-quality products.
Peter Ruggiere: Thank you for your insights.
Philipp Stratmann: Thank you, Peter. We appreciate your support as a long-term shareholder.
In closing, I want to thank all our shareholders for their support and look forward to delivering on our strategy for continued growth. Thank you.
Operator: Thank you for participating in today’s call. You may now disconnect. Have a great day.