Ocean Power Technologies Hits Project Snags in Oregon and Spain, but Expects Stronger Demand Next Fiscal Year

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Researched by Industrial Info Resources (Sugar Land, Texas)--Ocean Power Technologies Incorporated (NASDAQ:OPTT) (OPT) (Pennington, New Jersey), which designs and produces wave-energy devices for the renewable power sector, saw continued progress but weaker revenues from major projects worldwide in its fiscal fourth-quarter and full-year 2013. Higher gross profits and lower product development costs led to a slight decline in net losses for the year, but the quarter saw higher losses than the same period last year due in part to weaker external funding for projects in Oregon and Spain.

Net losses were reported to be $4.13 million for the quarter, compared with losses of $4.1 million in the fourth quarter of fiscal-year 2012, and $14.68 million for full-year 2012, compared with losses of $15.14 million in full-year 2012.

Total revenues stood at $407,881 for the quarter, compared with $1.39 million in the same period last year, and $3.62 million for the full fiscal year, compared with $5.74 million in 2012. Lower revenues were attributed partly to the completion of the U.S. Navy's Littoral Expeditionary Autonomous PowerBuoy (LEAP) program in fiscal 2012, which had been a major project for OPT. But the company also faced delays on its Mark 3 PowerBouy project in Reedsport, Oregon; although OPT completed assembly and land testing, deployment and commissioning were delayed after the Federal Energy Regulatory Commission (FERC) said that it considers the project subject to its jurisdiction. Deployment on the project is now expected to be delayed until after the beginning of calendar 2014.

OPT's WavePort project in Spain also reported progress, following the shipment of advanced modular power take-off in May. Although OPT has been working with a consortium of European companies to develop a new wave prediction model, both the WavePort project and the Mark 4 PowerBouy project, also in Spain, reported a decline in external funding. Still, OPT reported revenue gains from a $700,000 contract from Mitsui Engineering & Shipbuilding Company Limited for PowerBouy enhancements in Japan.

OPT's contract backlog at the end of the fourth quarter stood at $3.8 million in fully funded projects, most of them orders to support product development.

Industrial Info is tracking progress on the $600 million Reedsport project, as well as the estimated $170 million construction of a wave energy power station in Portland, Victoria, Australia. The Victoria project involves constructing 18 PowerBuoys Units of 500 kilowatts each that are to be connected to undersea substation pods and a land-based substation to supply renewable energy to the grid. The project is to be built in three stages, and is expected to be one of the largest wave power project in the world. OPT is continuing to develop funding for the project with the Australian Renewable Energy Agency, which oversees the $60.23 million (AUD$66.5 million) grant for the project.

"This fiscal year, we've enhanced our focus on [Autonomous PowerBouys (APB)] as a growth market for OPT, dedicating more resources to developing our line of APBs across a broader power spectrum, investigating new avenues for bringing these products to market," said Charles Dunleavy, the chief executive officer of OPT, in a conference call. "These PowerBouys are not grid-connected, but are designed to operate autonomously in remote and deeper ocean environments, providing continuous power under a variety of applications."

Dunleavy said that OPT is working with companies like Lockheed Martin Corporation (NYSE:LMT) to develop the wave power station in Victoria. He also said that deepwater oil and gas operations, oceanographic data gathering, and the U.S. departments of Defense and Homeland Security offer strong opportunities for the future demand for APBs.

"We have identified many areas where our technology can bring a unique solution for in-ocean energy requirements, and likewise our products can be used for oceanographic studies related to global warming, weather predictions or other purposes," Dunleavy said in the conference call. "Overall, there are many attractive markets for the smaller APBs; while gaining entry to the market is taking time, we expect to gain increased market traction within fiscal year 2014."

For more information, visit Industrial Info's North American Renewable Energy Project Database.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.