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Ocean Power Technologies Inc. Reports Operating Results (10-Q)

December 12, 2011 | About:
10qk

10qk

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Ocean Power Technologies Inc. (OPTT) filed Quarterly Report for the period ended 2011-10-31.

Ocean Power Technologies Inc. has a market cap of $37.32 million; its shares were traded at around $3.18 with and P/S ratio of 5.58.

Highlight of Business Operations:

During the three months ended October 31, 2011, we received a $3.0 million grant from the European Union related to our WavePort project to enhance the efficiency of our PowerBuoy. At October 31, 2011, our total negotiated backlog was $8.8 million compared with $7.5 million at October 31, 2010. We anticipate that a majority of our backlog will be recognized as revenue over the next 12 months. Most of our backlog at October 31, 2011 and October 31, 2010 consisted of cost-sharing contracts as described in the Financial Operations Overview section of this Managements Discussion and Analysis. Our backlog includes both funded amounts, which are unfilled firm orders for our products and services for which funding has been both authorized and appropriated by the customer (Congress, in the case of US Government agencies) and unfunded amounts, which are unfilled firm orders from the US Department of Energy for which funding has not been appropriated. If any of our contracts were to be terminated, our backlog would be reduced by the expected value of the remaining terms of such contracts. Funded backlog was $6.8 million and $6.9 million at October 31, 2011 and 2010, respectively.

For the three months ended October 31, 2011, we generated revenues of $1.5 million and incurred a net loss attributable to Ocean Power Technologies, Inc. of $3.9 million, compared to revenues of $1.9 million and a net loss attributable to Ocean Power Technologies, Inc. of $5.5 million for the three months ended October 31, 2010. For the six months ended October 31, 2011, we generated revenues of $3.4 million and incurred a net loss attributable to Ocean Power Technologies, Inc. of $8.9 million, compared to revenues of $3.2 million and a net loss attributable to Ocean Power Technologies, Inc. of $11.8 million for the six months ended October 31, 2010. As of October 31, 2011, our accumulated deficit was $119.7 million. We have not been profitable since inception, and we do not know whether or when we will become profitable because of the significant uncertainties with respect to our ability to successfully commercialize our PowerBuoy systems in the emerging renewable energy market.

Revenues decreased by $0.4 million, or 19%, to $1.5 million, in the three months ended October 31, 2011, as compared to $1.9 million in the three months ended October 31, 2010. The change in revenues was attributable to the following factors:

Cost of revenues decreased by $0.3 million, or 17%, to $1.5 million in the three months ended October 31, 2011, as compared to $1.8 million in the three months ended October 31, 2010. This decrease in the cost of revenues reflected the decreased activity related to our 150kW PowerBuoy project off the coast of Oregon and our LEAP and DWADS projects with the US Navy. This was partially offset by the increased activity on our PB500 PowerBuoy development project and our WavePort project off the coast of Spain.

We operated at a break-even gross profit in the six months ended October 31, 2011 and a gross loss of $0.1 million for the six months ended October 31, 2010. Certain of our projects in the six months ended October 31, 2011 and 2010 were under cost-sharing contracts. Under cost-sharing contracts, we receive a fixed amount agreed upon with the customer that is only intended to fund a portion of the costs on a specific project. We fund the remainder of the costs as part of our product development efforts. Revenue is typically recorded using the percentage-of-completion method applied to the contractual amount agreed upon with the customer. An equal amount corresponding to the revenue is recorded in cost of revenues resulting in gross profit on these contracts of zero. Our share of the costs is considered to be product development expense. Our ability to generate a gross profit will depend on the nature of future contracts, our success at increasing sales of our PowerBuoy systems and on our ability to manage costs incurred on our fixed price commercial contracts. During the six months ended October 31, 2010, revenue was reduced by $0.2 million due to a change in estimate of revenue to be recognized in connection with our Spain construction agreement. There was no corresponding reduction in cost of revenue. This resulted in a $0.2 million gross loss being recognized on the Spain project during the six months ended October 31, 2010.

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