Hello. Good afternoon, everyone. My name is Shawn Severson, Co-Founder and President of Water Tower Research, and Head of Sustainable Investment Research at WTR. Today we have Ocean Power Technologies with us, and CEO Philipp Stratmann. This is a new story that we recently picked up coverage. Very excited to start to talk about the company, get it out to our investor network. As a reminder, this is all open access formats. You can read our research and access this at www.watertowerresearch.com. This event will be available on demand as well. As a reminder, I'll run through the format. We try to keep these a max of half an hour through Q&A. Are you ready? If we're ready to start, Philipp, I'm gonna go ahead and jump into the first question. Yeah, that sounds good. Thanks for having us on, Shawn. Let's start with a little bit of the background. I mean, the company's been around a while. This isn't a new company and necessarily a new technology, but a lot of changes in implementation, strategy, management. Maybe just give us a little background on the transition and then on your background as well and what brought you to the company. Yeah, sure. Absolutely. Yeah. Thanks, Shawn. As you said, I mean, there's been a lot of change at OPT. I mean, company's got quite a storied history, and it's been around for a while. I think it's really been the last 18-24 months where things have materially shifted for us here at OPT. You know, probably none the least the fact that, you know, we tend to refer to ourselves just as OPT now. It's no longer about Ocean Power Technologies. It is really all about providing solutions that help energize ocean intelligence. You know, that can be autonomous, that could be roaming, it can be stationary type efforts. The way we go about it is by focusing on enabling our customer base to do more out in the ocean with a lower OpEx and CapEx and a lower carbon footprint than they would have done traditionally. We can do that by utilizing the work that OPT had done in the past and bringing these power platforms into the market, and then integrating that with the autonomous solutions that we integrated through the acquisition of Marine Advanced Robotics just over one year ago. I personally am super excited about this. My background myself, I grew up in Germany. I'm a naval architect. Spent some time in the military, worked in shipbuilding, moved over to oil and gas. I spent some time in West Africa, lived on the Gulf Coast, down in Houston for just about a decade, and then joined OPT. What really attracted me to OPT in the first place was the fact that it had sort of cracked the code on what it takes to put out small self-powering systems out in the ocean that can really deliver energy and clean energy to payloads in part of the ocean where it's otherwise not available. It just materially changes the way how other solutions and technology can therefore be deployed in the ocean. That's, that's, that's exciting. It is a step change from a way from what the company was doing previously. It's really moving away from being a product business that concentrates on power and energy to a business that deploys platforms that can host technology solutions, hardware and software, and combinations of hardware and software in the kind of multi-maritime domain awareness space, it would be that subsea or surface. In many ways, it's enabling technology. Obviously, lots of things can be done now. We have this solution available. A lot of things will be built up around this, I assume, because you do have a way to power, you know, autonomous vehicles and things like that. I assume. This is a piece of the puzzle that was critical to opening up that industry. Yeah, absolutely. I think that's really been the game changer, is the ability to do what is sort of taken for granted when you're doing it on land and start being able to do it out in the ocean, but being able to do it without needing to send a big boat out there, without needing to send crew out in harm's way. All of that has cost and carbon benefits. We... We are very excited about this kind of holistic coming together that enables things that, as I said, have been the de facto norm for like a decade plus onshore and start replicating that offshore. Let's talk a little bit about the technology itself. I think it'd be useful for investors to, just have a brief primer and overview on the products and the technology and how it works, and understanding that the technology itself has been in, you know, in development for quite some time. This is, this isn't necessarily bleeding edge technology, let's call it. It's been developed and matured by OPT. Maybe talk a little bit about what that is and also some of the proprietary nature of this and, where you fit in the technology curve here. Yeah, sure. I mean, if you think about it simplistically, there's kind of two or three underlying technologies that we utilize in our platforms. You know, the one that probably people that have known OPT for a while are most familiar with is the wave power side of the equation. Essentially what we do, we capture energy that is contained within waves, you know, by putting our buoys out in the ocean. You know, we've got a generator system, right, that moves up and down as the waves move up and down. Then we go and charge batteries that sit inside. From the generator, we then charge batteries that sit inside of the buoys and then use that to power payloads. In the case of our project down in Chile with EGP, we then transfer that energy through an umbilical cable, so an extension cord underwater, down into a series of subsea sensors. In the case of the project that we did for Premier Oil in the North Sea, we transfer that power into a surveillance system, and that is what we've based our maritime domain awareness solution. We also developed the hybrid system that we've got, which is really for air. Not everywhere has got a huge amount of wave energy. What that enables us to do is capture wave, sorry, solar and a little bit of wind energy to do a very similar job in terms of payload, but you can now do it in areas where there's very little activity. Then, as I mentioned in our earnings call, and as we stated publicly, you know, we received funding from the Department of Energy, which we're very grateful for, to start working on a Mass-on-Spring Wave Energy Converter. What that will enable us to do is merge the hull shapes that we've got for our buoys and essentially have one common type system for wave power and/or solar and/or wind that you may wanna put on top. You start, you know, you start introducing commonality into the overall platform. On the other side, on the roaming side of the equation, you know, we have the WAM-V, which is the vehicles that we've got. They came to us through the acquisition of Marine Advanced Robotics, and I think we're on serial number 77 or 78 of those vehicles. This isn't, as you said. Yes, they are at the very leading edge of what is going on in the industry, but they aren't the first of a kind out. You know, they're all at a TRL 9, same as the buoys are, and therefore, they're very, very competent vehicles. The key differentiator on the vehicle side from maybe other USVs that are out in the market is that because we use two independent pontoons, we can go and move over the waves as opposed to having to crash through the waves. If you wanna compare us to something on land, we're really the pickup truck of USVs. We have a very stable top side platform upon which we can deploy other systems. We have deployed underwater robots from it. We've deployed aerial drones from it. We've taken cameras out on it and so on and so forth. The combination of those technologies is what really is very exciting going forward because when you think about a USV that is electrically powered and has electric drives, and you have a buoy that generates its own electrical power, you know, you're not a million miles away from then starting to look at opportunities for autonomous charging of the vehicles once you put them out there. You really start introducing the notion of residency and persistency offshore, which, you know, for people that haven't been in the maritime environment sort of might be surprising, but that's really hard to do when you're out there. We think we've got a unique leading edge position as we're building that capability out. That's a good lead, wanted to ask about proprietary nature, patents, technology itself. You know, what kind of moat is there around the business and the technology? Maybe touch on the competitive landscape, where you see it or where it might be coming from, looking forward. Yeah. I mean, you know, we are, we're proud technologists in the way that we've come up with the technologies, but we are also very realistic and appreciate that we can't do technology for technology's sake, right? You know, we really focus on the applications of our technology and how that helps our customer base advance what they are trying to achieve. We will patent as and where we see it necessary to maintain a competitive edge, but we will also collaborate, because, you know, that's the. The ocean is pretty big and it takes all sorts of things out there in order to make things work for our customer base. Where we see competition heading, I think the autonomous market and robotics writ large, it's a really exciting time. You know, I think we've seen a lot of effort starting to push, as I mentioned earlier, what's been done on land into the water. Mm-hmm. Start being able to utilize and capitalize on those learnings to kind of drive things forward. You know, there are large vessels, there are small vessels, there are people doing offshore floating winds, and then there's small wave power buoys like we provide. You know, we like to look for opportunities where we can play and enable others to do things together. For example, take future wind farm development. You know, we can help a wind farm developer do initial survey work in their lease areas. We're using our vehicles. We can then deploy buoys that help monitor the area once that survey is done, so they know what's going on there. Once the wind turbine is installed, we can go and help them monitor the field together with other subsea robots, our surface vehicles, and our buoys, and so really help them advance next generation of renewable energy creation. I think the reason why I think that is important is that it shows that we can enable other technologies at grid scale to come into the market at a lower OpEx and lower risk than would have been done traditionally. It's a great area for us to work together with other people in the industry. Another example I think is worth pointing out is the way we developed our maritime domain awareness solution. It is a combination of edge computing and a government-compliant cloud platform, and we've developed that together with partners. Because there are certain people that have certain expertise in certain areas where it is much more cost efficient, same as it is cost efficient for a wind farm developer to work with us, it's more cost efficient for us to work with some other partners to help develop our kind of foreground technologies and then bring them to market. The one thing I would say, coming back to your question on IP, is that we take great care to make sure that we always have access rights. Yeah. Own the foreground IP that gets taken to market, so we're in control of how that solution is put together. That's a great lead-in to my next question, is I wanted to spend a little bit of time talking about applications, customers, and I'll just call it key target markets, but particularly in some of the emerging applications as well. If you look at the range of applications for it, look at the customers. I know we got commercial and military, but help us give us a framework of what we should look for there. Yeah, I mean, loosely speaking, you know, at the high level, it all comes together under, you know, maritime domain awareness and understanding the ocean. On a more kind of tactical matter, where what it really does entail is, you know, it could be survey work that we do using autonomous vehicles. When I mean survey work, it could be, you know, underwater mapping for the commercial space. It could be doing survey work of the seabed for future wind farm developments. It could be helping the military look for mines and unexploded ordnance to keep shipping lanes free. It could be surface surveillance. You know, surface surveillance, we've demonstrated that already. We did that for Premier Oil in the North Sea. That can be for oil and gas clients that are trying to keep fishing vessels or other untoward actors out of their production areas. It could be for the military. Obviously, we announced that we're working with a government agency on demonstrating offshore maritime domain awareness capabilities, and we'll be launching that off the coast of California in March. You know, looking at border monitoring, reducing the instances of drug smuggling by being a forward deployed camera base that helps detect bad actors. It can help prevent illegal fisheries by doing a very similar approach, detecting what is sort of in the industry known as dark vessels that are pretending to be something that they're not, and therefore being able to kind of enable other agencies to then go and stop illegal fishing. We can do work on resource protection. I'd say the other part is just the overall integration. You know, you've seen some of the pictures that the U.S. Navy's 5th Fleet has posted over the past couple of weeks as part of Digital Horizon. You know, us and other providers in the autonomy space working together, launching aerial drones, putting together safe communication networks. All of that is an ability to help, you know, the national security industry, the energy industry and kind of the ocean protection, oceanography, you know, kind of all those industries gain a better understanding of what happens out there. As I said, if you wanted to really simplify it is ocean intelligence. Mm-hmm. I guess along those lines, it's customizable, right? You can deploy different types of instrumentation depending on what customers want. This is, maybe should I think of this as a platform that could, you know, you could add all kinds of various instrumentation for, to solve for customer needs. Absolutely. You know, we've got some proprietary solutions that we bring along, but we have done a multitude of sensors. You're looking at the project down in Chile. Those aren't sensors that we have as part of a proprietary system. You know, we will work with any of our customers on any sensor integration as long as it fits within, like, you know, weight and power budgets, and the kind of operational envelopes that exist in the part of the ocean where something is meant to be deployed. We'll work on integrating it. We're very flexible. I would go that we're essentially sensor agnostic, and we can help integrate it into, you know, same as on the back end. You know, that's on the front end. On the back end, we will integrate with, if a customer has a specific software platform or technology platform they're utilizing, we will work with them in making sure that our data feeds go through their system the way they would like to see it, and, you know, so that we can be flexible to their needs. I guess, coming down to my one of my favorite subjects next is recurring revenue, and it's a model that's near and dear to many investors' hearts because it is a good model. Obviously, this has been a big strategic, you know, initiative for you and ongoing. Can you just talk about what you're doing to secure that and why it's important to you and how the model works inside OPT? Of course. I think recurring revenue is vital, and it's one of the reasons why we've been shifting so hard to moving towards the as a service model, be that on the power/energy side or the data side. You know, having spent over a decade in the marine energy and offshore installation industry, that's how pretty much everything works in the marine industry. Most of the customers do not want to own the assets. Even governments have started moving from what they used to be called, you know, government-owned, government-operated to government-owned, contractor-operated to essentially contractor-owned, contractor-operated. Mm-hmm. We are actively building out a fleet of assets on the vehicle side and on the buoy side that allows us to respond quicker to when a customer needs it. Instead of saying, "Hey, you need to spend $X hundred thousands dollars of an asset," it's a case of, "Here's the day rate. Mm-hmm. If you need it for 30 days, here's the day rate. If you need it for a quarter. Here's the day rate, you know, including however we can structure it for you. If you want it for two years, we can still do that on day rate. Plus, we can then start layering in maintenance services and so on and so forth. Once the system comes back, it comes back to us, we can refurb it, we'll maintain it, and then it's ready for the next customer. It really removes that pain for the customer to kind of going, "Okay, now I need to own this. Yeah. Now I need to figure out where to store it," and so on and so forth. We can make sure that we enable, on the one hand for our shareholders, the recurring revenues, but at the same time, it actually makes it much more easy for our customers to work with us. Let's talk a little bit about milestones as we look ahead, you know, from the outside perspective as investors and analysts, looking for milestones as strategic growth initiatives, things that we should be looking for and using to track progress at the company. If you can maybe line up a couple of those that you're looking out over the next 12-24 months that sort of demonstrate you're on target for what you wanted to do. I think obviously, you know, we're excited, as we mentioned on the earnings call, that, you know, we're almost at 6x the bookings this time of the year than we were compared to the same time last year. I think the conversion of that booking into revenues, the addition of additional bookings that will start coming in. You know, we put out a forecast of $9 million bookings for the current fiscal year that we're in at OPT. I think that'll be exciting. You know, I'm personally very excited about seeing what else we can start doing and working on with and for the United States Navy as a result of the work that we did for them in Bahrain as part of Digital Horizon. I'm excited about the work that we're doing in demonstrating that next generation Mass-on-Spring Wave Energy Converter, which we've got funding for from Department of Energy, because that helps drive that commonality that I mentioned earlier in the platforms. Yeah. As you start adding those things up, I think you'll start seeing a pipeline that's continues to grow, and you start seeing a quicker conversion from booking into revenues as we continue to scale up and build out the fleet. Great. I'm gonna take a couple questions from the audience before we wrap up today. We do have a few. One was regarding the MDA-S performing relative to military security readiness. I assume you can't answer too much on that, but maybe if you could talk about a little progress report would be helpful. Sure. Yeah. We've, we've deployed the MDA to the extent that, you know, we can divulge details in various formats now. I think we made it public. We had a version of our MDA-S deployed at ANTX, the Advanced Naval Technology Field Experimentation exercise called Coastal Trident. We had a system out for several months off Point Loma in San Diego, and then that exercise finished with us showcasing the performance of the system at an event called Fathomwerx in Port Hueneme, where our USVs are stationed. I think, you know, we continue, like any good software development, it continues to develop. Every time when somebody has a good idea for a new user feature, we will go through a sprint and start integrating and developing that new user feature. We're also excited about going forward, putting the MDA, working it in combination with our roaming assets. Mm-hmm ... that we can start working on data collection that has additional portals and capabilities to it. Sorry. I would also say that in terms of the raw data that we can collect, you know, if there are parts of the military, the government, or commercial customers that need that data fed through a specific pipe and into a specific format, we will work with them to get that into that single pane of glass that they might be excited. The next question is on the balance sheet. I wanna expand on the question that came in a little bit, and really looking at the capital-intensive nature. Is it capital-intensive to do the services business, for example? Because instead of selling the products or equipment, you are using your balance sheet theoretically to, you know, to hold, to build those products and use them. Maybe just a general question about balance sheet health and cash flow, and then the second part of that question, is that sufficient to, you know, to really supply and build the services business? I think that's a great question. Yeah. I mean, by its very nature, having a fleet and an inventory, you know, is more capital intensive than it is to kind of just build it as and when it's needed for a customer. However, in terms of scalability, it is also definitely the preferred model to go down. You know, we have a very healthy balance sheet. We have a very healthy cash balance as we stated on our earnings call yesterday and in our earnings release, after market close on Wednesday this week. We can build on the inventory that we are looking for at the moment that based on what we have on the balance sheet. On that is, you know, and as and when required, we will look at whether there are other opportunities we may want to pursue. I've a question on R&D spend, I guess again, a sort of a bigger picture here is where do you think you need to spend still? When we look at, when we look at the cash flow and then look at where the spend is going to be, what's left for you to do or are we more development stage right now at this point? I think we're really at the commercial phase for the majority of our offerings, which is, you know, and I think that is starting to be reflected in the bookings pipeline that we've managed to secure. We are continuously looking at opportunities to go and reduce R&D spend and utilize work that we're doing for customers who are on specific projects and converting that into ongoing benefits for our broader customer base. Mm-hmm. Obviously, as I mentioned, you know, before, we're grateful for the support that we've received from the Department of Energy, support the one kind of larger R&D item that we're still developing. I would say that we're going to start seeing a reduction in programmatic spend. Mm-hmm Looking at a focus on, you know, more true revenue-supporting items. I'm gonna take one last question before we wrap it up, and it's regard to collaboration. you know, you had mentioned that, looking to work with or are working with other companies. Question is regarding any color, commentary that you can give on that. As I mentioned, we, you know, most of our customers have fairly large problems they're looking to fix. Mm-hmm. We wouldn't be the ones that pretend that we can solve all things for all people. We can solve certain aspects that they may need to have resolved, and we will work with others. If that is us working with a larger company that has larger USVs, for example, and we provide services for them, we will do that. If that is us providing a buoy that acts as a communications gateway node so that others can operate aerial drones, underwater drones, and surface drones, we will do that. A great example of this is the Naval Postgraduate School's SLAMR initiative. You know, where it's us, couple of other kind of vehicle companies, it is AT&T, and it's looking at the ability, for example, for us to use our buoy as the kind of communications mesh network node for others to operate out in the ocean. I think that is exactly the kind of collaborations that I think our customers get excited about. It's actually when I speak with my counterparties at some of the companies that, you know, we encounter, they're also excited about. By working together, we all manage to go and help each other drive up and get to a larger scale, as opposed to nobody getting very much in the first place. If I could just expand on that a bit too, that, I mean, you guys are the expert in this, right? This is domain knowledge that there probably aren't a lot of other solutions or providers that companies would go to. I assume collaboration becomes critically important because you have a piece of the puzzle that is very much outside the expertise of even these much bigger companies. Yeah. I think we... As I said earlier, I mean, we definitely know our part of the equation... Right ... very well. I'd like to think certainly that we have a very collaborative approach with the industry. Yeah. Having grown up in an industry, you know, kind of in the marine space where it is vital for your survival to work well with others, we take that approach to market. You know. We won't pretend that we know everything. We will try and work around issues that might be encountered. We'll bring our knowledge into expert teams. We can jointly solve the problems that the customer truly needs to have solved. Well, I'm gonna wrap it up today. We're almost at half an hour. Really appreciate your time today. Looking forward to having you back. We have a lot of additional topics to talk about here, and I'd really love to get into more detail on some of these end markets and applications as well. Hopefully we can have you back soon to talk about that. Apologize for any questions we didn't get to today as we've run out of time from the audience. Thank you for your participation. Phil, if I just turn it over to you for any closing remarks, and then we'll wrap it up for this afternoon. Yeah, no, thank you, Shawn. It's, it's been great talking to you, and certainly appreciate all the, all the questions that come through. I think it's, this is an exciting time at OPT. I think being able to provide, you know, ocean intelligence and doing so with a clean powered platform base, it is exciting and is exactly where things need to be heading. I'm glad to see that this is where the industry is heading. You know, thanks for having us on, and happy holidays. Great. Same to you, Phil. Thank you. Thank you everyone for joining us today.