Ocean Power Technologies Reaches Agreement in Principle for Delivery of Multiple Unmanned Surface Vehicles to US Government
Ocean Power Technologies (NYSE American: OPTT) has reached an agreement in principle for a sole-source contract to deliver multiple WAM-Vs to a US Government department. This firm-fixed-price purchase order, finalized on a noncompetitive basis, will recognize revenue ratably over the contract term with an expected near-term delivery. Although specific terms are undisclosed, this deal adds to the company’s recent success in deploying its PowerBuoys and vehicles for maritime security in various regions, including North America and the Middle East. CEO Philipp Stratmann highlighted the strategic importance of this contract in enhancing ocean security using cost-efficient unmanned surface vehicles.
- Agreement for multiple WAM-Vs to be delivered to a US Government department.
- Firm-fixed-price purchase order ensures predictable revenue recognition.
- Contract expected to be fulfilled in the near term, indicating imminent revenue.
- Reflects recent commercial success in key regions like North America and the Middle East.
- Highlights the dual-use capability of OPT’s technologies, broadening customer base.
- Details of the contract terms remain undisclosed, leading to uncertainty.
Insights
The sole source contract award to Ocean Power Technologies (OPTT) is significant as it indicates a secure revenue stream from a high-credit entity, the US Government. The nature of a Firm-Fixed-Price contract implies that the company will not face cost overruns, enhancing margin stability. The fact that revenue recognition will occur ratably over the contract suggests a steady cash flow, which can help in operational planning and forecasting.
This contract win is particularly noteworthy given the noncompetitive basis, implying OPTT has a unique value proposition that competitors currently cannot match. Investors should consider how reliable government contracts typically reduce financial volatility, thus potentially making OPTT a safer investment during broader market uncertainties.
However, the lack of disclosed contract terms introduces some degree of uncertainty. Investors should watch for future disclosures or earnings calls for more detailed financial impacts, including contract size and potential margins.
Ocean Power Technologies' WAM-Vs (Wave Adaptive Modular Vessels) represent innovative technology in the maritime sector. These unmanned surface vehicles offer compelling benefits such as cost-efficient operations, scalability and adaptability in various environments. Their dual-use nature, serving both military and commercial needs, broadens the market potential and diversifies revenue streams for OPTT.
The technology's application in Maritime Domain Awareness and Counter-Unmanned Underwater Vehicle operations highlights its strategic importance. These areas are increasingly vital for national security, especially with rising geopolitical tensions. The endorsement by the US Government further validates the technology's efficacy and may encourage other nations or commercial entities to adopt similar solutions.
While the technical aspects seem promising, investors should be mindful of the potential for rapid technological advancements in the sector, which may introduce new competitors.
The maritime security and monitoring market has been growing steadily, driven by the need for enhanced surveillance and security measures. Ocean Power Technologies' recent contract aligns well with these trends. The ability to secure a sole source contract indicates a high degree of trust and reliability placed in OPTT's technology by the US Government.
This contract could serve as a showcase, strengthening OPTT's market position and potentially leading to additional contracts domestically and internationally. The dual-use nature of their technology also opens doors to various commercial applications, including offshore energy and environmental monitoring, widening the company's market reach.
Investors should note the company's recent commercial success in North America, Sub-Saharan Africa and the Middle East. This geographical diversification helps mitigate regional risks and could stabilize revenue streams over the long term.
Sole Source Contract will lead to further growth with the US Government
MONROE TOWNSHIP, N.J., June 26, 2024 (GLOBE NEWSWIRE) -- Ocean Power Technologies, Inc. (NYSE American: OPTT) (“OPT” or the “Company”), a leader in innovative and cost-effective low-carbon marine power, data, and service solutions, today announced it has reached an agreement in principle on a sole source contract award for multiple WAM-Vs for delivery to a Department of the US Government. The final contract award will be a Firm-Fixed-Price purchase order on a noncompetitive basis.
Revenue will be recognized ratably over the course of the contract with an expected near-term delivery date. Due to the sensitive nature of this relationship, terms have not been disclosed.
This award builds on the recent commercial success of OPT’s vehicles and PowerBuoys for autonomous Maritime Domain Awareness, Counter Unmanned Underwater Vehicles, and Mine Counter Measure Solutions in North America, Sub Saharan Africa, and the Middle East.
Philipp Stratmann, CEO and President of OPT, expressed his enthusiasm about this revenue generating contract, stating, "We believe this agreement is further proof that our systems form an important part of building out the future of ocean security. Using small Unmanned Surface Vehicles, like our WAM-V, is a cost-efficient force multiplier for the US Government and other offshore operators. The dual use nature of our technologies enables us to provide systems to a broad set of customers.”
For additional information about OPT and its services, please visit our website Ocean Power Technologies.
ABOUT OCEAN POWER TECHNOLOGIES
OPT provides intelligent maritime solutions and services that enable safer, cleaner, and more productive ocean operations for the defense and security, oil and gas, science and research, and offshore wind markets. Our PowerBuoy® platforms provide clean and reliable electric power and real-time data communications for remote maritime and subsea applications. We also provide WAM-V® autonomous surface vessels (ASVs) and marine robotics services. The Company’s headquarters is in Monroe Township, New Jersey and has an additional office in Richmond, California. To learn more, visit www.OceanPowerTechnologies.com.
FORWARD-LOOKING STATEMENTS
This release may contain forward-looking statements that are within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are identified by certain words or phrases such as "may", "will", "aim", "will likely result", "believe", "expect", "will continue", "anticipate", "estimate", "intend", "plan", "contemplate", "seek to", "future", "objective", "goal", "project", "should", "will pursue" and similar expressions or variations of such expressions. These forward-looking statements reflect the Company's current expectations about its future plans and performance. These forward-looking statements rely on a number of assumptions and estimates that could be inaccurate and subject to risks and uncertainties, including the effective delivery and implementation of the sole source contract, the continued success of OPT’s vehicles and PowerBuoys, the conversion of potential customers to contracts and the realization of the potential revenue thereunder. Actual results could vary materially from those anticipated or expressed in any forward-looking statement made by the Company. Please refer to the Company's most recent Forms 10-Q and 10-K and subsequent filings with the U.S. Securities and Exchange Commission for further discussion of these risks and uncertainties. The Company disclaims any obligation or intent to update the forward-looking statements in order to reflect events or circumstances after the date of this release.
A photo accompanying this announcement is available at:
https://www.globenewswire.com/NewsRoom/AttachmentNg/78a9efd9-401c-4e95-a84f-ae05b53bf9c8
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