a Octopus (US:CODA)2023-01-30 20:50Financial Data and Key Metrics Changes - For fiscal 2022, the company recorded revenues of $22.2 million, representing a 4.2% growth compared to $21.3 million in fiscal 2021, attributed to further market penetration for Echoscope and DAVD solutions [51] - Gross profit for fiscal 2022 was $15.2 million, a 2.9% increase from $14.8 million in fiscal 2021, with a gross margin percentage of 68.3% compared to 69.2% in the prior year [53] - Net income after taxes for fiscal 2022 totaled $4.3 million, or $0.40 per basic share, down from $4.9 million or $0.46 per basic share in 2021, largely due to an increase in the effective tax rate [57] Business Line Data and Key Metrics Changes - The marine technology business recorded revenue of $14.7 million for fiscal 2022, a 7% decrease compared to $15.8 million in fiscal 2021 [82] - The marine engineering business saw revenue growth of 36%, reaching $7.5 million in fiscal 2022 compared to $5.5 million in fiscal 2021 [83] - The gross margin for the marine technology business improved slightly to 80% in fiscal 2022, while the marine engineering business gross margin improved to 45.4% from 38.6% in the prior year [84] Market Data and Key Metrics Changes - The company faced currency headwinds of approximately $1.2 million due to the strengthening of the U.S. dollar, which impacted revenue translation from foreign subsidiaries [51][82] - The company anticipates a rebound in oil and gas projects, which could positively impact future revenues [99] Company Strategy and Development Direction - The company aims to increase marine business revenue, targeting approximately $25 million in revenue for the technology business on a standalone basis over the next two to three years, compared to $14.7 million in fiscal 2022 [44] - The focus is on expanding the number of programs supplied to prime defense contractors, leveraging long-standing relationships to secure recurring revenue [30][67] - The company is shifting resources from research and development to global business development and investor relations to create shareholder value [55] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about ongoing supply chain challenges, particularly regarding semiconductor availability, which is a global issue rather than a company-specific problem [5] - The management highlighted a strong pipeline of opportunities for 2023, indicating a potential increase in rental activities and project execution as the market normalizes post-COVID [60] - The company is optimistic about the future prospects of the Echoscope PIPE and DAVD technologies, which are expected to transform underwater imaging and diving operations [89] Other Important Information - The company has approximately $22.9 million in cash on hand and no debt as of October 31, 2022, compared to $17.7 million in cash and approximately $64,000 in debt a year earlier [106] - The DAVD technology has moved from R&D to operational status, which is expected to lead to increased orders from U.S. Navy commands [49][93] Q&A Session Summary Question: What are the major challenges to growth in fiscal 2022? - Management noted that pipeline activities were high, but many opportunities were shifting into 2023, with a normalization of project execution expected [60] Question: Are defense contractors still evaluating competing technologies to Echoscope? - Management indicated that the successful sales to prime defense contractors suggest a high degree of confidence in their technology, implying that evaluation of competitors is less likely at this stage [111] Question: What are the prohibitive factors in the engineering services business? - Management acknowledged the need to return to pre-pandemic revenue levels and noted that slow visibility on broader defense programs has been a challenge [94] Question: Any updates on first quarter trends for fiscal 2023? - Management reported good traction in the level of quotations and proposals, indicating a positive outlook for the first quarter [115]