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Monday, September 27, 2010


Ocean Power Technologies Completes First-Ever Grid Connection of a Wave Energy Device in the US

PENNINGTON, N.J.--(BUSINESS WIRE)--Ocean Power Technologies, Inc. (Nasdaq: OPTT and London Stock Exchange AIM: OPT) (“OPT” or the “Company”) announces that it has completed the first-ever grid connection of a wave energy device in the United States at the Marine Corps Base Hawaii (“MCBH”), in conjunction with the US Navy. This connection demonstrates the ability of OPT’s PowerBuoy® systems to produce utility-grade, renewable energy that can be transmitted to the grid in a manner fully compliant with national and international standards.

The PB40 PowerBuoy is part of OPT’s ongoing program with the US Navy to develop and test the Company’s PowerBuoy wave energy technology. The project began as a Small Business Innovation Research (SBIR) program at the Office of Naval Research (ONR). Key program goals include demonstrating system reliability and survivability, and the successful interconnection with the grid serving MCBH.

The PowerBuoy was deployed on December 14, 2009 approximately three-quarters of a mile off the coast of Oahu in water depth of 100 feet. To date, the PowerBuoy has operated and produced power from over 3 million power take-off cycles and 4,400 hours of operation. The PowerBuoy grid interface was certified in 2007 by an independent laboratory, Intertek Testing Services, as compliant with national and international standards, including the safety standards UL1741 and IEEE1547, and also bears the ETL Listed mark.

The system has numerous on-board sensors that monitor a wide variety of system performance variables, external conditions and lifecycle parameters. Data collected by on-board computers is transmitted to a shore-based facility via a fiber optic cable embedded in the submarine power transmission cable and then transmitted via the Internet to OPT’s facility in Pennington, New Jersey. The Company’s engineers have collated much of this data and compared it to OPT’s proprietary models which analyze the performance given actual in-coming wave conditions. This information has provided a strong correlation between the ‘actual’ and ‘expected’ system performance, which serves to confirm OPT’s models for its higher output PowerBuoys, including the PB150.

The wave power project at MCBH underwent an extensive environmental assessment by an independent environmental firm in accordance with the National Environment Policy Act (NEPA) that resulted in a Finding of No Significant Impact (FONSI). The FONSI is the highest rating assigned. The project has utilized local Hawaiian subcontractors, including Sea Engineering Inc. for the installation, test and servicing of the systems.

Charles F. Dunleavy, Chief Executive Officer of OPT, said, “OPT has been ocean-testing its technology in the Atlantic and Pacific Oceans for several years. Our engineers and marine operations personnel have worked hard to bring about this success. Grid connection is another significant milestone in demonstrating the potential for commercial status of our PowerBuoy technology. We thank the Navy and the Naval Facilities group for supporting this project as we move nearer to achieving their goals for the program. We are pleased to be a part of the renewable energy initiatives undertaken by the commander of Marine Corps Base Hawaii.”

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. These forward-looking statements reflect the Company's current expectations about its future plans and performance, including statements concerning the impact of marketing strategies, new product introductions and innovation, deliveries of product, sales, earnings and margins. These forward-looking statements rely on a number of assumptions and estimates which could be inaccurate and which are subject to risks and uncertainties. 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 Form 10-K for a 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.

About Ocean Power Technologies

Ocean Power Technologies, Inc. (Nasdaq: OPTT and London Stock Exchange AIM: OPT) is a pioneer in wave-energy technology that harnesses ocean wave resources to generate reliable and clean and environmentally-beneficial electricity. OPT has a strong track record in the advancement of wave energy. The Company participates in a $150 billion annual power generation equipment market. OPT’s proprietary PowerBuoy® system is based on modular, ocean-going buoys that capture and convert predictable wave energy into clean electricity. The Company is widely recognized as a leading developer of on-grid and autonomous wave-energy generation systems, benefiting from over a decade of in-ocean experience. OPT’s systems are insured by Lloyds Underwriters of London. OPT is headquartered in Pennington, New Jersey
has weathered the retail storm quite well. The company - a retailer specializing in all things pets - recently beat the Zacks Consensus Estimate by 14%, prompting analysts to raise estimates going forward. It was PetSmart's 10th consecutive earnings surprise.

People Still Spending on Their Pets

On August 18, PetSmart reported a 32% increase in earnings per share from the second quarter of 2009 to $0.41. Same-store sales improved 4.6% from the same period. Apparently people are more inclined to cut back on spending for themselves rather than their pets. Overall net sales increased 6.2%.

Service sales, which represent about 12% of total revenue, increased 7.2% year-over-year. These services include pet training, "styling salons" for grooming, and PetHotels for boarding. PetSmart also offers veterinary services through many of its stores.

The company was able to increase sales without deep discounting, as evidenced by its improved gross margin - up from 28.2% to 28.5%. Its operating margin also improved - from 4.5% of revenue to 6.6%.

Positive Outlook

Management expects continued growth going forward, with a low to mid single-digit increase in same-store sales. For the full year, the company expects EPS between $1.91 and $1.99, up from its previous guidance of $1.82 to $1.92. The company expects earnings for the third quarter between $0.35 to $0.39 per share.

Analysts have been revising their estimates higher since the latest earnings surprise. The Zacks Consensus Estimate for 2010 is $1.97 - within management's range - and a 24% increase from 2009 EPS. Analysts expect the company to earn $2.25 per share in 2011, a 14% increase from 2010 EPS.

Fundamentally Sound

PetSmart has repurchased 3.4 million shares year-to-date for a total of $107.1 million. The company did not buy back any stock in the second quarter however.

PetSmart recently raised its dividend 25%. It has a dividend yield of 1.5%.

The stock trades at 3.4x book value, a premium to industry average of 1.5x. This premium is justified given PetSmart's superior profitability. The company's return on equity of 18.6% trumps the industry average of 8.4%. Its net profit margin of 4.0% is well-above it peers at 1.2%.

The stock also trades at 17.3x forward earnings. Its PEG ratio is a very reasonable 1.3.

PetSmart operates 1,164 stores throughout North America. The company expects to open 21 to 24 new stores in the last half of 2010. It is a#2 Rank (Buy) stock

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