NVEC - Earnings call 2 2024

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Operator

Hello, and welcome to NVE Corporation conference call on second quarter results. [Operator Instructions]. I would now like to hand the conference over to Daniel Baker, President and CEO. Sir, you may begin.

Daniel Baker

Good afternoon, and welcome to our conference call for the quarter ended September 30, 2023. webcast recorded. being is call live and This A be available website, nve.com. through our replay will and by I'm Principal Baker, Dan . I'm joined Daniel Financial Accounting Nelson. Officer, and Manager then will After our Daniel opening marketing Nelson my financial new comments, results, I'll products. cover and present the open questions. to call we'll and press financial market. of issued on filed report results our close our We XX-Q following in the and quarterly Form the release with past hour

as industries are platform available and to related known the through in are SEC's results subject and the risks uncertainties, time updated are uncertainties uncertainties we XXXX. sales Links we risks website the press annual the quarterly March XX-K for and risks XX, as to well or the to that XX, website, time relate plans, and year credit Comments June to the report on ended on Twitter. including, our XX-Q X that and Form including to listed quarter with the to in revenue formerly factors environments XX-Q future as serve, for release losses as our economic performance filings Form SEC, make as ended others, XXXX, and of events, among on in from statements certain the may forward-looking future report related risks financial our such our

will the details from flow may ago. undertake our from we cash cover Nelson and differ record revenue no update provided earnings could Daniel? pleased We're of a make. we a information to forward-looking decreased the year financials. to results statements materially report Daniel Actual despite quarter and obligation strong

Daniel Nelson

a decrease ended XXXX, the The product quarter to sales industry a R&D. and semiconductor a forecast demand semiconductor a lines. the downturn. increased most for to XX% million year strong decrease XX, product in a industry XX% against was is a last projecting The XX% when XX% to reflection comparison and revenue decreased The this [indiscernible] of good decrease is quarter sales sales XXXX. for $XX.X XX% application after XX% was rebounds contract to $X.XX decrease million due a year in Total as tough ended that for in September decrease in sales compared increase product Dan. news a XX, are for September Thanks,

But existing in The sales expect was to primarily procurement due decrease we decrease weak this sales product later the markets in to of to timing completion to The and expected the to is was of customers. contracts year. fiscal revenue related contract contract were most defense new by due quarter. This recover purchases cycles, decreased sales coming active strengthen in R&D in to quarters. was and especially contracts. we the R&D these have Product

XX, the quarter of quarter September increase loss on of reversal, XXXX, the second by allowance in XX% of provision decreased a expenses debt XXXX loss losses was based partially compared $XXX,XXX expense. Total our to reversal of reassessment credit and due primarily fiscal for a second information XXXX. provision customer R&D to fiscal X% credit to offset for payments for due The credit as a

income to due securities XX, XX% on fiscal purchased Interest quarter the yields XXXX. after XXXX second for higher of September increased

credits. $XXX,XXX quarter decreased credit XX% the the deductions percentage is taxes tax provision quarter provision to for for reversal compared fiscal tax of Our before the in changes income X% taxes The XXXX. was of to due effective of rate, which to of amounts a loss second and fiscal second income and as of and the XXXX decrease for timing the

quarter-to-quarter. from tax Our vary effective rate can

the compared lower revenue. by XX% a XX% Net than offset will income second tax decreased decrease quarter likely the quarter XXXX increased margin quarter the and rate. ended expenses, year due income to fiscal interest partially in [ remarkable was rate primarily effective subsequent of the effective in effective a revenue, was The decreased was to September prior remarkable for -- XX, rate quarters tax of be ]. Our higher in XXXX tax net

of first was For million the X Net months the the XX% a fiscal in million X first XX% months sales for contract and of decreased activities $XX in to to of diluted XX% the X provided XXXX. per months million XXXX for a R&D million income prior fiscal per revenue. first revenue for XXXX. months year. to first X the decreased of operating half $XX.X total Net compared share half from -- to fiscal cash XX% The for the million flow the to $X.XX XX% $XX.X fiscal for $XX.X first of product decrease the share XXXX, $X.XX $X.XX for of decrease by million $X.XX diluted decrease due first half from or increased

securities far marketable The plus from million cover than fiscal $XX.X And for strong cash this operating year. to million. flow so cash our $XX.X increased dividend more

Now call to to back Baker Dan? business. cover the you, I'll Over Dan turn the over to

Daniel Baker

electromagnetic cover shareholders' I'll hazardous recently converters DC of and meeting. declaration line Thanks, Under NVE's products, conformity, DC of reduction and qualified the for of an our to EU Daniel. smallest which substances. includes prestigious CE compatibility marketing the world's safety, mark.

for certification helps from until third-party meets the that international October published for our strategy. body most part our additional told the NVE certificate new sales Organization converters, was key The no marketing to qualifying the in with the we mark DC components governing external the radiated mark DC a for compatibility for parts Also XXXX international excellence seal is compliance. consistent conventional have are the of testing by Standardization, pass an of the standards a rigorous enable emissions, International test shows to Our Europe. certification. approval of XXXX quality. standards valid renewed ISO. ISO ISO electromagnetic quarter, important distributors us Trade in could The XXXX. our Unlike ISO or is ensure officially

exhibited at hub event. the banner for a are the care own under quarter. and several health Medical medical at exhibited us. market an Manufacturing devices distributors and of the is Design Minneapolis, in week Show Our industry Minnesota last shows our in important Trade advanced past we part manufacturing

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sensors more size positional Our effective improves procedures. precision accuracy, be allows them used small small to enabling their and in catheters diameter

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I'd to questions. Now Tawanda? call the to like open

Operator

with comes Instructions] of the Bernstein Management. first [Operator Bernstein question Our Capital Silverberg line from Jeffrey

Jeffrey Bernstein

you. of couple So a for questions

you Just wondering, all the delivered backlog have during that built had up COVID? now

Daniel Baker

we backlog in in and the at meaning we it look but order do system. and continue gap Well, to has formally don't a we because -- orders flow have backlog system, the orders call

from and we've that continuing plagued the industry to in semiconductor pandemic, to we've fulfill. we shortages continue many of while orders So during have we're the flow order some recovered that the strong

Jeffrey Bernstein

times, of at have those in lead changed all? your So terms

Daniel Baker

They but lead our are part, the depends have. shorter. times on It

parts stock the in now most many that we in during than that industry, production have better been have always we pandemic We in we've because didn't integrated we the here in uniquely NVE. believe, positioned stock at have are we

over of most back have processes. our front We and end control end,

increased staffing. even in better shape some we're now abated. in we of have shortages capital in investments. better our shape we're We've than And capacity with the our industry. the So because We've increased most

for -- lead And times so in parts. parts many our stock many shorter offer or of we in can

Jeffrey Bernstein

the the of can Is a a are . you of Okay. little pre-COVID versus working talk difference guys And bit sort then you about in designs on? pipeline number times? that just there design significant

Daniel Baker

that's interesting an Yes, question.

it's think plagued personnel, then just design now that designs at somewhat. -- know just about are that. companies have feeling to a the that I interest new personnel and industry the longer-term that more, have getting as The shortages we that things. had think abated, during less but parts we've seem It's I I as looking don't pandemic it's least including could of they're support data worried also . more with

products, feedback also our in business. we've that navigation on optimistic that to including some of the our medical DC the So specific DC sensors of and particular, we're angle very gotten based in converters our are on mentioned I sensors useful some

high. our So is design activity

Jeffrey Bernstein

from pre-COVID, what just the ordering look And terms number who then of versus of does you are customers in that overall like?

Daniel Baker

it's during and during it by customers We pandemic, large. the picked increased. We and increased. them some we've think shortages, Well, retained up has the

than customers pandemic. So we have before we had the more

We the and continue support before, product that they quality said time, sometimes to for but lead we've from NVE. customers. But they stayed came they for as the get the pick up

Jeffrey Bernstein

will I'm just in had any just as going designs that they to years, you. of great. that needle some the at terms design you've That's of be point individual ramp the over that And think last wondering, Got never up? sort the of important? you couple are wins move Or then

Daniel Baker

Well, to use expected had out there win major electric some wins that we stations thrust we and to talked a required of vehicles design is build see before. in I include And we've vehicles. charging increase we've areas which design have for a infrastructure where important especially the support about electric the that would highlight X

and goes solar for energy away doesn't design has be because at important a win stored power have electricity, energy, always storage the wind conversion which and systems, of course, energy green blow electricity also energy for the mostly to to green conversion is night. We because

is to -- So locally important. that store being able

are growing as these that see markets So potential. we long-term potential tremendous having

course, of a those, design wins address proposition. important are where are with any those design But we So pleased convincing markets have fast-growing because we benefit they win. large,

Operator

Our [Operator Chris Instructions] line next question Bankosky. the from of comes

Unknown Analyst

I ask your YouTube want to channel. you on

for ] -- example driver using you electric a a trips enter device an markets? think DFI prices your for have a for and bike? [ You these to those for practical Do your an like

Daniel Baker

-- said for think yes. So I said for you bike electric you driving motors,

we of the And to for In drive efficiency an where our that we several a to motors. and in it's market cost have there's believe motor conversion demonstrated proposition competitive there. was market used And We our we that of an of do for believe was and market improve we for it was control of an So DC all is the electric YouTube types we electric that are kinds that of bike. the where a for motor. case, have conversion DC video power can converters effective. that decrease for parts broader particular it those a size we electric power isolators interesting can systems. us, power

expect. the efficiency in to of that a So the even bit can little sources. converting can and to motors might as And you significantly help a the portion use that's electricity significant electricity of energy challenge world. overall increasing used carbon-free

control. the excellent motor So we as an opportunity, category of general see that

Unknown Analyst

of would you you how kind of Can some or to kind neighborhood SPX like as motor? much efficiency an us a average industrial have gain give figure

Daniel Baker

not get But to -- number improvements changes XX% the with of past. percent efficiency like up it's are motor change and the lot saved. a Those even even difficult it number in turns X% out they have come to be or exact Yes, those than into application, -- of it because improvements slight sorts and a sorts going it's electricity motors and less rung that by been can significant XX%, the multiplied of as it's though. from depends that's to of because imagine, you on an can

So our conventional that's market. than it's can offer quantify difficult to it, target but to and higher we efficiency important electronics,

Unknown Analyst

speaking, And say higher better good that, to you than can current systems. -- the you do That's generally sensing efficiencies because existing hear. Okay. you

Daniel Baker

is between part converters. Exactly. to of And then sensing. the Yes. power an they DC off, very our then transistors. And DC is our isolators, is part current efficient interface the on reason switching they of but controls the when speed provide -- other of which can is transistors and important they're either the it because are Part of electricity. these efficiency or the And the transitioning of when it it they're burn that's

major So inefficiency. of a source that's

become devices extremely So efficient the more faster can switch that and our they those one devices, the are fast.

Unknown Analyst

more making like [ you wide and market are ] this That I good industrial ask, kind you like but applications always broader in something is hear. Okay. of are this? inroads to -- is And

Daniel Baker

are. We

was markets. So the question broader

market So -- we would of been to to industrial with and highlighted used We've Internet for strong been highlight those parts. of continue Those And some sensors, pleased connected highly you parts our the have the mean smart reception have industrial position Things. robotics control for -- and which robotics. a industrial are in our there. control we've we

of We go sensors systems. you those the make that will, the that continue into control provide nerves isolators robotics industrial to and if the provide eyes, systems of that the

that So strong a for remains us. market

Unknown Analyst

that video of you your again, sensors a your -- plug Okay. And Is can current your have for was safety market another YouTube using enter? in about which -- is bathrooms. you GFI, kind the for

Daniel Baker

it. I see. asked missed your time -- that I the you missed I first

interruptors. So or how GFCI shows on a do ground interruptors we [ fault be what And were and demonstration that talking you about would YouTube circuit have called to website our it's ground sometimes GFI (sic) that. or fault ] on

we're more out, pointed for wide correctly the efficiently. bathrooms for And kitchens are devices, us. be importantly, rather interesting home And you current is So and are But at. and an market sensors that's such controlling very which and market it like there sensitivity our which market, is we sensors. of current extreme in commoditized. for motors would demonstrating an The things range important industrial doing as looking

efficient So in very also that more allows motors to And the use our system. power little become themselves. sensors

to the spending measure improve the sensors current our So a might current current in conventional control order with current savings power the to use the significant sensor. that in of of amount to use current order And you're very some so efficiency, sensors little power.

the as So of for but range dynamic a sensing. current a we see demonstration those that particular application, parts. applicability of power, wide broader low In sensitivity, also high

Unknown Analyst

for you clients been that just ordering you inventory And Taiwan chips. week out the days, more there's in right. ending this of have the All -- of couple so? news seen correction is the Are or last general,

Daniel Baker

coming to reason for in the quarters. a until gives semiconductor optimism Daniel We've remarks, that alluded so and seen us [indiscernible] recovery of the as for industry, the prepared

Unknown Analyst

own you requests for at order own [indiscernible] seen your requests [ inbound have But interest ] it kind of in your

Daniel Baker

purchasing mean you foundries. So from

Unknown Analyst

mean you you're just client seem client -- Well, cyclical and uptick? orders I like inquiries

Daniel Baker

to some future. to that be We But seeing week optimistic would general, saw order improvement say the gradual. . in particular It's are difficult a improvement. we've us that and the been flow, been It in we an about seeing makes and improvement. point

Operator

Stephen of comes Lewis from Management. with Our the line next Capital question Lewis

Unknown Analyst

of you way a valuation had managed it's any I small showing bond plus the last change X small about had million a X versus in portfolio. been a You're question months? the only your to $X cost? Have difference in

Daniel Baker

Yes.

the been is is which happening for to, increasing. think I interest showing that general what been unrealized were have rates losses what's referring we portfolio, what is in bond you're in the So

results losses in so in And portfolio. that our unrealized bond

or statement unrealized while the face them look So value of lower, par value up losses, the pay is them expect we meaning to the when and that still the but bank -- value we value the up look them bonds. in online, or we

But income significantly the the in invested reinvest that's originally income, on that increasing, ones they in. that the interest you interest securities able with is interest than they is And as interest see statement. increased our it -- rates we've were flip been as rates bonds that because of our to can mature have that side higher

Unknown Analyst

doing That's now? what you're

Daniel Baker

Yes.

Unknown Analyst

In Okay? the higher higher rate

Daniel Baker

Yes.

matures that we than a bonds. reinvest bonds have new the interest reinvest So higher when mature with rates in reinvestment bond and we the so the then are we bonds that and old typically the occasionally, them with

several were years and them higher we our increases. than we bonds -- of roll in mature interest over might rate bonds be income bought rates . interest when several interest -- so our When can them ago, those when years maturity lower. Some into bonds we

Unknown Analyst

near you value by think the forecast can Assuming year? term, difference and you do your end cost will cash of eradicate the you between fair flow the

Daniel Baker

Unlikely by longer. the year of the maturities of are end the because the bonds

invest typically But them in flow mature, bonds value. the expect bonds we and to immediately. they -- cash when funds to we don't -- we proper so the strong expect need So because their multiyear have pay we

So if and bond But the we million to par the term lower bond, of million. the we but might loss expect that be now, pay where converge value then book the be value $X off over to the on $X tend will value the will have decrease. will it

Unknown Analyst

doctor business aid today. but [ there ability the on versus hearing business cheaper I has go been estimates? your checked comments haven't any see a lot to buy hearing is without that having of the call up aids average But -- the holding Regarding to to about ], has publicity through their

Daniel Baker

to that cost XX% the an those underserved market. help that excellent are inconvenient are The use us by large could and seek broader a part over-the-counter well the an hold business for to that continues only our are aids you market dispensing. implied market aid as It's market. as as aids that is many referred Hearing you the hearing hearing important hearing about of hearables estimates aid The of discouraged a up.

the convincing lower So hearing expand aids. having we benefit aids will and have over-the-counter a we in aids, cost believe, hearing and market, hearing proposition

good So we see that opportunity. long-term as a

Unknown Analyst

an Have you backlog? secured OTC

Daniel Baker

We year now, broader be small and which in a some market be design hearables necessarily It's grow. we not X that go to expect in aid. would about [ may market, that hearing things the wins space ] a but but have would relatively talked it

Unknown Analyst

are and Does that the solid quarter the the that of the months. quarter. You mean quarter results within the pleased? said your were pleased earnings another you to [indiscernible] be to X September for X% with actual for X% [indiscernible]

Daniel Baker

but pleased that Well, were -- of it under can we can quarters. business the the and the that as downturn circumstances September a significantly have volatile. in remarks and in was lumpy it Daniel defense -- mentioned be expect somewhat coming recover in prepared wasn't And the industry quarter, be to we down we the it

the the cash us. pleased prepared We were context in business the particular were remarks. flow of for industry mentioned We defense Daniel the with certainly particular and the and with lumpiness So and results. the the profitability the effects of pleased the defense that of in the

Unknown Analyst

please you the were expected least months? earlier that at what you So X were results

Daniel Baker

[indiscernible]. probably most and guidance, given provide so say, provide, we Well, you look there's did forward-looking of the it at how the the don't we environment to, and like know, we do to given don't but as compare -- we not much difficulty companies, don't we

our profitability, execution our quarter. with And and new had how delivering the the for that were the and bringing orders in team efficiency executed and we yes, folks So the pleased business.

Unknown Analyst

the with pleased [ log ]? You're back

Daniel Baker

as year And a with market industry for in improving expectations on given We're calendar the we are expect flow, much in other but order coming the the semiconductor the XXXX. questions. is in stronger industry we conditions, touched pleased the

Operator

next Private. Instructions] the question Our comes line [Operator from of Pete

Unknown Analyst

some patent significant portfolio license to the streams? patents [ see do of revenue create you company with has, Dan, the opportunities any those additional ] to

Daniel Baker

of of We particular, portfolio. memory high-value in time in to And is technology MRAM in but time opposed the that from fab can a licensing Pentronic to looked MRAM, where can we which memories our that low-density at our make pioneer licensing. as possibility fabs build we about for market the used that be were memories. multibillion-dollar the type large-scale is talked target We've

ways opportunity. of opportunity We're It's an proud for there's other property. So intellectual property. very our potentially a we then licensing. intellectual of portfolio And long-term of monetizing have our

is another sell where way we label under company's brand name. one And that private our can monetize we sales, products

So we're manufacturing of our manufacturing proud it. capability. still We're

our means And it's getting cases, and so infrastructure, easy somebody else and for our than technology not licensing And ways to parts invested a the bit we also, to that in in the technology the But it's other portfolio leverage and we've build explore that selling under not some quite simply it up. in property do it. brand. in making intellectual opportunities own

Operator

next of [Operator question line line top from Management. with Instructions] Capital the McBurney comes Colin Our

Unknown Analyst

on I you about just of outside the flat? was -- the first the Olympias defense, rate? comment like outside aside kind sense a or defense, like half? the get talked maybe kind the maybe quarter for just to for is defense. of business for on the in of the set Like either run Or wondering you've if past, of Could you

Daniel Baker

-- recent setting that particular results, major was quarter. been question, response particular the Yes, business. quarter the recent that's our aside non-defense And to that break revenue defense on September a versus and with as a most But slow were I a there for It drag on the was was business, has a a the we defense most on industry pleased in -- the us. the nondefense down we defense affects influence mentioned but quarter. in precisely prior don't

Unknown Analyst

have government Got customer, come kind many couple But like of Or it like could in very typically business, you touch orders customers by like sounds them like it DLA prime how is because a like it maybe is contractor? are it's million a dollars? one on they it. then there's like And yes? just like the you of for by of placed And U.S. lumpy. they that defense then maybe lumpy is something? on are government or order defense, that those one like something placed and the like in an or the or XX places U.S. -- the Or

Daniel Baker

The but large There's contractors. defense one, customers contractors. defense number a contractors, small number it's are typically not And large either. prime not relatively it's of

tends and defense And into tied products products, we procurement to lumpiness be anti-tamper to cycles the our to are the so systems. primarily in that electronic are sell protect industry which used technology large defense

take particular large types tend they So procurement be but those don't that when and systems then build and systems the system. tied drop of And quarter. things defense a to to built -- systems for be are while know to for September the to be the the they obvious We big we what sometimes tend what they starting get in that's can't often we say and off. are, happened so can to reasons, orders

Unknown Analyst

Got it.

recent as and/or environment of where triangulate the spending I Ukraine the next in versus And do then like for good things Okay. Israel's of that go-forward you it or a was is attacks of some than are guess, -- used over the of I mean seems kind year kind getting you been? of to And defense specifics, sense it ago. better how your have terms do year -- expectations like without any in have mean, equipment for terrorist kind response a I the

Daniel Baker

vulnerable going important those hands. because to sales to has Defense it's publicly protect to those that and reverse sales falling a especially said the for that business, are for would the to that is electronics conflicts That's point, Department systems has government what to be what hate are but tend unfriendly to Yes. good Colin. good into have said allied certainly say foreign engineering to We

environment sense, that in -- sales procurement positive relatively these defense for it's cycles. our long are a So suppose I

in a something at defense important fighters. part, not is we're it's we immediately So ours of war gaining to where system from though, it, look Allied small part protecting and if it proud U.S. part do an do the technology that we're but protecting revenue a our shipped, our

Unknown Analyst

That I correctly. Great. the going I sense. fully if X and just know -- it's personally, is Okay. obviously, think support had, It me And U.S. makes serve last -- I I military. maybe I on to --

$XX I Or you kind fiscal sort I somewhat to -- the each. revenue be sometimes in that that and a think the a feasible? your that XXXX or guys kind is to revenue. something previous I mean fiscal Obviously, XQ similar maybe would of million for lower? is your XQ of imply I started outlook like quarter fiscal comment. was would kind first said of potentially of there something like little mean, 'XX 'XX maybe closer change a half misunderstood bit

Daniel Nelson

Yes. [ Carlyn was ], the context I made sales. the of same think revenue being within comments the we before about anti-tamper

a that anti-tamper not significant -- lumpiness were not the in that to business, we about of the for expect we the particularly And So to related revenue full actually XXXX. business. -- -- and we fiscal see of lumpiness difference the talking discussing sales we the comment made did specifically for was

yes. So

Unknown Analyst

Okay. Got it.

defense. and And so then kind in into in it's the kind positive the lump those both lump 'XX, XQ of the 'XX positive presumably from of XQ were the

to comment holds would lumpiness of couple kind that year's still assuming have a of match last So you lumpiness? positive

Daniel Nelson

to We increase. anti-tamper defense sales expect sales

to our sales to can in difficult the But cycles which because defense Dan again, expect recover XXXX. fiscal of terribly We quarter as hard business is this part sales lumpiness say, be in remaining as contracts, procurement of to defense are the defense comments, as to because and his of predict. of the far tied timing mentioned

Operator

queue. call closing no further remarks. in I the the like for showing would questions back to now I'm turn Daniel over to

Daniel Baker

again to report and in We look strong conditions. earnings call forward earnings pleased We cash were flow the everyone. increased Well, challenging our thanks, with at to next despite January. speaking you

Operator

and today's conference participation. gentlemen, you your Ladies for concludes Thank call. this

disconnect. You now may

NVE (NVEC) 18 Oct 232024 Q2 Earnings call transcript