NVEC - Earnings call transcript Q2 2025

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Daniel Baker

Good afternoon, and welcome to the NVE Corporation Conference Call for the quarter ended September 30, 2024. I'm Dan Baker, NVE's President and CEO. I'm joined by Controller and Principal Financial Officer, Daniel Nelson. This call is being webcast live via YouTube and Amazon Chime and is being recorded. A replay will be available through our website, nve.com, and our YouTube channel, youtube.com/nvecorporation.

in mode. currently are participants a listen-only All After there will question-and-answer session. be a our presentation,

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to in XX-Q report the release the refer press plans, or results risks ended on financial and Form on risk to SEC's such X, for the performance to with and subject revenue, the including are including, events, the in certain close and serve, to Form in related quarterly uncertainties on your well market. press XX-Q through and harbor to Please annual as hour We safe to our relate uncertainties Twitter. issued statements from on uncertainties risks XX, related March others, that statement our SEC, listed future forward-looking as sales economic report to industries of may future past and filed we results website, the we as and the website screen. financial among are the following formerly the our our environments are filings time Comments year Links as with the known XXXX. release available factors and that our time XX-K make factors

may obligation make. from provided, no we statements information and we the update Actual differ to materially results could undertake forward-looking

Nelson financials. challenges We're despite in pleased will to industry. continuing earnings Daniel Daniel? strong the the cover report semiconductor

Daniel Nelson

due chip and R&D continued in XXXX, XX% the September in The by XX, to weak to channels contract decrease in the by product a in sales, manufacturing. X,XXX% inventory demand revenue quarter product revenue. recovery primarily clots, Total was due distributor global decreased for Dan. driven offset partially a in sales Thanks, increase decrease ended slow X% particularly

in has Although had the recovery semiconductor we hoped, industry us an outlook. been than have most the industry of slower optimistic

are markets Internet markets improving, electrification. of end Our we the have in Things Industrial and and growth

Total Gross increased XX% prior proportion distributor The year product to larger to more sales. quarter the percentage second and than mostly prior in increased increases increase X% expenses year selling, profit of and XXXX, XXXX from mix from XX% expense. and for second a increased the and XX% in in to were margin development rather a administrative quarter general of to compared fiscal and quarter. XX% of gross due the increase research fiscal the XX% profitable due expense, direct a

sales expense in increase and new The about personnel marketing increased added increase was selling, product sales was primarily research and expense due in development to those to general activities. We activities development activities. increased increased and activities. talk marketing administrative will and due The Dan shortly.

the income for X% due decreased Interest lower rate. interest to quarter

offset primarily to decreased by second compared of of increased SG&A, to increased revenue, quarter gross credit to increased fiscal is Our tax The tax timing the for The due a the credits XXXX in the to changes of of quarter before rate quarter quarter the partially was last for amounts rate, second taxes XX% income year was XXXX. X% percentage the margin. income the net year which as a decrease effective income recovery due tax and and losses taxes fiscal in fiscal rate federal higher prior decreased of increased income profit to in for of and second deductions. compared and tax XX% provision lower interest XXXX R&D,

gross It was margin, unrealized $X.XX XX% from prior with XX% million gain to $X.XX per and $X.XX XX% year profitable marketable million share. increased the margin, income earnings an from operating net quarter. margin With quarter comprehensive of securities, a

XXX% XXXX, first was the $XX increase in R&D a for due from million first XX% half million per income $X.XX to decrease $X.XX in million was Net the to $X.XX XX% sales, fiscal months months a decreased for from by decrease for X diluted the product the prior $XX.X offset fiscal contract first total revenue. of of revenue share, million months or $X.XX or partially The the XXXX. of year. For share X first per X

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

Daniel Baker

Thanks, and CapEx. marketing and Daniel. I'll sales products, cover new

on sponsored As Daniel of quarter revenue mentioned, R&D. which in customer R&D sales. increased included we've our the plus of cost is investment R&D, We past XX% expense spent in in

and a earlier tolerances. this of automotive which factory product most the a It's Magnetoresistance introduced Tunneling of new device efforts build R&D the our month, of mechanical Rotation we is systems. significant world's type, and complex sensor. result wide detecting As motion allows ALTXXX-XXE sensitive Applications is automation Rotation include its for ubiquitous. the team, sensing

sensitivity applicable on device to successful There's also our last more its would is the extraordinary demonstration technology website has information NVE precision. new Europa Clipper launch to medical like channel on YouTube and NASA our sensors and The of navigation. week. a congratulate

Our NASA great robust signs that a of in quality our and The Europa is our rigorously of reliability. reach life. the XXXX. validation scheduled qualified components April parts, sophisticated are will for Jupiter's spacecraft of search Icy to parts mission-critical instruments craft Moon

an Daniel Design sales Manufacturing the devices Event, in of As industry market increased Show we've noted, week part is for exhibited Trade and our Minnesota last marketing. and and at care a Manufacturing Advanced medical Minneapolis, Medical also are the us. important in health We hub investment

and benefit for reliability. size, superb medical a power have with devices low proposition small We convincing

MRI-tolerant sensors, our detect a Tunneling high the high capability Specifically, so enable can devices. omnidirectional we to MRI fields medical and which detect unique demonstrated have new Magnetoresistance field field from they high

navigation We featured our safety technology device isolators electrical ensure the instruments. also of best-in-class and to medical our medical

be investments in CapEx. packages spent wafer-level over fiscal We've more increase parts the value. of We've this million capacity more and million in-house. next half for to to These fiscal year, $X.XX the first our performance plans XXXX in self-sufficient be $X capture the already scale investments fiscal XXXX. The allow capabilities, capital will years, smaller, to will $X and Turning including X million and higher previously us fiscal and chip capability XXXX. discussed manufacture to

We several there's this are developing year. to types. wafer-level prototypes strong late We interest. and part been hope production chip customers provided fiscal with scale customer begin some We

the at looked expansion areas in options in have we We current or buildings building. for our expand could other the

our an in here August for March current an in-person help meetings Proxy annual at in We advisory Shareholders in pay in Our to firms expansion for current building. Annual XXXX, NVE. Meeting and governance. person lease exploring expires with extension held a allowance lease good we're recommend our

with Kelly We was first All for and had our of a public Way, of reelected, executive answer firm meet approved, In independent ratified. elected formal the was selection shareholders accounting officers directors to the along our time, chance was who was our director and including meeting, questions. compensation the officer auditors. attended registered named each and

meeting, the and X-K. demonstrate We on YouTube had position see of demonstrate dog an of a a and slides the demonstrations and channel. to on cooker try current vote filed replay our a Form Demonstrations final in array website chessboard and to sensors. a conversion chance the power facility. product demonstrations counts Shareholders and to There's report tour products a included out our product our hot hands-on

the a to my questions. unmute under before of X browser ask your the prevent the state like phone, Chime icon at That's unmute mute the the call to question. line left star bottom noise, for after we'd and or chat. question asking your raise yourself to App, Please speak. meeting open and column, a press name a background affiliation click please Now and hand to To question from your from or the your

Jeffrey Milton Bernstein

Jeff had the questions you. Bernstein a from just Capital. I Bernstein contract R&D it's was completed you Can couple in had talk project a about Dan, R&D. that you big Silverberg One, what for about? of uptick

Daniel Baker

Yes.

most is developing R&D systems. systems, anti-tamper and So defense our of business particularly related new to contract

contract -- product the sales product is is result of nature defense down usually that that's road, will in that and our So the it hope the R&D sales.

to those contracts other of that But They portfolio. the great because of technology job contracts, not and of of nature our our them. types is too they on property build of project. about the expand we our R&D did able get generally platform intellectual So a advantage types are those specific team

Jeffrey Milton Bernstein

Got you.

And XX next so could that something is or XX be the think you product that -- in months? a

Daniel Baker

It difficult frames. to could procurement depend time on be. It's cycles. They predict

we a that's But that products either they value-added can the take with that it's high that product. we R&D buy than -- of will developing that. the typically is or customer turn into goal custom we technology do -- that a longer for goal Sometimes

Jeffrey Milton Bernstein

Understand.

things update these and more -- has business give And -- a time. we're positive like then you lot ought sending some an into days at volatile the functions that -- just overseas systems us momentum? Can unclonable point, to Okay. convert been some over there that sophisticated

Daniel Baker

Jeff. does, It

are you falling especially need They're hands. susceptible say, to unfriendly defense protection. that anti-tamper systems that often sold systems As are allies to -- into

And to So earlier to an of that for Taiwan, this the was some and do year. and specifically know, as for see the instabilities, and while tend conflicts was Ukraine sales business. Allied sales some we hate help system appropriation recent Defense Ally of weapon you There there Israel.

require to of types anti-tamper. tend systems those So

Jeffrey Milton Bernstein

this unclonable business functions low this Okay. strong? been And was -- quarter? it Or a kind that on is of quarter

Daniel Baker

were vary to in schedules. predict quarter-to-quarter But quarter. it's defense as -- be strong you procurement from the about we quarter-to-quarter. They what on based and long-term the But know, can the optimistic based past hard see on lumpy sales now. We're sales

Jeffrey Milton Bernstein

was that the about towards shift And Got little had direct you impact distribution to with the you in the than product Yes. you. margin. less in that And further? on channel weakness customers. revenue Q you mentioned and dive into inventory call towards direct bit a in more comment -- very gross mix distribution revenue just due and more the a did the that positive hangover a nice on make Can

Daniel Baker

Yes.

The is in slowdown. industry So a the slowdown. in semiconductor general industry is a in

end get their inventories buying downturns. tends manage effect, aren't to orders, sometimes what's that supply happens, amplifies called the then when to build inventories tend during to the chain customers customers cancel and So them we changes what tend -- bullwhip since distributors up market because

distributor -- margin don't So a positive our the in tends there, because our -- to sales and strong we that have margins. but that remain help end was customer

increased the in pointed And was revenue quarter year-over-year, though our Daniel even slightly. profit the remarks, down prepared so gross as the out actually in

Jeffrey Milton Bernstein

lower the the can or assume of et that And to Is just cetera? that what of so XX% to to is. you sales of XX% order of XX% it or XX% an us and a channel? we're percent would -- we're now trough kind distribution in ranged end whatever at I range from range as give kind And of magnitude a

Daniel Baker

exactly You're right.

certainly that buying good which and -- for lower to tend we're are so right. inventories they're will, the appear correlate channel well, is We more hope that in buying the that being the means customers sign we if return is us number, to don't book-to-bill, what because a I that their at percentage the going end depleted, you're amount their that the a are to to that or that qualitatively, we distributors report will buying be you the -- a but to think closely

The right been the of not mentioned. distributor because sales that low effects user have depressed I End are sales now. as

And and the will increase. sales again up distributor so the that will hopeful percentage pick we're

Jeffrey Milton Bernstein

there. the you on -- during had about Okay. that And during call director the -- this quarter and wanted about a from for like and I feed out a new and catheters you quarter, thing. navigation your the offering the is offering to new was that where piece is catheters. big one, touched sensors And then -- to growth for was potentially precise -- expected Medtronic out them. I biggest also talked we the same pulse you be And area on applicable customer ablation your touch is something Looks in to is

as real-time local their's catheter -- to describe the having reading tissue. assess as to they proximity impedance Medtronic And

about the can you but of talking capabilities So parts thing bring, the that little a in terms we're discuss your that that I'm bit? same assuming of just kind navigation

Daniel Baker

Yes.

and -- So sensitive convincing and you important out, sensors are where an smaller is area an other a point that important that we have our for technologies. as area proposition an in benefit more than us and

catheter the therapy deliver the body. or right things can blood that's use angioplasty that right that's so that it's our external case very catheter of like can infer detect and to on the field make position magnetic the the So the that catheters. important to the coronary with in they sure customers the way vessel get they the an of place in this can And the the then is catheter imparted and in from

more size area an it's important. important So becoming that's and small and more precision becoming is where

have the prepared area, that things were at sensors our the one the advantages that we was promoting unique conference we about in MD&M that So recent in remarks. and that talked of

Unknown Analyst

This question? a is ask Mike Austiner. Can I

Daniel Baker

go Yes, sir. ahead,

Unknown Analyst

Yes. ago met meeting. Dan, Austiner. couple I this is a years you Mike annual the at of

Daniel Baker

of course. Oh, yes,

Unknown Analyst

questions. Two Yes.

First dividend? is, since expenditures. cash how increased Is it trade just all out wondering affecting of your to show your trade positive I real Anything -- your you've all, that? to I is in CapEx And know going then cash was your that the outcome flow? up your you second question what relation flow shows. come the the was? affecting is of finished Or

Daniel Baker

All right.

but trade we the leads we with were to leads got We up. on recently to if So during shows. follow with season. trade trade traffic week. we response, of you're -- the wrap-up question, video. and And we the And -- shows was one was the last pleased at did a had last lot the regard It's were first that the shows YouTube major of interested, three which MD&M, a have the we

are So at to we were distributors some support sales the shows. working customers the the trips that, and -- with our follow that got of on -- staff leads that and with associated up we're with and and working our those shows on sales on

takes that. some business develop into to these lag and and with leads It we're these sales. turn but time a optimistic So there, that sometimes we're it obviously there's pleased will into --

We payments. and make tends the the capital cash expenditure. expenditures often cash to so of terms In -- flow the down flow lead capital

the the that fiscal million payments we this of of year, we've down is on much fiscal first So half the spent year in mentioned that CapEx far equipment. $X.X so

will because to get our the subsequently, to but custom equipment be we going designed pay to in are meantime, delivered So that the equipment have the being are pieces equipment of for it cash specifications. these

that we shareholder -- in and will R&D in But a on to sheet is build we're course, meantime, pay that believe and have they generate value, be a and spending balance The and though, hope, is believe, the both we the business money return investments aggressive that have investment. and investment. able in of will that we the good an We products can continue off expenditures, to the to capital strong will our an and marketing sales have future. dividend that

Unknown Analyst

you've balance your as the come cash because -- Because sheet, forward Okay. balance has payments making these correct? been equipment, for down

Daniel Baker

make It has, investments make. to we We balance very yes. continue support by can to But metrics, dividend, we sheet. still and strong have most the need can a we --

Unknown Analyst

time Okay. I And have do a timing this hopefully that may comes And equipment missed you online? have the you that said? frame

Daniel Baker

fiscal next and and year XXXX. XXXX fiscal that's This year, so fiscal

year, some in be this to to fiscal XX, of would related which hope new are do investments we that the production March products XXXX. of some However, the end

any can other you unmute questions there microphone? your Are

next for call of report today's pleased the forward call. of for events on this our will you industry not, as be profit January. We and gross speaking strong we participating in our youtube.com/nvecorporation. on replay with that's look website, the channel, the earnings A quarter increases income nve.com Thank Well, again earnings and were past YouTube our in investor and call available you to page in comprehensive to continues to if recover.

NVE (NVEC) 23 Oct 242025 Q2 Earnings call transcript