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spk_0: they gonna be defeated by a walk to the n b economists call like a quarter results at the some officers on a look and only mode after the publication of your question and answer session the as question that time for starred in one hundred pounds hello all as well managed to a public college be awarded i went on to the probably hostess with daniel baker president and feel that you may begin
spk_1: good afternoon and welcome to our conference call for the thousand and six months ended september thirty of twenty twenty one this call is being webcast live in being recorded a replay will be available to our website and the dot com i'm joined by a new controller in principle financial officer john larson john started his career and i'd bailey and his previous experience as a controller he has a bs degree in accounting firm st cloud stayed in the men be a from the university of minnesota and he is a certified public accountant were happy to have him providers retired october first as our see a poll after more than twenty years with the company could started as controller in two thousand and one of his name see a fall in two thousand and six we wish him the best his retirement was plan and first disclosed in an ak in july after my open comments john will present a financial review that all cover the business a new products then we'll open the car the questions we issued a press release with second quarter results and filed are quarterly report on form tend to in the past hour following the cause of market links to the press release and ten q are available through the as he sees website our website and our twitter timeline comments we may make the related future plans of and financial results are performance or forward looking statements that are subject to certain risks and uncertainties including among others such factors as risks and uncertainties related future sales and revenue uncertainties related future dividend payments and risks related to the covert nine team pandemic as well as the risk factors listed from time to time and are pilings with the fcc including our a more report on for ten k for the year ended march thirty first twenty twenty one as updated and are just filed ten que actual results could differ materially from the information provided and we undertake no obligation to update forward looking statements we may make we're pleased to report our second consecutive quarter of large year over year increase as and product sales total revenue in earnings product sales increase fifty nine percent from the prior year quarter total revenue increased fifty six percent and their income increased sixty four percent we reported earnings at seventy five cents per share for the quarter versus forty six cents for the year ago quarter now john cover the details about financial results welcome the microphone john
spk_2: thanks dan i'm very excited to join envy and want to thank her dan the board and all the mb employees who have helped get me up to speed as dan said total revenue for the quarter ended september thirtieth twenty twenty one increase fifty six percent to six point eight two million compared to four point three eight million last year due to a fifty nine percent increase in product sales partially offset by thirteen percent decrease in contract or and the revenue the covered eighteen pandemic had a significant impact on revenue in the past years quarter we believe those effects or subsiding although risks and uncertainties remain we were impacted by widespread supply chain challenges and shortages of semiconductor materials and services but it was a double edged sword and that we may have picked up business from competitors for more severely affected by the shortages expenses increased one percent for the quarter from the prior year due to a thirty five percent increase in as dna partially offset by thirteen percent decrease in rd the increase in as dna was due to increased employ cup of compensation expenses the decrease in our the expenses due to staffing changes and the completion of some new product developments interest income decrease to two hundred and ninety five thousand for the most recent quarter
spk_3: from four hundred and one thousand in the prior year quarter due to decreases in are available for sale securities and a decrease in the average interest rates on the security that income for the quarter was three point six five million dollars or seventy five cents per diluted share compared to two point two two million dollars or forty six and last year we continue to generate strong profitability gross margin with seventy seven percent operating margin was sixty percent and that margin with fifty three percent
spk_2: for the first six months of fiscal twenty twenty two for revenue increased fifty six percent to fourteen million dollars from eight point nine seven million for the first six months of the prior year increases due to it's fifty nine percent increase in product sales partially offset by a thirteen percent decrease in contract aren't the revenue net income for the first six months increased fifty six percent to seven point two three million dollars or a dollar forty nine per diluted share from four point six three million or ninety six cents per share for the first half of fiscal twenty twenty one capital expenditures were seventy four thousand in the first half of the fiscal year after know capital expenditures in the prior year period these expenditures were primarily to increase our production capacity to alleviate potential production bottlenecks we're planning additional capital expenditures in the second half of the fiscal year in the half a million dollar range
spk_3: we're also reposting part of the building for production to make room for new equipment
spk_2: we pay one dollar per share dividend in the past quarter and today we announce that are bored declared another quarterly dividend of one dollar per share pebble november thirtieth to shareholders of record as of november first now turn the call back the death covered
spk_4: products
spk_1: yeah thanks to and aka the business new products is john said though we continue to manage challenges and opportunities presented by the global semiconductor shortages some analysts have said shortages could last several more years raw material and packaging service lead times have increased and prices of many raw materials have increased we've addressed these threats by increasing inventories at all stages and increasing our production capacity to support converting that inventory to thinness goods we didn't create some places where we've had to because of higher material and labor costs for other parts we've been able to keep our prices the same all improving our competitive position the shortages of created opportunities to provide products where we have drop in replacements for competitors particularly couplers and isolate years we've won some business because we are parts available and we have to keep that business by demonstrating more reliable supply or with excellent product performance and quality in addition to the expansion of our test area the john mentioned we are reaping the carpeting and doing other remodeling to make our workplaces more pleasant an efficient most of the walls or a color called gray matters which we thought was appropriate since our employees gray matter is our most important asset most of the remodeling costs are covered by a ten an improvement allowance included in the least renewal we signed in early twenty twenty we had postponed most of the work due to the pandemic turning the new products in the past quarter we introduced a line of sensors and expanded our line of isolator that include integrated dc to dt converters the new line of sensors is billed as the world's first tunneling magneto resistance the or to sensors and are designed to measure in control rotation the newer sensors can be more precise than our venerable giant magnetoresistance sensors we a demonstration boards that showcase angular resolution of a few thousandths of a degree there's also a video the demonstration on our you tube channel also in the past quarter we expanded our line of products that include converters to transmit power as well as data in smart grids industrial networks and cars conventional network electronics often required to power supplies one for controller and another for a network bucks the new to eliminate the need for a network boss power supply the new isolator is also address one of the biggest challenges for smart grids which is that microcontrollers run on low voltage is like free of i bought while motors that consume energy such as those and furnaces are refrigerators run on one hundred and twenty or two hundred and forty volts the new parts provide a break edge between control systems and line voltage measurements allowing more efficient control of motors and other energy consumers there's a video demonstration of the safe have safely measuring the kind of one hundred and twenty volt motor with three vote electronics on our you tube channel most of the new isolated generate a three bold network supply from a three ball control or supply but one of the new products has what's called a boost converter it booze or three will power supply commonly used for microcontrollers to the bible's used for many industrial networks in the past quarter advanced technology team also worked on spintronics memory your amram under a customer sponsored are the contract for contract for a custom parts am i am is one of our core technologies we manufacture a man's for specialized applications such as anti tamper and these programs allow us to build our technology capabilities turning the sales and marketing last month we attended our first in person trade so since the pandemic began sensors expo is billed as north america's largest of them dedicated to sensors connectivity and the internet of things attendance was last the than the last time the conference was held in twenty nineteen but we had some good leads and it was great again front of customers and prospects turning to governance iberdrola annual shareholders meeting was in august unfortunately we couldn't meet many of you in person as we had for years before the pandemic our youtube channel has a playlist of new product demonstrations we are planning for and in person meeting we ought to have and in person meeting next year james w bracket he was elected to our board for the first time at the annual meeting jim as an accomplished executive and highly experienced public company director he was the ceo of life core biomedical for more than twenty years is management technical medical device and public company experience and his medical education qualify under serve as a director
spk_5: after seven years and our board some arctic ceo gary maharaja didn't stand for reelection
spk_1: we appreciate his service our executive officer compensation supports goals a profitable growth and improving long term shareholder value without being excessive and shoulders overwhelmingly approved officer compensation and finally the selection of auditor's was ratified at the annual meeting we filed a formal k with details of the shareholder boats
spk_0: now i'd like to open a copper questions valerie
spk_6: you again later the like that the licenses that than one
spk_0: again that the question
spk_7: than one
spk_8: one on way
spk_9: the question project by opens
spk_7: but dan damage on couple questions were here
spk_1: the ah the as dna with that largely driven by cells permissions i assume that you had some mom advertisement about with for electrical engineers dun dun of you were hiring for our the purposes or or some cells engineers and the talk a little bit about that yeah absolutely this is that this is dan so we have been adding people ah with the increase in sales and with some of the challenges that we face now and logistics that we didn't have a couple of years ago we've added a number of very talented people oh we we are recruiting for an engineer as you noticed and our engineers are typically do quite a bit of sales support they know the products and we want to get them in front of customers and talking to customers so at the short answer your question is yes a lot of the compensation was incentive based compensation
spk_10: we've had a lot of challenges and the of folks have risen to the challenges as evidenced by the increase in product sales and revenue overall
spk_11: and we've also we've also been adding staff and so we've we've got a great
spk_7: a a great reserve of talent and some very talented technical staff that and some of them a bird joined the company relatively recently that's great thanks and then
spk_10: do you alluded to this
spk_7: and some successes result of this kind of seminal opportunity with the tightness in the semiconductor industry
spk_1: yet to potentially get in and get some designs from customers weren't in previously who yellow are looking for alternative sources it is there any way you can qualify you know anything about design wins or inbound calls or website traffic you know it he thing that your favorite metric to to talk about that a little bit yeah it's a that's a great question it's hard to come up with specific metrics that we could consider reliable design wins can vary and you know design when could be could be a few parts or it could be hundreds of thousands of parts but ah we spend ah we spend a fair amount of time and now working with customers who are frustrated by the shortages are by some conventional semiconductor manufacturers we look at how we can drop him and replaced their parts ah whether we can redesign boards and improve their performance and those those inquiry these are much more frequent and now as then they were and the we i i can tell you personally sometimes early in the morning we'll get emails from the from europe and from asia from customers who see our parts and want to know exactly how they work how they'll work under certain circumstances and we spent a fair amount of time answering those questions and many of those results in with results in design wins
spk_7: especially in couplers and isolator where we have as you know we have some drop in replacement parts for conventional semiconductors where we have the same package type the same pan out
spk_1: i'm so in many cases it's cop and replacements in some cases it's a different park usually a better part of course can we work with customer to figure out how we can how how we can serve their needs and get our parts into their application and then the a what's what's kind of the lead time to be able to serve somebody who wants to do with a drop in replacement with a pin compatible you know part is is that in a weeks or months serve no and any color on that yeah that that's good question it's a lot shorter than it used to be because in many cases these folks are coming to us because they can't get the parts that they had been using so if that the draw a drop in replacement and it's parts we have in stock we will ship them off the same day and i in some cases you know the customer in many cases the customer wants to test the parts so worship ship out a small quantity right away and and and then we'll get production orders and sometimes that can be a matter of or that entire cycle can be a matter of weeks sometimes it's longer but of course our goal is to make it a short as possible our goal is to have as many parts and stock as possible to have
spk_7: excellent
spk_12: a customer support and fast responses to these customers so they can get answers to their questions and so that they can
spk_7: get get going on their new design using our parts that's great thanks and then in in the quarter i think you are now some i eat a certified isolator is that
spk_12: you were
spk_1: i guess environments that could be flammable etc it is that you know apply directly to you oh battery systems or a or he views overall or or is that really for other kinds of industrial applications yeah it's mostly for industrial but i suppose a crew didn't could apply to eat these were there are explosive gases around and so at the a lot of the applications are and chemical plants and sometimes even food plants we don't always think of food plants as being an explosive environment but but things like we'd dust can be explosive so there's a and actually a fairly large market that that is concerned about though what's typically called intrinsically safe and you mentioned your very well informed you mentioned some of the acronyms that are that are used in the industry so that's an area where we have a very strong benefit proposition it's a bit of a niche but our parts are excellent in an environment and there we actually are
spk_7: our engineers had a little bit of far have fun with this that we took some competitive parts and expose him to the same conditions as are parts and there was a small can bob and her parts parts survived the the extreme conditions extremely well
spk_1: so in those explosive environments what you don't want to smoke or or arts or things that cutting ignite an explosion and it highlights one more advantage of our parts their their reliability and they are ideal for some of these really demanding applications that's a that's great and then and then lastly i think we had spoken about the potential that that of your ports could actually be powered by ambient why by you know microwave energy that that found in in many systems now are these days and and i'm just wondering if that's advancing it is that's a great point is so the general term add to that we uses energy harvesting and ah parts are extremely low power many of them are and they can run off of batteries they can run off of solar or other as you
spk_13: you say ambient radio frequency energy so that comes up and things like meters and remote monitoring for the internet of things as that's an area that's growing and we continue to look at extremely efficient
spk_1: sensors and couplers of that can run on very low very low power of very small amounts of energy
spk_14: as you know we have a demo at that we've had the death our annual meetings and there's a youtube video showing that we can power one of our sensors off of the a blueberry off of the energy that you can get from two electrodes it in a blueberry because of the a slight acidity of the of the jew
spk_1: who's so
spk_15: of course that's not really one of the most practical energy harvesting applications but it just illustrates how little power how few electrons it takes to power some of our components
spk_6: that's great that thanks very much as on them
spk_16: thank you jeff thank you
spk_12: and
spk_17: cj that email again woodworth your eyes open
spk_1: hi this is actually drew in the same office so i i heard you say before you are expanding to your product line is isn't a new with a correct in here in you'd spend like a new product that is replacing or old products with new products so in the case of the sensors it was a new product line or tunneling magneto resistance gear to sensors we have gear to sensors now that are based on what's called giant magnetoresistance which is a spintronics technology that we've been making for a number of years are newer technology is called tunneling magneto resistance and ah we've deployed that in several areas but this is the first time we've deployed it into these gear to sensors so these are used for detecting motor rotation and as i mentioned in the prepared remarks these particular sensors are extremely precise they can detect rotation of a few thousand so the degree so that allows very precise control of motors and other mecca tonics which means that we can have robots it enables robots or other mech them mecca tonic systems that can do more intricate more precise jobs that they perhaps couldn't have done with
spk_16: older technology so that was the one area and then the second area was what we call isolator is that include dc to dc converters so dc dc converters convert power and transmit power in addition to transmitting the data
spk_1: so those components we had some of those before and we expanded that product line so that was an expansion of a product line that we started introducing in the past year or so and the some important areas in some popular applications and the sensor is it is
spk_18: an entirely new product line that include several
spk_19: sub types are several models that fall into that product why
spk_0: okay
spk_1: interesting thank you thanks true
spk_20: yeah
spk_21: again
spk_20: in one hour
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