NVE Corporation

Ladies and gentlemen, thank you for standing by, and welcome to the NBE conference call's second quarter results. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question at that time, please put star, then 1, on your touch-tone telephone. As a reminder, today's conference call is being recorded. I would now like to call the conference call's host, Mr. Daniel Baker, President and CEO. Sir, you may begin.

Good afternoon and welcome to our conference call for the quarter and six months ended September 30th, 2021. This call is being webcast live and being recorded. A replay will be available through our website, nve.com. I'm joined by our new controller and principal financial officer, John Larson. John started his career at Eide Bailey and his previous experience as a controller. He has a BS degree in accounting from St. Cloud State and an MBA from the and he is a certified public accountant. We're happy to have him. Kurt Reinders retired October 1st as our CFO after more than 20 years with the company. Kurt started as controller in 2001 and was named CFO in 2006. We wish him the best. His retirement was planned and first disclosed in an 8K in July. After my opening comments, John will present a financial review. Then I'll cover the business and new products. Then we'll open the call to questions. We issued our press release with second quarter results and filed our quarterly report on Form 10Q in the past hour following the close of market. Links to the press release and 10Q are available through the SEC's website, our website, and our Twitter timeline. Comments we may make that relate to future plans, events, financial results, or performance are forward-looking statements that are subject to certain risks and uncertainties including, among others, such factors as risks and uncertainties related to future sales and revenue, uncertainties related to future dividend payments, and risks related to the COVID-19 pandemic, as well as the risk factors listed from time to time in our filings with the SEC, including our annual report on Form 10-K for the year ended March 31, 2021, as updated in our just-filed 10-Q. 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 increases in product sales, total revenue, and earnings. Product sales increased 59% from the prior year quarter, total revenue increased 56%, and net income increased 64%. We reported earnings of 75 cents per share for the quarter versus 46 cents for the year-ago quarter. Now, John will cover the details of our financial results. Welcome to the microphone, John.

Thanks, Dan. I'm very excited to join NVE and want to thank Kurt, Dan, the board, and all the NVE employees who have helped get me up to speed. As Dan said, total revenue for the quarter ended September 30, 2021 increased 56% to $6.82 million compared to $4.38 million last year due to a 59% increase in product sales partially offset by a 13% decrease in contract R&D revenue. The COVID-19 pandemic had a significant impact on revenue in the past year's quarter. We believe those effects are 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 in that we may have picked up business from competitors who are more severely affected by the shortages. Expenses increased 1% for the quarter from the prior year due to a 35% increase in SG&A, partially offset by a 13% decrease in R&D. The increase in SG&A was due to increased employee compensation expenses. The decrease in R&D expenses due to staffing changes and the completion of some new product developments. Interest income decreased to $295,000 for the most recent quarter from $401,000 in the prior year quarter due to decreases in our available for sale securities and a decrease in the average interest rates on those securities. Net income for the quarter was $3.65 million or 75 cents per diluted share compared to $2.22 million or 46 cents last year. We continue to generate strong profitability. Gross margin was 77%, operating margin was 60% and net margin was 53%. For the first six months of fiscal 2022, total revenue increased 56% to $14 million from 8.97 million For the first six months of the prior year, the increase was due to a 59% increase in product sales partially offset by a 13% decrease in contract R&D revenue. Net income for the first six months increased 56% to $7.23 million, or $1.49 per diluted share, from $4.63 million, or $0.96 per share, for the first half of fiscal 2021. Capital expenditures were $74,000 in the first half of the fiscal year after no 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. We're also repurposing part of the building for production to make room for new equipment. We paid a $1 per share dividend in the past quarter, and today we announced that our board declared another quarterly dividend of $1 per share, payable November 30th to shareholders of record as of November 1st. Now I'll turn the call back to Dan to cover the business and new products. Dan?