NVE Corporation

Good evening, and thank you for standing by. Welcome to the NVE conference call on fourth quarter and fiscal year results. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would like to now hand the conference over to Dan Baker, President and CEO of NVE Corporation.

Thanks, Dan. As Dan said, revenue and net income for the quarter were the best in our history by far. Total revenue for the most recent quarter increased 91% to $12.8 million from $6.72 million in the prior year quarter. The increase was due to a 95% increase in product sales and a 10% increase in contract research and development revenue. Gross profit as a percentage of revenue increased to 80% for the fourth quarter of fiscal 2023 compared to 77% for the fourth quarter of fiscal 2022. The increase was primarily due to economies of scale from increased production and increased prices, partially offset by increased material and labor costs. Total expenses increased 29% for the fourth quarter of fiscal 2023 compared to the fourth quarter of fiscal 2022 due to a 25% decrease in research and development expense and a 204% increase in SG&A expense. The increase in expense were primarily due to increased staffing and increased compensation. Interest income for the fourth quarter of fiscal 2023 increased 35% due to an increase in our available for sale securities. and an increased ADA average interest rate. Our effective tax rate, which is the provision for taxes as a percentage of income before taxes, was 12% in the full fiscal quarter compared to 16% for the fiscal year due to CHIPS Act tax credit related to the expansion of our production space and new production equipment deployed in the past quarter and depreciation on those newly deployed production equipment. Net income for the fourth quarter of fiscal 2023 increased 116% to $8.2 million, or $0.70 per diluted share, compared to $3.82 million, or $0.79 per share for the prior year quarter. We also set new records for revenue and net income for the fiscal year. Total revenue increased 42% to a record $38.3 million, compared to $27 million in the prior year. The increase was due to a 44% increase in production sales, partially offset by a 6% decrease in contract R&D revenue. Gross margin increased to 79% for fiscal 2023 from 77% for fiscal 2022. The increase was primarily due to economies of skills from increased production and increased prices, partially offset by increased material and labor costs. Net income for the year increased 56% from the prior year to a record $22.7 million or $4.70 per diluted share from $14.5 million or $3 per share for fiscal 2022. It was our second consecutive year of record profits. Now, Joe will provide some color on our financial results. Over to you, Joe.

Thanks, Daniel. The large increase in product sales for the quarter was primarily due to increased purchases by existing customers along with new customers. We did acquire new customers from traditional semiconductor companies with our superior products and shorter lead times. Sales increased in most of our markets and product lines. Improvements in supply chain deliveries along with the increased capacity resulting from new equipment purchases enabled NVE to increase product shipments. Although supply chain delivery performance has improved over the past quarter, risks do remain. Our strategy to build up raw material and whip inventory as a safeguard against disruptions remains in effect. According to a recent forecast by Gartner, weak demand is spreading from consumer to businesses and worldwide semiconductor revenue is expected to decline 11% in 2023. This downturn could affect our sales for the quarter ending June 30 and in future quarters. NVE has experienced some softening in order flow, and this upcoming year will have its challenges. On the positive, we are starting the year with a significant booking base. Our profit metrics continue to be strong. For the quarter ended March 31st, gross margin was 80%. Operating margin was 70%, pre-tax margin was 73%, and net margin was 64%. Cash flow from operations for the fiscal year was a strong 19.1 million, and we ended the fiscal year with a strong balance sheet. Current assets increased support our growth. Accounts receivable increased 1.82 million, primarily due to increased product sales and the timing of those sales to customers. Inventory increased $1.33 million primarily due to our decision to increase inventories to support increased product sales and to mitigate longer vendor lead times. Purchases of fixed assets were $936,000 in the fiscal year, the most in 10 years. These were primarily capital expenditures for additional production equipment. We deployed most of that equipment in the past quarter successfully executing the plan we had discussed in our January earnings call. Net income more than covered our dividends for the first year since we began paying dividends in 2015. In addition to the past quarter's $1 per share dividend, today we announced that our board declared another quarterly dividend of $1 per share payable May 31st to shareholders of record as of May 15. We increased our employment in the past year to 56 employees as of March 31st, 51 of whom were full-time compared to 49 employees as of March 31st, 2022. We're proud of the productivity of our employees. Our revenue per employee and net income per employee are among the best in the semiconductors industry. Now I'll turn the call back to Dan Baker to cover marketing and new products and to summarize our past year's accomplishments.