NVE Corp. (NASDAQ:NVEC) Q1 2019 Earnings Conference Call - Final Transcript

Jul 17, 2019 • 05:00 pm ET

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NVE Corp. (NASDAQ:NVEC) Q1 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen, and welcome to the NVE First Quarter Results Conference Call. [Operator Instructions].

I would now like to introduce your host for today's conference, Mr.Daniel Baker, President and CEO. Sir, you may begin.

Executive
Daniel A. Baker

Thank you, and good afternoon. Welcome to our conference call for the quarter ended June 30th, 2019. As always, I'm joined by Curt Reynders, our Chief Financial Officer. This call is being webcast live and being recorded. A replay will be available through our website nve.com.

After my opening comments, Curt will present our financial review of the quarter. I'll cover product development, trade shows and distribution, and then we'll open the call to questions. We issued our press release and filed our quarterly report on Form 10-Q in the past hour following the close of market. Links to documents 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, risks related to changes in tariffs and other trade barriers, 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 31st, 2019. The Company undertakes no obligation to update forward-looking statements we may make.

We're pleased to report 26% sequential growth in net income and important product launches this past quarter. Curt will cover details of the financial results and then I'll cover the business. Curt?

Executive
Curt A. Reynders

Thanks, Dan. For year-over-year comparisons, total revenue for the first quarter of fiscal 2020 decreased 11% to $6.29 million from $7.11 million in the first quarter last year. The decrease was due to an 11% decrease in product sales and a 12% decrease in contract R&D from last year. Anti-tamper product sales were strong, but the medical device market continued to be weak.

Sequentially, total revenue increased 13% compared to the quarter ended March 31st, driven by a 13% increase in product sales. We're hoping for a third consecutive sequential revenue increase this quarter, which ends September 30th.

Gross margin increased to a record 83% for the quarter from 80% in the first quarter last year, due to a more profitable product mix.

Expenses decreased 1% from the prior year due to a 2% decrease in R&D as we completed some important new product development projects. Dan will discuss product development in a few minutes.

Interest income for the first quarter increased 8% due to an increase in the average interest rates on our marketable securities and money market funds.

Net income for the quarter decreased 9% year-over-year to $3.61 million or $0.74 per diluted share compared to $3.95 million or $0.81 per share for the prior year quarter. Net margin was 57% of revenue, the highest ever. Net income increased 26% sequentially compared to the quarter ended March