# NVE Corp: Form 10-Q for the period ended Jun 30, 2021

- Company: [NVE Corp](/companies/nvec.md) (CIK 724910)
- Form: 10-Q
- Filed: 2021-07-21
- Accepted by EDGAR: Jul 21, 2021, 16:16 ET
- Period: 2021-06-30
- Accession: 0001437749-21-017294
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/724910/000143774921017294/nvec20210630_10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/724910/000143774921017294/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2021-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2021-04-01 to 2021-06-30 | $7.2m | us-gaap:RevenueFromContractWithCustomerIncludingAssessedTax |
| Cost of revenue | 3 months, 2021-04-01 to 2021-06-30 | $1.8m | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2021-04-01 to 2021-06-30 | $5.4m | us-gaap:GrossProfit |
| Research and development | 3 months, 2021-04-01 to 2021-06-30 | $808.1k | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2021-04-01 to 2021-06-30 | $466.6k | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2021-04-01 to 2021-06-30 | $4.1m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2021-04-01 to 2021-06-30 | $819.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2021-04-01 to 2021-06-30 | $3.6m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2021-04-01 to 2021-06-30 | $0.74 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2021-04-01 to 2021-06-30 | $0.74 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2021-04-01 to 2021-06-30 | 4,836,821 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2021-04-01 to 2021-06-30 | $3.3m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2021-04-01 to 2021-06-30 | $25.7k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 3 months, 2021-04-01 to 2021-06-30 | $4.8m | us-gaap:PaymentsOfDividendsCommonStock |
| Cash and equivalents | at 2021-06-30 | $8.9m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2021-06-30 | $33.6m | us-gaap:AssetsCurrent |
| Total assets | at 2021-06-30 | $72.1m | us-gaap:Assets |
| Current liabilities | at 2021-06-30 | $2.0m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2021-06-30 | $2.5m | us-gaap:Liabilities |
| Shareholders' equity | at 2021-06-30 | $69.6m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 8,023 characters.

### Forward-looking statements

Some of the statements made in this Report or in the documents incorporated by reference in this Report and in other materials filed or to be filed by us with the Securities and Exchange Commission (“SEC”) as well as information included in verbal or written statements made by us constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to the safe harbor provisions of the reform act. Forward-looking statements may be identified by the use of the terminology such as may, will, expect, anticipate, intend, believe, estimate, should, or continue, or the negatives of these terms or other variations on these words or comparable terminology. To the extent that this Report contains forward-looking statements regarding the financial condition, operating results, business prospects or any other aspect of NVE, you should be aware that our actual financial condition, operating results and business performance may differ materially from that projected or estimated by us in the forward-looking statements. We have attempted to identify, in context, some of the factors that we currently believe may cause actual future experience and results to differ from their current expectations. These differences may be caused by a variety of factors, including but not limited to risks related to our reliance on several large customers for a significant percentage of revenue, uncertainties related to the economic environments in the industries we serve, uncertainties related to future sales and revenues, risks and uncertainties related to future stock repurchases and dividend payments, and other specific risks that may be alluded to in this Report or in the documents incorporated by reference in this Report.

Further information regarding our risks and uncertainties are contained in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended March 31, 2021 as updated in Item 1A of this report.

### General

NVE Corporation, referred to as NVE, we, us, or our, develops and sells devices that use spintronics, a nanotechnology that relies on electron spin rather than electron charge to acquire, store and transmit information. We manufacture high-performance spintronic products including sensors and couplers that are used to acquire and transmit data.

### Critical accounting policies

A description of our critical accounting policies is provided in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended March 31, 2021. As of June 30, 2021 our critical accounting policies and estimates continued to include investment valuation, inventory valuation, and deferred tax assets estimation.

### Quarter ended June 30, 2021 compared to quarter ended June 30, 2020

The table shown below summarizes the percentage of revenue and quarter-to-quarter changes for various items:

| Revenue | Percentage of Revenue Quarter Ended June 30 2021 | 2020 | Quarter- to-Quarter Change |
| --- | ---: | ---: | ---: |
| Product sales | 97.2% | 95.0% | 59.5% |
| Contract research and development | 2.8% | 5.0% | (13.5)% |
| Total revenue | 100.0% | 100.0% | 55.9% |
| Cost of sales | 24.7% | 18.2% | 111.6% |
| Gross profit | 75.3% | 81.8% | 43.5% |
| Expenses |  |  |  |
| Research and development | 11.3% | 19.2% | (8.3)% |
| Selling, general, and administrative | 6.6% | 7.7% | 31.4% |
| Total expenses | 17.9% | 26.9% | 3.1% |
| Income from operations | 57.4% | 54.9% | 63.3% |
| Interest income | 4.1% | 8.7% | (27.4)% |
| Income before taxes | 61.5% | 63.6% | 50.8% |
| Provision for income taxes | 11.5% | 11.0% | 62.4% |
| Net income | 50.0% | 52.6% | 48.4% |

Total revenue for the quarter ended June 30, 2021 (the first quarter of fiscal 2022) increased 56% compared to the quarter ended June 30, 2020 (the first quarter of fiscal 2021). The increase was due to a 60% increase in product sales partially offset by a 14% decrease in contract research and development revenue.

The increase in product sales in the first quarter of fiscal 2022 from the prior-year quarter was primarily due to increased purchases by existing customers, and sales increased in most of our markets and product lines. The decrease in contract research and development revenue was due to the completion of certain contracts.

Gross profit as a percentage of revenue decreased to 75% the first quarter of fiscal 2022 from 82% the first quarter of fiscal 2021 primarily due to revenue mix.

Total expenses increased 3% in the first quarter of fiscal 2022 compared to the first quarter of fiscal 2021 due to a 31% increase in selling, general, and administrative expense, partially offset by an 8% decrease in research and development expense. The increase in selling, general, and administrative expense was primarily due to increased employee compensation expense. The decrease in research and development expense was primarily due to staffing changes and the completion of certain product development activities.

Interest income for the first quarter of fiscal 2022 decreased 27% due to a decrease in our available-for-sale securities and a decrease in the average interest rates on those securities.

The 48% increase in net income in the first quarter of fiscal 2022 compared to the prior-year quarter was primarily due to an increase in product sales.

### The Impact of the COVID-19 Pandemic

We believe the impact of the COVID-19 pandemic on total revenue and net income was significantly less in the quarter ended June 30, 2021 than in the quarter ended June 30, 2020.

### Liquidity and Capital Resources

### Overview

Cash and cash equivalents were $8,868,823 as of June 30, 2021 compared to $10,427,340 as of March 31, 2021. The $1,558,517 decrease in cash and cash equivalents during first quarter of fiscal 2022 was due to $4,833,232 of cash used in financing activities and $25,679 of cash used investing activities, partially offset by $3,300,394 in net cash provided by operating activities.

### Operating Activities

Net cash provided by operating activities related to product sales and research and development contract revenue as our primary source of working capital for the current and prior year quarters. Net cash provided by operating activities was $3,300,394 for first quarter of fiscal 2022 and $3,172,427 for the first quarter of fiscal 2021.

Accounts receivable increased by $1,355,557 during first quarter of fiscal 2022 primarily due to the timing of sales to and payments from customers.

### Investing Activities

Cash used in investing activities during the quarter ended June 30, 2021 consisted of $25,679 in capital expenditures. Capital expenditures can vary from quarter to quarter depending on our needs and equipment purchasing opportunities. We currently plan significantly more capital expenditures during fiscal 2022 than the $62,727 we invested in fiscal 2021.

### Financing Activities

Cash used in financing activities during the quarter ended June 30, 2021 consisted of $4,833,232 of cash dividends paid to shareholders. In addition to cash dividends to shareholders paid in first quarter of fiscal 2022, on July 21, 2021 we announced that our Board had declared a cash dividend of $1.00 per share of Common Stock, or $4,833,232 based on shares outstanding as of July 16, 2021, to be paid August 31, 2021. We plan to fund dividends through cash provided by operating activities and proceeds from maturities of marketable securities. All future dividends will be subject to Board approval and subject to the company’s results of operations, cash and marketable security balances, estimates of future cash requirements, and other factors the Board may deem relevant. Furthermore, dividends may be modified or discontinued at any time without notice.

We currently believe our working capital and cash generated from operations will be adequate for our needs at least for the next 12 months.

## Controls and procedures

As filed, 1,328 characters.

### Disclosure Controls and Procedures

Management, with the participation of the Chief Executive Officer and Chief Financial Officer, has performed an evaluation of our disclosure controls and procedures that are defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”) as of the end of the period covered by this Report. This evaluation included consideration of the controls, processes, and procedures that are designed to ensure that information required to be disclosed by us in the reports we file under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as June 30, 2021, our disclosure controls and procedures were effective.

### Changes in Internal Controls

During the quarter ended June 30, 2021, there was no change in our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 2,382 characters.

There have been no material changes from the risk factors disclosed in our Annual Report on Form 10-K for the fiscal year ended March 31, 2021, except the following risk factor is replaced in its entirety by the following to reflect new COVID-19 related restrictions on certain packaging vendors:

***The loss of supply from any of our packaging vendors could impact our ability to produce and deliver products and cause loss of revenue.***

We are dependent on our packaging vendors. Because of the unique materials our products use, the complexity of some of our products, unique magnetic requirements, and high isolation voltage specifications, many of our products are more challenging to package than conventional integrated circuits. Some of our products use processes or tooling unique to a particular packaging vendor, and it might be expensive, time-consuming, or impractical to convert to another vendor in the event of a supply interruption due to vendors’ business decisions, business condition, or acts of God, including floods, typhoons, earthquakes, or pandemics. Lead times for packaging services have increased during the COVID-19 pandemic and there have been shortages of raw materials and equipment our packaging vendors need for their process. One of our packaging vendors, located in India was forced to suspend its factory operations in 2020 due to government-imposed restrictions and is still not fully operational. Another packaging vendor, located in Malaysia, has been subject to strict government lockdown restrictions since June 1, 2021. Our packaging vendors could face further restrictions in the future. Additionally, certain of our packaging vendors are in flood-susceptible areas. Flooding risks to such vendors may increase in the future due to possible higher ocean levels, extreme weather, and other potential effects of climate change. We have alternate vendors or potential alternate vendors for the majority of our products, but it can be expensive, time-consuming, and technically challenging to convert to alternate vendors. Furthermore, we may not be able to recover work in process or finished goods at a packaging vendor in the event of a disruption. Any supply interruptions or loss of inventory could seriously jeopardize our ability to provide products that are critical to our business and operations and may cause us to lose revenue.

Filed Jul 21, 2021.
Source: SEC EDGAR, the filing index for accession 0001437749-21-017294. Last ingested by Listed: Nov 5, 2026, 19:10 ET. No prices; not investment advice.