# NVE Corp: Form 10-Q for the period ended Sep 30, 2022

- Company: [NVE Corp](/companies/nvec.md) (CIK 724910)
- Form: 10-Q
- Filed: 2022-10-19
- Accepted by EDGAR: Oct 19, 2022, 20:31 ET
- Period: 2022-09-30
- Accession: 0001437749-22-024389
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/724910/000143774922024389/nvec20220930_10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/724910/000143774922024389/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2022-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Cost of revenue | 3 months, 2022-07-01 to 2022-09-30 | $2.4m | us-gaap:CostOfRevenue |
| Cost of revenue | 6 months, 2022-04-01 to 2022-09-30 | $4.1m | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2022-07-01 to 2022-09-30 | $8.3m | us-gaap:GrossProfit |
| Gross profit | 6 months, 2022-04-01 to 2022-09-30 | $14.0m | us-gaap:GrossProfit |
| Research and development | 3 months, 2022-07-01 to 2022-09-30 | $670.0k | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 6 months, 2022-04-01 to 2022-09-30 | $1.3m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2022-07-01 to 2022-09-30 | $435.6k | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months, 2022-04-01 to 2022-09-30 | $806.9k | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2022-07-01 to 2022-09-30 | $7.2m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2022-04-01 to 2022-09-30 | $11.9m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2022-07-01 to 2022-09-30 | $1.5m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2022-04-01 to 2022-09-30 | $2.3m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2022-07-01 to 2022-09-30 | $6.1m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2022-04-01 to 2022-09-30 | $10.2m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2022-07-01 to 2022-09-30 | $1.26 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2022-04-01 to 2022-09-30 | $2.12 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2022-07-01 to 2022-09-30 | $1.26 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2022-04-01 to 2022-09-30 | $2.12 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2022-07-01 to 2022-09-30 | 4,830,956 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2022-04-01 to 2022-09-30 | 4,830,927 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2022-04-01 to 2022-09-30 | $9.4m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2022-04-01 to 2022-09-30 | $24.5k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 6 months, 2022-04-01 to 2022-09-30 | $9.7m | us-gaap:PaymentsOfDividendsCommonStock |
| Cash and equivalents | at 2022-09-30 | $3.6m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2022-09-30 | $26.2m | us-gaap:AssetsCurrent |
| Total assets | at 2022-09-30 | $67.5m | us-gaap:Assets |
| Current liabilities | at 2022-09-30 | $3.4m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2022-09-30 | $3.8m | us-gaap:Liabilities |
| Shareholders' equity | at 2022-09-30 | $63.7m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 11,058 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, our dependence on critical suppliers and packaging vendors, 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, 2022.

### 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, 2022. As of September 30, 2022 our critical accounting policies and estimates continued to include investment valuation, inventory valuation, and deferred tax assets estimation.

### Quarter ended September 30, 2022 compared to quarter ended September 30, 2021

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

| Revenue | Percentage of Revenue Quarter Ended September 30 2022 | 2021 | Quarter- to-Quarter Change |
| --- | ---: | ---: | ---: |
| Product sales | 98.1% | 97.2% | 58.6% |
| Contract research and development | 1.9% | 2.8% | 5.1% |
| Total revenue | 100.0% | 100.0% | 57.1% |
| Cost of sales | 22.4% | 22.6% | 55.6% |
| Gross profit | 77.6% | 77.4% | 57.5% |
| Expenses |  |  |  |
| Research and development | 6.2% | 10.4% | (5.4)% |
| Selling, general, and administrative | 4.1% | 7.1% | (9.8)% |
| Total expenses | 10.3% | 17.5% | (7.2)% |
| Income from operations | 67.3% | 59.9% | 76.3% |
| Interest income | 3.2% | 4.3% | 19.2% |
| Income before taxes | 70.5% | 64.2% | 72.5% |
| Provision for income taxes | 13.7% | 10.8% | 99.6% |
| Net income | 56.8% | 53.4% | 67.0% |

Total revenue for the quarter ended September 30, 2022 (the second quarter of fiscal 2023) increased 57% compared to the quarter ended September 30, 2021 (the second quarter of fiscal 2022). The increase was due to a 59% increase in product sales and a 5% increase in contract research and development revenue. The increase in product sales was primarily due to increased purchases by existing customers and new customers. Sales increased in most of our markets and product lines. The increase in contract research and development revenue was due to new contracts.

Total expenses decreased 7% for the second quarter of fiscal 2023 compared to the second quarter of fiscal 2022 due to a 5% decrease in research and development expense and a 10% decrease in selling, general, and administrative expense. The decreases in expenses were primarily due to the reallocation of resources to revenue-generating activities.

Interest income for the second quarter of fiscal 2023 increased 19% due to an increase in our available-for-sale securities and an increase in their average interest rate.

The 67% increase in net income in the second quarter of fiscal 2023 compared to the prior-year quarter was primarily due to increased revenue and decreased expenses.

### Six months ended September 30, 2022 compared to six months ended September 30, 2021

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

| Revenue | Percentage of Revenue Six Months Ended September 30 2022 | 2021 | Period- to-Period Change |
| --- | ---: | ---: | ---: |
| Product sales | 97.4% | 97.2% | 29.5% |
| Contract research and development | 2.6% | 2.8% | 18.8% |
| Total revenue | 100.0% | 100.0% | 29.2% |
| Cost of sales | 22.5% | 23.7% | 22.4% |
| Gross profit | 77.5% | 76.3% | 31.3% |
| Expenses |  |  |  |
| Research and development | 7.0% | 10.9% | (16.1)% |
| Selling, general, and administrative | 4.5% | 6.8% | (15.0)% |
| Total expenses | 11.5% | 17.7% | (15.7)% |
| Income from operations | 66.0% | 58.6% | 45.4% |
| Interest income | 3.5% | 4.2% | 8.5% |
| Income before taxes | 69.5% | 62.8% | 43.0% |
| Provision for income taxes | 12.8% | 11.1% | 49.4% |
| Net income | 56.7% | 51.7% | 41.6% |

Total revenue for the six months ended September 30, 2022 (the first six months of fiscal 2023) increased 29% compared to the six months ended September 30, 2021 (the first six months of fiscal 2022). The increase was due to a 29% increase in product sales and a 19% increase in contract research and development revenue. The increase in product sales was primarily due to increased purchases by existing customers and new customers. Sales increased in most of our markets and product lines. The increase in contract research and development revenue was due to new contracts.

Gross profit as a percentage of revenue increased to 78% for the first six months of fiscal 2023 from 76% for the first six months of fiscal 2022 primarily due to increased prices partially offset by increased costs.

Total expenses decreased 16% for the first six months of fiscal 2023 compared to the first six months of fiscal 2022 due to a 16% decrease in research and development expense and a 15% decrease in selling, general, and administrative expense. The decreases in expenses were primarily due to the reallocation of resources to revenue-generating activities.

Interest income for the first six months of fiscal 2023 increased 9% due to an increase in our available-for-sale securities and an increase in their average interest rate.

The 42% increase in net income in the first six months of fiscal 2023 compared to the prior-year period was primarily due to increased revenue and decreased expenses.

### Supply Chain Disruptions

Supply chain disruptions related to the COVID-19 pandemic may have favorably affected product sales in the quarter and six months ended September 30, 2022 since we believe the disruptions may have been less severe for us than for our competitors. We believe supply chain disruptions also had an unfavorable impact on our costs of sales.

### Liquidity and Capital Resources

### Overview

Cash and cash equivalents were $3,583,539 as of September 30, 2022 compared to $10,449,510 as of March 31, 2022. The $6,865,971 decrease in cash and cash equivalents during the first six months of fiscal 2023 was due to $9,661,652 of cash used in financing activities for dividend payments and $6,555,557 of cash used by investing activities, partially offset by $9,351,238 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 $9,351,238 for the first six months of fiscal 2023 compared to $6,458,196 for the first six months of fiscal 2022.

Accounts receivable increased $1,155,585 during the first six months of fiscal 2023 primarily due to increased product sales.

Inventories increased $706,214 due primarily to our decisions to increase work in process in order to mitigate longer vendor lead-times.

Accounts payable and accrued expenses increased $890,822 due primarily due to a $1,504,462 increase in accrued expenses partially offset by a $544,272 decrease in accounts payable and a $69,368 net decrease in current and long-term operating lease liabilities. The increase in accrued expenses was due to increases in income taxes payable and deferred revenue. The decrease in accounts payable was due to the timing of vendor payments.

### Investing Activities

Cash used by investing activities during the six months ended September 30, 2022 consisted of $25,381,057 of marketable securities purchases and $24,500 of fixed asset purchases, partially offset by $18,750,000 in proceeds from maturities of marketable securities and the receipt of a $100,000 tenant improvement allowance. Fixed asset purchases can vary from quarter to quarter depending on our needs and equipment purchasing opportunities. We have ordered additional new production equipment to increase our production capacity. Therefore we currently expect significantly more fixed asset purchases during fiscal 2023 than the $484,579 we invested in fiscal 2022.

### Financing Activities

Cash used in financing activities during the six months ended September 30, 2022 consisted of $9,661,652 of cash dividends paid to shareholders. In addition to cash dividends to shareholders paid in second quarter of fiscal 2023, on October 19, 2022 we announced that our Board had declared a cash dividend of $1.00 per share of Common Stock, or $4,830,826 based on shares outstanding as of October 14, 2022, to be paid November 30, 2022. 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.

## Controls and procedures

As filed, 1,377 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 Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Although there have been changes in personnel involved in our controls, processes, and procedures, our management concluded that, as of September 30, 2022, our disclosure controls and procedures were effective.

### Changes in Internal Controls

During the quarter ended September 30, 2022, 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, 143 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, 2022.

Filed Oct 19, 2022.
Source: SEC EDGAR, the filing index for accession 0001437749-22-024389. Last ingested by Listed: Oct 24, 2026, 14:55 ET. No prices; not investment advice.