NVE(NVEC) - 2021 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements For Q1 FY2021, NVE Corporation experienced a year-over-year decline in total revenue and net income, with cash decreasing due to dividend payments surpassing operational cash flow Balance Sheets Balance Sheet Summary (as of June 30, 2020) | Balance Sheet Item | June 30, 2020 | March 31, 2020 | | :--- | :--- | :--- | | Total Current Assets | $32,542,188 | $34,384,711 | | Total Assets | $78,882,332 | $79,498,150 | | Total Current Liabilities | $1,199,336 | $796,201 | | Total Liabilities | $2,064,787 | $1,502,801 | | Total Shareholders' Equity | $76,817,545 | $77,995,349 | Statements of Income Income Statement Summary (for the Quarter Ended June 30) | Metric | 2020 | 2019 | Change | | :--- | :--- | :--- | :--- | | Product Sales | $4,358,635 | $6,085,364 | -28.4% | | Total Revenue | $4,589,262 | $6,294,696 | -27.1% | | Gross Profit | $3,752,840 | $5,202,659 | -27.9% | | Income from Operations | $2,516,846 | $3,899,583 | -35.5% | | Net Income | $2,411,865 | $3,607,419 | -33.1% | | Net Income Per Share (Diluted) | $0.50 | $0.74 | -32.4% | Statements of Comprehensive Income Comprehensive Income Summary (for the Quarter Ended June 30) | Metric | 2020 | 2019 | | :--- | :--- | :--- | | Net Income | $2,411,865 | $3,607,419 | | Unrealized gain from marketable securities, net of tax | $1,242,662 | $570,063 | | Comprehensive Income | $3,654,527 | $4,177,482 | Statements of Shareholders' Equity - Shareholders' equity decreased from $78.0 million on March 31, 2020, to $76.8 million on June 30, 2020, primarily driven by $4.84 million in cash dividend payments, partially offset by $3.65 million in total comprehensive income for the quarter[19] Statements of Cash Flows Cash Flow Summary (for the Quarter Ended June 30) | Cash Flow Activity | 2020 | 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $3,172,427 | $4,537,628 | | Cash provided by investing activities | $0 | $6,470,370 | | Cash used in financing activities | ($4,835,038) | ($4,846,010) | | Net (Decrease) Increase in Cash | ($1,662,611) | $6,161,988 | Notes to Financial Statements - The company develops and sells devices using spintronics, a nanotechnology that relies on electron spin to acquire, store, and transmit information[28] - Revenue from product sales is recognized upon shipment or delivery, while contract research and development revenue is recognized over time as work is completed[31][32] - As of June 30, 2020, the company held $70.3 million in available-for-sale securities (corporate bonds and money market funds), which constituted approximately 89% of its total assets[39][41] - The company's stock repurchase program had a remaining authorization of $3,853,459 as of June 30, 2020, with no shares repurchased during the first quarter of fiscal 2021[50] Management's Discussion and Analysis of Financial Condition and Results of Operations Management reported a significant year-over-year decline in Q1 FY2021 total revenue and net income, primarily due to reduced product sales and COVID-19 impacts, though liquidity remains sufficient for the next 12 months Results of Operations Quarter-to-Quarter Financial Changes (Q1 FY2021 vs Q1 FY2020) | Item | % of Revenue (2020) | % of Revenue (2019) | Quarter-to-Quarter Change | | :--- | :--- | :--- | :--- | | Product sales | 95.0% | 96.7% | (28.4)% | | Total revenue | 100.0% | 100.0% | (27.1)% | | Gross profit | 81.8% | 82.7% | (27.9)% | | Income from operations | 54.9% | 62.0% | (35.5)% | | Net income | 52.6% | 57.3% | (33.1)% | - The decrease in product sales was attributed to decreased purchases by existing customers[59] - Management believes the COVID-19 pandemic had a significant negative impact on revenue and net income for the quarter, particularly due to its effects on the medical devices industry, and expects this trend to continue[62] Liquidity and Capital Resources - Cash and cash equivalents decreased by $1.66 million during the quarter to $6.40 million, primarily due to $4.84 million in dividend payments, partially offset by $3.17 million in net cash from operations[64] - The Board of Directors declared a quarterly cash dividend of $1.00 per share, to be paid on August 31, 2020, with future dividends subject to Board approval and potential impacts from the COVID-19 pandemic[52][66] - Management believes that current working capital and cash generated from operations will be sufficient to meet the company's needs for at least the next 12 months[67] Controls and Procedures As of June 30, 2020, the CEO and CFO concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2020[70] - There were no changes in the company's internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls[71] PART II. OTHER INFORMATION Legal Proceedings The company is not aware of any material pending or threatened legal proceedings that would significantly impact its financial condition or operations - As of the reporting date, NVE is not aware of any material pending or threatened legal proceedings[73] Risk Factors While no material changes occurred, two risk factors were updated to reflect current conditions, specifically concerning public health crises and potential supply chain disruptions from packaging vendors - The risk factor concerning public health crises was updated to reflect the ongoing impact of the COVID-19 pandemic, which has caused customers to delay or cancel orders and poses a risk of future operational restrictions[74] - The risk factor related to packaging vendors was updated to highlight supply chain vulnerabilities, noting that one vendor had to suspend operations due to COVID-19 orders and that the pandemic has caused material shortages[75] Mine Safety Disclosures This section is not applicable to the company's operations - Not applicable[76] Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files for financial reporting - The exhibits filed with this report include certifications from the CEO (Daniel A. Baker) and CFO (Curt A. Reynders) pursuant to Rule 13a-14(a)/15d-14(a) and 18 U.S.C. Section 1350, along with XBRL instance and taxonomy documents[77]