NVE(NVEC) - 2024 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements The company's Q1 FY2024 financial statements show a slight asset decrease, revenue growth, and increased net income Balance Sheets Total assets decreased slightly to $68.1 million as of June 30, 2023, with reduced marketable securities and cash Balance Sheet Summary (Unaudited) | Account | June 30, 2023 ($) | March 31, 2023 ($) | | :--- | :--- | :--- | | Total current assets | $26,010,039 | $30,786,804 | | Total assets | $68,119,098 | $69,255,170 | | Total current liabilities | $1,271,464 | $1,832,760 | | Total liabilities | $1,573,330 | $2,175,668 | | Total shareholders' equity | $66,545,768 | $67,079,502 | Statements of Income Q1 FY2024 total revenue increased 20.4% to $8.8 million, driven by product sales, yielding $4.4 million net income Quarterly Income Statement Highlights (Unaudited) | Metric | Q1 FY2024 (ended June 30, 2023) ($) | Q1 FY2023 (ended June 30, 2022) ($) | | :--- | :--- | :--- | | Product sales | $8,700,092 | $7,072,961 | | Total revenue | $8,831,414 | $7,336,407 | | Gross profit | $6,751,791 | $5,684,560 | | Income from operations | $5,368,244 | $4,711,322 | | Net income | $4,403,730 | $4,140,116 | | Net income per share – diluted | $0.91 | $0.86 | | Cash dividends declared per share | $1.00 | $1.00 | Statements of Cash Flows Operating cash flow increased to $5.0 million, but dividend payments and investments led to a $230k cash decrease Quarterly Cash Flow Summary (Unaudited) | Activity | Quarter Ended June 30, 2023 ($) | Quarter Ended June 30, 2022 ($) | | :--- | :--- | :--- | | Net cash provided by operating activities | $5,025,302 | $3,331,143 | | Net cash (used) provided by investing activities | ($541,966) | $4,349,437 | | Cash used in financing activities | ($4,713,299) | ($4,830,826) | | (Decrease) increase in cash | ($229,963) | $2,849,754 | Notes to Financial Statements Notes detail spintronics business, ASU 2016-13 adoption, $53.2 million marketable securities, and dividend declarations - The company develops and sells devices using spintronics, a nanotechnology that relies on electron spin to acquire, store, and transmit information[28] - Effective June 30, 2023, the company adopted ASU No. 2016-13 regarding credit losses, resulting in an increased allowance for credit losses of $212,440, recorded as a credit loss expense, which reduced net income per share by $0.04 for the quarter[36][37] - Marketable securities totaled $53.2 million, representing approximately 78% of total assets as of June 30, 2023, consisting of money market funds and corporate bonds rated A- or higher[39][40] - The company's stock repurchase program had a remaining authorization of $3,520,369 as of June 30, 2023, with no shares repurchased during the quarter[50] - On July 19, 2023, the Board of Directors declared a quarterly cash dividend of $1.00 per share, payable on August 31, 2023[52] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses 20.4% revenue growth, 42% expense increase, 6.4% net income growth, and liquidity management Results of Operations Q1 FY2024 revenue grew 20.4% from product sales, expenses rose 42.2%, leading to 6.4% net income growth Quarter-to-Quarter Financial Changes | Item | Q1 2023 (% of Revenue) | Q1 2022 (% of Revenue) | Change (%) | | :--- | :--- | :--- | :--- | | Product sales | 98.5% | 96.4% | 23.0% | | Contract R&D | 1.5% | 3.6% | (50.2)% | | Total revenue | 100.0% | 100.0% | 20.4% | | Gross profit | 76.5% | 77.5% | 18.8% | | Total expenses | 15.7% | 13.3% | 42.2% | | Net income | 49.9% | 56.4% | 6.4% | - The increase in expenses was due to a 16% rise in R&D, a 28% rise in SG&A (both from increased staffing and compensation), and a $212,440 credit loss expense following the adoption of ASU No. 2016-13[59] - The effective tax rate rose to 24% from 17% in the prior-year quarter due to changes in the timing and availability of tax credits[60] Liquidity and Capital Resources Cash decreased by $230k due to dividends and investments, despite $5.0 million in operating cash flow - Net cash provided by operating activities was $5,025,302 for the quarter, a primary source of working capital[63][64] - Financing activities used $4,713,299, which consisted of $4,830,826 in dividend payments offset by $117,527 from stock option exercises[63][67] - A subsequent dividend of $1.00 per share (approx. $4.8 million) was declared on July 19, 2023, to be paid on August 31, 2023[68] Controls and Procedures Management concluded disclosure controls were effective as of June 30, 2023, with no material internal control changes - Management concluded that as of June 30, 2023, the company's disclosure controls and procedures were effective[71] - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[72] PART II. OTHER INFORMATION Legal Proceedings The company is not aware of any material pending or threatened legal proceedings impacting its financial condition - As of the report date, the company is not aware of any material pending or threatened legal proceedings[74] Risk Factors No material changes to risk factors, except for a new risk related to credit losses from ASU No. 2016-13 adoption - A new risk factor was added related to the risk of credit losses, as the adoption of ASU No. 2016-13 requires measuring allowance based on expected future losses, which could negatively impact financial results[75] Mine Safety Disclosures This item is not applicable as the company has no mine safety disclosures to report - None[76] Exhibits The report includes key exhibits: Sonova Supply Agreement amendment, CEO/CFO certifications, and Inline XBRL data files - Filed exhibits include the Second Amendment Sonova Supply Agreement, CEO/CFO certifications (Rule 13a-14(a)/15d-14(a) and Section 906), and various Inline XBRL documents[78] Signatures The report was signed on July 19, 2023, by Daniel A. Baker (CEO) and Daniel Nelson (Principal Financial Officer) - The Form 10-Q was signed on July 19, 2023, by Daniel A. Baker (President and CEO) and Daniel Nelson (Principal Financial Officer)[81]