NVE(US:NVEC)2019-07-18 02:30Financial Data and Key Metrics Changes - Total revenue for Q1 2020 decreased 11% year-over-year to $6.29 million from $7.11 million in the same quarter last year, attributed to an 11% decrease in product sales and a 12% decrease in contract R&D [6][8] - Gross margin increased to a record 83% from 80% in the first quarter last year due to a more profitable product mix [7] - Net income 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, but net income increased 26% sequentially [8][10] - Comprehensive income increased 9% to $4.18 million compared to $3.84 million for the prior year quarter, driven by a significant unrealized gain from marketable securities [9] Business Line Data and Key Metrics Changes - Anti-tamper product sales were strong, but the medical device market continued to be weak [6] - The company introduced a new smart TMR magnetometer called the SM225, which is designed for Internet of Things applications [11][12] - Revenues from new smart sensors are expected to grow as they are well received in the market, with a recent design win for a Bluetooth connected smart tape measure [13][14] Market Data and Key Metrics Changes - The medical device market remains challenging, but long-term demographics are positive, indicating a growing need for medical devices due to an aging population [29] - The company added a new representative in Europe to enhance sales efforts, indicating a strategic focus on expanding market presence [18] Company Strategy and Development Direction - The company is focusing on product development in smart sensors and power conversion ICs, aiming to improve efficiency in motor controls [33][34] - There is an ongoing interest in the biosensor technology for early-stage cancer detection, with plans to either market it independently or through licensing arrangements [41][42] - The company is committed to maintaining a strong balance sheet while continuing to pay dividends, with over $90 million paid in total dividends [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about achieving sequential sales growth in the upcoming quarter, with expectations of returning to year-over-year growth [26] - The company acknowledges challenges in the medical device market but sees long-term opportunities due to demographic trends [29] - Management is prepared to invest in long-term projects, particularly in the neurostimulator market, which is expected to grow despite current challenges [30][31] Other Important Information - The company is celebrating its 30th anniversary and will demonstrate new products at the upcoming annual shareholders meeting [20] - The company has engaged a new accounting firm, Boulay PLLP, for better governance and efficiency [23] Q&A Session Summary Question: Insights on Abbott's CRM business and visibility - Management noted Abbott's sequential sales growth and expressed confidence in achieving sequential sales growth in their own third quarter [26] Question: Competitors in the CRM market - Management refrained from discussing specific competitors but emphasized their strong position in the medical device market [27] Question: Focus areas in neurostimulators - Management indicated a focus on various applications, including pain management and neurological disorders, while acknowledging regulatory challenges [30][31] Question: Changes in product development focus - Management explained the addition of power conversion ICs for motor controls and clarified that medical diagnostics remains an area of interest [32][35] Question: Licensing technology for biosensors - Management confirmed the possibility of licensing technology or forming partnerships with larger companies for market entry [41][42] Question: Details on unclonable functions business - Management described the business as high value-added systems primarily used in military applications, with rigorous testing and variable margins [48][50] Question: Private label couplers - Management explained that private label couplers are sold under other companies' brand names, which helps reach different customer segments [52][54]