Thank you for standing by and welcome to the NVE Corporation’s First Quarter of 2022 Fiscal Year Results. At this time, all participants are in listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder, today's program may be recorded. I would now like to introduce your host for today's program, Daniel Baker, President and CEO. Please go ahead, sir.

Good afternoon, and welcome to our conference call for the quarter ended June 30, 2021. With me is our Chief Financial Officer, Curt Reynders. This call is being webcast live and being recorded. A replay will be available through our website, nve.com. After my opening comments, Curt will present a financial review of the quarter and I'll cover the business, and then we'll open the call to questions. We issued our press release with first quarter results and filed our quarterly report on Form 10-Q in the past hour following the close of market. Links to the press release and the 10-Q are available through the SEC’s website, our website and our Twitter timeline. Comments we may make that relate to future plans, events, financial results or performance are forward-looking statements that are subject to certain risks and uncertainties, including among others, such factors as risks and uncertainties related to future sales and revenue, uncertainties related to dividend payments and future stock repurchases, and risks related to the COVID-19 pandemic as well as the risk factors listed from time to time in our filings with the SEC, including our annual report on Form 10-K for the year ended March 31, 2021 as updated in our just filed 10-Q. Actual results could differ materially from the information provided and we undertake no obligation to update forward-looking statements we may make. We're pleased to report a strong recovery from the pandemic impacted year ago quarter, for the quarter we reported earnings of $0.74 per share versus $0.50 in the year ago quarter driven by a 60% increase in product sales. Now Curt will cover the details of our financial results. Curt?

Thanks, Dan. Total revenue for the quarter ended June 30, 2021 increased 56% to $7.15 million compared to $4.59 million last year, due to a 60% increase in product sales, partially offset by a 14% decrease in contract R&D revenue. This was our highest revenue quarter since 2018. The COVID-19 pandemic had a significant impact on revenue in the past year. We believe those effects are subsiding, although risks and uncertainties remain. Expenses increased 3% for the quarter from the prior year due to a 31% increase in SG&A, partially offset by an 8% decrease in R&D. The increase in SG&A was due to increased employee compensation expense. The decrease in R&D expense was due to staffing changes and the completion of some new product developments. Interest income decreased to $290,000 for the most recent quarter from $399,000 in the prior year quarter due to decreases in our available for sale securities and a decrease in the average interest rates on those securities. Net income for the quarter was $3.58 million or $0.74 per diluted share compared to $2.41 million or $0.50 last year. Gross margin decreased to 75% versus 82% for the prior year quarter due to revenue mix, and that margin was a solid 50%. We paid a $1 per share dividend in the past quarter, and today we announced that our Board declared another quarterly dividend of $1 per share payable August 31 to shareholders of record as of August 2. Now I'll turn the call back to Dan to cover the business. Dan?

Thanks, Curt. I'll cover business and marketing. We continue to manage the challenges and opportunities presented by global semiconductor shortages. Some have said shortages could last several more years. Raw material and packaging service lead times have increased and prices of many raw materials have increased. We've addressed these threats by increasing inventories at all stages and increasing our production capacity to support converting that inventory to finish goods. We've increased some prices where we've had to because of higher material and labor costs. For other parts, we've been able to keep our prices the same while improving our competitive position. The shortages have created opportunities to provide products where we have drop-in replacements for competitors, particularly couplers. We've won some business because we have parts available and we hope to keep that business by demonstrating we're a reliable supplier with excellent product performance and quality. Our advanced technology team continues to work on new and improved Tunneling Magnetoresistance or TMR sensors, which have more signal and use less power than conventional sensors. This is especially important for automotive current sensors, which are a key element of our long-term growth strategy. Our advanced technology team also worked on spintronic memory or MRAM under our customer sponsored R&D contract for custom parts. MRAM is one of our core technologies. We manufacture MRAMs for specialized applications, such as anti-tamper. And these programs allow us to build our technology capabilities. Turning to sales and marketing. Most in-person industry trade shows were canceled or were virtual in the past quarter, but one of our distributors participated in a small in-person exhibition in late June in Northern Italy. We hope there will be more in-person exhibitions. SENSOR+TEST is an important industry trade show, it's normally held in Germany, but took place virtually in the past…

Certainly. [Operator Instructions] And we have a question from the line of Jeff Bernstein from Cowen. Your question please.

Hey guys, a nice quarter. It was very strong sequentially and year-to-year. And I think that you had hoped that last quarter would have had a little bit of a bounce back. So did we sort of get two quarters worth of bounce back in this quarter? Or can you just characterize a little bit more of where the strengths came from in the quarter?

I’m sure Jeff. The sales increased across the Board in most of our markets and our product lines. Coupler sales were especially strong in the past quarter. And we believe we’re better positioned in these times of shortages than some traditional semi-conductor competitors we have. The overall worldwide semiconductor market is strong and the effects of the pandemic on revenue appear to be subsiding. The impact of the pandemic on elective medical devices also appears to be recovering based on the orders forecast and what we’ve been hearing, we currently expect a strong year-over-year growth this quarter, the quarter ending September 30, 2021.

Great. That’s great. And so there wasn’t any large customer that, that was a significant factor sequentially or anything like that?

No. It was really across the Board. Some markets were stronger than others, but it wasn’t really an across-the-Board increase.

That’s great. And you mentioned that you believe you had some wins where you had drop-in products, I guess that was in couplers. And so customers of competitors were who couldn’t get product were able to source product from you essentially. Is that the size of it?

Yes. We do believe we saw some of that in the recent quarter.

Got you. And is that kind of activity continuing or are you still seeing opportunities like that?

Yes. We’ve continued to see opportunities, and we continue to see a very strong demand particularly with the couplers.

Got you. Okay. That’s great. And then I wanted to ask about the isolator business you guys mentioned, the Angst+Pfister work with the silicon carbide products and related products. And there was a Texas Instruments put out a thing about a webinar on using their isolators to meet a certain, I think it was RF emission standards for I guess the Federal Communications Commissioner or something. And I think that your products are sort of naturally don’t cause those problems, but can you just talk a little bit about that?

Yes, Jeff, this is Dan. So, CISPR 32, which I think is what you’re referring to. Those are radio frequency noise limits, which is, as you correctly pointed out, that’s an area where our spintronic isolators have significant advantages over semiconductor isolators like you mentioned Texas Instruments. So, we don’t have to have webinars on how to mitigate that noise, because we don’t have the noise, because electron spin is inherently persistent. Our devices don’t require the radio frequency carriers that create the noise pollution that’s regulated by CISPR 32. So, we do see that as an advantage, and it’s a significant advantage for some of our customers and the regulatory environment on those sorts of radio frequency noise is becoming stricter as we get more and more devices in the Internet of Things and more and more devices just throughout our lives. So, we don’t want them interfering with other electronics causing other electronics to fail. So that’s the reason for these limits and our parts perform very well in those sorts of tests.

Got you. And is it correct to assume that this is a bigger problem in sort of the high-speed kinds of applications that come with some of the compound semiconductors like silicon carbide?

Yes. It tends to be, because the faster you run the devices, the higher the frequencies are, and then they can transmit better through barriers and things like that. So transmitting battery is bad when it’s noise pollution, when it’s radio frequency pollution.

Okay, great, great. And so you’ve talked in the past about how well you are positioned for the EV market. I’ve been reading a lot more recently about a lot of capital going into eVTOLs, electric vertical takeoff and landing, essentially small drone/helicopters for transporting people and goods. It would seem like that your products would be equally if not even better positioned in a situation like that where both weight and power are important parameters.

Yes, exactly. So, that’s a fascinating area. And the advantages that we have of lower power and smaller size, which we get from our core technology of spintronics are significant advantages in many markets. And certainly as you point out, it’s a big advantage in that type of market, the drone market where every little bit of weight is – power is extremely important. Of course, lower power translates into smaller batteries. And our devices, particularly our tunneling magnetoresistive devices are especially efficient for power. And we have the smallest devices of their type in the industry. We have experience in space and aviation, as well as in medical device markets. So, we’ve gotten pretty good at designing for small size and low power.

And how would you go after a market like that, where – there’s not really any kind of traditional supply chain yet those things are just starting out with all these essentially private startup companies?

Yes. So, we worked to reach those folks through some targeted marketing. We are working on as you know we have a letter of conformance from the International Automotive Task Force, which is important in some of those emerging sub-segments. We have a private label partnership with a company with strong automotive sales channels, which allows us to reach some of those customers. And then we’re working to continually get our message out as you know through webinars and other means to highlight things like lower power and smaller size and to leverage our excellent reputation in other markets that require a small size and low power. We are working to try to reach some of those smaller companies that you mentioned, but also some of the companies that make the sub-assemblies, what are called Tier 2 and Tier 3 suppliers in the automotive industry that might be providing battery management systems or modules for companies that aren’t going to design that themselves.

That’s great. Thank you. And I’ll drop off and let somebody else ask the question. Thanks.

Thanks, Jeff.

Thank you. And this does conclude the question-and-answer session of today’s program. I’d like to hand the program back to Daniel Baker for any further remarks.

Well, if there are no other questions, we were pleased to report a 48% increase in earnings driven by a 56% increase in revenue. We look forward to speaking with you again on August 5th for our Annual Meeting and on October to discuss second quarter results. Thank you for participating in the call.

Thank you, ladies and gentlemen for your participation in today’s conference. This does conclude the program. You may now disconnect. Good day.