NVE Corporation (NASDAQ:NVEC) Q2 2024 Earnings Call Transcript

Daniel Baker : The customers are typically prime contractors, defense contractors. And it’s not one, but it’s not large number either. There’s a relatively small number of large defense contractors. And so the lumpiness tends to be tied to defense procurement cycles and our products that we sell into the defense industry are primarily anti-tamper products, which are used to protect electronic technology in large systems. So those tend to be tied to particular procurement systems for the large defense system. We can’t say what types of systems they are, and we often don’t know for obvious reasons, but they tend to be things that take a while to build and the — so we get big orders when the systems are starting to be built and then they can sometimes drop off. And that’s what happened in the September quarter.

Collin McBirney: Got it. Okay. And then do you have a sense for — without getting any specifics, I mean, are some of the equipment used in Ukraine and/or kind of Israel’s response to your recent terrorist attacks like — I mean it seems like the environment for defense spending over the next year is as good or better than it was a year ago. And I guess, how do you kind of triangulate that in terms of the kind of go-forward expectations versus where things have been?

Daniel Baker : Yeah. That’s a good point, Collin. We would certainly hate to have to say that those conflicts are good for business, but what the government has said publicly what the Defense Department has said is that it’s important to protect electronics for systems that are going to foreign sales to allied sales because those tend to be especially vulnerable to reverse engineering and falling into unfriendly hands. So — in that sense, I suppose it’s a positive environment for our defense sales these are relatively long procurement cycles. So it’s not something where if a defense system is shipped, we’re immediately gaining revenue from it. We do look at it, though, that we’re proud to do our part, a small part but an important part of protecting the U.S. technology and protecting ours in our Allied war fighters.

Collin McBirney: Okay. Great. That makes sense. And obviously, personally, I fully support the U.S. military. It is — and maybe last one I had, just on — I think if I — I know it’s going to serve me correctly. I think sometimes you guys said that kind of fiscal ’24 — your fiscal ’24 revenue would be somewhat similar to your fiscal 2023 revenue. Obviously, the first half was kind of started a little bit lower? I mean, that would sort of imply something closer to like $11 million a quarter for 3Q and 4Q each. I mean is something like that potentially feasible? Or is there kind of a change in maybe the outlook or maybe I misunderstood previous comment.

Daniel Nelson : Yeah. Collin, I think the comments we made before about revenue being the same was within the context of anti-tamper sales. So we were actually discussing — talking about the lumpiness of the anti-tamper sales business, and we — the comment we made was specifically related to that we did not expect to see a significant difference in the lumpiness of that business. And not particularly revenue for the — for full fiscal 2024. So yes.

Collin McBirney: Okay. Got it. And so it’s presumably the kind of the positive lump in into kind of 2Q ’23 and then the positive lump in 4Q ’23, those were both from the defense. So assuming that comment still holds you would have kind of a couple of positive lumpiness to match last year’s lumpiness?