NVE Corporation (NASDAQ:NVEC) Q3 2023 Earnings Call Transcript

Joseph Schmitz: Yes, yes. We’ve — to Dan’s point or to what we said earlier, I guess it was my comment, I mean in some cases, we’ve paid a little bit of a premium to get the inventory on hand so we can meet our customer delivery schedules. We’ve also taken larger quantities than we would necessarily take because, in some cases, the supply chain has been spotty. So I think at this point, as I said earlier, at this point of time in the company, that increase in inventory is going to help us in the future to deliver to customer schedules.

Unidentified Analyst: Right, right. That makes sense. Okay. One other question. Can you provide any color on the kind of the order flow within the quarter, would you say it was relatively even? Or did it kind of slow down towards the end of the quarter or been increasing? A lot of the other companies, there’s some slowdown happening in certain sectors, so I’m just kind of curious if there’s any commentary you can provide on the sort of the trajectory of the order flow in general over the course of the quarter?

Joseph Schmitz: Yes. I would say we still have good order flow. I think if anything, we are seeing customers, in some cases, reseasonalizing their demand based on their schedule. But in terms of the flow itself, we’ve not seen a decrease.

Unidentified Analyst: Okay. Excellent quarter. Congratulations on being able to earned the dividend for the three quarters and hope for to market news for you next quarter.

Operator: Our next question comes from the line of Donald Hall. Your line is open.

Unidentified Analyst : Alright. Obviously, you had nice year-over-year comparisons, and you’re doing well, and we appreciate as a shareholder, I appreciate that. But I’d like to focus in on product sales, last quarter, were $10.5 million. This quarter, $7.2 million. That’s down over $3 million. And you explained that somewhat of defense — apparently a big defense order and some other cyclical issues. But that would imply you were not capacity constrained in the third quarter, yet you are adding capacity, which looks good and is promising. Can we expect that the sales will jump up to $10 million again pretty quickly based on these factors? By the way, I’m quoting here, you also said that we have a number of top — new top-notch customers. So I’m assuming they’re part of the reason for the capacity additions. So please explain that a little more, the capacity and the sales that can be expected and when?

Joseph Schmitz: Well, this is Joe. I’ll try and answer some of that — some of those questions. You were correct that there is a chunkiness in our government-related business that we alluded to in our comments. We’re still serving that market. It’s just returning to a more of a normal state. So I would say that to jump back up to a $10 million quarter would be not something that we would say that we can readily see in the future, although that’s certainly our goal. The capacity discussion is around reducing our backlog, improving our service levels and being positioned to attract new business when those opportunities present themselves. So — we have — so in the short term, we will be reducing our product backlog with these new investments, but we’re also laying the foundation for, hopefully, good things to come in the future.

Unidentified Analyst : Okay. Dan, do you have anything to add to that?