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DATE

Wednesday, July 22, 2026 at 5:00 p.m. ET

CALL PARTICIPANTS

• President and Chief Executive Officer - Daniel Baker
• Principal Financial Officer - Daniel Nelson
• Vice President of Advanced Technology - Peter Eames

TAKEAWAYS

• Total Revenue -- $11.0 million, representing an 81% increase driven by higher product sales and a strong semiconductor market.
• Product Sales -- $10.7 million, increasing 82% across defense and nondefense product lines as well as distributor and direct channels.
• Contract Research and Development Revenue -- $299,322, reflecting a 53% increase compared to the prior-year quarter.
• Net Income -- $6.39 million, a 79% increase from $3.58 million in the prior-year period.
• Diluted EPS -- $1.32, rising from $0.74 in the previous year.
• Gross Margin -- 81.3% of revenue, compared to 80.6% in the prior-year quarter, benefiting from higher production volumes.
• Operating Margin -- 66% for the quarter, reflecting higher revenue and lower expenses as a percentage of sales.
• Pretax Margin -- 70.0% of revenue, as calculated from reported income before taxes of $7.7 million.
• Net Margin -- 58.0% of revenue.
• Total Expenses -- $1.7 million, increasing 49% due to higher performance-based compensation and increased staffing.
• Research and Development Expense -- $946,582, increasing 31% to support new product development and staffing needs.
• Selling, General, and Administrative Expense -- $755,594, an 81% increase primarily attributed to higher performance-based compensation.
• Expense Ratio -- 15% of revenue, decreasing from 19% in the prior-year quarter as revenue growth outpaced expense increases.
• Interest Income -- $449,920, a 10% decrease due to a smaller marketable securities portfolio after bond maturities funded dividends and fixed asset purchases.
• Cash and Marketable Securities -- $43.9 million as of June 30, 2026, an increase of $391,000 from the end of the prior fiscal year.
• Inventories -- $6.67 million, a 6% decrease from the previous quarter due to increased product sales.
• Fixed Asset Purchases -- $57,000, representing a significant decrease from the prior year following the completion of a multiyear expansion program.
• Dividend -- $1.00 per share, which management reported was more than covered by quarterly earnings.
• Accounts Receivable -- $6.55 million, increasing from $3.41 million due to higher sales volume occurring in the third month of the quarter.
• Product Launches -- Two new wafer-level chip scale sensors were introduced for use in miniaturized implantable medical devices.
• MRI Safety -- New sensors were tested for stability in magnetic fields exceeding 9 Tesla, ensuring safety for patients requiring MRI procedures.
• Market Target -- Management identified robotics as the strongest growing area and most promising market for the company's technology.
• Board Expansion -- The Board of Directors will expand from five to seven members, pending shareholder approval at the annual meeting.
• Total Assets -- $62.1 million as of June 30, 2026, compared to $60.4 million at the end of fiscal 2026.
• Performance-Based Compensation -- Increased SG&A expenses were primarily driven by payments related to reaching growth targets.

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RISKS

• Baker stated, "factors as our reliance on several large customers significant uncertainties related to the economic environments in the industries we serve [and] uncertainties related to future sales and revenue," noting these could cause actual results to differ materially from plans.

SUMMARY

Management at NVE Corporation (NVEC -1.65%) reported that the company's multiyear capacity expansion is transitioning from research and development support to active production, coinciding with a planned leadership succession and board expansion. The company reported significant growth in the semiconductor and medical device markets, targeting high-growth sectors such as advanced robotics, data centers, and the industrial artificial intelligence of things. Strategic initiatives focus on the miniaturization of sensor technology through wafer-level packaging while maintaining safety standards for high-field magnetic environments. The company remains focused on returning capital to shareholders through dividends while maintaining a debt-free balance sheet.

• President and CEO Daniel Baker is retiring in August 2026, with Vice President Peter Eames appointed to succeed him. Baker stated, "The Board conducted a thoughtful succession planning process and unanimously chose Pete as the company's next CEO."
• Eames identified the robotics market as a primary driver for future growth, stating, "We see some distinct advantages in both low power, but particularly the precision that our products offer in automation and robotics. We'd say that's probably the strongest growing area and the most promising for our technology."
• The company's new sensors for implantable medical devices are one-third the size of conventional packages and are stable in magnetic fields produced by the strongest MRI machines. Eames noted, "The sensor functions as a magnetic switch in a normal magnetic field and the sensors are stable to very high magnetic fields of over 9 Tesla."
• Management attributed an 82% increase in product sales to the adoption of newer products by existing customers and the addition of new customers in high-growth markets.
• The company exhibited at major trade shows in Silicon Valley and Germany to generate sales leads for robotics, power conversion, and the artificial intelligence of things.
• Nelson confirmed that while accounts receivable increased significantly, most outstanding invoices from the end of the quarter have already been collected.
• The Board has nominated Carolyn Valentine as a new director, a move intended to expand the board to seven members and strengthen corporate governance.

INDUSTRY GLOSSARY

• AIoT: Artificial Intelligence of Things, the combination of artificial intelligence technologies with the Internet of Things infrastructure to achieve more efficient IoT operations.
• MRAM: Magnetoresistive Random Access Memory, a type of non-volatile random-access memory which uses magnetic charges to store data.
• MRI-safe: The ability of a device to remain functional and safe in the presence of strong magnetic fields used in medical imaging.
• Spintronics: A nanotechnology that relies on the electron's spin rather than its charge to acquire, store, and transmit information.
• Tesla: A unit of magnetic induction or magnetic flux density; 9 Tesla represents a field strength significantly higher than standard 1.5 or 3 Tesla medical MRI machines.
• Wafer-level chip scale package: A technology of packaging an integrated circuit while still part of the wafer, resulting in a device that is practically the same size as the die itself.

Full Conference Call Transcript

Daniel Baker: Good afternoon, and welcome to the MD Corporation conference call for the quarter ended June 30, 2026. I'm Dan Baker. The President and CEO. I'm joined by Daniel Nelson, our Principal Financial Officer; and Pete Eames, Vice President of Advanced Technology and This call is being webcast live by YouTube and Google Meet and being reported. A replay will be available for our website, nve.com and our [Operator Instructions] After my opening comment, Daniel Nelson will present our financial results. He will cover new products and R&D, and I'll cover sales mark. I'll also cover our oncoming leadership position and Board expansion. And then we'll open the call to questions.

We include our press summary financial results and filed our quarterly report on Form 10-Q in the past hour following the close of Martin. Links to the press release and 10-Q are available through our website, the SEC's website and as formerly known as please refer to the safe harbor statement on your screen.

Comments we may make that relate to future plans, events, financial results or performance are forward-looking statements subject to certain risks and uncertainties, including, among others, such factors as our reliance on several large customers significant uncertainties related to the economic environments in the industries we serve uncertainties related to future sales and revenue as well as the risk factors listed from time to time in our filings with the including our annual report on Form 10-K for the year ended March 31, 2026. 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 exceptional results our growth accelerated with an 81% increase in revenue and a 79% increase in net income, driven by new product sales and a strong semiconductor market. Daniel Nelson will cover details of the financials. Daniel?

Daniel Nelson: Thanks, Dan. As Dan said, first quarter total revenue increased 81% to $11 million from $6.1 million for the prior year quarter. The increase was due to an 82% increase in product sales and a 53% increase in contract R&D revenue. Product sales increased across defense and nondefense product lines, as well as distributor and direct channels. Higher volumes helped boost gross margin for the quarter to 81.3% of revenue compared to 8.6% in the prior year quarter. Total expenses increased 49% due to a 31% increase in research and development expense and an 81% increase in selling, general and administrative expense. The increase in research and development expense was due to increased staffing and new product development activities.

The increase in selling, general and administrative expenses was primarily due to increased performance-based compensation. The increase in expenses was less than a revenue increase. So expenses as a percentage of revenue decreased from 19% to 15%. Interest income decreased 10% and due to decrease in our marketable securities portfolio as proceeds from bond maturities partially funded dividends and fixed asset purchases in the prior fiscal year. Net income for the quarter increased 79% to $6.39 million, or $1.32 per diluted share from $3.8 million or $0.74 per share. The increase was primarily due to increased revenue, partially offset by increased operating expenses and decreased interest income. Earnings more than cover above $1 for the quarter was strong.

Operating margin was 66%, Pretax margin was 78% and net margin was 58%. Inventories decreased by 6% in the quarter due to increased product sales. Fixed asset purchases were $57,000 for the quarter compared to $106 million in the same quarter was due to the completion of our 2-year multimillion dollar expansion. We expect fixed asset purchases this fiscal year to be significantly less than the prior year with the completion of our expansion. Our balance sheet strengthened in the quarter, with earnings more than covering our dividend. Cash plus marketable securities increased $391,000 to $43.9 million as of June 30 compared to $43.5 million as of March 31.

Now I'll turn the call over to Pete Eames to cover new products and research and development. Pete?

Peter Eames: Thanks, Daniel. I'll cover new products and R&D. Our R&D strategy is to transition the world's best technologies into the world's best products for high-value markets such as advanced humanoid robotics, data centers and highly automated fourth wave factories using artificial intelligence of things. Just this week, we launched 2 new wafer-level chip scale sensors for implantable medical devices. The new parts are about 1/3 of the area of the conventionally packaged versions, which are already quite small. The even smaller sensors allow miniaturized implantable medical devices. These are our first wafer-level chip scale sensors with a unique and important MRI-safe feature.

The sensor functions as a magnetic switch in a normal magnetic field and the sensors are stable to very high magnetic fields of over 9 Tesla, which is more than the fields produced by the strongest MRI machines. MRI safety ensures that the medical device that uses the sensor doesn't fail if the patient needs an MRI. We have a video on our website and YouTube channel showing how we verify this feature using ultra-high-field magnets. In addition to the new product launches, we're developing several new products, including more precise sensors for robotics and more power-efficient isolators for power conversion. Now I'll turn it back over to Dan Baker.

Daniel Baker: Thanks, Pete. I'll cover sales and marketing and our upcoming leadership transition. In the past quarter, we exhibited at 2 trade shows focused on sensors. In May, we were at Sensors Converge in Silicon Valley -- which is North America's largest event of its type where we focused on robotics and the artificial intelligence of things or AIoT. We have a strong benefit proposition for those markets, including small size for precise motion and smart sensor edge computing for easy integration with AI. In June, we exhibited a sensor plus test in Germany, which is built as the leading international trade fair for sensors, measuring and testing technology.

In addition to robotics and AIoT, the German show was a good opportunity for us to highlight our power conversion products. Videos of several new demos are on our website and our YouTube channel. The shows generated some good leads, and we believe our investments in shows will pay off in future sales. Last month, we announced that I'm retiring as President and CEO, effective as of our annual meeting in August. The Board appointed Pete to succeed me, subject to shareholder approval, I'll remain on the board as Chairman. Current Chairman, Terry Glarner, will remain on the Board, and Pete will join the Board.

In addition to the incumbent directors in Pete, the Board has nominated a new Director, Carolyn Valentine, pending shareholder approval, the Board will expand from 5 to 7 directors. The larger Board will strengthen our corporate governance, and we already have the highest possible ISS governance score. Leading NVE has been a privilege. I'm proud of what our team has accomplished and confident the company is well positioned for continued success. The Board conducted a thoughtful succession planning process and unanimously chose Pete as the company's next CEO. He brings extraordinary experience. dedication and judgment, and I know our shareholders will be well served by his leadership in the years ahead.

Peter Eames: Dan, on behalf of employees, customers and shareholders, I thank you for many dedicated years of service and pioneering leadership with [ Spintronics ] at NVE. We will continue to benefit from your guidance as Board Chairman. I'm honored to lead NVE as CEO. We have a talented team, strong customer relationships and many exciting opportunities ahead. . I look forward to building on our momentum, creating long-term value for our shareholders through profitable growth, strong shareholder returns and continued Spintronic product excellence.

Daniel Baker: Thanks for the kind words, Pete. Now we'd like to open the call for questions via Google Meet. [Operator Instructions]

Unknown Analyst: Dan, this from Principal Financial. Congrats on the latest results. I wanted to ask based on the sequential increase you saw in the past quarter, I'm curious if you could attribute or how much you could attribute to the capacity expansion versus market demand as possible.

Peter Eames: This is Pete. Thanks for the question. We see both those factors. We've recently completed the expansion that you mentioned, and we started using that capacity primarily for R&D activities. But we also see the market conditions as important factors. We have excellent new products out there now in important new markets, and we're excited about the growth. .

Unknown Analyst: Awesome. And just as a quick follow-up, if I may. So it sounds like volume production remains in the existing or the legacy manufacturing facility. And so is it the plan that eventually the expanded capacity will be used for volume production as well? Or is it the plan that it will stay for R&D use cases?

Peter Eames: The existing capacity is used for R&D largely now, but it's also being used for production, especially for some of our new products. And it will be continued to phase over as production shifts and the new products ramp up. So we really do see the investment paying off for long term there.

Unknown Analyst: This is Aran from Delta Research. I just want to say great work on the quarter. I did have one question. So the release sites new product sales. I was wondering if you could provide any color whether if these new products are going to new customers or are existing customers adopting the newer parts.

Daniel Baker: The new products that most of the volume was in existing customers, but we also had new customers and they tend to start out a little bit more slowly. So they don't move the top line an awful lot, but they bode very well for the future. So we were very pleased with the results of having some of our existing customers, design in our newer products and new customers looking at newer products as well.

Unknown Analyst: And just a quick question. I noticed your accounts receivable went up not quite double. Some color on that.

Daniel Nelson: Mike, this is Daniel Nelson, thanks for the question. So you're right, accounts receivable did increase and most of that increase is driven by increased sales in the past quarter. Timing of customer payments as well contributed to some of that but mostly driven by increased sales in the past quarter.

Unknown Analyst: Okay. So does that mean like I don't know what the terms are for payments and so forth. But it sounds like maybe a lot of your increase in sales came on the back end of the quarter versus the front end? Or how does that look?

Daniel Nelson: Yes. Some of the sales did happen in the third month of the quarter. And most of those invoices are still outstanding as of the end of the month. But as we speak, most of those have already been collected on.

Unknown Analyst: Hello. My name is Dell. I've got a question coming from the fact that I've worked with the insurance crop insurance industry for quite a number of years on metical support analysts and I was looking at some of the technology that topic you NVE, and I'm especially interested if there's any pursuing cases going using DRIP-free-TMIr sensor infrastructures on the field for enhancement of AI, which is only going to grow with agricultural exponentially as with everything else. What is your idea on that, sir?

Peter Eames: Yes. Great question. So there are some opportunities there, and particularly the features of NVE products make that an interesting market. We have very low power sensors for unattended networks and unattended sensor nodes that's particularly powerful for crop insurance because we're able to monitor crop conditions directly and then respond quickly as well with our sensor technologies as well. So we're doing sensing and data transmission and both of those areas are important for monitoring the data of crops remotely and responding adequately.

Unknown Analyst: If I have some of the ideas, I'm sorry, if I can to agreements -- if I have some other ideas because I've been in the industry for so long, I specialized with remote support. I was wondering could I send them to a place within NVE like for RS 48 wired edge frameworks and other things like that where your cross pattern, node displacements so that it doesn't follow within neighborhood line, so you don't lose whole patents of fields stuff like that. Is there any way of doing that?

Daniel Nelson: Absolutely. We've got some of the best customer service in the industry, and we're ready to respond to your inquiries. If you go to our website, there's a sensor apps e-mail address available, and you can submit your questions directly to that.

Unknown Analyst: I was wondering, understandably don't give customers by name, but if you could detail any incremental momentum you're seeing by end market, whether that be robotics and humanoids or industrial automation or data centers or medical. I would just be curious to hear maybe how you kind of rank the end markets and the change in momentum lately.

Peter Eames: Sure. Thanks, Yes, there's important opportunities, particularly in robotics that we see -- we talked a lot about wafer level chip scale products, including the announcement on the call today. in the previous calls last quarter as well. And we do see some distinct advantages in both low power, but particularly the precision that our products offer in automation and robotics. We'd say that's probably the strongest growing area and the most promising for our technology.

Unknown Analyst: Walter Morris, as you know we've been very long-term shareholders in your company. Congratulations on a great quarter. Certainly, the right kind of way to wrap up your long tenure at the company. So kudos. Would you talk about -- I mean, this was an explosive quarter. Now we've had over the years, breakout quarters where revenue run rate, which is consistently over many years, on a quarterly basis, we're on it $6 million to $7 million. And then periodically, we'll have a high single-digit, low double-digit revenue quarter. But at least up to now, there's been a reversion to the kind of $25 million annualized revenue run rate in your business?

Very importantly, can you speak to the possibility or the likelihood that this represents a new higher, meaningfully higher plateau and over the next 3 to 5 years, a major increase, hopefully, in strong double digits in the company's secular revenue growth rate.

Daniel Nelson: Absolutely, Walter. We see this as evidence and validation of the strategy that we put in place to target some of these very high-growth markets that we've been talking about. Pete mentioned the growth in robotics, which is a fast-growing market where we have a convincing benefit proposition. So while you're right, things might have taken a little longer than we had hoped, we're confident that we have the right strategy. We have products in place. We have a dedicated sales force and distribution network and we have unique products and capacity that we just added. So we're very bullish about the future.

Unknown Analyst: So if I just might parities that to make sure I understand it, this current quarter's revenue run rate represents in general, give or take, million, let's say, a new and consistently higher revenue run rate off of which you hope top line grows at healthy double-digit rates going forward. Is that fair?

Daniel Baker: Well, Walter, I think you know us well enough to know that we aren't able to give forward-looking guidance but I will -- and particularly with specific numbers that you just alluded to. But I will say we're very optimistic and extremely pleased with we have.

Unknown Analyst: Final question, has the momentum of the June quarter continued at least so far into the September quarter?

Peter Eames: Walter, it's hard to comment on the numbers for the current quarter. I think the primary factor among the others that Dan mentioned is the improvement in the semiconductor industry, and that's producing a lot of optimism in general. So I think for that reason alone, we're optimistic going forward. And also, as Dan said, we have great products excellent distribution and sales, and we're very excited.

Daniel Baker: Well, there are no further questions. So I'd sum up with saying we were pleased to report a blowout quarter with an 81% increase in revenue, a 79% increase in net income and $1.32 earnings per share. We look forward to meeting some of you at our Annual Shareholders Meeting August 6 here at NVE. Our next earnings call will be in October. A replay of this call will be available on the investor events page of our website at nve.com and our YouTube channel that's youtube.com/nvecorporation.