NVE Corporation — FY2022 Form 10-K
Reporting period: Fiscal year ended March 31, 2022, compared with fiscal 2021. Although the request metadata says “2021 Q4,” this is an annual report for FY2022, not a quarterly filing. NVE develops and sells spintronics-based sensors and couplers and conducts contract research and development; it also licenses MRAM technology.
Financial performance and position
| Metric | FY2022 / March 31, 2022 | FY2021 / March 31, 2021 |
|---|---|---|
| Total revenue | $26.99 million | $21.37 million |
| Gross profit / margin | $20.72 million / 76.8% | $17.24 million / 80.7% |
| Operating income | $16.33 million | $12.74 million |
| Net income | $14.51 million | $11.69 million |
| Diluted EPS | $3.00 | $2.42 |
| Operating cash flow | $12.50 million | $13.36 million |
| Cash and cash equivalents | $10.45 million | $10.43 million |
| Marketable securities, short- and long-term | $45.15 million | $54.72 million |
| Total assets / total liabilities | $67.47 million / $2.90 million | $72.50 million / $1.61 million |
Product sales were $25.87 million and contract R&D revenue was $1.12 million. NVE reported no borrowings; liabilities consisted primarily of operating lease obligations, accounts payable, and accrued expenses. Current assets were $41.50 million versus current liabilities of $2.46 million. The filing also reports $51.91 million of available-for-sale securities including money market funds, of which $6.76 million is included in cash and cash equivalents.
Changes versus FY2021
- Revenue increased 26.3%, reflecting higher purchases by existing customers across most markets and product lines, plus new R&D contracts.
- Gross margin declined from 80.7% to 76.8%, as higher materials, labor, and services costs more than offset price increases.
- Operating income rose 28.1% and net income rose 24.1%. R&D expense fell 8.1%, primarily from staffing changes and completion of development activities; selling, general, and administrative expense increased 11.6%.
- Operating cash flow decreased to $12.50 million. Higher receivables and inventory—inventory was increased to mitigate longer supplier lead times—used working capital.
- Unrealized losses on available-for-sale securities contributed to a $1.42 million loss in other comprehensive income, compared with a $0.58 million gain in FY2021. NVE said it did not consider the securities impaired.
Outlook, risks, and notable items
- Management expected supply-chain shortages to continue in FY2023. It reported greater supply-chain impact from COVID-19 in FY2022, including potential effects from China lockdowns, longer wafer and packaging lead times, and constraints on vendor capacity.
- Dividend payments were $19.33 million in FY2022, exceeding operating cash flow. The company declared a further $1.00-per-share quarterly dividend after year-end, payable May 31, 2022. Management cautioned that dividends may be changed or discontinued and that recent dividend levels may be unsustainable relative to cash flow.
- Two customers each represented at least 10% of revenue: 25% and 11% in FY2022, versus 22% and 15% in FY2021. The filing identifies major customers elsewhere, but the concentration note uses anonymized labels.
- Other material risks include reliance on large customers and single-source suppliers, competitive and pricing pressure, medical-device product liability and quality requirements, foreign operations, cyber and operational disruptions, and possible investment-security losses. Corporate bonds had $637,305 of gross unrealized losses at year-end, including $613,578 on positions in a loss position for at least 12 months.
- NVE began marketing new current, smart, rotational, and TMR sensors and couplers with isolated power conversion. Longer-term development focused on more accurate TMR sensors and MRAM. The filing provides no quantified revenue or earnings guidance.
- The auditor issued an unqualified opinion on the financial statements and reported no critical audit matters. Management concluded disclosure controls and internal control over financial reporting were effective; the auditor was not engaged to opine on internal-control effectiveness.
Key facts for investors to verify
- Whether customer demand, especially from the two concentrated customers, is sustained and whether key customer agreements are renewed.
- Whether wafer, materials, and packaging supply constraints continue, and their effects on deliveries, costs, and gross margin.
- The composition, credit quality, maturities, and sensitivity to market rates of the substantial securities portfolio and any subsequent valuation changes.
- Whether dividends remain supported by operating cash generation and liquidity, given FY2022 dividends exceeded operating cash flow.
- Commercial traction and development spending for recently introduced products, TMR sensors, and MRAM; no quantified outlook is provided in this filing.