NVE Corporation — FY2024 Form 10-K
Reporting period: Fiscal year ended March 31, 2024; this is an annual filing, not a calendar fourth-quarter report. NVE develops and sells spintronic sensors, couplers and related products, and earns contract research and development revenue.
Financial performance and liquidity
| Metric | FY2024 | FY2023 |
|---|---|---|
| Total revenue | $29.80 million | $38.25 million |
| Product sales | $29.22 million | $37.20 million |
| Contract R&D revenue | $0.59 million | $1.06 million |
| Gross profit / margin | $23.03 million / 77.3% | $30.19 million / 78.9% |
| Operating income / margin | $18.52 million / 62.2% | $25.64 million / 67.0% |
| Net income | $17.12 million | $22.69 million |
| Diluted EPS | $3.54 | $4.70 |
| Cash from operations | $18.25 million | $19.09 million |
Revenue fell 22.1%, primarily as existing customers reduced purchases amid a semiconductor-industry downturn and fewer R&D contracts were performed. Net income declined 24.5%. Gross margin fell 1.6 percentage points as material, labor and production overhead costs increased. R&D expense rose 5.7% with new-product development; SG&A fell 9.7%, partly due to lower performance-based accruals. Higher investment yields lifted interest income 34.5% to $1.95 million. The effective tax rate was 16% in both years, below the 21% statutory rate, primarily reflecting tax credits and deductions.
Cash and cash equivalents were $10.28 million at year-end, up from $1.67 million. Marketable securities totaled $52.55 million, about 79% of assets; total assets were $66.78 million. Current assets were $33.19 million versus current liabilities of $1.04 million. The filing reports no borrowings; total liabilities of $1.21 million consisted mainly of operating lease obligations. Operating cash flow was strong, but cash dividends paid of $19.33 million exceeded operating cash flow. NVE declared $4.00 per share in dividends for FY2024 and announced a further $1.00-per-share dividend payable May 31, 2024.
Business, outlook and material risks
NVE markets products for industrial automation, power conversion and medical devices, with distribution in more than 75 countries. It introduced or began marketing new coupler/DC-to-DC products, high-isolation couplers, extended-temperature transceivers and antitamper MRAM products. Development programs include sensitive TMR sensors, medical-device sensors and next-generation antitamper MRAM. Management plans $4–$5 million of production-capacity and capability investments during FY2025 and FY2026, subject to change. The filing provides no revenue or earnings guidance.
Management attributed the sales decline to weaker customer demand in the semiconductor downturn and reduced R&D contract activity. It increased wages amid a tight labor market. Inventory rose $0.74 million as NVE built raw-material and finished-goods stocks in anticipation of recovery and to mitigate supply risks.
- Customer exposure: One customer represented 23% of FY2024 revenue and 21% of year-end receivables; the note does not identify the customer. NVE also relies on several large customers. The Abbott Supplier Partnering Agreement expires December 31, 2024, and renewal terms are uncertain.
- Supply and operations: Certain wafer, chemical and packaging supplies are single-sourced or difficult to replace. Risks include shortages, foreign sourcing and tariffs, extreme weather, and critical equipment failure.
- Marketable securities: The portfolio includes $42.71 million of corporate bonds and had $0.996 million in gross unrealized losses, principally attributed to interest-rate increases. NVE reported no credit-loss impairment and said it did not expect to need to sell securities before recovery of amortized cost.
- Other risks: Competition and pricing pressure, wage inflation, medical-device product liability or recalls, foreign-market exposure, cybersecurity and IT disruptions, and dividend sustainability. NVE cautions that dividends may be reduced or discontinued.
The auditor issued an unqualified opinion on the financial statements and reported no critical audit matters. Management assessed disclosure controls and internal control over financial reporting as effective; the independent auditor was not engaged to audit internal control.
Key facts for investors to verify
- Whether customer demand and product sales recover after the reported semiconductor downturn, and whether the revenue decline continues.
- Renewal status and terms of the Abbott agreement before its December 2024 expiration, along with revenue and receivables concentration.
- Whether planned $4–$5 million capacity investments proceed and generate sufficient returns.
- Dividend coverage by operating cash flow and maturities of marketable securities, given FY2024 dividends exceeded operating cash flow.
- Credit quality, maturity profile and interest-rate exposure of the securities portfolio, and the reliability of critical suppliers.