Q2 2023 NVE Corp Earnings Call
Okay.
Good day and welcome to the <unk> conference call on second quarter results.
At this time all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session.
To ask a question. During this session you will need to press star one one on your telephone you will then hear an automated message advising your hand is rate. Please.
Please be advised that today's conference is being recorded I would now.
Now like to hand, the conference over to your Speaker, President and CEO , Mr. Dan Baker. Please go ahead.
Good afternoon, and welcome to our conference call for the quarter ended September 32022.
This call is being webcast live and being recorded a replay will be available through our website <unk> dot com.
Drawing by our CFO Joe Smith.
After my opening comments, Joe will present, a financial review then I'll cover the business and new products. Then we will open the call to questions.
We issued our press release with quarterly results and filed our quarterly report on Form 10-Q in the past hour following the close of market.
Links to the press release and 10-Q are available through the SEC website, our website and our Twitter timeline.
Comments, we may make that relate to future plans events financial results or performance are forward looking statements that are subject to certain risks and uncertainties, including among others such factors as risks and uncertainties related to future sales and revenue.
Certainties related to future stock repurchases and dividend payments, our dependence on critical suppliers and packaging vendors and.
And risks related to the COVID-19, pandemic and supply chain disruptions as well as the factors listed from time to time in our filings with the SEC, including our annual report on Form 10-K for the fiscal year ended March 31 2022.
Actual results could materially differ from the information provided and we undertake no obligation to update forward looking statements we may make.
We're pleased to report a record shattering quarter net income for the quarter increased 67% to $6 9 million or $1.26 per diluted share driven by a 57% revenue increase revenue and earnings were the highest ever by far Joe will cover the details Joe.
Thanks, Dan.
As Dan said total revenue for the most recent quarter increased 57% to a record setting $10 $7 million compared to $6 eight 2 million for the prior year quarter the.
The increase was due to a 59% increase in product sales and a 5% increase in contract R&D revenue.
The large product sales increase was primarily due to increased purchases by existing customers along with the addition of some new customers.
We did acquire some new customers from traditional semiconductor companies.
Companies with our superior products and shorter lead time.
Sales increased in most of our markets and product lines.
Anti tamper products for the defense sector were especially strong which enabled us to overcome some weakness in the medical device market.
Improvements in our supply chain execution allowed for increased product shipments, although shortages remain a headwind and a continuing risk.
Investments last year in equipment and added personnel in key production areas helped us achieve the record shipments we began investing in production capacity early in the pandemic when some companies were pulling back.
We continue to use our strong balance sheet to purchase equipment to increase our capacity and we're expanding our production space for the second time this year to make room for new equipment.
We expect to invest about $1 million or more in additional production and test equipment and the rest of the fit for the rest of the fiscal year.
Expenses for the quarter decreased 7% from the prior year due to a 5% decrease in R&D and a 10% decrease in SG&A.
The decreases were primarily due to the reallocation of resources to revenue generating activities.
As a result of increased revenue strong margins and expense controls our operating margin increased from 60% to 67, 3%.
730 basis point improvement.
Interest income for the second quarter of fiscal 2023 increased nine 9% due to an increase in our available for sale securities and an increase in the in their investment excuse me in their interest rate.
In the past two quarters as investments matured, we were in a position to rollover nearly $19 million in our available for sale securities to capture increased market yields.
Driven by increased revenue and decreased expenses net income for the quarter increased 67% to 6.19 million or $1 26 per diluted share compared to $3 $65 million or <unk> 75 per diluted share for the prior year quarter.
For the first six months of fiscal 2023, total revenue increased 29% to $18 $1 million from $14 million for the first six months of the prior year.
The increase was due to a 29% increase in product sales at a 19% increase in contract R&D revenue.
Net income for the first six months increased 42% to $10 $2 million or $2 12 per diluted share from seven $2 million to $3 million or $1 49 per diluted share for the first half of 2022.
Okay.
Turning to cash flow during the first half of the year of the fiscal year, we increased raw material inventory by $337000 and work in process inventory by $474000 to mitigate.
Some of the supply chain shortages we've.
We've experienced.
Capital expenditures were just $24500 in the first half of the year.
As I said earlier in this call we're planning to deploy additional production equipment that we've had on order for a while in the second half of the fiscal year.
Investments could result in capital expenditures in the range of $1 billion or more.
We paid a $1 dividend per share in the past quarter as we have for every quarter for the past seven years.
For the first time since we started paying dividends in 2015 earnings more than covered the dividend for both the quarter and six month periods. We see this as an important milestone.
Today, we announced that our board declared another quarterly dividend of $1 per share payable November 30 to shareholders of record as of October 31.
Now I'll turn it back to Dan to cover the business.
Thanks, Joe I'll cover product development product certifications and governance.
On product development in the past quarter, we expanded our line of DC to DC converter products D.
DC to DC converters transmit power without a direct electrical connection these.
These products are useful in a number of industrial and automotive applications, including interfaces to next generation power switches, such as silicon carbide power transistors.
Silicon Carbide has been described as a new gold rush and such systems could revolutionize power control and energy storage.
There is a new demonstration showing the simplicity of using our DC to DC converters, Spintronics Isolator and silicon carbide transistors for power control and the videos section of our website as well as our social media sites.
Part of the challenge we face is the small companies validating the exceptional reliability and toughness of our parts.
We devoted considerable time and resources to two certifications intrinsically safe certification and <unk> certification.
We achieved an intrinsically safe certification in June and in the past quarter, We received <unk> certification under the latest standard known as Das 17.
DTE as a European standard recognized throughout the world.
<unk> 17 is the gold standard for electrical safety and reliability and required extensive internal testing rigorous independent testing and an onsite factory surveillance audit.
We also invested in new test equipment and design, New test electronics to test, 100% of our isolate or is it the required voltage.
It's an impressive validation of our technology and manufacturing capabilities and is valuable in harsh environments, such as power conversion.
The certifications include the most rigorous <unk> 17 standard known as reinforced which means a device can replace two conventional isolator.
To reinforce standard applies to our unique V series, Isolator, which were introduced in 2014 and still have best in class specifications for toughness, including six kilovolt isolation voltage, meaning the parts that are just three tenths of an inch wide can withstand six kilovolt for at least a minute.
Turning to governance in August we held our first in person annual shareholders' meeting since 2019.
Each director was reelected any old compensation was approved and the selection of the independent registered public accounting firm was ratified.
Details were filed in a current report on form 8-K, the day after the meeting.
We're pleased to have a strong independent board of directors with two former public company Ceos, Rich Kramp and Jim bracket.
A former CFO of a public company, Pat Hollister and an experienced director for a number of successful companies Terry Garner.
All of our directors attended the meeting and all of our directors hold stock or options in the company.
We made ownership filings on behalf of our outside directors after the meeting.
We had several live hands on product demonstrations at the annual meeting if you werent able to attend you can see some of our product demonstrations on our website or Youtube channel.
Now I'd like to open the call for questions Sherry.
Thank you as a reminder to ask a question you will need to press star one one on your telephone please standby, while we compile the Q&A roster.
And we do have a question one moment.
And that will come from the line of Jeffrey Bernstein with Cowen. Please go ahead.
Hey, Dan and Joe Congratulations on the.
Amazing quarter.
I'm going to date myself, but it sounds like Ricky Ricardo from I Love, Lucy, but but you guys got some explaining to do.
Can you go into whatever amount of detail as possible.
On how much.
Isn't it.
In the quarter with sort of catch up on shipments you Couldnt make previously how.
How much is from new customers how much.
Stepped up volumes from current customers and are those for any kind of new additional products or wins, there just give us a better feel for the.
The big upside here.
That's a very good question I think we talked about some of our supply chain improvements that we've seen.
Which enabled us to meet some of our existing.
Back order.
I will say that our order flow for the quarter was strong.
So I don't think you can say that the cupboard is bare unnecessarily.
I think really how I look at it is.
We're getting the wafers are getting them.
And we're able to turn it and ship it. So I think that is a good story.
Dan.
Some comments regarding.
The.
Our sales into our defense sector.
I would say that the anticancer product I would say some of that was absolutely.
Pull ahead.
Who are our customer.
And some expedited delivery on some products.
Sure.
I will say, we did pull ahead some revenue there.
But we still have ongoing business with that account too so.
I think we said in our comments.
<unk> is lumpy.
I don't anticipate us repeating that performance next year, but our next quarter excuse me.
Yeah.
We still have more business with that account so.
Yeah.
Gotcha question.
Yeah, I guess, it really put a point on it.
So we had been.
In the 4 million to $7 million kind of quarterly run rate of revenue forever.
Is there a new run rate here that that eight or 9 million.
A lot of this overage kind of a catch up.
Just give us a general feeling for.
What's kind of the go forward revenue trajectory.
This is Dan.
So.
We see.
<unk> increased business and increased potential and we're we're currently expecting to continued strong year over year revenue growth as Joe mentioned, we we had some business that is can be lumpy specifically the anti tamper products. But then also we had some business that was relatively weak in the.
Our medical sector. So those.
Those.
Offset a little bit.
Our interest in our.
<unk>.
Catalog products was very strong.
And as Joe mentioned, our order flow remains strong. So we're optimistic that we can continue.
Strong year over year revenue growth now there are some risks of course and there is a caveat that.
That we face the supply chain headwinds, but.
But we're optimistic that this is business that.
Much of this business is business that we can retain the business that we've won from competitors.
And that we can continue our growth trajectory.
That's great and Dan can you talk to are there.
There are some product area opportunities that you have had for quite a while and some of those are the markets are really moving forward now so.
First over the counter hearing AIDS are apparently now in stores and available finally, the FDA regs are out on those.
Have we gotten some business additional business and hearing AIDS.
Yes.
Or any other new areas.
Right. So of course as you know we've been looking at over the counter hearing AIDS and the broader so called <unk> market for many years.
And so it's great to see that the new rules are now taking a fact or just taking effect.
Realistically, we expect our near term sales for the OTC market to be much less than the traditional hearing aid market, but that could change.
Been estimated that only 20% of people with hearing problems use hearing aid. So there is a large unserved market.
<unk> devices could help reach out market by reducing the expense and increasing the dispensing convenience and then we have we.
We have design wins in that space and then we also have design wins in the broader horrible space and we've developed sensors that are compatible with rechargeable batteries that are often used in consumer wearables rather than disposable batteries generally used in traditional hearing AIDS. So we do see that as an opportunity although.
In the near term it might not be a significant contributor to our revenues or sales.
Got you okay.
And anything to say on the on the EV side.
So on the EV side, we continue to work on the power control and the things so that would be onboard charging and power control motor control within <unk>.
Electric vehicles, and those DC to DC converters, and Isolator that I mentioned in my.
Our prepared remarks addressed those markets. So we see that as an excellent market as well as the broader power control and power conversion market.
So electric vehicles or take a little longer but we do have some very intriguing design wins in power conversion.
For for converting D C electricity that might come from wind mills or batteries into the AC electricity that we use in our homes. So.
That's a market that we see as having excellent potential as I mentioned in the prepared remarks, often those rely on next generation power transistors, such as silicon carbide transistors.
While we don't make power transistors, which has been described as a gold rush.
We make the.
Maybe the picks and shovels that go.
So with those transistors in order to control large amounts of power.
With relatively simple small efficient devices.
I understand that's great and then just on the on the pumps business obviously.
There was some.
The expedited <unk>.
Orders that shipped in the quarter and helped.
I was curious to see and I think it was electronic design or something.
Sort of infomercial article.
By analog devices on their Mac them.
Got a new MOSFET.
DNA path and they talked about the older renal oscillator technology and I think your technology.
Really superior to both of those.
But I didn't realize it was kind of a big enough market for Adi to really care about.
Can you just.
What you think that market is what it is that those guys see there and how you might be able to compete.
Yes, so thats a great question and as you know because you've been following this technology for a long time and so have we.
We've been innovating in this area. So we were we were involved in pops or physical uncountable functions before they were before they were so popular and now where we're starting to see as you've noted that there's more and more interest in this area. So the interest comes in for device security and for cyber.
Site security, which is of course very important.
So we pioneered some of these devices for use in defense systems and to protect defense systems that might.
That could fall into unfriendly hands, but they have a number of commercial applications for cyber security and for device security.
For all kinds of all kinds of devices.
We use every day in our lives so.
As far as the advantages.
We we use spintronics for our pumps.
And our approach allows us to use extremely thin materials, such as the oxide thicknesses that define the uniqueness of the of the key thats used in the path. So.
So that means that the deviations or variations in our devices can be smaller than those in semiconductor devices. This means higher entropy. So the bottom line is the reverse engineering, our pumps is much more difficult than traditional semiconductor pumps and that's important in this area because of course as soon as it gets reverse engineered it is no longer it's no longer.
Longer of any use.
I understand that's great I'll, let somebody else ask a question. Thank you.
Thank you as a reminder, if you have a question. Please press star one.
On your telephone.
One moment for our next question.
That will come from the line of Irwin Silverberg with Cowen. Please go ahead.
Dan Hi, so.
You answered most of my question when you responded to Jeff about the hearing aid market.
Just more specifically.
Excuse me.
Yeah.
Until let's say six months ago.
Only about five or six manufacturers of hearing AIDS and then the last six months or so my sense is and you see advertisements.
On the TV.
Some new entrants anticipating this FDA rule.
And if I remember correctly, you had one particular customer historically in the hearing aid area and I just wonder.
How many youre doing business with now and what you anticipate as more people into this market.
While we see that as a segment hearing AIDS as a segment, where we have a very convincing benefit proposition and we have a very.
Strong, perhaps even dominant position for force sensors in hearing AIDS.
We can't name obviously for confidentiality reasons, we can't name all of our customers, we do make public filings that relate to <unk>, which is one of the biggest hearing aid companies in the world. So that's a matter of public record.
But it's a segment that we.
We participate in both with the traditional hearing aid manufacturers.
And with new hearing aid manufacturers as I alluded to in the answer to Jeff's question. So.
We do expect and the FDA has said that they expect to see new manufacturers enter the market.
And we see that as an opportunity and there are different constraints for some of the over the counter market.
<unk> cost constraints performance points and we also mentioned that I mentioned in my answer to Jeff that we typically or we often see rechargeable batteries, which are higher voltage than the traditional single cell.
Disposable batteries that are in legacy and traditional hearing aid so.
So we've adapted our technology to fit with the power supplies that go into those devices. So we see it as an excellent long term market.
And we hope to.
We hope to continue to have a very strong presence in that in that market.
Thank you Dan.
Thank you.
Thank you one moment, Sir our next.
Yeah.
Okay.
And that will come from the line of.
Stanley Casselman with Maxim Group. Please go ahead.
Hi, guys first congratulations on earning the dividend. My question has to do I guess with the medical devices that you said was slow.
Specifically with Abbott, what's happening with them.
You mean, what's happening with their business or I thought you had a contract coming due or.
Renewing.
Do you have a contract that is due for renewal at the end of the year. The beginning of the year, we did sign a one.
Yes.
We're still in negotiations with them.
We hope to.
Finished those negotiations by the end of the year. So we're active.
Engaging with them.
Trying to get that deal done.
Thank you and keep up the good work.
Okay.
Thank you Stanley.
Thank you and speakers I'm showing no further questions in the queue. At this time I would now like to turn the call back over to you for any closing remarks.
Well. Thank you we were pleased to report a record shattering quarter was 67% increase in earnings we look forward to speaking with you again at our next earnings call in January .
Thank you ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect.
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Good day and welcome to the MGE conference call on second quarter results.
At this time all participants are in a listen only mode. After the speaker presentation. There will be a question and answer session to ask a question. During this session you will need to press star one one on your telephone you will then hear an automated message advising your hand is rate. Please.
Please be advised that today's conference is being recorded I would now like to hand, the conference over to your Speaker, President and CEO Mr. Dan Baker. Please go ahead.
Good afternoon, and welcome to our conference call for the quarter ended September 32022.
Call is being webcast live and being recorded a replay will be available through our website <unk> dot com.
By our CFO Joe Smith.
After my opening comments, Joe will present, a financial review then I'll cover the business and new products. Then we will open the call to questions.
We issued our press release with quarterly results and filed our quarterly report on Form 10-Q in the past hour following the close of market.
Links to the press release and 10-Q are available through the SEC's website, our website and our Twitter timeline.
Comments, we may make that relate to future plans events financial results or performance are forward looking statements that are subject to certain risks and uncertainties, including among others such factors as risks and uncertainties related to future sales and revenue.
Uncertainties related to future stock repurchases and dividend payments, our dependence on critical suppliers and packaging vendors.
And risks related to the COVID-19, pandemic and supply chain disruptions as well as the factors listed from time to time in our filings with the SEC, including our annual report on Form 10-K for the fiscal year ended March 31 2022.
Actual results could materially differ from the information provided and we undertake no obligation to update forward looking statements we may make.
We're pleased to report a record shattering quarter net income for the quarter increased 67% to $6 9 million or $1.26 per diluted share driven by a 57% revenue increase revenue and earnings were the highest ever by far.
Joe will cover the details.
Joe.
Thanks, Dan.
As Dan said total revenue for the most recent quarter increased 57% to a record setting $10 $7 million compared to $6 $82 million for the prior year quarter.
The increase was due to a 59% increase in product sales and a 5% increase in contract R&D revenue.
The large product sales increase was primarily due to increased purchases by existing customers along with the addition of some new customers.
We did acquire some new customers from traditional semiconductor companies.
Companies with our superior products and shorter lead time.
Sales increased in most of our markets and product lines.
Anti tamper products for the defense sector were especially strong which enabled us to overcome some weakness in the medical device market.
Improvements in our supply chain execution allowed for increased product shipments, although shortages remain a headwind and a continuing risk.
Investments last year in equipment and added personnel in key production areas helped us achieved the record shipments.
We began investing in production capacity early in the pandemic when some companies were pulling back.
We continue to use our strong balance sheet to purchase equipment to increase our capacity and we're expanding our production space for the second time this year to make room for new equipment.
We expect to invest about $1 million or more in additional production and test equipment and the rest of the fit for the rest of the fiscal year.
Expenses for the quarter decreased 7% from the prior year due to a 5% decrease in R&D and a 10% decrease in SG&A.
The decreases were primarily due to the reallocation of resources to revenue generating activities.
As a result of increased revenue strong margins and expense controls our operating margin increased from 60% to 67, 3%.
730 basis point improvement.
Interest income for the second quarter of fiscal 2023 increased nine 9% due to an increase in our available for sale securities and an increase in the in their investment excuse me and their interest rate.
In the past two quarters as investments matured, we were in a position to rollover nearly $19 million in our available for sale securities to capture increased market yields.
Driven by increased revenue and decreased expenses net income for the quarter increased 67% to 6.19 million or $1 26 per diluted share compared to $3 $65 million or <unk> 75 per diluted share for the prior year quarter.
For the first six months of fiscal 2023, total revenue increased 29% to $18 $1 million from $14 million for the first six months of the prior year.
The increase was due to a 29% increase in product sales at a 19% increase in contract R&D revenue.
Net income for the first six months increased 42% to $10 $2 million or $2 12 per diluted share from seven $2 million to $3 million or $1 49 per diluted share for the first half of 2022.
Okay.
Turning to cash flow during the first half of the year of the fiscal year, we increased raw material inventory by $337000 and work in process inventory by $474000 to mitigate.
Some of the supply chain shortages we've.
We've experienced.
Capital expenditures were just $24500 in the first half of the year.
As I said earlier in this call we're planning to deploy additional production equipment that we've had on order for a while in the second half of the fiscal year.
Investments could result in capital expenditures in the range of $1 billion or more.
We paid a $1 dividend per share in the past quarter as we have for every quarter for the past seven years.
For the first time since we started paying dividends in 2015 earnings more than covered the dividend for both the quarter and six month periods. We see this as an important milestone.
Today, we announced that our board declared another quarterly dividend of one dollar per share payable November 30 to shareholders of record as of October 31.
Now I'll turn it back to Dan to cover the business.
Thanks, Joe I'll cover product development product certifications and governance.
On product development in the past quarter, we expanded our line of DC to DC converter products D.
DC to DC converters transmit power without a direct electrical connection these.
These products are useful in a number of industrial and automotive applications, including interfaces to next generation power switches, such as silicon carbide power transistors.
Silicon Carbide has been described as a new gold rush and such systems could revolutionize power control and energy storage.
There is a new demonstration showing the simplicity of using our DC to DC converters, Spintronics Isolator and silicon carbide transistors for power control and the videos section of our website as well as our social media sites.
Part of the challenge, we face as a small company is validating the exceptional reliability and toughness of our parts.
We devoted considerable time and resources to two certifications intrinsically safe certification and <unk> certification.
We achieved an intrinsically safe certification in June and in the past quarter, We received <unk> certification under the latest standard known as Das 17.
DTE as a European standard recognized throughout the world.
<unk> 17 is the gold standard for electrical safety and reliability and required extensive internal testing rigorous independent testing and an onsite factory surveillance audit.
We also invested in new test equipment and design, New test electronics to test, 100% of our isolate or is it the required voltage.
It's an impressive validation of our technology and manufacturing capabilities and is valuable in harsh environments, such as power conversion.
The certifications include the most rigorous <unk> 17 standard known as reinforced which means a device can replace two conventional isolator.
Reinforce standard applies to our unique V series, Isolator, which were introduced in 2014 and still have best in class specifications for toughness, including six kilovolt isolation voltage meaning.
The parts that are just three tenths of an inch wide can withstand six kilovolt for at least a minute.
Turning to governance in August we held our first in person annual shareholders' meeting since 2019.
Each director was reelected any old compensation was approved and the selection of the independent registered public accounting firm was ratified.
Details were filed in a current report on form 8-K, the day after the meeting.
We're pleased to have a strong independent board of directors with two former public company Ceos, Rich Kramp and Jim bracket.
Our former CFO of a public company, Pat Hollister and an experienced director for a number of successful companies Terry Garner.
All of our directors attended the meeting and all of our directors hold stock or options in the company.
We made ownership filings on behalf of our outside directors after the meeting.
We had several live hands on product demonstrations at the annual meeting if you werent able to attend you can see some of our product demonstrations on our website or Youtube channel.
Now I'd like to open the call for questions Sherry.
Thank you as a reminder to ask a question you will need to press star one one on your telephone please standby, while we compile the Q&A roster.
And we do have a question one moment.
And that will come from the line of Jeffrey Bernstein with Cowen. Please go ahead.
Hey, Hey, Dan and Jeff Congratulations on the island.
Amazing quarter.
I'm going to date myself, but it sounds like Ricky Ricardo for my I Love, Lucy, but but you guys got some explaining to do.
Can you go into whatever amount of detail if possible on how much.
Isn't it.
In the quarter with sort of catch up on shipments you Couldnt make previously how.
How much is from new customers how much.
Stepped up volumes from current customers and are those for any kind of new additional products or wins, there just give us a better feel for that.
The big upside here.
That's a very good question I think we talked about some of our supply chain improvements that we've seen.
Which enabled us to meet some of our existing.
Backorder.
I will say that our order flow for the quarter was strong.
I don't think you can say that the cupboard is bare necessarily I think.
Really how I look at it is.
We're getting the wafers or getting the product and we're able to turn it and ship. It. So I think that is a good news story.
Dan made a similar.
Some comments regarding.
The.
Sales into our defense sector.
I would say that the anti tamper product I would say some of that was absolutely pull ahead, we had.
Vendor who are our customers.
Wanted some expedited delivery on some products.
I will say, we did pull ahead some revenue there.
But we still have ongoing business with that account too so.
I think we said in our comments that that demand is lumpy.
Don't anticipate us repeating that performance next year, but our next quarter excuse me.
Right.
We still have more business with that account so.
Yes.
Got your question.
Yes, I guess, it really put a point on it so.
So.
We had been in the 4 million to $7 million kind of quarterly run rate of revenue forever.
Is there a new run rate here.
Eight or 9 million.
A lot of this overage kind of catch up.
Just give us a.
General feeling for.
What's what's kind of the go forward revenue trajectory.
This is Dan so.
We see.
We see increased business and increased potential and we're we're currently expecting to continue the strong year over year revenue growth as Joe mentioned, we we had some business that is can be lumpy specifically the anti tamper products. But then also we had some business that was relatively weak.
In the medical sector. So those.
Those.
Offset a little bit.
Our interest in our.
<unk>.
Catalog products.
<unk> very strong.
And as Joe mentioned, our order flow remains strong. So we're optimistic that we can continue.
Strong year over year revenue growth now there are some risks of course and there is a caveat that.
That we face the supply chain headwinds, but.
But we're optimistic that this is business that.
Much of this business is business that we can retain the business that we've won from competitors.
And that we can continue our growth trajectory.
That's great and Dan can you talk to are there.
There are some product area opportunities that <unk> had for quite a while and some of those are the markets are really moving forward now so.
First over the counter hearing AIDS are apparently now in stores and available finally, the FDA regs are out on those.
Have we gotten some business additional business and hearing aid.
Yes.
Or any other new areas.
Right. So of course as you know we've been looking at over the counter hearing AIDS and the broader so called <unk> market for many years.
And so it's great to see that the new rules are now taking a fact or just taking effect.
Realistically, we expect our near term sales for the OTC market to be much less than the traditional hearing aid market, but that could change.
Been estimated that only 20% of people with hearing problems used hearing AIDS. So there is a large unserved market.
TC devices could help reach out market by reducing the expenses and increasing the dispensing convenience and then we have we.
We have design wins in that space and then we also have design wins in the broader horrible space and we've developed sensors that are compatible with rechargeable batteries that are often used in consumer wearables rather than the disposable batteries generally used in traditional hearing AIDS.
We do see that as an opportunity although.
In the near term it might not be a significant contributor to our revenues or sales.
Got you okay.
And anything to say on the on the EV side.
So on the EV side, we continue to work on the power control and the things so that would be onboard charging and power control motor control within.
Electric vehicles, and those DC to DC converters, and Isolator that I mentioned in my.
Our prepared remarks address those markets. So we see that as an excellent market as well as the broader power control and power conversion market.
So electric vehicles or take a little longer but we do have some very intriguing design wins in power conversion.
For for converting D C electricity that might come from wind mills or batteries into the AC electricity that we use in our homes. So.
That's a market that we see as having excellent potential as I mentioned in the prepared remarks, often those rely on next generation power transistors, such as silicon carbide transistors.
While we don't make power transistors, which has been described as a gold rush.
We make the.
Maybe the picks and shovels that go.
So with those transistors in order to control large amounts of power.
With relatively simple small efficient devices.
I understand that's great and then just on the on the pumps business obviously.
There was some.
Expedited.
Orders that shipped in the quarter and helped.
I was curious to see and I think it was electronic design or something.
Sort of infomercial article.
By analog devices on.
Maxim.
Got it Nu Mark that they ship DNA path and they talked about the older renal oscillator technology and I think your technology is.
Probably superior to both of those.
But I didn't realize it was kind of a big enough market for Adi to really care about.
Can you just.
What you think that market is and what it is that those guys see there and how you might be able to compete.
Yes, so thats a great question and as you know because you've been following this technology for a long time and so have we.
We've been innovating in this area. So we were we were involved in pops or physical uncountable functions before they were before they were so popular and now where we're starting to see as you've noted that there's more and more interest in this area. So the interest comes in for device security and for cyber.
Cyber security, which is of course very important.
So we pioneered some of these devices for use in defense systems and to protect defense systems that might.
That could fall into unfriendly hands, but they have a number of commercial applications for cyber security and for device security.
For all kinds of all kinds of devices.
We use every day in our lives so.
As far as the advantages.
We we use spintronics for our pumps.
And our approach allows us to use extremely thin materials, such as the oxide thicknesses that define the uniqueness of the of the key that's used in the path. So.
So that means that the deviations or variations in our devices can be smaller than those in semiconductor devices. This means higher entropy. So the bottom line is the reverse engineering, our pumps is much more difficult than traditional semiconductor pumps and thats important in this area because of course as soon as it gets reverse engineered it is no longer it's no law.
Longer of any use.
I understand that's great I'll, let somebody else ask a question. Thank you.
Thank you as a reminder, if you have a question. Please press star one.
On your telephone.
One moment for our next question.
That will come from the line of Irwin Silverberg with Cowen. Please go ahead.
Dan Hi, so.
You answered most of my question when you responded to Jeff about the hearing aid market.
Just more specifically.
Excuse me.
Yeah.
Until let's say six months ago.
Only about five or six manufacturers of hearing AIDS and then the last six months ago. So my senses.
And you see advertisements on TV.
Some new entrants anticipating this FDA.
And if I remember correctly, you had one particular customer historically in the hearing aid area just wonder.
How many youre doing business with now and what you anticipate as more people and because this market.
While we see that as a segment hearing AIDS as a segment, where we have a very convincing benefit proposition and we have a very strong perhaps even dominant position for force sensors in hearing AIDS.
We can't name obviously for confidentiality reasons, we can't name all of our customers, we do make public filings that relate to <unk>, which is one of the biggest hearing aid companies in the world. So that's a matter of public record.
But it's a segment that we.
That we participate in both with the traditional hearing aid manufacturers.
And with new hearing aid manufacturers as I alluded to in the answer to Jeff's question. So we do expect and the FDA has said that they expect to see new manufacturers enter the market.
And we see that as an opportunity and there are different constraints for some of the over the counter market are there different cost constraints performance points and we also mentioned that I mentioned in my answer to Jeff that we typically or we often see rechargeable batteries, which are higher voltage than the traditional single cell.
Disposable batteries that are in legacy in traditional hearing AIDS. So so we've adapted our technology to fit with the power supplies that go into those devices. So we see it as an excellent long term market.
And we hope to.
We hope to continue to have a very strong presence in that in that market.
Thank you Ben.
Thank you.
Thank you one moment, Sir our next question.
Okay.
And that will come from the line of.
Stanley Kesselman with Maxim Group. Please go ahead hi.
Hi, guys first congratulations on earning the dividend.
Question has to do I guess with the medical devices that you said was slow.
Specifically with Abbott, what's happening with them.
You mean, what's happening with their business or I thought you had a contract coming due or.
Renewing.
We do have a contract that is due for renewal at the end of the year.
The beginning of the year, we did sign a one.
Yes.
We're still in negotiations with them.
We hope to.
Finished those negotiations by the end of the year. So we are actively engaging with them in.
Trying to get that deal done okay. Thank you.
You and keep up the good work.
Thank you Stanley.
Thank you and speakers I'm showing no further questions in the queue. At this time I would now like to turn the call back over to you for any closing remarks.
Well. Thank you we were pleased to report a record shattering quarter was 67% increase in earnings we look forward to speaking with you again at our next earnings call in January .
Thank you ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect.