NVE Corp (NVEC) 2024 Q2 法說會逐字稿

Hello, and welcome to NVE Corporation conference call on second-quarter results. (Operator Instructions) I would now like to hand the conference over to Daniel Baker, President and CEO. Sir, you may begin.

您好，歡迎參加 NVE 公司第二季業績電話會議。 （操作員指示）我現在想將會議交給總裁兼執行長 Daniel Baker。先生，您可以開始了。

Good afternoon, and welcome to our conference call for the quarter ended September 30, 2023. This call is being webcast live and recorded. A replay will be available through our website, nve.com.

下午好，歡迎參加我們截至 2023 年 9 月 30 日的季度的電話會議。本次電話會議正在進行網路直播和錄音。重播將透過我們的網站 nve.com 提供。

I'm Dan Baker, and I'm joined by Accounting Manager and Principal Financial Officer, Daniel Nelson. After my opening comments, Daniel Nelson will present our financial results. Then I'll cover marketing and new products, and we'll open the call to questions.

我是 Dan Baker，會計經理兼財務長 Daniel Nelson。在我的開場白之後，丹尼爾尼爾森將介紹我們的財務表現。然後我將介紹行銷和新產品，然後我們將開始提問。

We issued our press release with financial 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 on X, the platform formerly known as Twitter.

我們在收盤後的一小時內發布了包含財務業績的新聞稿，並以 10-Q 表格形式提交了季度報告。新聞稿和 10-Q 的連結可透過 SEC 網站、我們的網站以及 X（以前稱為 Twitter 的平台）取得。

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 uncertainties related to the economic environments in the industries we serve; risks and uncertainties related to future sales and revenue; and risks of credit losses; as well as risks listed from time to time in our filings with the SEC, including our annual report on Form 10-K for the year ended March 31, 2023, as updated in our quarterly report on Form 10-Q for the quarter ended June 30, 2023. Actual results could differ materially from the information provided, and we undertake no obligation to update forward-looking statements we may make.

我們可能發表的與未來計畫、事件、財務表現或績效相關的評論屬於前瞻性陳述，受到某些風險和不確定性的影響，其中包括與我們所服務產業的經濟環境相關的不確定性等因素;與未來銷售和收入相關的風險和不確定性；和信用損失的風險；以及我們向 SEC 提交的文件中不時列出的風險，包括截至 2023 年 3 月 31 日的年度 10-K 表格年度報告，以及截至 6 月結束的季度的 10-Q 表格季度報告中更新的風險2023年3 月30 日。實際結果可能與所提供的資訊有重大差異，我們不承擔更新我們可能做出的前瞻性陳述的義務。

We're pleased to report strong earnings and cash flow despite decreased revenue from a record quarter a year ago. Daniel Nelson will cover the details of our financials. Daniel?

儘管收入較一年前創紀錄的季度有所下降，但我們很高興地報告強勁的盈利和現金流。丹尼爾尼爾森將介紹我們的財務細節。丹尼爾？

Thanks, Dan. Total revenue for the quarter ended September 30, 2023, decreased 33% to $7.13 million, compared to $10.7 million for the quarter ended September 30, 2022. The decrease was due to a 32% decrease in product sales and a 92% decrease in contract R&D.

謝謝，丹。截至2023 年9 月30 日的季度總收入下降33%，至713 萬美元，而截至2022 年9 月30 日的季度總收入為1,070 萬美元。下降的原因是產品銷售額下降32%，合約金額下降92%研發。

The decrease in product sales was against the tough comparison to last year when product sales increased 59% and a reflection of the semiconductor industry downturn. The good news is that forecast for a strong industry (technical difficulty) projecting a 20% increase in semiconductor sales after a 12% decrease this year, as demand rebounds for most application lines.

產品銷售量的下降與去年產品銷售成長 59% 的嚴峻對比，也反映了半導體產業的低迷。好消息是，隨著大多數應用系列的需求反彈，預計半導體銷售額在今年下降 12% 後將成長 20%，產業強勁（技術難度）。

The decrease in product sales was primarily due to decreased purchases by existing customers. Product sales to defense markets were especially weak in the quarter. This was related to the timing of procurement cycles, and we expect these sales to recover in the coming quarters.

產品銷售下降主要是由於現有客戶購買量減少所致。本季國防市場的產品銷售尤其疲軟。這與採購週期的時間安排有關，我們預計這些銷售額將在未來幾季恢復。

The decrease in contract R&D revenue was due to the completion of most contracts. But we have new active contracts, and contract R&D is expected to strengthen later this fiscal year.

合約研發收入減少是由於大部分合約已完成。但我們有新的活躍合同，合約研發預計將在本財年晚些時候加強。

Total expenses decreased 17% for the second quarter of fiscal 2024, compared to the second quarter of fiscal 2023, primarily due to a $202,926 credit loss provision reversal, partially offset by a 2% increase in R&D expense. The provision for credit loss reversal was due to a reassessment of our allowance for credit losses based on payments and depth of customer information as of September 30, 2023.

與 2023 財年第二季相比，2024 財年第二季的總費用下降了 17%，這主要是由於 202,926 美元的信用損失準備金轉回，但部分被研發費用增加 2% 所抵銷。信用損失撥回撥備是由於我們根據截至 2023 年 9 月 30 日的付款情況和客戶資訊深度重新評估了信用損失準備金。

Interest income for the second quarter of fiscal 2024 increased 46% due to higher yields on securities purchased after September 30, 2022. Our effective tax rate, which is the provision for income taxes as a percentage of income before taxes, decreased to 8% for the second quarter of fiscal 2024, compared to 19% for the second quarter of fiscal 2023.

由於 2022 年 9 月 30 日後購買的證券收益率較高，2024 財年第二季的利息收入增加了 46%。我們的有效稅率（所得稅撥備佔稅前收入的百分比）下降至 8% 2024財年第二季的成長率為19%，而2023 財年第二季的成長率為19%。

The decrease was due to the reversal of a $202,926 credit loss provision and changes in the amounts and timing of tax deductions and credits. Our effective tax rate can vary from quarter to quarter. Our effective tax rate in subsequent quarters will likely be higher than the effective tax rate in the quarter ended September 30, 2023.

減少的原因是 202,926 美元的信用損失撥備的轉回以及稅收減免和抵免的金額和時間的變化。我們的有效稅率可能因季度而異。我們後續幾季的有效稅率可能會高於截至 2023 年 9 月 30 日的季度的有效稅率。

The 22% decrease in net income for the second quarter of fiscal 2024 compared to the prior-year quarter was primarily due to decreased revenue, partially offset by decreased expenses, increased interest income, and a lower effective tax rate. Net margin was a remarkable 65% of revenue.

與去年同期相比，2024 財年第二季淨利下降 22%，主要是由於收入減少，但部分被費用減少、利息收入增加和有效稅率降低所抵銷。淨利潤佔營收的 65% 令人矚目。

For the first six months of fiscal 2024, total revenue decreased 12% to $16 million from $18.1 million for the first six months of the prior year. The decrease was due to a 10% decrease in product sales and a 68% decrease in contract R&D revenue.

2024 財年的前六個月，總收入從上一年前六個月的 1,810 萬美元下降至 1,600 萬美元，下降了 12%。下降的原因是產品銷售下降10%，合約研發收入下降68%。

Net income for the first six months decreased 11% to $9.13 million or $1.89 per diluted share, from $10.2 million or $2.12 per diluted share for the first half of fiscal 2023. Net cash flow provided by operating activities increased 11% to $10.4 million for the first half of fiscal 2024, compared to $9.35 million for the first half of fiscal 2023.

前六個月的淨利潤下降了11%，至913 萬美元，或稀釋後每股1.89 美元，而2023 財年上半年為1,020 萬美元，或稀釋後每股2.12 美元。營運活動提供的淨現金流量增加了11%，至1,040 萬美元。2024 財年上半年的營收為 935 萬美元，而 2023 財年上半年為 935 萬美元。

The strong operating cash flow more than cover our dividend so far for this fiscal year. And cash plus marketable securities increased from $53.3 million to $53.8 million. Now I'll turn the call back over to Dan Baker to cover the business. Over to you, Dan.

強勁的營運現金流足以支付本財年迄今的股息。現金加上有價證券從 5,330 萬美元增加到 5,380 萬美元。現在我將把電話轉回給丹貝克 (Dan Baker) 處理此事。交給你了，丹。

Thanks, Daniel. I'll cover products, marketing, and our shareholders' meeting. NVE's line of the world's smallest DC-to-DC converters recently qualified for the prestigious CE mark under an EU declaration of conformity, which includes safety, electromagnetic compatibility, and reduction of hazardous substances.

謝謝，丹尼爾。我將介紹產品、行銷和股東大會。 NVE 的世界上最小的 DC-DC 轉換器系列最近根據歐盟符合性聲明獲得了享有盛譽的 CE 標誌，其中包括安全性、電磁相容性和有害物質減少。

Our distributors have told us the mark could enable additional sales in Europe. The key to qualifying for the mark was rigorous testing the international standards for radiated emissions. Unlike most conventional DC-to-DC converters, our parts passed the test with no external components for electromagnetic compatibility compliance.

我們的經銷商告訴我們，該標誌可以促進歐洲的額外銷售。獲得該標誌的關鍵是嚴格測試輻射發射的國際標準。與大多數傳統的直流對直流轉換器不同，我們的部件通過了電磁相容性測試，無需外部組件。

Also in the quarter, we officially renewed our ISO 9001 certification. The new certificate is valid until October 2026. ISO certification is a seal of approval from a third-party governing body that NVE meets the international standards of excellence published by the International Organization for Standardization or ISO. ISO 9001 helps ensure consistent quality.

同樣在本季度，我們正式更新了 ISO 9001 認證。新證書的有效期至 2026 年 10 月。ISO 認證是第三方管理機構的批准印章，表明 NVE 符合國際標準化組織 (ISO) 發布的國際卓越標準。 ISO 9001 有助於確保一致的品質。

Trade shows are an important part of our marketing strategy. Our distributors exhibited at several shows in the past quarter. We exhibited under our own banner at the Medical Design and Manufacturing trade show last week in Minneapolis, part of the Advanced Manufacturing event.

貿易展覽是我們行銷策略的重要組成部分。我們的經銷商在上個季度參加了幾場展會。上週，我們在明尼阿波利斯舉行的醫療設計和製造貿易展上以自己的名義進行了展出，這是先進製造活動的一部分。

Minnesota is a healthcare industry hub, and medical devices are an important market for us. We have a convincing benefit proposition for medical devices with small size, low power, and superb reliability. The nearby show was also a chance for some of our employees, who don't usually go to trade shows, to interact with customers and prospects.

明尼蘇達州是醫療保健產業中心，醫療器材是我們的重要市場。我們對小尺寸、低功耗和卓越可靠性的醫療設備提出了令人信服的優勢主張。附近的展會也為我們的一些通常不參加貿易展會的員工提供了與客戶和潛在客戶互動的機會。

We demonstrated our new high-field tunneling magnetoresistive sensors, which have a unique omnidirectional capability. And they can detect the high fields from MRI to enable MRI-tolerant medical devices. We showed our new ultra-high sensitivity tunneling magnetoresistive sensors, which are ideal for catheter position detection and navigation.

我們展示了新型高場隧道磁阻感測器，它具有獨特的全向能力。它們可以檢測 MRI 的高場，從而實現 MRI 耐受的醫療設備。我們展示了新型超高靈敏度隧道磁阻感測器，非常適合導管位置檢測和導航。

In these applications, an array of sensors on a catheter form a miniature compass using an externally generated field to determine the position of the catheter. Our sensors' small size allows them to be used in small-diameter catheters. And their precision improves positional accuracy, enabling more effective procedures.

在這些應用中，導管上的感測器陣列形成微型羅盤，使用外部產生的場來確定導管的位置。我們的感測器尺寸小，可用於小直徑導管。它們的精度提高了定位精度，從而實現更有效的程序。

We also featured a new chessboard to demonstrate the wide operating latitude and power efficiency our sensors provide in medical and industrial applications. Demos are also on our website and our YouTube channel.

我們還推出了一個新的棋盤，以展示我們的感測器在醫療和工業應用中提供的廣泛操作範圍和功效。我們的網站和 YouTube 頻道上也有示範。

We held our Annual Shareholders' Meeting in August at a nearby hotel. Unlike many companies, we returned to in-person meetings after the COVID-19 pandemic. Proxy advisory firms recommend in-person Annual Shareholders' Meetings for good governance.

我們八月在附近的一家酒店舉行了年度股東大會。與許多公司不同，我們在 COVID-19 大流行後恢復了面對面會議。代理諮詢公司建議召開現場年度股東大會，以實現良好的治理。

All of our directors and officers attended along with our auditors. We had a chance to meet our shareholders and answer questions. Our shareholders could see and try out hands-on product demonstrations.

我們所有的董事和管理人員以及我們的審計師都出席了會議。我們有機會會見股東並回答問題。我們的股東可以觀看並嘗試實際的產品演示。

In the formal meeting, each director was re-elected. Named executive officer compensation was approved. Shareholders voted in favor of annual say-on-pay votes, and the selection of our independent registered public accounting firm was ratified.

在正式會議上，對各董事進行了連任。指定執行官的薪酬獲得批准。股東投票贊成年度薪酬投票，並批准了我們獨立註冊會計師事務所的選擇。

We filed the final vote counts in a current report on Form 8-K shortly after the meeting. There's a replay of the meeting with slides and product demonstrations on our website and YouTube channel. Now I'd like to open the call to questions. Tawanda?

會議結束後不久，我們在 8-K 表的當前報告中提交了最終計票結果。我們的網站和 YouTube 頻道上有會議的重播，包括幻燈片和產品簡報。現在我想開始提問。塔萬達？

(Operator Instructions) Jeffrey Bernstein, Silverberg Bernstein Capital Management.

（操作員指示）Jeffrey Bernstein，Silverberg Bernstein 資本管理公司。

Hi, Dan. How are you?

嗨，丹。你好嗎？

Good. Hi, Jeff.

好的。嗨，傑夫。

So a couple of questions for you. Just wondering, have you delivered now all the backlog that had built up during COVID?

有幾個問題想問你。只是想知道，你們現在已經交付了新冠疫情期間累積的所有積壓訂單了嗎？

Well, we don't formally call it backlog because backlog has a gap meaning. But we do look at order flow and orders in the system, and we continue to have orders in the system. So while we've recovered from some of the shortages that plagued many in the semiconductor industry during the pandemic, we continue to have strong order flow and orders that we're continuing to fulfill.

嗯，我們不正式稱之為積壓，因為積壓有間隙的意思。但我們確實會關注系統中的訂單流和訂單，並且系統中仍然有訂單。因此，雖然我們已經從大流行期間困擾半導體行業許多人的一些短缺中恢復過來，但我們仍然擁有強勁的訂單流和我們正在繼續履行的訂單。

So in terms of your lead times, have those changed at all?

那麼就您的交貨時間而言，這些有變化嗎？

They have. It depends on the part, but our lead times are shorter. We have many parts in stock now that we didn't have in stock. We've always been better than most in the industry, we believe, during the pandemic because we are uniquely positioned in that we have integrated production here at NVE. We have front end, back end, and control over most of our processes.

他們有。這取決於零件，但我們的交貨時間更短。我們現在有很多沒有庫存的零件。我們相信，在疫情期間，我們一直比業內大多數公司做得更好，因為我們在 NVE 進行了一體化生產，因此處於獨特的地位。我們擁有前端、後端並控制大部分流程。

So we're in better shape than most in the industry. And now we're in even better shape because some of the shortages have abated. We've increased our capacity with capital investments. We've increased our staffing. And so we can offer shorter lead times or parts in stock in many -- for many of our parts.

因此，我們的狀況比業內大多數公司都要好。現在我們的狀況甚至更好，因為一些短缺已經減輕。我們透過資本投資增強了產能。我們增加了人員編制。因此，我們可以為我們的許多零件提供更短的交貨時間或庫存零件。

Yeah. Okay. And then can you just talk a little bit about the design pipeline versus pre-COVID times? Is there a significant difference in the number of designs that you guys are working on?

是的。好的。然後可以談談設計流程與新冠疫情之前的情況嗎？你們正在進行的設計數量有顯著差異嗎？

Yeah, that's an interesting question. I think it's more, but I don't know that we have data that could support that. It's just a feeling that we've had more interest, as companies are less worried about just getting parts. Then now they're looking also with new designs and longer-term things.

是的，這是一個有趣的問題。我認為更多，但我不知道我們有數據可以支持這一點。只是感覺我們更有興趣了，因為公司不再那麼擔心只是獲得零件。現在他們也在尋找新的設計和更長期的東西。

The shortages of personnel, including design personnel, that plagued the industry during the pandemic seem to have abated, at least somewhat. So we're very optimistic also based on the feedback that we've gotten on some of our specific products, including our DC-to-DC converters, some of our angle sensors, and I mentioned navigation sensors that are, in particular, useful in the medical business. So our design activity is high.

疫情期間困擾該行業的人員短缺（包括設計人員）似乎已經有所緩解，至少有所緩解。因此，基於我們對一些特定產品的回饋，我們也非常樂觀，包括我們的直流-直流轉換器、一些角度感測器，我還提到了特別有用的導航感測器在醫療行業。所以我們的設計活動很高。

Got you. And then in terms of just the overall number of customers who are ordering from you versus pre COVID, what does that look like?

明白你了。那麼，就向您訂購的客戶總數與新冠疫情爆發前相比，情況如何？

We think it's increased. Well, it has increased. We picked up some customers during the pandemic, during the shortages, and we've retained them by and large.

我們認為它有所增加。嗯，已經增加了。在疫情期間、短缺期間，我們接待了一些客戶，基本上留住了他們。

So we have more customers than we had before the pandemic. We continue to pick up customers. But as we've said before, they sometimes came for the lead time, but they stayed for the quality product and the support that they get from NVE.

因此，我們的客戶比大流行之前更多。我們繼續接客。但正如我們之前所說，他們有時是為了提前交貨而而來，但他們留下來是為了獲得高品質的產品以及從 NVE 獲得的支援。

Got you. That's great. And then, just wondering, in terms of any design wins that you've had over the last couple of years, that you think will move the needle at some point as they ramp up, or are the individual designs just never going to be that important?

明白你了。那太棒了。然後，只是想知道，就您在過去幾年中獲得的任何設計勝利而言，您認為隨著它們的增加，它們會在某個時刻發生變化，或者個別設計永遠不會成為那樣重要的？

Well, we see some especially important areas where we've had design wins. And two that I would highlight include charging stations for electric vehicles, which is a major thrust to build out the infrastructure required to support the expected increase in use of electric vehicles. And we have a design win there that we've talked about before.

嗯，我們看到了一些特別重要的領域，我們在設計上取得了勝利。我要強調的兩個問題包括電動車充電站，這是建立支援電動車使用預期成長所需基礎設施的主要推動力。我們之前已經討論過，我們在那裡取得了設計勝利。

We also have a design win in power conversion for energy storage systems, which is important for the conversion to green energy. Because green energy electricity -- mostly electricity has to be stored because the wind doesn't always blow, and of course, solar energy goes away at night. So being able to store that locally is important.

我們也在儲能係統的功率轉換方面取得了設計勝利，這對於向綠色能源的轉換非常重要。因為綠色能源電力——大部分電力必須儲存，因為風並不總是吹，當然，太陽能在晚上就會消失。因此，能夠在本地儲存它很重要。

So these are growing markets that we see as having tremendous potential, long-term potential. So those are design wins we are pleased with -- any design win. But those, of course, are important because they address large, fast-growing markets where we have a convincing benefit proposition.

因此，我們認為這些正在成長的市場具有巨大的潛力和長期潛力。因此，我們對這些設計勝利感到滿意——任何設計勝利。但這些當然很重要，因為它們針對的是快速成長的大型市場，我們在這些市場上有令人信服的利益主張。

That's great. Thanks for the help today.

那太棒了。感謝您今天的幫助。

Thanks, Jeff.

謝謝，傑夫。

(Operator Instructions) Chris Jackowski.

（操作員說明）Chris Jackowski。

Hello, thank you for taking question. I want to ask you -- on your YouTube channel, you have an example for using your chips for a GFI device and for a driver for an electric bike. Do you think those, like your prices, are practical to enter these markets?

您好，感謝您提出問題。我想問您，在您的 YouTube 頻道上，您有一個將您的晶片用於 GFI 設備和電動自行車驅動器的範例。您認為這些價格（例如您的價格）對於進入這些市場是否實用？

So you said for -- I think you said for driving electric bike motors. Yeah. So we have a YouTube video where we demonstrated several of our parts, our isolators, and our DC-to-DC converters for power conversion to drive an electric motor. In that case, it was for -- it was an electric motor that was used in an electric bike.

所以你說的是——我想你說的是驅動電動自行車馬達。是的。因此，我們有一個 YouTube 視頻，其中展示了我們的多個部件、隔離器以及用於功率轉換以驅動電動馬達的 DC-DC 轉換器。在這種情況下，它是用於電動自行車的電動馬達。

And that particular market is an interesting market for us, for the power conversion there. And we do believe that we have a competitive proposition where we can improve the efficiency of those types of systems. We can decrease the size, and we believe that it's cost effective.

對我們來說，這個特定的市場對於電力轉換來說是一個有趣的市場。我們確實相信我們有一個有競爭力的主張，可以提高這些類型系統的效率。我們可以縮小尺寸，並且我們相信這是具有成本效益的。

There's a broader market for power control of all kinds of motors. So motors use a significant portion of the electricity that's used in the world, as you might expect. And increasing that efficiency can -- even a little bit, can significantly help the overall challenge of converting to electricity and to carbon-free energy sources. So we see that as an excellent opportunity, the general category of motor control.

各類馬達的功率控制有著更廣大的市場。因此，正如您所料，馬達消耗了世界上大部分電力。提高效率，即使是一點點，也可以大大幫助解決向電力和無碳能源轉變的整體挑戰。因此，我們認為馬達控制的通用類別是一個絕佳的機會。

Can you give us some kind of a neighborhood figure as to how much efficiency gain you would have or kind of like an average industrial motor?

您能否給我們一些附近的數字，說明您將獲得多少效率增益，或類似於普通工業馬達？

Yeah, that's -- it's difficult to come up with an exact number because it depends on the motor and the application. As you can imagine, it's not like it's going to change from 50% to 99%; though, those sorts of changes -- those sorts of improvements and efficiency have been rung out in the past.

是的，那就是——很難得出確切的數字，因為它取決於馬達和應用。正如你可以想像的那樣，它不會從 50% 變成 99%；而是會改變。不過，這類改變──這類改進和效率在過去已經被考慮過。

But even slight improvements, 1% or even less than 1%, are significant because they get multiplied by a number of motors, and it turns into a lot of electricity that can be saved. So it's difficult to quantify it, but we can offer higher efficiency than conventional electronics, and that's important to our target market.

但即使是微小的改進，1% 甚至小於 1%，也很重要，因為它們會乘以多個電機，並轉化為大量可節省的電力。因此很難量化它，但我們可以提供比傳統電子產品更高的效率，這對我們的目標市場很重要。

Okay. That's good to hear. And higher efficiencies because you can say that, generally speaking, you do better current sensing than the existing systems.

好的。聽起來還不錯。效率更高，因為一般來說，您可以比現有系統進行更好的電流感應。

Exactly.

確切地。

Okay.

好的。

Yeah. Part of it is current sensing, and then part of it is the efficiency of our DC-to-DC converters. And then the other part of it is the speed of our isolators, which provide an interface between the controls and the power-switching transistors.

是的。一部分是電流感應，另一部分是我們的直流-直流轉換器的效率。另一部分是我們的隔離器的速度，它提供了控制和功率開關電晶體之間的介面。

And the reason that's important is because these transistors are very efficient when they're either on or off. But when they're transitioning, they can -- they burn electricity. So that's a major source of inefficiency. So the faster that one can switch those devices, the more efficient they become. And our devices are extremely fast.

這很重要的原因是這些電晶體在打開或關閉時都非常有效率。但當他們轉型時，他們可以——他們燃燒電力。所以這是效率低下的一個主要根源。因此，人們切換這些設備的速度越快，它們的效率就越高。而且我們的設備速度非常快。

Okay. That is good to hear. And are you -- and this is something I always ask -- but are you making inroads in kind of like more wide -- broader market industrial applications like this?

好的。這是個好消息。你是否——這是我經常問的問題——但你是否正在像這樣更廣泛的市場工業應用方面取得進展？

We are. So the question was broader markets, so you mean our traditional industrial control market and the industrial Internet of Things. And we continue to have a strong position there. We've highlighted -- we would highlight some of our smart sensors, which are used in robotics for industrial control and highly connected robotics.

我們是。所以問題是更廣泛的市場，所以你指的是我們傳統的工控市場和工業物聯網。我們在那裡繼續保持強勢地位。我們已經強調了——我們將強調我們的一些智慧感測器，這些感測器用於工業控制和高度連接的機器人技術。

Those parts have been -- we've been pleased with the reception for those parts. We continue to make isolators that provide the nerves of those systems and the sensors that provide the eyes, if you will, of the robotics that go into industrial control systems. So that remains a strong market for us.

這些零件 - 我們對這些零件的反應感到滿意。我們繼續製造為這些系統提供神經的隔離器，以及為工業控制系統中的機器人提供眼睛（如果你願意的話）的感測器。因此，這對我們來說仍然是一個強大的市場。

Okay. And another YouTube video was about using, again, your current sensors for GFI, which is kind of the safety plug you have in your bathrooms. Is that a market you can enter?

好的。另一個 YouTube 影片是關於使用當前的 GFI 感應器，這是一種浴室中的安全插頭。這是一個你可以進入的市場嗎？

I see. I missed your -- I missed that the first time you asked it. So what you were talking about would be GFI or ground-fault interrupters, or sometimes, it's called GCFI, ground-fault circuit interrupters. And we have a demonstration on our website and on YouTube that shows how to do that.

我懂了。我想念你的——我想念你第一次問這個問題的時候。所以你所說的是 GFI 或接地故障斷路器，或者有時，它被稱為 GCFI，接地故障電路斷路器。我們在網站和 YouTube 上都有演示，展示如何做到這一點。

So that's an interesting market for us. The home market, which would be in things like bathrooms and kitchens, is rather commoditized. But there is an industrial market for such devices, which we are looking at. And more importantly, we're demonstrating the extreme sensitivity and very wide range of our current sensors.

所以這對我們來說是一個有趣的市場。家庭市場，包括浴室和廚房等，已經相當商品化。但我們正在關注此類設備的工業市場。更重要的是，我們正在展示我們目前感測器的極高靈敏度和非常廣泛的範圍。

And as you correctly pointed out, current sensors are important for controlling motors and doing it efficiently. So that allows motors to become more efficient in the system. And also, our sensors use very little power themselves.

正如您正確指出的那樣，電流感測器對於控制馬達並使其高效運行非常重要。這使得馬達在系統中變得更有效率。而且，我們的感測器本身消耗的電量非常少。

So conventional current sensors might use a significant amount of power. So to measure the current in order to control the current in order to improve the efficiency, you're spending some of that savings with the current sensor. And our current sensors use very little power. So we see that as a demonstration for a particular application, but also of the broader applicability of those parts in low-power, high-sensitivity, wide-dynamic-range current sensing.

因此，傳統的電流感測器可能會使用大量的功率。因此，為了測量電流以控制電流以提高效率，您需要使用電流感測器來節省一些費用。我們目前的感測器消耗的電量非常少。因此，我們將其視為特定應用的演示，同時也展示了這些部件在低功耗、高靈敏度、寬動態範圍電流感測方面的更廣泛適用性。

All right. And for general, just the couple of days, there's been news out of Taiwan that the inventory correction is ending. Clients are ordering more chips. Are you -- have you seen this in the last week or so?

好的。整體而言，就在這幾天，台灣傳來庫存調整即將結束的消息。客戶正在訂購更多晶片。你在上週左右看到過這個嗎？

We've seen (technical difficulty) recovery of the semiconductor industry, as Daniel alluded to in the prepared remarks. And so that gives us reason for optimism for the coming quarters.

正如丹尼爾在準備好的演講中提到的那樣，我們已經看到半導體行業的（技術難度）復甦。因此，這讓我們有理由對未來幾季感到樂觀。

But have you seen it in your own orders and your own kind of requests for -- inbound interest requests (multiple speakers) --?

但是您是否在您自己的訂單和您自己的請求中看到了這一點——入站興趣請求（多個發言者）——？

We have -- so you mean purchasing from foundries?

我們有－－那你的意思是從代工廠採購？

Well, I mean, your just client inquiries and client orders. Have you seen like a cyclical uptick?

嗯，我的意思是，您只是客戶詢問和客戶訂單。您看過週期性上升嗎？

We are seeing some improvement. It's been gradual. It would be difficult to point to a particular week and say that we saw improvement. But in general, we've been seeing an improvement in the order flow, and that makes us optimistic about the future.

我們看到了一些改進。這是漸進的。很難指出某一週我們看到了進步。但總的來說，我們看到訂單流有所改善，這讓我們對未來感到樂觀。

All right. That's it for me. Thank you for your very detailed answers, and good luck.

好的。對我來說就是這樣。感謝您非常詳細的回答，祝您好運。

Thank you, Chris.

謝謝你，克里斯。

(Operator Instructions) Stephen Lewis, Lewis Capital Management.

（操作員指示）Stephen Lewis，劉易斯資本管理公司。

Good afternoon. I had a question about your bond portfolio. Have you had any change in the way it's been managed in the last three to six months? You're showing a small valuation difference of only $1 million-plus versus cost.

午安.我對您的債券投資組合有疑問。在過去三到六個月內，您的管理方式是否有任何改變？您顯示的估值與成本之間的差異很小，僅為 100 萬美元以上。

Yeah. So what we were showing for the unrealized losses in the bond portfolio, which I think is what you're referring to, is what's been happening is that, in general, interest rates have been increasing. And so that results in unrealized losses in our bond portfolio.

是的。因此，我們所顯示的債券投資組合的未實現損失（我認為這就是您所指的）是，總體而言，利率一直在上升。因此，這導致我們的債券投資組合出現未實現的損失。

So unrealized losses, meaning that while the value, when we look them up in the bank statement or we look them up online, the value is lower, but we still expect them to pay the face value or par value of the bonds. But the flip side of that is that interest rates have -- with interest rates increasing, is that it significantly increased our interest income, as you can see on the income statement.

因此，未實現的損失意味著，當我們在銀行對帳單或在線查找它們時，雖然其價值較低，但我們仍然期望他們支付債券的面值或面值。但另一方面，隨著利率上升，利率顯著增加了我們的利息收入，正如您在損益表中看到的那樣。

And that's because we've been able to reinvest our bonds as they mature in higher-interest securities than the ones that they were originally invested in.

這是因為我們能夠在債券到期時將其再投資於比最初投資的債券利息更高的證券。

That's what you're doing now?

這就是你現在正在做的事情？

Yes.

是的。

Investing in higher rate, okay.

投資更高的利率，好。

Yes. So when we reinvest in a bond that matures -- so we have bonds that mature occasionally, and then we reinvest them. And the interest rates are typically higher with the reinvestment with the new bonds than the old bonds.

是的。因此，當我們再投資於到期的債券時，我們會有偶爾到期的債券，然後我們再投資它們。新債券再投資的利率通常高於舊債券。

Some of our bonds might be several years' maturity. And so when we bought them several years ago, interest rates were lower. When we -- when those bonds mature and we can roll them over into higher-interest-rate bonds, then our interest income increases.

我們的一些債券可能有幾年的期限。因此，當我們幾年前購買它們時，利率較低。當這些債券到期時，我們可以將它們展期為利率較高的債券，那麼我們的利息收入就會增加。

Assuming you can forecast your cash flow near term, do you think you will eradicate the difference between cost and fair value by the end of the year?

假設您可以預測近期的現金流量，您認為到年底您會消除成本與公允價值之間的差異嗎？

Unlikely by the end of the year because the maturities of the bonds are longer. So we typically invest in multiyear bonds because we have strong cash flow, and we don't expect to need the funds immediately. But -- so when the bonds mature, they -- we expect them to pay their [par] value.

到今年年底不太可能，因為債券的期限較長。因此，我們通常會投資多年期債券，因為我們擁有強勁的現金流，而且我們預計不會立即需要資金。但是，當債券到期時，我們期望它們支付其[票面]價值。

So if we have $1 million bond, the book value might be lower now. But we expect it to pay off $1 million. But that will be over the term of the bond, where the value will tend to converge on the par value and then the loss will decrease.

因此，如果我們有 100 萬美元的債券，那麼現在的帳面價值可能會更低。但我們預計它將償還 100 萬美元。但這將是在債券期限內，其價值將趨於收斂於票面價值，然後損失將會減少。

Thank you. Regarding the average hearing aid business, there has been a lot of publicity about the ability to buy cheaper hearing aids without having to go through the doctor. I haven't checked to see it but has any comments on their call today, but is that business holding up versus your estimates?

謝謝。對於普通助聽器業務，已經有很多關於無需透過醫生就可以購買更便宜的助聽器的宣傳。我還沒有查看，但對他們今天的電話有任何評論，但該業務是否符合您的預期？

The hearing aid business continues to hold up. It's an important part of our market. The broader market that you referred to, about over-the-counter hearing aids and hearables, is an excellent market for us.

助聽器業務持續保持成長。這是我們市場的重要組成部分。您提到的非處方助聽器和耳戴式設備的廣大市場對我們來說是一個很好的市場。

Hearing aids are a large underserved market. The estimates are -- that only 20% of those that could use a hearing aid seek help, as you implied, that many are discouraged by the cost as well as the inconvenient dispensing.

助聽器是一個服務不足的龐大市場。據估計，只有 20% 的人可以使用助聽器尋求幫助，正如您所暗示的，許多人因費用和配藥不方便而望而卻步。

So having over-the-counter hearing aids and lower-cost hearing aids, we believe, will expand the market. And we have a convincing benefit proposition in hearing aids. So we see that as a good long-term opportunity.

因此，我們相信，擁有非處方助聽器和低成本助聽器將擴大市場。我們在助聽器方面有令人信服的益處主張。所以我們認為這是一個很好的長期機會。

Have you secured an OTC backlog?

您是否已獲得 OTC 積壓訂單？

We have talked about some design wins in that space and the broader hearables market, which would be things that would go in once here but may not necessarily be a hearing aid. It's a relatively small market now, but we expect it to grow.

我們已經討論了該領域和更廣泛的耳戴式設備市場中的一些設計勝利，這些東西將在這裡出現，但不一定是助聽器。現在這是一個相對較小的市場，但我們預計它會成長。

Probably, you said you are pleased with the solid earnings for the quarter and the six months. Does that mean that the actual results for the quarter September were within 3% to 5% of your estimate going into the quarter (inaudible) pleased?

您可能說過您對本季和六個月的穩健收益感到滿意。這是否意味著 9 月季度的實際結果與您進入該季度的預期（聽不清楚）相差 3% 到 5% 之內？

Well, we were pleased under the circumstances of the industry downturn and the -- as Daniel mentioned in the prepared remarks, that we have a defense business that can be lumpy and can be somewhat volatile. And it wasn't -- it was down significantly in the September quarter, but we expect it to recover in coming quarters.

好吧，我們很高興在行業低迷的情況下——正如丹尼爾在準備好的發言中提到的那樣，我們的國防業務可能不穩定並且可能有些波動。但事實並非如此——它在九月季度大幅下降，但我們預計它將在未來幾季恢復。

So in the context of the industry and the particular effects of the defense -- and the particular lumpiness of the defense business for us, we were pleased with the results. We were certainly pleased with the cash flow and the profitability that Daniel mentioned in the prepared remarks.

因此，在產業背景和國防的特殊影響以及國防業務對我們的特殊影響的背景下，我們對結果感到滿意。我們當然對丹尼爾在準備好的評論中提到的現金流和盈利能力感到滿意。

You were pleased that the results were what you expected earlier at least three months?

您對結果符合您至少三個月前的預期感到高興嗎？

Well, we don't provide -- as you probably know, we don't -- like most companies, we don't provide forward-looking guidance, so there's not much to compare to. But we look at it and say, how did we do given the environment and given the difficulty of the (technical difficulty)? So yes, we were pleased with how our folks executed in delivering orders and bringing in new business, and the profitability, the efficiency, and the execution that our team had for the quarter.

好吧，我們不提供——正如您可能知道的那樣——像大多數公司一樣，我們不提供前瞻性指導，所以沒有太多可比較的。但我們看看它並說，考慮到環境和（技術難度）的難度，我們做得怎麼樣？所以，是的，我們對我們的員工在交付訂單和引入新業務方面的執行情況以及我們團隊本季度的盈利能力、效率和執行力感到滿意。

You're pleased with the backlog?

您對積壓情況滿意嗎？

We're pleased with the order flow, given the industry conditions. But the industry is improving, as we touched on in other questions. And we expect -- the expectations are for a much stronger semiconductor market in the coming year in calendar 2024.

考慮到行業狀況，我們對訂單流感到滿意。但正如我們在其他問題中談到的那樣，該行業正在改善。我們預計，2024 年的半導體市場將會更加強勁。

Thank you very much.

非常感謝。

Thank you, Stephen.

謝謝你，史蒂芬。

(Operator Instructions) [Pete Previte].

（操作員說明）[Pete Previte]。

Hi, Dan. With the significant patent portfolio the company has, do you see any opportunities to license some of those patents to create additional revenue streams?

嗨，丹。憑藉該公司擁有的重要專利組合，您是否認為有機會授權其中一些專利來創造額外的收入來源？

We've looked from time to time at the possibility of licensing. And in particular, we talked about licensing our MRAM portfolio. We were a pioneer in MRAM, which is spintronic memory. But our target market for that technology is in high-value, low-density memories where we can build the type of fab that can be used as opposed to the multibillion-dollar fabs that make large-scale memories.

我們不時研究許可的可能性。我們特別討論了 MRAM 產品組合的授權問題。我們是 MRAM（自旋電子記憶體）領域的先驅。但我們該技術的目標市場是高價值、低密度記憶體，我們可以在其中建造可使用的晶圓廠類型，而不是製造大規模記憶體的數十億美元的晶圓廠。

So there's an opportunity for potentially licensing -- it's a long-term opportunity. And then we have other ways of monetizing our intellectual property. We're very proud of our portfolio of intellectual property. And one way we can monetize that is private label sales, where we sell our products under another company's brand name.

因此，存在潛在的許可機會——這是一個長期的機會。然後我們還有其他方式將我們的智慧財產權貨幣化。我們對我們的知識產權組合感到非常自豪。我們可以透過自有品牌銷售獲利的一種方式，即我們以另一家公司的品牌名稱銷售我們的產品。

So we're still manufacturing it. We're proud of our manufacturing capability. And so licensing the technology and not making it means giving that up.

所以我們仍在製造它。我們為我們的製造能力感到自豪。因此，獲得技術許可而不製造它就意味著放棄。

And it's also -- in some cases, we've invested quite a bit in the technology and in the infrastructure, and it's not that easy for somebody else to build it. But we do explore opportunities to leverage our intellectual property portfolio in other ways than simply selling parts under our own brand.

而且在某些情況下，我們在技術和基礎設施上投入了大量資金，而其他人建造它並不那麼容易。但我們確實探索以其他方式利用我們的智慧財產權組合的機會，而不僅僅是以我們自己的品牌銷售零件。

Great. Thank you very much.

偉大的。非常感謝。

Thanks, Pete.

謝謝，皮特。

(Operator Instructions) Collin McBirney, Topline Capital Management.

（操作員指令）Collin McBirney，Topline Capital Management。

Hi, Dan. Thanks for taking the question. I was wondering on the -- in the past, you've talked about the lumpiness in defense. Could you maybe just comment like outside of -- if you kind of set aside defense, maybe either for the quarter or for the first half? Like is the business outside of defense, like, flat or -- just to get a sense for kind of the run rate.

嗨，丹。感謝您提出問題。我想知道——過去，你談到了防守的不穩定。你能否像外界一樣發表評論——如果你放棄防守，也許是在本季或上半場？就像防守之外的事情一樣，例如，平局或——只是為了了解跑動率。

Yeah, that's -- we don't break down precisely our defense versus non-defense business. But defense was a major influence on the most recent quarter, on the September quarter.

是的，那就是——我們沒有準確地分解我們的國防業務和非國防業務。但防守對最近一個季度（即九月的季度）產生了重大影響。

And as I mentioned in response to a prior question, we were pleased with the results, setting that aside for the non-defense business. It has been a slow industry, and that affects us. But the defense was a particular -- that was a particular drag on revenue in the most recent quarter.

正如我在回答之前的問題時提到的，我們對結果感到滿意，並將其留給非國防業務。這是一個緩慢的行業，這影響了我們。但防守是一個特別的問題——這對最近一個季度的收入造成了特別的拖累。

Got it. And then on the defense business, are those orders placed by, like, the US government like the DLA or something? Or are they typically placed by a prime contractor? And then maybe you could just like touch on like maybe how many like customers you have in defense.

知道了。那麼在國防業務方面，這些訂單是由 DLA 之類的美國政府發出的嗎？或者它們通常是由主承包商放置的？然後也許你可以談談你在國防方面有多少類似的客戶。

Like is it one that places an order for a couple of million dollars? Or is it like 10 of them, and they kind of come in lumpy -- I mean, it sounds like it's very lumpy. But is that because there's like one customer, the US government or something or -- yeah?

例如下訂單價值幾百萬美元？或者是像 10 個一樣，而且它們有點塊狀——我的意思是，聽起來像是非常塊狀。但這是因為有一個客戶、美國政府還是其他東西——對嗎？

The customers are typically prime contractors, defense contractors. And it's not one, but it's not large number either. There's a relatively small number of large defense contractors.

客戶通常是主承包商、國防承包商。而且數量不是一個，但也不是很大。大型國防承包商的數量相對較少。

And so the lumpiness tends to be tied to defense procurement cycles. And our products that we sell into the defense industry are primarily anti-tamper products, which are used to protect electronic technology in large systems.

因此，這種不穩定性往往與國防採購週期有關。我們向國防工業銷售的產品主要是防篡改產品，用於保護大型系統中的電子技術。

So those tend to be tied to particular procurement systems for the large defense system. We can't say what types of systems they are, and we often don't know for obvious reasons. But they tend to be things that take a while to build and their -- so we get big orders when the systems are starting to be built, and then they can sometimes drop off. And that's what happened in the September quarter.

因此，這些往往與大型國防系統的特定採購系統有關。我們無法說出它們是什麼類型的系統，而且我們常常出於明顯的原因不知道。但它們往往需要一段時間才能構建，因此當系統開始構建時我們會收到大訂單，然後它們有時會下降。這就是九月季度發生的情況。

Got it. Okay. And then do you have a sense for -- without getting into specifics, I mean, are some of the equipment used in Ukraine and/or kind of Israel's response to the recent terrorist attacks like -- I mean, it seems like the environment for defense spending over the next year is as good or better than it was a year ago. And I guess, how do you kind of triangulate that in terms of the kind of go-forward expectations versus where things have been?

知道了。好的。然後，您是否了解 - 我的意思是，烏克蘭使用的一些設備和/或以色列對最近恐怖襲擊的反應，例如 - 我的意思是，這似乎是明年的國防開支與一年前一樣好，甚至更好。我想，你如何根據未來的預期與過去的情況來進行三角測量？

Yeah. That's a good point, Collin. We would certainly hate to have to say that those conflicts are good for business. But what the government has said publicly, what the Defense Department has said, is that it's important to protect electronics for systems that are going to foreign sales to allied sales. Because those tend to be especially vulnerable to reverse engineering and falling into unfriendly hands.

是的。這是一個很好的觀點，科林。我們當然不願意說這些衝突對商業有利。但政府和國防部公開表示，保護將向國外銷售給盟軍的系統的電子產品非常重要。因為這些往往特別容易受到逆向工程的影響並且落入不友善的手中。

So in that sense, I suppose it's a positive environment for our defense sales. These are relatively long procurement cycles. So it's not something where if a defense system is shipped, we're immediately gaining revenue from it. We do look at it, though, that we're proud to do our part, a small part but an important part, of protecting the US technology and protecting ours and our allied war fighters.

因此，從這個意義上說，我認為這對我們的國防銷售來說是一個積極的環境。這些都是相對較長的採購週期。因此，如果防禦系統出貨，我們不會立即從中獲得收入。不過，我們確實認為，我們很自豪能夠盡自己的一份力量，保護美國技術並保護我們和我們盟國的戰士，雖然是一小部分，但很重要。

Okay. Great. That makes sense. And obviously, personally, I fully support the US military. It is -- and maybe last one I had, just on -- I think if I -- I know it's going to serve me correctly. I think sometime, you guys said that fiscal '24 -- your fiscal '24 revenue would be somewhat similar to your fiscal 2023 revenue. Obviously, the first half was kind of started a little bit lower.

好的。偉大的。這就說得通了。顯然，就我個人而言，我完全支持美國軍隊。它是——也許是我最後一個，就在——我想如果我——我知道它會正確地為我服務。我想有時候，你們說 24 財年──你們 24 財年的收入會與 2023 財年的收入有些相似。顯然，上半場開局有點低。

I mean, that would sort of imply something closer to like $11 million a quarter for 3Q and 4Q each. I mean, is something like that potentially feasible? Or is there kind of a change in maybe the outlook, or maybe I misunderstood previous comment?

我的意思是，這在某種程度上意味著第三季和第四季各季度接近 1100 萬美元。我的意思是，類似的事情可能可行嗎？或者前景是否發生了變化，或者我誤解了先前的評論？

Yeah. Collin, I think the comments we made before about revenue being the same was within the context of anti-tamper sales. So we were actually discussing -- talking about the lumpiness of the anti-tamper sales business.

是的。科林，我認為我們之前關於收入相同的評論是在防篡改銷售的背景下進行的。所以我們其實是在討論防篡改銷售業務的混亂狀況。

And we -- the comment we made was specifically related to that. We did not expect to see a significant difference in the lumpiness of that business, and not particularly revenue for the -- for full fiscal 2024. So yeah.

我們所做的評論與此特別相關。我們預計 2024 財年整個財年該業務的混亂程度不會出現顯著差異，尤其是收入。所以是的。

Okay. Got it. And so, presumably, the kind of the positive lump into kind of 2Q '23 and then the positive lump in 4Q '23, those were both from the defense. So assuming that comment still holds, you guys would have kind of a couple of positive lumpiness to match last year's lumpiness?

好的。知道了。因此，大概是 23 年 2 季的積極進攻，以及 23 年 4 季的積極進攻，這些都是來自防守。因此，假設這個評論仍然成立，你們會有一些積極的塊度來匹配去年的塊度嗎？

We expect anti-tamper sales -- defense sales to increase. We expect defense sales to recover in the remaining quarter of fiscal 2024. But as far as the timing, it's hard to say, again, because of the lumpiness of this part of our business. Because, as Dan mentioned in his comment, sales are tied to defense procurement cycles and defense contracts, which can be terribly difficult to predict.

我們預計防篡改銷售—國防銷售將會增加。我們預計國防銷售將在 2024 財年的剩餘季度內恢復。但至於時間，很難說，因為我們這部分業務的不穩定。因為，正如丹在評論中提到的那樣，銷售與國防採購週期和國防合約息息相關，而這可能非常難以預測。

Got it, understood. Okay, great. Well, thank you guys. Appreciate it.

明白了，明白了。好的，太好了。嗯，謝謝你們。欣賞它。

Thank you. I'm showing no further questions in the queue. I would now like to turn the call back over to Dan for closing remarks.

謝謝。我在隊列中沒有顯示任何其他問題。我現在想將電話轉回給丹，讓他發表結束語。

Well, thanks, everyone. We were pleased to report strong earnings and increased cash flow despite the challenging conditions. We look forward to speaking with you again at our next earnings call in January.

嗯，謝謝大家。儘管條件充滿挑戰，我們很高興地報告強勁的收益和增加的現金流。我們期待在一月份的下一次財報電話會議上再次與您交談。

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

女士們、先生們，今天的電話會議到此結束。感謝您的參與。您現在可以斷開連線。