NVE Corporation NVEC
Q3 2011 Earnings Call Transcript

Operator: Steven Crowley, Craig-Hallum Capital Group.

Steven Crowley - Craig-Hallum Capital Group: A few questions. In terms of the contract R&D business, you spent a little time on the prepared comments talking about how that can be quite productive downstream in your product development and your product sales. There has been a little bit of variability in that business line. Year-to-date, it seems to have stabilized in the $1.2 million to $1.4 million range in the last two quarters. What can you tell us about the pipeline for those projects and what kind of revenue component we should plan on from that segment of your operations?

Curt A. Reynders - CFO: Well, Steve, we don't have specifics to provide, but and as you know our contract R&D revenue can fluctuate depending on timing and availability of awards, as well as follow-on funding. Follow-on funding is dependent on results, and we have had some promising results on certain contracts, which has enabled us to receive additional funding.

Steven Crowley - Craig-Hallum Capital Group: That sounds encouraging that we shouldn't be expecting a big drop-off in that business to say the least, or how should we think about that revenue component as this year has progressed? Clearly the baton for growth has been passed to the product side of the business, and that seems to be appropriate, but it doesn't sound like there is a slippery slope on the contract R&D side?

Curt A. Reynders - CFO: Well, as we've said in the past, our vision is to increase the product sales, and that relies much on contract R&D. We do pursue R&D contracts in strategic areas, and we have seen this year. We have seen some additional funding from those efforts.

Steven Crowley - Craig-Hallum Capital Group: Now, in terms of your product sales, you had a very good quarter. You pointed out the strength on the industrial side of our business, but can you tell us a little bit about the performance of the medical side of your business? Was it solid, was it dampened by any strange factors in the period? How would you characterize it?

Daniel A. Baker - President and CEO: We were pleased with our sales into the medical sector, Steve. We were just commenting on our – when we were commenting on the excellent growth, the year-over-year growth, particularly in a historically weak quarter, I think we found that the industrial market have recovered pretty well and that may have been the reason for the reversal of the seasonal pattern. We're seeing some signs of improvement in the manufacturing economy, which is very encouraging, but I think we were pleased with our results across the board, including our sales into the medical markets.

Steven Crowley - Craig-Hallum Capital Group: On the industrial side, besides maybe some encouraging macro trends there, have you seen acceptance of some newer products like the controller area network stuff or some new applications, a noticeable component of your success in that market?

Daniel A. Baker - President and CEO: We have seen some excellent interest in the controller area network products and other new products, such as new sensors and the very small packages that I alluded to you when we talked about the calendar 2010 accomplishments. So we were pleased with that. We're seeing some strength in manufacturing automation, as I alluded to. We're also seeing some strength in environmental controls, which is a relatively fast-growing area. That would be controls that help save energy that support alternative energy systems, such as solar and wind power where efficiency in converting that energy into electricity is becoming more and more important. So, those would be the ones that I'd highlight.