NVE's CEO Discusses F3Q 2014 Results - Earnings Call Transcript

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 |  About: NVE Corporation (NVEC)
by: SA Transcripts

NVE Corporation (NASDAQ:NVEC)

F3Q 2014 Earnings Conference Call

January 22, 2013 17:00 ET

Executives

Dan Baker - President and Chief Executive Officer

Curt Reynders - Chief Financial Officer

Analysts

Steven Crowley - Craig-Hallum Capital

Greg Greenberg - Wells Fargo Advisors

Kevin Sonich - RK Capital

Operator

Good day, ladies and gentlemen and thank you for your patience. You joined the NVE Conference Call on Third Quarter Results. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions) As a reminder, this conference maybe recorded.

I would now like to turn the call over to your host, the President and CEO of NVE Corporation, Mr. Dan Baker. Sir, you may begin.

Dan Baker - President and Chief Executive Officer

Thank you. Good afternoon and welcome to our conference call for the quarter ended December 31, 2013 the third quarter of fiscal 2014. As always, I am joined by Curt Reynders, our Chief Financial Officer. This call is being webcast live and being recorded. A replay will be available through our website, nve.com.

After my opening comments, Curt will present a financial review of the quarter and fiscal year to date. I will cover business items and we’ll open the call to questions. We filed our press release with quarterly results plus our quarterly report on Form 10-Q with the SEC in the past hour following the close of market. Both filings are available through our website.

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, uncertainties relating to future revenue and growth, uncertainties related to future R&D contracts, risks related to developing marketable products, uncertainties relating to the revenue potential of new products, litigation risks as well as the risk factors 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, 2013. The company undertakes no obligation to update forward-looking statements we may make.

We are pleased to report a solid increase in product sales and strong earnings for the quarter. For the quarter, product sales increased 12% and net income was $0.57 per diluted share. For the first nine months of the fiscal year, operating cash flow increased 17%.

Now, I will turn the call over to Curt for details of our financial results.

Curt Reynders - Chief Financial Officer

Thanks Dan. Total revenue for the third quarter of fiscal 2014 decreased 1% to $6.47 million due to a 97% decrease in contract research and development revenue nearly offset by the 12% increase in product sales. Contract R&D revenue decreased due to the completion of certain contracts and contract activities. This continued to be a challenging environment for government funding, but we are optimistic about future contract R&D revenue. The increase in product sales was due to increased sales in the medical device market. Gross profit margin increased to 78% of revenue for the third quarter of fiscal 2014 compared to 73% for the third quarter of fiscal 2013 due to a more favorable revenue mix and a more favorable product sales mix.

Total expenses increased 35% for the third quarter of fiscal 2014 compared to the third quarter of fiscal 2013 due to an 81% increase in research and development expense partially offset by a 5% decrease in selling, general and administrative expense. The increase in R&D expense was due to increased product development activities and a decrease in contract R&D, which allowed us to reallocate R&D resources to expensed R&D. We believe the investment in R&D will pay off in future revenues. Interest income decreased 12% due to lower interest rates on our marketable securities. The provision for income taxes was a slightly lower percentage than the prior year quarter, 32.4% of income before taxes compared to 32.8% last year because of lower effective tax rates.

Net income for the third quarter was $2.78 million, or $0.57 per diluted share compared to $2.9 million or $0.60 last year. The decrease in net income was primarily due to the large decrease in R&D revenue and large increase in R&D expense. We are optimistic we can bring in more contract R&D revenue in the future, which would also tend to reduce expensed R&D. For the fiscal so far the first nine months of fiscal 2014, product sales were up 9% and total revenue increased slightly to $20 million as the increase in product sales was partially offset by an 83% decrease in contract R&D. Gross profit margin increased to 78% of revenue for the first nine months compared to 74% for the first nine months of fiscal 2013 due to a more favorable revenue mix, a more favorable product sales mix and more efficient product manufacturing.

Net income for the first nine months decreased 2% to $8.57 million or $1.76 per share. The slight decrease in net income in the first nine months of fiscal 2014 compared to the prior year period was primarily due to the large decrease in R&D revenue and increase in R&D expense. Operating cash flow or net cash provided by operating activities increased 17% to $9.82 million for the first nine months of the fiscal year compared to $8.42 million in the prior year. Purchases of fixed assets were approximately $34,000 for the first nine months of the fiscal year compared to $1.61 million for the first nine months of last year. Last year’s investment was unusually high for us as we expanded and upgraded our production capabilities to support future growth. With strong earnings and the completion of our expansion we generated excellent free cash flow. Free cash flow which is operating cash flow, less capital expenditures increased 44% to $9.78 million for the first nine months of the fiscal year compared to $6.81 million the prior year.

We have also spent approximately $1.26 million in the fiscal year to repurchase shares of our common stock. As of December 31, cash plus marketable securities was $92.8 million, an increase of $7.58 million in the fiscal year even with the share repurchases. Also of note, our assets and shareholders’ equity both crossed $100 million for the first time. This meant we had to add another digit to our balance sheet columns but it’s evidence of how far NVE has come in increasing shareholder value over the years. Total assets were $102.2 million and shareholders’ equity was $100.8 million. When Dan and I joined NVE in 2001 shareholders’ equity was about $2 million.

Now I will turn it over to Dan for his perspective on our business. Dan?

Dan Baker - President and Chief Executive Officer

Thanks Curt. I will cover R&D contracts, product development and review some of our accomplishments in 2013. Starting with contract R&D, we are more than halfway through one year National Science Foundation Project Grant titled Real Time Detection for Salmonella. The project is to develop biosensors for enhanced food safety and cooperation with the University of Minnesota and the University of Florida. The goal is to develop sensors with faster detection of food borne pathogens than existing techniques, while retaining sensitivity. In the past quarter, we made good progress in each of three key project areas, spintronic sensors, nano-beads with aptamers and microfluidics.

We are also in discussions with food producers about their specific needs. Despite a challenging government funding environment in the past quarter, we were selected for the award of a Missile Defense Agency small business innovation research Phase 1 contract titled spintronics-based Physical Unclonable Functions. The contract is for six months and approximately $125,000. A Physical Unclonable Function, PUF or PUF is a function that’s embodied in a physical structure and is easy to evaluate, but hard to predict. Their proposal is for spin PUFs based on existing and future spintronics. Possible applications include commercial high-speed encryption. A committee of government scientists, engineers and technical managers recommended our proposal as a promising approach for the MDA, our principal investigators, Dr. Joe Davies who is recognized as an expert on anti-tamper technologies. There is a link to an abstract approved by the MDA for public release from the – in the news page of our website.

Turning to product development, we continue testing and development of controller area network couplers or in-car networks and other applications. One of our key advantages is our products are half the size of conventional devices. Feedback from potential customers is the size is an important advantage. So in the past quarter, we began development of structures for even smaller parts, which would be one fourth the size of conventional devices. We see automotive electronics as a promising large potential market. In the past quarter, we expanded our new top of the line coupler family with two new part types that contain four data channels. Four channel couplers are some of our most popular configurations for industrial control and factory automation. And these new products have a combination of best-in-class features for that market. And finally in the past quarter, NVE couplers were certified under VDE 0884, a German gold standard for high-voltage performance of components of this type. This certification should be especially evaluable in Germany and is also important worldwide for smart grid applications.

As we began 2014, we look back on 2013 as a very successful year for NVE with new products, new distribution and expansion. New products in the past year included current sensor samples, IL800-Series top of the line couplers, smaller network couplers, low cost network couplers and several new and custom medical device sensors. In addition to developing new products, we upgraded several key product specifications to keep our products best-in-class. These specification upgrades were possible because of tighter process control and more mature manufacturing processes. Specifications that were upgraded included ruggedness specifications such as the ability to withstand high voltage for a very long time and to tolerate extremely fast high-voltage transients.

We also specified lower power consumption on many of our products for improved energy efficiency. New distribution in the past year included Newark element14 in North America, CFC Electronic in Italy, IS-POWER in Turkey and Jingshi Technologies in China. And early in 2013, we expanded production capabilities, including a new clean room bay. And finally during the year, we deployed and optimized several new pieces of production equipment with goals of increasing capacity to enable future growth, improve our efficiency to reduce our product cost and equipment redundancy for reliability of supply even if there are unanticipated equipment failures.

With that, we will open the call for questions. Latif?

Question-and-Answer Session

Operator

Yes sir. (Operator Instructions) Our first question comes from Steven Crowley of Craig-Hallum Capital. Your line is open.

Steven Crowley - Craig-Hallum Capital

Good afternoon gentlemen.

Dan Baker

Good afternoon Steve.

Steven Crowley - Craig-Hallum Capital

In terms of some follow-up questions on some of your prepared commentary, you mentioned about some of the new product iterations and capabilities you brought to market during calendar 2013, in the medical area, in the industrial area and new segments of the industrial area, can you flush out some of the applications for these products that a real world where you are – where you have had some traction at least starting acceptance of those products versus just where they might be able to fit? We would love to hear the customer and the size of the market and all that stuff, but you are probably not going to go there, but maybe you can put some meat on the bones of where you have seen some acceptance at least in the general neighborhood?

Dan Baker

Yes, that’s a great question Steve. This is Dan. So a number of the areas we mentioned, for example, are price sensitive customers and the low cost network couplers, which were new products that we introduced in the past year and so a lot of what those go into are modules that are interconnected, so more and more modules in factory automation are being connected to central control systems. So more and more automation, more and more robotics, more and more processes that used to be – have to be done by people which are being done now by machines and equipment, more information coming back to the central control systems and this allows for more efficient factories, lower-cost goods and we are especially seeing some traction on those types of products the industrial control factory automation in Asia.

Another area that I would highlight is energy management and energy efficiency and I mentioned that we had improved the energy efficiency specifications of a number of our products. And so what many people are using our products for is to improve the energy efficiency of their processes. So for example things like factories, things like process control, process engineering plants where they are more and more sensitive to using energy wisely, to save money and to reduce their carbon footprint. And our products are ideal for that because of the inherent low power that spintronics requires because there is no energy required to keep the products – to keep the products going, there is only energy required at the transitional state. So those are a couple of areas that I would highlight, but I think we were pleased with how things were going with the new products across the board.

Steven Crowley - Craig-Hallum Capital

And then in terms of medical, you mentioned some new custom sensors, can you talk about some of the neighborhoods that those are pointed toward or already in?

Dan Baker

There are several areas. Probably, the two most important are implantable medical devices. And I think most of our listeners are familiar with our leadership in CRM cardiac rhythm management implantable devices. We are also gaining traction in neuro-stimulators. And we have also gotten some good early design wins in non-implantable medical devices. So these would be external medical devices where power consumption reliability are very important. So we are as I think we talked about before, our strategy is to branch out from our traditional strength in life-support medical devices, into non-life-support medical devices and I think we are making some very good headway in those areas. Although it is somewhat early and sometimes those are fairly long design cycles, but we have gotten interest in new products we have responded with new and custom products. In many cases, our customers pay for those. And that’s an area the non-life-support medical device is an area that we see is very promising.

Steven Crowley - Craig-Hallum Capital

Is it safe to say while you have had design wins and definitive indication of growth prospects in those areas, their contribution really hasn’t been all that noticeable in the past and maybe in the future and so many words in your mouth?

Dan Baker

No, I think that’s fair that these are when we are talking about new products in the past year these are early in the design stages, but there has been enough interest in our customer – from our customers that they were interested in customizing the products for their particular needs, sometimes that’s size, sometimes that’s electrical interface or other characteristics and that tends to be a high value activity for us. And it’s very good long-term business and I think it bodes well for the future.

Steven Crowley - Craig-Hallum Capital

And in terms of your traditional businesses and customers the December quarter can sometimes have that that end-of-the-year phenomenon at customers who want to lean out inventories, look good at the report card stage and was there that kind of phenomenon that you saw in your respective markets of medical and industrial, was it notable or noticeable or not really?

Curt Reynders

Steve, this is Curt. We really didn’t see any evidence of anything unusual as far as customer inventories. And as you had mentioned the third quarter historically often is one of our weaker quarters, which that can be tied back to holidays and also some of our customers that shutdown late in the calendar year, but I think overall we are pretty positive about future product sales.

Steven Crowley - Craig-Hallum Capital

Great. And in terms of helping us understand two elements of the equation that are somewhat intertwined. I will ask two questions then I will hop back in the queue, but the decline in contract R&D that’s been pretty breathtaking. I mean, you are down to pretty much nil, but it sounds like besides hitting mathematical – near mathematical bottom, there are some improving prospects maybe with what’s loosened up in Washington, maybe with some of the projects that you have identified and pursued and maybe even won at this stage. Can we see a bounce back to at least a couple of hundred thousand dollars a quarter in contract R&D pretty quickly? And how should we think about that as ongoing portion of your revenue mix regards to who get to try to model your company?

Curt Reynders

Yes, Steve. It’s still been a pretty challenging environment for government contracts, but we are optimistic about future contract revenue growth from the most recent quarter, although probably not to the levels we saw a year ago. Dan did mention the MDA contract that we won, that came in right at the end of the third quarter. So that particular contract, we have not recognized revenue from yet. And we are also pretty optimistic with some of the positive feedback we have received on some of the proposals, but I would say we wouldn’t to any potential new revenue until probably the first quarter of the next fiscal year.

Steven Crowley - Craig-Hallum Capital

Revenue, okay. Now in the intertwined part of this equation that I was going to ask about R&D is much higher than a year ago. Part of that is the shift of resources from what would have been absorbed by that contract R&D into your own project, but is there any way to parse that such that we understand on an apples-to-apples basis, what your NVE specific and NVE directed current R&D efforts are up year-over-year. Maybe it’s just reflected in the numbers where before there was a couple of $300,000 that was reflected in customer funded activity or maybe there is that total number that you give us for the year, the combination of the two buckets. I am just wondering in terms of your total capabilities, how much is really going on more than a year ago?

Curt Reynders

As far as – well, it’s kind of hard to quantify the R&D expense item that we show on our income statement. All of that is or the vast majority of that is related to internally funded research and development. Basically, the cost for the contracts, are primarily in the cost of sales line, but yes…

Steven Crowley - Craig-Hallum Capital

On an annual basis, Curt, you gave us a number that’s kind of the combination of NVE funded and customer funded R&D?

Curt Reynders

Right.

Steven Crowley - Craig-Hallum Capital

I am just wondering if you were to total both of those buckets up in the third quarter whether it would look relatively comparable in total year-over-year, just you guys bearing more the brunt of it or whether or not you kind of expanded your efforts in your footprint in R&D?

Curt Reynders

Yes, yes. I don’t have that exact number with me, but I would say it’s probably a little bit higher than last year that the total R&D effort for internal and the contract R&D.

Steven Crowley - Craig-Hallum Capital

Okay, that’s helpful. I will hop back in the queue and maybe come back with a few more. Thanks.

Operator

Thank you. (Operator Instructions) Our next question comes from Greg Greenberg of Wells Fargo Advisors. Your line is open.

Greg Greenberg - Wells Fargo Advisors

Good afternoon. I know you are hesitant even to update on the Everspin litigation, but at least can you give us – remind us what’s in the public domain as far as the last court date and what the next scheduled court date is?

Dan Baker

So the question about the Everspin litigation, the lawsuits that we filed – we filed the lawsuit against them that a lawsuit has been stayed pending patent office review what’s called an inter-parties review of the patents until June, so there is not a lot of court activity there. There is a lawsuit pending also where Everspin sued us and that is proceeding through the courts. We didn’t give any, there was no – there were no material updates, so there was nothing in our 10-Q about legal proceedings about that.

Greg Greenberg - Wells Fargo Advisors

Okay. And then kind of along the similar line over the years we talked about sort of having this cash as a deterrent as well as to be able to defend yourselves and the exact case is on Everspin and obviously in last quarter, in the quarter you just ended you did not buyback any stock, correct but the previous quarter you did?

Dan Baker

That’s correct. So for the fiscal year we bought back a little over $1.2 million in stock for the fiscal year.

Greg Greenberg - Wells Fargo Advisors

Okay and so in cash and securities they are now somewhere in $90 million.

Curt Reynders

Right, they are about $92 million.

Greg Greenberg - Wells Fargo Advisors

Okay. And is there sort of a number that you feel you need to have as far as this war chest?

Curt Reynders

There is not a specific number. We do continuously look at how to best allocate capital, to maximize long-term shareholder value. And we talked about the - we talked about the buyback, we talked about the litigation. We are also – we also think a strong balance sheet is important for the possibility of opportunistic acquisitions and for hedge against contingencies. But we are always looking at how best to allocate capital. So we will have to see, but we don’t have any specific numbers where that will trigger any particular actions.

Greg Greenberg - Wells Fargo Advisors

Okay, I think you guys are doing a fantastic job, it’s exciting to see the revenue – the product revenue growth which is really what matters here long-term and it’s being obviously a little bit matched by the decline in contract R&D, but you guys have done a great job, it’s fun to watch and hopefully we will see some sort of maybe stair step function with the new products in the next few years. Thanks.

Dan Baker

Well, thank you. We are certainly going to do our best.

Operator

Thank you. Our next question comes from the line of from Kevin Sonich of RK Capital. You line is open.

Kevin Sonich - RK Capital

Thanks. Hi guys.

Dan Baker

Hi Kevin.

Kevin Sonich - RK Capital

So that last question is a great segue into what I wanted to ask you about on taking the contract R&D out of the mix and just looking at product revenue. You have often talked about it being unfair to look at quarterly just quarterly results and I think that’s a fair way to think that’s a fair warning, but on the last three quarters we have seen can product revenue growth from as much as 38% to as little as minus 15% year-to-year, but even on trailing four quarter basis over the last few quarters we have seen minus 7% to this quarter if my math is right 3% to 4% year-to-year growth on a trailing four quarter basis. And it’s an improve again next quarter assuming even if revenues are flat with last year it will improve a little bit.

And so I guess what I wanted to ask is I think it was Curt mentioned feeling pretty positive about future product sales and I know for you guys or I will make the assumption anyway for you guys that doesn’t mean 3% or 4% kind of product sales growth I suspect that’s kind of well into the double-digit product growth something more akin to what we have seen in the last six months on a year-to-year basis? And then – and with that assumption I guess I am curious what you think drives that, is it – is it mostly the existing product portfolio with perhaps some additional option, kind of optionality layered on top of that from some of the new products, is it stuff that you have already started to sell, you have already commercialized and you are starting to see it ramp maybe things where you have been designed in but haven’t started selling yet or even earlier in the kind of in the – even earlier stage than that?

Dan Baker

Well, that’s a good question. I am not to dodge the question, but it’s combination, it’s existing products where we can grow with our customers, it’s new products, it’s winning new design wins from new customers to us. We talked about, for example, an answer to a previous question about design wins that we have in new and custom medical device sensors. So that’s a new area that will build over time. And sometimes, these things take a while, but we are already seeing results from new products. We have had a very successful year for new product introductions I mentioned some of them in the prepared remarks. And we are starting to see some of the results from that opening up new markets or sub-markets to us, opening up new customers and applications with our new products. Some of them are incremental, but some of them are really quite dramatically better products or different products. So it’s a combination of things. We look both at the near term and the long term. And we believe both are important. So we are looking at markets that have various stages, various lengths of design cycles. And we think that with a ladder of those that we are going to build a strong foundation for growth. We have already seen results of that as you mentioned in the second half of the calendar year.

Kevin Sonich - RK Capital

Thanks for that. Without any kind of blockbuster developments something like maybe the sensors on the food safety side or the auto market really opening up – understanding those are all very real opportunities and you are going to be pursuing them unless you thought. You can make strides there, but if we take that off the math just for a second and we look at the existing product portfolio, including what you – some of the new products you have launched recently and some of the new markets or submarkets you have got into already. Can that alone start getting us back into the growth rates on the product side maybe not all the way back to what we are seeing a few years ago, but at least well back into the, I don’t know, something that I think you guys strive for well into the double-digits or do we need one or two of these new opportunity sets to really take off?

Dan Baker

Well, Kevin as you know, we typically don’t get into specific numbers or growth rates, but just the way I’d characterize it is our goal for the existing products and some of the new products that we have that are in existing markets is that, that can fuel significant growth. That’s the goal. Our goal is always to significantly outperform our competitors and outperform our industry. And then we feel we have some excellent opportunities to open up significantly bigger markets than the ones we serve now. So we see very good growth potential with our existing portfolio. As I said, we believe its best-in-class. We are continuously improving those products. And we made significant improvements in the past calendar year. And then we see a number of opportunities that we have talked about that could significantly – that could fuel significant growth that where some of those markets are much bigger than the markets that we currently serve. So we think we have excellent potential as I mentioned in the near-term and an opportunity to truly revolutionize an industry in the long-term.

Kevin Sonich - RK Capital

Okay, that’s helpful. Thanks Dan.

Operator

Thank you. (Operator Instructions) Our next question comes from Steven Crowley of Craig-Hallum Capital. Your question please.

Steven Crowley - Craig-Hallum Capital

Yes guys. As promised coming back with a couple more. In terms of the partnership you have referenced over the past year or so with a major global semiconductor company that kind of lays the groundwork or at least puts on the path to penetrating the in-car network market, the in-car device market versus this just being in the automotive factory. Can you give us a sense for whether or not you are making forward progress down that path? And how long that path is likely to be as you have got more educated about what it takes to be in that marketplace, the way you want to be in that marketplace?

Dan Baker

Yes. We are making good progress on getting into that particular product that we talked about is controller area networks, which in particular were targeting hybrid electric vehicles. And I think this calendar year is going to be an important year for that. I think we are going to start seeing designs firm up for the next generation of hybrid electric vehicles. And we want to be an important part of that. And we believe we have a convincing benefit proposition with advantages in speed, power, reliability and size. And we talked about size in the prepared remarks. We are working on products that are currently half the size of conventional products and we are working on platforms to make them a quarter of the size. So that would be an even more significant advantage. And then we are also pursuing some other opportunities in the automotive in car electronics in conventional 12 volts vehicles. And those might have some potential near term they probably aren’t as sweeping as some of the potential that we see in hybrid electric vehicles, but we are seeing a number of opportunities to improve efficiency in cars and we see that as a very important market for us.

Steven Crowley - Craig-Hallum Capital

And I infer from the good tone and turner [ph] of those comments that your relationship with that partner who has a good presence in the car market has continued to develop and progress or at least be in good stead?

Dan Baker

Yes.

Steven Crowley - Craig-Hallum Capital

Now in terms of the food safety capability or food safety diagnostics pathogen protection stuff that you started to talk to us about, can you talk to us was maybe a little bit about the unique capabilities or the novel capabilities you were trying to develop or validate in this work and if you are successful what’s your commercialization strategy might look like I trust maybe given that you are in that market that a partner would be necessary then and how early are we in that equation of starting to develop potential partners?

Dan Baker

So the goal in this project that would be the one year projects which would be concluding mid-year, mid-calendar year and the goal there is to demonstrate faster detection of food borne pathogens in line or in stream detection so it would be very close to real time. And while retaining the existing sensitivity, so there tends to be a trade off between speed and sensitivity, sensitivity being the level of pathogen that can be detected. And so our goal is to have a significantly faster system. The progress that we made in the past quarter was that we have now combined spintronic sensors with nanobeads and microfluidics in a prototype or a breadboard and we are now testing that. And then the next step would be to integrate that with the biologics the aptamers. And then our goal is to be able to demonstrate that faster speed and that in line capability at the conclusion of this program about mid-calendar year.

So I also mentioned that we are in discussion with food producers. We believe that we can partner directly with food producers. Many of them have a great deal of capability in-house to – and food safety is as you can imagine very important to them. We happen to be in a major poultry producing state here in Minnesota. It’s a very important part of the state economy and food safety is very important to them, to our potential customers. So we have had discussions about customizing these products and bringing them to commercial versions that will meet the needs or the specific needs of these potential customers, primarily large food producers. So we see it as a technology where we have some of the key technical capabilities in the sensors. We have partnerships with the – in the areas, where we don’t have capabilities. So there is the nanobeads, the microfluidics and the aptamers or biologics and we believe we have good relationships with potential customers, wholesale food producers.

Steven Crowley - Craig-Hallum Capital

Great, thanks for answering the question. There was some really good color there. We’ll talk to you soon.

Dan Baker

Thank you, Steve.

Operator

Thank you. And at this time, I would like to turn the call back over to Mr. Baker for any closing remarks.

Dan Baker - President and Chief Executive Officer

Well, thank you. We reported a 12% increase in product sales for the quarter, 17% increase in operating cash flow year-to-date. We continue to see a bright future for new products as we have discussed. And we look forward to speaking with you again in early May to report our results for the full fiscal year. Thank you for participating in the call.

Operator

Thank you, sir and thank you ladies and gentlemen for your participation. That does conclude your program. You may disconnect your lines at this time. Have a great day.

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