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Investors Press Releases

Nova Reports First Quarter 2018 Results

Rehovot, Israel, May 2, 2018

Rehovot, Israel – May 2, 2018 – Nova (Nasdaq: NVMI), a leading innovator and a key provider of metrology solutions for advanced process control used in semiconductor manufacturing, today reported financial results for the first quarter 2018, the period ended March 31, 2018.  

First Quarter 2018 Highlights:

  • Record quarterly revenue of $62.6 million, up 15% year-over-year, exceeding guidance of $54 to $60 million
  • GAAP net income of $14.1 million, or $0.49 per diluted share, exceeding guidance of $0.29 to $0.40 per share
  • Non-GAAP net income of $15.4 million, or $0.54 per diluted share, exceeding guidance of $0.34 to $0.45 per share
  • Growing position in China yielded 40% of overall product revenue
  • Expansion in the Memory sector generated 50% of overall product revenue  
GAAP Results ($K)
  Q1 2018 Q4 2017 Q1 2017
Revenues $62,603 $57,378 $54,430
Net Income $14,080 $8,241 $13,403
Earnings per Diluted Share $0.49 $0.29 $0.48
NON-GAAP Results ($K)
  Q1 2018 Q4 2017 Q1 2017
Net Income $15,430 $13,021 $14,115
Earnings per Diluted Share $0.54 $0.45 $0.50

A reconciliation between GAAP operating results and non-GAAP operating results is provided following the financial statements that are part of this release. Non-GAAP results exclude amortization of acquired intangible assets, certain discrete tax items and stock-based compensation expenses.

Management Comments
“Nova continued to perform well this quarter, setting new revenue and profit records that demonstrate our competitive strength in the market and the growing adoption of our diversified portfolio,” commented Eitan Oppenhaim, President and Chief Executive Officer of Nova. “Growth in the first quarter was driven by two main notable factors: the expansion of our Memory business and our continued growth in China. This strong start supports our outlook for another growth year in which we continue to execute our strategic plan to expand our portfolio and enhance our value proposition. These efforts contribute directly to our customers’ success in transitioning to the most advanced technology nodes,” concluded Mr. Oppenhaim.

2018 Second Quarter Financial Outlook
Management provided an outlook for the second quarter, the period ending June 30, 2018. Based on current estimates, management expects:

  • $57 million to $63 million in revenue
  • $0.30 to $0.40 in diluted GAAP EPS
  • $0.35 to $0.45 in diluted non-GAAP EPS

2018 First Quarter Results
Total revenues for the first quarter of 2018 were $62.6 million, an increase of 9% compared to the fourth quarter of 2017, and an increase of 15% relative to the first quarter of 2017.

Gross margin for the first quarter of 2018 was 58%, compared with gross margin of 56% in the fourth quarter of 2017 and compared with gross margin of 60% in the first quarter of 2017.

Operating expenses in the first quarter of 2018 were $20.3 million. This is compared with $19.7 million in the fourth quarter of 2017 and compared with $17.7 million in the first quarter of 2017.

On a GAAP basis, the company reported net income of $14.1 million, or $0.49 per diluted share, in the first quarter of 2018. This is compared with net income of $8.2 million, or $0.29 per diluted share, in the fourth quarter of 2017, and compared with net income of $13.4 million, or $0.48 per diluted share, in the first quarter of 2017.  

On a Non-GAAP basis, which excludes amortization of acquired intangible assets, certain discrete tax items and stock-based compensation expenses, the company reported net income of $15.4 million, or $0.54 per diluted share, in the first quarter of 2018. This is compared with net income of $13.0 million, or $0.45 per diluted share, in the fourth quarter of 2017, and compared with net income of $14.1 million, or $0.50 per diluted share, in the first quarter of 2017.

Conference Call Information

Nova will host a conference call today, May 2, 2018, at 9 a.m. Eastern Time, to discuss the financial results and future outlook. To attend the conference call, please dial one of the following teleconferencing numbers. Please begin by placing your calls five minutes before the conference call commences. If you are unable to connect using the toll-free numbers, please try the international dial-in number.

U.S. Dial-in Number: 1-888-394-8218
Israel Dial-in Number: 1-809-212- 883
International Dial-in Number: 1-323-701-0225

At:
9 a.m. Eastern Time
6 a.m. Pacific Time
4 p.m. Israel Time

The conference call will also be webcast live from a link on Nova’s website at http://ir.novameasuring.com. For those unable to participate in the conference call, there will be a replay available from a link on Nova’s website at http://ir.novameasuring.com.

Replay Dial-In Numbers:
U.S. Dial-in Number:   1-844-512-2921
International Dial-in Number:   1-412-317-6671
From:  05/02/18 at 12:00 pm Eastern Time
To:    05/09/18 at 11:59 pm Eastern Time
Replay Pin Number:  1121259

About Nova: Nova Measuring Instruments delivers continuous innovation by providing advanced metrology solutions for the semiconductor manufacturing industry. Deployed with the world’s largest integrated-circuit manufacturers, Nova’s products deliver state-of-the-art, high-performance metrology solutions for effective process control throughout the semiconductor fabrication lifecycle. Nova’s product portfolio, which combines high-precision hardware and cutting-edge software, supports the development and production of the most advanced devices in today’s high-end semiconductor market. Nova’s technical innovation and market leadership enable customers to improve process performance, enhance products’ yields and accelerate time to market. Nova acts as a partner to semiconductor manufacturers from its offices around the world. Additional information may be found at www.novameasuring.com.

Nova is traded on the NASDAQ & TASE under the symbol NVMI.

This press release provides financial measures that exclude charges for amortization of acquired intangible assets, certain discrete tax items and stock-based compensation expenses and are therefore not calculated in accordance with generally accepted accounting principles (GAAP). Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding Nova’s performance because they reflect our operational results and enhances management’s and investors’ ability to evaluate Nova’s performance before charges or benefits considered by management to be outside Nova’s ongoing operating results. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Management believes that it is in the best interest of its investors to provide financial information that will facilitate comparison of both historical and future results and allows greater transparency to supplemental information used by management in its financial and operational decision making. A reconciliation of each GAAP to non-GAAP financial measure discussed in this press release is contained in the accompanying financial tables.

This press release contains forward-looking statements within the meaning of safe harbor provisions of the Private Securities Litigation Reform Act of 1995 relating to future events or our future performance, such as statements regarding, but are not limited to, anticipated growth opportunities and projections about our business and its future revenues, expenses and profitability. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied in those forward-looking statements. Factors that may affect our results, performance, circumstances or achievements include, but are not limited to, the following: our dependency on three product lines; our dependency on a small number of large customers and small number of suppliers; the highly cyclical and competitive nature of the markets we target and we operate in; our inability to reduce spending during a slowdown in the semiconductor industry; our ability to respond effectively on a timely basis to rapid technological changes; our dependency on PEMs; risks related to exclusivity obligations and non-limited liability that may be included in our commercial agreements and arrangements; our ability to retain our competitive position despite the ongoing consolidation in our industry; risks related to our dependence on our manufacturing facilities; risks related to changes in our order backlog; risks related to efforts to complete and integrate current and/or future acquisitions; risks related to the worldwide financial instabilities; risks related to our intellectual property; new product offerings from our competitors; unanticipated manufacturing or supply problems; risks related to government programs we participate in; risks related to taxation; changes in customer demand for our products; risks related to currency fluctuations; risks related to technology security threats and changes in privacy laws; risks related to acquisitions we may pursue and risks related to our operations in Israel. We cannot guarantee future results, levels of activity, performance or achievements. The matters discussed in this press release also involve risks and uncertainties summarized under the heading “Risk Factors” in Nova’s Annual Report on Form 20-F for the year ended December 31, 2017 filed with the Securities and Exchange Commission on February 28, 2018. These factors are updated from time to time through the filing of reports and registration statements with the Securities and Exchange Commission. Nova Measuring Instruments Ltd. does not assume any obligation to update the forward-looking information contained in this press release.

(Tables to Follow)

NOVA MEASURING INSTRUMENTS LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands) – (Unaudited)

  As of
ASSETS  

March 31,

2018

 

December 31,

2017

Current assets        
Cash and cash equivalents   28,468   27,697
Short-term interest-bearing bank deposits   132,198   121,390
Trade accounts receivable   37,425   40,949
Inventories   39,064   34,921
Other current assets   5,807   7,313
         
Total current assets   242,962   232,270
         
Long-term assets        
Long-term interest-bearing bank deposits   1,100   750
Deferred tax assets   2,093   1,957
Severance pay funds   1,512   1,503
Property and equipment, net   13,612   13,891
Identifiable intangible assets, net   12,147   12,800
Goodwill   20,114   20,114
         
Total long-term assets   50,578   51,015
         
Total assets   293,540   283,285
LIABILITIES AND SHAREHOLDERS’ EQUITY        
Current liabilities        
Trade accounts payable   18,050   15,754
Deferred revenues   5,965   10,334
Other current liabilities   23,191   26,038
         
Total current liabilities   47,206   52,126
         
Long-term liabilities        
Liability for employee severance pay   2,558   2,590
Other long-term liabilities   2,115   1,833
         
Total long-term liabilities   4,673   4,423
         
Shareholders’ equity   241,661   226,736
         
Total liabilities and shareholders’ equity   293,540   283,285
         

 

NOVA MEASURING INSTRUMENTS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(U.S. dollars in thousands, except per share data) – (Unaudited)

  Three months ended  
 

March 31,

2018

 

March 31,

2017

 
         
Revenues:        
Products 50,185   43,516  
Services 12,418   10,914  
Total revenues 62,603   54,430  
         
Cost of revenues:        
Products 17,969   15,120  
Services 8,277   6,450  
Total cost of revenues 26,246   21,570  
         
Gross profit 36,357   32,860  
         
Operating expenses:        
Research and development expenses, net 11,226   9,275  
Sales and marketing expenses 6,231   6,088  
General and administrative expenses 2,230   1,657  
Amortization of acquired intangible assets 653   640  
Total operating expenses 20,340   17,660  
         
Operating income 16,017   15,200  
         
Financing income, net 448   415  
         
Income before tax on income 16,465   15,615  
         
Income tax expenses 2,385   2,212  
         
Net income for the period 14,080   13,403  
         
Earnings per share:        
Basic 0.50   0.49  
Diluted 0.49   0.48  
         
Shares used for calculation of earnings per share:        
         
Basic 27,915   27,467  
Diluted 28,739   28,148  
     

 

NOVA MEASURING INSTRUMENTS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. dollars in thousands) – (Unaudited)

  Three months ended
 

March 31,

2018

 

March 31,

2017

Cash flows from operating activities:      
Net income for the period 14,080   13,403
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation 915   955
Amortization of acquired intangible assets 653   640
Amortization of deferred stock-based compensation 834   663
Increase (decrease) in liability for employee termination benefits, net (41)   32
Deferred tax assets, net (136)   (591)
Decrease in trade accounts receivable 3,567   4,387
Increase in inventories (4,475)   (1,575)
Decrease in other current and long-term assets 1,506   421
Increase in trade accounts payable 2,353   90
Increase (decrease) in other current liabilities and other long-term liabilities (2,684)   1,879
Increase (decrease) in short and long term deferred revenues (4,369)   2,394
       
Net cash provided by operating activities 12,203   22,698
       
Cash flow from investment activities:      
Increase in short-term interest-bearing bank deposits, including long-term (11,158)   (20,078)
Additions to property and equipment (361)   (420)
       
Net cash used in investment activities (11,519)   (20,498)
       
Cash flows from financing activities:      
Shares issued under employee stock-based plans 87   1,817
       
Net cash provided by financing activities 87   1,817
       
Increase in cash and cash equivalents 771   4,017
Cash and cash equivalents – beginning of period 27,697   20,406
Cash and cash equivalents – end of period 28,468   24,423

 

NOVA MEASURING INSTRUMENTS LTD.

RECONCILIATION OF GAAP TO NON-GAAP RESULTS

(U.S. dollars in thousands, except percentage and per share data) – (Unaudited)

  Three months ended
  March 31,
2018
  December 31,
2017
  March 31,
2017
GAAP cost of revenues 26,246   25,324   21,570
Stock-based compensation in cost of products (92)   (107)   (76)
Stock-based compensation in cost of services (79)   (89)   (66)
Non-GAAP cost of revenues 26,075   25,128   21,428
           
GAAP gross profit 36,357   32,054   32,860
Gross profit adjustments 171   196   142
Non-GAAP gross profit 36,528   32,250   33,002
GAAP gross margin as a percentage of revenues 58%   56%   60%
Non-GAAP gross margin as a percentage of revenues 58%   56%   61%
           
GAAP operating expenses 20,340   19,723   17,660
Stock-based compensation in research and development (340)   (346)   (262)
Stock-based compensation in sales and marketing (219)   (216)   (165)
Stock-based compensation in general and administrative (104)   (141)   (94)
Amortization of acquired intangible assets (653)     (640)   (640)
Non-GAAP operating expenses 19,024   18,380   16,499
Non-GAAP operating income 17,504   13,870   16,503
GAAP operating margin as a percentage of revenues 26%   21%   28%
Non-GAAP operating margin as a percentage of revenues 28%   24%   30%
           
GAAP tax on income 2,385   4,800   2,212
 Certain discrete tax items 137   (3,241)   591
Non-GAAP tax on income 2,522   1,559   2,803
           
GAAP net income 14,080   8,241   13,403
Amortization of acquired intangible assets 653   640   640
Stock-based compensation expenses 834   899   663
Certain discrete tax items (137)   3,241   (591)
Non-GAAP net income 15,430   13,021   14,115
           
GAAP basic earnings per share 0.50   0.30   0.49
Non-GAAP basic earnings per share 0.55   0.47   0.51
           
GAAP diluted earnings per share 0.49   0.29   0.48
Non-GAAP diluted earnings per share 0.54   0.45   0.50
           
Shares used for calculation of earnings per share:          
Basic 27,915   27,873   27,467
Diluted 28,739   28,786   28,148
Company Contact:
Dror David, Chief Financial Officer
Nova Measuring Instruments Ltd.
Tel: +972-73-229-5760
E-mail: info@novami.com
www.novami.com
Investor Relations Contacts:
Miri Segal
MS-IR LLC
Tel: +917-607-8654
E-mail: msegal@ms-ir.com