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Investors Press Releases

Nova Reports First Quarter 2016 Financial Results

Rehovot, Israel, May 4, 2016

Recent uptick in bookings supports expectations for a stronger second half of 2016

Rehovot, Israel, May 4, 2016 Nova Measuring Instruments (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 of 2016, the period ended March 31, 2016.

First Quarter 2016 Highlights:

  • Revenues of $34.1 million, within guidance ($33-37 million)
  • Non-GAAP net income of $4.5 million, or $0.16 per diluted share, at the high end of the guidance ($0.10-$0.17 per diluted share)
  • Diversified customer mix yielded four customers contributing more than 10% each                to the quarterly revenues, including one leading memory customer
  • Selected by the world’s leading foundry to deliver Optical and X-ray metrology solutions for multiple process steps at 10/7/5nm technology nodes
  • Growing revenues from multiple competitive wins in China
GAAP Results ($K)
Q1 2016 Q4 2015 Q1 2015
Revenues $34,056 $40,022 $27,494
Net Income $2,905 $5,161 $2,977
Earnings per Diluted Share $0.11 $0.19 $0.11
NON-GAAP Results ($K)
Q1 2016 Q4 2015 Q1 2015
Net Income $4,450 $5,278 $4,034
Earnings per Diluted Share $0.16 $0.19 $0.15

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, deferred tax assets adjustments (net), stock-based compensation expenses and acquisition related expenses.

Management Comments
“The first quarter results were in-line with our expectations, with profitability at the higher end of our guidance, reflecting the market dynamics and our ability to adjust accordingly,” commented Eitan Oppenhaim, President and Chief Executive Officer of Nova. “As evident by this quarter results, our focus on customer diversification is becoming critically important, as customers adopt different spending cycles, and is a key to our continuous growth. Our goal to expand our portfolio by converging different metrology techniques (X-ray and Optical) is gathering momentum with several customers as we widen our applications’ reach beyond CDs to include Film Thickness and Material composition as well.”

“A notable recent uptick in bookings supports our expectations that 2016 will be another well-executed year with a stronger second half that will benefit primarily from investment related to next-generation devices,” continued Mr. Oppenhaim. “The increase in bookings is already evident, with the recent announcement of more than $20 million in orders received from several Foundry customers in recent weeks, bolstering our confidence in another solid year for Nova.”

2016 Second Quarter Financial Outlook
Management provided an outlook for the second quarter, the period ending June 30, 2016. Based on current estimates, management expects:

  • $34 million to $38 million in revenue
  • $0.08 to $0.15 in diluted non-GAAP EPS
  • $0.04 to $0.10 in diluted GAAP EPS

2016 First Quarter Results
Total revenues for the first quarter of 2016 were $34.1 million, a decrease of 15% compared to the fourth quarter of 2015, and an increase of 24% relative to the first quarter of 2015.

Gross margin for the first quarter of 2016 was 54%. This is compared with 52% in the fourth quarter and first quarter of 2015.

Operating expenses in the first quarter of 2016 were $15.7 million, and included $0.6 million of amortization of acquired intangible assets. This is compared with $17.3 million in the fourth quarter of 2015 and compared with $12.1 million in the first quarter of 2015.

On a GAAP basis, the company reported net income of $2.9 million, or $0.11 per diluted share, in the first quarter of 2016. This is compared with net income of $5.2 million, or $0.19 per diluted share, in the fourth quarter of 2015. The company reported net income of $3.0 million, or $0.11 per diluted share, in the first quarter of 2015.

On a Non-GAAP basis, which excludes amortization of acquired intangible assets, adjustments of deferred tax assets net, stock-based compensation expenses and acquisition related expenses the company reported net income of $4.5 million, or $0.16 per diluted share, in the first quarter of 2016. This is compared with net income of $5.3 million, or $0.19 per diluted share, in the fourth quarter of 2015 and compared with net income of $4.0 million, or $0.15 per diluted share, in the first quarter of 2015.

Conference Call Information
Nova will host a conference call that same day, May 4, 2016, at 9:30 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: 1-888-417-8516
ISRAEL Dial-in Number: 1 80 924 5906
INTERNATIONAL Dial-in Number: 1-719-457-2645

At:
9:30 a.m. Eastern Time
6:30 a.m. Pacific Time
4:30 p.m. Israeli Time
Please reference conference ID 1539748

The conference call will also be webcast live from a link on Nova’s website at http://ir.novameasuring.com.

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 non-cash charges for amortization of acquired intangible assets, deferred tax assets adjustments (net), stock-based compensation expenses and acquisition related 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 ability to recognize the benefits of ReVera acquisition and risks that the acquisition may disrupt current plans and operations and impact relationships with customers, distributors and suppliers; 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 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 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, 2015 filed with the Securities and Exchange Commission on February 29, 2016. 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,

2016

December 31,

2015

(Audited)

Current assets
Cash and cash equivalents 16,198 27,733
Short-term interest-bearing bank deposits 76,328 69,298
Trade accounts receivable 22,086 19,046
Inventories 27,974 27,683
Deferred tax assets 4,439 3,540
Other current assets 3,752 2,888
Total current assets 150,777 150,188
Long-term assets
Long-term interest-bearing bank deposits 750 750
Deferred tax assets 4,792 5,735
Severance pay funds 1,541 1,514
Property and equipment, net 10,433 11,062
Identifiable intangible assets, net 17,270 17,906
Goodwill 20,114 20,114
Total long-term assets 54,900 57,081
Total assets 205,677 207,269
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Trade accounts payable 11,188 14,378
Deferred revenues 2,871 5,828
Deferred tax liabilities 1,297 956
Other current liabilities 15,895 15,996
Total current liabilities 31,251 37,158
Long-term liabilities
Deferred tax liabilities 5,528 5,760
Liability for employee severance pay 2,562 2,469
Other long-term liabilities 848 822
Total long-term liabilities 8,938 9,051
Shareholders’ equity 165,488 161,060
Total liabilities and shareholders’ equity 205,677 207,269

 

NOVA MEASURING INSTRUMENTS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

Three months ended
March 31,

2016

  March 31,

2015

Revenues:
Products 24,262   19,324
Services 9,794   8,170
Total revenues 34,056   27,494
Cost of revenues:
Products 9,861   8,639
Services 5,665   4,432
Total cost of revenues 15,526   13,071
Gross profit 18,530   14,423
Operating expenses:
Research and development expenses, net 7,908   6,999
Sales and marketing expenses 5,367   2,806
General and administration expenses 1,810   1,224
Acquisition related expenses   1,106
Amortization of acquired intangible assets 636  
Total operating expenses 15,721   12,135
Operating income 2,809   2,288
Financing income, net 469   211
Income before tax on income 3,278   2,499
Income tax expenses (benefit) 373   (478)
Net income for the period 2,905   2,977
Earnings per share:
Basic 0.11   0.11
Diluted 0.11   0.11
Shares used for calculation of earnings per

 share:

Basic 27,116   27,210
Diluted 27,351   27,552

 

NOVA MEASURING INSTRUMENTS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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

Three months ended
March 31,

2016

  March 31,

2015

Cash flows from operating activities:
Net income for the period 2,905      2,977
Adjustments to reconcile net income to net cashprovided by (used in) operating activities:
Depreciation 1,285   1,060
Amortization of acquired intangible assets 636  
Amortization of deferred stock-based compensation 756   517
Increase (decrease) in liability for employee termination

    benefits, net

66   (16)
Deferred tax assets, net 153   (566)
Loss on securities   42
Increase in trade accounts receivable (3,040)   (2,496)
Decrease (increase) in inventories (370)   117
Decrease (increase) in other current and long term assets (347)   330
Increase (decrease) in trade accounts payable (3,190)   135
Increase (decrease) in other current liabilities and

   other long-term liabilities

(117)   475
Decrease in short and long term deferred

   revenues

(2,957)   (1,102)
Net cash provided by (used in) operating activities (4,220)   1,473
Cash flow from investment activities:
Decrease (increase) in short-term interest-bearing

   bank deposits

(7,030)   48,497
Payment on account of acquisition   (46,500)
Additions to property and equipment (577)   (757)
Net cash provided by (used in) investment activities (7,607)   1,240
Cash flows from financing activities:
Shares issued under employee stock-based plans 292   1,092
Net cash provided by financing activities 292   1,092
Increase (decrease) in cash and cash equivalents (11,535)   3,805
Cash and cash equivalents – beginning of period 27,733   13,649
Cash and cash equivalents – end of period 16,198   17,454

 

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, 2016   December  31, 2015   March 31, 2015
GAAP cost of revenues 15,526   19,168   13,071
 Amortization of acquired intangible assets in cost of products   (1,051)  
 Stock-based compensation in cost of products (96)   (94)   (81)
 Stock-based compensation in cost of services (64)   (63)   (32)
Non-GAAP cost of revenues 15,366   17,960   12,958
GAAP gross profit 18,530   20,854   14,423
Gross profit adjustments 160   1,208   113
Non-GAAP gross profit 18,690   22,062   14,536
GAAP gross margin as a percentage of revenues 54%   52%   52%
Non-GAAP gross margin as a percentage of revenues 55%   55%   53%
GAAP operating expenses 15,721   17,284   12,135
 Stock-based compensation in research and development (306)   (322)   (190)
 Stock-based compensation in sales and marketing (210)   (213)   (160)
 Stock-based compensation in general and administrative (80)   (73)   (54)
 Acquisition related expenses     (1,106)
 Amortization of acquired intangible assets (636)   (378)  
Non-GAAP operating expenses 14,489   16,298   10,625
Non-GAAP operating income 4,201   5,764   3,911
GAAP operating margin as a percentage of revenues 8%   9%   8%
Non-GAAP operating margin as a percentage of revenues 12%   14%   14%
GAAP tax on income 373   (1,407)   (478)
 Deferred tax assets adjustments, net (153)   2,077   566
Non-GAAP tax on income 220   670   88
GAAP net income 2,905   5,161   2,977
 Amortization of acquired intangible assets 636   1,429  
 Stock-based compensation expenses 756   765   517
 Deferred tax assets adjustments, net 153   (2,077)   (566)
 Acquisition related expenses     1,106
Non-GAAP net income 4,450   5,278   4,034
GAAP basic earnings per share 0.11   0.19   0.11
Non-GAAP basic earnings per share 0.16   0.19   0.15
GAAP diluted earnings per share 0.11   0.19   0.11
Non-GAAP diluted earnings per share 0.16   0.19   0.15
Shares used for calculation of earnings per share:
 Basic 27,116   27,073   27,210
 Diluted 27,351   27,334   27,552
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