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Investors Press Releases

Nova Reports Record Revenues for Second Quarter 2015

Rehovot, Israel, July 28, 2015

Quarterly Revenues of $40.6 million Drive Non-GAAP Net Income of $0.20

Per Diluted Share, Both Exceeding the Guidance

Rehovot, Israel, July 28, 2015 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 record 2015 second quarter results. The company closed the acquisition of ReVera on April 2, 2015. Accordingly, the company’s second quarter results include the contribution of ReVera, with no similar contribution in previous periods.

Quarterly Highlights:

  • Record quarterly revenue of $40.6 million, up 47% sequentially
  • Non-GAAP net income of $5.4 million, or $0.20 per diluted share, up 34% sequentially
  • Customer mix includes four customers contributing more than 10% each to the quarterly revenues, including two leading memory customers
  • Launched new standalone Optical CD system, the HelioSense100TM, targeted at the most complex device manufacturing across all semiconductor segments
  • The acquisition of ReVera creating strong pipeline of opportunities and leading to further customer diversification
GAAP Results ($K)
Q2 2015 Q1 2015 Q2 2014
Revenues $40,552 $27,494 $32,785
Net Income $2,150 $2,977 $5,694
Earnings per Diluted Share $0.08 $0.11 $0.20
NON-GAAP Results ($K)
Q2 2015 Q1 2015 Q2 2014
Net Income $5,402 $4,034 $6,108
Earnings per Diluted Share $0.20 $0.15 $0.22

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, adjustments of deferred tax assets, stock-based compensation expenses and acquisition related expenses.

Management Comments
“We continue to diversify our revenue and customer base by expanding our technologies and creating a comprehensive suite of solutions, which is becoming increasingly attractive to our customers,” commented Eitan Oppenhaim, President and CEO of Nova. “Our efforts to differentiate our offering and expand our customer mix are contributing to our growth and improving our financial results, which continue to represent industry leading performance,” added Mr. Oppenhaim. “The integration of ReVera continues to go well, and the strategic benefits of this pivotal acquisition have exceeded our expectations. We believe Nova is well positioned today to capture the growing market opportunities that are driven by key industry inflection points, due to our holistic approach and complete suite of products, including optical and x-ray technologies, as well as our advanced software and modeling solutions.”

2015 Second Quarter Results
Total revenues for the second quarter of 2015 were $40.6 million, an increase of 47% compared to the first quarter of 2015, and an increase of 24% relative to the second quarter of 2014.

Gross margin for the second quarter of 2015 was 47%, and included $2.4 million of amortization of acquired intangible assets in cost of product. This is compared with 52% in the first quarter of 2015 and compared with 54% in the second quarter of 2014.

Operating expenses in the second quarter of 2015 were $18.7 million, and included $1.5 million of acquisition related expenses and $0.6 million of amortization of acquired intangible assets. This is compared with $12.1 million in the first quarter of 2015 and compared to $12.0 million in the second quarter of 2014.

On a GAAP basis, the company reported net income of $2.2 million, or $0.08 per diluted share, in the second quarter of 2015. This compares with net income of $3.0 million, or $0.11 per diluted share, in the first quarter of 2015. The company reported net income of $5.7 million, or $0.20 per diluted share, in the second quarter of 2014.

On a Non-GAAP basis, which excludes amortization of acquired intangible assets, adjustments of deferred tax assets, stock-based compensation expenses and acquisition related expenses, the company reported net income of $5.4 million, or $0.20 per diluted share, in the second quarter of 2015. This compares sequentially to net income of $4.0 million, or $0.15 per diluted share, in the first quarter of 2015 and to net income of $6.1 million, or $0.22 per diluted share, in the second quarter of 2014.

Third Quarter Financial Outlook
Management provided an outlook for the third quarter, the period ending September 30, 2015. Based on current estimates, management expects:

  • $38 million to $42 million in revenue
  • $0.10 to $0.20 in diluted non-GAAP EPS
  • $0.08 to $0.18 in diluted GAAP EPS

Conference Call Information
Nova will host a conference call on Tuesday, July 28, 2015 at 4:30 p.m. Eastern Time, to discuss the second quarter results and future outlook.

To attend the conference call, please dial one of the following teleconferencing numbers. Please begin by placing your calls 5 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:  1-800-967-7135
ISRAEL Dial-in Number:  1809-24-6042
INTERNATIONAL Dial-in Number:  1-719-325-2370

At:
4:30 p.m. Eastern Time
1:30 p.m. Pacific Time
11:30 p.m. Israeli 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.

About Nova: Nova Measuring Instruments Ltd. 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 holistic approach and complete suite of products, which combines high-precision hardware and cutting-edge software, support the development and production of the most advanced devices in today’s high-end semiconductor market. Our technical innovation and market leadership enable customers to improve their process performance, products yields and 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.

This press release provides financial measures that exclude non-cash charges for amortization of acquired intangible assets, adjustments of deferred tax assets, 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 benefits, growth opportunities and other events relating to the acquisition of ReVera Incorporated, 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. These risks and other factors include but are not limited to: the ability to recognize benefits of the acquisition; risks that the acquisition disrupts current plans and operations; and impact of the acquisition on relationships with customers, distributors and suppliers. Factors that may affect our results, performance, circumstances or achievements also include, but are not limited to, the following: 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 PEM; 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 financial, political and environmental instabilities in Asia; risks related to our intellectual property; new product offerings from our competitors; unanticipated manufacturing or supply problems; changes in tax requirements; changes in customer demand for our products; risks related to currency fluctuations 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, 2014 filed with the Securities and Exchange Commission on February 25, 2015. 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 June 30,

2015

December 31,

2014 

(Audited)

Current assets
Cash and cash equivalents 21,543 13,649
Short-term interest-bearing bank deposits 58,803 107,289
Held for trading securities 2,063 1,995
Trade accounts receivable 21,470 15,566
Inventories 26,598 16,107
Deferred tax assets 1,362 142
Other current assets 3,301 3,097
Total current assets 135,140 157,845
Long-term assets
Long-term interest-bearing bank deposits 750 750
Deferred tax assets 12,063 1,654
Severance pay funds 1,637 1,580
Property and equipment, net 11,003 11,450
Identifiable intangible assets, net 19,918
Goodwill 14,657
Total long-term assets 60,028 15,434
Total assets 195,168 173,279
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Trade accounts payable 15,337 11,568
Deferred revenues 3,611 3,022
Deferred tax liabilities 1,337
Other current liabilities 13,884 12,606
Total current liabilities 34,169 27,196
Long-term liabilities
Deferred tax liabilities 6,631
Liability for employee severance pay 2,606 2,465
Deferred revenues   36
Total long-term liabilities 9,237 2,501
Shareholders’ equity 151,762 143,582
Total liabilities and shareholders’ equity 195,168 173,279

 

NOVA MEASURING INSTRUMENTS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

Three months ended   Six months ended
June 30,

2015

  June 30,

2014

  June 30,

2015

  June 30,

2014

Revenues:
Products 30,861   26,015   50,185   54,791  
Services 9,691   6,770   17,861   12,654  
Total revenues 40,552   32,785   68,046   67,445  
Cost of revenues:
Products 13,343   11,050   21,982   23,847  
Services 5,598   4,139   10,030   8,279  
Amortization of acquired intangible assets in

 cost of products

2,442     2,442  
Total cost of revenues 21,383   15,189   34,454   32,126  
Gross profit 19,169   17,596   33,592   35,319
Operating expenses:
Research and Development expenses, net 10,904   7,152   17,903   14,053  
Sales and Marketing expenses 4,260   3,505   7,066   6,911  
General and Administration expenses 1,413   1,316   2,637   2,380
    Acquisition related expenses 1,549     2,655  
Amortization of acquired intangible assets 569     569  
Total operating expenses 18,695   11,973   30,830   23,344
Operating income 474   5,623   2,762   11,975
Financing income, net 154   202   365   377
Income before tax on income 628   5,825   3,127   12,352
   Income tax expenses (benefit) (1,522)   131   (2,000)   260
Net income for the period 2,150   5,694   5,127   12,092
Earnings per share:
    Basic 0.08   0.21   0.19   0.44
    Diluted 0.08   0.20   0.19   0.43
Shares used for calculation of earnings per share:
    Basic 27,291   27,592   27,250   27,512
    Diluted 27,677   28,138   27,426   27,983

 

NOVA MEASURING INSTRUMENTS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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

Three months ended Six months ended
June 30,

2015

  June 30,

2014

  June 30,

2015

  June 30,

2014

Cash flows from operating activities:
Net income for the period 2,150   5,694   5,127   12,092
Adjustments to reconcile net income to net cashprovided by operating activities:
Depreciation 1,146   972   2,206   1,874
Amortization of acquired intangible assets 3,011     3,011  
Amortization of deferred stock-based compensation 613   472   1,130   994
Decrease in liability for employee termination

    benefits, net

100   74   84   48
Deferred tax assets, net (1,921)   (58)   (2,487)   (49)
Gain on securities (110)     (68)  
Decrease (increase) in trade accounts receivable (1,887)   (3,898)   (4,383)   1,843
Decrease (increase) in inventories (1,380)   688   (1,263)   (672)
Decrease (increase) in other current assets (373)   257   (43)   (460)
Increase (decrease) in trade accounts payable and

   other long-term liabilities

2,428   (2,456)   2,563   (3,505)
Increase (decrease) in other current liabilities 207   (787)   682   446
Increase (decrease) in short and long term deferred

   revenues

 

259

 

1,247

 

(843)

 

2,330

Net cash provided by operating activities 4,243   2,205   5,716   14,941
Cash flow from investment activities:
Decrease (increase) in short-term interest-bearing

   bank deposits

(11)   (1,943)   48,486   (11,984)
Investment in short-term available for sale

   securities

  (19)     (18)
Acquisition of subsidiary, net of acquired cash 1,156       (45,344)  
Additions to property and equipment (767)   (1,228)   (1,524)   (1,753)
Net cash provided by (used in) investment activities 378   (3,190)   1,618   (13,755)
Cash flows from financing activities:
Purchases of treasury shares (1,389)   (1,103)   (1,389)   (1,103)
Shares issued under employee stock-based plans 857   961   1,949   2,274
Net cash provided by (used in) financing activities (532)   (142)   560   1,171
Increase (decrease) in cash and cash equivalents 4,089   (1,127)   7,894   2,357
Cash and cash equivalents – beginning of period 17,454   21,026   13,649   17,542
Cash and cash equivalents – end of period 21,543   19,899   21,543   19,899

 

NOVA MEASURING INSTRUMENTS LTD.

RECONCILIATION OF GAAP TO NON-GAAP RESULTS

(U.S. dollars in thousands, except percentage) – (Unaudited)

Three months ended
June 30,

2015

  March 31,

2015

  June 30,

2014

GAAP cost of revenues 21,383   13,071   15,189
 Amortization of acquired intangible assets in cost of         products (2,442)    
 Stock-based compensation in cost of products (89)   (81)   (80)
 Stock-based compensation in cost of services (46)   (32)   (30)
Non-GAAP cost of revenues 18,806   12,958   15,079
GAAP gross profit 19,169   14,423   17,596
Gross profit adjustments 2,577   113   110
Non-GAAP gross profit 21,746   14,536   17,706
GAAP gross margin as a percentage of revenues 47%   52%   54%
Non-GAAP gross margin as a percentage of revenues 54%   53%   54%
GAAP operating expenses 18,695   12,135   11,973
 Stock-based compensation in Research and Development (254)   (190)   (199)
 Stock-based compensation in Sales and Marketing (166)   (160)   (111)
 Stock-based compensation in General and Administrative (58)   (54)   (52)
 Acquisition related expenses (1,549)   (1,106)  
 Amortization of acquired intangible assets (569)    
Non-GAAP operating expenses 16,099   10,625   11,611
Non-GAAP operating income 5,647   3,911   6,095
GAAP operating margin as a percentage of revenues 1%   8%   17%
Non-GAAP operating margin as a percentage of revenues 14%   14%   19%
GAAP tax on income (1,522)   (478)   131
 Deferred tax assets adjustments, net 1,921   566   58
Non-GAAP tax on income 399   88   189
GAAP net income 2,150   2,977   5,694
 Amortization of acquired intangible assets 3,011    
 Stock-based compensation expenses 613   517   472
 Deferred tax assets adjustments, net (1,921)   (566)   (58)
 Acquisition related expenses 1,549   1,106  
Non-GAAP net income 5,402   4,034   6,108
GAAP basic earnings per share 0.08   0.11   0.21
Non-GAAP basic earnings per share 0.20   0.15   0.22
GAAP diluted earnings per share 0.08   0.11   0.20
Non-GAAP diluted earnings per share 0.20   0.15   0.22
Shares used for calculation of earnings per share:
 Basic 27,291   27,210   27,592
 Diluted 27,677   27,552   28,138
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