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Investors Press Releases

Nova Reports Second Quarter 2016 Financial Results

Rehovot, Israel, August 3, 2016

Record quarterly bookings expected to result in record Q3 revenues

Rehovot, Israel, August 3, 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 second quarter of 2016, the period ended June 30, 2016.

Second Quarter 2016 Highlights:

  • Revenues grew sequentially to $35.6 million, within guidance
  • GAAP net income of $3.2 million, or $0.11 per diluted share, within guidance
  • Non-GAAP net income of $4.7 million, or $0.17 per diluted share, exceeding guidance
  • Multiple competitive wins yield record quarterly Optical CD bookings of $45 million
  • Received repeat order from a leading memory customer for X-Ray solution
GAAP Results ($K)
  Q2 2016 Q1 2016 Q2 2015
Revenues $35,575 $34,056 $40,552
Net Income $3,153 $2,905 $2,150
Earnings per Diluted Share $0.11 $0.11 $0.08
NON-GAAP Results ($K)
  Q2 2016 Q1 2016 Q2 2015
Net Income $4,703 $4,450 $5,402
Earnings per Diluted Share $0.17 $0.16 $0.20

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
“Strong demand for our Optical CD solutions, across the entire breadth of our product offering, drove the increase in revenues and bookings,” commented Eitan Oppenhaim, President and Chief Executive Officer of Nova. “Booking levels in the second quarter reached a record high, bolstering our confidence in the third quarter and the second half performance. In parallel, our well-managed operational model allowed us to once again reach high levels of profitability while continuing our investment in the long-term technology roadmap.”

“The strength of our recent new bookings has been driven by the value proposition we offer our customers via an expanded and a unique product portfolio, which is utilized by now across multiple Foundry and Memory customers,” added Mr. Oppenhaim. “Our partnership with key customers and leading semiconductor research centers early in the R&D stage, based on our innovative combined offering of Optical CD and X-Ray technologies, improve our technology position and increase our confidence in the company’s long-term strategic plan.”

2016 Third Quarter Financial Outlook
Management provided an outlook for the third quarter, the period ending September 30, 2016. Based on current estimates, management expects record revenues in the quarter:

  • $42 million to $44 million in revenue
  • $0.16 to $0.19 in diluted GAAP EPS
  • $0.24 to $0.27 in diluted non-GAAP EPS

2016 Second Quarter Results
Total revenues for the second quarter of 2016 were $35.6 million, an increase of 4% compared to the first quarter of 2016, and a decrease of 12% relative to the second quarter of 2015.

Gross margin for the second quarter of 2016 was 53%. This is compared with 54% in the first quarter of 2016 and compared with 47% in the second quarter of 2015.

Operating expenses in the second quarter of 2016 were $15.4 million, and included $0.6 million of amortization of acquired intangible assets. This is compared with $15.7 million in the first quarter of 2016 and compared with $18.7 million in the second quarter of 2015.

On a GAAP basis, the company reported net income of $3.2 million, or $0.11 per diluted share, in the second quarter of 2016. This is compared with net income of $2.9 million, or $0.11 per diluted share, in the first quarter of 2016. The company reported net income of $2.2 million, or $0.08 per diluted share, in the second 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 $4.7 million, or $0.17 per diluted share, in the second quarter of 2016. This is compared with net income of $4.5 million, or $0.16 per diluted share, in the first quarter of 2016, and compared with net income of $5.4 million, or $0.20 per diluted share, in the second quarter of 2015.

Conference Call Information
Nova will host a conference call today, August 3, 2016, 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: 1-888-430-8709
ISRAEL Dial-in Number: 1 80 924 5906
INTERNATIONAL Dial-in Number: 1-719-325-2464

At:
9 a.m. Eastern Time
6 a.m. Pacific Time
4 p.m. Israeli Time
Please reference conference ID 5472687

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  

June 30,

2016

 

December 31,

2015

(Audited)

Current assets        
Cash and cash equivalents   19,455   27,733
Short-term interest-bearing bank deposits   75,230   69,298
Trade accounts receivable   22,775   19,046
Inventories   30,661   27,683
Deferred tax assets   3,615   3,540
Other current assets   2,611   2,888
         
Total current assets   154,347   150,188
         
Long-term assets        
Long-term interest-bearing bank deposits   750   750
Deferred tax assets   4,979   5,735
Severance pay funds   1,461   1,514
Property and equipment, net   9,872   11,062
Identifiable intangible assets, net   16,634   17,906
Goodwill   20,114   20,114
         
Total long-term assets   53,810   57,081
         
Total assets   208,157   207,269

LIABILITIES AND SHAREHOLDERS’ EQUITY
       
Current liabilities        
Trade accounts payable   13,134   14,378
Deferred revenues   3,722   5,828
Deferred tax liabilities   1,305   956
Other current liabilities   13,344   15,996
         
Total current liabilities   31,505   37,158
         
Long-term liabilities        
Deferred tax liabilities   5,148   5,760
Liability for employee severance pay   2,512   2,469
Other long-term liabilities   887   822
         
Total long-term liabilities   8,547   9,051
         
Shareholders’ equity   168,105   161,060
         
Total liabilities and shareholders’ equity   208,157   207,269
         

 

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,
2016
  June 30,
2015
  June 30,
2016
  June 30,
2015
               
Revenues:              
Products 25,427   30,861   49,689   50,185   
Services 10,148   9,691   19,942   17,861
Total revenues 35,575   40,552   69,631   68,046
               
Cost of revenues:              
Products 10,092   13,343   19,953   21,982
Services 6,584   5,598   12,249   10,030
Amortization of acquired intangible assets in cost of products   2,442     2,442
Total cost of revenues 16,676   21,383   32,202   34,454
               
Gross profit 18,899   19,169   37,429   33,592
               
Operating expenses:              
Research and development expenses, net 8,684   10,904     16,592   17,903
Sales and marketing expenses 4,535   4,260   9,902   7,066
General and administration expenses 1,521   1,413   3,331   2,637
Acquisition related expenses   1,549     2,655
Amortization of acquired intangible assets 636   569   1,272   569
Total operating expenses 15,376   18,695   31,097   30,830
               
Operating income 3,523   474   6,332   2,762
               
Financing income, net 256   154   725   365
               
Income before tax on income 3,779   628   7,057   3,127
               
Income tax expenses (benefit) 626   (1,522)   999   (2,000)
               
Net income for the period 3,153   2,150   6,058   5,127
               
Earnings per share:              
Basic 0.12   0.08   0.22   0.19
Diluted 0.11   0.08   0.22   0.19
               
Shares used for calculation of earnings per
 share:
             
Basic 27,123   27,291   27,120   27,250
Diluted 27,422   27,677   27,253   27,426
             

 

NOVA MEASURING INSTRUMENTS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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

  Three months ended   Six months ended
  June 30,
2016
  June 30,
2015
  June 30, 2016   June 30, 2015
Cash flows from operating activities:              
Net income for the period 3,153   2,150   6,058   5,127
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
             
Depreciation 1,064   1,146   2,349   2,206
Amortization of acquired intangible assets 636   3,011   1,272   3,011
Amortization of deferred stock-based compensation 649   613   1,405   1,130
Increase in liability for employee termination benefits, net 30   100   96   84
Deferred tax assets, net 265   (1,921)   418   (2,487)
Gain on securities   (110)     (68)
Increase in trade accounts receivable (689)   (1,887)   (3,729)   (4,383)
Increase in inventories (2,687)   (1,380)   (3,057)   (1,263)
Decrease (increase) in other current and long term assets 739   (373)   392   (43)
Increase (decrease) in trade accounts payable 1,946   2,428   (1,244)   2,563
Increase (decrease) in other current and other long-term liabilities (2,490)  
207
  (2,607)   682
Increase (decrease) in short and long term deferred revenues 851   259   (2,106)   (843)
               
Net cash provided by (used in) operating activities 3,467   4,243   (753)   5,716
               
Cash flow from investment activities:              
Decrease (increase) in short-term interest-bearing bank deposits 1,098   (11)   (5,932)   48,486
Acquisition of subsidiary, net of acquired cash   1,156     (45,344)
Additions to property and equipment (503)   (767)   (1,080)   (1,524)
               
Net cash provided by (used in) investment activities 595   378   (7,012)   1,618
               
Cash flows from financing activities:              
Purchases of treasury shares (937)   (1,389)   (937)   (1,389)
Shares issued under employee stock-based plans 132   857   424   1,949
               
Net cash provided by (used in) financing activities (805)   (532)   (513)   560
               
Increase (decrease) in cash and cash equivalents 3,257     4,089   (8,278)   7,894
Cash and cash equivalents – beginning of period 16,198   17,454   27,733   13,649
Cash and cash equivalents – end of period 19,455   21,543   19,455   21,543

 

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
  June 30,
2016
  March 31,
2016
  June 30,
2015
GAAP cost of revenues 16,676   15,526   21,383
 Amortization of acquired intangible assets in cost of products     (2,442)
 Stock-based compensation in cost of products (79)   (96)   (89)
 Stock-based compensation in cost of services (48)   (64)   (46)
Non-GAAP cost of revenues 16,549   15,366   18,806
           
GAAP gross profit 18,899   18,530   19,169
Gross profit adjustments 127   160   2,577
Non-GAAP gross profit 19,026   18,690   21,746
GAAP gross margin as a percentage of revenues 53%   54%   47%
Non-GAAP gross margin as a percentage of revenues 53%   55%   54%
           
GAAP operating expenses 15,376   15,721   18,695
 Stock-based compensation in research and development (230)   (306)   (254)
 Stock-based compensation in sales and marketing (237)   (210)   (166)
 Stock-based compensation in general and administrative (55)   (80)   (58)
 Acquisition related expenses     (1,549)
 Amortization of acquired intangible assets (636)   (636)   (569)
Non-GAAP operating expenses 14,218   14,489   16,099
Non-GAAP operating income 4,808   4,201   5,647
GAAP operating margin as a percentage of revenues 10%   8%   1%
Non-GAAP operating margin as a percentage of revenues 14%   12%   14%
           
GAAP tax on income 626   373   (1,522)
 Deferred tax assets adjustments, net (265)   (153)   1,921
Non-GAAP tax on income 361   220   399
           
GAAP net income 3,153   2,905   2,150
 Amortization of acquired intangible assets 636   636   3,011
 Stock-based compensation expenses 649   756   613
 Deferred tax assets adjustments, net 265   153   (1,921)
 Acquisition related expenses     1,549
Non-GAAP net income 4,703   4,450   5,402
           
GAAP basic earnings per share 0.12   0.11   0.08
Non-GAAP basic earnings per share 0.17   0.16   0.20
           
GAAP diluted earnings per share 0.11   0.11   0.08
Non-GAAP diluted earnings per share 0.17   0.16   0.20
           
Shares used for calculation of earnings per share:          
 Basic 27,123   27,116   27,291
 Diluted 27,422   27,351   27,677
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