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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