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Investors Press Releases

Nova Reports Third Quarter 2015 Financial Results

Rehovot, Israel, October 27, 2015

Improved Sales Mix Drives Net Income Above Guidance

Rehovot, Israel, October 27, 2015 Nova Measuring Instruments Ltd. (NASDAQ: NVMI), a leading innovator and a key provider of metrology solutions for advanced process control used in semiconductor manufacturing, today reported its 2015 third quarter results. The company closed the acquisition of ReVera on April 2, 2015. Accordingly, the company’s third quarter results include the contribution of ReVera, with no similar contribution in periods before the acquisition date.

Quarterly Highlights:

  • Quarterly revenues of $40.4 million, in-line with guidance, up 48% year-over-year and essentially unchanged on a sequential basis compared to Q2 2015
  • Non-GAAP net income of $6.3 million, or $0.23 per diluted share, exceeding guidance. Up 64% year-over-year and up 17% sequentially compared to Q2 2015
  • Balanced sales mix, benefitting from strong service and software revenues, contributes to margin expansion and increased profitability
  • Solid Foundry contribution with multiple competitive wins in multiple technology nodes
  • The acquisition of ReVera continues to expand Nova’s addressable market and leading to further customers diversification

GAAP Results ($K)

  Q3 2015 Q2 2015 Q3 2014
Revenues $40,446 $40,552 $27,350
Net Income $5,437 $2,150 $3,269
Earnings per Diluted Share $0.20 $0.08 $0.12

NON-GAAP Results ($K)

  Q3 2015 Q2 2015 Q3 2014
Net Income $6,316 $5,402 $3,854
Earnings per Diluted Share $0.23 $0.20 $0.14

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

Management Comments
“This was another strong quarter for Nova, with revenues in-line with our guidance and profitability that exceeded our guidance,” commented Eitan Oppenhaim, President and CEO of Nova. “Our quarterly results benefited from a diverse mix of revenues, including elevated levels of software and service revenues, which drove better margins and profitability. During the quarter we continued to solidify our position in the Foundry segment with our advanced portfolio, achieving several wins in multiple advanced sites. With these solid results we expect to deliver a third consecutive year of record revenue in 2015, reinforcing our strategic plans to continue our profitable growth. This achievement is the result of a well-executed plan to strengthen our market position while diversifying our customer base and product mix.”

Mr. Oppenhaim continued, “During 2015 we have built a solid platform, which is based on a broader customer base and a unique offering that can continue driving our long-term profitable growth while navigating through interim industry cycles.”

 2015 Third Quarter Results
Total revenues for the third quarter of 2015 were $40.4 million, similar to the second quarter of 2015 and an increase of 48% relative to the third quarter of 2014.

Gross margin for the third quarter of 2015 was 56%. This is compared with 47% in the second quarter of 2015 and compared with 54% in the third quarter of 2014.

Operating expenses in the third quarter of 2015 were $17.4 million. This is compared with $18.7 million in the second quarter of 2015 and compared to $11.5 million in the third quarter of 2014.

On a GAAP basis, the company reported net income of $5.4 million, or $0.20 per diluted share, in the third quarter of 2015. This compares with net income of $2.2 million, or $0.08 per diluted share, in the second quarter of 2015. The company reported net income of $3.3 million, or $0.12 per diluted share, in the third 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 $6.3 million, or $0.23 per diluted share, in the third quarter of 2015. This compares sequentially to net income of $5.4 million, or $0.20 per diluted share, in the second quarter of 2015, and to net income of $3.9 million, or $0.14 per diluted share, in the third quarter of 2014.

2015 Fourth Quarter Financial Outlook
Management provided an outlook for the fourth quarter, the period ending December 31, 2015. Based on current estimates, management expects:

  • $37 million to $41 million in revenue
  • $0.11 to $0.20 in diluted non-GAAP EPS
  • $0.08 to $0.17 in diluted GAAP EPS

Conference Call Information
Nova will host a conference call on October 27, 2015, at 4:30 p.m. Eastern Time, to discuss the financial results, market trends 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:  1-888-430-8691
ISRAEL Dial-in Number:  1809-24-5906
INTERNATIONAL Dial-in Number:  1-719-325-2469

At:
4:30 p.m. Eastern Time
1:30 p.m. Pacific Time
10:30 p.m. Israeli Time
Please reference conference ID 5999414.

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, all adjustments of deferred tax assets and liabilities, 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   September 30,
2015
  December 31,
2014 
(Audited)
Current assets        
Cash and cash equivalents   25,030   13,649
Short-term interest-bearing bank deposits   59,253   107,289
Held for trading securities   1,982   1,995
Trade accounts receivable   23,343   15,566
Inventories   28,029   16,107
Deferred tax assets   1,599   142
Other current assets   3,760   3,097
         
Total current assets   142,996   157,845
         
Long-term assets        
Long-term interest-bearing bank deposits   750   750
Deferred tax assets   12,074   1,654
Severance pay funds   1,513   1,580
Property and equipment, net   10,544   11,450
Identifiable intangible assets, net   19,335  
Goodwill   14,657  
         
Total long-term assets   58,873   15,434
         
Total assets   201,869   173,279
LIABLITIES AND SHAREHOLDERS’ EQUITY        
Current liabilities        
Trade accounts payable   12,909   11,568
Deferred revenues   7,746   3,022
Deferred tax liabilities   1,331  
Other current liabilities   16,403   12,606
         
Total current liabilities   38,389   27,196
         
Long-term liabilities        
Deferred tax liabilities   6,403  
Liability for employee severance pay   2,433   2,465
Deferred revenues       36
         
Total long-term liabilities   8,836   2,501
         
Shareholders’ equity   154,644   143,582
         
Total liabilities and shareholders’ equity   201,869   173,279

 

NOVA MEASURING INSTRUMENTS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

  Three months ended   Nine months ended
 

September

30, 2015

 

September

30, 2014

 

September

30, 2015

 

September

30, 2014

               
Revenues:              
Products 30,412   20,157   80,597   74,948  
Services 10,034   7,193   27,895   19,847  
Total revenues 40,446   27,350   108,492   94,795  
               
Cost of revenues:              
Products 12,610   8,543   34,592   32,390  
Services 5,189   3,975   15,219   12,254  

Amortization of acquired intangible assets in

 cost of products

13     2,455  
Total cost of revenues 17,812   12,518   52,266   44,644  
               
Gross profit 22,634   14,832   56,226   50,151
               
Operating expenses:              
Research and Development expenses, net 10,974   7,510   28,877   21,563  
Sales and Marketing expenses 4,228   2,888   11,294   9,799  
General and Administration expenses 1,613   1,096   4,250   3,476
    Acquisition related expenses     2,655  
Amortization of acquired intangible assets 570     1,139  
Total operating expenses 17,385   11,494   48,215   34,838
               
Operating income 5,249   3,338   8,011   15,313
               
Financing income, net 94   20   459   397
               
Income before tax on income 5,343   3,358   8,470   15,710
               
    Income tax expenses (benefit) (94)   89   (2,094)   349
               
Net income for the period 5,437   3,269   10,564   15,361
               
Earnings per share:              
    Basic 0.20   0.12   0.39   0.56
    Diluted 0.20   0.12   0.38   0.55
               

Shares used for calculation of earnings per

 share:

             
    Basic 27,172   27,496   27,224   27,506
    Diluted 27,481   27,780   27,507   27,920
         

 

NOVA MEASURING INSTRUMENTS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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

  Three months ended   Nine months ended
 

September

30, 2015

 

September

30, 2014

 

September

30, 2015

 

September

30, 2014

Cash flows from operating activities:              
               
Net income for the period 5,437   3,269   10,564   15,361
Adjustments to reconcile net income to net cashprovided by operating activities:              
               
Depreciation 1,103   1,072   3,309   2,946
Amortization of acquired intangible assets 583     3,594  
Amortization of deferred stock-based compensation 778   620   1,908   1,614

Decrease (increase) in liability for employee

   termination benefits, net

(49)   (77)   35   (29)
Deferred tax assets, net (482)   (35)   (2,969)   (84)
Loss on securities 81     13  
Decrease (increase) in trade accounts receivable (1,873)   3,330   (6,256)   5,173
Decrease (increase) in inventories (1,431)   1,963   (2,694)   1,291
Decrease (increase) in other current assets (459)   1,254   (502)   794

Increase (decrease) in trade accounts payable and

   other long-term liabilities

(2,428)   (3,207)   135   (6,712)
Increase in other current liabilities 1,964   56   2,646   502

Increase (decrease) in short and long term deferred

   revenues

4,132   (1,906)   3,289   424
               
Net cash provided by operating activities 7,356   6,339   13,072   21,280
               
Cash flow from investment activities:              
               

Decrease (increase) in short-term interest-bearing

   bank deposits

(450)   (8,458)   48,036   (20,442)

Decrease in short-term available for sale

   securities

  18    
Acquisition of subsidiary, net of acquired cash     (45,344)  
Additions to property and equipment (644)   (1,788)   (2,168)   (3,541)
               
Net cash provided by (used in) investment activities (1,094)   (10,228)   524   (23,983)
               
Cash flows from financing activities:              
               
Purchases of treasury shares (2,913)   (3,173)   (4,302)   (4,276)
Shares issued under employee stock-based plans 138   312   2,087   2,586
               
Net cash used in financing activities (2,775)   (2,861)   (2,215)   (1,690)
               
Increase (decrease) in cash and cash equivalents 3,487   (6,750)   11,381   (4,393)
Cash and cash equivalents – beginning of period 21,543   19,899   13,649   17,542
Cash and cash equivalents – end of period 25,030   13,149   25,030   13,149

 

NOVA MEASURING INSTRUMENTS LTD.

RECONCILIATION OF GAAP TO NON-GAAP RESULTS

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

  Three months ended
 

September

30, 2015

 

June

30, 2015

 

September

  30, 2014

           
GAAP cost of revenues 17,812   21,383   12,518
 Amortization of acquired intangible assets in cost of products (13)   (2,442)  
 Stock-based compensation in cost of products (109)   (89)   (103)
 Stock-based compensation in cost of services (62)   (46)   (37)
Non-GAAP cost of revenues 17,628   18,806   12,378
           
GAAP gross profit 22,634   19,169   14,832
Gross profit adjustments 184   2,577   140
Non-GAAP gross profit 22,818   21,746   14,972
GAAP gross margin as a percentage of revenues 56%   47%   54%
Non-GAAP gross margin as a percentage of revenues 56%   54%   55%
           
GAAP operating expenses 17,385   18,695   11,494
 Stock-based compensation in Research and Development (318)   (254)   (253)
 Stock-based compensation in Sales and Marketing (205)   (166)   (136)
 Stock-based compensation in General and Administrative (84)   (58)   (91)
 Acquisition related expenses   (1,549)  
 Amortization of acquired intangible assets (570)   (569)  
Non-GAAP operating expenses 16,208   16,099   11,014
Non-GAAP operating income 6,610   5,647   3,958
GAAP operating margin as a percentage of revenues 13%   1%   12%
Non-GAAP operating margin as a percentage of revenues 16%   14%   14%
           
GAAP tax on income (94)   (1,522)   89
 Deferred tax assets adjustments, net 482   1,921   35
Non-GAAP tax on income 388   399   124
           
GAAP net income 5,437   2,150   3,269
 Amortization of acquired intangible assets 583   3,011  
 Stock-based compensation expenses 778   613   620
 Deferred tax assets adjustments, net (482)   (1,921)   (35)
 Acquisition related expenses   1,549  
Non-GAAP net income 6,316   5,402   3,854
         
GAAP basic earnings per share 0.20   0.08   0.12
Non-GAAP basic earnings per share 0.23   0.20   0.14
         
GAAP diluted earnings per share 0.20   0.08   0.12
Non-GAAP diluted earnings per share 0.23   0.20   0.14
         
Shares used for calculation of earnings per share:        
 Basic 27,172 27,291   27,496
 Diluted 27,481 27,677   27,780
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