X
Go
Investors Press Releases

Nova Reports Fourth Quarter and Full Year 2017 Results

Rehovot, Israel, February 13, 2018

Rehovot, Israel – February 13, 2018 – Nova (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 fourth quarter and full year 2017, the periods ended December 31, 2017.

Fourth Quarter 2017 Highlights:

  • Record quarterly revenue of $57.4 million, up 14% year-over-year, exceeding guidance of $53 to $57 million
  • GAAP net income of $8.2 million, or $0.29 per diluted share, including non-recurring expense of $3.5 million related to tax provision for prior years, meeting guidance of $0.29 to $0.37 per share
  • Non-GAAP net income of $13.0 million, or $0.45 per diluted share, exceeding guidance of $0.34 to $0.42 per share
  • Launched three new metrology solutions, enhancing Nova’s Optical CD and X-ray capabilities in Memory and Logic

Full Year 2017 Highlights:

  • Record full-year revenue of $222 million, up 35% year-over-year, outperforming the industry growth pace
  • Record GAAP net income of $46.5 million, or $1.63 per diluted share, up 365% year-over-year on a per-share basis
  • Record non-GAAP net income of $55.4 million, or $1.94 per diluted share, up 76% year-over-year on a per-share basis
  • Continuous customer diversification and growing position in Memory led to record yearly revenue in both Dimensional Optical and Materials X-ray metrology product lines

GAAP Results ($K)

  Q4 2017 Q3 2017 Q4 2016 FY 2017 FY 2016
Revenues $ 57,378 $54,058 $50,212 $ 221,992 $163,903
Net Income $ 8,241  $11,502 $8,364 $ 46,459 $9,644
Earnings per Diluted Share $0.29 $0.40 $0.30 $1.63 $0.35

NON-GAAP Results ($K)

  Q4 2017 Q3 2017 Q4 2016 FY 2017 FY 2016
Net Income $ 13,021 $13,101 $11,719 $ 55,404 $30,321
Earnings per Diluted Share $0.45 $0.46 $0.42 $1.94 $1.10

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, net adjustments of deferred tax assets, tax provision for previous years, stock-based compensation expenses, expense related to a royalty buyout agreement with the Israel Innovation Authority, or IIA (formerly known as the Office of the Chief Scientist) and inventory write-off.

 Management Comments

“Our record quarterly revenue was an excellent conclusion to a fifth consecutive record revenue year, demonstrating the strength of our diverse product portfolio across all platforms and technology segments,” commented Eitan Oppenhaim, President and Chief Executive Officer of Nova. “2017 was an outstanding year in which our product revenue grew at 42%, outperforming the industry’s growth rates. In parallel, we continued to leverage our operational efficiency, leading to record annual profit”

“We believe that our consistent performance, combined with the launch of new offerings, will lead us to continued growth in 2018. Encouraged by our performance in 2017, we intend to continue executing our strategic plan effectively in order to meet our aggressive growth plan while we expand our product portfolio, solidify our market position and improve customer diversification,” Mr. Oppenhaim continued. “As a leading innovator in the metrology space, we intend to continue our growth by investing in the research and development of disruptive solutions, in order to capture emerging metrology markets and strengthen our market position.”

2018 First Quarter Financial Outlook

Management provided an outlook for the first quarter, the period ending March 31, 2018. Based on current estimates, management expects:

  • $54 million to $60 million in revenue
  • $0.29 to $0.40 in diluted GAAP EPS
  • $0.34 to $0.45 in diluted non-GAAP EPS

2017 Fourth Quarter Results

Total revenues for the fourth quarter of 2017 were $57.4 million, an increase of 6% compared to the third quarter of 2017, and an increase of 14% relative to the fourth quarter of 2016.

Gross margin for the fourth quarter of 2017 was 56%, compared with gross margin of 61% in the third quarter of 2017 and equal to gross margin of 56% in the fourth quarter of 2016.

Operating expenses in the fourth quarter of 2017 were $19.7 million. This is compared with $18.3 million in the third quarter of 2017 and compared with $17.4 million in the fourth quarter of 2016.

On a GAAP basis, the company reported net income of $8.2 million, or $0.29 per diluted share, in the fourth quarter of 2017. This is compared with net income of $11.5 million, or $0.40 per diluted share, in the third quarter of 2017, and compared with net income of $8.4 million, or $0.30 per diluted share, in the fourth quarter of 2016.

On a Non-GAAP basis, which excludes amortization of acquired intangible assets, net adjustments of deferred tax assets, tax provision for prior years and stock-based compensation expenses, the company reported net income of $13.0 million, or $0.45 per diluted share, in the fourth quarter of 2017. This is compared with net income of $13.1 million, or $0.46 per diluted share, in the third quarter of 2017, and compared with net income of $11.7 million, or $0.42 per diluted share, in the fourth quarter of 2016.

2017 Full Year Results

Total revenues for 2017 were $222.0 million, an increase of 35% compared to total revenues of $163.9 million for 2016.

Gross margin in 2017 was 59%, compared with gross margin of 46% in 2016, which included $12.9 million of non-recurring expense related to a royalty buyout agreement with the Israel Innovation Authority, or IIA (formerly known as the Office of the Chief Scientist).

Operating expenses in 2017 were $73.4 million, compared with operating expenses of $65.1 million in 2016.

On a GAAP basis, the company reported net income of $46.5 million, or $1.63 per diluted share, in 2017. This is compared with a net income of $9.6 million, or $0.35 per diluted share, in 2016, which included $12.9 million of expense related to a royalty buyout agreement with IIA.

On a non-GAAP basis, which excludes amortization of acquired intangible assets, net adjustments of deferred tax assets, tax provision for prior years, stock-based compensation expenses, expense related to a royalty buyout agreement with IIA and inventory write-off, the company reported net income of $55.4 million, or $1.94 per diluted share, in 2017, compared with net income of $30.3 million, or $1.10 per diluted share, in 2016.

Total cash reserves at the end of 2017 were $149.8 million, compared to $91.7 million at the end of 2016.

Conference Call Information

Nova will host a conference call today, February 13, 2018, 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: 1-888-289-0438

ISRAEL Dial-in Number: 1 809-212- 883

INTERNATIONAL Dial-in Number: 1-323-794-2423

At:

9 a.m. Eastern Time

6 a.m. Pacific Time

4 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 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 charges for amortization of acquired intangible assets, net adjustment of deferred tax assets, tax provision for prior years, stock-based compensation expenses, expense related to a royalty buyout agreement with IIA (formerly known as the Office of the Chief Scientist) and inventory write-off 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 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 efforts to complete and integrate current and/or future acquisitions; risks related to 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, 2016 filed with the Securities and Exchange Commission on March 3, 2017. 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 December 31,
ASSETS 2017   2016
Current assets      
Cash and cash equivalents 27,697   20,406
Short-term interest-bearing bank deposits 121,390   70,546
Trade accounts receivable 40,949   42,626
Inventories 34,921   29,260
Other current assets 7,313   5,068
       
Total current assets 232,270   167,906
       
Long-term assets      
Long-term interest-bearing bank deposits 750   750
Deferred tax assets 1,957   3,020
Severance pay funds 1,503   1,425
Property and equipment, net 13,891   10,017
Identifiable intangible assets, net 12,800   15,361
Goodwill 20,114   20,114
       
Total long-term assets 51,015   50,687
       
Total assets 283,285   218,593
 LiabIlities and shareholders’ Equity      
Current liabilities      
Trade accounts payable 15,754   16,501
Deferred revenues 10,334   4,072
Other current liabilities 26,038   18,461
       
Total current liabilities 52,126   39,034
       
Long-term liabilities      
Deferred tax liabilities   1,094
Liability for employee severance pay 2,590   2,418
Other long-term liabilities 1,833   1,330
       
Total long-term liabilities 4,423   4,842
       
Shareholders’ equity 226,736   174,717
       
Total liabilities and shareholders’ equity 283,285   218,593
       

 

NOVA MEASURING INSTRUMENTS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

 

Three months ended

December 31,

 

Year ended

December 31,

   2017   2016    2017   2016
               
Revenues:              
Products 44,754   39,806   174,343   122,439
Services 12,624   10,406   47,649   41,464
Total revenues 57,378   50,212   221,992   163,903
               
Cost of revenues:              
Products 17,523   15,497   62,242   48,577
Services 7,801   6,557   28,563   25,282

Expense related to a royalty buyout agreement

with the IIA

      12,875
Inventory write-off       1,889
Total cost of revenues 25,324   22,054   90,805   88,623
               
Gross profit 32,054   28,158   131,187   75,280
               
Operating expenses:              
Research and development expenses, net 10,617   9,225   38,956   34,998
Sales and marketing expenses 5,908   5,814   23,751   20,736
General and administration expenses 2,558   1,702   8,100   6,835
Amortization of acquired intangible assets 640   636   2,561   2,545
Total operating expenses 19,723   17,377   73,368   65,114
               
Operating income 12,331   10,781   57,819   10,166
               
Financing income, net 710   190   2,276   1,216
               
Income before tax on income 13,041   10,971   60,095   11,382
               
Income tax expenses 4,800   2,607   13,636   1,738
               
Net income for the period 8,241   8,364   46,459   9,644
               
Earnings per share:              
Basic 0.30   0.31   1.68   0.35
Diluted 0.29   0.30   1.63   0.35
               
Shares used for calculation of earnings per share:              
               
Basic 27,873   27,292   27,696   27,175
Diluted 28,786   27,704   28,524   27,503
                               

 

NOVA MEASURING INSTRUMENTS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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

 

Three months ended

December 31,

 

Year ended

December 31,

  2017   2016   2017   2016
Cash flows from operating activities:              
Net income for the period 8,241   8,364   46,459   9,644
Adjustments to reconcile net income to net cash provided by (used in) operating activities:              
Depreciation 787   731   3,618   4,271
Amortization of acquired intangible assets 640   636   2,561   2,545
Amortization of deferred stock-based compensation 899   691   2,779   2,735
Increase (decrease) in liability for employee termination benefits, net 3   (57)   94   38
Deferred tax assets, net (395)   2,028   (31)   633
Decrease (increase) in trade accounts receivable (7,395)   (19,068)   1,677   (23,580)
Decrease (increase) in inventories 3,050   (335)   (6,858)   (1,670)
Decrease (increase) in other current and long term assets 1,187   (1,885)   (2,245)   (2,180)
Increase (decrease) in trade accounts payable (1,869)   4,127   (747)   2,123
Increase in other current liabilities and other long-term liabilities 5,218   3,601   8,242   3,037
Increase (decrease) in short and long term deferred revenues (1,092)   (351)   6,262   (1,756)
               
Net cash provided by (used in) operating activities 9,274   (1,518)   61,811   (4,160)
               
Cash flow from investment activities:              
Decrease (increase) in short-term interest-bearing bank deposits 2,443   (998)   (50,844)   (1,248)
Additions to property and equipment (4,171)   (1,518)   (6,295)   (3,133)
               
Net cash used in investment activities (1,728)   (2,516)   (57,139)   (4,381)
               
Cash flows from financing activities:              
Purchases of treasury shares       (937)
Shares issued under employee stock-based plans 131   786   2,619   2,151
               
Net cash provided by financing activities 131   786   2,619   1,214
               
Increase (decrease) in cash and cash equivalents 7,677   (3,248)   7,291   (7,327)
Cash and cash equivalents – beginning of period 20,020   23,654   20,406   27,733
Cash and cash equivalents – end of period 27,697   20,406   27,697   20,406

 

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
  December 31,
2017
  September 30,
2017
  December 31,
2016
GAAP cost of revenues 25,324   21,179   22,054
  Stock-based compensation in cost of products (107)   (113)   (88)
  Stock-based compensation in cost of services (89)   (57)   (54)
Non-GAAP cost of revenues 25,128   21,009   21,912
           
GAAP gross profit 32,054   32,879   28,158
  Gross profit adjustments 196   170   142
Non-GAAP gross profit 32,250   33,049   28,300
GAAP gross margin as a percentage of revenues 56%   61%   56%
Non-GAAP gross margin as a percentage of revenues 56%   61%   56%
           
GAAP operating expenses 19,723   18,277   17,377
Stock-based compensation in research and development (346)   (259)   (247)
  Stock-based compensation in sales and marketing (216)   (95)   (211)
  Stock-based compensation in general and administrative (141)   (145)   (91)
  Amortization of acquired intangible assets (640)   (641)   (636)
Non-GAAP operating expenses 18,380   17,137   16,192
Non-GAAP operating income 13,870   15,912   12,108
GAAP operating margin as a percentage of revenues 21%     27%      21%
Non-GAAP operating margin as a percentage of revenues 24%   29%   24%
           
GAAP tax on income 4,800   3,726   2,607
  Deferred tax assets adjustments, net 312   (289)   (2,028)
  Tax provision for prior years (3,553)    
Non-GAAP tax on income 1,559   3,437   579
           
GAAP net income 8,241   11,502   8,364
  Amortization of acquired intangible assets 640   641   636
  Stock-based compensation expenses 899   669   691
  Deferred tax assets adjustments, net (312)   289   2,028
  Tax provision for prior years 3,553    
Non-GAAP net income 13,021   13,101   11,719
           
GAAP basic earnings per share 0.30        0.41   0.31
Non-GAAP basic earnings per share 0.47   0.47   0.43
           
GAAP diluted earnings per share 0.29   0.40   0.30
Non-GAAP diluted earnings per share 0.45   0.46   0.42
           
Shares used for calculation of earnings per share:          
  Basic 27,873   27,788   27,292
  Diluted 28,786   28,601   27,704
           

 

NOVA MEASURING INSTRUMENTS LTD.

RECONCILIATION OF GAAP TO NON-GAAP RESULTS

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

  Year ended December 31,
  2017   2016
GAAP cost of revenues 90,805   88,623
  Expense related to a royalty buyout agreement with the IIA   (12,875)
  Inventory write-off   (1,889)
  Stock-based compensation in cost of products (370)   (342)
  Stock-based compensation in cost of services (268)   (218)
Non-GAAP cost of revenues 90,167   73,299
       
GAAP gross profit 131,187   75,280
Gross profit adjustments 638   15,324
Non-GAAP gross profit 131,825   90,604
GAAP gross margin as a percentage of revenues 59%   46%
Non-GAAP gross margin as a percentage of revenues 59%   55%
       
GAAP operating expenses 73,368   65,114
  Stock-based compensation in research and development (1,055)   (983)
  Stock-based compensation in sales and marketing (621)   (884)
  Stock-based compensation in general and administrative (465)   (308)
  Amortization of acquired intangible assets (2,561)   (2,545)
Non-GAAP operating expenses 68,666   60,394
Non-GAAP operating income 63,159   30,210
GAAP operating margin as a percentage of revenues 26%   6%
Non-GAAP operating margin as a percentage of revenues 28%   18%
       
GAAP tax on income 13,636   1,738
  Deferred tax assets adjustments, net (52)   (633)
  Tax provision for prior years (3,553)  
Non-GAAP tax on income 10,031   1,105
       
GAAP net income 46,459   9,644
  Amortization of acquired intangible assets 2,561   2,545
  Expense related to a royalty buyout agreement with the IIA   12,875
  Stock-based compensation expenses 2,779   2,735
  Deferred tax assets adjustments, net 52   633
  Tax provision for prior years 3,553  
  Inventory write-off   1,889
Non-GAAP net income 55,404   30,321
       
GAAP basic earnings per share 1.68   0.35
Non-GAAP basic earnings per share 2.00   1.12
       
GAAP diluted earnings per share 1.63   0.35
Non-GAAP diluted earnings per share 1.94   1.10
       
Shares used for calculation of earnings per share:      
  Basic 27,696   27,175
  Diluted 28,524   27,503

 

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