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Investors Press Releases

Nova Reports Fourth Quarter and Full Year 2019 Results

Rehovot, February 13, 2020

Rehovot, Israel, February 13, 2020 – Nova (Nasdaq: NVMI) today announced financial results for the fourth quarter and full year 2019.

Fourth Quarter 2019 Highlights:

  • Quarterly revenue of $64.6 million, exceeding guidance of $56 million to $62 million.
  • GAAP net income of $12.4 million, or $0.43 per diluted share, exceeding guidance of $0.32 to $0.42 per share.
  • Non-GAAP net income of $14.6 million, or $0.51 per diluted share, exceeding guidance of $0.40 to $0.50 per share.
  • Accelerated deliveries to leading edge Foundry to support its most advanced technology nodes.
  • Received initial orders for the new Dimensional Stand-Alone Platform, the NovaPRISM™.

Full Year 2019 Highlights:

  • Full year revenue of $224.9 million.
  • GAAP net income of $35.2 million, or $1.23 per diluted share.
  • Non-GAAP net income of $45.5 million, or $1.59 per diluted share.
  • Balanced products revenue mix.  Foundry and Memory contributing approximately 50% each.

GAAP Results ($K)

 

Q4 2019

Q3 2019

Q4 2018

FY 2019

FY 2018

Revenues

$64,625

$52,507

$63,072

$224,909

$251,134

Net Income

$12,385

$8,562

$15,152

$35,171

$54,375

Earnings per Diluted Share

$0.43

$0.30

$0.53

$1.23

$1.89

NON-GAAP Results ($K)

 

Q4 2019

Q3 2019

Q4 2018

FY 2019

FY 2018

Net Income

$14,561

$11,507

$16,914

$45,523

$60,766

Earnings per Diluted Share

$0.51

$0.40

$0.59

$1.59

$2.11

A reconciliation between GAAP operating results and non-AAP operating results is provided following the financial statements that are part of this release. Non-GAAP results exclude amortization of acquired intangible assets, stock-based compensation expenses, facilities transition costs, revaluation of long-term liabilities and tax effect of non-GAAP adjustments.

Management Comments

“Nova reported strong results for the fourth quarter, demonstrating the meaningful value our differentiated portfolio brings to our customers. Our sound performance drove revenue and profitability to exceed the company’s guidance and propelled our quarterly revenue to a new record high,” commented Eitan Oppenhaim, President and Chief Executive Officer. “This was an excellent conclusion to a volatile year during which we continued to strengthen our position and expand our unique portfolio to support our long-term growth. As we enter a new calendar year, we are excited by multiple opportunities associated with the technology enhancements our customers implement. Following our major investment in new products’ development, we believe that Nova is well positioned to capitalize on these opportunities in 2020.”

2020 First Quarter Financial Outlook

Management provided an outlook for the first quarter, the period ending March 31, 2020. Based on current estimates, management expects:

  • $50 million to $60 million in revenue
  • $0.18 to $0.34 in diluted GAAP EPS
  • $0.26 to $0.42 in diluted non-GAAP EPS

2019 Fourth Quarter Results

Total revenues for the fourth quarter of 2019 were $64.6 million, an increase of 23% compared to the third quarter of 2019 and increase of 2% compared to the fourth quarter of 2018.

Gross margin for the fourth quarter of 2019 was 54%, compared to a gross margin of 52% in the third quarter of 2019, and compared to the gross margin of 57% in the fourth quarter of 2018.

Operating expenses in the fourth quarter of 2019 were $20.1 million, compared with $21.0 in the third quarter of 2019 and compared with $20.7 million in the fourth quarter of 2018.

On a GAAP basis, the company reported net income of $12.4 million, or $0.43 per diluted share, in the fourth quarter of 2019. This is compared with $8.6 million, or $0.30 per diluted share, in the third quarter of 2019, and compared with net income of $15.2 million, or $0.53 per diluted share, in the fourth quarter of 2018.

On a non-GAAP basis, which exclude amortization of acquired intangible assets, stock-based compensation expenses, facilities transition costs, revaluation of long-term liabilities and tax effect of non-GAAP adjustments, the company reported net income of $14.6 million, or $0.51 per diluted share, in the fourth quarter of 2019. This is compared with net income of $11.5 million, or $0.40 per diluted share, in the third quarter of 2019, and compared with net income of $16.9 million, or $0.59 per diluted share, in the fourth quarter of 2018.

2019 Full Year Results

Total revenues for 2019 were $224.9 million, a decrease of 10% compared to total revenues of $251.1 million for 2018.

Gross margin in 2019 was 54%, compared with gross margin of 58% in 2018.

Operating expenses in 2019 were $85.4 million, compared with operating expenses of $84.8 in 2018.

On a GAAP basis, the company reported net income of $35.2 million, or $1.23 per diluted share, in 2019. This is compared with a net income of $54.4 million, or $1.89 per diluted share, in 2018.

On a non-GAAP basis, which exclude amortization of acquired intangible assets, stock-based compensation expenses, facilities transition costs, revaluation of long-term liabilities and tax effect of non-GAAP adjustments, the company reported net income of $45.5 million, or $1.59 per diluted share, in 2019. This is compared with net income of $60.8 million, or $2.11 per diluted share, in 2018.

Conference Call Information

Nova will host a conference call today, February 13, 2020, at 9 a.m. Eastern Time, to discuss the financial results and 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: 1-888-394-8218
ISRAEL Dial-in Number: 1-809-212-883
INTERNATIONAL Dial-in Number: 1-323-701-0225

At:
9 a.m. Eastern Time
6 a.m. Pacific Time
4 p.m. Israeli Time

Please reference conference ID 7996016

The conference call will also be webcast live from a link on Nova’s website at http://ir.novami.com.

A replay of the conference call will be available from February 13, 2020 at 12 p.m. Eastern Time to February 20, 2020 at 11:59 p.m. Eastern Time. To access the replay, please dial one of the following numbers:

Replay Dial-in TOLL-FREE 1-844-512-2921
TOLL/INTERNATIONAL 1-412-317-6671

Replay Pin Number: 7996016

A replay will also be available for 90 days on Nova’s website at http://ir.novami.com.

 

About Nova:

Nova is a leading innovator and key provider of metrology solutions for advanced process control used in semiconductor manufacturing. Nova delivers continuous innovation by providing 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, provides its customers with deep insight into the development and production of the most advanced semiconductor devices. Nova’s unique capability to deliver innovative X-ray and Optical solutions enable its customers to improve performance, enhance product 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.novami.com.

Nova is traded on the NASDAQ & TASE under the symbol NVMI.

This press release provides financial measures that exclude amortization of acquired intangible assets, stock-based compensation expenses, facilities transition costs, revaluation of long-term liabilities and tax effect of non-GAAP adjustments 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 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 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 technology security threats and changes in privacy laws; 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, 2018 filed with the Securities and Exchange Commission on February 28, 2019. 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

 

2019

 

2018

 

Current assets

 

 

 

 

 

Cash and cash equivalents

 

31,748

 

22,877

 

Short-term interest-bearing bank deposits

 

157,346

 

152,951

 

Trade accounts receivable

 

51,603

 

53,531

 

Inventories

 

48,362

 

41,786

 

Other current assets

 

17,122

 

10,961

 

 

 

 

 

 

 

Total current assets

 

306,181

 

282,106

 

 

 

 

 

 

 

Long-term assets

 

 

 

 

 

Long-term interest-bearing bank deposits

 

2,000

 

2,000

 

Deferred tax assets

 

4,554

 

3,873

 

Severance pay funds

 

1,210

 

1,394

 

Property and equipment, net

 

30,566

 

13,756

 

Identifiable intangible assets, net

 

7,562

 

10,187

 

Operating lease right-of-use assets

 

28,256

 

 

Goodwill

 

20,114

 

20,114

 

 

 

 

 

 

 

Total long-term assets

 

94,262

 

51,324

 

 

 

 

 

 

 

Total assets

 

400,443

 

333,430

 

 LiabIlities and shareholders’ Equity

 

 

 

 

 

Current liabilities

 

 

 

 

 

Trade accounts payable

 

20,706

 

19,015

 

Deferred revenues

 

2,256

 

3,984

 

Operating lease current liabilities

 

3,382

 

 

Other current liabilities

 

21,751

 

25,079

 

 

 

 

 

 

 

Total current liabilities

 

48,095

 

48,078

 

 

 

 

 

 

 

Long-term liabilities

 

 

 

 

 

Liability for employee severance pay

 

2,120

 

2,254

 

Operating lease long-term liabilities

 

29,931

 

 

Other long-term liabilities

 

5,758

 

2,358

 

 

 

 

 

 

 

Total long-term liabilities

 

37,809

 

4,612

 

 

 

 

 

 

 

Shareholders’ equity

 

314,539

 

280,740

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

 

400,443

 

333,430

 

 

 

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,

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

Products

47,015

 

48,376

 

167,200

 

193,298

Services

17,610

 

14,696

 

57,709

 

57,836

Total revenues

64,625

 

63,072

 

224,909

 

251,134

 

 

 

 

 

 

 

 

Cost of revenues:

 

 

 

 

 

 

 

Products

18,854

 

18,120

 

67,300

 

71,706

Services

11,138

 

9,242

 

35,789

 

34,194

Total cost of revenues

29,992

 

27,362

 

103,089

 

105,900

 

 

 

 

 

 

 

 

Gross profit

34,633

 

35,710

 

121,820

 

145,234

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Research and development expenses, net

9,722

 

10,490

 

44,508

 

45,451

Sales and marketing expenses

7,270

 

7,303

 

28,213

 

27,992

General and administrative expenses

2,502

 

2,209

 

10,066

 

8,735

Amortization of acquired intangible assets

656

 

654

 

2,625

 

2,614

Total operating expenses

20,150

 

20,656

 

85,412

 

84,792

 

 

 

 

 

 

 

 

Operating income

14,483

 

15,054

 

36,408

 

60,442

 

 

 

 

 

 

 

 

Financing income, net

826

 

1,178

 

3,078

 

2,984

 

 

 

 

 

 

 

 

Income before tax on income

15,309

 

16,232

 

39,486

 

63,426

 

 

 

 

 

 

 

 

Income tax expenses

2,924

 

1,080

 

4,315

 

9,051

 

 

 

 

 

 

 

 

 

Net income for the period

12,385

 

15,152

 

         35,171

 

54,375

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

Basic

0.44

 

0.54

 

1.26

 

1.94

Diluted

0.43

 

0.53

 

1.23

 

1.89

 

 

 

 

 

 

 

 

Shares used for calculation of earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

27,965

 

               28,026

 

             27,895

 

             28,022

Diluted

28,689

 

               28,655

 

             28,574

 

             28,765

 

 

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,

 

2019

 

2018

 

2019

 

2018

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income for the period

12,385

 

15,152

 

35,171

 

54,375

Adjustments to reconcile net income to net cash
provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

1,086

 

2,150

 

10,398

 

7,684

Amortization of deferred stock-based compensation

1,430

 

1,245

 

5,092

 

4,326

Decrease (increase) in liability for employee termination benefits, net

(2)

 

(174)

 

50

 

(227)

Deferred tax assets, net

73

 

(1,171)

 

(681)

 

(1,916)

Decrease (increase) in trade accounts receivable

(4,549)

 

(5,460)

 

1,928

 

(12,539)

Decrease (increase) in inventories

1,669

 

(119)

 

(7,518)

 

(8,123)

Increase in other current and long-term assets

(1,561)

 

(4,717)

 

(6,161)

 

(3,648)

Increase in trade accounts payable

2,117

 

1,395

 

1,691

 

3,261

Increase (decrease) in other current liabilities and other long-term liabilities

4,292

 

6,860

 

2,960

 

(734)

Decrease in short term deferred revenues

(1,459)

 

(2,267)

 

(1,728)

 

(6,350)

 

 

 

 

 

 

 

 

Net cash provided by operating activities

15,481

 

12,894

 

41,202

 

36,109

 

 

 

 

 

 

 

 

Cash flow from investment activities:

 

 

 

 

 

 

 

Increase in short-term and long-term interest-bearing bank deposits

(4,430)

 

*(7,151)

 

(4,395)

 

*(31,561)

Additions to property and equipment

(5,648)

 

(1,899)

 

(21,269)

 

(3,678)

 

 

 

 

 

 

 

 

Net cash used in investment activities

(10,078)

 

*(9,050)

 

(25,664)

 

*(35,239)

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Purchases of treasury shares

 

(4,801)

 

(7,159)

 

(4,801)

Shares issued under employee stock-based plans

125

 

67

 

492

 

361

 

 

 

 

 

 

 

 

Net cash provided by (used in) financing activities

125

 

(4,734)

 

(6,667)

 

(4,440)

 

 

 

 

 

 

 

 

Increase (decrease) in cash and cash equivalents and restricted cash

5,528

 

*(890)

 

8,871

 

*(3,570)

Cash and cash equivalents and restricted cash – beginning of period

28,220

 

*25,767

 

24,877

 

*28,447

Cash and cash equivalents and restricted cash – end of period

33,748

 

*24,877

 

33,748

 

*24,877

 

 

 

 

 

 

 

 

Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheet

 

 

 

 

 

 

 

Cash and cash equivalents

31,748

 

22,877

 

31,748

 

22,877

Restricted cash included in Long-term interest-bearing bank deposits

2,000

 

2,000

 

2,000

 

2,000

Total cash, cash equivalents, and restricted cash

33,748

 

24,877

 

33,748

 

24,877

 

*reclassified

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                         

 

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,
2019

 

September 30,
2019

 

December 31,
2018

GAAP gross profit

34,633

 

27,493

 

35,710

Stock-based compensation expenses *

269

 

277

 

269

Facilities transition costs

– 

 

220

 

– 

Non-GAAP gross profit

34,902

 

27,990

 

35,979

GAAP gross margin as a percentage of revenues

54%

 

52%

 

57%

Non-GAAP gross margin as a percentage of revenues

54%

 

53%

 

57%

 

 

 

 

 

 

GAAP operating income

14,483

 

6,474

 

15,054

Stock-based compensation expenses *

1,430

 

1,364

 

1,245

Amortization of acquired intangible assets

656

 

657

 

654

Facilities transition costs

– 

 

888

 

– 

Non-GAAP operating income

16,569

 

9,383

 

16,953

GAAP operating margin as a percentage of revenues

22%

 

12%

 

24%

Non-GAAP operating margin as a percentage of revenues

26%

 

18%

 

27%

 

 

 

 

 

 

GAAP net income

12,385

 

8,562

 

15,152

Stock-based compensation expenses *

1,430

 

1,364

 

1,245

Amortization of acquired intangible assets

656

 

657

 

654

Facilities transition costs

 

888

 

– 

Revaluation of long-term liabilities

269

 

362

 

– 

Tax effect of non-GAAP adjustments

(179)

 

(326)

 

(137)

Non-GAAP net income

14,561

 

11,507

 

16,914

 

 

 

 

 

 

GAAP basic earnings per share

0.44

 

0.31

 

0.54

Non-GAAP basic earnings per share

0.52

 

0.41

 

0.60

 

 

 

 

 

 

GAAP diluted earnings per share

0.43

 

0.30

 

0.53

Non-GAAP diluted earnings per share

0.51

 

0.40

 

0.59

 

 

 

 

 

 

Shares used for calculation of earnings per share:

 

 

 

 

 

Basic

27,965

 

27,826

 

28,026

Diluted

28,689

 

28,474

 

28,655

             

* Stock-based compensation expenses for the three months ended December 31, 2019 included in – Cost of revenues products – 109; Cost of revenues services – 160; Research and development expenses, net – 724; Sales and marketing expenses – 352; General and administrative expenses – 85.

 

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,

 


2019

 


2018

 

GAAP gross profit

121,820

 

145,234

 

Stock-based compensation expenses (1)

1,003

 

929

 

Facilities transition costs (2)

703

 

– 

 

Non-GAAP gross profit

123,526

 

146,163

 

GAAP gross margin as a percentage of revenues

54%

 

58%

 

Non-GAAP gross margin as a percentage of revenues

55%

 

58%

 

 

 

 

 

 

GAAP operating income

36,408

 

60,442

 

Stock-based compensation expenses (1)

5,092

 

4,326

 

Amortization of acquired intangible assets

2,625

 

2,614

 

Facilities transition costs (2)

2,329

 

– 

 

Non-GAAP operating income

46,454

 

67,382

 

GAAP operating margin as a percentage of revenues

16%

 

24%

 

Non-GAAP operating margin as a percentage of revenues

21%

 

27%

 

 

 

 

 

 

GAAP net income

35,171

 

54,375

 

Stock-based compensation expenses (1)

5,092

 

4,326

 

Amortization of acquired intangible assets

2,625

 

2,614

 

Facilities transition costs (2)

2,329

 

– 

 

Revaluation of long-term liabilities

1,410

 

– 

 

Tax effect of non-GAAP adjustments

(1,104)

 

(549)

 

Non-GAAP net income

45,523

 

60,766

 

 

 

 

 

 

GAAP basic earnings per share

1.26

 

1.94

 

Non-GAAP basic earnings per share

1.63

 

2.17

 

 

 

 

 

 

GAAP diluted earnings per share

1.23

 

1.89

 

Non-GAAP diluted earnings per share

1.59

 

2.11

 

 

 

 

 

 

Shares used for calculation of earnings per share:

 

 

 

 

Basic

27,895

 

28,022

 

Diluted

28,574

 

28,765

 

 (1) Stock-based compensation expenses for the year ended December 31, 2019 included in – Cost of revenues products – 534; Cost of revenues services – 469; Research and development expenses, net – 2,206; Sales and marketing expenses – 1,121; General and administrative expenses – 762.

(2) Facilities transition costs for the year ended December 31, 2019 included in – Cost of revenues products – 457; Cost of revenues services – 246; Research and development expenses, net – 743; Sales and marketing expenses – 285; General and administrative expenses – 598.

 

 

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 Contact:
Miri Segal
MS-IR LLC
Tel: +917-607-8654
E-mail: msegal@ms-ir.com
Nova