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Nova Reports Fourth Quarter and Full Year 2020 Results

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REHOVOT, Israel, Feb. 18, 2021 /PRNewswire/ — Nova (Nasdaq: NVMI) today announced financial results for the fourth quarter and full year 2020.

Fourth Quarter 2020 Highlights:

  • Quarterly record revenue of $76.3 million, up 18% year-over-year
  • GAAP net income of $13.7 million, or $0.47 per diluted share, up 9% year-over-year on a per-share basis
  • Non-GAAP net income of $15.9 million, or $0.55 per diluted share, up 8% year-over-year on a per-share basis
  • Initial revenues recognized from multiple customers for Nova ELIPSON™, a newly launched materials metrology solution
  • Record quarterly materials metrology revenue, driven by expansion into leading Logic and Foundry customers

Full Year 2020 Highlights:

  • Record annual revenue of $269.4 million, up 20% year-over-year
  • GAAP net income of $47.9 million, or $1.65 per diluted share, up 35% year-over-year on a per-share basis
  • Non-GAAP net income of $59.6 million, or $2.06 per diluted share, up 30% year-over-year on a per-share basis

GAAP Results ($K)

Q4 2020

Q3 2020

Q4 2019

FY 2020

FY 2019

Revenues

$76,303

$69,485

$64,625

$269,396

$224,909

Net Income

$13,657

$13,896

$12,385

$47,907

$35,171

Earnings per Diluted Share

$0.47

$0.48

$0.43

$1.65

$1.23

NON-GAAP Results ($K)

Q4 2020

Q3 2020

Q4 2019

FY 2020

FY 2019

Net Income

$15,872

$16,511

$14,561

$59,638

$45,523

Earnings per Diluted Share

$0.55

$0.57

$0.51

$2.06

$1.59

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, stock-based compensation expenses, expense related to a transaction made by a financial institution without Company authorization, facilities transition costs, revaluation of operating lease liabilities, amortization of debt discount and issuance costs and tax effect of non-GAAP adjustment.

Management Comments

“Our robust fourth quarter financial results concluded a record year for Nova, demonstrating the company’s growing agility and outstanding execution capabilities,” commented Eitan Oppenhaim, President and Chief Executive Officer. “This was a firm conclusion to a well-performed year during which we continued to innovate and expand our differentiated portfolio to support our customers’ new generation of devices. Our resilience amid the pandemic, led by our global teams, drove our strong performance throughout the year. With our new enhanced product offering and solid market position, we enter 2021 with substantial momentum to continue our growth across customers and territories.”

2021 First Quarter Financial Outlook

Management provided an outlook for the first quarter, the period ending March 31, 2021. Based on current estimates, management expects:

  • $76 million to $83 million in revenue
  • $0.41 to $0.53 in diluted GAAP EPS
  • $0.55 to $0.66 in diluted non-GAAP EPS

2020 Fourth Quarter Results

Total revenues for the fourth quarter of 2020 were $76.3 million, an increase of 9.8% compared with the third quarter of 2020 and an increase of 18.1% compared with the fourth quarter of 2019.

Gross margin for the fourth quarter of 2020 was 55.5%, compared with a gross margin of 57.1% in the third quarter of 2020, and compared with a gross margin of 53.6% in the fourth quarter of 2019.

Operating expenses in the fourth quarter of 2020 were $25.5 million, compared with $24.1 million in the third quarter of 2020 and compared with $20.1 million in the fourth quarter of 2019.

On a GAAP basis, the Company reported net income of $13.7 million, or $0.47 per diluted share, in the fourth quarter of 2020. This is compared with net income of $13.9 million, or $0.48 per diluted share, in the third quarter of 2020, and compared with net income of $12.4 million, or $0.43 per diluted share, in the fourth quarter of 2019.

On a non-GAAP basis, which excludes amortization of acquired intangible assets, stock-based compensation expenses, one-time expense related to a transaction made by a financial institution without Company authorization, facilities transition costs, revaluation of operating lease liabilities, amortization of debt discount and issuance costs and tax effect of non-GAAP adjustment, the Company reported net income of $15.9 million, or $0.55 per diluted share, in the fourth quarter of 2020. This is compared with net income of $16.5 million, or $0.57 per diluted share, in the third quarter of 2020, and compared with net income of $14.6 million, or $0.51 per diluted share, in the fourth quarter of 2019.

2020 Full Year Results

Total revenues for 2020 were $269.4 million, an increase of 19.8% compared to total revenues of $224.9 million for 2019.

Gross margin in 2020 was 56.8%, compared with gross margin of 54.2% in 2019.

Operating expenses in 2020 were $97.4 million, compared with operating expenses of $85.4 in 2019.

On a GAAP basis, the Company reported net income of $47.9 million, or $1.65 per diluted share, in 2020. This is compared with a net income of $35.2 million, or $1.23 per diluted share, in 2019.

On a non-GAAP basis, which excludes amortization of acquired intangible assets, stock-based compensation expenses, one-time expense related to a transaction made by a financial institution without Company authorization, facilities transition costs, revaluation of operating lease liabilities, amortization of debt discount and issuance costs and tax effect of non-GAAP adjustment, the Company reported net income of $59.6 million, or $2.06 per diluted share, in 2020. This is compared with net income of $45.5 million, or $1.59 per diluted share, in 2019.

Conference Call Information

Nova will host a conference call today, February 18, 2021, 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. TOLL-FREE Dial-in Number: 1-866-548-4713
ISRAEL TOLL-FREE Dial-in Number: 1-809-212-883
INTERNATIONAL Dial-in Number: 1-323-794-2093

At:
9 a.m. Eastern Time
6 a.m. Pacific Time
4 p.m. Israel Time
Please reference conference ID: 1340079

The conference call will also be webcast live from a link on Nova’s website at https://www.novami.com/investors/events/.

A replay of the conference call will be available from February 18, 2021 at 12 p.m. Eastern Time to February 25, 2021 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
Replay Dial-in TOLL/INTERNATIONAL: 1-412-317-6671
Replay Pin Number: 1340079

A replay will also be available for 90 days on Nova’s website at https://www.novami.com/investors/events/.

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 enables 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, expense related to a transaction made by a financial institution without Company authorization, facilities transition costs, revaluation of operating lease liabilities, amortization of debt discount and issuance costs and tax effect of non-GAAP adjustment, as applicable, 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 enhance 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 allow 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 worldwide financial and economic instabilities, including the implications of the ongoing novel coronavirus (COVID-19) pandemic; 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, including data breaches, cyberattacks and system disruptions, 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, 2019 filed with the Securities and Exchange Commission on March 12, 2020. 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

2020

2019

Current assets

Cash and cash equivalents

232,304

31,748

Short-term interest-bearing bank deposits

191,567

154,533

Trade accounts receivable, net

63,314

51,603

Inventories

61,734

48,362

Other current assets

9,782

16,685

Total current assets

558,701

302,931

Non-current assets

Interest-bearing bank deposits

2,547

2,813

Restricted interest-bearing bank deposits

1,476

2,000

Deferred tax assets

2,869

4,554

Other long-term assets

462

437

Severance pay funds

1,281

1,210

Operating lease right-of-use assets

29,109

28,256

Property and equipment, net

34,168

30,566

Intangible assets, net

5,059

7,562

Goodwill

20,114

20,114

Total non-current assets

97,085

97,512

Total assets

655,786

400,443

 LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities

Trade accounts payable

24,096

20,706

Deferred revenues

4,717

2,256

Operating lease current liabilities

3,703

2,777

Other current liabilities

28,418

20,493

Total current liabilities

60,934

46,232

Non-current liabilities

Convertible senior notes, net

178,808

-

Accrued severance pay

3,719

3,294

Operating lease long-term liabilities

31,905

30,536

Other long-term liability

8,882

5,842

Total non-current liabilities

223,314

39,672

Shareholders' equity

371,538

314,539

Total liabilities and shareholders' equity

655,786

400,443

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,

2020

2019

2020

2019

Revenues:

Products

61,741

47,015

209,320

167,200

Services

14,562

17,610

60,076

57,709

Total revenues

76,303

64,625

269,396

224,909

Cost of revenues:

Products

22,633

18,854

78,555

67,300

Services

11,347

11,138

37,918

35,789

Total cost of revenues

33,980

29,992

116,473

103,089

Gross profit

42,323

34,633

152,923

121,820

Operating expenses:

Research and development, net

15,753

9,722

53,015

44,508

Sales and marketing

8,089

7,270

29,321

28,213

General and administrative

1,009

2,502

12,514

10,066

Amortization of acquired intangible assets

626

656

2,503

2,625

Total operating expenses

25,477

20,150

97,353

85,412

Operating income

16,846

14,483

55,570

36,408

Financing income (expense), net

(1,335)

826

926

3,078

Income before tax on income

15,511

15,309

56,496

39,486

Income tax expenses

1,854

2,924

8,589

4,315

Net income for the period

13,657

12,385

47,907

35,171

Earnings per share:

Basic

0.49

0.44

1.71

1.26

Diluted

0.47

0.43

1.65

1.23

Shares used for calculation of earnings per share

 (in thousands):

Basic

28,146

27,965

28,097

27,895

Diluted

28,999

28,689

28,950

28,574

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,

2020

2019

2020

2019

Cash flows from operating activities:

Net income for the period

13,657

12,385

47,907

35,171

Adjustments to reconcile net income to net cash

provided by operating activities:

Depreciation and amortization

2,596

1,086

9,729

10,398

Share-based compensation

2,231

1,430

6,949

5,092

Net effect of exchange rate fluctuation

(1,187)

(106)

(1,584)

(510)

Amortization of debt discount and issuance costs

868

-

868

-

Change in deferred tax assets, net

535

73

(193)

(681)

Change in accrued severance pay, net

162

100

354

470

Change in trade accounts receivable

(22,217)

(4,549)

(11,711)

1,928

Change in inventories

(1,219)

1,669

(16,271)

(7,518)

Change in other current and long-term assets

1,655

(1,561)

6,878

(6,161)

Change in trade accounts payable

1,228

2,117

3,255

1,691

Change in other current and long-term liabilities

7,241

4,190

11,611

2,540

Change in short term deferred revenues

926

(1,459)

2,461

(1,728)

Net cash provided by operating activities

6,476

15,375

60,253

40,692

Cash flow from investment activities:

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

10,125

(4,392)

(36,016)

(4,181)

Purchase of property and equipment

(1,570)

(5,648)

(6,443)

(21,269)

Net cash provided by (used in) investment activities

8,555

(10,040)

(42,459)

(25,450)

Cash flows from financing activities:

Proceeds from the issuance of convertible senior notes,
net of issuance costs

193,588

-

193,588

-

Purchases of treasury shares

(10,000)

-

(12,549)

(7,159)

Shares issued upon exercise of options

-

125

367

492

Net cash provided by (used in) financing activities

183,588

125

181,406

(6,667)

Effect of exchange rate fluctuations on cash and cash
equivalents

972

68

1,356

296

Increase in cash and cash equivalents

199,591

5,528

200,556

8,871

Cash and cash equivalents – beginning of period

32,713

26,220

31,748

22,877

Cash and cash equivalents – end of period

232,304

31,748

232,304

31,748

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,

2020

September 30,

2020

December 31,

2019

GAAP gross profit

42,323

39,657

34,633

Stock-based compensation expenses *

415

414

269

Non-GAAP gross profit

42,738

40,071

34,902

GAAP gross margin as a percentage of revenues

55%

57%

54%

Non-GAAP gross margin as a percentage of revenues

56%

58%

54%

GAAP operating income

16,846

15,528

14,483

Stock-based compensation expenses *

2,231

1,946

1,430

Amortization of acquired intangible assets

626

625

656

One-time income related to a transaction made by a
financial institution without Company authorization

(2,850)

-

-

Non-GAAP operating income

16,853

18,099

16,569

GAAP operating margin as a percentage of revenues

22%

22%

22%

Non-GAAP operating margin as a percentage of revenues

22%

26%

26%

GAAP net income

13,657

13,896

12,385

Stock-based compensation expenses *

2,231

1,946

1,430

Amortization of acquired intangible assets

626

625

656

Amortization of debt discount and issuance costs

868

-

-

One-time income related to a transaction made by a
financial institution without Company authorization

(2,850)

-

-

Revaluation of operating lease liabilities

1,364

161

269

Tax effect of non-GAAP adjustments

(24)

(117)

(179)

Non-GAAP net income

15,872

16,511

14,561

GAAP basic earnings per share

0.49

0.49

0.44

Non-GAAP basic earnings per share

0.56

0.59

0.52

GAAP diluted earnings per share

0.47

0.48

0.43

Non-GAAP diluted earnings per share

0.55

0.57

0.51

Shares used for calculation of earnings per share

(in thousands):

Basic

28,146

28,168

27,965

Diluted

28,999

29,020

28,689

* Stock-based compensation expenses for the three months ended December 31, 2020 included in – Cost of revenues
products – 292; Cost of revenues services – 123; Research and development expenses, net – 904; Sales and marketing
expenses – 449; General and administrative expenses – 463

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,

2020

2019

GAAP gross profit

152,923

121,820

Stock-based compensation expenses *

1,364

1,003

Facilities transition costs

-

703

Non-GAAP gross profit

154,287

123,526

GAAP gross margin as a percentage of revenues

57%

54%

Non-GAAP gross margin as a percentage of revenues

57%

55%

GAAP operating income

55,570

36,408

Stock-based compensation expenses *

6,949

5,092

Amortization of acquired intangible assets

2,503

2,625

One-time expense related to a transaction made by a
financial institution without Company authorization,
net

150

-

Facilities transition costs

-

2,329

Non-GAAP operating income

65,172

46,454

GAAP operating margin as a percentage of revenues

21%

16%

Non-GAAP operating margin as a percentage of revenues

24%

21%

GAAP net income

47,907

35,171

Stock-based compensation expenses *

6,949

5,092

Amortization of acquired intangible assets

2,503

2,625

Amortization of debt discount and issuance costs

868

-

One-time expense related to a transaction made by a
financial institution without Company authorization,
net

150

-

Facilities transition costs

-

2,329

Revaluation of operating lease liabilities

2,053

1,410

Tax effect of non-GAAP adjustments

(792)

(1,104)

Non-GAAP net income

59,638

45,523

GAAP basic earnings per share

1.71

1.26

Non-GAAP basic earnings per share

2.12

1.63

GAAP diluted earnings per share

1.65

1.23

Non-GAAP diluted earnings per share

2.06

1.59

Shares used for calculation of earnings per share

(in thousands):

Basic

28,097

27,895

Diluted

28,950

28,574

* Stock-based compensation expenses for the year ended December 31, 2020 included in – Cost of revenues products –
927; Cost of revenues services – 437; Research and development expenses, net – 2,556; Sales and marketing expenses
– 1,531; General and administrative expenses – 1,498

NOVA MEASURING INSTRUMENTS LTD.

SUPPLEMENTAL INFORMATION - RECONCILIATION OF FISRT QUARTER 2021

GAAP TO NON-GAAP GUIDANCE

(Unaudited)

Low

High

Estimated GAAP net income per diluted share

0.41

0.53

Estimated non-GAAP items:

Stock-based compensation expenses

0.09

0.09

Amortization of acquired intangible assets

0.02

0.02

Amortization of debt discount and issuance costs

0.04

0.04

Tax effect of non-GAAP adjustments

(0.01)

(0.02)

Estimated non-GAAP net income per diluted share

0.55

0.66

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