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Investors Press Releases

Nova Reports Fourth Quarter and Record Full Year 2018 Results

Rehovot, Israel, February 13, 2019

Rehovot, Israel, February 13, 2019 – Nova (Nasdaq: NVMI) today announced financial results for the fourth quarter and full year 2018.

Fourth Quarter 2018 Highlights:

  • Revenue of $63.1 million, up 10% year-over-year, at the high end of company guidance
  • Record GAAP net income of $15.2 million, or $0.53 per diluted share, exceeding guidance of $0.28 to $0.40 per share
  • Record Non-GAAP net income of $16.9 million, or $0.59 per diluted share, exceeding guidance of $0.35 to $0.46 per share
  • Four customers contributed more than 10% each to total product revenue, including the world’s leading Foundry and the three largest Memory providers
  • Initiated $25 Million Share Repurchase Program

Full Year 2018 Highlights:

  • Record full-year revenue of $251.1 million, up 13% year-over-year
  • Record GAAP net income of $54.4 million, or $1.89 per diluted share, up 16% year-over-year on a per-share basis
  • Record non-GAAP net income of $60.8 million, or $2.11 per diluted share, up 9% year-over-year on a per-share basis
  • Balanced exposure to Memory and Foundry, each contributing approximately 50% to total product revenue
  • Revenue from Memory customers grew approximately 60%, significantly exceeding the market growth rate

 

GAAP Results ($K)

  Q4 2018 Q3 2018 Q4 2017 FY 2018 FY 2017
Revenues $63,072 $63,571 $57,378 $251,134 $221,992
Net Income $15,152 $13,310 $8,241 $54,375 $46,459
Earnings per Diluted Share $0.53 $0.46 $0.29 $1.89 $1.63

NON-GAAP Results ($K)

  Q4 2018 Q3 2018 Q4 2017 FY 2018 FY 2017
Net Income $16,914 $15,080 $13,021 $60,766 $55,404
Earnings per Diluted Share $0.59 $0.52 $0.45 $2.11 $1.94

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, certain discrete tax items and stock-based compensation expenses.

Management Comments

“Nova reported strong results for the fourth quarter, with revenues reaching the high end of the guidance and profitability exceeding the guidance range. Our solid performance in the quarter was an excellent conclusion for a sixth consecutive record year, highlighting the strength of our product offering, our diversified customer base and our execution capabilities,” commented Mr. Eitan Oppenhaim, President and Chief Executive Officer of Nova. “Following our results in 2018, we intend to continue executing our long-term strategic plans while we expand our technology offering and solidify our market position in both Memory and Logic,” concluded Mr. Oppenhaim.

2019 First Quarter Financial Outlook

Management provided an outlook for the first quarter, the period ending March 31, 2019. Based on current estimates, management expects:

  • $52 million to $58 million in revenue
  • $0.15 to $0.26 in diluted GAAP EPS
  • $0.24 to $0.34 in diluted non-GAAP EPS

2018 Fourth Quarter Results

Total revenues for the fourth quarter of 2018 were $63.1 million, decrease of 1% compared to the third quarter of 2018 and a year-over-year increase of 10% relative to the fourth quarter of 2017.

Gross margin for the fourth quarter of 2018 was 57%, compared to 59% gross margin in the third quarter of 2018, and compared to the gross margin of 56% in the fourth quarter of 2017.

Operating expenses in the fourth quarter of 2018 were $20.7 million, compared with $21.7 in the third quarter of 2018, and compared with $19.7 million in the fourth quarter of 2017.

On a GAAP basis, the company reported net income of $15.2 million, or $0.53 per diluted share, in the fourth quarter of 2018. This is compared with $13.3 million, or $0.46 per diluted share, in the third quarter of 2018, and compared with net income of $8.2 million, or $0.29 per diluted share, in the fourth quarter of 2017.

On a non-GAAP basis, which excludes amortization of acquired intangible assets, certain discrete tax items and stock-based compensation expenses, the company reported net income of $16.9 million, or $0.59 per diluted share, in the fourth quarter of 2018. This is compared with net income of $15.1 million, or $0.52 per diluted share, in the third quarter of 2018, and compared with net income of $13.0 million, or $0.45 per diluted share, in the fourth quarter of 2017.

2018 Full Year Results

Total revenues for 2018 were $251.1 million, an increase of 13.1% compared to total revenues of $222.0 million for 2017.

Gross margin in 2018 was 58%, compared with gross margin of 59% in 2017.

Operating expenses in 2018 were $84.8 million, compared with operating expenses of $73.4 million in 2017.

On a GAAP basis, the company reported net income of $54.4 million, or $1.89 per diluted share, in 2018. This is compared with a net income of $46.5 million, or $1.63 per diluted share, in 2017.

On a non-GAAP basis, which excludes amortization of acquired intangible assets, certain discrete tax items and stock-based compensation expenses, the company reported net income of $60.8 million, or $2.11 per diluted share, in 2018, compared with net income of $55.4 million, or $1.94 per diluted share, in 2017.

Total cash reserves at the end of 2018 were $177.8 million, compared to $149.8 million at the end of 2017.

Conference Call Information

Nova will host a conference call today, February 13, 2019, 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: 1-800-239-9838

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

INTERNATIONAL Dial-in Number: 1-323-794-2551

At:

9 a.m. Eastern Time

6 a.m. Pacific Time

4 p.m. Israeli Time 

Please reference conference ID 3727578 

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, 2019 at 12 p.m. Eastern Time to February 13, 2019 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:  3727578

 

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 charges for amortization of acquired intangible assets, certain discrete tax items and stock-based compensation 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 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, 2017 filed with the Securities and Exchange Commission on February 28, 2018. 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 2018   2017
Current assets      
    Cash and cash equivalents 22,877   27,697
    Short-term interest-bearing bank deposits 152,951   121,390
    Trade accounts receivable 53,531   40,949
    Inventories 41,786   34,921
    Other current assets 10,961   7,313
       
Total current assets 282,106   232,270
       
Long-term assets      
    Long-term interest-bearing bank deposits 2,000   750
    Deferred tax assets 3,873   1,957
    Severance pay funds 1,394   1,503
    Property and equipment, net 13,756   13,891
    Identifiable intangible assets, net 10,187   12,800
    Goodwill 20,114   20,114
       
Total long-term assets 51,324   51,015
       
Total assets 333,430   283,285
 LIABILITIES AND SHAREHOLDERS’ EQUITY      
Current liabilities      
    Trade accounts payable 19,015   15,754
    Deferred revenues 3,984   10,334
    Other current liabilities 25,079   26,038
       
Total current liabilities 48,078   52,126
       
Long-term liabilities      
    Liability for employee severance pay 2,254   2,590
    Other long-term liabilities 2,358   1,833
       
Total long-term liabilities 4,612   4,423
       
Shareholders’ equity 280,740   226,736
       
Total liabilities and shareholders’ equity 333,430   283,285
       

 

 

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,

   2018   2017    2018   2017
               
Revenues:              
    Products 48,376   44,754   193,298   174,343
    Services 14,696   12,624   57,836   47,649
Total revenues 63,072   57,378   251,134   221,992
               
Cost of revenues:              
    Products 18,120   17,523   71,706   62,242
    Services 9,242   7,801   34,194   28,563
Total cost of revenues 27,362   25,324   105,900   90,805
               
Gross profit 35,710   32,054   145,234   131,187
               
Operating expenses:              
    Research and development expenses, net 10,490   10,617   45,451   38,956
    Sales and marketing expenses 7,303   5,908   27,992   23,751
    General and administration expenses 2,209   2,558   8,735   8,100
    Amortization of acquired intangible assets 654   640   2,614   2,561
Total operating expenses 20,656   19,723   84,792   73,368
               
Operating income 15,054   12,331   60,442   57,819
               
    Financing income, net 1,178   710   2,984   2,276
               
Income before tax on income 16,232   13,041   63,426   60,095
               
    Income tax expenses 1,080   4,800   9,051   13,636
               
Net income for the period 15,152   8,241   54,375   46,459
               
Earnings per share:              
    Basic 0.54   0.30   1.94   1.68
    Diluted 0.53   0.29   1.89   1.63
               
Shares used for calculation of earnings per share:              
               
    Basic 28,026   27,873   28,022   27,696
    Diluted                28,655   28,786   28,765   28,524
                               

 

 

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,

  2018   2017   2018   2017
Cash flows from operating activities:              
Net income for the period 15,152   8,241   54,375   46,459
Adjustments to reconcile net income to net cash provided by operating activities:              
Depreciation 1,497   787   5,071   3,618
Amortization of acquired intangible assets 653   640   2,613   2,561
Amortization of deferred stock-based compensation 1,245   899   4,326   2,779
Decrease (Increase) in liability for employee termination benefits, net (174)   3   (227)   94
Deferred tax assets, net (1,171)   (395)   (1,916)   (31)
Decrease (increase) in trade accounts receivable (5,460)   (7,395)   (12,539)   1,677
Decrease (increase) in inventories (119)   3,050   (8,123)   (6,858)
Decrease (increase) in other current assets (4,717)   1,187   (3,648)   (2,245)
Increase (decrease) in trade accounts payable 1,395   (1,869)   3,261   (747)
Increase (decrease) in other current liabilities and other long-term liabilities 6,860   5,218   (734)   8,242
Increase (decrease) in short term deferred revenues (2,267)   (1,092)   (6,350)   6,262
               
Net cash provided by operating activities 12,894   9,274   36,109   61,811
               
Cash flow from investment activities:              
Increase in short-term and long-term interest-bearing bank deposits (7,151)   2,443   (32,811)   (50,844)
Additions to property and equipment (1,899)   (4,171)   (3,678)   (6,295)
               
Net cash used in investment activities (9,050)   (1,728)   (36,489)   (57,139)
               
Cash flows from financing activities:              
Purchases of treasury shares (4,801)     (4,801)  
Shares issued under employee stock-based plans 67   131   361   2,619
               
Net cash provided by (used in) financing activities (4,734)   131   (4,440)   2,619
               
Increase (decrease) in cash and cash equivalents (890)   7,677   (4,820)   7,291
Cash and cash equivalents – beginning of period 23,767   20,020   27,697   20,406
Cash and cash equivalents – end of period 22,877   27,697   22,877   27,697

 

 

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,
2018

 

September 30,
2018

 

December 31,
2017

GAAP cost of revenues

27,362

 

26,104

 

25,324

    Stock-based compensation in cost of products

(147)

 

(161)

 

(107)

   Stock-based compensation in cost of services

(122)

 

(122)

 

(89)

Non-GAAP cost of revenues

27,093

 

25,821

 

25,128

 

 

 

 

 

 

GAAP gross profit

35,710

 

37,467

 

32,054

Gross profit adjustments

269

 

283

 

196

Non-GAAP gross profit

35,979

 

37,750

 

32,250

GAAP gross margin as a percentage of revenues

57%

 

59%

 

56%

Non-GAAP gross margin as a percentage of revenues

57%

 

59%

 

56%

 

 

 

 

 

 

GAAP operating expenses

20,656

 

21,717

 

19,723

    Stock-based compensation in research and development

(500)

 

(484)

 

(346)

    Stock-based compensation in sales and marketing

(262)

 

(285)

 

(216)

    Stock-based compensation in general and administrative

(214)

 

(202)

 

(141)

    Amortization of acquired intangible assets

(654)

 

(653)

 

(640)

Non-GAAP operating expenses

19,026

 

20,093

 

18,380

Non-GAAP operating income

16,953

 

17,657

 

13,870

GAAP operating margin as a percentage of revenues

24%

 

25%

 

21%

Non-GAAP operating margin as a percentage of revenues

27%

 

28%

 

24%

 

 

 

 

 

 

GAAP tax on income

1,080

 

3,312

 

4,800

    Certain discrete tax items

137

 

137

 

(3,241)

Non-GAAP tax on income

1,217

 

3,449

 

1,559

 

 

 

 

 

 

GAAP net income

15,152

 

13,310

 

8,241

    Amortization of acquired intangible assets

654

 

653

 

640

    Stock-based compensation expenses

1,245

 

1,254

 

899

    Certain discrete tax items

(137)

 

(137)

 

3,241

Non-GAAP net income

16,914

 

15,080

 

13,021

 

 

 

 

 

 

GAAP basic earnings per share

0.54

 

0.47

 

0.30

Non-GAAP basic earnings per share

0.60

 

0.54

 

0.47

 

 

 

 

 

 

GAAP diluted earnings per share

0.53

 

0.46

 

0.29

Non-GAAP diluted earnings per share

0.59

 

0.52

 

0.45

 

 

 

 

 

 

Shares used for calculation of earnings per share:

 

 

 

 

 

    Basic

28,026

 

28,047

 

27,873

    Diluted

28,655

 

28,777

 

28,786

             

 

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,

 

 

2018

 

 

2017

GAAP cost of revenues

105,900

 

 

90,805

    Stock-based compensation in cost of products

(515)

 

 

(370)

    Stock-based compensation in cost of services

(414)

 

 

(268)

Non-GAAP cost of revenues

104,971

 

 

90,167

 

 

 

 

 

GAAP gross profit

145,234

 

 

131,187

Gross profit adjustments

929

 

 

638

Non-GAAP gross profit

146,163

 

 

131,825

GAAP gross margin as a percentage of revenues

58%

 

 

59%

Non-GAAP gross margin as a percentage of revenues

58%

 

 

59%

 

 

 

 

 

GAAP operating expenses

84,792

 

 

73,368

    Stock-based compensation in research and development

(1,710)

 

 

(1,055)

    Stock-based compensation in sales and marketing

(1,026)

 

 

(621)

    Stock-based compensation in general and administrative

(661)

 

 

(465)

    Amortization of acquired intangible assets

(2,614)

 

 

(2,561)

Non-GAAP operating expenses

78,781

 

 

68,666

Non-GAAP operating income

67,382

 

 

63,159

GAAP operating margin as a percentage of revenues

24%

 

 

26%

Non-GAAP operating margin as a percentage of revenues

27%

 

 

28%

 

 

 

 

 

GAAP tax on income

9,051

 

 

13,636

    Certain discrete tax items

549

 

 

(3,605)

Non-GAAP tax on income

9,600

 

 

10,031

 

 

 

 

 

GAAP net income

54,375

 

 

46,459

    Amortization of acquired intangible assets

2,614

 

 

2,561

    Stock-based compensation expenses

4,326

 

 

2,779

    Certain discrete tax items

(549)

 

 

3,605

Non-GAAP net income

60,766

 

 

55,404

 

 

 

 

 

GAAP basic earnings per share

1.94

 

 

1.68

Non-GAAP basic earnings per share

2.17

 

 

2.00

 

 

 

 

 

GAAP diluted earnings per share

1.89

 

 

1.63

Non-GAAP diluted earnings per share

2.11

 

 

1.94

 

 

 

 

 

Shares used for calculation of earnings per share:

 

 

 

 

    Basic

28,022

 

 

27,696

    Diluted

28,765

 

 

28,524

           

 

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