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Investors Press Releases

Nova Reports Second Quarter 2018 Results

Rehovot, Israel, August 1, 2018

Rehovot, Israel, August 1, 2018 Nova (Nasdaq: NVMI) today announced financial results for the second quarter 2018, the period ended June 30, 2018.

Second Quarter 2018 Highlights:

  • Quarterly revenue of $61.9 million, up 10% year-over-year, within company guidance
  • GAAP net income of $11.8 million, or $0.41 per diluted share, exceeding guidance of $0.30 to $0.40 per share
  • Non-GAAP net income of $13.3 million, or $0.46 per diluted share, exceeding guidance of $0.35 to $0.45 per share
  • Memory customers generated 50% of overall product revenue
  • Five large customers, three Memory and two Foundry, contributed more than 10% each to overall product revenue 

 

GAAP Results ($K)
Q2 2018 Q1 2018 Q2 2017
Revenues $61,888 $62,603 $56,126
Net Income $11,833 $14,080 $13,313
Earnings per Diluted Share $0.41 $0.49 $0.47
NON-GAAP Results ($K)
Q2 2018 Q1 2018 Q2 2017
Net Income $13,343 $15,430 $15,167
Earnings per Diluted Share $0.46 $0.54 $0.53

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
“We are very pleased with our quarterly results, which reflect our continuous efforts to execute on our strategic growth plan to diversify our customer base and technology offering,” commented Eitan Oppenhaim, President and Chief Executive Officer of Nova. “The second quarter results solidify the progress we are making with both our Dimensional and Materials metrology solutions for advanced 3D NAND and DRAM device manufacturing. We believe that the expanded customer base, along with our differentiated technology, presents a larger market for us to pursue as we continue to execute effectively our long-term growth plans,” concluded Mr. Oppenhaim.    

2018 Third Quarter Financial Outlook
Management provided an outlook for the third quarter, the period ending September 30, 2018. Based on current estimates, management expects:

  • $58 million to $64 million in revenue
  • $0.32 to $0.44 in diluted GAAP EPS
  • $0.37 to $0.49 in diluted non-GAAP EPS

2018 Second Quarter Results
Total revenues for the second quarter of 2018 were $61.9 million, a decrease of 1% compared to the first quarter of 2018 and a year-over-year increase of 10% relative to the second quarter of 2017.

Gross margin for the second quarter of 2018 was 58%, unchanged from gross margin in the first quarter of 2018 and compared to the gross margin of 59% in the second quarter of 2017.

Operating expenses in the second quarter of 2018 were $22.1 million, compared with $20.3 the first quarter of 2018 and compared with $17.7 million in the second quarter of 2017.

On a GAAP basis, the company reported net income of $11.8 million, or $0.41 per diluted share, in the second quarter of 2018. This is compared with $14.1 million, or $0.49 per diluted share, in the first quarter of 2018, and compared with net income of $13.3 million, or $0.47 per diluted share, in the second 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 $13.3 million, or $0.46 per diluted share, in the second quarter of 2018. This is compared with net income of $15.4 million, or $0.54 per diluted share, in the first quarter of 2018, and compared with net income of $15.2 million, or $0.53 per diluted share, in the second quarter of 2017.

Total cash reserves on June 30, 2018 were $168.8 million, compared to $149.8 million on December 31, 2017.

Conference Call Information
Nova will host a conference call today, August 1, 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: 1-888-394-8218
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 8991200

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 August 1, 2018 at 12 p.m. Eastern Time to August 8, 2018 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:  8991200

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
ASSETS June 30,
2018
December 31,
2017
Current assets
Cash and cash equivalents 27,622 27,697
Short-term interest-bearing bank deposits 140,039 121,390
Trade accounts receivable 43,073 40,949
Inventories 41,332 34,921
Other current assets 3,739 7,313
Total current assets 255,805 232,270
Long-term assets
Long-term interest-bearing bank deposits 1,100 750
Deferred tax assets 2,514 1,957
Severance pay funds 1,476 1,503
Property and equipment, net 13,585 13,891
Identifiable intangible assets, net 11,493 12,800
Goodwill 20,114 20,114
Total long-term assets 50,282 51,015
Total assets 306,087 283,285
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Trade accounts payable 18,545 15,754
Deferred revenues 9,484 10,334
Other current liabilities 18,732 26,038
Total current liabilities 46,761 52,126
Long-term liabilities
Liability for employee severance pay 2,528 2,590
Other long-term liabilities 2,228 1,833
Total long-term liabilities 4,756 4,423
Shareholders’ equity 254,570 226,736
Total liabilities and shareholders’ equity 306,087 283,285

 

NOVA MEASURING INSTRUMENTS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

Three months ended Six months ended
June 30,

2018

June 30,

2017

June 30,

2018

June 30,

2017

Revenues:
Products 45,784 44,954 95,969 88,470
Services 16,104 11,172 28,522 22,086
Total revenues 61,888 56,126 124,491 110,556
Cost of revenues:
Products 18,002 15,809 35,971 30,929
Services 8,186 6,923 16,463 13,373
Total cost of revenues 26,188 22,732 52,434 44,302
Gross profit 35,700 33,394 72,057 66,254
Operating expenses:
Research and development expenses, net 11,849 9,238 23,075 18,513
Sales and marketing expenses 7,442 5,892 13,673 11,980
General and administrative expenses 2,134 1,938 4,364 3,595
Amortization of acquired intangible assets 654 640 1,307 1,280
Total operating expenses 22,079 17,708 42,419 35,368
Operating income 13,621 15,686 29,638 30,886
Financing income, net 486 525 934 940
Income before tax on income 14,107 16,211 30,572 31,826
Income tax expenses 2,274 2,898 4,659 5,110
        
Net income for the period 11,833 13,313 25,913 26,716
Earnings per share:
Basic 0.42 0.48 0.93 0.97
Diluted 0.41 0.47 0.91 0.96
Shares used for calculation of earnings per share:
Basic 27,977 27,655 27,946 27,561
Diluted 28,766 28,562 28,349 27,958

 

NOVA MEASURING INSTRUMENTS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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

Three months ended Six months ended
June 30,

2018

June 30,

2017

June 30,

2018

June 30,

2017

Cash flows from operating activities:
Net income for the period 11,833 13,313 25,913 26,716
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation 1,312 938 2,227 1,893
Amortization of acquired intangible assets 654 640 1,307 1,280
Amortization of deferred stock-based compensation 993 548 1,827 1,211
Decrease (increase) in liability for employee termination benefits, net 6 41 (35) 73
Deferred tax assets, net (421) 666 (557) 75
Decrease (increase) in trade accounts receivable (5,648) 1,887 (2,081) 6,274
Increase in inventories (2,761) (3,041) (7,236) (4,616)
Decrease (increase) in other current assets 2,068 (1,376) 3,574 (955)
Increase in trade accounts payable 438 2,618 2,791 2,708
Increase (decrease) in other current liabilities and other long-term liabilities (4,414) 409 (7,098) 2,288
Increase (decrease) in short term deferred revenues 3,519 3,770 (850) 6,164
Net cash provided by operating activities 7,579 20,413 19,782 43,111
Cash flow from investment activities:
Increase in short-term and long term interest-bearing bank deposits (7,841) (2,581) (18,999) (22,659)
Additions to property and equipment (735) (847) (1,096) (1,267)
Net cash used in investment activities (8,576) (3,428) (20,095) (23,926)
Cash flows from financing activities:
Shares issued under employee stock-based plans 151 324 238 2,141
Net cash provided by financing activities 151 324 238 2,141
Increase (decrease) in cash and cash equivalents (846) 17,309 (75) 21,326
Cash and cash equivalents – beginning of period 28,468 24,423 27,697 20,406
Cash and cash equivalents – end of period 27,622 41,732 27,622 41,732

 

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
June 30,

2018

March 31,

2018

June 30,

2017

GAAP cost of revenues 26,188 26,246 22,732
Stock-based compensation in cost of products (114) (92) (74)
Stock-based compensation in cost of services (92) (79) (56)
Non-GAAP cost of revenues 25,982 26,075 22,602
GAAP gross profit 35,700 36,357 33,394
Gross profit adjustments 206 171 130
Non-GAAP gross profit 35,906 36,528 33,524
GAAP gross margin as a percentage of revenues 58% 58% 59%
Non-GAAP gross margin as a percentage of revenues 58% 58% 60%
GAAP operating expenses 22,079 20,340 17,708
Stock-based compensation in research and development (386) (340) (188)
Stock-based compensation in sales and marketing (259) (219) (146)
Stock-based compensation in general and administrative (142) (104) (84)
Amortization of acquired intangible assets (654) (653)   (640)
Non-GAAP operating expenses 20,638 19,024 16,650
Non-GAAP operating income 15,268 17,504 16,874
GAAP operating margin as a percentage of revenues 22% 26% 28%
Non-GAAP operating margin as a percentage of revenues 25% 28% 30%
GAAP tax on income 2,274 2,385 2,898
Certain discrete tax items 137 137 (666)
Non-GAAP tax on income 2,411 2,522 2,232
GAAP net income 11,833 14,080 13,313
Amortization of acquired intangible assets 654 653 640
Stock-based compensation expenses 993 834 548
Certain discrete tax items (137) (137) 666
Non-GAAP net income 13,343 15,430 15,167
GAAP basic earnings per share 0.42 0.50 0.48
Non-GAAP basic earnings per share 0.48 0.55 0.55
GAAP diluted earnings per share 0.41 0.49 0.47
Non-GAAP diluted earnings per share 0.46 0.54 0.5 3
Shares used for calculation of earnings per share:
Basic 27,977 27,915 27,655
Diluted 28,766 28,739 28,562
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