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Investors Press Releases

Nova Reports Second Quarter 2019 Results

Rehovot, Israel, August 7, 2019

Rehovot, Israel, August 7, 2019 Nova (Nasdaq: NVMI) today announced financial results for the second quarter 2019, the period ended June 30, 2019.

Second Quarter 2019 Highlights:

  • Quarterly revenue of $51.1 million, meeting guidance of $45 million to $53 million.
  • GAAP net income of $6.5 million, or $0.23 per diluted share, meeting guidance of $0.09 to  $0.26 per share
  • Non-GAAP net income of $9 million, or $0.32 per diluted share, meeting guidance of $0.17 to $0.35 per share
  • Tool selection wins in a global memory customer led to a diversified customer mix with 65% of product revenue generated from memory
  • Launched a breakthrough technology (PRIZM™) to enhance Nova’s Dimensional Metrology portfolio

GAAP Results ($K)

 

Q2 2019

Q1 2019

Q2 2018

Revenues

$51,120

$56,657

$61,888

Net Income

$6,468

$7,756

$11,833

Earnings per Diluted Share

$0.23

$0.27

$0.41

NON-GAAP Results ($K)

 

Q2 2019

Q1 2019

Q2 2018

Net Income

$9,007

$10,449

$13,343

Earnings per Diluted Share

$0.32

$0.37

$0.46

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, facilities transition costs, revaluation of long-term liabilities and tax effect of non-GAAP adjustments.

Management Comments

“Our second quarter results came within the high end of our guidance range, reflecting the progress we are making with leading Memory and Foundry customers in several key applications,” commented Eitan Oppenhaim, President and Chief Executive Officer of Nova. “We are encouraged by the traction our new technological developments are gaining in the market and are confident that our unique technical approach will support Nova’s long-term growth.The first product launched as part of our new portfolio was the PRIZM™, a dimensional metrology platform, which integrates ground breaking technology allowing our customers to improve their yield and time to market in the most complex device fabrication processes,” added Mr. Oppenhaim. “We believe that the industry fundamental drivers will continue generating growth opportunities for us while we strengthen our market position and competitive portfolio.”

2019 Third Quarter Financial Outlook

Management provided an outlook for the third quarter, the period ending September 30, 2019. Based on current estimates, management expects:

  • $46 million to $54 million in revenue
  • $0.11 to $0.24 in diluted GAAP EPS
  • $0.20 to $0.34 in diluted non-GAAP EPS

2019 Second Quarter Results

Total revenues for the second quarter of 2019 were $51.1 million, a decrease of 10% compared to the first quarter of 2019 and 21% compared to the second quarter of 2018.

Gross margin for the second quarter of 2019 was 55%, compared to 56% gross margin in the first quarter of 2019, and compared to the gross margin of 58% in the second quarter of 2018.

Operating expenses in the second quarter of 2019 were $21.3 million, compared with $22.9 million in the first quarter of 2019, and compared with $22.1 million in the second quarter of 2018.

On a GAAP basis, the company reported net income of $6.5 million, or $0.23 per diluted share, in the second quarter of 2019. This is compared with $7.8 million, or $0.27 per diluted share, in the first quarter of 2019, and compared with net income of $11.8 million, or $0.41 per diluted share, in the second quarter of 2018.

On a non-GAAP basis, which excludes amortization of acquired intangible assets, stock-based compensation expenses, facilities transition costs, revaluation of long-term liabilities and tax effects of non-GAAP adjustments, the company reported net income of $9 million, or $0.32 per diluted share, in the second quarter of 2019. This is compared with net income of $10.4 million, or $0.37 per diluted share, in the first quarter of 2019, and compared with net income of $13.3 million, or $0.46 per diluted share, in the second quarter of 2018.

Conference Call Information

Nova will host a conference call today, August 7, 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- 800-289-0438
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

Please reference conference ID 4935686

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 7, 2019 at 12 p.m. Eastern Time to August 14, 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: 4935686

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 perations 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

 

ASSETS

 

June 30,

2019

 

December 31,

2018

 

Current assets

         

Cash and cash equivalents

 

30,850

 

22,877

 

Short-term interest-bearing bank deposits

 

146,876

 

152,951

 

Trade accounts receivable

 

48,078

 

53,531

 

Inventories

 

48,976

 

41,786

 

Other current assets

 

8,381

 

10,961

 
           

Total current assets

 

283,161

 

282,106

 
           

Long-term assets

         

Long-term interest-bearing bank deposits

 

2,000

 

2,000

 

Deferred tax assets

 

4,217

 

3,873

 

Severance pay funds

 

1,157

 

1,394

 

Property and equipment, net

 

19,353

 

13,756

 

Identifiable intangible assets, net

 

8,874

 

10,187

 

Operating lease right-of-use assets

 

27,078

 

 

Goodwill

 

20,114

 

20,114

 
           

Total long-term assets

 

82,793

 

51,324

 
           

Total assets

 

365,954

 

333,430

 


 Liabilities and shareholders’ Equity

         

Current liabilities

         

Trade accounts payable

 

16,889

 

19,015

 

Deferred revenues

 

5,314

 

3,984

 

Operating lease current liabilities

 

3,137

 

 

Other current liabilities

 

19,460

 

25,079

 
           

Total current liabilities

 

44,800

 

48,078

 
           

Long-term liabilities

         

Liability for employee severance pay

 

2,044

 

2,254

 

Operating lease long-term liabilities

 

25,723

 

 

Other long-term liabilities

 

2,779

 

2,358

 
           

Total long-term liabilities

 

30,546

 

4,612

 
           

Shareholders’ equity

 

290,608

 

280,740

 
           

Total liabilities and shareholders’ equity

 

365,954

 

333,430

 

 

 

 

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,

 2019

 

June 30,

 2018

 

June 30,

 2019

 

June 30,

 2018

               

Revenues:

             

Products

37,401

 

45,784

 

81,462

 

95,969

Services

13,719

 

16,104

 

26,315

 

28,522

Total revenues

51,120

 

61,888

 

107,777

 

124,491

               

Cost of revenues:

             

Products

14,527

 

18,002

 

32,104

 

35,971

Services

8,483

 

8,186

 

15,979

 

16,463

Total cost of revenues

23,010

 

26,188

 

48,083

 

52,434

               

Gross profit

28,110

 

35,700

 

59,694

 

72,057

               

Operating expenses:

             

Research and development expenses, net

11,654

 

11,849

 

24,238

 

23,075

Sales and marketing expenses

6,641

 

7,442

 

13,787

 

13,673

General and administrative expenses

2,384

 

2,134

 

4,906

 

4,364

Amortization of acquired intangible assets

656

 

654

 

1,312

 

1,307

Total operating expenses

21,335

 

22,079

 

44,243

 

42,419

               

Operating income

6,775

 

13,621

 

15,451

 

29,638

               

Financing income, net

855

 

486

 

1,365

 

934

               

Income before tax on income

7,630

 

14,107

 

16,816

 

30,572

Income tax expenses

1,162

 

2,274

 

2,592

 

4,659

               

Net income for the period

6,468

 

11,833

 

14,224

 

25,913

 

Earnings per share:

             

Basic

0.23

 

0.42

 

0.51

 

0.93

Diluted

0.23

 

0.41

 

0.50

 

0.91

               

Shares used for calculation of earnings per
share:

             
               

Basic

27,869

 

27,977

 

27,898

 

27,946

Diluted

28,564

 

28,766

 

28,234

 

28,349

 

 

 

NOVA MEASURING INSTRUMENTS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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

       
 

Three months ended

 

Six months ended

 

June 30,

2019

 

June 30,

2018

 

June 30,

2019

 

June 30,

2018

Cash flows from operating activities:

             

Net income for the period

6,468

 

11,833

 

14,224

 

25,913


Adjustments to reconcile net income to net cash
provided by (used in) operating activities:

             

Depreciation and amortization

2,770

 

1,966

 

5,470

 

3,534

Amortization of deferred stock-based compensation

1,086

 

993

 

2,298

 

1,827

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

(6)

 

6

 

27

 

(35)

Deferred tax assets, net

(147)

 

(421)

 

(344)

 

(557)

Decrease (increase) in trade accounts receivable

(1,157)

 

(5,648)

 

5,453

 

(2,081)

Increase in inventories

(3,323)

 

(2,761)

 

(7,855)

 

(7,236)

Decrease in other current assets

1,978

 

2,068

 

2,580

 

3,574

Increase (decrease) in trade accounts payable

(5,430)

 

438

 

(2,126)

 

2,791

Decrease in other current liabilities and other long-
term liabilities

(3,457)

 

(4,414)

 

(4,579)

 

(7,098)

Increase (decrease) in short term deferred revenues

196

 

3,519

 

1,330

 

(850)

Net cash provided by (used in) operating
activities

(1,022)

 

7,579

 

16,478

 

19,782

Cash flow from investment activities:

             

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

8,447

 

*(7,841)

 

6,075

 

*(18,999)

Additions to property and equipment

(5,716)

 

(735)

 

(7,693)

 

(1,096)

Net cash provided by (used in) investment
activities

2,731

 

*(8,576)

 

(1,618)

 

*(20,095)

Cash flows from financing activities:

             

Purchases of treasury shares

(7,159)

 

 

(7,159)

 

Shares issued under employee stock-based plans

166

 

151

 

272

 

238

Net cash provided by (used in) financing activities

(6,993)

 

151

 

(6,887)

 

238

Decrease in cash and cash equivalents and
restricted cash

(5,284)

 

*(846)

 

7,973

 

*275

Cash and cash equivalents and restricted cash –
beginning of period

38,134

 

*29,568

 

24,877

 

*28,447

Cash and cash equivalents and restricted cash –
end of period

32,850

 

*28,722

 

32,850

 

*28,722

               

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

             

Cash and cash equivalents

30,850

 

27,622

 

30,850

 

27,622

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

2,000

 

1,100

 

2,000

 

1,100

Total cash, cash equivalents, and restricted cash

32,850

 

28,722

 

32,850

 

28,722

 

*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

 
 

June 30,
2019

 

March 31,
2019

 

June 30,
2018

GAAP gross profit

28,110

 

31,584

 

35,700

Stock-based compensation expenses (1)

222

 

234

 

206

Facilities transition costs (2)

271

 

212

 

Non-GAAP gross profit

28,603

 

32,030

 

35,906

GAAP gross margin as a percentage of revenues

55%

 

56%

 

58%

Non-GAAP gross margin as a percentage of revenues

56%

 

57%

 

58%

           

GAAP operating income

6,775

 

8,676

 

13,621

Stock-based compensation expenses (1)

1,086

 

1,212

 

993

Amortization of acquired intangible assets

656

 

656

 

654

Facilities transition costs (2)

827

 

614

 

Non-GAAP operating income

9,344

 

11,158

 

15,268

GAAP operating margin as a percentage of revenues

13%

 

15%

 

22%

Non-GAAP operating margin as a percentage of revenues

18%

 

20%

 

25%

GAAP net income

6,468

 

7,756

 

11,833

Stock-based compensation expenses (1)

1,086

 

1,212

 

993

Amortization of acquired intangible assets

656

 

656

 

654

Facilities transition costs (2)

827

 

614

 

Revaluation of long-term liabilities

295

 

484

 

Tax effect of non-GAAP adjustments

(325)

 

(273)

 

(137)

Non-GAAP net income

9,007

 

10,449

 

13,343

GAAP basic earnings per share

0.23

 

0.28

 

0.42

Non-GAAP basic earnings per share

0.32

 

0.37

 

0.48

GAAP diluted earnings per share

0.23

 

0.27

 

0.41

Non-GAAP diluted earnings per share

0.32

 

0.37

 

0.46

           

Shares used for calculation of earnings per share:

         

Basic

27,869

 

27,932

 

27,977

Diluted

28,564

 

28,580

 

28,766

             

(1)  Stock-based compensation expenses in the three months ended June 30, 2019 – Cost of revenues products – 125; Cost of revenues services – 97; Research and development expenses, net – 401; Sales and marketing expenses – 272; General and administrative expenses – 191.
(2)  Facilities transition costs in the three months ended June 30, 2019 – Cost of revenues products – 185; Cost of revenues services – 101; Research and development expenses, net – 255; Sales and marketing expenses – 100; General and administrative expenses – 186.

 

 

Company Contact:
Dror David, Chief Financial Officer
Nova Measuring Instruments Ltd.
Tel: +972-73-229-5760
E-mail: info@novami.com
staging-novami.kinsta.cloud

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