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Nova Reports Third Quarter 2023 Financial Results

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REHOVOT, Israel - November 9, 2023 - Nova (Nasdaq: NVMI) today announced financial results for the third quarter, the three-month period ended September 30, 2023.

Third Quarter 2023 Highlights:

  • Quarterly revenue of $128.8 million, a 5% increase QoQ, exceeding the Company guidance.
  • GAAP net income of $33.7 million, or $1.05 per diluted share, a 12% increase QoQ, exceeding the Company guidance.
  • Non-GAAP net income of $39.4 million, or $1.23 per diluted share, a 16% increase QoQ, exceeding the Company guidance of $1.13.
  • Continued proliferation of materials metrology and chemical metrology solutions, driven by demand from memory customers looking to expand their DRAM and high bandwidth memory capacity.
  • New penetrations of optical metrology solutions, spearheaded by Nova Prism and Nova Fit™.
  • Consistent growth of services business, reflecting an increased share of service contracts.  

GAAP Results (K)

 

Q3 2023

Q2 2023

Q3 2022

Revenues

$128,808

$122,702

$143,906

Net Income

$33,689

$29,926

$35,075

Earnings per Diluted Share

$1.05

$0.94

$1.10

 

Non-GAAP Results (K)

 

Q3 2023

Q2 2023

Q3 2022

Net Income

$39,405

$33,814

$39,698

Earnings per Diluted Share

$1.23

$1.06

$1.24

A reconciliation between GAAP operating results and non-GAAP operating results is provided following the financial statements included in this release. See also "Use of Non-GAAP Adjusted Financial Measures" section.

 

Management Comments

"Nova's performance this quarter exceeded the company's revenue and profitability guidance and our goal is to maintain similar business levels in the next quarter as well, making the second half of 2023 stronger than the first," said Gaby Waisman, President and CEO. "We were able to deliver beyond our earlier projections, by leveraging the growth in our materials metrology offering as well as the increasing adoption of our optical metrology solutions and the continuous strength of our service business. As we already look ahead toward 2024, we expect Nova to resume its growth and outperformance trajectory towards our $1B strategic plan."

2023 Fourth Quarter Financial Outlook

Management provided an outlook for the fourth quarter, the period ending December 31, 2023. Based on current estimates, management expects:

  • $123 million to $132 million in revenue
  • $0.96 to $1.11 in diluted GAAP EPS
  • $1.16 to $1.31 in diluted non-GAAP EPS

2023 Third Quarter Results

Total revenues for the third quarter of 2023 were $128.8 million, an increase of 5% compared with the second quarter of 2023 and a decrease of 10% compared with the third quarter of 2022.

Gross margin in the third quarter of 2023 was 56%, compared with 57% in the second quarter of 2023 and 56% in the third quarter of 2022.

Operating expenses in the third quarter of 2023 were $38.1 million, compared with $40.9 million in the second quarter of 2023 and $41.9 million in the third quarter of 2022.

On a GAAP basis, the Company reported net income of $33.7 million, or $1.05 per diluted share, in the third quarter of 2023. This is compared with net income of $29.9 million, or $0.94 per diluted share, in the second quarter of 2023, and $35.1 million, or $1.10 per diluted share, in the third quarter of 2022.

On a non-GAAP basis, the Company reported net income of $39.4 million, or $1.23 per diluted share, in the third quarter of 2023. This is compared with net income of $33.8 million, or $1.06 per diluted share, in the second quarter of 2023, and $39.7 million, or $1.24 per diluted share, in the third quarter of 2022.

Conference Call Information

Nova will host a conference call today, November 09, 2023, at 8:30 a.m. Eastern Time, to discuss the Company's third quarter 2023 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: 1-833-816-1427
ISRAEL TOLL-FREE Dial-in Number: 1809-213-284
INTERNATIONAL Dial-in Number: 1-412-317-0519

At:
8:30 a.m. Eastern Time
5:30 a.m. Pacific Time
3:30 p.m. Israel Time

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 November 9, 2023, at 11:30 a.m. Eastern Time until November 16, 2023, at 11:59 p.m. Eastern Time. To access the replay, please dial one of the following numbers:

Replay Dial-in U.S. TOLL-FREE: 1-844-512-2921
Replay Dial-in INTERNATIONAL: 1-412-317-6671
Replay Pin Number: 10183091

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

About Nova

Nova is a leading innovator and key provider of material, optical and chemical metrology solutions for advanced process control 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 developing and producing the most advanced semiconductor devices. Nova's unique capability to deliver innovative 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 worldwide. Additional information may be found on Nova's website link - https://www.novami.com/.
Nova is traded on the Nasdaq and TASE, Nasdaq ticker symbol NVMI.

Use of Non-GAAP Adjusted Financial Measures
This press release provides financial measures that exclude amortization of acquired intangible assets, stock-based compensation expenses, revaluation of operating lease liabilities and remeasurement of intercompany loans, 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.

Forward-Looking Statements
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 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 differ materially 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: political, economic and military instability in Israel, including related to the recent attack by Hamas and other terrorist organizations from the Gaza Strip and Israel's war against them; increased information technology security threats and sophisticated computer crime; foreign political and economic risks including supply-chain difficulties; regulations that could restrict our operations such as economic sanctions and export restrictions; changes in U.S. trade policies; indirect effects of the Russia – Ukraine conflict; market instability including inflation and recessionary pressures; risks related to doing business with China; catastrophic events such as the outbreak of COVID-19; inability to protect our intellectual property; open source technology exposure; failure to compete effectively or to respond to rapid technological changes; consolidation in our industry; difficulty in predicting the length and strength of any downturn or expansion period of the market we target; factors that adversely affect the pricing and demand for our product lines; dependency on a small number of large customers; dependency on a single manufacturing facility per product line; dependency on a limited number of suppliers; difficulty in integrating current or future acquisitions; lengthy sales cycle and customer delays in orders; risks related to our convertible notes; currency fluctuations; and quarterly fluctuations in our operating results. 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, 2022, filed with the Securities and Exchange Commission on February 28, 2023. These factors are updated from time to time through the filing of reports and registration statements with the Securities and Exchange Commission. Nova Ltd. does not assume any obligation to update the forward-looking information contained in this press release.

 

(Tables to Follow)

 

NOVA LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

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

 
   

As of

   
   

September 30,

 

December 31,

   

ASSETS

 

2023

 

2022

   

Current assets

           

Cash and cash equivalents

 

116,480

 

111,121

   

Short-term interest-bearing bank deposits

 

151,269

 

95,305

   

Marketable securities

 

206,160

 

167,073

   

Trade accounts receivable, net

 

91,861

 

109,320

   

Inventories

 

141,224

 

116,600

   

Other current assets

 

17,852

 

13,527

   

Total current assets

 

724,846

 

612,946

   

Non-current assets

           

Marketable securities

 

133,955

 

153,462

   

Interest-bearing bank deposits and restricted cash

 

5,901

 

2,083

   

Deferred tax assets

 

24,507

 

20,097

   

Operating lease right-of-use assets

 

42,095

 

44,885

   

Property plant and equipment, net

 

61,734

 

55,886

   

Intangible assets, net

 

39,014

 

43,586

   

Goodwill

 

48,830

 

49,009

   

Other long-term assets

 

3,277

 

2,151

   

Total non-current assets

 

359,313

 

371,159

   

Total assets

 

1,084,159

 

984,105

   

LIABILITIES AND SHAREHOLDERS' EQUITY

           

Current liabilities

           

   Convertible senior notes, net

 

197,354

 

-

   

Trade accounts payable

 

26,268

 

42,732

   

Deferred revenues

 

42,222

 

30,543

   

Operating lease current liabilities

 

5,552

 

5,968

   

Other current liabilities

 

50,788

 

54,825

   

Total current liabilities

 

322,184

 

134,068

   

Non-current liabilities

           

Convertible senior notes, net

 

-

 

196,394

   

Operating lease long-term liabilities

 

38,802

 

43,697

   

Long-term deferred tax liability

 

10,432

 

12,190

   

Other long-term liabilities

 

11,961

 

10,793

   

Total non-current liabilities

 

61,195

 

263,074

   

Shareholders' equity

 

700,780

 

586,963

   

Total liabilities and shareholders' equity 

 

1,084,159

 

984,105

   

 

 

NOVA LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

 
 

Three months ended 
September 30,

 

Nine months ended 
September 30,

 

2023

 

2022

 

2023

 

2022

Revenues:

             

Products

99,971

 

116,634

 

300,929

 

340,666

Services

28,837

 

27,272

 

82,774

 

78,825

Total revenues

128,808

 

143,906

 

383,703

 

419,491

Total cost of revenues

56,567

 

63,065

 

164,538

 

184,942

Gross profit

72,241

 

80,841

 

219,165

 

234,549

Operating expenses:

             

Research and development, net

21,372

 

23,008

 

66,753

 

64,252

Sales and marketing

12,438

 

13,631

 

38,887

 

38,515

General and administrative

4,283

 

5,264

 

14,924

 

18,775

Total operating expenses

38,093

 

41,903

 

120,564

 

121,542

Operating income

34,148

 

38,938

 

98,601

 

113,007

Financing income, net

4,797

 

1,535

 

15,153

 

6,321

Income before taxes on income

38,945

 

40,473

 

113,754

 

119,328

Income tax expenses

5,256

 

5,398

 

15,512

 

15,213

Net income for the period

33,689

 

35,075

 

98,242

 

104,115

               

Earnings per share:

             

Basic

1.17

 

1.22

 

3.42

 

3.63

Diluted

1.05

 

1.10

 

3.07

 

3.26

               

Shares used in calculation of earnings per share
 (in thousands):

             

Basic

28,870

 

28,685

 

28,754

 

28,686

Diluted

31,983

 

31,892

 

32,033

 

31,956

 

NOVA LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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

       
 

Three months ended
September 30,

 

Nine months ended
 September 30,

 

2023

 

2022

 

2023

 

2022

Cash flows from operating activities:

             

Net income

33,689

 

35,075

 

98,242

 

104,115

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

             

     Depreciation of property and equipment

2,772

 

2,094

 

7,588

 

6,130

     Amortization of intangible assets

1,477

 

1,444

 

4,396

 

4,570

     Amortization of premium and accretion of discount on
     marketable securities, net

(818)

 

376

 

(1,867)

 

1,920

     Amortization of debt discount and issuance costs

324

 

322

 

960

 

960

     Share-based compensation

4,571

 

4,334

 

12,632

 

12,266

     Net effect of exchange rate fluctuation

2,589

 

1,140

 

4,345

 

4,111

Changes in assets and liabilities:

             

     Trade accounts receivable, net

(9,258)

 

(5,419)

 

17,423

 

(22,213)

     Inventories

6,173

 

(14,608)

 

(28,851)

 

(27,143)

     Other current and long-term assets

(2,673)

 

(2,078)

 

(5,391)

 

(10,149)

     Deferred tax assets, net

(1,713)

 

(2,202)

 

(6,056)

 

(7,142)

     Operating lease right-of-use assets

1,150

 

997

 

2,791

 

3,032

     Trade accounts payable

(9,452)

 

6,281

 

(16,725)

 

5,221

     Deferred revenues

15,051

 

229

 

11,683

 

4,751

     Operating lease liabilities

(2,050)

 

(1,328)

 

(5,312)

 

(6,466)

     Other current and long-term liabilities

4,938

 

5,346

 

(1,680)

 

(4,039)

     Accrued severance pay, net

(83)

 

(52)

 

(252)

 

19

Net cash provided by operating activities

46,687

 

31,951

 

93,926

 

69,943

Cash flows from investment activities:

             

Acquisition of subsidiary, net of acquired cash

-

 

-

 

-

 

(78,469)

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

(52,415)

 

39,957

 

(61,025)

 

156,461

Investment in marketable securities

(68,737)

 

(130,151)

 

(166,877)

 

(181,678)

Proceeds from maturity of marketable securities

66,329

 

23,737

 

150,644

 

57,935

Purchase of property and equipment

(3,555)

 

(4,928)

 

(9,587)

 

(12,885)

Net cash provided by (used in) investing activities

(58,378)

 

(71,385)

 

(86,845)

 

(58,636)

Cash flows from financing activities:

             

Settlement of a contingent consideration liability

-

 

(8,480)

 

-

 

(8,480)

Purchases of treasury shares

-

 

(2,146)

 

(112)

 

(6,416)

Proceeds from exercise of options

7

 

-

 

122

 

82

Net cash provided by (used in) financing activities

7

 

(10,626)

 

10

 

(14,814)

Effect of exchange rate fluctuations on cash and cash
 equivalents

(1,026)

 

(1,423)

 

(2,332)

 

(4,377)

Changes in cash and cash equivalents and restricted
cash

(12,710)

 

(51,483)

 

4,759

 

(7,884)

Cash and cash equivalents and restricted cash -
beginning of period

129,190

 

170,297

 

111,721

 

126,698

Cash and cash equivalents - end of period

116,480

 

118,814

 

116,480

 

118,814

 

 

NOVA LTD.

RECONCILIATION OF GAAP TO NON-GAAP RESULTS

(U.S. dollars in thousands, except percentage and per share data) - (Unaudited)

 
 

Three months ended

 

September 30,
2023

 

June 30,
2023

 

September 30,
2022

GAAP gross profit

72,241

 

69,658

 

80,841

Stock-based compensation*

1,173

 

1,071

 

1,114

Amortization of acquired intangible assets

1,369

 

1,368

 

1,289

Non-GAAP gross profit

74,783

 

72,097

 

83,244

GAAP gross margin as a percentage of revenues

56 %

 

57 %

 

56 %

Non-GAAP gross margin as a percentage of revenues

58 %

 

59 %

 

58 %

           

GAAP operating income

34,148

 

28,716

 

38,938

Stock-based compensation*

4,571

 

3,667

 

4,334

Amortization of acquired intangible assets

1,477

 

1,475

 

1,444

Non-GAAP operating income

40,196

 

33,858

 

44,716

GAAP operating margin as a percentage of revenues

27 %

 

23 %

 

27 %

Non-GAAP operating margin as a percentage of revenues

31 %

 

28 %

 

31 %

           

GAAP net income

33,689

 

29,926

 

35,075

Stock-based compensation*

4,571

 

3,667

 

4,334

Amortization of acquired intangible assets

1,477

 

1,475

 

1,444

Amortization of debt discount and issuance costs

324

 

320

 

322

Revaluation of operating lease and intercompany loans

423

 

(768)

 

(572)

Tax effect of non-GAAP adjustments

(1,079)

 

(806)

 

(905)

Non-GAAP net income

39,405

 

33,814

 

39,698

           

GAAP basic earnings per share

1.17

 

1.04

 

1.22

Non-GAAP basic earnings per share

1.36

 

1.18

 

1.38

           

GAAP diluted earnings per share

1.05

 

0.94

 

1.10

Non-GAAP diluted earnings per share

1.23

 

1.06

 

1.24

           

Shares used for calculation of earnings per share
(in thousands):

         

Basic

28,870

 

28,766

 

28,685

Diluted

31,983

 

31,928

 

31,892

             

* Stock-based compensation for the three months ended September 30, 2023, included in – Cost of revenues - 1,173;

Research and development, net – 1,995; Sales and marketing – 863; General and administrative – 540.

 

 

NOVA LTD.

SUPPLEMENTAL INFORMATION - RECONCILIATION OF FOURTH QUARTER 2023 

GAAP TO NON-GAAP GUIDANCE

(U.S. dollars) (Unaudited)

 

       
 

Low

 

High

Estimated GAAP net income per diluted share

0.96

 

1.11

Estimated non-GAAP items:

     

Stock-based compensation

0.19

 

0.19

Amortization of acquired intangible assets

0.04

 

0.04

Amortization of issuance costs

0.01

 

0.01

Tax effect of non-GAAP adjustments

(0.04)

 

(0.04)

Estimated non-GAAP net income per diluted share

1.16

 

1.31

 

Company Contact:
Dror David, Chief Financial Officer
Tel: +972-73-229-5760
E-mail - investors@novami.com
Nova website link - https://www.novami.com/

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

 

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