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Investors Press Releases

Nova Reports Record Second Quarter 2017 Results

Rehovot, Israel, August 2, 2017

Rehovot, Israel, August 2, 2017 Nova (Nasdaq: NVMI), a leading innovator and a key provider of metrology solutions for advanced process control used in semiconductor manufacturing, today reported record financial results for the second quarter 2017, the period ended June 30, 2017.

Second Quarter 2017 Highlights:

  • Record quarterly revenue of $56.1 million, up 58% year-over-year, above the high end of guidance of $52 million to $56 million
  • GAAP net income of $13.3 million, or $0.47 per diluted share, up 327% year-over-year on a per-share basis, exceeding guidance of $0.32 to $0.39 per share
  • Non-GAAP net income of $15.2 million, or $0.53 per diluted share, up 212% year-over-year on a per-share basis, exceeding guidance of $0.38 to $0.46 per share
  • Diversified customer mix, including five 10%-plus customers
  • Record quarterly revenue from Integrated Metrology solutions, including record Integrated Metrology revenue from Memory customers   
GAAP Results ($K)
  Q2 2017 Q1 2017 Q2 2016
Revenues $56,126 $54,430 $35,575
Net Income $13,313 $13,403 $3,153
Earnings per Diluted Share $0.47 $0.48 $0.11
NON-GAAP Results ($K)
  Q2 2017 Q1 2017 Q2 2016
Net Income $15,167 $14,115 $4,703
Earnings per Diluted Share $0.53 $0.50 $0.17

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, net adjustments of deferred tax assets and stock-based compensation expenses.

Management Comments
“We continue to outperform and solidify Nova’s competitive position in the market by offering an innovative and unique portfolio of metrology solutions to a growing addressable market,” commented Eitan Oppenhaim, President and Chief Executive Officer of Nova. “The record quarterly results are driven by continuous demand for all our product lines, including Dimensional and Materials solutions, across all segments. Our second quarter revenue and profitability both exceeded our guidance range, supported by an increasingly diverse customer base with five 10%-plus customers from both the Foundry and Memory segments.”

“We delivered significant growth during the first half of 2017, demonstrating the value and efficiency embedded into our business model, which allows us to continue investing in our next-generation products and to pursue our strategic targets,” added Mr. Oppenhaim. “The results in the first half of 2017 suggest that we are well on pace for another significant growth year, while our strong cash reserves provide ample resources to further expand our market position.”   

2017 Third Quarter Financial Outlook
Management provided an outlook for the third quarter, the period ending September 30, 2017. Based on current estimates, management expects:

  • $51 million to $56 million in revenue
  • $0.27 to $0.37 in diluted GAAP EPS
  • $0.33 to $0.43 in diluted non-GAAP EPS

2017 Second Quarter Results
Total revenues for the second quarter of 2017 were $56.1 million, a sequential increase of 3% compared to the first quarter of 2017 and a year-over-year increase of 58% relative to the second quarter of 2016.

Gross margin in the second quarter of 2017 was 59%, compared to a gross margin of 60% in the first quarter of 2017 and compared to a gross margin of 53% in the second quarter of 2016.

Operating expenses in the second quarter of 2017 were $17.7 million, similar to the first quarter of 2017 and compared with $15.4 million in the second quarter of 2016.

On a GAAP basis, the company reported net income of $13.3 million, or $0.47 per diluted share, in the second quarter of 2017. This is compared with net income of $13.4 million, or $0.48 per diluted share, in the first quarter of 2017, and compared with net income of $3.2 million, or $0.11 per diluted share, in the second quarter of 2016.

On a non-GAAP basis, which excludes amortization of acquired intangible assets, net adjustments of deferred tax assets and stock-based compensation expenses, the company reported net income of $15.2 million, or $0.53 per diluted share, in the second quarter of 2017. This is compared with net income of $14.1 million, or $0.50 per diluted share, in the first quarter of 2017, and compared with net income of $4.7 million, or $0.17 per diluted share, in the second quarter of 2016.

Total cash reserves at June 30, 2017 were $135.7 million, compared to $91.7 million at December 31, 2016.

Conference Call Information

Nova will host a conference call today, August 2, 2017, 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: 1-800-310-1961
ISRAEL Dial-in Number: 1-809-245-905
INTERNATIONAL Dial-in Number: 1-719-325-2291

At:
9 a.m. Eastern Time
6 a.m. Pacific Time
4 p.m. Israeli Time
Please reference conference ID 1221502

The conference call will also be webcast live from a link on Nova’s website at http://ir.novameasuring.com.

A replay of the conference call will be available from August 2, 2017 at 12 p.m. Eastern Time to August 9, 2017 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:  1221502

A replay will also be available for 90 days on Nova’s website at http://ir.novameasuring.com.

About Nova: Nova delivers continuous innovation by providing advanced metrology solutions for the semiconductor manufacturing industry. Deployed with the world’s largest integrated-circuit manufacturers, Nova’s products deliver 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, supports the development and production of the most advanced devices in today’s high-end semiconductor market. Nova’s technical innovation and market leadership enable customers to improve process performance, enhance products’ 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.novameasuring.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, net adjustment of deferred tax assets 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 ability to recognize the benefits of ReVera acquisition and risks that the acquisition may disrupt current plans and operations and impact relationships with customers, distributors and suppliers; 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 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, 2016 filed with the Securities and Exchange Commission on March 3, 2017. 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,

2017

 

December 31,

2016

Current assets        
Cash and cash equivalents   41,732   20,406
Short-term interest-bearing bank deposits   93,205   70,546
Trade accounts receivable   36,352   42,626
Inventories   33,671   29,260
Other current assets   6,023   5,068
         
Total current assets   210,983   167,906
         
Long-term assets        
Long-term interest-bearing bank deposits   750   750
Deferred tax assets   2,367   3,020
Severance pay funds   1,471   1,425
Property and equipment, net   9,596   10,017
Identifiable intangible assets, net   14,081   15,361
Goodwill   20,114   20,114
         
Total long-term assets   48,379   50,687
         
Total assets   259,362   218,593
LIABILITIES AND SHAREHOLDERS’ EQUITY        
Current liabilities        
Trade accounts payable   19,209   16,501
Deferred revenues   10,236   4,072
Other current liabilities   19,996   18,461
         
Total current liabilities   49,441   39,034
         
Long-term liabilities        
Deferred tax liabilities   516   1,094
Liability for employee severance pay   2,537   2,418
Other long-term liabilities   1,616   1,330
         
Total long-term liabilities   4,669   4,842
         
Shareholders’ equity   205,252   174,717
         
Total liabilities and shareholders’ equity   259,362   218,593

 

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,

2017

 

June 30,

2016

 

June 30,

2017

 

June 30,

2016

               
Revenues:              
Products 44,954   25,427   88,470   49,689
Services 11,172   10,148   22,086   19,942
Total revenues 56,126   35,575   110,556   69,631
               
Cost of revenues:              
Products 15,809   10,092   30,929   19,953
Services 6,923   6,584   13,373   12,249
Total cost of revenues 22,732   16,676   44,302   32,202
               
Gross profit 33,394   18,899   66,254   37,429
               
Operating expenses:              
Research and development expenses, net 9,238   8,684   18,513   16,592
Sales and marketing expenses 5,892   4,535   11,980   9,902
General and administration expenses 1,938   1,521   3,595   3,331
Amortization of acquired intangible assets 640   636   1,280   1,272
Total operating expenses 17,708   15,376   35,368   31,097
               
Operating income 15,686   3,523   30,886   6,332
               
Financing income, net 525   256   940   725
               
Income before tax on income 16,211   3,779   31,826   7,057
               
Income tax expenses 2,898   626   5,110   999
               
Net income for the period 13,313   3,153   26,716   6,058
               
Earnings per share:              
Basic 0.48   0.12   0.97   0.22
Diluted 0.47   0.11   0.96   0.22
               
Shares used for calculation of earnings per share:              
               
Basic 27,655   27,123   27,561   27,120
Diluted 28,562   27,422   27,958   27,253

 

NOVA MEASURING INSTRUMENTS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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

  Three months ended   Six months ended
 

June 30,

2017

 

June 30,

2016

 

June 30,

2017

 

June 30,

2016

Cash flows from operating activities:              
Net income for the period 13,313   3,153   26,716   6,058

Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
             
Depreciation 938   1,064   1,893   2,349
Amortization of acquired intangible assets 640   636   1,280   1,272
Amortization of deferred stock-based compensation 548   649   1,211   1,405
Increase in liability for employee termination benefits, net 41   30   73   96
Deferred tax assets, net 666   265   75   418
Decrease (increase) in trade accounts receivable 1,887   (689)   6,274   (3,729)
Increase in inventories (3,041)   (2,687)   (4,616)   (3,057)
Decrease (increase) in other current assets (1,376)   739   (955)   392
Increase (decrease) in trade accounts payable 2,618   1,946   2,708   (1,244)
Increase (decrease) in other current liabilities and other long-term liabilities 409   (2,490)   2,288   (2,607)
Increase (decrease) in short term deferred revenues 3,770   851   6,164   (2,106)
               
Net cash provided by (used in) operating activities 20,413   3,467   43,111   (753)
               
Cash flow from investment activities:              
Decrease (increase) in short-term interest-bearing bank deposits (2,581)   1,098   (22,659)   (5,932)
Additions to property and equipment (847)   (503)   (1,267)   (1,080)
               
Net cash provided by (used in) investment activities (3,428)   595   (23,926)   (7,012)
               
Cash flows from financing activities:              
Purchases of treasury shares   (937)     (937)
Shares issued under employee stock-based plans 324   132   2,141   424
               
Net cash provided by (used in) financing activities 324   (805)   2,141   (513)
               
Increase (decrease) in cash and cash equivalents 17,309   3,257   21,326   (8,278)
Cash and cash equivalents – beginning of period 24,423   16,198   20,406   27,733
Cash and cash equivalents – end of period 41,732   19,455   41,732   19,455

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,

2017

 

March 31,

2017

 

June 30,

2016

GAAP cost of revenues 22,732   21,570   16,676
Stock-based compensation in cost of products (74)   (76)   (79)
Stock-based compensation in cost of services (56)   (66)   (48)
Non-GAAP cost of revenues 22,602   21,428   16,549
           
GAAP gross profit 33,394   32,860   18,899
Gross profit adjustments 130   142   127
Non-GAAP gross profit 33,524   33,002   19,026
GAAP gross margin as a percentage of revenues 59%   60%   53%
Non-GAAP gross margin as a percentage of revenues 60%   61%   53%
           
GAAP operating expenses 17,708   17,660   15,376
Stock-based compensation in research and development (188)   (262)   (230)
Stock-based compensation in sales and marketing (146)   (165)   (237)
Stock-based compensation in general and administrative (84)   (94)   (55)
Amortization of acquired intangible assets (640)   (640)   (636)
Non-GAAP operating expenses 16,650   16,499   14,218
Non-GAAP operating income 16,874   16,503   4,808
GAAP operating margin as a percentage of revenues 28%   28%   10%
Non-GAAP operating margin as a percentage of revenues 30%   30%   14%
           
GAAP tax on income 2,898   2,212   626
Deferred tax assets adjustments, net (666)   591   (265)
Non-GAAP tax on income 2,232   2,803   361
           
GAAP net income 13,313   13,403   3,153
Amortization of acquired intangible assets 640   640   636
Stock-based compensation expenses 548   663   649
Deferred tax assets adjustments, net 666   (591)   265
Non-GAAP net income 15,167   14,115   4,703
           
GAAP basic earnings per share 0.48   0.49   0.12
Non-GAAP basic earnings per share 0.55   0.51   0.17
           
GAAP diluted earnings per share 0.47   0.48   0.11
Non-GAAP diluted earnings per share 0.5 3   0.50   0.17
           
Shares used for calculation of earnings per share:          
Basic 27,655   27,467   27,123
Diluted 28,562   28,148   27,422
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