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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