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Investors Press Releases

Nova Reports Third Quarter 2017 Results

Rehovot, Israel, November 1, 2017

Rehovot, Israel, November 1, 2017 Nova (Nasdaq: NVMI), a leading innovator and a key provider of metrology solutions for advanced process control used in semiconductor manufacturing, today reported financial results for the third quarter 2017, the period ended September 30, 2017.

Third Quarter 2017 Highlights:

  • Quarterly revenue of $54.1 million, within company guidance
  • GAAP net income of $11.5 million, or $0.40 per diluted share, exceeding guidance of $0.27 to $0.37 per share
  • Non-GAAP net income of $13.1 million, or $0.46 per diluted share, exceeding guidance of $0.33 to $0.43 per share
  • Continuous diversification with Memory customers generating 45% of quarterly revenue  
  • On pace to achieve fifth consecutive record revenue year, driven by growing market adoption of both OCD and XPS metrology solutions
GAAP Results ($K)
  Q3 2017 Q2 2017 Q3 2016
Revenues $54,058 $56,126 $44,060
Net Income (Loss) $11,502 $13,313 $(4,778)
Earnings (Loss) per Diluted Share $0.40 $0.47 $(0.18)
NON-GAAP Results ($K)
  Q3 2017 Q2 2017 Q3 2016
Net Income $13,101 $15,167 $9,449
Earnings per Diluted Share $0.46 $0.53 $0.34

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, stock-based compensation expenses, expense related to royalty buyout agreement with the Office of the Chief Scientist and inventory write-off.

Management Comments
“Strength in both our Dimensional and Materials metrology product lines drove another solid quarter, supporting our expectations for a fifth sequential record year,” commented Eitan Oppenhaim, President and Chief Executive Officer of Nova. “Our initiatives to diversify our customer base and expand our presence in the Memory segment continue to bear fruit with growing contribution from several Memory customers, including a leading Memory manufacturer that accounted for 30% of the product revenues.”

“Nova is evolving to offer a wider range of solutions, expanding our addressable markets and supporting our plans for sustainable growth,” continued Mr. Oppenhaim. “Following the successful integration of ReVera, today we can offer a unique and differentiated portfolio, which combines disruptive hardware and software capabilities and is appealing to a growing number of customers.”     

“With another record year clearly in our sights, we are progressing steadily toward our long-term growth targets while enhancing our product offering and expanding our market presence,” concluded Mr. Oppenhaim.

2017 Fourth Quarter Financial Outlook
Management provided an outlook for the fourth quarter, the period ending December 31, 2017. Based on current estimates, management expects:

  • $53 million to $57 million in revenue
  • $0.29 to $0.37 in diluted GAAP EPS
  • $0.34 to $0.42 in diluted non-GAAP EPS

2017 Third Quarter Results

Total revenues for the third quarter of 2017 were $54.1 million, a decrease of 4% compared to the second quarter of 2017 and a year-over-year increase of 23% relative to the third quarter of 2016.

Gross margin for the third quarter of 2017 was 61%, compared to gross margin of 59% in the second quarter of 2017 and compared to the gross margin of 22% in the third quarter of 2016, which included $12.9 million of expense related to royalty buyout agreement with the Office of the Chief Scientist and $1.9 million of expense related to inventory write-off.

Operating expenses in the third quarter of 2017 were $18.3 million, compared to $17.7 million in the second quarter of 2017 and compared to $16.6 million in the third quarter of 2016.

On a GAAP basis, the company reported net income of $11.5 million, or $0.40 per diluted share, in the third quarter of 2017. This is compared with $13.3 million, or $0.47 per diluted share, in the second quarter of 2017, and compared with net loss of $4.8 million, or $0.18 loss per diluted share, in the third quarter of 2016, which was inclusive of a non-recurring expense of $12.9 million related to royalty payment to the Israeli Office of the Chief Scientist and $1.9 million of expense related to inventory write-off.

On a non-GAAP basis, which excludes amortization of acquired intangible assets, net adjustments of deferred tax assets and stock-based compensation expenses, expense related to royalty buyout agreement with the Office of the Chief Scientist and inventory write-off, the company reported net income of $13.1 million, or $0.46 per diluted share, in the third quarter of 2017. This is compared with net income of $15.2 million, or $0.53 per diluted share, in the second quarter of 2017, and compared with net income of $9.4 million, or $0.34 per diluted share, in the third quarter of 2016.

Total cash reserves at September 30, 2017 were $144.6 million, compared to $91.7 million at December 31, 2016.

Conference Call Information

Nova will host a conference call today, November 1, 2017, at 9 a.m. Eastern Time, to discuss the 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. 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
3 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 November 2, 2017 at 12 p.m. Eastern Time to November 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, stock-based compensation expenses and expense related to royalty buyout agreement with the Office of the Chief Scientist and inventory write-off 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  

September 30,

2017

 

December 31,

2016

Current assets        
Cash and cash equivalents   20,020   20,406
Short-term interest-bearing bank deposits   123,833   70,546
Trade accounts receivable   33,554   42,626
Inventories   38,952   29,260
Other current assets   8,500   5,068
         
Total current assets   224,859   167,906
         
Long-term assets        
Long-term interest-bearing bank deposits   750   750
Deferred tax assets   2,009   3,020
Severance pay funds   1,457   1,425
Property and equipment, net   9,526   10,017
Identifiable intangible assets, net   13,440   15,361
Goodwill   20,114   20,114
         
Total long-term assets   47,296   50,687
         
Total assets   272,155   218,593
LIABILITIES AND SHAREHOLDERS’ EQUITY        
         
Current liabilities        
Trade accounts payable   17,623   16,501
Deferred revenues   11,426   4,072
Other current liabilities   21,072   18,461
         
Total current liabilities   50,121   39,034
         
Long-term liabilities        
Deferred tax liabilities   447   1,094
Liability for employee severance pay   2,541   2,418
Other long-term liabilities   1,603   1,330
         
Total long-term liabilities   4,591   4,842
         
Shareholders’ equity   217,443   174,717
         
Total liabilities and shareholders’ equity   272,155   218,593

 

NOVA MEASURING INSTRUMENTS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

  Three months ended   Nine months ended
  September 30,
2017
  September 30,
2016
  September 30,
2017
  September 30,
2016
               
Revenues:              
Products 41,119    32,944   129,589   82,633
Services 12,939   11,116   35,025   31,058
Total revenues 54,058   44,060   164,614   113,691
               
Cost of revenues:              
Products 13,790   13,127   44,719   33,080
Services 7,389   6,476   20,762   18,725
Expense related to royalty buyout agreement with the Office of the Chief Scientist   12,875     12,875  
Inventory write-off   1,889     1,889
Total cost of revenues 21,179   34,367   65,481   66,569
               
Gross profit 32,879   9,693   99,133   47,122
               
Operating expenses:              
Research and development expenses, net 9,826   9,181   28,339   25,773
Sales and marketing expenses 5,863   5,020   17,843   14,922
General and administration expenses 1,947   1,802   5,542   5,133
Amortization of acquired intangible assets 641   637   1,921   1,909
Total operating expenses 18,277   16,640   53,645   47,737
               
Operating income (loss) 14,602   (6,947)   45,488   (615)
               
Financing income, net 626   301      1,566   1,026
               
Income (loss) before tax on income 15,228   (6,646)   47,054   411
               
Income tax expenses (benefit) 3,726   (1,868)   8,836   (869)
               
Net income (loss) for the period 11,502   (4,778)   38,218   1,280
               
Earnings (loss) per share:              
Basic 0.41   (0.18)   1.38   0.05
Diluted 0.40   (0.18)   1.34   0.05
               
Shares used for calculation of earnings (loss) per share:              
               
Basic 27,788   27,169   27,637   27,136
Diluted 28,601   27,169   28,437   27,361

 

NOVA MEASURING INSTRUMENTS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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

  Three months ended   Nine months ended
  September 30, 2017   September 30, 2016   September 30, 2017   September 30, 2016
Cash flows from operating activities:              
Net income (loss) for the period 11,502   (4,778)   38,218   1,280
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
             
Depreciation 938   1,191   2,831   3,540
Amortization of acquired intangible assets   641   637   1,921   1,909
Amortization of deferred stock-based compensation 669   639       1,880   2,044
Increase (decrease) in liability for employee termination benefits, net 18   (1)   91   95
Deferred tax assets, net 289   (1,813)    364                (1,395)
Decrease (increase) in trade accounts receivable 2,798   (783)   9,072   (4,512)
Decrease (increase) in inventories (5,292)   1,722   (9,908)   (1,335)
Increase in other current and long-term assets (2,477)   (687)   (3,432)   (295)
Increase (decrease) in trade accounts payable (1,586)   (760)   1,122   (2,004)
Increase (decrease) in other current liabilities and other long-term liabilities 736   2,043   3,024   (564)
Increase (decrease) in short term deferred revenues 1,190   701   7,354   (1,405)
               
Net cash provided by (used in) operating activities 9,426   (1,889)   52,537   (2,642)
               
Cash flow from investment activities:              
Decrease (increase) in short-term interest-bearing bank deposits (30,628)   5,682   (53,287)   (250)
Additions to property and equipment (857)   (535)   (2,124)   (1,615)
               
Net cash provided by (used in) investment activities (31,485)   5,147   (55,411)   (1,865)
               
Cash flows from financing activities:              
Purchases of treasury shares       (937)
Shares issued under employee stock-based plans 347   941   2,488   1,365
               
Net cash provided by financing activities  347   941   2,488   428
               
Increase (decrease) in cash and cash equivalents (21,712)   4,199   (386)   (4,079)
Cash and cash equivalents – beginning of period 41,732   19,455   20,406   27,733
Cash and cash equivalents – end of period 20,020   23,654   20,020   23,654

 

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
 

September 30,

2017

 

June 30,

2017

 

September 30,

2016

GAAP cost of revenues 21,179   22,732   34,367
Expense related to royalty buyout agreement with the Office of the Chief Scientist     (12,875)
        (1,889)
Stock-based compensation in cost of products (113)   (74)   (79)
Stock-based compensation in cost of services (57)   (56)   (52)
Non-GAAP cost of revenues 21,009   22,602   19,472
           
GAAP gross profit 32,879   33,394   9,693
Gross profit adjustments 170   130   14,895
Non-GAAP gross profit 33,049   33,524   24,588
GAAP gross margin as a percentage of revenues 61%   59%   22%
Non-GAAP gross margin as a percentage of revenues 61%   60%   56%
           
GAAP operating expenses 18,277   17,708   16,640
Stock-based compensation in research and development (259)   (188)   (200)
Stock-based compensation in sales and marketing (95)   (146)   (226)
Stock-based compensation in general and administrative (145)   (84)   (82)
Amortization of acquired intangible assets (641)   (640)   (637)
Non-GAAP operating expenses 17,137   16,650   15,495
Non-GAAP operating income 15,912   16,874   9,093
GAAP operating margin as a percentage of revenues 27%   28%   (16%)
Non-GAAP operating margin as a percentage of revenues 29%   30%   21%
           
GAAP tax on income 3,726   2,898   (1,868)
Deferred tax assets adjustments, net (289)   (666)   1,813
Non-GAAP tax on income 3,437   2,232   (55)
           
GAAP net income (loss) 11,502   13,313   (4,778)
Amortization of acquired intangible assets 641       640                                 637
Expense related to royalty buyout agreement with the Office of the Chief Scientist     12,875
Stock-based compensation expenses 669   548   639
Deferred tax assets adjustments, net 289   666   (1,813)
Inventory write-off    –   1,889
Non-GAAP net income 13,101   15,167   9,449
           
GAAP basic earnings (loss) per share 0.41   0.48   (0.18)
Non-GAAP basic earnings per share 0.47   0.55   0.35
           
GAAP diluted earnings (loss) per share 0.40   0.47   (0.18)
Non-GAAP diluted earnings per share 0.46   0.5 3   0.34
           
Shares used for calculation of earnings (loss) per share:          
Basic 27,788   27,655   27,169
Diluted 28,601   28,562   27,536
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