Nova Reports Second Quarter 2019 Results

7 August 2019

REHOVOT, Israel, Aug. 7, 2019 /PRNewswire/ -- 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 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, 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:

Investor Relations Contact:

Dror David, Chief Financial Officer

Miri Segal

Nova Measuring Instruments Ltd.

MS-IR LLC

Tel: +972-73-229-5760

Tel: +917-607-8654

E-mail: info@novami.com

E-mail: msegal@ms-ir.com

www.novami.com

 

 

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SOURCE Nova