REHOVOT, Israel, Nov. 1, 2017 /PRNewswire/ -- 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 expensesand 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) |
Inventory write-off | - |
| - |
| (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 |
|
|
|
|
|
|
|
View original content:http://www.prnewswire.com/news-releases/nova-reports-third-quarter-2017-results-300547143.html
SOURCE Nova Measuring Instruments Ltd.