PR Newswire | Aug 4, 2020 08:03AM EDT

08/04 07:00 CDT

Nova Reports Second Quarter 2020 Results REHOVOT, Israel, Aug. 4, 2020

REHOVOT, Israel, Aug. 4, 2020 /PRNewswire/ -- Nova (Nasdaq: NVMI) today announced financial results for the second quarter 2020, the period ended June 30, 2020.

Second Quarter 2020 Highlights:

* Quarterly revenue of $62.6 million, meeting guidance of $58 million to $66 million * GAAP net income of $8.7 million, or $0.30 per diluted share, meeting guidance of $0.29 to $0.43 per share * Non-GAAP net income of $13.8 million, or $0.48 per diluted share, meeting guidance of $0.37 to $0.51 per share * Balanced revenue mix with five major customers contributing over 10% each to the geographically diverse product revenue * Record quarterly integrated metrology revenues, driven by growing demand for advanced integrated solutions across different technology nodes

GAAP Results ($K)

Q2 2020 Q1 2020 Q2 2019

Revenues $62,586 $61,022 $51,120

Net Income $8,672 $11,682 $6,468

Earnings per Diluted Share $0.30 $0.41 $0.23

NON-GAAP Results ($K)

Q2 2020 Q1 2020 Q2 2019

Net Income $13,774 $13,481 $9,007

Earnings per Diluted Share $0.48 $0.47 $0.32

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, expense related to a transaction made by a financial institution without Company authorization, facilities transition costs, revaluation of long-term liabilities and tax effect of non-GAAP adjustments.

Management Comments

"Our second quarter results met our expectations and Company guidance, highlighting our ability to successfully navigate through the dynamic global environment caused by the COVID-19 pandemic. The success of our decisive actions to secure our supply chain and production capabilities, while ensuring business continuity, is evident in our achievements this quarter. During the second quarter, we continued to execute well and achieved important milestones in our new product rollout plans with several leading customers," stated Eitan Oppenhaim, President and Chief Executive Officer. "Despite various market uncertainties, we remain focused on the Company's growth as we leverage the current steady demand for our products."

2020 Third Quarter Financial Outlook

Management provided an outlook for the third quarter, the period ending September 30, 2020. Based on current estimates, management expects:

* $58 million to $66 million in revenue * $0.25 to $0.39 in diluted GAAP EPS * $0.34 to $0.47 in diluted non-GAAP EPS

2020 Second Quarter Results

Total revenues for the second quarter of 2020 were $62.6 million, an increase of 2.6% compared with the first quarter of 2020 and an increase of 22.4% compared with the second quarter of 2019.

Gross margin for the second quarter of 2020 was 58.5%, compared with a gross margin of 56.3% in the first quarter of 2020, and compared with a gross margin of 55.0% in the second quarter of 2019.

Operating expenses in the second quarter of 2020 were $26.3 million, compared with $21.5 million in the first quarter of 2020 and compared with $21.3 million in the second quarter of 2019.

On a GAAP basis, the Company reported net income of $8.7 million, or $0.30 per diluted share, in the second quarter of 2020. This is compared with net income of $11.7 million, or $0.41 per diluted share, in the first quarter of 2020, and compared with net income of $6.5 million, or $0.23 per diluted share, in the second quarter of 2019.

On a non-GAAP basis, which excludes amortization of acquired intangible assets, stock-based compensation expenses, one-time expense related to a transaction made by a financial institution without Company authorization, facilities transition costs, revaluation of long-term liabilities and tax effect of non-GAAP adjustments, the Company reported net income of $13.8million, or $0.48 per diluted share, in the second quarter of 2020. This is compared with net income of $13.5 million, or $0.47 per diluted share, in the first quarter of 2020, and compared with net income of $9.0 million, or $0.32 per diluted share, in the second quarter of 2019.

Conference Call Information

Nova will host a conference call today, August 4, 2020, 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. TOLL-FREE Dial-in Number: 1-866-548-4713ISRAEL TOLL-FREE Dial-in Number: 1-809-212-883INTERNATIONAL Dial-in Number: 1-323-794-2093

At:

9 a.m. Eastern Time6 a.m. Pacific Time4 p.m. Israel TimePlease reference conference ID: 8576081

The conference call will also be webcast live from a link on Nova's website at https://www.novami.com/investors/events/.

A replay of the conference call will be available from August 4, 2020 at 12 p.m. Eastern Time to August 11, 2020 at 11:59 p.m. Eastern Time. To access the replay, please dial one of the following numbers:

Replay Dial-in TOLL-FREE: 1-844-512-2921Replay Dial-in TOLL/INTERNATIONAL: 1-412-317-6671Replay Pin Number: 8576081

A replay will also be available for 90 days on Nova's website at https://www.novami.com/investors/events/.

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 enables 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, expense related to a transaction made by a financial institution without Company authorization, 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 worldwide financial and economic instabilities, including the implications of the ongoing novel coronavirus (COVID-19) pandemic; 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, including data breaches, cyberattacks and system disruptions, 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, 2019 filed with the Securities and Exchange Commission on March 12, 2020. 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.

Company Contact:Dror David, Chief Financial Officer Nova Measuring Instruments Ltd. Tel: +972-73-229-5760 E-mail: info@novami.comwww.novami.comInvestor Relations Contact:Miri Segal MS-IR LLC Tel: +917-607-8654 E-mail: msegal@ms-ir.com

NOVA MEASURING INSTRUMENTS LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

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

As of

June 30, December 31,ASSETS 2020 2019

Current assets

Cash and cash equivalents 25,885 31,748

Short-term interest-bearing bank deposits 187,535 154,533

Trade accounts receivable 44,457 51,603

Inventories 56,584 48,362

Other current assets 12,383 17,122

Total current assets 326,844 303,368

Non-current assets

Interest-bearing bank deposits 2,804 2,813

Restricted interest-bearing bank deposits 2,000 2,000

Deferred tax assets 5,100 4,554

Severance pay funds 1,181 1,210

Right of-use assets 27,555 28,256

Property and equipment, net 31,489 30,566

Intangible assets, net 6,310 7,562

Goodwill 20,114 20,114

Total non-current assets 96,553 97,075

Total assets 423,397 400,443

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities

Trade accounts payable 21,716 20,706

Deferred revenues 1,165 2,256

Operating lease current liabilities 1,935 2,236

Other current liabilities 23,161 21,751

Total current liabilities 47,977 46,949

Non-current liabilities

Accrued severance pay 2,119 2,120

Operating lease long-term liabilities 30,891 31,077

Other long-term liability 6,448 5,758

Total non-current liabilities 39,458 38,955

Shareholders' equity 335,962 314,539

Total liabilities and shareholders' equity 423,397 400,443

NOVA MEASURING INSTRUMENTS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

Three months Six months ended ended

June June June June 30, 30, 30, 30,

2020 2019 2020 2019

Revenues:

Products 47,097 37,401 92,822 81,462

Services 15,489 13,719 30,786 26,315

Total revenues 62,586 51,120 123,608 107,777

Cost of revenues:

Products 17,150 14,527 35,190 32,104

Services 8,835 8,483 17,475 15,979

Total cost of revenues 25,985 23,010 52,665 48,083

Gross profit 36,601 28,110 70,943 59,694

Operating expenses:

Research and development expenses, net 12,622 11,654 24,305 24,238

Sales and marketing expenses 7,263 6,641 13,826 13,787

General and administrative expenses 5,775 2,384 8,364 4,906

Amortization of acquired intangible assets 626 656 1,252 1,312

Total operating expenses 26,286 21,335 47,747 44,243

Operating income 10,315 6,775 23,196 15,451

Financing income, net 387 855 1,415 1,365

Income before tax on income 10,702 7,630 24,611 16,816

Income tax expenses 2,030 1,162 4,257 2,592

Net income for the period 8,672 6,468 20,354 14,224

Earnings per share:

Basic 0.31 0.23 0.73 0.51

Diluted 0.30 0.23 0.70 0.50

Shares used for calculation of earnings per share:

Basic 28,039 27,869 28,037 27,898

Diluted 28,888 28,564 28,890 28,234

NOVA MEASURING INSTRUMENTS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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

Three months ended Six months ended

June 30, June 30, June 30, June 30,

2020 2019 2020 2019

Cash flows from operating activities:

Net income for the period 8,672 6,468 20,354 14,224

Adjustments to reconcile net income to net cashprovided by (used in) operating activities:

Depreciation and amortization 2,039 2,770 4,783 5,470

Share-based compensation 1,454 1,086 2,772 2,298

Change in deferred tax assets, net (345) (147) (546) (344)

Change in accrued severance pay, net 42 (6) 28 27

Change in trade accounts receivable 10,586 (1,157) 7,146 5,453

Change in inventories (7,022) (3,323) (8,470) (7,855)

Change in other current and long-term assets 1,046 1,978 4,739 2,580

Change in trade accounts payable 2,920 (5,430) 665 (2,126)

Change in other current and long-term liabilities 1,140 (3,457) 2,206 (4,579)

Change in short term deferred revenues (1,437) 196 (1,091) 1,330

Net cash provided by (used in) operating activities 19,095 (1,022) 32,586 16,478

Cash flow from investment activities:

Increase in short-term and long-term interest-bearing bank deposits (25,458) 8,447 (32,993) 6,075

Purchase of property and equipment (890) (5,716) (3,160) (7,693)

Net cash provided by (used in) investment activities (26,348) 2,731 (36,153) (1,618)

Cash flows from financing activities:

Purchases of treasury shares (2,535) (7,159) (2,549) (7,159)

Shares issued upon exercise of options 142 166 253 272

Net cash used in financing activities (2,393) (6,993) (2,296) (6,887)

Increase (decrease) in cash and cash equivalents (9,646) (5,284) (5,863) 7,973

Cash and cash equivalents - beginning of period 35,531 38,134 31,748 24,877

Cash and cash equivalents - end of period 25,885 32,850 25,885 32,850

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 March 31, June 30, 2020 30, 2020 2019

GAAP gross profit 36,601 34,342 28,110

Stock-based compensation expenses * 279 256 222

Facilities transition costs - - 271

Non-GAAP gross profit 36,880 34,598 28,603

GAAP gross margin as a percentage of revenues 58% 56% 55%

Non-GAAP gross margin as a percentage of revenues 59% 57% 56%

GAAP operating income 10,315 12,881 6,775

Stock-based compensation expenses * 1,454 1,318 1,086

Amortization of acquired intangible assets 626 626 656

One-time expense related to a transaction made by a 3,000 - -financial institution without Company authorization

Facilities transition costs - - 827

Non-GAAP operating income 15,395 14,825 9,344

GAAP operating margin as a percentage of revenues 16% 21% 13%

Non-GAAP operating margin as a percentage of revenues 25% 24% 18%

GAAP net income 8,672 11,682 6,468

Stock-based compensation expenses * 1,454 1,318 1,086

Amortization of acquired intangible assets 626 626 656

One-time expense related to a transaction made by a 3,000 - -financial institution without Company authorization

Facilities transition costs - - 827

Revaluation of long-term liabilities 594 (66) 295

Tax effect of non-GAAP adjustments (572) (79) (325)

Non-GAAP net income 13,774 13,481 9,007

GAAP basic earnings per share 0.31 0.42 0.23

Non-GAAP basic earnings per share 0.49 0.48 0.32

GAAP diluted earnings per share 0.30 0.41 0.23

Non-GAAP diluted earnings per share 0.48 0.47 0.32

Shares used for calculation of earnings per share:

Basic 28,039 27,902 27,869

Diluted 28,888 28,760 28,564

* Stock-based compensation expenses for the three months ended June 30, 2020 included in - Cost of revenues products - 169; Cost of revenues services - 110; Research and development expenses, net - 604; Sales and marketing expenses - 327; General and administrative expenses - 244

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SOURCE Nova