PR Newswire | Aug 5, 2021 07:31AM EDT

08/05 06:30 CDT

Nova Reports Record Second Quarter 2021 Results REHOVOT, Israel, Aug. 5, 2021

REHOVOT, Israel, Aug. 5, 2021 /PRNewswire/ -- Nova(Nasdaq: NVMI) today announced record financial results for the second quarter of 2021, the period ended June 30, 2021.

Second Quarter 2021 Highlights:

* Record quarterly revenue of $97.7 million, up 56% year over year * Record GAAP net income of $22.9 million, or $0.77 per diluted share, up 157% year over year on a per-share basis * Record non-GAAP net income of $26.9 million, or $0.90 per diluted share, up 88% year over year on a per-share basis * The continuing proliferation of optical CD standalone solutions to various leading customers drove sales to a new quarterly high * Broader exposure to multiple accounts strengthened geographical diversification with record revenues from China

GAAP Results ($K)

Q2 2021Q1 2021Q2 2020

Revenues $97,746$84,133$62,586

Net Income $22,924$17,616$8,672

Earnings per Diluted Share$0.77 $0.60 $0.30

NON-GAAP Results ($K)

Q2 2021Q1 2021Q2 2020

Net Income $26,886$20,485$13,774

Earnings per Diluted Share$0.90 $0.70 $0.48

A reconciliation between GAAP operating results and non-GAAP operating results is provided following the financial statements that are part of this release. See also "Use of Non-GAAP Adjusted Financial Measures" section.

Management Comments

"We continue to reap the benefits of our well-executed plans meeting the Company's strategic targets. Our evolving product portfolio resonates well with our customers and propelled our continuous growth with another strong quarter," commented Eitan Oppenhaim, President and Chief Executive Officer. "Following our consistent achievements this year, we announced during our recent analyst and investor day, our new plan to organically grow the business to more than $500M in revenues. The combination of our financial model, operation leverage, and diversified portfolio supports our plans to continue our growth across segments and customers. Along with our guidance for the third quarter of 2021, we are well-positioned to achieve another record year and position Nova to capitalize on further opportunities in different territories."

2021 Third Quarter Financial Outlook

Management provided an outlook for the third quarter, the period ending September 30, 2021. Based on current estimates, management expects:

* $99 million to $106 million in revenue * $0.71 to $0.84 in diluted GAAP EPS * $0.85 to $0.98 in diluted non-GAAP EPS

2021 Second Quarter Results

Total revenues for the second quarter of 2021 were $97.7 million, an increase of 16% compared with the first quarter of 2021 and an increase of 56% compared with the second quarter of 2020.

Gross margin in the second quarter of 2021 was 57%, similar to the previous quarter and compared with gross margin of 58% in the second quarter of 2020.

Operating expenses in the second quarter of 2021 were $28.7 million, compared with $28.2 million in the first quarter of 2021 and $26.3 million in the second quarter of 2020.

On a GAAP basis, the Company reported net income of $22.9 million, or $0.77 per diluted share, in the second quarter of 2021. This is compared with net income of $17.6 million, or $0.60 per diluted share, in the first quarter of 2021, and net income of $8.7 million, or $0.30 per diluted share, in the second quarter of 2020.

On a non-GAAP basis, the Company reported net income of $26.9million, or $0.90 per diluted share, in the second quarter of 2021. This is compared with net income of $20.5 million, or $0.70 per diluted share, in the first quarter of 2021, and net income of $13.8 million, or $0.48 per diluted share, in the second quarter of 2020.

Conference Call Information

Nova will host a conference call today, August 5, 2021, at 8:30 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: 1-888-394-8218ISRAEL TOLL-FREE Dial-in Number: 1-809-212-883INTERNATIONAL Dial-in Number: 1-323-701-0225

At:8:30 a.m. Eastern Time5:30 a.m. Pacific Time3:30 p.m. Israel TimePlease reference conference ID: 6930576

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 5, 2021 at 11:30 a.m. Eastern Time to August 12, 2021 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: 6930576

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 https://www.novami.com/.

Nova is traded on the Nasdaq & TASE, Nasdaq ticker symbol NVMI.

Use of Non-GAAP Adjusted Financial Measures

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, revaluation of operating lease liabilities, amortization of debt discount and issuance costs and tax effect of non-GAAP adjustment, as applicable, 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 enhance 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 allow 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.

Forward-Looking Statements

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 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: catastrophic events such as the outbreak of COVID-19; increased information technology security threats and sophisticated computer crime; foreign political and economic risks; changes in U.S. trade policies; inability to protect intellectual property; open source technology exposure; failure to compete effectively or to respond to the rapid technological changes; consolidation in our industry; difficulty to predict the length and strength of any downturn or expansion period of the market we target; factors that adversely affect the pricing and demand for our product lines; dependency on a small number of large customers; dependency on a single manufacturing facility per product line; dependency on a limited number of suppliers; lengthy sales cycle and customer delays in orders; political, economic, and military instability in Israel; risks related to our convertible notes; currency fluctuations; and quarterly fluctuations in our operating results. 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, 2020 filed with the Securities and Exchange Commission on March 1, 2021. These factors are updated from time to time through the filing of reports and registration statements with the Securities and Exchange Commission. Nova Ltd. does not assume any obligation to update the forward-looking information contained in this press release.

(Tables to Follow)

NOVA LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

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

As of

June 30, December 31,ASSETS 2021 2020

Current assets

Cash and cash equivalents 136,290 232,304

Short-term interest-bearing bank deposits 243,635 191,567

Marketable securities 40,270 -

Trade accounts receivable, net 58,207 63,314

Inventories 71,800 61,734

Other current assets 9,879 9,782

Total current assets 560,081 558,701

Non-current assets

Marketable securities 59,605 -

Interest-bearing bank deposits 3,503 2,547

Restricted interest-bearing bank deposits 1,750 1,476

Deferred tax assets 4,583 2,869

Other long-term assets 456 462

Severance pay funds 1,311 1,281

Operating lease right-of-use assets 28,833 29,109

Property and equipment, net 33,041 34,168

Intangible assets, net 3,910 5,059

Goodwill 20,114 20,114

Total non-current assets 157,106 97,085

Total assets 717,187 655,786

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities

Convertible senior notes, net 180,893 -

Trade accounts payable 26,527 24,096

Deferred revenues 13,591 4,717

Operating lease current liabilities 3,942 3,703

Other current liabilities 32,096 28,418

Total current liabilities 257,049 60,934

Non-current liabilities

Convertible senior notes, net - 178,808

Accrued severance pay 3,804 3,719

Operating lease long-term liabilities 31,022 31,905

Other long-term liability 9,610 8,882

Total non-current liabilities 44,436 223,314

Shareholders' equity 415,702 371,538

Total liabilities and shareholders' equity 717,187 655,786

NOVA LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

Three months ended Six months ended June 30, June 30,

2021 2020 2021 2020

Revenues:

Products 78,293 47,097 144,576 92,822

Services 19,453 15,489 37,303 30,786

Total revenues 97,746 62,586 181,879 123,608

Cost of revenues 41,802 25,985 78,005 52,665

Gross profit 55,944 36,601 103,874 70,943

Operating expenses:

Research and development, net 15,341 12,622 29,859 24,305

Sales and marketing 9,432 7,263 18,972 13,826

General and administrative 3,388 5,775 6,927 8,364

Amortization of acquired intangible assets 574 626 1,149 1,252

Total operating expenses 28,735 26,286 56,907 47,747

Operating income 27,209 10,315 46,967 23,196

Financing income (expense), net (1,150) 387 (726) 1,415

Income before tax on income 26,059 10,702 46,241 24,611

Income tax expenses 3,135 2,030 5,701 4,257

Net income for the period 22,924 8,672 40,540 20,354

Earnings per share:

Basic 0.81 0.31 1.43 0.73

Diluted 0.77 0.30 1.37 0.70

Shares used for calculation of earnings pershare (in thousands):

Basic 28,304 28,039 28,259 28,037

Diluted 29,815 28,888 29,561 28,890

NOVA LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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

Three months ended Six months ended June 30, June 30,

2021 2020 2021 2020

Cash flows from operating activities:

Net income $ 22,924 $ 8,672 $ 40,540 $ 20,354

Adjustments to reconcile net income to net cash provided byoperating activities:

Depreciation of property and equipment 1,596 1,419 3,175 2,829

Amortization of intangible assets 574 626 1,149 1,252

Amortization of premium and accretion of discount on 283 - 283 -marketable securities, net

Amortization of debt discount and issuance costs 1,051 - 2,085 -

Share-based compensation 2,128 1,454 4,350 2,772

Net effect of exchange rate fluctuation (350) (178) 12 221

Changes in assets and liabilities:

Trade accounts receivables, net 1,613 10,586 5,107 7,146

Inventories (5,831) (7,022) (10,248) (8,470)

Other current and long-term assets 554 1,046 (608) 4,739

Deferred tax assets, net (1,116) (345) (1,714) (546)

Operating lease right-of-use assets 411 350 817 604

Trade accounts payables 1,932 2,920 2,371 665

Deferred revenues (147) (1,437) 8,874 (1,091)

Operating lease liabilities 81 76 (1,185) (390)

Other current and long-term liabilities 587 618 4,305 2,572

Accrued severance pay, net 93 132 55 150

Net cash provided by operating activities 26,383 18,917 59,368 32,807

Cash flows from investment activities:

Change in short-term and long-term interest-bearing bank deposits 2,461 (25,373) (53,344) (33,002)

Investment in marketable securities (106,403) - (106,403) -

Proceed from sales and maturities of marketable securities 6,137 - 6,137 -

Purchase of property and equipment (1,318) (890) (1,806) (3,160)

Net cash used in investing activities (99,123) (26,263) (155,416) (36,162)

Cash flows from financing activities:

Purchases of treasury shares - (2,535) - (2,549)

Proceeds from exercise of options - 142 - 253

Net cash used in financing activities - (2,393) - (2,296)

Effect of exchange rate fluctuations on cash and cash equivalents 272 93 34 (212)

Decrease in cash and cash equivalents (72,468) (9,646) (96,014) (5,863)

Cash and cash equivalents - beginning of period 208,758 35,531 232,304 31,748

Cash and cash equivalents - end of period $ 136,290 $ 25,885 $ 136,290 $ 25,885

NOVA 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, March 31, June 2021 2021 30, 2020

GAAP gross profit 55,944 47,930 36,601

Stock-based compensation expenses * 382 418 279

Non-GAAP gross profit 56,326 48,348 36,880

GAAP gross margin as a percentage of revenues 57% 57% 58%

Non-GAAP gross margin as a percentage of revenues 58% 57% 59%

GAAP operating income 27,209 19,758 10,315

Stock-based compensation expenses * 2,128 2,222 1,454

Amortization of acquired intangible assets 574 575 626

Expense related to a transaction made by a financial - - 3,000institution without Company authorization

Non-GAAP operating income 29,911 22,555 15,395

GAAP operating margin as a percentage of revenues 28% 23% 16%

Non-GAAP operating margin as a percentage of revenues 31% 27% 25%

GAAP net income 22,924 17,616 8,672

Stock-based compensation expenses * 2,128 2,222 1,454

Amortization of acquired intangible assets 574 575 626

Amortization of debt discount and issuance costs 1,051 1,034 -

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

Revaluation of operating lease liabilities 554 (860) 594

Tax effect of non-GAAP adjustments (345) (102) (572)

Non-GAAP net income 26,886 20,485 13,774

GAAP basic earnings per share 0.81 0.62 0.31

Non-GAAP basic earnings per share 0.95 0.73 0.49

GAAP diluted earnings per share 0.77 0.60 0.30

Non-GAAP diluted earnings per share 0.90 0.70 0.48

Shares used for calculation of earnings per share(in thousands):

Basic 28,304 28,214 28,039

Diluted 29,815 29,306 28,888

* Stock-based compensation expenses for the three months ended June 30, 2021 included in - Cost of revenues - 382; Research and development expenses, net - 811; Sales and marketing expenses - 527; General and administrative expenses - 408

NOVA LTD.

SUPPLEMENTAL INFORMATION - RECONCILIATION OF THIRD QUARTER 2021

GAAP TO NON-GAAP GUIDANCE

(Unaudited)

Low High

Estimated GAAP net income per diluted share 0.71 0.84

Estimated non-GAAP items:

Stock-based compensation expenses 0.10 0.10

Amortization of acquired intangible assets 0.02 0.02

Amortization of debt discount and issuance costs 0.03 0.03

Tax effect of non-GAAP adjustments (0.01) (0.01)

Estimated non-GAAP net income per diluted share 0.85 0.98

Company Contact:Dror David, Chief Financial Officer Tel: +972-73-229-5760 investors@novami.com https://www.novami.com/

Investor Relations Contact:Miri Segal MS-IR LLCTel: +917-607-8654msegal@ms-ir.com

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SOURCE Nova