PR Newswire | Nov 4, 2021 07:31AM EDT

11/04 06:30 CDT

Nova Reports Record Third Quarter 2021 Results REHOVOT, Israel, Nov. 4, 2021

REHOVOT, Israel, Nov. 4, 2021 /PRNewswire/ -- Nova (Nasdaq: NVMI) today announced record financial results for the third quarter of 2021, the period ended September 30, 2021.

Third Quarter 2021 Highlights:

* Record quarterly revenue of $112.7 million, up 62% year over year * Record GAAP net income of $30.3 million, or $1.02 per diluted share, up 113% year over year on a per-share basis * Record non-GAAP net income of $34.5 million, or $1.16 per diluted share, up 104% year over year on a per-share basis * Record materials metrology revenue driven by expanded product portfolio and new logic penetration * Continuous adoption of the NovaPRISM(r) standalone platform across segments and customers

GAAP Results ($K)

Q3 2021 Q2 2021Q3 2020

Revenues $112,713$97,746$69,485

Net Income $30,335 $22,924$13,869

Earnings per Diluted Share$1.02 $0.77 $0.48

NON-GAAP Results ($K)

Q3 2021Q2 2021Q3 2020

Net Income $34,546$26,886$16,511

Earnings per Diluted Share$1.16 $0.90 $0.57

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 remain confident in our strategy and the long-term value we create for our customers as they move towards production of next-generation devices across all technologies and segments. With the global surge in demand and the commensurate challenges to production capacity, our technology value continues to resonate strongly with a wide range of customers. This was demonstrated in the third quarter by several selection wins and by the successful proliferation of our industry-leading technologies," commented Eitan Oppenhaim, President and Chief Executive Officer. "The increasing demand for our innovative portfolio along with the current market demand, paves us the way to another outperformance year in 2021 and builds a solid momentum towards 2022."

2021 Fourth Quarter Financial Outlook

Management provided an outlook for the fourth quarter, the period ending December 31, 2021. Based on current estimates, management expects:

* $113 million to $123 million in revenue * $0.78 to $0.96 in diluted GAAP EPS * $0.94 to $1.12 in diluted non-GAAP EPS

2021 Third Quarter Results

Total revenues for the third quarter of 2021 were $112.7 million, an increase of 15% compared with the second quarter of 2021 and an increase of 62% compared with the third quarter of 2020.

Gross margin in the third quarter of 2021 was 58%, compared with 57% in the second quarter of 2021 and 57% in the third quarter of 2020.

Operating expenses in the third quarter of 2021 were $29.7 million, compared with $28.7 million in the second quarter of 2021 and $24.1 million in the third quarter of 2020.

On a GAAP basis, the Company reported net income of $30.3 million, or $1.02 per diluted share, in the third quarter of 2021. This is compared with net income of $22.9 million, or $0.77 per diluted share, in the second quarter of 2021, and net income of $13.9 million, or $0.48 per diluted share, in the third quarter of 2020.

On a non-GAAP basis, the Company reported net income of $34.5 million, or $1.16 per diluted share, in the third quarter of 2021. This is compared with net income of $26.9 million, or $0.90 per diluted share, in the second quarter of 2021, and net income of $16.5 million, or $0.57 per diluted share, in the third quarter of 2020.

Conference Call Information

Nova will host a conference call today, November 4, 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: 1-855-327-6837 ISRAEL TOLL-FREE Dial-in Number: 1-809-458-327 INTERNATIONAL Dial-in Number: 1-631-891-4304

At:8:30 a.m. Eastern Time5:30 a.m. Pacific Time2:30 p.m. Israel TimePlease reference conference ID: 10016821

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 November 4, 2021 at 11:30 a.m. Eastern Time to November 11, 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: 10016821

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 Nova website link - 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, 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.

NOVA LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

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

As of

September 30, December 31,ASSETS 2021 2020

Current assets

Cash and cash equivalents 72,127 232,304

Short-term interest-bearing bank deposits 258,970 191,567

Marketable securities 78,889 -

Trade accounts receivable, net 64,630 63,314

Inventories 73,390 61,734

Other current assets 10,056 9,782

Total current assets 558,062 558,701

Non-current assets

Marketable securities 120,940 -

Interest-bearing bank deposits 3,536 2,547

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

Deferred tax assets 5,117 2,869

Other long-term assets 571 462

Severance pay funds 1,253 1,281

Operating lease right-of-use assets 28,570 29,109

Property and equipment, net 32,791 34,168

Intangible assets, net 3,336 5,059

Goodwill 20,114 20,114

Total non-current assets 217,978 97,085

Total assets 776,040 655,786

Liabilities and shareholders' Equity

Current liabilities

Convertible senior notes, net 181,962 -

Trade accounts payable 29,008 24,096

Deferred revenues 31,910 4,717

Operating lease current liabilities 4,153 3,703

Other current liabilities 35,754 28,418

Total current liabilities 282,787 60,934

Non-current liabilities

Convertible senior notes, net - 178,808

Accrued severance pay 3,745 3,719

Operating lease long-term liabilities 31,039 31,905

Other long-term liability 9,923 8,882

Total non-current liabilities 44,707 223,314

Shareholders' equity 448,546 371,538

Total liabilities and shareholders' equity 776,040 655,786

NOVA LTD.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(U.S. dollars in thousands, except per share data) - (Unaudited)

Three months ended Nine months ended September 30, September 30,

2021 2020 2021 2020

Revenues:

Products 92,552 54,757 237,128 147,579

Services 20,161 14,728 57,464 45,514

Total revenues 112,713 69,485 294,592 193,093

Cost of revenues 47,475 29,828 125,480 82,493

Gross profit 65,238 39,657 169,112 110,600

Operating expenses:

Research and development, net 15,858 12,957 45,717 37,262

Sales and marketing 9,145 7,406 28,117 21,232

General and administrative 4,135 3,141 11,062 11,505

Amortization of acquired intangible assets 574 625 1,723 1,877

Total operating expenses 29,712 24,129 86,619 71,876

Operating income 35,526 15,528 82,493 38,724

Financing income (expense), net (889) 846 (1,615) 2,261

Income before tax on income 34,637 16,374 80,878 40,985

Income tax expenses 4,302 2,478 10,003 6,735

Net income for the period 30,335 13,896 70,875 34,250

Earnings per share:

Basic 1.07 0.49 2.50 1.22

Diluted 1.02 0.48 2.39 1.18

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

Basic 28,429 28,168 28,316 28,080

Diluted 29,858 29,020 29,660 28,933

NOVA LTD.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(U.S. dollars in thousands) - (Unaudited)

Three months ended Nine months ended September 30, September 30,

2021 2020 2021 2020

Cash flows from operating activities:

Net income $ 30,335 $ 13,896 $ 70,875 $ 34,250

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

Depreciation of property and equipment 1,619 1,474 4,794 4,303

Amortization of intangible assets 574 625 1,723 1,877

Amortization of premium and accretion of discount on 570 - 853 - marketable securities, net

Amortization of debt discount and issuance costs 1,069 - 3,154 -

Share-based compensation 2,642 1,946 6,992 4,718

Net effect of exchange rate fluctuation (63) (618) (51) (397)

Changes in assets and liabilities:

Trade accounts receivables, net (6,423) 3,360 (1,316) 10,506

Inventories (2,245) (6,582) (12,493) (15,052)

Other current and long-term assets (276) 484 (884) 5,223

Deferred tax assets, net (534) (182) (2,248) (728)

Operating lease right-of-use assets 374 352 1,191 956

Trade accounts payables 2,527 1,362 4,898 2,027

Deferred revenues 18,319 2,626 27,193 1,535

Operating lease liabilities 117 (865) (1,068) (1,255)

Other current and long-term liabilities 4,027 3,050 8,332 5,622

Accrued severance pay, net (1) 42 54 192

Net cash provided by operating activities 52,631 20,970 111,999 53,777

Cash flows from investment activities:

Change in short-term and long-term interest-bearing bank deposits (15,335) (13,139) (68,679) (46,141)

Investment in marketable securities (107,261) - (208,727) -

Proceed from sales and maturities of marketable securities 6,521 - 7,721 -

Purchase of property and equipment (760) (1,713) (2,566) (4,873)

Net cash used in investing activities (116,835) (14,852) (272,251) (51,014)

Cash flows from financing activities:

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

Proceeds from exercise of options 11 114 11 367

Net cash used in financing activities 11 114 11 (2,182)

Effect of exchange rate fluctuations on cash and cash equivalents 30 596 64 384

Decrease in cash and cash equivalents (64,163) 6,828 (160,177) 965

Cash and cash equivalents - beginning of period 136,290 25,885 232,304 31,748

Cash and cash equivalents - end of period $ 72,127 $ 32,713 $ 72,127 $ 32,713

NOVA 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, June 30, September 30, 2021 2021 2020

GAAP gross profit 65,238 55,944 39,657

Stock-based compensation expenses * 557 382 414

Non-GAAP gross profit 65,795 56,326 40,071

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

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

GAAP operating income 35,526 27,209 15,528

Stock-based compensation expenses * 2,642 2,128 1,946

Amortization of acquired intangible assets 574 574 625

Non-GAAP operating income 38,742 29,911 18,099

GAAP operating margin as a percentage of revenues 32% 28% 22%

Non-GAAP operating margin as a percentage of revenues 34% 31% 26%

GAAP net income 30,335 22,924 13,896

Stock-based compensation expenses * 2,642 2,128 1,946

Amortization of acquired intangible assets 574 574 625

Amortization of debt discount and issuance costs 1,069 1,051 -

Revaluation of operating lease liabilities 217 554 161

Tax effect of non-GAAP adjustments (291) (345) (117)

Non-GAAP net income 34,546 26,886 16,511

GAAP basic earnings per share 1.07 0.81 0.49

Non-GAAP basic earnings per share 1.22 0.95 0.59

GAAP diluted earnings per share 1.02 0.77 0.48

Non-GAAP diluted earnings per share 1.16 0.90 0.57

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

Basic 28,429 28,304 28,168

Diluted 29,858 29,815 29,020

* Stock-based compensation expenses for the three months ended September 30, 2021 included in - Cost of revenues - 557; Research and development expenses, net - 1,025; Sales and marketing expenses - 476; General and administrative expenses - 584

NOVA LTD.SUPPLEMENTAL INFORMATION - RECONCILIATION OF FOURTH QUARTER 2021GAAP TO NON-GAAP GUIDANCE(Unaudited)

Low High

Estimated GAAP net income per diluted share 0.78 0.96

Estimated non-GAAP items:

Stock-based compensation expenses 0.11 0.11

Amortization of acquired intangible assets 0.02 0.02

Amortization of debt discount and issuance costs 0.04 0.04

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

Estimated non-GAAP net income per diluted share 0.94 1.12

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

Investor Relations Contact:Miri Segal MS-IR LLC Tel: +917-607-8654 E-mail: msegal@ms-ir.com

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SOURCE Nova