Nova Reports Fourth Quarter and Full Year 2017 Results

REHOVOT, Israel, Feb. 13, 2018 /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 fourth quarter and full year 2017, the periods ended December 31, 2017.  

Fourth Quarter 2017 Highlights:

  • Record quarterly revenue of $57.4 million, up 14% year-over-year, exceeding guidance of $53 to $57 million
  • GAAP net income of $8.2 million, or $0.29 per diluted share, including non-recurring expense of $3.5 million related to tax provision for prior years, meeting guidance of $0.29 to $0.37 per share
  • Non-GAAP net income of $13.0 million, or $0.45 per diluted share, exceeding guidance of $0.34 to $0.42 per share
  • Launched three new metrology solutions, enhancing Nova's Optical CD and X-ray capabilities in Memory and Logic

Full Year 2017 Highlights:

  • Record full-year revenue of $222 million, up 35% year-over-year, outperforming the industry growth pace
  • Record GAAP net income of $46.5 million, or $1.63 per diluted share, up 365% year-over-year on a per-share basis
  • Record non-GAAP net income of $55.4 million, or $1.94 per diluted share, up 76% year-over-year on a per-share basis
  • Continuous customer diversification and growing position in Memory led to record yearly revenue in both Dimensional Optical and Materials X-ray metrology product lines

 

GAAP Results ($K)


Q4 2017

Q3 2017

Q4 2016

FY 2017

FY 2016

Revenues

$ 57,378

$54,058

$50,212

$ 221,992

$163,903

Net Income

$ 8,241

$11,502

$8,364

$ 46,459

$9,644

Earnings per Diluted Share

$0.29

$0.40

$0.30

$1.63

$0.35

NON-GAAP Results ($K)


Q4 2017

Q3 2017

Q4 2016

FY 2017

FY 2016

Net Income

$ 13,021

$13,101

$11,719

$ 55,404

$30,321

Earnings per Diluted Share

$0.45

$0.46

$0.42

$1.94

$1.10

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, tax provision for previous years, stock-based compensation expenses, expense related to a royalty buyout agreement with the Israel Innovation Authority, or IIA (formerly known as the Office of the Chief Scientist) and inventory write-off.

Management Comments

"Our record quarterly revenue was an excellent conclusion to a fifth consecutive record revenue year, demonstrating the strength of our diverse product portfolio across all platforms and technology segments," commented Eitan Oppenhaim, President and Chief Executive Officer of Nova. "2017 was an outstanding year in which our product revenue grew at 42%, outperforming the industry's growth rates. In parallel, we continued to leverage our operational efficiency, leading to record annual profit"

"We believe that our consistent performance, combined with the launch of new offerings, will lead us to continued growth in 2018. Encouraged by our performance in 2017, we intend to continue executing our strategic plan effectively in order to meet our aggressive growth plan while we expand our product portfolio, solidify our market position and improve customer diversification," Mr. Oppenhaim continued. "As a leading innovator in the metrology space, we intend to continue our growth by investing in the research and development of disruptive solutions, in order to capture emerging metrology markets and strengthen our market position."

2018 First Quarter Financial Outlook

Management provided an outlook for the first quarter, the period ending March 31, 2018. Based on current estimates, management expects:

  • $54 million to $60 million in revenue
  • $0.29 to $0.40 in diluted GAAP EPS
  • $0.34 to $0.45 in diluted non-GAAP EPS

2017 Fourth Quarter Results

Total revenues for the fourth quarter of 2017 were $57.4 million, an increase of 6% compared to the third quarter of 2017, and an increase of 14% relative to the fourth quarter of 2016.

Gross margin for the fourth quarter of 2017 was 56%, compared with gross margin of 61% in the third quarter of 2017 and equal to gross margin of 56% in the fourth quarter of 2016.

Operating expenses in the fourth quarter of 2017 were $19.7 million. This is compared with $18.3 million in the third quarter of 2017 and compared with $17.4 million in the fourth quarter of 2016.

On a GAAP basis, the company reported net income of $8.2 million, or $0.29 per diluted share, in the fourth quarter of 2017. This is compared with net income of $11.5 million, or $0.40 per diluted share, in the third quarter of 2017, and compared with net income of $8.4 million, or $0.30 per diluted share, in the fourth quarter of 2016.  

On a Non-GAAP basis, which excludes amortization of acquired intangible assets, net adjustments of deferred tax assets, tax provision for prior years and stock-based compensation expenses, the company reported net income of $13.0 million, or $0.45 per diluted share, in the fourth quarter of 2017. This is compared with net income of $13.1 million, or $0.46 per diluted share, in the third quarter of 2017, and compared with net income of $11.7 million, or $0.42 per diluted share, in the fourth quarter of 2016.

2017 Full Year Results

Total revenues for 2017 were $222.0 million, an increase of 35% compared to total revenues of $163.9 million for 2016.

Gross margin in 2017 was 59%, compared with gross margin of 46% in 2016, which included $12.9 million of non-recurring expense related to a royalty buyout agreement with the Israel Innovation Authority, or IIA (formerly known as the Office of the Chief Scientist).

Operating expenses in 2017 were $73.4 million, compared with operating expenses of $65.1 million in 2016.

On a GAAP basis, the company reported net income of $46.5 million, or $1.63 per diluted share, in 2017. This is compared with a net income of $9.6 million, or $0.35 per diluted share, in 2016, which included $12.9 million of expense related to a royalty buyout agreement with IIA.

On a non-GAAP basis, which excludes amortization of acquired intangible assets, net adjustments of deferred tax assets, tax provision for prior years, stock-based compensation expenses, expense related to a royalty buyout agreement with IIA and inventory write-off, the company reported net income of $55.4 million, or $1.94 per diluted share, in 2017, compared with net income of $30.3 million, or $1.10 per diluted share, in 2016.

Total cash reserves at the end of 2017 were $149.8 million, compared to $91.7 million at the end of 2016.

Conference Call Information

Nova will host a conference call today, February 13, 2018, 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: 1-888-289-0438
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

The conference call will also be webcast live from a link on Nova's website at http://ir.novameasuring.com. For those unable to participate in the conference call, there will be a replay available from a link on Nova's website at http://ir.novameasuring.com.

About Nova: Nova Measuring Instruments 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, tax provision for prior years, stock-based compensation expenses, expense related to a royalty buyout agreement with IIA (formerly known as 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 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 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 December 31,

ASSETS


2017


2016

Current assets





     Cash and cash equivalents


27,697


20,406

     Short-term interest-bearing bank deposits


121,390


70,546

     Trade accounts receivable


40,949


42,626

     Inventories


34,921


29,260

     Other current assets


7,313


5,068






Total current assets


232,270


167,906






Long-term assets





     Long-term interest-bearing bank deposits


750


750

     Deferred tax assets


1,957


3,020

     Severance pay funds


1,503


1,425

     Property and equipment, net


13,891


10,017

     Identifiable intangible assets, net


12,800


15,361

     Goodwill


20,114


20,114






Total long-term assets


51,015


50,687






Total assets


283,285


218,593






LiabIlities and shareholders' Equity

Current liabilities





     Trade accounts payable


15,754


16,501

     Deferred revenues


10,334


4,072

     Other current liabilities


26,038


18,461






Total current liabilities


52,126


39,034






Long-term liabilities





     Deferred tax liabilities


-


1,094

     Liability for employee severance pay


2,590


2,418

     Other long-term liabilities


1,833


1,330






Total long-term liabilities


4,423


4,842






Shareholders' equity 


226,736


174,717






Total liabilities and shareholders' equity 


283,285


218,593

 

 

NOVA MEASURING INSTRUMENTS LTD

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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










Three months ended


Year ended


December 31,


December 31,


2017


2016


2017


2016









Revenues:








Products

44,754


39,806


174,343


122,439

Services

12,624


10,406


47,649


41,464

Total revenues

57,378


50,212


221,992


163,903









Cost of revenues:








Products

17,523


15,497


62,242


48,577

Services

7,801


6,557


28,563


25,282

     Expense related to a royalty buyout agreement

       with the IIA

-


-


-


12,875

Inventory write-off

-


-


-


1,889

Total cost of revenues

25,324


22,054


90,805


88,623









Gross profit

32,054


28,158


131,187


75,280









Operating expenses:








Research and development expenses, net

10,617


9,225


38,956


34,998

Sales and marketing expenses

5,908


5,814


23,751


20,736

General and administration expenses

2,558


1,702


8,100


6,835

Amortization of acquired intangible assets

640


636


2,561


2,545

Total operating expenses

19,723


17,377


73,368


65,114









Operating income

12,331


10,781


57,819


10,166









Financing income, net

710


190


2,276


1,216









Income before tax on income

13,041


10,971


60,095


11,382









Income tax expenses

4,800


2,607


13,636


1,738









Net income for the period

8,241


8,364


46,459


9,644









Earnings per share:








Basic

0.30


0.31


1.68


0.35

Diluted

0.29


0.30


1.63


0.35









Shares used for calculation of earnings per share:
















Basic

27,873


27,292


27,696


27,175

Diluted

28,786


27,704


28,524


27,503


















 

 

NOVA MEASURING INSTRUMENTS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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






Three months ended

December 31,


Year ended

December 31,


2017


2016


2017


2016

Cash flows from operating activities:








Net income for the period

8,241


8,364


46,459


9,644

 

Adjustments to reconcile net income to net cash

provided by (used in) operating activities:








Depreciation

787


731


3,618


4,271

Amortization of acquired intangible assets

640


636


2,561


2,545

Amortization of deferred stock-based compensation

899


691


2,779


2,735

Increase (decrease) in liability for employee

  termination benefits, net

3


(57)


94


38

Deferred tax assets, net

(395)


2,028


(31)


633

Decrease (increase) in trade accounts receivable

(7,395)


(19,068)


1,677


(23,580)

Decrease (increase) in inventories

3,050


(335)


(6,858)


(1,670)

Decrease (increase) in other current and long term

  assets

1,187


(1,885)


(2,245)


(2,180)

Increase (decrease) in trade accounts payable

(1,869)


4,127


(747)


2,123

Increase in other current liabilities and other

  long-term liabilities

5,218


3,601


8,242


3,037

Increase (decrease) in short and long term deferred

  revenues

(1,092)


(351)


6,262


(1,756)









Net cash provided by (used in) operating activities

9,274


(1,518)


61,811


(4,160)









Cash flow from investment activities:








Decrease (increase) in short-term interest-bearing

  bank deposits

2,443


(998)


(50,844)


(1,248)

Additions to property and equipment

(4,171)


(1,518)


(6,295)


(3,133)









Net cash used in investment activities

(1,728)


(2,516)


(57,139)


(4,381)









Cash flows from financing activities:








Purchases of treasury shares

-


-


-


(937)

Shares issued under employee stock-based plans

131


786


2,619


2,151









Net cash provided by financing activities

131


786


2,619


1,214









Increase (decrease) in cash and cash equivalents

7,677


(3,248)


7,291


(7,327)

Cash and cash equivalents – beginning of period

20,020


23,654


20,406


27,733

Cash and cash equivalents – end of period

27,697


20,406


27,697


20,406

 

 

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


December 31,

2017


September 30,

2017


December 31,

2016

GAAP cost of revenues

25,324


21,179


22,054

  Stock-based compensation in cost of products

(107)


(113)


(88)

  Stock-based compensation in cost of services

(89)


(57)


(54)

Non-GAAP cost of revenues

25,128


21,009


21,912







GAAP gross profit

32,054


32,879


28,158

  Gross profit adjustments

196


170


142

Non-GAAP gross profit

32,250


33,049


28,300

GAAP gross margin as a percentage of revenues

56%


61%


56%

Non-GAAP gross margin as a percentage of revenues

56%


61%


56%







GAAP operating expenses

19,723


18,277


17,377

  Stock-based compensation in research and  

    development

(346)


(259)


(247)

  Stock-based compensation in sales and marketing

(216)


(95)


(211)

  Stock-based compensation in general and administrative

(141)


(145)


(91)

  Amortization of acquired intangible assets

(640)


(641)


(636)

Non-GAAP operating expenses

18,380


17,137


16,192

Non-GAAP operating income

13,870


15,912


12,108

GAAP operating margin as a percentage of revenues

21%


27%


21%

Non-GAAP operating margin as a percentage of revenues

24%


29%


24%







GAAP tax on income

4,800


3,726


2,607

  Deferred tax assets adjustments, net

312


(289)


(2,028)

  Tax provision for prior years

(3,553)


-


-

Non-GAAP tax on income

1,559


3,437


579







GAAP net income

8,241


11,502


8,364

  Amortization of acquired intangible assets

640


641


636

  Stock-based compensation expenses

899


669


691

  Deferred tax assets adjustments, net

(312)


289


2,028

  Tax provision for prior years

3,553


-


-

Non-GAAP net income

13,021


13,101


11,719







GAAP basic earnings per share

0.30


0.41


0.31

Non-GAAP basic earnings per share

0.47


0.47


0.43







GAAP diluted earnings per share

0.29


0.40


0.30

Non-GAAP diluted earnings per share

0.45


0.46


0.42







Shares used for calculation of earnings per share:






  Basic

27,873


27,788


27,292

  Diluted

28,786


28,601


27,704







 

 

NOVA MEASURING INSTRUMENTS LTD.

RECONCILIATION OF GAAP TO NON-GAAP RESULTS

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




Year ended December 31,


2017


2016

GAAP cost of revenues

90,805


88,623

  Expense related to a royalty buyout agreement with the IIA

-


(12,875)

  Inventory write-off

-


(1,889)

  Stock-based compensation in cost of products

(370)


(342)

  Stock-based compensation in cost of services

(268)


(218)

Non-GAAP cost of revenues

90,167


73,299





GAAP gross profit

131,187


75,280

Gross profit adjustments

638


15,324

Non-GAAP gross profit

131,825


90,604

GAAP gross margin as a percentage of revenues

59%


46%

Non-GAAP gross margin as a percentage of revenues

59%


55%





GAAP operating expenses

73,368


65,114

  Stock-based compensation in research and development

(1,055)


(983)

  Stock-based compensation in sales and marketing

(621)


(884)

  Stock-based compensation in general and administrative

(465)


(308)

  Amortization of acquired intangible assets

(2,561)


(2,545)

Non-GAAP operating expenses

68,666


60,394

Non-GAAP operating income

63,159


30,210

GAAP operating margin as a percentage of revenues

26%


6%

Non-GAAP operating margin as a percentage of revenues

28%


18%





GAAP tax on income

13,636


1,738

  Deferred tax assets adjustments, net

(52)


(633)

  Tax provision for prior years

(3,553)


-

Non-GAAP tax on income

10,031


1,105





GAAP net income

46,459


9,644

  Amortization of acquired intangible assets

2,561


2,545

  Expense related to a royalty buyout agreement with the IIA

-


12,875

  Stock-based compensation expenses

2,779


2,735

  Deferred tax assets adjustments, net

52


633

  Tax provision for prior years

3,553


-

  Inventory write-off

-


1,889

Non-GAAP net income

55,404


30,321





GAAP basic earnings per share

1.68


0.35

Non-GAAP basic earnings per share

2.00


1.12





GAAP diluted earnings per share

1.63


0.35

Non-GAAP diluted earnings per share

1.94


1.10





Shares used for calculation of earnings per share:




  Basic

27,696


27,175

  Diluted

28,524


27,503

 

 

Company Contact:
Dror David, Chief Financial Officer
Nova Measuring Instruments Ltd.
Tel: +972-73-229-5760
E-mail: info@novameasuring.com
www.novameasuring.com

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

 

Cision View original content:http://www.prnewswire.com/news-releases/nova-reports-fourth-quarter-and-full-year-2017-results-300597754.html

SOURCE Nova



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