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Nova Reports Fourth Quarter and Record Full Year 2018 Results
[February 13, 2019]

Nova Reports Fourth Quarter and Record Full Year 2018 Results


REHOVOT, Israel, Feb. 13, 2019 /PRNewswire/ -- Nova (NASDAQ: NVMI) today announced financial results for the fourth quarter and full year 2018.

Fourth Quarter 2018 Highlights:

  • Revenue of $63.1 million, up 10% year-over-year, at the high end of company guidance
  • Record GAAP net income of $15.2 million, or $0.53 per diluted share, exceeding guidance of $0.28 to $0.40 per share
  • Record Non-GAAP net income of $16.9 million, or $0.59 per diluted share, exceeding guidance of $0.35 to $0.46 per share
  • Four customers contributed more than 10% each to total product revenue, including the world's leading Foundry and the three largest Memory providers
  • Initiated $25 Million Share Repurchase Program

Full Year 2018 Highlights:

  • Record full-year revenue of $251.1 million, up 13% year-over-year
  • Record GAAP net income of $54.4 million, or $1.89 per diluted share, up 16% year-over-year on a per-share basis
  • Record non-GAAP net income of $60.8 million, or $2.11 per diluted share, up 9% year-over-year on a per-share basis
  • Balanced exposure to Memory and Foundry, each contributing approximately 50% to total product revenue
  • Revenue from Memory customers grew approximately 60%, significantly exceeding the market growth rate

 





GAAP Results ($K)


Q4 2018

Q3 2018

Q4 2017

FY 2018

FY 2017

Revenues

$63,072

$63,571

$57,378

$251,134

$221,992

Net Income

$15,152

$13,310

$8,241

$54,375

$46,459

Earnings per Diluted Share

$0.53

$0.46

$0.29

$1.89

$1.63

NON-GAAP Results ($K)


Q4 2018

Q3 2018

Q4 2017

FY 2018

FY 2017

Net Income

$16,914

$15,080

$13,021

$60,766

$55,404

Earnings per Diluted Share

$0.59

$0.52

$0.45

$2.11

$1.94


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, certain discrete tax items and stock-based compensation expenses.


 

Management Comments

"Nova reported strong results for the fourth quarter, with revenues reaching the high end of the guidance and profitability exceeding the guidance range. Our solid performance in the quarter was an excellent conclusion for a sixth consecutive record year, highlighting the strength of our product offering, our diversified customer base and our execution capabilities," commented Mr. Eitan Oppenhaim, President and Chief Executive Officer of Nova. "Following our results in 2018, we intend to continue executing our long-term strategic plans while we expand our technology offering and solidify our market position in both Memory and Logic," concluded Mr. Oppenhaim.

2019 First Quarter Financial Outlook

Management provided an outlook for the first quarter, the period ending March 31, 2019. Based on current estimates, management expects:

  • $52 million to $58 million in revenue
  • $0.15 to $0.26 in diluted GAAP EPS
  • $0.24 to $0.34 in diluted non-GAAP EPS

2018 Fourth Quarter Results

Total revenues for the fourth quarter of 2018 were $63.1 million, decrease of 1% compared to the third quarter of 2018 and a year-over-year increase of 10% relative to the fourth quarter of 2017.

Gross margin for the fourth quarter of 2018 was 57%, compared to 59% gross margin in the third quarter of 2018, and compared to the gross margin of 56% in the fourth quarter of 2017.

Operating expenses in the fourth quarter of 2018 were $20.7 million, compared with $21.7 in the third quarter of 2018, and compared with $19.7 million in the fourth quarter of 2017.

On a GAAP basis, the company reported net income of $15.2 million, or $0.53 per diluted share, in the fourth quarter of 2018. This is compared with $13.3 million, or $0.46 per diluted share, in the third quarter of 2018, and compared with net income of $8.2 million, or $0.29 per diluted share, in the fourth quarter of 2017.

On a non-GAAP basis, which excludes amortization of acquired intangible assets, certain discrete tax items and stock-based compensation expenses, the company reported net income of $16.9 million, or $0.59 per diluted share, in the fourth quarter of 2018. This is compared with net income of $15.1 million, or $0.52 per diluted share, in the third quarter of 2018, and compared with net income of $13.0 million, or $0.45 per diluted share, in the fourth quarter of 2017.

2018 Full Year Results

Total revenues for 2018 were $251.1 million, an increase of 13.1% compared to total revenues of $222.0 million for 2017.

Gross margin in 2018 was 58%, compared with gross margin of 59% in 2017.

Operating expenses in 2018 were $84.8 million, compared with operating expenses of $73.4 million in 2017.

On a GAAP basis, the company reported net income of $54.4 million, or $1.89 per diluted share, in 2018. This is compared with a net income of $46.5 million, or $1.63 per diluted share, in 2017.

On a non-GAAP basis, which excludes amortization of acquired intangible assets, certain discrete tax items and stock-based compensation expenses, the company reported net income of $60.8 million, or $2.11 per diluted share, in 2018, compared with net income of $55.4 million, or $1.94 per diluted share, in 2017.

Total cash reserves at the end of 2018 were $177.8 million, compared to $149.8 million at the end of 2017.

Conference Call Information

Nova will host a conference call today, February 13, 2019, 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: 1-800-239-9838
ISRAEL Dial-in Number: 1-809-212-883
INTERNATIONAL Dial-in Number: 1-323-794-2551
At:
9 a.m. Eastern Time
6 a.m. Pacific Time
4 p.m. Israeli Time

Please reference conference ID 3727578

The conference call will also be webcast live from a link on Nova's website at http://ir.novami.com.

A replay of the conference call will be available from February 13, 2019 at 12 p.m. Eastern Time to February 13, 2019 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:  3727578

A replay will also be available for 90 days on Nova's website at http://ir.novami.com.

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 enable 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 charges for amortization of acquired intangible assets, certain discrete tax items and stock-based compensation expenses 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 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 technology security threats 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, 2017 filed with the Securities and Exchange Commission on February 28, 2018. 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


2018


2017

Current assets





Cash and cash equivalents


22,877


27,697

Short-term interest-bearing bank deposits


152,951


121,390

Trade accounts receivable


53,531


40,949

Inventories


41,786


34,921

Other current assets


10,961


7,313






Total current assets


282,106


232,270






Long-term assets





Long-term interest-bearing bank deposits


2,000


750

   Deferred tax assets


3,873


1,957

   Severance pay funds


1,394


1,503

   Property and equipment, net


13,756


13,891

   Identifiable intangible assets, net


10,187


12,800

   Goodwill


20,114


20,114






Total long-term assets


51,324


51,015






Total assets


333,430


283,285






 LiabIlities and shareholders' Equity

Current liabilities





Trade accounts payable


19,015


15,754

   Deferred revenues


3,984


10,334

   Other current liabilities


25,079


26,038






Total current liabilities


48,078


52,126






Long-term liabilities





   Liability for employee severance pay


2,254


2,590

   Other long-term liabilities


2,358


1,833






Total long-term liabilities


4,612


4,423






Shareholders' equity 


280,740


226,736






Total liabilities and shareholders' equity 


333,430


283,285






 

 

 

NOVA MEASURING INSTRUMENTS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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



Three months ended

 December 31,


Year ended

  December 31,


2018


2017


2018


2017









Revenues:








Products

48,376


44,754


193,298


174,343

Services

14,696


12,624


57,836


47,649

Total revenues

63,072


57,378


251,134


221,992









Cost of revenues:








Products

18,120


17,523


71,706


62,242

Services

9,242


7,801


34,194


28,563

Total cost of revenues

27,362


25,324


105,900


90,805









Gross profit

35,710


32,054


145,234


131,187









Operating expenses:








Research and development expenses, net

10,490


10,617


45,451


38,956

Sales and marketing expenses

7,303


5,908


27,992


23,751

General and administrative expenses

2,209


2,558


8,735


8,100

Amortization of acquired intangible assets

654


640


2,614


2,561

Total operating expenses

20,656


19,723


84,792


73,368









Operating income

15,054


12,331


60,442


57,819









Financing income, net

1,178


710


2,984


2,276









Income before tax on income

16,232


13,041


63,426


60,095









Income tax expenses

1,080


4,800


9,051


13,636









Net income for the period

15,152


8,241


54,375


46,459









Earnings per share:








Basic

0.54


0.30


1.94


1.68

Diluted

0.53


0.29


1.89


1.63









Shares used for calculation of earnings per share:
















Basic

28,026


27,873


28,022


27,696

Diluted

28,655


28,786


28,765


28,524

 

 

 

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,


2018


2017


2018


2017

Cash flows from operating activities:








Net income for the period

15,152


8,241


54,375


46,459


Adjustments to reconcile net income to net cash
provided by operating activities:








Depreciation

1,497


787


5,071


3,618

Amortization of acquired intangible assets

653


640


2,613


2,561

Amortization of deferred stock-based compensation

1,245


899


4,326


2,779

Decrease (increase) in liability for employee termination benefits, net

(174)


3


(227)


94

Deferred tax assets, net

(1,171)


(395)


(1,916)


(31)

Decrease (increase) in trade accounts receivable

(5,460)


(7,395)


(12,539)


1,677

Decrease (increase) in inventories

(119)


3,050


(8,123)


(6,858)

Decrease (increase) in other current assets

(4,717)


1,187


(3,648)


(2,245)

Increase (decrease) in trade accounts payable

1,395


(1,869)


3,261


(747)

Increase (decrease) in other current liabilities and other long-term liabilities

6,860


5,218


(734)


8,242

Increase (decrease) in short term deferred revenues

(2,267)


(1,092)


(6,350)


6,262









Net cash provided by operating activities

12,894


9,274


36,109


61,811









Cash flow from investment activities:








Increase in short-term and long-term interest-bearing bank deposits

(7,151)


2,443


(32,811)


(50,844)

Additions to property and equipment

(1,899)


(4,171)


(3,678)


(6,295)









Net cash used in investment activities

(9,050)


(1,728)


(36,489)


(57,139)









Cash flows from financing activities:








Purchases of treasury shares

(4,801)


-


(4,801)


-

Shares issued under employee stock-based plans

67


131


361


2,619









Net cash provided by (used in) financing activities

(4,734)


131


(4,440)


2,619









Increase (decrease) in cash and cash equivalents

(890)


7,677


(4,820)


7,291

Cash and cash equivalents – beginning of period

23,767


20,020


27,697


20,406

Cash and cash equivalents – end of period

22,877


27,697


22,877


27,697

 

 

 

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,

2018


September 30,

2018


December 31,

2017

GAAP cost of revenues

27,362


26,104


25,324

Stock-based compensation in cost of products

(147)


(161)


(107)

Stock-based compensation in cost of services

(122)


(122)


(89)

Non-GAAP cost of revenues

27,093


25,821


25,128







GAAP gross profit

35,710


37,467


32,054

Gross profit adjustments

269


283


196

Non-GAAP gross profit

35,979


37,750


32,250

GAAP gross margin as a percentage of revenues

57%


59%


56%

Non-GAAP gross margin as a percentage of revenues

57%


59%


56%







GAAP operating expenses

20,656


21,717


19,723

Stock-based compensation in research and development

(500)


(484)


(346)

Stock-based compensation in sales and marketing

(262)


(285)


(216)

Stock-based compensation in general and administrative

(214)


(202)


(141)

Amortization of acquired intangible assets

(654)


(653)


(640)

Non-GAAP operating expenses

19,026


20,093


18,380

Non-GAAP operating income

16,953


17,657


13,870

GAAP operating margin as a percentage of revenues

24%


25%


21%

Non-GAAP operating margin as a percentage of revenues

27%


28%


24%







GAAP tax on income

1,080


3,312


4,800

Certain discrete tax items

137


137


(3,241)

Non-GAAP tax on income

1,217


3,449


1,559







GAAP net income

15,152


13,310


8,241

Amortization of acquired intangible assets

654


653


640

Stock-based compensation expenses

1,245


1,254


899

Certain discrete tax items

(137)


(137)


3,241

Non-GAAP net income

16,914


15,080


13,021







GAAP basic earnings per share

0.54


0.47


0.30

Non-GAAP basic earnings per share

0.60


0.54


0.47







GAAP diluted earnings per share

0.53


0.46


0.29

Non-GAAP diluted earnings per share

0.59


0.52


0.45







Shares used for calculation of earnings per share:






Basic

28,026


28,047


27,873

Diluted

28,655


28,777


28,786








 

 

 

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,


2018



2017

GAAP cost of revenues

105,900



90,805

Stock-based compensation in cost of products

(515)



(370)

Stock-based compensation in cost of services

(414)



(268)

Non-GAAP cost of revenues

104,971



90,167






GAAP gross profit

145,234



131,187

Gross profit adjustments

929



638

Non-GAAP gross profit

146,163



131,825

GAAP gross margin as a percentage of revenues

58%



59%

Non-GAAP gross margin as a percentage of revenues

58%



59%






GAAP operating expenses

84,792



73,368

Stock-based compensation in research and development

(1,710)



(1,055)

Stock-based compensation in sales and marketing

(1,026)



(621)

Stock-based compensation in general and administrative

(661)



(465)

Amortization of acquired intangible assets

(2,614)



(2,561)

Non-GAAP operating expenses

78,781



68,666

Non-GAAP operating income

67,382



63,159

GAAP operating margin as a percentage of revenues

24%



26%

Non-GAAP operating margin as a percentage of revenues

27%



28%






GAAP tax on income

9,051



13,636

Certain discrete tax items

549



(3,605)

Non-GAAP tax on income

9,600



10,031






GAAP net income

54,375



46,459

Amortization of acquired intangible assets

2,614



2,561

Stock-based compensation expenses

4,326



2,779

Certain discrete tax items

(549)



3,605

Non-GAAP net income

60,766



55,404






GAAP basic earnings per share

1.94



1.68

Non-GAAP basic earnings per share

2.17



2.00






GAAP diluted earnings per share

1.89



1.63

Non-GAAP diluted earnings per share

2.11



1.94






Shares used for calculation of earnings per share:





Basic

28,022



27,696

Diluted

28,765



28,524







 

Company Contact:

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

Investor Relations Contact:

Miri Segal
MS-IR LLC
Tel: +1-917-607-8654
E-mail: msegal@ms-ir.com

 

Cision View original content:http://www.prnewswire.com/news-releases/nova-reports-fourth-quarter-and-record-full-year-2018-results-300794904.html

SOURCE Nova


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