Nova Reports Fourth Quarter and Full Year 2019 Results

REHOVOT, Israel, Feb. 13, 2020 /PRNewswire/ -- Nova (Nasdaq: NVMI) today announced financial results for the fourth quarter and full year 2019.

Fourth Quarter 2019 Highlights:

    --  Quarterly revenue of $64.6 million, exceeding guidance of $56 million to
        $62 million.
    --  GAAP net income of $12.4 million, or $0.43 per diluted share, exceeding
        guidance of $0.32 to $0.42 per share.
    --  Non-GAAP net income of $14.6 million, or $0.51 per diluted share,
        exceeding guidance of $0.40 to $0.50 per share.
    --  Accelerated deliveries to leading edge Foundry to support its most
        advanced technology nodes.
    --  Received initial orders for the new Dimensional Stand-Alone Platform,
        the NovaPRISM(TM).

Full Year 2019 Highlights:

    --  Full year revenue of $224.9 million.
    --  GAAP net income of $35.2 million, or $1.23 per diluted share.
    --  Non-GAAP net income of $45.5 million, or $1.59 per diluted share.
    --  Balanced products revenue mix.  Foundry and Memory contributing
        approximately 50% each.

                                     
            
        GAAP Results ($K)

                                                ---

                                       Q4 2019                 Q3 2019  Q4 2018   FY 2019    FY 2018

                                                                                                 ---


       Revenues                       $64,625                  $52,507   $63,072   $224,909    $251,134

    ---


       Net Income                     $12,385                   $8,562   $15,152    $35,171     $54,375

    ---

        Earnings per Diluted Share       $0.43                    $0.30     $0.53      $1.23       $1.89

    ---

                                   
            
        NON-GAAP Results ($K)

                                                ---

                                       Q4 2019                 Q3 2019  Q4 2018   FY 2019    FY 2018

                                                                                                 ---


       Net Income                     $14,561                  $11,507   $16,914    $45,523     $60,766

    ---

        Earnings per Diluted Share       $0.51                    $0.40     $0.59      $1.59       $2.11

    ---

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, facilities transition costs, revaluation of long-term liabilities and tax effect of non-GAAP adjustments.

Management Comments

"Nova reported strong results for the fourth quarter, demonstrating the meaningful value our differentiated portfolio brings to our customers. Our sound performance drove revenue and profitability to exceed the company's guidance and propelled our quarterly revenue to a new record high," commented Eitan Oppenhaim, President and Chief Executive Officer. "This was an excellent conclusion to a volatile year during which we continued to strengthen our position and expand our unique portfolio to support our long-term growth. As we enter a new calendar year, we are excited by multiple opportunities associated with the technology enhancements our customers implement. Following our major investment in new products' development, we believe that Nova is well positioned to capitalize on these opportunities in 2020."

2020 First Quarter Financial Outlook

Management provided an outlook for the first quarter, the period ending March 31, 2020. Based on current estimates, management expects:

    --  $50 million to $60 million in revenue
    --  $0.18 to $0.34 in diluted GAAP EPS
    --  $0.26 to $0.42 in diluted non-GAAP EPS

2019 Fourth Quarter Results

Total revenues for the fourth quarter of 2019 were $64.6 million, an increase of 23% compared to the third quarter of 2019 and increase of 2% compared to the fourth quarter of 2018.

Gross margin for the fourth quarter of 2019 was 54%, compared to a gross margin of 52% in the third quarter of 2019, and compared to the gross margin of 57% in the fourth quarter of 2018.

Operating expenses in the fourth quarter of 2019 were $20.1 million, compared with $21.0 in the third quarter of 2019 and compared with $20.7 million in the fourth quarter of 2018.

On a GAAP basis, the company reported net income of $12.4 million, or $0.43 per diluted share, in the fourth quarter of 2019. This is compared with $8.6 million, or $0.30 per diluted share, in the third quarter of 2019, and compared with net income of $15.2 million, or $0.53 per diluted share, in the fourth quarter of 2018.

On a non-GAAP basis, which exclude amortization of acquired intangible assets, stock-based compensation expenses, facilities transition costs, revaluation of long-term liabilities and tax effect of non-GAAP adjustments, the company reported net income of $14.6 million, or $0.51 per diluted share, in the fourth quarter of 2019. This is compared with net income of $11.5 million, or $0.40 per diluted share, in the third quarter of 2019, and compared with net income of $16.9 million, or $0.59 per diluted share, in the fourth quarter of 2018.

2019 Full Year Results

Total revenues for 2019 were $224.9 million, a decrease of 10% compared to total revenues of $251.1 million for 2018.

Gross margin in 2019 was 54%, compared with gross margin of 58% in 2018.

Operating expenses in 2019 were $85.4 million, compared with operating expenses of $84.8 in 2018.

On a GAAP basis, the company reported net income of $35.2 million, or $1.23 per diluted share, in 2019. This is compared with a net income of $54.4 million, or $1.89 per diluted share, in 2018.

On a non-GAAP basis, which exclude amortization of acquired intangible assets, stock-based compensation expenses, facilities transition costs, revaluation of long-term liabilities and tax effect of non-GAAP adjustments, the company reported net income of $45.5 million, or $1.59 per diluted share, in 2019. This is compared with net income of $60.8 million, or $2.11 per diluted share, in 2018.

Conference Call Information

Nova will host a conference call today, February 13, 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. Dial-in Number: 1-888-394-8218
ISRAEL Dial-in Number: 1-809-212-883
INTERNATIONAL Dial-in Number: 1-323-701-0225

At:
9 a.m. Eastern Time
6 a.m. Pacific Time
4 p.m. Israeli Time

Please reference conference ID 7996016

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, 2020 at 12 p.m. Eastern Time to February 20, 2020 at 11:59 p.m. Eastern Time. To access the replay, please dial one of the following numbers:

Replay Dial-in TOLL-FREE 1-844-512-2921
TOLL/INTERNATIONAL 1-412-317-6671

Replay Pin Number: 7996016

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 amortization of acquired intangible assets, stock-based compensation expenses, 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 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, 2018 filed with the Securities and Exchange Commission on February 28, 2019. 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                                                                                  2019     2018




     Current assets



     Cash and cash equivalents                                                                          31,748   22,877



     Short-term interest-bearing bank deposits                                                         157,346  152,951



     Trade accounts receivable                                                                          51,603   53,531



     Inventories                                                                                        48,362   41,786



     Other current assets                                                                               17,122   10,961






     
                Total current assets                                                                 306,181  282,106






     Long-term assets



     Long-term interest-bearing bank deposits                                                            2,000    2,000



     Deferred tax assets                                                                                 4,554    3,873



     Severance pay funds                                                                                 1,210    1,394



     Property and equipment, net                                                                        30,566   13,756



     Identifiable intangible assets, net                                                                 7,562   10,187



     Operating lease right-of-use assets                                                                28,256



     Goodwill                                                                                           20,114   20,114






     
                Total long-term assets                                                                94,262   51,324






     
                Total assets                                                                         400,443  333,430





        LIABILITIES AND SHAREHOLDERS' EQUITY



     Current liabilities



     Trade accounts payable                                                                             20,706   19,015



     Deferred revenues                                                                                   2,256    3,984



     Operating lease current liabilities                                                                 3,382



     Other current liabilities                                                                          21,751   25,079






     
                Total current liabilities                                                             48,095   48,078






     Long-term liabilities



     Liability for employee severance pay                                                                2,120    2,254



     Operating lease long-term liabilities                                                              29,931



     Other long-term liabilities                                                                         5,758    2,358






     
                Total long-term liabilities                                                           37,809    4,612






     
                Shareholders' equity                                                                 314,539  280,740






     
                Total liabilities and shareholders' equity                                           400,443  333,430


                                                  
              
                
                  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,

                                                                                                                                                    ---

                                                                                                                  2019                 2018              2019    2018

                                                                                                                                                               ---




          Revenues:



          Products                                                                                             47,015               48,376           167,200 193,298



          Services                                                                                             17,610               14,696            57,709  57,836

                                                                                                                                                               ---


          Total revenues                                                                                       64,625               63,072           224,909 251,134






          Cost of revenues:



          Products                                                                                             18,854               18,120            67,300  71,706



          Services                                                                                             11,138                9,242            35,789  34,194




          Total cost of revenues                                                                               29,992               27,362           103,089 105,900






          
                Gross profit                                                                            34,633               35,710           121,820 145,234





          Operating expenses:



          Research and development expenses, net                                                                9,722               10,490            44,508  45,451



          Sales and marketing expenses                                                                          7,270                7,303            28,213  27,992



          General and administrative expenses                                                                   2,502                2,209            10,066   8,735



          Amortization of acquired intangible                                                                     656                  654             2,625   2,614
    assets




          Total operating expenses                                                                             20,150               20,656            85,412  84,792

                                                                                                                                                               ---




          
                Operating income                                                                        14,483               15,054            36,408  60,442





          Financing income, net                                                                                   826                1,178             3,078   2,984

                                                                                                                                                               ---




          
                Income before tax on income                                                             15,309               16,232            39,486  63,426





          Income tax expenses                                                                                   2,924                1,080             4,315   9,051

                                                                                                                                                               ---



                                                                                                                12,385               15,152            35,171  54,375


          
                Net income for the period






          
                Earnings per share:



          Basic                                                                                                  0.44                 0.54              1.26    1.94

                                                                                                                                                               ===


          Diluted                                                                                                0.43                 0.53              1.23    1.89

                                                                                                                                                               ===




          
                Shares used for calculation of earnings per
    share:





          Basic                                                                                                27,965               28,026            27,895  28,022

                                                                                                                                                               ===


          Diluted                                                                                              28,689               28,655            28,574  28,765

                                                                                                                                                               ===


                                                                
              
           
                  NOVA MEASURING INSTRUMENTS LTD.

                                                                                             ---

                                                        
              
             
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                             ---

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




                                                                                                                                      Three months ended                           Year ended

                                                                                                                                      December 31,                            December 31,



                                                                                                                          2019                                2018       2019                         2018

                                                                                                                                                                                                    ---


              Cash flows from operating activities:



              
                Net income for the period                                                                   12,385                              15,152     35,171                       54,375



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



              Depreciation and amortization                                                                             1,086                               2,150     10,398                        7,684



              Amortization of deferred stock-based                                                                      1,430                               1,245      5,092                        4,326
    compensation



              Decrease (increase) in liability for employee                                                               (2)                              (174)        50                        (227)
    termination benefits, net



              Deferred tax assets, net                                                                                     73                             (1,171)     (681)                     (1,916)



              Decrease (increase) in trade accounts receivable                                                        (4,549)                            (5,460)     1,928                     (12,539)



              Decrease (increase) in inventories                                                                        1,669                               (119)   (7,518)                     (8,123)



              Increase in other current and long-term assets                                                          (1,561)                            (4,717)   (6,161)                     (3,648)



              Increase in trade accounts payable                                                                        2,117                               1,395      1,691                        3,261



              Increase (decrease) in other current liabilities                                                          4,292                               6,860      2,960                        (734)
    and other long-term liabilities



              Decrease in short term deferred revenues                                                                (1,459)                            (2,267)   (1,728)                     (6,350)





              
                Net cash provided by operating activities                                                   15,481                              12,894     41,202                       36,109

                                                                                                                                                                                                    ---




              Cash flow from investment activities:



              Increase in short-term and long-term interest-                                                          (4,430)                           *(7,151)   (4,395)                   *(31,561)
    bearing bank deposits



              Additions to property and equipment                                                                     (5,648)                            (1,899)  (21,269)                     (3,678)

                                                                                                                                                                                                    ---




              
                Net cash used in investment activities                                                    (10,078)                           *(9,050)  (25,664)                   *(35,239)

                                                                                                                                                                                                    ---




              Cash flows from financing activities:



              Purchases of treasury shares                                                                                                               (4,801)   (7,159)                     (4,801)



              Shares issued under employee stock-based plans                                                              125                                  67        492                          361

                                                                                                                                                                                                    ---




              
                Net cash provided by (used in) financing                                                       125                             (4,734)   (6,667)                     (4,440)
    activities

                                                                                                                                                                                                    ---




              
                Increase (decrease) in cash and cash                                                         5,528                              *(890)     8,871                     *(3,570)
    equivalents and restricted cash



              
                Cash and cash equivalents and restricted                                                    28,220                             *25,767    24,877                      *28,447
    cash - beginning of period



              
                Cash and cash equivalents and restricted                                                    33,748                             *24,877    33,748                      *24,877
    cash - end of period

                                                                                                                                                                                                    ===




              
                Reconciliation of cash, cash equivalents, and
    restricted cash to the consolidated balance
    sheet



              Cash and cash equivalents                                                                                31,748                              22,877     31,748                       22,877



              Restricted cash included in Long-term interest-                                                           2,000                               2,000      2,000                        2,000
    bearing bank deposits




              
                Total cash, cash equivalents, and restricted                                                33,748                              24,877     33,748                       24,877
    cash

                                                                                                                                                                                                    ===




              
                *reclassified


                                                                                              
              
                
                  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,    September
       30,  December
                                                                                                                                                                                                                  31,
                                                                                                                                                                                  2019                 2019        2018

                                                                                                                                                                                                                  ---


              GAAP gross profit                                                                                                                                                34,633               27,493      35,710



              Stock-based compensation expenses *                                                                                                                                 269                  277         269



              Facilities transition costs                                                                                                                                           -                 220



              Non-GAAP gross profit                                                                                                                                            34,902               27,990      35,979




              
                GAAP gross margin as a percentage of revenues                                                                                                          54%                 52%        57%



              
                Non-GAAP gross margin as a percentage of revenues                                                                                                      54%                 53%        57%





              GAAP operating income                                                                                                                                            14,483                6,474      15,054



              Stock-based compensation expenses *                                                                                                                               1,430                1,364       1,245



              Amortization of acquired intangible assets                                                                                                                          656                  657         654



              Facilities transition costs                                                                                                                                           -                 888



              Non-GAAP operating income                                                                                                                                        16,569                9,383      16,953




              
                GAAP operating margin as a percentage of revenues                                                                                                      22%                 12%        24%



              
                Non-GAAP operating margin as a percentage of revenues                                                                                                  26%                 18%        27%





              GAAP net income                                                                                                                                                  12,385                8,562      15,152



              Stock-based compensation expenses *                                                                                                                               1,430                1,364       1,245



              Amortization of acquired intangible assets                                                                                                                          656                  657         654



              Facilities transition costs                                                                                                                                           -                 888



              Revaluation of long-term liabilities                                                                                                                                269                  362           -



              Tax effect of non-GAAP adjustments                                                                                                                                (179)               (326)      (137)



              Non-GAAP net income                                                                                                                                              14,561               11,507      16,914






              GAAP basic earnings per share                                                                                                                                      0.44                 0.31        0.54




              Non-GAAP basic earnings per share                                                                                                                                  0.52                 0.41        0.60






              GAAP diluted earnings per share                                                                                                                                    0.43                 0.30        0.53




              Non-GAAP diluted earnings per share                                                                                                                                0.51                 0.40        0.59






              Shares used for calculation of earnings per share:



              Basic                                                                                                                                                            27,965               27,826      28,026




              Diluted                                                                                                                                                          28,689               28,474      28,655






              * Stock-based compensation expenses for the three months ended December 31, 2019 included in - Cost of
    revenues products - 109; Cost of revenues services - 160; Research and development expenses, net - 724;
    Sales and marketing expenses - 352; General and administrative expenses - 85.


           
              
                
                  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,





                                                                           2019                       2018

                                                                                                      ---

               GAAP gross profit                                        121,820                    145,234


               Stock-based compensation
                expenses (1)                                              1,003                        929


               Facilities transition
                costs (2)                                                   703


               Non-GAAP gross profit                                    123,526                    146,163

                                                                                                      ===

                            GAAP gross margin as a
                             percentage of revenues                         54%                       58%


                            Non-GAAP gross margin as a
                             percentage of revenues                         55%                       58%




               GAAP operating income                                     36,408                     60,442


               Stock-based compensation
                expenses (1)                                              5,092                      4,326


               Amortization of acquired
                intangible assets                                         2,625                      2,614


               Facilities transition
                costs (2)                                                 2,329


               Non-GAAP operating income                                 46,454                     67,382

                                                                                                      ===

                            GAAP operating margin as a
                             percentage of revenues                         16%                       24%


                            Non-GAAP operating margin
                             as a percentage of
                             revenues                                       21%                       27%





              GAAP net income                                           35,171                     54,375


               Stock-based compensation
                expenses (1)                                              5,092                      4,326


               Amortization of acquired
                intangible assets                                         2,625                      2,614


               Facilities transition
                costs (2)                                                 2,329


               Revaluation of long-term
                liabilities                                               1,410


               Tax effect of non-GAAP
                adjustments                                             (1,104)                     (549)


               Non-GAAP net income                                       45,523                     60,766

                                                                                                      ===



               GAAP basic earnings per
                share                                                      1.26                       1.94

                                                                                                      ===

               Non-GAAP basic earnings
                per share                                                  1.63                       2.17

                                                                                                      ===



               GAAP diluted earnings per
                share                                                      1.23                       1.89

                                                                                                      ===

               Non-GAAP diluted earnings
                per share                                                  1.59                       2.11

                                                                                                      ===



               Shares used for calculation of earnings per share:



              Basic                                                     27,895                     28,022

                                                                                                      ===


              Diluted                                                   28,574                     28,765

                                                                                                      ===



               (1)  Stock-based compensation expenses for the year ended December 31, 2019 included in
                - Cost of
    revenues products -534; Cost of revenues services -469; Research and development
     expenses, net -
    2,206; Sales and marketing expenses - 1,121; General and administrative expenses - 762.


               (2)  Facilities transition costs for the year ended December 31, 2019 included in - Cost
                of revenues
    products -457; Cost of revenues services -246; Research and development expenses, net -
     743; Sales
    and marketing expenses - 285; General and administrative expenses - 598.


                  Company Contact:                Investor Relations Contact:


     Dror David, Chief
      Financial Officer            
     Miri Segal


     Nova Measuring
      Instruments Ltd.             
     MS-IR LLC


     Tel:
      +972-73-229-5760             
     Tel: +917-607-8654


     E-mail:
      info@novami.com                                            E-mail: msegal@ms-ir.com



                  www.novami.com   
     Tel: +917-607-8654

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SOURCE Nova