Nova Reports Third Quarter 2015 Financial Results

Improved Sales Mix Drives Net Income Above Guidance

REHOVOT, Israel, Oct. 27, 2015 /PRNewswire/ -- Nova Measuring Instruments Ltd. NVMI, a leading innovator and a key provider of metrology solutions for advanced process control used in semiconductor manufacturing, today reported its 2015 third quarter results. The company closed the acquisition of ReVera on April 2, 2015. Accordingly, the company's third quarter results include the contribution of ReVera, with no similar contribution in periods before the acquisition date.

Quarterly Highlights:

  • Quarterly revenues of $40.4 million, in-line with guidance, up 48% year-over-year and essentially unchanged on a sequential basis compared to Q2 2015
  • Non-GAAP net income of $6.3 million, or $0.23 per diluted share, exceeding guidance. Up 64% year-over-year and up 17% sequentially compared to Q2 2015
  • Balanced sales mix, benefitting from strong service and software revenues, contributes to margin expansion and increased profitability
  • Solid Foundry contribution with multiple competitive wins in multiple technology nodes
  • The acquisition of ReVera continues to expand Nova's addressable market and leading to further customers diversification

GAAP Results ($K)


Q3 2015

Q2 2015

Q3 2014

Revenues

$40,446

$40,552

$27,350

Net Income

$5,437

$2,150

$3,269

Earnings per Diluted Share

$0.20

$0.08

$0.12

NON-GAAP Results ($K)


Q3 2015

Q2 2015

Q3 2014

Net Income

$6,316

$5,402

$3,854

Earnings per Diluted Share

$0.23

$0.20

$0.14

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, all adjustments of deferred tax assets and liabilities, stock-based compensation expenses and acquisition related expenses.

Management Comments

"This was another strong quarter for Nova, with revenues in-line with our guidance and profitability that exceeded our guidance," commented Eitan Oppenhaim, President and CEO of Nova. "Our quarterly results benefited from a diverse mix of revenues, including elevated levels of software and service revenues, which drove better margins and profitability. During the quarter we continued to solidify our position in the Foundry segment with our advanced portfolio, achieving several wins in multiple advanced sites. With these solid results we expect to deliver a third consecutive year of record revenue in 2015, reinforcing our strategic plans to continue our profitable growth. This achievement is the result of a well-executed plan to strengthen our market position while diversifying our customer base and product mix."

Mr. Oppenhaim continued, "During 2015 we have built a solid platform, which is based on a broader customer base and a unique offering that can continue driving our long-term profitable growth while navigating through interim industry cycles."

2015 Third Quarter Results

Total revenues for the third quarter of 2015 were $40.4 million, similar to the second quarter of 2015 and an increase of 48% relative to the third quarter of 2014.

Gross margin for the third quarter of 2015 was 56%. This is compared with 47% in the second quarter of 2015 and compared with 54% in the third quarter of 2014.

Operating expenses in the third quarter of 2015 were $17.4 million. This is compared with $18.7 million in the second quarter of 2015 and compared to $11.5 million in the third quarter of 2014.

On a GAAP basis, the company reported net income of $5.4 million, or $0.20 per diluted share, in the third quarter of 2015. This compares with net income of $2.2 million, or $0.08 per diluted share, in the second quarter of 2015. The company reported net income of $3.3 million, or $0.12 per diluted share, in the third quarter of 2014.

On a Non-GAAP basis, which excludes amortization of acquired intangible assets, adjustments of deferred tax assets, stock-based compensation expenses and acquisition related expenses, the company reported net income of $6.3 million, or $0.23 per diluted share, in the third quarter of 2015. This compares sequentially to net income of $5.4 million, or $0.20 per diluted share, in the second quarter of 2015, and to net income of $3.9 million, or $0.14 per diluted share, in the third quarter of 2014.

2015 Fourth Quarter Financial Outlook

Management provided an outlook for the fourth quarter, the period ending December 31, 2015. Based on current estimates, management expects:

  • $37 million to $41 million in revenue
  • $0.11 to $0.20 in diluted non-GAAP EPS
  • $0.08 to $0.17 in diluted GAAP EPS

Conference Call Information

Nova will host a conference call on October 27, 2015, at 4:30 p.m. Eastern Time, to discuss the financial results, market trends 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:  1-888-430-8691 
ISRAEL Dial-in Number:  1809-24-5906
INTERNATIONAL Dial-in Number:  1-719-325-2469

At:
4:30 p.m. Eastern Time
1:30 p.m. Pacific Time
10:30 p.m. Israeli Time

Please reference conference ID 5999414.

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 Ltd. 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 holistic approach and complete suite of products, which combines high-precision hardware and cutting-edge software, support the development and production of the most advanced devices in today's high-end semiconductor market. Our technical innovation and market leadership enable customers to improve their process performance, products yields and 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.

This press release provides financial measures that exclude non-cash charges for amortization of acquired intangible assets, all adjustments of deferred tax assets and liabilities, stock-based compensation expenses and acquisition related 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 benefits, growth opportunities and other events relating to the acquisition of ReVera Incorporated, 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. These risks and other factors include but are not limited to: the ability to recognize benefits of the acquisition; risks that the acquisition disrupts current plans and operations; and impact of the acquisition on relationships with customers, distributors and suppliers. Factors that may affect our results, performance, circumstances or achievements also include, but are not limited to, the following: 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 PEM; 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 the financial, political and environmental instabilities in Asia; risks related to our intellectual property; new product offerings from our competitors; unanticipated manufacturing or supply problems; changes in tax requirements; changes in customer demand for our products; risks related to currency fluctuations 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, 2014 filed with the Securities and Exchange Commission on February 25, 2015. 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

 

 

ASSETS


September 30,
2015

 


December 31,
2014

(Audited)

Current assets





Cash and cash equivalents


25,030


13,649

Short-term interest-bearing bank deposits


59,253


107,289

Held for trading securities


1,982


1,995

Trade accounts receivable


23,343


15,566

Inventories


28,029


16,107

Deferred tax assets


1,599


142

Other current assets


3,760


3,097






Total current assets


142,996


157,845






Long-term assets





Long-term interest-bearing bank deposits


750


750

Deferred tax assets


12,074


1,654

Severance pay funds


1,513


1,580

Property and equipment, net


10,544


11,450

Identifiable intangible assets, net


19,335


-

Goodwill


14,657


-






Total long-term assets


58,873


15,434






Total assets


201,869


173,279






LIABILITIES AND SHAREHOLDERS' EQUITY





Current liabilities





Trade accounts payable


12,909


11,568

Deferred revenues


7,746


3,022

Deferred tax liabilities


1,331


-

Other current liabilities


16,403


12,606






Total current liabilities


38,389


27,196






Long-term liabilities





Deferred tax liabilities


6,403


-

Liability for employee severance pay


2,433


2,465

Deferred revenues 


-


36






Total long-term liabilities


8,836


2,501






Shareholders' equity


154,644


143,582






Total liabilities and shareholders' equity


201,869


173,279

 

NOVA MEASURING INSTRUMENTS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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



Three months ended

Nine months ended



September 30,

2015

September 30,

 2014

September 30,

2015

September 30,

2014








Revenues:






Products

30,412

20,157

80,597

74,948


Services

10,034

7,193

27,895

19,847


Total revenues

40,446

27,350

108,492

94,795








Cost of revenues:






Products

12,610

8,543

34,592

32,390


Services

5,189

3,975

15,219

12,254


     Amortization of acquired intangible 
     assets in cost of products

13

-

2,455



Total cost of revenues

17,812

12,518

52,266

44,644








Gross profit

22,634

14,832

56,226

50,151


Operating expenses:






Research and Development expenses, net

10,974

7,510

28,877

21,563


Sales and Marketing expenses

4,228

2,888

11,294

9,799


General and Administration expenses

1,613

1,096

4,250

3,476


     Acquisition related expenses

-

-

2,655

-


Amortization of acquired intangible assets

570

-

1,139

-


Total operating expenses

17,385

11,494

48,215

34,838


Operating income

5,249

3,338

8,011

15,313


Financing income, net

94

20

459

397


Income before tax on income

5,343

3,358

8,470

15,710


     Income tax expenses (benefit)

(94)

89

(2,094)

349


Net income for the period

5,437

3,269

10,564

15,361


Earnings per share:






     Basic

0.20

0.12

0.39

0.56


     Diluted

0.20

0.12

0.38

0.55


Shares used for calculation of earnings per

  share:






     Basic

27,172

27,496

27,224

27,506


     Diluted

27,481

27,780

27,507

27,920














 

NOVA MEASURING INSTRUMENTS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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







Three months ended

Nine months ended


September 30, 

September 30, 

September 30, 

September 30, 


2015

2014

2015

2014

Cash flows from operating activities:










Net income for the period

5,437

3,269

10,564

15,361






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





Depreciation

1,103

1,072

3,309

2,946

Amortization of acquired intangible assets

583

-

3,594

-

Amortization of deferred stock-based compensation

778

620

1,908

1,614

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

(49)

(77)

35

(29)

Deferred tax assets, net

(482)

(35)

(2,969)

(84)

Loss on securities

81

-

13

-

Decrease (increase) in trade accounts receivable

(1,873)

3,330

(6,256)

5,173

Decrease (increase) in inventories

(1,431)

1,963

(2,694)

1,291

Decrease (increase) in other current assets

(459)

1,254

(502)

794

Increase (decrease) in trade accounts payable and
    other long-term liabilities 

(2,428)

(3,207)

135

(6,712)

Increase in other current liabilities

1,964

56

2,646

502

Increase (decrease) in short and long term deferred 
    revenues

4,132

(1,906)

3,289

424






Net cash provided by operating activities

7,356

6,339

13,072

21,280






Cash flow from investment activities:










Decrease (increase) in short-term interest-bearing
    bank deposits 

(450)

(8,458)

48,036

(20,442)

Decrease in short-term available for sale 
    securities

-

18

-

-

Acquisition of subsidiary, net of acquired cash

-

-

(45,344)

-

Additions to property and equipment

(644)

(1,788)

(2,168)

(3,541)






Net cash provided by (used in) investment activities

(1,094)

(10,228)

524

(23,983)






Cash flows from financing activities:










Purchases of treasury shares

(2,913)

(3,173)

(4,302)

(4,276)

Shares issued under employee stock-based plans

138

312

2,087

2,586






Net cash used in financing activities

(2,775)

(2,861)

(2,215)

(1,690)






Increase (decrease) in cash and cash equivalents

3,487

(6,750)

11,381

(4,393)

Cash and cash equivalents – beginning of period

21,543

19,899

13,649

17,542

Cash and cash equivalents – end of period

25,030

13,149

25,030

13,149

 

NOVA MEASURING INSTRUMENTS LTD.

RECONCILIATION OF GAAP TO NON-GAAP RESULTS

(U.S. dollars in thousands, except percentage) - (Unaudited)



Three months ended


September 30,

2015

June 30,            

2015

September 30,

2014





GAAP cost of revenues

17,812

21,383

12,518

  Amortization of acquired intangible assets in cost of products

(13)

(2,442)

-

  Stock-based compensation in cost of products

(109)

(89)

(103)

  Stock-based compensation in cost of services

(62)

(46)

(37)

Non-GAAP cost of revenues

17,628

18,806

12,378





GAAP gross profit

22,634

19,169

14,832

Gross profit adjustments

184

2,577

140

Non-GAAP gross profit

22,818

21,746

14,972

GAAP gross margin as a percentage of revenues

56%

47%

54%

Non-GAAP gross margin as a percentage of revenues

56%

54%

55%





GAAP operating expenses

17,385

18,695

11,494

  Stock-based compensation in Research and Development

(318)

(254)

(253)

  Stock-based compensation in Sales and Marketing

(205)

(166)

(136)

  Stock-based compensation in General and Administrative

(84)

(58)

(91)

  Acquisition related expenses

-

(1,549)

-

  Amortization of acquired intangible assets

(570)

(569)

-

Non-GAAP operating expenses

16,208

16,099

11,014

Non-GAAP operating income

6,610

5,647

3,958

GAAP operating margin as a percentage of revenues

13%

1%

12%

Non-GAAP operating margin as a percentage of revenues

16%

14%

14%





GAAP tax on income

(94)

(1,522)

89

  Deferred tax assets adjustments, net

482

1,921

35

Non-GAAP tax on income

388

399

124





GAAP net income

5,437

2,150

3,269

  Amortization of acquired intangible assets

583

3,011

-

  Stock-based compensation expenses

778

613

620

  Deferred tax assets adjustments, net

(482)

(1,921)

(35)

  Acquisition related expenses

-

1,549

-

Non-GAAP net income

6,316

5,402

3,854





GAAP basic earnings per share

0.20

0.08

0.12

Non-GAAP basic earnings per share

0.23

0.20

0.14





GAAP diluted earnings per share

0.20

0.08

0.12

Non-GAAP diluted earnings per share

0.23

0.20

0.14





Shares used for calculation of earnings per share:




  Basic

27,172

27,291

27,496

  Diluted

27,481

27,677

27,780





 

 

Company Contact:

     Investor Relations Contacts:

Dror David, Chief Financial Officer

     Hayden/ MS-IR LLC

Nova Measuring Instruments Ltd.

     Miri Segal

Tel: +972-73-229-5760

     Tel: +917-607-8654

E-mail: info@novameasuring.com

     E-mail: msegal@ms-ir.com

www.novameasuring.com

     Or
     Brett Maas
     Tel: +646-536-7331
     E-mail: brett@haydenir.com  

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/nova-reports-third-quarter-2015-financial-results-300167224.html

SOURCE Nova Measuring Instruments Ltd

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