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. (NASDAQ: 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,
|
December 31, (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 |
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 |
||||
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 |
(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 |
(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 |
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 |
(450) |
(8,458) |
48,036 |
(20,442) |
Decrease in short-term available for sale |
- |
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: [email protected] |
E-mail: [email protected] |
Or |
SOURCE Nova Measuring Instruments Ltd
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