Nova Announces 2011 Fourth Quarter and Full Year Results

REHOVOT, Israel, February 15, 2012 /PRNewswire/ --

Nova Measuring Instruments Ltd. (Nasdaq: NVMI), provider of leading edge stand alone metrology and the market leader of integrated metrology solutions to the semiconductor process control market, today reported its 2011 fourth quarter and full year results.

Highlights for the Fourth Quarter of 2011

  • Quarterly revenues of $19.2 million
  • Gross margin of 55%
  • Operating margin of 12%
  • GAAP Net income of $5.0 million, or $0.18 per diluted share (including $2.5 million income related to the creation of a deferred income tax asset)
  • Non-GAAP Net income of $3.0 million, or $0.11 per diluted share
  • Positive cash flow from operating activities of $3.9 million

Highlights for the Full Year of 2011

  • Record revenues of $102.8 million, up 19% year over year
  • Gross margin of 56%
  • Operating margin of 24%
  • GAAP Net income of $28.1 million, or $1.04 per diluted share (including $2.5 million income related to the creation of a deferred income tax asset)
  • Non-GAAP Net income of $27.1 million, or $1.00 per diluted share
  • Positive operating cash flow of $25.1 million
  • Total cash reserves at a record level of $87.1 million

Management Comments

"2011 was the best year in our history. It was a third consecutive year of outgrowing the industry, a year in which we crossed the $100 million revenue mark for the first time, generating a net income of more than $27 million and increasing our cash by more than $22 million", said Gabi Seligsohn, President and CEO of Nova. "Fourth quarter revenues were at the high end of our guidance, and profitability exceeded our expectations as a result of a favorable product mix and our success in controlling immediate expenses. In addition, the accounting rules required us to establish a deferred income tax asset as a result of establishing a pattern of profitability, and our fourth quarter net income included a $2.5 million tax benefit."

"We began to see a pickup in bookings early in the fourth quarter, which accelerated as the quarter progressed and we have continued to see a positive trend in the early part of the first quarter. As a result, we ended the year with a very significant improvement in our backlog compared to the end of the third quarter and have entered 2012 with improved visibility. Looking at the opportunities that lie ahead, we are planning to invest the necessary resources to continue and enable our long term growth trajectories. The focus over the last few years on aggressive product development, operational excellence and strong customer presence is what brought us to where we stand today. This focus will continue into the future as we adapt our strategy to the company size we have become, in order to support our long term growth plans."

"After several years of focusing on new customer penetrations, we are benefitting from repeat orders in stand alone solutions and they accounted for a significant proportion of our business in 2011. During the year, we introduced three new products into the field for which we are also receiving repeat orders from multiple customers, a strong indication that we have executed well on our product road map. Our bookings also indicate that we are well-positioned in the high end technology nodes, with most of the orders focused on 28nm and below and with recent wins including 11nm and 14nm process development activities with leading edge customers".

2012 First Quarter Guidance

For the first quarter of 2012, management expects revenues of $20.5-$23.0 million, with operating margins of 6%-13%, and with GAAP diluted earnings per share of $0.04-$0.09.

On a Non-GAAP basis, which excludes adjustments of deferred income tax assets and stock based compensation expenses, management expects diluted earnings per share of $0.07-$0.13 for the first quarter of 2012.

2011 Fourth Quarter Results

Total revenues for the fourth quarter of 2011 were $19.2 million, a decrease of 29% relative to the fourth quarter of 2010, and 26% relative to the third quarter of 2011.

Gross margin for the fourth quarter of 2011 was 55%, compared with 57% in the fourth quarter of 2010 and 55% in the third quarter of 2011.

Operating expenses in the fourth quarter of 2011 were $8.3 million, compared with $8.0 million in the fourth quarter of 2010 and $8.4 million in the third quarter of 2011.

On a GAAP basis, the company reported net income of $5.0 million, or $0.18 per diluted share, in the fourth quarter of 2011, including $2.5 million income related to the creation of a deferred tax asset. This compares to a net income of $7.5 million, or $0.28 per diluted share, in the fourth quarter of 2010, and a net income of $5.9 million, or $0.22 per diluted share, in the third quarter of 2011.

On a Non-GAAP basis, which excludes benefit from income taxes and stock based compensation expenses, the company reported net income of $3.0 million, or $0.11 per diluted share, in the fourth quarter of 2011. This compares to a net income of $7.8 million, or $0.29 per diluted share, in the fourth quarter of 2010, and a net income of $6.4 million, or $0.23 per diluted share, in the third quarter of 2011.

The company generated $3.9 million in cash from operating activities during the fourth quarter of 2011.

2011 Full Year Results

Total revenues for 2011 were $102.8 million, compared to total revenues of $86.6 million for 2010.

Gross margin in 2011 was 56%, compared to 55% in 2010.

Operating expenses in 2011 were $33.3 million, as compared with $25.6 million in 2010.

On a GAAP basis, the company reported net income $28.1 million in 2011, or $1.04 per diluted share, including $2.5 million income related to the creation of a deferred tax asset. This compares to a net income of $22.2 million, or $0.86 per diluted share, in 2010.

On a Non-GAAP basis, which excludes benefit from income taxes and stock based compensation expenses, the company reported net income $27.1 million in 2011, or $1.00 per diluted share. This compares to a net income of $22.9 million, or $0.89 per diluted share, in 2010.

During 2011, the company generated $25.1 million in cash flow from operating activities, as compared to $25.8 million cash flow generated from operating activities in 2010.

Total cash reserves at the end of 2011 were $87.1 million, an increase of $25.5 million compared to the end of 2010.

The Company will host a conference call today, February 15, 2012, at 9:30am ET. To participate, please dial in the US: 1 877 249 9037; or internationally: +972-3-721 9510 / +1 646 254 3364. A recording of the call will be available on Nova's website, within 24 hours following the end of the call. In addition, a presentation to accompany the conference call will be available together with a live webcast of the conference call. This will be accessible from a link on Nova's website at http://www.nova.co.il.

This press release provides financial measures that exclude non-cash charges for stock-based compensation and benefit from income taxes 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.

About Nova

Nova Measuring Instruments Ltd. develops, produces and markets advanced integrated and stand alone metrology solutions for the semiconductor manufacturing industry. Nova is traded on the NASDAQ & TASE under the symbol NVMI. The Company's website is http://www.nova.co.il.

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 trends, demand for our products, expected deliveries, transaction, expected revenues, operating results, earnings 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:  our dependency on two product lines; the highly cyclical nature of the markets we target; 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 OEM suppliers; our ability to retain our competitive position despite the ongoing consolidation in our industry; risks associated with our dependence on a single manufacturing facility; our ability to expand our manufacturing capacity or marketing efforts to support our future growth; our dependency on a small number of large customers and small number of suppliers; our dependency on our key employees; 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; changes in customer demands for our products; new product offerings from our competitors; changes in or an inability to execute our business strategy; 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 31,2010 filed with the Securities and Exchange Commission on March 30, 2011. 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.
                           CONSOLIDATED BALANCE SHEETS
                            (U.S. dollars in thousands)
                                                 
                                                  As of             As of
                                              December 31,       December 31,
                                                  2011              2010
 
    CURRENT ASSETS
    Cash and cash equivalents                        18,716         25,394
    Short-term interest-bearing bank deposits        66,247         35,562
    Held to maturity securities                       1,582             --
    Trade accounts receivable                        13,402         13,162
    Inventories                                       9,608         10,849
    Deferred income tax assets                        2,500             --
    Other current assets                              1,173          1,736
                                                    113,228         86,703
    LONG-TERM ASSETS
    Long-term interest-bearing bank deposits            545            631
    Other long-term assets                              291            163
    Severance pay funds                               2,885          2,786
                                                      3,721          3,580
 
    FIXED ASSETS, NET                                 5,998          3,094
 
    Total assets                                    122,947         93,377
 
    CURRENT LIABILITIES
    Trade accounts payable                            8,305          9,956
    Deferred income                                   2,172          3,397
    Other current liabilities                         8,082          7,908
                                                     18,559         21,261
 
    LONG-TERM LIABILITIES
    Liability for employee severance pay              3,851          3,709
    Deferred income                                     611             --
    Other long-term liability                            20             23
                                                      4,482          3,732
 
    SHAREHOLDERS' EQUITY                             99,906         68,384
 
    Total liabilities and shareholders' equity      122,947         93,377
 


                      NOVA MEASURING INSTRUMENTS LTD.
              QUARTERLY CONSOLIDATED STATEMENTS OF OPERA TIONS
             (U.S. dollars in thousands, except per share data)

                                           Three months ended
                             December 31,  September 30,  December 31,
                                   2011        2011          2010
 
    REVENUES
    Product sales                 15,273       21,382       22,650
    Services                       3,919        4,438        4,339
                                  19,192       25,820       26,989
 
    COST OF REVENUES
    Products                      5,972        8,921         8,842
    Services                      2,693        2,782         2,765
                                  8,665       11,703        11,607
 
    GROSS PROFIT                 10,527       14,117        15,382
 
    OPERATING EXPENSES
    Research & Development
    expenses, net                 4,567        4,627         4,280
    Sales & Marketing expenses    2,951        2,933         2,885
    General & Administration
    expenses                        746          809           843
                                  8,264        8,369         8,008
 
    OPERATING PROFIT              2,263        5,748         7,374
 
    INTEREST INCOME, NET            207          189           119
 
    INCOME BEFORE INCOME TAXES    2,470        5,937         7,493
 
    BENEFIT FROM INCOME TAXES     2,500           --            --
 
    NET INCOME FOR THE PERIOD     4,970        5,937         7,493
 
    Net income per share:
    Basic                          0.19         0.23          0.30
    Diluted                        0.18         0.22          0.28
 
    Shares used for calculation
    of net income
    per share:
    Basic                        26,425       26,334       25,248
    Diluted                      27,007       27,079       26,762
 


                         NOVA MEASURING INSTRUMENTS LTD.
                   ANNUAL CONSOLIDATED STATEMENTS OF OPERATIONS
                (U.S. dollars in thousands, except per share data)

                                                       Year ended
                                             December 31,       December 31,
                                                2011               2010
    REVENUES
    Product sales                               85,562            71,790
    Services                                    17,266            14,830
                                               102,828            86,620
 
    COST OF REVENUES
    Product sales                               33,789            29,056
    Services                                    11,043            10,148
                                                44,832            39,204
 
    GROSS PROFIT                                57,996            47,416
 
    OPERATING EXPENSES
    Research & Development expenses, net        18,677            12,445
    Sales & Marketing expenses                  11,373            10,133
    General & Administration expenses            3,229             2,968
                                                33,279            25,546
 
    OPERATING PROFIT                            24,717            21,870
 
    INTEREST INCOME, NET                           901               305
 
    INCOME BEFORE INCOME TAXES                  25,618            22,175
 
    BENEFIT FROM INCOME TAXES                    2,500                --
 
    NET INCOME FOR THE YEAR                     28,118            22,175
 
    Net income per share:
    Basic                                         1.07              0.91
    Diluted                                       1.04              0.86
 
    Shares used for calculation of net
    income per share:
    Basic                                       26,232            24,448
    Diluted                                     26,931            25,692
 


                     NOVA MEASURING INSTRUMENTS LTD.
             QUARTERLY CONSOLIDATED STATEMENTS OF CASH FLOWS
                       (U.S. dollars in thousands)

                                              Three months ended
                                          December   September    December
                                             31,        30,          31,
                                            2011       2011         2010
    CASH FLOW - OPERATING ACTIVITIES
 
    Net income for the period              4,970      5,937         7,493
    Adjustments to reconcile net income
    to net cash
    provided by operating activities:
 
    Depreciation and amortization            541        420           259
    Amortization of deferred
    stock-based compensation                 476        421           257
    Deferred income taxes                 (2,500)        --            --
    Decrease in liability for employee
    termination benefits, net                (60)       (94)          (35)
 
    Decrease (increase) in trade
    accounts receivables                  (1,281)     7,554          (639)
    Decrease (increase) in inventories       954      1,499        (1,339)
    Decrease in other short and long
    term assets                               85        726         1,620
    Increase (decrease) in trade
    accounts payables
    and other long term liabilities          332     (3,967)        1,313
    Increase (decrease) in other
    current liabilities                      625       (642)          978
    Decrease in short and long term
    deferred income                         (287)    (5,966)       (3,220)
    Net cash provided by operating
    activities                             3,855      5,888         6,687
 
    CASH FLOW - INVESTMENT ACTIVITIES
 
    Increase (decrease) in short-term
    interest-bearing bank deposits         8,044     (9,000)        7,666
    Increase (decrease) in long-term
    interest-bearing bank deposits            86         --           (61)
    Proceeds from (Investments in)
    short-term held to maturity 
    securities                              (482)       86             --
    Additions to fixed assets               (632)     (460)          (400)
    Net cash provided by (used in)
    investment activities                  7,016    (9,374)         7,205
 
    CASH FLOW - FINANCING ACTIVITIES
 
    Shares issued under
    employee share-based plans               163       104            525
    Net cash provided by
    financing activities                     163       104            525
 
   Increase (decrease) in cash
   and cash equivalents                   11,034    (3,382)        14,417
   Cash and cash equivalents -
   beginning of period                     7,682    11,064         10,977
   Cash and cash equivalents -
   and of period                          18,716     7,682         25,394
 


                         NOVA MEASURING INSTRUMENTS LTD.
                   ANNUAL CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (U.S. dollars in thousands)

                                                          Year ended
                                                   December 31,   December 31,
                                                       2011           2010
    CASH FLOW - OPERATING ACTIVITIES
 
    Net income for the year                           28,118         22,175
    Adjustments to reconcile net income to net
    cash provided by operating activities:
 
    Depreciation and amortization                      1,700          1,260
    Amortization of deferred stock-based
    compensation                                       1,435            710
    Deferred income taxes                             (2,500)            --
    Increase in liability for employee
    termination benefits, net                             43            108
 
    Increase in trade accounts receivables              (240)        (1,617)
    Increase in inventories                           (1,056)        (7,526)
    Increase (decrease) in other short and long
    term assets                                         (305)           197
    Increase (decrease) in trade accounts
    payables and other long term liabilities          (1,639)         6,242
    Increase in current liabilities                      159          2,740
    Increase (decrease) in short and long term
    deferred income                                     (614)         1,543
    Net cash provided by operating activities         25,101         25,832
 
    CASH FLOW - INVESTMENT ACTIVITIES
 
    Increase in short-term interest-bearing bank
    deposits                                         (30,685)       (26,955)
    Investments in short-term held to maturity
    securities                                        (1,582)            --
    Decrease (increase) in long-term
    interest-bearing bank deposits                        86            (70)
    Additions to fixed assets                         (2,307)        (1,565)
    Net cash used in investment activities           (34,488)       (28,590)
 
    CASH FLOW - FINANCING ACTIVITIES
 
    Shares issued under employee share-based
    plans and exercise of warrants                     2,709          1,323
    Shares issued in public offering                      --         16,968
    Net cash provided by financing activities          2,709         18,291
 
    Increase (decrease) in cash and cash
    equivalents                                       (6,678)        15,533
    Cash and cash equivalents - beginning of
    period                                            25,394          9,861
    Cash and cash equivalents - end of period         18,716         25,394


                         NOVA MEASURING INSTRUMENTS LTD.
                        DISCLOSURE OF NON-GAAP NET INCOME
                (U.S. dollars in thousands, except per share data)

                                                 Three months ended
                                       December 31, September 30, December 31,
                                           2011         2011          2010
 
    GAAP Net income for the period        4,970         5,937        7,493
 
    Non-GAAP Adjustments:
    Stock based compensation expenses       476           421          257
    Benefit from income taxes            (2,500)           --           --
 
    Non-GAAP Net income for the period    2,946         6,358        7,750
 
    Non-GAAP Net income per share:
    Basic                                  0.11          0.24         0.31
    Diluted                                0.11          0.23         0.29
 
    Shares used for calculation of
    Non-GAAP net income per share:
    Basic                                26,425        26,334       25,248
    Diluted                              27,007        27,079       26,762
 


                                           Year ended December 31,
                                                2011         2010
 
    GAAP Net income for the year               28,118       22,175
 
    Non-GAAP Adjustments:
    Stock based compensation expenses           1,435          710
    Benefit from income taxes                  (2,500)          --
 
    Non-GAAP Net income for the year           27,053       22,885
 
    Non-GAAP Net income per share:
    Basic                                        1.03         0.94
    Diluted                                      1.00         0.89
 
    Shares used for calculation of Non-GAAP net
 
    income per share:
    Basic                                      26,232       24,448
    Diluted                                    26,931       25,692
 


Company Contact:                                   
Dror David, Chief Financial Officer                                            
Nova Measuring Instruments Ltd.                                        
Tel: +972-8-938-7505                                                            
http://www.nova.co.il                      

Investor relations Contacts:
Ehud Helft / Kenny Green
CCG Investor Relations
Tel: +1-646-201-9246
E-mail: info@nova.co.il
E-mail: info@ccgisrael.com


SOURCE Nova Measuring Instruments Ltd



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