Nova Announces 2014 Second Quarter Results

Jul 30, 2014, 04:00 ET from Nova Measuring Instruments Ltd.

REHOVOT, Israel, July 30, 2014 /PRNewswire/ -- Nova Measuring Instruments (Nasdaq: NVMI), a leading innovator and a key provider of optical metrology solutions for advanced process control used in semiconductor manufacturing, today reported 2014 second quarter results.

Business Highlights:

  • Continued delivery to the most advanced nodes for 20/16/14nm product lines
  • Successful V2600 Through-Silicon-Via evaluation yielded first order from a leading Logic and Memory customer in Asia
  • Expanding presence with new integrated metrology wins
  • Multiple evaluations and orders for 10nm R&D lines
  • Multiple evaluations at memory customers for V-NAND applications
  • Software products gaining traction with orders for both Hybrid Metrology and Fleet Management solutions

Financial Highlights:

  • Quarterly revenues of $32.8 million, up 17% from $28.1 million a year ago
  • Revenue for the six months ended June 30, 2014 of $67.5 million, up 21% from $55.5 million in the same period a year ago
  • Quarterly gross margin of 54%, compared with 55% a year ago
  • Quarterly net income of $5.7 million, up 103% from $2.8 million a year ago
  • Net income for the six months ended June 30, 2014 of $12.1 million, up 133% from $5.2 million in the same period a year ago
  • Total cash reserves of $114.1 million as of June 30, 2014, and no debt
  • Initiated previously-announced $12 million share repurchase program

 

GAAP Results ($K)

Q2 2014

Q1 2014

Q2 2013

Revenues

$32,785

$34,660

$28,124

Net Income

$5,694

$6,398

$2,803

Earnings per Diluted Share

$0.20

$0.23

$0.10

NON-GAAP Results ($K)

Q2 2014

Q1 2014

Q2 2013

Net Income

$6,108

$6,929

$3,779

Earnings per Diluted Share

$0.22

$0.25

$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 adjustments of deferred tax assets, stock based compensation expenses, income from insurance claim and loss related to equipment and inventory damage.

Management Comments

"We posted solid results for the quarter with strong net income at the high end of our guidance, delivering on an efficient operating model that maximizes our ongoing investments and guarantees our future growth. In fact, our net income for the first six months of 2014 exceeded our net income for the entire year of 2013", commented Eitan Oppenhaim, President and CEO of Nova. "During the quarter, we continued to strengthen our position in the market segments we are serving, despite the challenging conditions that our customers are facing. We are well positioned to capitalize on their expansions as they move to the next technology nodes."

"The use of Optical Metrology is expanding rapidly as the semiconductor industry continues its technology transition to advanced 3D structures such as V-NAND and FinFET, further broadening the opportunity available to us. We are currently being evaluated in multiple projects with our broad portfolio of products, including our next generation Optical CD tools.  We expect these initiatives, along with new technology directions that we are pursuing, to have a substantial impact on our future performance."

Second Quarter 2014 Results

Total revenues for the second quarter of 2014 were $32.8 million, an increase of 17% relative to the second quarter of 2013, and a decrease of 5% relative to the first quarter of 2014.

Gross margin for the second quarter of 2014 was 54%, compared with 55% in the second quarter of 2013 and 51% in the first quarter of 2014.

Operating expenses in the second quarter of 2014 were $12.0 million, same as in the second quarter of 2013 and compared with $11.4 million in the first quarter of 2014.

On a GAAP basis, the company reported net income of $5.7 million, or $0.20 per diluted share, in the second quarter of 2014. This compares to a net income of $2.8 million, or $0.10 per diluted share, in the second quarter of 2013, and a net income of $6.4 million, or $0.23 per diluted share, in the first quarter of 2014.

On a Non-GAAP basis, which excludes deferred income tax expenses, stock based compensation expenses, income from insurance claim and loss related to equipment and inventory damage, the company reported net income of $6.1 million, or $0.22 per diluted share, in the second quarter of 2014. This compares to a net income of $3.8 million, or $0.14 per diluted share, in the second quarter of 2013, and a net income of $6.9 million, or $0.25 per diluted share, in the first quarter of 2014.

Conference Call Information

Nova will host a conference call on Wednesday, July 30, 2014 at 8:30 a.m. Eastern Time, to discuss the second quarter results and future outlook, along with its guidance for the third quarter of 2014.

To attend the conference call, please dial one of the following teleconferencing numbers. Please begin by placing your calls 5 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:  1-866-290-0920 ISRAEL Dial-in Number:  1809-24-6064 INTERNATIONAL Dial-in Number:  1-913-312-0422

At:

8:30 a.m. Eastern Time 5:30 a.m. Pacific Time 3:30 p.m. Israeli Time

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 Instrument Ltd. delivers continuous innovation by providing advanced optical 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 product portfolio, which combines high-precision hardware and cutting-edge software, supports the development and production of the most advanced devices in today's high-end semiconductor market. Nova's technical innovation and market leadership enable customers to improve process performance, enhance products' 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.novameasuring.com.

Nova is traded on the NASDAQ & TASE under the symbol NVMI.

This press release provides financial measures that exclude non-cash charges for stock-based compensation expenses, deferred income taxes expenses, income from insurance claim and loss related to equipment and inventory damage 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 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; our dependency on a small number of large customers and small number of suppliers; 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 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 a single manufacturing facility; risks related to the extremely competitive market we are operation in;  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, 2013 filed with the Securities and Exchange Commission on February 28, 2014. 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.

Company Contact:

Investor Relations Contacts:

Dror David, Chief Financial Officer

Hayden/ MS-IR LLC

Nova Measuring Instruments Ltd.

Miri Segal

Tel: +972-73-229-5833

Tel: +917-607-8654

E-mail: info@novameasuring.com

E-mail: msegal@ms-ir.com

www.novameasuring.com

Or

David Fore

Tel: +206-395-2711

E-mail: dave@haydenir.com

(Tables to Follow)

 

NOVA MEASURING INSTRUMENTS LTD. CONSOLIDATED BALANCE SHEET (U.S. dollars in thousands)

As of June 30,

As of December 31,

2014

2013

CURRENT ASSETS

Cash and cash equivalents

19,899

17,542

Short-term interest-bearing bank deposits

91,536

79,552

Available for sale securities

1,873

1,845

Trade accounts receivable

26,104

27,947

Inventories

18,790

18,118

Deferred income tax assets

186

137

Other current assets

3,996

3,922

162,384

149,063

LONG-TERM ASSETS

Long-term interest-bearing bank deposits

750

750

Other long-term assets

208

230

Severance pay funds

1,773

1,852

2,731

2,832

FIXED ASSETS, NET

10,261

10,382

TOTAL ASSETS

175,376

162,277

CURRENT LIABILITIES

Trade accounts payable

12,095

15,599

Deferred income

5,670

3,420

Other current liabilities

11,839

11,448

29,604

30,467

LONG-TERM LIABILITIES

Liability for employee severance pay

2,776

2,798

Deferred income

421

341

Other long-term liability

6

7

3,203

3,146

SHAREHOLDERS' EQUITY

142,569

128,664

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

175,376

162,277

 

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

Three months ended

June 30, 2014

March 31, 2014

June 30,  2013

REVENUES

Products

26,015

28,776

22,419

Services

6,770

5,884

5,705

32,785

34,660

28,124

COST OF REVENUES

Products

11,050

12,797

9,342

Services

4,139

4,140

3,449

15,189

16,937

12,791

GROSS PROFIT

17,596

17,723

15,333

OPERATING EXPENSES

Research and Development expenses, net

7,152

6,901

7,567

Sales and Marketing expenses

3,505

3,406

2,968

General and Administration expenses

1,316

1,064

1,472

11,973

11,371

12,007

OPERATING PROFIT

5,623

6,352

3,326

INTEREST INCOME, NET

202

175

246

INCOME BEFORE INCOME TAXES

5,825

6,527

3,572

    INCOME TAX EXPENSES

131

129

769

NET INCOME FOR THE PERIOD

5,694

6,398

2,803

Earnings per share:

       Basic

0.21

0.23

0.10

       Diluted

0.20

0.23

0.10

Shares used for calculation of earnings per share:

       Basic

27,592

27,432

27,121

       Diluted

28,138

27,890

27,419

 

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

Six months ended

June 30, 2014

June 30, 2013

REVENUES

Product

54,791

44,760

Services

12,654

10,789

67,445

55,549

COST OF REVENUES

Product sales

23,847

18,421

Services

8,279

7,029

32,126

25,450

GROSS PROFIT

35,319

30,099

OPERATING EXPENSES

Research and Development expenses, net

14,053

15,066

Sales and Marketing expenses

6,911

6,192

General and Administration expenses

2,380

2,591

23,344

23,849

OPERATING PROFIT

11,975

6,250

    INTEREST INCOME, NET

377

376

INCOME BEFORE INCOME TAXES

12,352

6,626

    INCOME TAX  EXPENSES

260

1,428

NET INCOME FOR THE PERIOD

12,092

5,198

Net income per share:

       Basic

0.44

0.19

       Diluted

0.43

0.19

Shares used for calculation of net income per share:

       Basic   

27,512

26,988

       Diluted 

27,983

27,278

 

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

Three months ended

June 30, 2014

March 31, 2014

June 30, 2013

CASH FLOW – OPERATING ACTIVITIES

   Net income for the period

5,694

6,398

2,803

 

   Adjustments to reconcile net income to net cash

      provided by operating activities:

      Depreciation and amortization

972

902

846

      Loss related to inventory damage

-

-

148

      Amortization of deferred stock-based compensation

472

522

624

      Increase (decrease)  in liability for employee

         termination benefits, net

 

74

 

(26)

 

66

      Deferred income taxes

(58)

9

713

      Decrease (increase) in trade accounts receivables

(3,898)

5,741

(712)

      Decrease(increase) in inventories

688

(1,360)

583

      Decrease (increase)  in other current and long term 

         assets

257

(717)

841

      Decrease in trade accounts payables

         and other long-term liabilities

 

(2,456)

 

(1,049)

 

(147)

      Increase (decrease) in other current liabilities

(787)

1,233

(504)

      Increase (decrease) in short and long term

         deferred income

1,247

1,083

(1,793)

   Net cash provided by operating activities

2,205

12,736

3,468

CASH FLOW – INVESTMENT ACTIVITIES

   Increase in short-term interest-bearing bank deposits

(1,943)

(10,041)

(6,317)

   Investment in short-term available for sale securities

(19)

1

-

   Proceeds from insurance claim

-

-

219

   Additions to fixed assets

(1,228)

(525)

(1,042)

   Net cash used in investment activities

(3,190)

(10,565)

(7,140)

CASH FLOW – FINANCING ACTIVITIES

   Purchases of treasury shares

(1,103)

-

-

   Shares issued under employee share-based plans

961

1,313

599

   Net cash provided by (used in) financing activities

(142)

1,313

599

   Increase (decrease) in cash and cash equivalents

(1,127)

3,484

(3,073)

   Cash and cash equivalents – beginning of period

21,026

17,542

20,872

   Cash and cash equivalents – end of period

19,899

21,026

17,799

 

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

Six months ended

June 30, 2014

June 30, 2013

CASH FLOW – OPERATING ACTIVITIES

     Net income for the period

12,092

5,198

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

         Depreciation and amortization

1,874

1,670

         Loss related to equipment and inventory damage

-

148

         Amortization of deferred stock-based compensation

994

1,209

         Increase in liability for employee termination benefits, net

48

55

         Deferred income taxes

(49)

1,322

         Decrease (increase) in trade accounts receivables

1,843

(2,355)

         Decrease (increase) in inventories

(672)

23

         Decrease (increase) in other current and long term assets

(460)

121

         Decrease in trade accounts payables and              other long term liabilities

(3,505)

(222)

         Increase in other current liabilities

446

840

         Increase (decrease) in short and long term deferred income

2,330

(1,732)

     Net cash provided by operating activities

14,941

6,277

CASH FLOW – INVESTMENT ACTIVITIES

     Increase in short-term interest-bearing bank deposits

(11,984)

(4,332)

     Investment in short-term available for sale securities

(18)

-

     Proceeds from insurance claim

-

219

     Additions to fixed assets

(1,753)

(1,384)

     Net cash used in investment activities

(13,755)

(5,497)

CASH FLOW – FINANCING ACTIVITIES

     Purchases of treasury shares

(1,103)

-

     Shares issued under employee share-based plans

2,274

1,056

     Net cash provided by financing activities

1,171

1,056

     Increase in cash and cash equivalents

2,357

1,836

     Cash and cash equivalents – beginning of period

17,542

15,963

     Cash and cash equivalents – end of period

19,899

17,799

 

DISCLOSURE OF NON-GAAP NET INCOME

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

Three months ended

June 30,

March 31,

June 30,

2014

2014

2013

GAAP Net income for the period

5,694

6,398

2,803

Non-GAAP Adjustments:

Stock based compensation expenses

472

522

624

Deferred Income taxes expenses (income)

(58)

9

713

Income from insurance claim

-

-

(509)

Loss related to equipment and inventory damage

-

-

148

Non-GAAP Net income for the period

6,108

6,929

3,779

Non-GAAP Net income per share:

       Basic

0.22

0.25

0.14

       Diluted

0.22

0.25

0.14

Shares used for calculation of  Non-GAAP net income per share:

       Basic

27,592

27,432

27,121

       Diluted

28,138

27,890

27,419

Six months ended

June 30,

June 30,

2014

2013

GAAP Net income for the period

12,092

5,198

Non-GAAP Adjustments:

Stock based compensation expenses

994

1,209

Deferred income taxes expenses (income)

(49)

1,322

Income from insurance claim

-

(509)

Loss related to equipment and inventory damage

-

148

Non-GAAP Net income for the period

13,037

7,368

Non-GAAP Net income per share:

       Basic

0.47

0.27

       Diluted

0.47

0.27

Shares used for calculation of Non-GAAP net income per share:

       Basic

27,512

26,988

       Diluted

27,983

27,278

 

SOURCE Nova Measuring Instruments Ltd.



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