Nova Reports Second Quarter 2023 Financial Results

About this update from Nova Ltd.

REHOVOT, Israel , Aug. 3, 2023 /PRNewswire/ -- Nova (NASDAQ: NVMI) today announced financial results for the second quarter, the three-month period ended June 30, 2023 . Second Quarter 2023 Highlights: Quarterly revenue of $122.7 million , above the midpoint of guidance range of $117 to $125 million and down 13% year over year. GAAP net income of $29.9 million , or $0.94 per diluted share, higher than the company guidance of $0.75 to $0.89 and down 14% year over year on a per-share basis. Non-GAAP net income of $33.8 million , or $1.06 per diluted share, reaching the top of the company's guidance range of $0.92 to $1.06 and down 15% year over year on a per-share basis. Continued adoption of advanced dimensional and materials product portfolio, including the Elipson and multiple procurements of Nova's newest Veraflex model by a leading Memory customer. Heightened interest in Nova's unique technology offerings, including advanced packaging solutions, manifested by multiple evaluation processes at leading customers. GAAP Results (K) Q2 2023 Q1 2023 Q2 2022 Revenues $122,702 $132,193 $141,628 Net Income $29,926 $34,627 $34,878 Earnings per Diluted Share $0.94 $1.09 $1.09 Non-GAAP Results (K) Q2 2023 Q1 2023 Q2 2022 Net Income $33,814 $39,075 $39,546 Earnings per Diluted Share $1.06 $1.23 $1.24 A reconciliation between GAAP operating results and non-GAAP operating results is provided following the financial statements included in this release. See also "Use of Non-GAAP Adjusted Financial Measures" section. Management Comments "Nova's results for the quarter met our expectations, highlighting the resilience of our portfolio, our wide exposure to new advanced applications, a well-maintained operational model, an effective combination of customers' focus and our roadmap of continuous investment in every division," said Gaby Waisman , President and CEO. "The value of our broad Materials and Dimensional portfolio propels increased traction with several notable achievements this quarter, including new penetrations and additional orders following successful evaluations of our new portfolio products. These opportunities will allow us to broaden our position and capitalize on larger opportunities once the industry fully recovers." 2023 Third Quarter Financial Outlook Management provided an outlook for the third quarter, the period ending September 30, 2023 . Based on current estimates, management expects: $119 million to $126 million in revenue $0.83 to $0.94 in diluted GAAP EPS $1.02 to $1.13 in diluted non-GAAP EPS 2023 Second Quarter Results Total revenues for the second quarter of 2023 were $122.7 million, a decrease of 7% compared with the first quarter of 2023 and a decrease of 13% compared with the second quarter of 2022. Gross margin in the second quarter of 2023 was 57%, compared with 58% in the first quarter of 2023 and 56% in the second quarter of 2022. Operating expenses in the second quarter of 2023 were $40.9 million , compared with $41.5 million in the first quarter of 2023 and $42.1 million in the second quarter of 2022. On a GAAP basis, the Company reported net income of $29.9 million , or $0.94 per diluted share, in the second quarter of 2023. This is compared with net income of $34.6 million , or $1.09 per diluted share, in the first quarter of 2023, and net income of $34.9 million , or $1.09 per diluted share, in the second quarter of 2022. On a non-GAAP basis, the Company reported net income of $33.8 million , or $1.06 per diluted share, in the second quarter of 2023. This is compared with net income of $39.1 million , or $1.23 per diluted share, in the first quarter of 2023, and net income of $39.5 million , or $1.24 per diluted share, in the second quarter of 2022. Conference Call Information Nova will host a conference call today, August 03, 2023 , at 8:30 a.m. Eastern Time , to discuss the Company's second quarter 2023 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. TOLL-FREE Dial -in Number: 1-877-300-8521 ISRAEL TOLL-FREE Dial -in Number: 1809-213-284INTERNATIONAL Dial-in Number: 1-412-317-6026 At: 8:30 a.m. Eastern Time 5:30 a.m. Pacific Time 3:30 p.m. Israel Time The conference call will also be webcast live from a Link on Nova's website at https://www.novami.com/investors/events/ . A replay of the conference call will be available from August 3, 2023 , at 11:30 a.m. Eastern Time until August 10, 2023 , at 11:59 p.m. Eastern Time . To access the replay, please dial one of the following numbers: Replay Dial -in U.S. TOLL-FREE: 1-844-512-2921 Replay Dial -in INTERNATIONAL : 1-412-317-6671Replay Pin Number: 10180161 A replay will also be available for 90 days on Nova's website link at https://www.novami.com/investors/events/ . About Nova Nova is a leading innovator and key provider of material, optical and chemical metrology solutions for advanced process control 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 developing and producing the most advanced semiconductor devices. Nova's unique capability to deliver innovative solutions enables its customers to improve performance, enhance product yields and accelerate time to market. Nova acts as a partner to semiconductor manufacturers from its offices worldwide. Additional information may be found on Nova's website link - https://www.novami.com/ . Nova is traded on the Nasdaq and TASE, Nasdaq ticker symbol NVMI. Use of Non-GAAP Adjusted Financial Measures This press release provides financial measures that exclude amortization of acquired intangible assets, acquisition-related expenses, inventory step-up and contingent consideration revaluation, stock-based compensation expenses, revaluation of operating lease liabilities, amortization of debt discount and issuance costs and tax effect of non-GAAP adjustment, as applicable, 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 enhance 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 allow 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. Forward-Looking Statements 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 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 differ materially 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: catastrophic events such as the outbreak of COVID-19; increased information technology security threats and sophisticated computer crime; foreign political and economic risks; changes in U.S. trade policies; inability to protect our intellectual property; open source technology exposure; failure to compete effectively or to respond to rapid technological change; consolidation in our industry; difficulty in predicting the length and strength of any downturn or expansion period of the market we target; factors that adversely affect the pricing and demand for our product lines; dependency on a small number of large customers; dependency on a single manufacturing facility per product line; dependency on a limited number of suppliers; difficulty in integrating current or future acquisitions; lengthy sales cycle and customer delays in orders; political, economic, and military instability in Israel ; risks related to our convertible notes; currency fluctuations; and quarterly fluctuations in our operating results. 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, 2022 , filed with the Securities and Exchange Commission on February 28, 2023 . These factors are updated from time to time through the filing of reports and registration statements with the Securities and Exchange Commission . Nova Ltd. does not assume any obligation to update the forward-looking information contained in this press release. (Tables to Follow) NOVA LTD. CONDENSED CONSOLIDATED BALANCE SHEETS ( U.S. dollars in thousands) - (Unaudited) As of June 30 , December 31 , ASSETS 2023 2022 Current assets Cash and cash equivalents 129,190 111,121 Short-term interest-bearing bank deposits 99,036 95,305 Marketable securities 188,163 167,073 Trade accounts receivable, net 82,904 109,320 Inventories 149,001 116,600 Other current assets 16,220 13,527 Total current assets 664,514 612,946 Non-current assets Marketable securities 148,379 153,462 Interest-bearing bank deposits and restricted cash 5,971 2,083 Deferred tax assets 23,756 20,097 Operating lease right-of-use assets 43,134 44,885 Property plant and equipment, net 60,471 55,886 Intangible assets, net 41,434 43,586 Goodwill 49,539 49,009 Other long-term assets 1,906 2,151 Total non-current assets 374,590 371,159 Total assets 1,039,104 984,105 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Convertible senior notes, net 197,030 - Trade accounts payable 35,951 42,732 Deferred revenues 27,181 30,543 Operating lease current liabilities 5,728 5,968 Other current liabilities 47,323 54,825 Total current liabilities 313,213 134,068 Non-current liabilities Convertible senior notes, net - 196,394 Operating lease long-term liabilities 40,564 43,697 Long-term deferred tax liability 11,675 12,190 Other long-term liabilities 11,324 10,793 Total non-current liabilities 63,563 263,074 Shareholders' equity 662,328 586,963 Total liabilities and shareholders' equity 1,039,104 984,105 NOVA LTD. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ( U.S. dollars in thousands, except per share data) - (Unaudited) Three months ended June 30 , Six months ended June 30 , 2023 2022 2023 2022 Revenues: Products 95,627 114,120 200,958 224,032 Services 27,075 27,508 53,937 51,553 Total revenues 122,702 141,628 254,895 275,585 Total cost of revenues 53,044 62,595 107,971 121,877 Gross profit 69,658 79,033 146,924 153,708 Operating expenses: Research and development, net 22,413 22,115 45,381 41,244 Sales and marketing 12,927 12,500 26,449 24,884 General and administrative 5,602 7,455 10,641 13,511 Total operating expenses 40,942 42,070 82,471 79,639 Operating income 28,716 36,963 64,453 74,069 Financing income, net 5,628 3,568 10,356 4,786 Income before taxes on income 34,344 40,531 74,809 78,855 Income tax expenses 4,418 5,653 10,256 9,815 Net income for the period 29,926 34,878 64,553 69,040 Earnings per share: Basic 1.04 1.22 2.25 2.41 Diluted 0.94 1.09 2.02 2.16 Shares used in calculation of earnings per share (in thousands): Basic 28,766 28,688 28,706 28,662 Diluted 31,928 31,902 31,927 31,963 NOVA LTD. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ( U.S. dollars in thousands) - (Unaudited) Three months ended June 30 , Six months ended June 30, 2023 2022 2023 2022 Cash flows from operating activities: Net income 29,926 34,878 64,553 69,040 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of property and equipment 2,476 2,001 4,816 4,036 Amortization of intangible assets 1,475 1,513 2,919 3,126 Amortization of premium and accretion of discount on marketable securities, net (621) 715 (1,049) 1,544 Amortization of debt discount and issuance costs 320 318 636 638 Share-based compensation 3,667 4,072 8,061 7,932 Net effect of exchange rate fluctuation 407 2,178 1,756 2,971 Changes in assets and liabilities: Trade accounts receivable, net 18,064 (17,264) 26,681 (16,794) Inventories (14,689) (5,637) (35,024) (12,535) Other current and long-term assets 5,513 7,925 (2,718) (8,071) Deferred tax assets, net (2,406) (2,331) (4,343) (4,940) Operating lease right-of-use assets 839 1,123 1,641 2,035 Trade accounts payable (7,773) 881 (7,273) (1,060) Deferred revenues (3,055) 5,266 (3,368) 4,522 Operating lease liabilities (1,617) (4,332) (3,262) (5,138) Other current and long-term liabilities (8,288) (6,234) (6,618) (9,385) Accrued severance pay, net (71) 10 (169) 71 Net cash provided by operating activities 24,167 25,082 47,239 37,992 Cash flows from investment activities: Acquisition of subsidiary, net of acquired cash - - - (78,469) Change in short-term and long-term interest-bearing bank deposits 14,452 66,872 (8,610) 116,504 Investment in marketable securities (44,458) (34,691) (98,140) (51,527) Proceeds from maturity of marketable securities 42,423 18,428 84,315 34,198 Purchase of property and equipment (3,274) (4,239) (6,032) (7,957) Net cash provided by (used in) investing activities 9,143 46,370 (28,467) 12,749 Cash flows from financing activities: Purchases of treasury shares - (4,270) (112) (4,270) Proceeds from exercise of options 115 82 115 82 Net cash provided by (used in) financing activities 115 (4,188) 3 (4,188) Effect of exchange rate fluctuations on cash and cash equivalents (310) (2,160) (1,306) (2,954) Changes in cash and cash equivalents and restricted cash 33,115 65,104 17,469 43,599 Cash and cash equivalents and restricted cash -beginning of period 96,075 105,193 111,721 126,698 Cash and cash equivalents - end of period 129,190 170,297 129,190 170,297 NOVA LTD. RECONCILIATION OF GAAP TO NON-GAAP RESULTS ( U.S. dollars in thousands, except percentage and per share data) - (Unaudited) Three months ended June 30, 2023 March 31, 2023 June 30,2022 GAAP gross profit 69,658 77,266 79,033 Stock-based compensation* 1,071 1,165 1,021 Amortization of acquired intangible assets 1,368 1,338 1,355 Acquisition related inventory step-up - - 366 Non-GAAP gross profit 72,097 79,769 81,775 GAAP gross margin as a percentage of revenues 57 % 58 % 56 % Non-GAAP gross margin as a percentage of revenues 59 % 60 % 58 % GAAP operating income 28,716 35,737 36,963 Stock-based compensation* 3,667 4,394 4,072 Acquisition-related inventory step-up - - 366 Acquisition-related expenses and contingent consideration revaluation - - 2,392 Amortization of acquired intangible assets 1,475 1,444 1,513 Non-GAAP operating income 33,858 41,575 45,306 GAAP operating margin as a percentage of revenues 23 % 27 % 26 % Non-GAAP operating margin as a percentage of revenues 28 % 31 % 32 % GAAP net income 29,926 34,627 34,878 Stock-based compensation* 3,667 4,394 4,072 Acquisition-related inventory step-up - - 366 Acquisition-related expenses and contingent consideration revaluation - - 2,392 Amortization of acquired intangible assets 1,475 1,444 1,513 Amortization of debt discount and issuance costs 320 316 318 Revaluation of operating lease liabilities (768) (822) (3,350) Tax effect of non-GAAP adjustments (806) (884) (643) Non-GAAP net income 33,814 39,075 39,546 GAAP basic earnings per share 1.04 1.21 1.22 Non-GAAP basic earnings per share 1.18 1.36 1.38 GAAP diluted earnings per share 0.94 1.09 1.09 Non-GAAP diluted earnings per share 1.06 1.23 1.24 Shares used for calculation of earnings per share(in thousands): Basic 28,766 28,678 28,688 Diluted 31,928 31,824 31,902 * Stock-based compensation for the three months ended June 30, 2023 , included in – Cost of revenues - 1,071; Research and development, net – 1,403; Sales and marketing – 688; General and administrative – 505. NOVA LTD. SUPPLEMENTAL INFORMATION - RECONCILIATION OF SECOND QUARTER 2023GAAP TO NON-GAAP GUIDANCE ( U.S. dollars) (Unaudited) Low High Estimated GAAP net income per diluted share 0.83 0.94 Estimated non-GAAP items: Stock-based compensation 0.18 0.18 Amortization of acquired intangible assets 0.04 0.04 Amortization of issuance costs 0.01 0.01 Tax effect of non-GAAP adjustments (0.04) (0.04) Estimated non-GAAP net income per diluted share 1.02 1.13 Company Contact: Dror David , Chief Financial OfficerTel: +972-73-229-5760E-mail - [email protected] Nova website link - https://www.novami.com/ Investor Relations Contact: Miri Segal MS-IR LLC Tel: +917-607-8654E-mail - [email protected] Logo - https://mma.prnewswire.com/media/1446151/Nova_Logo.jpg View original content: https://www.prnewswire.com/news-releases/nova-reports-second-quarter-2023-financial-results-301892566.html SOURCE Nova

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