Nova Reports Second Quarter 2023 Financial Results

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

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: 1-877-300-8521ISRAEL TOLL-FREE Dial-in Number: 1809-213-284INTERNATIONAL Dial-in Number: 1-412-317-6026

At:8:30 a.m. Eastern Time5:30 a.m. Pacific Time3:30 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: 1-844-512-2921Replay 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 MeasuresThis 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 StatementsThis 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)

(169)

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

Net cash provided by (used in) financing activities

115

(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

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

Amortization of acquired intangible assets

0.04

Amortization of issuance costs

0.01

Tax effect of non-GAAP adjustments

(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] website link - https://www.novami.com/

Investor Relations Contact:

Miri Segal MS-IR LLCTel: +917-607-8654E-mail - [email protected]

Logo - https://mma.prnewswire.com/media/1446151/Nova_Logo.jpg

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SOURCE Nova

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