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Nova Reports First Quarter 2023 Results

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REHOVOT, Israel, May 11, 2023 /PRNewswire/ -- Nova (Nasdaq: NVMI) today announced financial results for the first quarter ended March 31, 2023.

Nova Logo

 

First Quarter 2023 Highlights:

  • Quarterly revenue of $132.2 million, down 1% year over year
  • GAAP net income of $34.6 million, or $1.09 per diluted share, up 2% year over year on a per-share basis, exceeding management guidance of $0.77 to $0.98
  • Non-GAAP net income of $39.1 million, or $1.23 per diluted share, down 5% year over year on a per-share basis, exceeding management guidance of $0.93 to $1.14
  • Significant improvement in blended gross margin, driven by record software revenues and a favorable product mix
  • Record bookings for materials metrology, including VERAFLEX, METRION, and ELIPSON platforms

GAAP Results (K)


Q1 2023

Q4 2022

Q1 2022

Revenues

$132,193

$151,238

$133,957

Net Income

$34,627

$36,098

$34,162

Earnings per Diluted Share

$1.09

$1.14

$1.07

 

Non-GAAP Results (K)


Q1 2023

Q4 2022

Q1 2022

Net Income

$39,075

$40,778

$41,487

Earnings per Diluted Share

$1.23

$1.28

$1.30

 

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 performance in the first quarter displays resilience amidst a challenging industry environment. Our excellent profitability attests to the exceptional value our portfolio offers to customers and to the agility of our operational model," said Gaby Waisman, President and CEO. "We're encouraged by the record bookings for our materials metrology solutions and believe our positioning in this strategic domain is a growth engine for years to come. As our industry charts a path forward, navigating a host of global volatile conditions, we at Nova remain focused on our strategic plans and infrastructure investments that will enable our long-term growth."

2023 Second Quarter Financial Outlook

Management provided an outlook for the second quarter, the period ending June 30, 2023. Based on current estimates, management expects:

  • $117 million to $125 million in revenue
  • $0.75 to $0.89 in diluted GAAP EPS
  • $0.92 to $1.06 in diluted non-GAAP EPS

2023 First Quarter Results

Total revenues for the first quarter of 2023 were $132.2 million, a decrease of 13% compared with the fourth quarter of 2022 and a decrease of 1% compared with the first quarter of 2022.

Gross margin in the first quarter of 2023 was 58%, compared with 55% in the fourth quarter of 2022 and 56% in the first quarter of 2022.

Operating expenses in the first quarter of 2023 were $41.5 million, compared with $45.5 million in the fourth quarter of 2022 and $37.6 million in the first quarter of 2022.

On a GAAP basis, the Company reported net income of $34.6 million, or $1.09 per diluted share, in the first quarter of 2023. This is compared with net income of $36.1 million, or $1.14 per diluted share, in the fourth quarter of 2022, and net income of $34.2 million, or $1.07 per diluted share, in the first quarter of 2022.

On a non-GAAP basis, the Company reported net income of $39.1 million, or $1.23 per diluted share, in the first quarter of 2023. This is compared with net income of $40.8 million, or $1.28 per diluted share, in the fourth quarter of 2022, and net income of $41.5 million, or $1.30 per diluted share, in the first quarter of 2022.

Conference Call Information

Nova will host a conference call today, May 11, 2023, at 8:30 a.m. Eastern Time, to discuss the 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: 1-844-826-3035
ISRAEL TOLL-FREE Dial-in Number: 1-80-921-3284
INTERNATIONAL Dial-in Number: 1-412-317-5195

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 May 11, 2023, at 11:30 a.m. Eastern Time until May 18, 2023, at 11:59 p.m. Eastern Time. To access the replay, please dial one of the following numbers:

Replay Dial-in TOLL-FREE: 1-844-512-2921
Replay Dial-in TOLL/INTERNATIONAL: 1-412-317-6671
Replay Pin Number: 10177465

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: increased information technology security threats and sophisticated computer crime; foreign political and economic risks including supply-chain difficulties; regulations that could restrict our operations such as economic sanctions and export restrictions; changes in U.S. trade policies; indirect effects of the RussiaUkraine conflict; market instability including inflation and recessionary pressures; risks related to doing business with China; catastrophic events such as the outbreak of COVID-19; inability to protect our intellectual property; open source technology exposure; failure to compete effectively or to respond to rapid technological changes; 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 including related to the potential changes to the judicial system; 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.

NOVA LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands) - (Unaudited)


As of


March 31,

December 31,

ASSETS

2023

2022

Current assets



Cash and cash equivalents

96,075

111,121

Short-term interest-bearing bank deposits

113,562

95,305

Marketable securities

179,761

167,073

Trade accounts receivable, net

100,985

109,320

Inventories

137,096

116,600

Other current assets

21,639

13,527

Total current assets

649,118

612,946

Non-current assets



Marketable securities

154,825

153,462

Interest-bearing bank deposits and restricted cash

5,998

2,083

Deferred tax assets

21,656

20,097

Operating lease right-of-use assets

43,968

44,885

Property plant and equipment, net

56,821

55,886

Intangible assets, net

42,969

43,586

Goodwill

49,585

49,009

Other long-term assets

1,997

2,151

Total non-current assets

377,819

371,159

Total assets

1,026,937

984,105

LIABILITIES AND SHAREHOLDERS' EQUITY



Current liabilities



Trade accounts payable

43,092

42,732

Deferred revenues

30,238

30,543

Operating lease current liabilities

5,974

5,968

Other current liabilities

56,426

54,825

Total current liabilities

135,730

134,068

Non-current liabilities



Convertible senior notes, net

196,710

196,394

Operating lease long-term liabilities

41,932

43,697

Long-term deferred tax liability

12,065

12,190

Other long-term liabilities

11,206

10,793

Total non-current liabilities

261,913

263,074

Shareholders' equity

629,294

586,963

Total liabilities and shareholders' equity 

1,026,937

984,105

NOVA LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except per share data) - (Unaudited)


Three months ended
March 31,


2023

2022

Revenues:



Products

105,331

109,912

Services

26,862

24,045

Total revenues

132,193

133,957

Total cost of revenues

54,927

59,282

Gross profit

77,266

74,675

Operating expenses:



Research and development, net

22,968

19,129

Sales and marketing

13,522

12,384

General and administrative

5,039

6,056

Total operating expenses

41,529

37,569

Operating income

35,737

37,106

Financing income, net

4,728

1,218

Income before taxes on income

40,465

38,324

Income tax expenses

5,838

4,162

Net income for the period

34,627

34,162




Earnings per share:



Basic

1.21

1.20

Diluted

1.09

1.07




Shares used in calculation of earnings per share
 (in thousands):



Basic

28,678

28,579

Diluted

31,824

31,968

NOVA LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. dollars in thousands) - (Unaudited)


Three months ended
March 31,


2023

2022

Cash flows from operating activities:



Net income

34,627

34,162

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



     Depreciation of property and equipment

2,340

2,035

     Amortization of intangible assets

1,444

1,613

     Amortization of premium and accretion of discount on marketable securities, net

(428)

829

     Amortization of debt discount and issuance costs

316

320

     Share-based compensation

4,394

3,860

     Net effect of exchange rate fluctuation

1,349

793

Changes in assets and liabilities:



     Trade accounts receivables, net

8,617

470

     Inventories

(20,335)

(6,898)

     Other current and long-term assets

(8,231)

(15,996)

     Deferred tax assets, net

(1,937)

(2,609)

     Operating lease right-of-use assets

802

912

     Trade accounts payables

500

(1,941)

     Deferred revenues

(313)

(744)

     Operating lease liabilities

(1,645)

(806)

     Other current and long-term liabilities

1,670

(3,151)

     Accrued severance pay, net

(98)

61

Net cash provided by operating activities

23,072

12,910

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

(23,062)

49,632

Investment in marketable securities

(53,682)

(16,836)

Proceeds from maturity of marketable securities

41,892

15,770

Purchase of property and equipment

(2,758)

(3,718)

Net cash used in investing activities

(37,610)

(33,621)

Cash flows from financing activities:



Purchases of treasury shares

(112)

-

Net cash used in financing activities

(112)

-

Effect of exchange rate fluctuations on cash and cash equivalents

(996)

(794)

Changes in cash and cash equivalents and restricted cash

(15,646)

(21,505)

Cash and cash equivalents and restricted cash - beginning of period

111,721

126,698

Cash and cash equivalents - end of period

96,075

105,193

 

NOVA LTD.
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
(U.S. dollars in thousands, except percentage and per share data) - (Unaudited)


Three months ended



March 31,
2023

December 31,
2022

March 31,
2022

GAAP gross profit

77,266

82,421

74,675

Stock-based compensation*

1,165

1,148

883

Amortization of acquired intangible assets

1,338

1,307

1,475

Acquisition related inventory step-up

-

-

2,606

Non-GAAP gross profit

79,769

84,876

79,639

GAAP gross margin as a percentage of revenues

58 %

54 %

56 %

Non-GAAP gross margin as a percentage of revenues

60 %

56 %

59 %





GAAP operating income

35,737

36,924

37,106

Stock-based compensation*

4,394

4,381

3,860

Acquisition-related inventory step-up

-

-

2,606

Acquisition-related expenses and contingent

 consideration revaluation

-

(752)

1,355

Amortization of acquired intangible assets

1,444

1,463

1,613

Non-GAAP operating income

41,575

42,016

46,540

GAAP operating margin as a percentage of revenues

27 %

24 %

28 %

Non-GAAP operating margin as a percentage of revenues

31 %

28 %

35 %





GAAP net income

34,627

36,098

34,162

Stock-based compensation*

4,394

4,381

3,860

Acquisition-related inventory step-up

-

-

2,606

Acquisition-related expenses and contingent

 consideration revaluation

-

(752)

1,355

Amortization of acquired intangible assets

1,444

1,463

1,613

Amortization of debt discount and issuance costs

316

322

320

Revaluation of operating lease liabilities

(822)

294

(546)

Tax effect of non-GAAP adjustments

(884)

(1,028)

(1,883)

Non-GAAP net income

39,075

40,778

41,487





GAAP basic earnings per share

1.21

1.26

1.20

Non-GAAP basic earnings per share

1.36

1.42

1.45





GAAP diluted earnings per share

1.09

1.14

1.07

Non-GAAP diluted earnings per share

1.23

1.28

1.30





Shares used for calculation of earnings per share
(in thousands):




Basic

28,678

28,731

28,579

Diluted

31,824

31,737

31,968






* Stock-based compensation for the three months ended, March 31, 2023 included in – Cost of revenues - 1,165; Research and development, net – 1,784; Sales and marketing – 847; General and administrative – 598.

NOVA LTD.
SUPPLEMENTAL INFORMATION - RECONCILIATION OF SECOND QUARTER 2023
GAAP TO NON-GAAP GUIDANCE
(Unaudited)


Low

High

Estimated GAAP net income per diluted share

0.75

0.89

Estimated non-GAAP items:



Stock-based compensation

0.15

0.15

Amortization of acquired intangible assets

0.04

0.04

Amortization of issuance costs

0.01

0.01

Tax effect of non-GAAP adjustments

(0.03)

(0.03)

Estimated non-GAAP net income per diluted share

0.92

1.06

Company Contact:

Dror David, Chief Financial Officer
Tel: +972-73-229-5760
E-mail - investors@novami.com 

Nova website link - https://www.novami.com/

Investor Relations Contact:

Miri Segal MS-IR LLC
Tel: +917-607-8654
E-mail - msegal@ms-ir.com

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SOURCE Nova

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