Nova Reports Fourth Quarter and Full Year 2023 Results

Published

REHOVOT, Israel, Feb. 15, 2024 /PRNewswire/ -- Nova (Nasdaq: NVMI) today announced financial results for the fourth quarter and full year ended December 31, 2023.

Nova Logo

Fourth Quarter 2023 Highlights:

  • Quarterly revenue of $134.2 million, up 4% QoQ, exceeding the high end of the guidance of $132 million.
  • Record GAAP net income of $38.1 million, or $1.20 per diluted share, up 13% QoQ, exceeding the high end of the guidance of $1.11.
  • Record Non-GAAP net income of $43.6 million, or $1.36 per diluted share, up 10% QoQ, exceeding the high end of the guidance of $1.31.
  • Continued proliferation of materials and chemical metrology solutions across both Frontend and Backend markets.
  • Expanding the adoption of optical metrology solutions among multiple DRAM customers for High Bandwidth Memory.

Full Year 2023 Highlights:

  • Annual revenue of $517.9 million.
  • GAAP net income of $136.3 million, or $4.28 per diluted share.
  • Non-GAAP net income of $155.9 million, or $4.86 per diluted share.
  • Solidifying Nova's leadership position in materials process control.
  • Multiple PRISM wins in Memory, Logic and Hybrid Bonding customers.

GAAP Results (K)

Q4 2023

Q3 2023

Q4 2022

FY 2023

FY 2022

Revenues

$134,219

$128,808

$151,238

$517,922

$570,729

Net Income

$38,068

$33,689

$36,098

$136,310

$140,213

Earnings per Diluted Share

$1.20

$1.06

$1.15

$4.28

$4.43

Non-GAAP Results (K)

Q4 2023

Q3 2023

Q4 2022

FY 2023

FY 2022

Net Income

$43,597

$39,405

$40,778

$155,891

$161,509

Earnings per Diluted Share

$1.36

$1.23

$1.28

$4.86

$5.07

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 delivered a robust quarter, exceeding the top end of our guidance for revenue and profit, concluding the fiscal year on a stronger note than initially anticipated," said Gaby Waisman, President and CEO. "Our diversified exposure across territories and markets allowed us to achieve record performance in chemical metrology and services. Nova is uniquely positioned to accelerate its market penetration in Hybrid Bonding and to capitalize on the transition to GAA through our strong position in advanced logic manufacturing. Looking forward, we see positive performance indicators across our growth engines, expected to steer Nova to a path of growth in 2024."

2024 First Quarter Financial Outlook

Management provided an outlook for the first quarter, the period ending March 31, 2024. Based on current estimates, management expects:

  • $134 million to $140 million in revenue
  • $1.00 to $1.12 in diluted GAAP EPS
  • $1.21 to $1.33 in diluted non-GAAP EPS

2023 Fourth Quarter Results

Total revenues for the fourth quarter of 2023 were $134.2 million, an increase of 4% compared with the third quarter of 2023 and a decrease of 11% compared with the fourth quarter of 2022.

Gross margin in the fourth quarter of 2023 was 55%, compared with 57% in the third quarter of 2023 and 54% in the fourth quarter of 2022.

Operating expenses in the fourth quarter of 2023 were $40.4 million, compared with $38.1 million in the third quarter of 2023 and $45.5 million in the fourth quarter of 2022.

On a GAAP basis, the Company reported net income of $38.1 million, or $1.20 per diluted share, in the fourth quarter of 2023. This is compared with net income of $33.7 million, or $1.06 per diluted share, in the third quarter of 2023, and $36.1 million, or $1.15 per diluted share, in the fourth quarter of 2022.

On a non-GAAP basis, the Company reported net income of $43.6 million, or $1.36 per diluted share, in the fourth quarter of 2023. This is compared with net income of $39.4 million, or $1.23 per diluted share, in the third quarter of 2023, and $40.8 million, or $1.28 per diluted share, in the fourth quarter of 2022.

2023 Full Year Results

Total revenues for 2023 were $517.9 million, a decrease of 9% compared to total revenues of $570.7 million for 2022.

Gross margin in 2023 was 57%, compared with 56% in 2022.

Operating expenses in 2023 were $160.9 million, compared with operating expenses of $167.0 million in 2022.

On a GAAP basis, the Company reported net income of $136.3 million, or $4.28 per diluted share, in 2023. This is compared with a net income of $140.2 million, or $4.43 per diluted share, in 2022.

On a non-GAAP basis, the Company reported net income of $155.9 million, or $4.86 per diluted share, in 2023. This is compared with net income of $161.5 million, or $5.07 per diluted share, in 2022.

Conference Call Information

Nova will host a conference call today, February 15, 2024, at 8:30 a.m. Eastern Time, to discuss the Company's fourth 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: 1-833-816-1427ISRAEL TOLL-FREE Dial-in Number: 1809-213-284INTERNATIONAL Dial-in Number: 1-412-317-0519

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 February 15, 2024, at 11:30 a.m. Eastern Time until November 22, 2024, 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: 1-877-344-7529Replay Dial-in INTERNATIONAL: 1-412-317-0088Replay Pin Number:  6569905

A replay will also be available for 90 days on Nova's website link at https://www.novami.com/investors/events/.

About NovaNova 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 and remeasurement of intercompany loans, 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: political, economic and military instability in Israel, including related to the recent attack by Hamas and other terrorist organizations from the Gaza Strip and Israel's war against them; 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; 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 December 31,

ASSETS

2023

2022

Current assets

Cash and cash equivalents

107,574

111,121

Short-term interest-bearing bank deposits

119,850

95,305

Marketable securities

216,258

167,073

Trade accounts receivable, net

111,256

109,320

Inventories

138,198

116,600

Other current assets

17,084

13,527

Total current assets

710,220

612,946

Non-current assets

Marketable securities

191,351

153,462

Interest-bearing bank deposits and restricted cash

6,254

2,083

Deferred tax assets

23,583

20,097

Operating lease right-of-use assets

41,856

44,885

Property plant and equipment, net

66,874

55,886

Intangible assets, net

39,184

43,586

Goodwill

50,080

49,009

Other long-term assets

4,405

2,151

Total non-current assets

423,587

371,159

Total assets

1,133,807

984,105

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities

   Convertible senior notes, net

197,678

-

Trade accounts payable

35,158

42,732

Deferred revenues

41,978

30,543

Operating lease current liabilities

6,703

5,968

Other current liabilities

41,294

54,825

Total current liabilities

322,811

134,068

Non-current liabilities

Convertible senior notes, net

-

196,394

Operating lease long-term liabilities

39,762

43,697

Long-term deferred tax liability

10,574

12,190

Other long-term liabilities

9,908

10,793

Total non-current liabilities

60,244

263,074

Shareholders' equity

750,752

586,963

Total liabilities and shareholders' equity 

1,133,807

984,105

 

NOVA LTD.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

Three months ended December 31,

Year ended

December 31,

2023

2022

2023

2022

Revenues:

Products

104,108

123,486

405,037

464,152

Services

30,111

27,752

112,885

106,577

Total revenues

134,219

151,238

517,922

570,729

Total cost of revenues

60,207

68,817

224,745

253,759

Gross profit

74,012

82,421

293,177

316,970

Operating expenses:

Research and development, net

21,290

26,206

88,043

90,458

Sales and marketing

13,580

14,214

52,467

52,729

General and administrative

5,480

5,077

20,404

23,852

Total operating expenses

40,350

45,497

160,914

167,039

Operating income

33,662

36,924

132,263

149,931

Financing income, net

7,283

2,157

22,436

8,478

Income before taxes on income

40,945

39,081

154,699

158,409

Income tax expenses

2,877

2,983

18,389

18,196

Net income for the period

38,068

36,098

136,310

140,213

Earnings per share:

Basic

1.31

1.26

4.73

4.89

Diluted

1.20

1.15

4.28

4.43

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

Basic

28,975

28,731

28,828

28,697

Diluted

32,023

31,737

32,089

31,870

 

NOVA LTD.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. dollars in thousands) - (Unaudited)

Three months ended December 31,

Year ended

December 31,

2023

2022

2023

2022

Cash flows from operating activities:

Net income

38,068

36,098

136,310

140,213

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

     Depreciation of property and equipment

2,756

2,491

10,344

8,621

     Amortization of intangible assets

1,461

1,463

5,857

6,033

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

(1,134)

(254)

(3,001)

1,666

     Amortization of debt discount and issuance costs

324

322

1,284

1,282

     Share-based compensation

5,654

4,381

18,286

16,647

     Net effect of exchange rate fluctuation

(2,591)

412

1,754

4,523

Changes in assets and liabilities:

     Trade accounts receivable, net

(18,606)

(9,421)

(1,183)

(31,634)

     Inventories

2,851

(2,168)

(26,000)

(29,311)

     Other current and long-term assets

(361)

5,926

(5,752)

(4,223)

     Deferred taxes, net

(185)

(6,598)

(6,241)

(13,740)

     Operating lease right-of-use assets

259

841

3,050

3,873

     Trade accounts payable

8,917

(79)

(7,807)

5,142

     Deferred revenues

(292)

10,492

11,391

15,243

     Operating lease liabilities

2,091

115

(3,221)

(6,351)

     Other current and long-term liabilities

(9,671)

5,548

(11,352)

1,509

     Accrued severance pay, net

64

27

(188)

46

Net cash provided by operating activities

29,605

49,596

123,531

119,539

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

31,367

(26,517)

(29,658)

129,944

Investment in marketable securities

(106,695)

(30,064)

(273,572)

(211,742)

Proceeds from maturity of marketable securities

44,443

23,390

195,087

81,325

Purchase of property and equipment

(7,601)

(8,429)

(17,188)

(21,314)

Net cash provided by (used in) investing activities

(38,486)

(41,620)

(125,331)

(100,256)

Cash flows from financing activities:

Settlement of a contingent consideration liability

-

-

-

(8,480)

Purchases of treasury shares

-

(15,000)

(112)

(21,416)

Proceeds from exercise of options

-

8

122

90

Net cash provided by (used in) financing activities

-

(14,992)

10

(29,806)

Effect of exchange rate fluctuations on cash and cash equivalents

(25)

(77)

(2,357)

(4,454)

Changes in cash and cash equivalents and restricted cash

(8,906)

(7,093)

(4,147)

(14,977)

Cash and cash equivalents and restricted cash -beginning of period

116,480

118,814

111,721

126,698

Cash and cash equivalents - end of period

107,574

111,721

107,574

111,721

 

NOVA LTD.RECONCILIATION OF GAAP TO NON-GAAP RESULTS

(U.S. dollars in thousands, except percentage and per share data) - (Unaudited)

Three months ended

December 31,2023

September 30,2023

December 31,2022

GAAP gross profit

74,012

72,241

82,421

Stock-based compensation*

1,537

1,173

1,148

Amortization of acquired intangible assets

1,354

1,369

1,307

Non-GAAP gross profit

76,903

74,783

84,876

GAAP gross margin as a percentage of revenues

55 %

56 %

54 %

Non-GAAP gross margin as a percentage of revenues

57 %

58 %

56 %

GAAP operating income

33,662

34,148

36,924

Stock-based compensation*

5,654

4,571

4,381

Acquisition-related expenses and contingent

 consideration revaluation

-

-

(752)

Amortization of acquired intangible assets

1,461

1,477

1,463

Non-GAAP operating income

40,777

40,196

42,016

GAAP operating margin as a percentage of revenues

25 %

27 %

24 %

Non-GAAP operating margin as a percentage of revenues

30 %

31 %

28 %

GAAP net income

38,068

33,689

36,098

Stock-based compensation*

5,654

4,571

4,381

Acquisition-related expenses and contingent

 consideration revaluation

-

-

(752)

Amortization of acquired intangible assets

1,461

1,477

1,463

Amortization of debt discount and issuance costs

324

324

322

Revaluation of operating lease and intercompany loans

(827)

423

294

Tax effect of non-GAAP adjustments

(1,083)

(1,079)

(1,028)

Non-GAAP net income

43,597

39,405

40,778

GAAP basic earnings per share

1.31

1.17

1.26

Non-GAAP basic earnings per share

1.50

1.36

1.42

GAAP diluted earnings per share

1.20

1.06

1.15

Non-GAAP diluted earnings per share

1.36

1.23

1.28

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

Basic

28,975

28,870

28,731

Diluted

32,023

31,983

31,737

* Stock-based compensation for the three months ended December 31, 2023 included in - Cost of revenues - 1,537; Research and development, net - 2,554; Sales and marketing - 1,039; General and administrative - 524.

 
NOVA LTD.RECONCILIATION OF GAAP TO NON-GAAP RESULTS

(U.S. dollars in thousands, except percentage and per share data) - (Unaudited)

Year ended December 31,

2023

2022

GAAP gross profit

293,177

316,970

Stock-based compensation*

4,946

4,166

Acquisition-related inventory step-up

5,430

5,426

Non-GAAP gross profit

303,553

329,534

GAAP gross margin as a percentage of revenues

57 %

56 %

Non-GAAP gross margin as a percentage of revenues

59 %

58 %

GAAP operating income

132,263

149,931

Stock-based compensation*

18,286

16,647

Acquisition-related inventory step-up

-

2,972

Acquisition-related expenses and contingent

 consideration revaluation

-

2,995

Amortization of acquired intangible assets

5,857

6,033

Non-GAAP operating income

156,406

178,578

GAAP operating margin as a percentage of revenues

26 %

26 %

Non-GAAP operating margin as a percentage of revenues

30 %

31 %

GAAP net income

136,310

140,213

Stock-based compensation*

18,286

16,647

Acquisition-related inventory step-up

-

2,972

Acquisition-related expenses and contingent

 consideration revaluation

-

2,995

Amortization of acquired intangible assets

5,857

6,033

Amortization of debt discount and issuance costs

1,284

1,282

Revaluation of operating lease liabilities

(1,994)

(4,174)

Tax effect of non-GAAP adjustments

(3,852)

(4,459)

Non-GAAP net income

155,891

161,509

GAAP basic earnings per share

4.73

4.89

Non-GAAP basic earnings per share

5.41

5.63

GAAP diluted earnings per share

4.28

4.43

Non-GAAP diluted earnings per share

4.86

5.07

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

Basic

28,828

28,697

Diluted

32,089

31,870

* Stock-based compensation for the year ended December 31, 2023, included in - Cost of revenues - 4,946; Research and development, net - 7,736; Sales and marketing - 3,437; General and administrative - 2,167.

 

NOVA LTD.SUPPLEMENTAL INFORMATION - RECONCILIATION OF FIRST QUARTER 2024GAAP TO NON-GAAP GUIDANCE

(U.S. dollars) (Unaudited)

Low

High

Estimated GAAP net income per diluted share

1.00

1.12

Estimated non-GAAP items:

Stock-based compensation

0.20

0.20

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

1.21

1.33

 

Company Contact:Dror David, Chief Financial OfficerTel: +972-73-229-5760E-mail - investors@novami.comNova website link - https://www.novami.com/

Investor Relations Contact:Miri Segal MS-IR LLCTel: +917-607-8654E-mail - msegal@ms-ir.com

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

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