NVMI - Earnings call transcript Q2 2022

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Operator

Thank you for standing by. This is the conference operator. Good day, and welcome to Nova's Second Quarter 2022 Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Miri Segal, CEO of MS-IR. ahead. go Please

Miri Segal

line and to operator, quarter to I Mr. on everybody. financial President Eitan Thank CEO; and all good of like and the us With welcome conference David, second are you would Mr. results Oppenhaim, CFO. you, Dror call. day today to XXXX Nova's

earnings this to harbor like forward-looking statements contain call. I'd begin, listeners statement we may in remind our pertains that the call safe release certain Before to information this outlined today's provided also on and

If section copy with view Dror, business you begin of the it in a not received by have a Company's an will release, overview the of Eitan, with followed please Investor website. of call Relations the the update, the financials.

the call CEO. turn I'll for We question-and-answer go session. to Eitan and President will the then Eitan, Nova's please Oppenhaim, ahead. now the Mr. open call

Eitan Oppenhaim

second all about will today the for call joining you and Thank highlights. financial results our I call. results start quarterly performance speaking conference by quarter our

Following and conclude with review my strength our across then of for quarter, third the results the detail guidance XXXX. materials portfolios. second product the results quarter in all for commentary, dimensional, demonstrating quarter's reported the chemical and solid financial metrology in Dror Nova lines will

secure industry growth gaining keep expand to momentum its and driver we to While semiconductor outperformance. from growth long-term we and various adoption market continue multiple segments, in our diversification portfolio

of significantly $XXX meet over are operating and company that company in strengthen and embedding million in This multiple macroeconomics few issues quarter our which the in our We in strategic various chain implemented we years elements, changes years. to once concerns. will next fundamental believe into to by the last markets position verticals and resiliency the revenue the reaching goal demonstrate two geopolitical multiple be supply including results the again continues model, the strained other

half another with the guidance, end For the of of expectation year-over-year results respectively. compared at ahead including significant profitability of XX%, came and HX growth sequential a record, all year-over-year. in and around XXXX which pace including quarter, revenues XXXX, XX% well represents quarterly the and shows top XX% earnings of first our growth elements growth financial revenue our in Reviewing

in last of Our performance missing our economic customers' organic the manufacturing to demonstrates global intensity strong demand the in for both of in still our over changing without continuous technology beat. and few a market of operational our proliferation current quarters other new Against control solid adoption see meet and agility growth, constantly as backdrop products capacity process memory the a uncertainties, development combination demand a verticals growing logic, demand, environment engines. and we growth ability

quarter a of XXXX. the second second our and backlog a for record As while XXXX result, reached visibility half further the the enabling of quarter first high, exiting

more than markets, across in are continues Furthermore, revenues efforts XX fruit XX% which products by XX% five approximately same year. diversification segments just main and different spread of contribute our these territories, to were four compared to Our bear customers last throughout as customers this period the each. quarter generated

newest from portfolio. contribution As diversification more the with the in record progress U.S. companies growth metrology generated We're chemical technology, Even the we Act previously the led is seeing discussed in this year territory. significant approval, a revenue additional a quarter. already growing years national investment multinational our and CHIPS expect after this that and to with in coming the U.S. the by

full. ancosys report first results The second quarter we in which in the is

diversify intercompany manufacturer. to XPS acquisition, efforts short these analog year. products, the validated chemical device Furthermore, in other motion already since our year. by solution We traditional leading multiple integration measure of annual by period, are to VeraFlex interest process led analysis that the selection mix our our to we a significant encouraged setting segments this the with this In market increase drive revenue tools. a Adopting customer record quarter will grown optical the a by by in revenue have and this parameters unsupported customer's still growth were tools recent market share the vital to enables synergies

technology the more requirements. markets expect chip as like fast-evolving of We cases will adopting its performance steps that part more as start back-end metrology meet developing to

we mainly growing to outperformance the dimensional faster a which diversified Finally, our of portfolio, our the record meaningfully and performance from Nova adoption and process the offering, our steps continuous by CD Optical changes this efforts in this fleet differentiate quarter more is by FIT were well, given now a currently learn segment in of PRISM prevailing as devices aim overachieving and real expectations the PRISM memory part is hundreds in driven ratio and and and learning to another with structure Nova aspect as accurately. machine measurements. by of sales and larger anomalies provide and insight and year. quarter whole from previous of financial as our guidance optical metrology record the high train Highlighting our another we foresight second for physical stand-alone the platforms. complex the third multiple tools example driven detect year of software limitation to can The there to was different solution growing this platforms saw setting stand-alone The in adoption more materials providing results software tools inefficiency in connecting traditional stocks. for portion high-end for chip layers is extensive prevent different our quarter, preparing where platforms deep grow memory

was exceeding quarter introduced a of the pillars to by increased rates plan, technology long-term future Nova ability support mark profitability our can was organic which and and million we the revenues result the business growth. fundamentals over strategic delineate built quarters to With hitting and our last growth. inorganic higher have XXX plan strategic established we $XXX the revenue momentum on execute inorganic the our clear differentiation, The four of which company model, a of The realization XXXX. diversification strong is planned our cemented plan, demonstrated this in

each pillar, including Virtual both chemical the upcoming growing all and inorganic in presenting XX. which September areas, and to to milestone, materials organic in customers our and Day path capacity and manufacturing developing metrology in sites more strides performance it our paving exposure in on the in increased progress we'll Analyst be strategic Our next is our segments, engines,

will would second including to long-term end the market markets summarizing elements, quarter driven by several self-sustained the we Overall, highlights, demand to performance. and demand applications, and Before that technology megatrends transformations buildups. Nova's semiconductor to the like relates environment as believe it refer complex geographical I semiconductor persist semiconductor

and While we accommodate IC some we delivery year. are of plans to consumer prices, rest the with monitoring strong the market continue the the demand for our latest issues of the

other planning, a next anticipate Although, factor in various catalysts in our quarters. major we few still is capacity growth the

see XXXX, during demand chain monitoring we territories, and remainder The the this expansion. our new concerns. therefore, finally, and requirements, customers' overall for begun in-line process our expect closely essential of developments lead increased are year. optional other other incremental suppliers complex of like of metrology which then to a both delay are dynamic all meet multiple the setting increasingly improvement With quarter to rates requests quarter logic, remain the metrology tool may supply the main remarkable our disruptions advanced memory in had against methods, of first results. new Nevertheless, environment. in nodes, attach half the contributors our major fabs that, and back-end by suppliers, metrology impact Nova materials of to technology main in times of ramp-up backdrop one market Those of customers and I We've customers. share metrology would of growing second greenfield proliferation recap our records markets in various and [indiscernible]

quarter third, are and in As again striving our the and to record we Nova. another given our consider year for guidance accomplishments for once the we the market outperform achieve second

to Day company towards new plan will continue billion a the momentum annual in announce September, our our charting course we we market, strong in aspire Investor $X in the a revenues. strategic during As

detail. Now, let to the hand results review Dror, over our in Dror? financial me call to

Dror David

diluted positions non-GAAP the XX%. to the quarter company intangible call. revenues revaluation consideration XXXX million XX% Product record revenues. amortization reflecting to revenue Product revenues, one-time this product than conference of main of additional of operating increasing $X.X basis four contributing the increased influent basis, basis tax in semiconductor Earnings a across currency. XX% and ancosys reflecting a GAAP also main customers. diluted second impact liabilities thank came each investments IDM second included additional and the quarter. $X.X XXXX a related on gross mainly in contributed Earnings of $X.XX of the level the million its basis to of on a non-GAAP Operating for from million current within analog XX% per Product quarter, purposes second for Operating The quarter and versus related company non-GAAP in on for high-end second adjusted customers three in and basis increased impact infrastructure Good does XX% including mainly the joining expenses levels. basis the XX% share, The the growth of GAAP share revaluation outperformance Thanks, the quarterly was to acquisition Eitan. in XX% share, quarter Branded reached of XX% is GAAP were included the exchange assets. was more rate with quarter for the basis, higher dollar diversified second of for year-over-year. capital more of on Nova in GAAP on and workforce non-GAAP regions a territories revenues approximately a business Foundry, in mainly to day, Logic to distribution amount revaluation of on company due for adoption our efforts at in expenses XX%. quarter the Operating per higher margin for presented adjusted for to margins million guidance non-GAAP the than significantly share the each our XX% lease than XX%. $XX a Technologies high-end local million the This million of slightly into therefore, XX% positive than and expenses the effective that of to as or rates on to a product were XX% are logic align per a $XX favorable purposes. at the non-GAAP you a everyone, model target memory. to global guidance. $X.XX $XXX the target and and results. and XX% model and basis on revenues and Total expansion from contingent territories representing approximately an such of in was and quarter the $X.X the Israeli second the U.S. segments G&A a company These second non-GAAP per was the and higher quarter reason are guidance company not

guidance the million; third quarter the from Moving $XX following: to a for operating to earnings margins XX%; earnings XX%. non-GAAP be our operating revenues to XXXX. to range share into basis diluted $XXX approximately expect the of on gross we on share of of approximately non-GAAP Currently tax of estimates, diluted range to a million the GAAP effective $X.XX; rate midpoint $XX per expenses third following: At $X.XX expenses our from we of basis quarter $X.XX anticipate and million; approximately $XXX to GAAP per approximately million; of $X.XX. between

would half equipment to I increased first Nova's following: the the I third Before solid year than the remarks, of well outperforming like the peer backlog of with my coupled market year, throughout elevated the the quarter revenues more XXXX. The comparable half to XXXX, to levels, note growth position company's continue group and over rates. company XXXX conclude XX% guidance perform the capital for

strategic reached plan. the Nova's quarter, XXX the of marking XX-month trailing million, fulfillment revenues During $XXX Nova

gross As XX% a to of of XX% margins margins this we plan, XX% and operating of XX% part targeted basis. to non-GAAP on

margins Our operations. results reflecting gross of the operating quarters target into model and were and of the in target XX% leverage four XX% built within margins the the exceeding last company the model

back for execution the XXX Nova cash million build strategic to and allows with simultaneously to $XXX share initiated. aggressive program, announced the in total turn the execute of have an which call We Eitan. repurchase continue strategy reserves, growth future approximately the With plan which to recently that, was will concluded I the and to

Eitan Oppenhaim

Dror. you, Thank

happy be would take prepared questions our Following we to remarks, your now. Operator?

Operator

you. Thank

Securities. will begin from Bank America Instructions] Arya [Operator Please ahead. Vivek now the question session. We of from first question-and-answer go The is

Vivek Arya

actually. I taking a Thank few questions. my had you for

first you you growth ancosys' so important this what us the the give be of appreciate it's it is year, that aspect So can for rate? is is what one, a Do we year? Eitan, year? more But is, the higher this the question you think could the contribution sense WFE part it what helping the organic of of start more would outgrow gains? thought you the share than intensity metrology Or at is

Dror David

So we an regarding million. to ancosys' annual contribution are specific be the we contribution, higher on slightly numbers, than obviously, disclosing not basis, expect, but $XX

Vivek Arya

growth the then And rate? organic on

Eitan Oppenhaim

everybody need the us prepared about new because which well in I saying is, product I'll some and in talking other the talked remarks elements couple to to the answer and it demand, order it to we we in unique also outperform regard is – give Nova: the but of that the about tailwinds are remember proliferation, feel are propel issues this capacity with year. one and starting very to the

thing starting to a is second be materials one. is We metrology material feel the growth. that growth The the significant

from – control is, said, one the the this is times nodes node XX% transition process intensity third a node we intensity the because technology logic as XXX% and we process see If in in around can the of the you versus at couple said I intensity growing to in the the is memory growing. XX%. tools, around And in see can higher the advanced year The nodes. control complex to pace grows process is technology – of as the growth

customers require growth customer before. moving is the last when And see development definitely steps new of node, requires the intensity. that didn't in which item a steps are new So to new node, those we the

layers, move around need took see definitely to we now is, the share. you doing remarks, we we last of you this with the to adding some And and different process to stock again year, following year, market it's marked that, or as start to my bit course, measurement. if steps it, a to it the structure of specifically all three market memory the profile gate which example, XXX at For of that said structure, either the last a according move is a control thing course, and the have market growth in prepared year orders by we see I end we share in share. the

Vivek Arya

Got it.

margin. So my second question on gross

it's sequentially what's an a on target gross you basis? down But input within model, and the issue? the your sequential able So as isn't Is inflation clearly to and this Is decline power are mix environment demand this pricing margins a outlined. overcome? this strong Why and creating year-on-year year-on-year? Dror, cost Why issue?

Dror David

a of the the on mainly So would basis, the portfolio. that mix quarterly because of say products I fluctuations are and

we new And the features in these to and position where growth I are products of experiencing bill on count obviously, costs a chain supply all year, the includes It combination technologies that's are the we together elements. the introducing So of business the basis, a a of also, and with basis. material, new lot trends. offset good head cost of in and company an annual infrastructure quarterly and new this is On obviously, significantly able think on of costs. pressure

Vivek Arya

Thank you.

Operator

Malik question next The Please go is Citi. ahead. from from Atif

Atif Malik

comments in questions. leading the on And VeraFlex being job look type competition? chipmaker. about plan devices good end plan. of And adopted question the Eitan, you. Thank September. these? Nova it Is is is at incumbent more you We what have for the a in talk you a who Thank it What sounds application? in analog my taking I XPS about the power forward is Because are MCUs? management? technology? Can achieving next And Is in what XXX it to your incremental.

Eitan Oppenhaim

Yes.

talk the So and competition would like the let border itself. of about to I say just segment And me that can competitors. talk the not stay in about I

use to that customers those the think in are devices, we're when front going some the starting end. I methods those of to

very thin kind or very you have And problems X-ray very defined to vacuum potential therefore, X-ray the that And specifically in with it to either And measured measure. device, or of usage because tools films. of difficult that is the film the be market, thick will the to traditional optical the ultra has end. issue films, solve to by be advanced and the thick otherwise the every start are therefore, similar the in some analog one the capabilities start see this okay. thin structures either in example, front to very to we becoming For have films

a Regarding customer can with much to But and thickness actually thin would line. doing you're way, the end and compete it X-ray the if real cut destructive looking he they this specifically with is the like non-destructive in measurement and guys that any is on the you everybody if of gives to right competition, films. measure. front express method It's it's wafer. way And the the kind like are very measuring

Atif Malik

and the as seen And guys in And you. talk region? your if sub-XX has an follow-up, nanometer comment have on know being could impact shipments if flights can Is Taiwan impact of it. China that are kind impact you that at the I any you Thank from it's restrictions that on, the political you can from rerouted? about to situation impact expanding ships and my where Dror, early, on Got you? U.S. below

Eitan Oppenhaim

Yes.

the will part. with So the first I start will Dror and second part take

we definitely, Act year. deliveries Austin year established happening And see in the venture probably CHIPS starting for were also maybe And in fabs mainly that's places to later with think like of in see the we Arizona of both the regarding for I and Taiwan and new some in the those programs, that on the expect and other other the more in to this definitely manufacturing, we development chip see China. the we'll started also and next deliveries well. as that Korea, Japan, U.S. programs Act already joint CHIPS in So those automotive Europe, in in East that Germany invest lines

said war, company. – with an Nova trade Regarding before, I issue political is Israeli as the the the

shipped to has are only we tools The that therefore, by ship the So from – U.S. effect regularly continue been XPS to have is we the China. that

to working products. are we to SMIC there, the Shanghai, we about for limited for large Over case, the licenses XPS. to And it's in if want services. talk got is new the volume license We get any export which, impact, business not of for the in just

Dror David

the I impact Yes, the that limitations financial of is of Eitan because marginal. mentioned would generally these say really reasons

in first to relative a see to of just In is and any the in it's add all in or these globe operating expand announcement. the impact historically. because we did we had quarter, date way significant territory, would adding company Korea, territories. one the for the the presence four XX% across I time the I that And evidently terms continue new in of important It's the recent – And look terms Taiwan, territories managing think say, results needs at its more very which the would one and in that second of, accounting we and not it to that, I situations. China Taiwan

Atif Malik

Thank you.

Operator

ahead. Needham. next Janoskie is of from The Please Trevor Instructions] [Operator go question

Trevor Janoskie

I'm based Thanks. to is conversations you customers, preliminary next your wondering well? Quinn on new given as do for expect Trevor have my XXXX product taking year outgrow on any And your Bolton. Yes. with WFE you on This question. do thoughts ramps, for WFE? Thanks

Eitan Oppenhaim

billion. in what look cautious not year. So to we're and looking beyond quarter those bit a believe $X billion next in as are our expect years years, we environment want well. the a bit outperformance talking get for year But are we demand all definitely Trevor, and we until the $X – we guiding to predicting we to outperform be planning and for will based on the few last with – definitely our on next about plan, now exactly thanks And it's this happen on plan our the growth revenue we in when Obviously, we question. products strategic when customers and

are So, on next definitely, year. looking growth we

Trevor Janoskie

METRION tools how follow-up, expect you per METRION quantify my revenue much as fab? many do you can And year? contribute may how And next advanced

Eitan Oppenhaim

and it in tools. become METRION, two it only go the or we because per phase that, very if to the the two that higher, become one in-line. or metrology that it fab. the moves on complex those after be not So look measurement starts After the per and are are requirements with all when Always laboratory. technologies, it After one going

together one when the those have, And tools METRION target and after So we're are in-line penetration I of we to bringing right latest rates measured customers per want successful will fab, The to number talking to to on step grow we again in that, every we to talking planned currently that the now emphasize on that tool. and be those confidence in-line. the tools. it okay. that the move – on customers our fab are is in is customer to we'll two or the on the or with attach next be get

where fab, out of it high to to one every new fabs, two So tool. or in the second moved in value will it's see METRION them the high was price, start it step the a

yearly couple on So we expect them basis. to of see a

Trevor Janoskie

Very Thank you. helpful.

Operator

This conference CEO, remarks. to concludes the to the any over session. I like back for would and closing President turn question-and-answer Oppenhaim, Eitan

Eitan Oppenhaim

We press us on very seeing today. soon. at September joining timing Thank release have much Investor you forward for exact Day look on a all the be you our and nice all published to you A Virtual will day. Thank XX.

Operator

today's This concludes call. conference

a and participating You disconnect pleasant Thank have your for lines. day. may you

Nova (NVMI) 7 Aug 222022 Q2 Earnings call transcript