Nova (NVMI) 9 Nov 232023 Q3 Earnings call transcript

Good day, and welcome to the Nova Limited Third Quarter 2023 Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Ms. Miri Segal, CEO of MS-IR.

Please go ahead.

to Quarter you Conference Financial of Call. all Nova's XXXX Third Results Welcome the Mr. today us line With on are Gaby Waisman, President and CEO; and Mr. Dror David, CFO.

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

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

the We will then question-and-answer open session. the call for

I'll now go Nova's ahead. over Mr. please President Gaby turn Waisman, the call Gaby, and CEO. to

today and Nova. our as Thank quarter will conference to financial by you, the they our relate results call I speaking performance quarterly market and Miri, about everyone, dynamics highlights to third call. the welcome, start

the Dror the fourth for commentary, the will my Following results review present and in guidance detail quarter. financial

profitability exceeded new quarter and Nova's and diverse as quarter next These our of our performance the maintain opportunities. goal well, the by demonstrate is driven leverage XXXX expanding guidance, our our making this again to the strength second the the business in results first. to than to market portfolio of half revenue similar levels stronger exposure company's once ability and applications

to business year Nova's resilient past well as model we revenue and our margins over in the the this quarter as in and validate flexible changes in XXXX, and the took thus actions address far, market.

adding of our our offerings we able by several in the deliver and leveraging optical increasing growth materials outperformance were our metrology and chemical and towards technologies projections to customers in solutions ahead the by its by growth by XXXX, than trajectory. results look expect adoption our metrology Nova of new growth business. we resume new service to the As better We earlier

billion in areas, in long-term plan revenues. forward $X of accordance we execute to X strategic every to with our these reach In continue and push

I this Israel of to the business supporting foremost Nova Before of situation obligations. some in its to turn and and for and highlights and times like Nova. I'd committed the customers first our quarter, implications review meeting delivery to business address is

place, global business We have continuity in well-prepared basis. thought on a and out plan designed a

continue operations and on disruption our no global to run Our has to been intended, and there delivery as performance schedule. impact our no

our resolved to continue of are employees. support community and plan. We investment from to the we trust customers, Thanks we and commitment and suppliers to and conduct according the appreciate our received the dedication and business

the turn that third the quarter. we of let's the and to already, observe growth. XXXX noted business the we to return this Now a We main the trajectory drivers can of of highlights expect company growth seeds to in

over our most compared was previous to logic, skewed of XX% QX, restored memory sales revenue. amounted The balance foundry largely to and past is grew In the which quarter more our by memory year. encouraging between sign product the the than XX% and

memory, main to trend as NAND shows of stabilization. driver, QX continue DRAM signs while this acting high-bandwidth expect including investments, We the with into

X advanced some Moreover, provides measurement have memory the in much we base. Nova the our platform, Nova the for new the XXXX, the and quarter advanced version are we high cost of record this most DRAM VeraFlex version XPS a offerings and customer. IV, expanded which manufacture half we tools PRISM of hit value As for for former, technology. a the the higher per further significantly sales our most opportunity platform softness see implementation its want customer VeraFlex reduces evidence I of the the note platform. Despite VeraFlex in of to of and demand of

to in capacity highly its this value to advanced demand, solve unique specific a addition ongoing applications. In offers VeraFlex

rapidly by DRAM evolving driven been Nova's adoption. high have applications and rapid production, these experience and in see NAND past, generating domain them the into demand this manufacturing both is now in While logic and we

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the please go may the line for reconnected. management Gaby, have We you ahead.

you, Thank operator.

innovative Another growth unique driver technologies is and our and portfolio.

ability Let's take, the system and by platform. example, electric indicators several metrology of testing. multiple for previously nodes performance our of have ELIPSON via customers to for materials advanced been sites, device record received repeat tool systems we to selected the orders We at customer due as only proliferation available the already have provide its has

manufacturing. This high-volume as production tool the orders selection as of record potential for transitions additional to reflects

are diverted the Furthermore, on the from case initial in-line advanced were memory to R&D all-around available. system, material not metrology see applications, techniques of gate limited devices the now as in characteristics were test stemmed but demand past in that became performed structures before metrology VeraFlex, ELIPSON new to more applications and we We wafers. the blanket process in device, measuring unique applications other and displacing seeing steps solving that simply

if METRION, expect XXXX. we too, have the we memory the leading end logic growing add of customer global and And base, manufacturers at we a world's and the to of look some by here to list

to and avoiding wafer process increased excursion, global came [ ] machine and of wafer sampling new yield high-resolution, process capability MapPro growth faster manufacturer, early [ Nova driven stimulus the improved MapPro leading our in for a measurements form recent full FIT control. learning learning software Another detection a to a called by solution ]. of of sale leading physical provides a curve

was to Nova challenges. a address leading in node bonding hybrid most to Nova. engine set tool and packaging, Prism multiple part is advanced advanced area see additional The applications X third opportunities process for our as of propel its metrology by foundry XXXX and selected we where advanced business recently packaging an The achievements

systems more effective unique We variations, ability capability measurements have a presence to the initial in of production. orders Prism's make critical for multiple expected to with robust due underlay to

effective current for vendor. as advanced PRISM applications, alternative as packaging Following a evaluating via, through-silicon X more leading its highly better logic successful also manufacturer to and demo another such is a

In memory are we for addition, vital orders on reach packaging metrology working Nova packaging processes of our to targeted direct as closely integrated they advanced with metal recently bring Elsewhere, solution and plating for and they and customers. points inflection capabilities replenishment received customers from problems in face bear challenges. to for advanced CMP we encounter leading unprecedented

Finally, I want business, revenues secured record to high which this highlight our service quarter.

approximately growth of While utilization short-term portion may current year-over-year. revenue impact the XX% levels contract effect by total this we increasing rates, by our service offset

I an softness increasingly quarter strong a environment. Nova quarter that, complex our backdrop the would recap to With market and results. like third of had against

the ahead growth to We expect As both of steer the we quarter coming trust into continue strong look execution. that our our semiconductor company we outperformance. into a the the year, and of will and us trajectory industry next fundamentals and

I Before thank dedication. to it and to and I'd over our global team Israeli Dror, resilience commitment, turn for support, like their

fortunate success. team to committed our that have to are incredible is an We

Now for call more some let me the the financials, details hand on over to Dror.

Logic Product the deliveries Thanks, guidance for joining Gaby. specific quarter customer XXXX revenues you Total was of fourth XX% and approximately a quarter from distribution Foundry day, XXXX of for memory. call. originally for everyone, scheduled of from Good exceeding of third revenue result in and our XX% and the as several were thank the conference the quarter approximately company third million third 'XX. pull-ins $XXX quarter

The XX% diversification, more or territories from wider included X reflects each X main U.S. the revenue. territory contributed customers continued territories by and increasing the main that revenues continued Europe. product investments and Western driven to Product distribution territorial of

non-GAAP on was XX%. GAAP Blended quarter a XX% gross basis model and target to non-GAAP a margin on in basis of XX% the the company third within XX%

implemented measures in quarter by at and with and in relative basis management million GAAP $XX by containment the business environment, XX% the previous to a align expenses operating million decreased on came the basis. on $XX current cost Following non-GAAP the to expenses quarter third a approximately

Earnings quarter basis a third was diluted The share the quarter approximately the basis basis XX%. and Operating guidance in on remained the target were on reserves basis. high the in and GAAP margins at tax model on rate in effective on following exceeded million. to end per the came income $X.XX XX% GAAP were cash the in $X a in per XX% XX%. and non-GAAP a share elevated third and $X.XX company higher third XX% Financial non-GAAP non-GAAP quarter quarter yields at company's on of of a

free In in constituting terms total revenues. $XX of cash than flow of XX% generated cash for the million flow, quarter, the fourth company more

for Finally, guidance I would of like to share the the details 'XX. fourth of our quarter

diluted non-GAAP expect we between range revenues we share to $XXX GAAP million be per anticipate to basis basis non-GAAP non-GAAP $X.XX $X.XX $XX on Operating midpoint the increase $XX share quarter basis. to be GAAP to margins of to basis per approximately of earnings and XX% the earnings from a and the to a range and At fourth $X.XX. the XX% target from following: non-GAAP to to on Currently, gross $X.XX on on diluted million. a million midpoint estimates, approximately the model. $XXX a GAAP to expenses approximately million company at

quarter that tax tax the to and year, income increase the Financial approximately the to year than blended end non-GAAP third in end the expect to limitations. gradually midpoint profitability fourth model fourth the lower we forward, similar an operating of higher the be in quarter with due XXXX. model. guidance, status XX% of target company's expenses of of of Looking to adjustments company be to conclude X% approximately rate quarter the at XX% in we to the the operating in gross the margin Taking XX% margins, and company and into consideration excellent expect approximately metrics of XXXX of both

year. the prudent business the product operational reflects of resilient performance the increasing implemented control initiatives cost this company management value generation agile the and different our earlier model by exceptional expected This new in scenarios, and

and to To development million conclude reserves company's plan. company, provide increased the the my $XXX required $X towards and would billion flexibility remarks, to business I pursue the nonorganic of to organic executing strategic like which activities cash the highlight

Gaby? With call turn the will that, back Gaby. to I

Dror. you, Thank

Our are to Operator? concluded. prepared be your remarks happy take questions. We now would

Arya comes question with first America Vivek The Instructions] [Operator of Securities. Bank from

team the wishes. our well, hope holding is I best up

the for For curious So you the next your doing thinking are of and share mid-teens 'XX baseline very my sales in gains, at first then calendar the about I because just sort growth are It's assumption investor where this WFE sort kind question, what I'm expectations growth. I'm you're year? growth is market well broad drivers for of of look as curious of of in for Nova exiting year. the kind how

could just year? market what is of what think growth of do next for drivers the doing curious for I'm So and be the Nova potential you kind this

next we is year next are that that we mid-single-digit XXXX. some feedback the Our on based grow customers. also assumption the market of in the year from levels market in in planning and process have for the Obviously, research the will

gain of mid-single-digit growth part as kind you share Okay. of helps And what environment? that

So metrology advanced we I mentioned in that for growth our have 'XX packaging. drivers well as both the as material portfolio

new with So going of course, of our in both take-up are via alongside adoption to generations tool and technology XXXX. drive, of

Okay. to next And packaging the And my follow-up, then curious, it where for think do gets I'm how for you now? Nova much quick is exposure year?

high adoption bandwidth the of but in expect business packaging course, initial this and our seen is, and some driving to and we've been of material XXXX. in the grow and that adoption, XX%, seen in we steps I would tools this metrology with memory. packaging chemical has we metrology our the grew So further year And over continue of together dimensional business it now, that of say, traditionally advanced in the have both metrology and

next The comes Shi Charles Needham & with Company. from question

Gaby, the rate like are very full looks -- memory you market. on at with strong want above result look coming revenue QX, to the reported run for last end basis, year. actual the the from in it start I it's probably already memory revenue a I Dror. If year's

maybe of more little the quarter? different. memory to that of key kind QX, a But back? foundry of same down, understand bit here, maybe technology next what's or was you're kind the bit why split provide importantly, bit is curious. can there. may some I there's memory Do strength really seeing the revert you -- because a doing of more has curious kind so just break memory more the So I'm the adoptions some we it little expect logic dynamics mean you into of a little in the well I Can color?

Definitely, Charles.

of adopted in believe regards to applications terms I in ratios around our the -- the that traditionally the it similar memory high-bandwidth of take-up, the in as by portfolio in business. first, only, into and with or memory related, not So memory, the driven were especially of be Logic we've DRAM adoption metrology but a as well. quarter And material QX, of will the memory level in to seen next third course, side

offering are alongside and technology with applications that unique the a new offer PRISM, competition. the of with Nova to underlayer the our driving that solution customers adoption capabilities it's variation superior additional So a is which that the

it. Got

know they're maybe to year. your that a this that particular mean, follow-up. shipping we in So customer, couldn't thought strength? U.S. ship peers X quick previously customer mean, -- Chinese particular the customer, I which Was Was to contributing I they half second some QX of China

answer yes. The is

maybe the I follow-up a So ask want next to Vivek's question just question. to

seeing a recovery the assumption first linear year a said are something But the year. or next into year-on-year next less, more the you I second mean mid-single gradual seeing more market half? extending next you like half 'XX profile want I year? is So half like to X%. for maybe your I and what's digit, correct, more Or in second rate half-over-half you're mean, run

second of memory than first So we be next half, in year the side. going recoveries believe that edge the half and the to by is leading stronger driven

it. Got

So business, maybe mean also probably to year? business similar is I try this like specific QX keep fair QX, this you a your half the to will to it a at is as probably level -- first assume more

beyond are obviously specific the specific for orders we one. Charles, not So guidances giving fourth

with The from next Shrotre question Jefferies. is Vedvati with

on I to So the seeing wanted the memory. in memory first growth you're -- growth X double-click the

sense you the your by transition that technology different really of pushing wasn't us something tools. this growth? material I really that's that So driven driving what's here? that understand that of could a give there Is before it's architecture But adoption wise metrology the is adoption there

and to and like metrology Basically, Vedvati. fact first I'd it's adoption the only. you, material highlight not foremost, but driven that Thank by

with the the memory chemical. both memory. across which board also which specifically, optical course, I some part of on related orders and of And replenishment, received of offering that is metrology we have, we So we that see our metal the this mentioned from customers our high-bandwidth direct also, is growth chemical to driving

In to asking, were we in is VeraFlex related that the those is can you're in X around adoption of see platforms. addition, driving and One XPS. initially which some the what well product -- of cabled as We well. applications interesting as see the of applications And memory we to also, the either ELIPSON perspective performed some enabled and by solution enabler were before in applications now that as see those adoption that or those devices an this are of not well. some

would inflection So the say, us terms specifically, for I I all are adoption the of inflection an in platforms an those of both in definitely those not necessarily point offering, that point mentioned. DRAM say of but

Got it.

on maybe that. pushing so And

gauge? DRAM by you just type to can your characterize versus of trying So HPM was increase metrology big driven chemical an the how it DRAM versus what applications, I'm is

in third HPM So relatively the was quarter low.

expect We quarter. to stronger the fourth become in it

in of the the driven by So optical. by material most part, adoption metrology course, that was of of solutions and

some there splits on or nodes of you Could heating in and question, foundry pockets a sense out give versus you're how there? Okay. us then edge so weakness for areas that seeing my weakness between trailing is the And strength of second comment of logic.

the first the say, sometime, to next is half obviously, of we high lead expect I relatively or the year. So in relatively ratio high nodes take node advanced would still but of trailing

the essentially? have through And talked XXXX is So so flow to by a gate-all-around gate-all-around ramp, the companies benefits in? most driven being about see start that you'd adoption ramps primarily of come and before the

Correct.

the next with from Company. Benchmark comes question The Mark Miller

wanted outlook. a your to more I get little on and understanding. Congratulations just quarter

was Was just bandwidth were -- that from memory high to I'm due what by? that memory? specifically there fourth the being quarter. driven wondering were pull-ins pull-ins said You

Yes. not It's HPM. pull-ins -- only but these were memory, around

impact on it's Okay. announced it impact first -- to or X -- Taiwan that semiconductor backlog Has its at had out staffing. any was due on all Arizona of forecast? plant your that your pushing any

are the we And in working plan. close customers. order very naturally, exact understand our all keep very contact So with delivery of we to closely

including in working so well, sure of quarter as are X it and all to have third and we're closely continue that customers, in fourth the in fully making aligned, proved we expect the quarter. our that we with I So

I President turn like over now Over This session. Nova's question-and-answer conference Gaby and to CEO, concludes to our any back sir. would Waisman, closing remarks. the you, Mr. for to

operator, and you, joining Thank you for thank today. all our call

today's conference presentation. The you. Thank for attending Thank now concluded. you has

now may You disconnect.