Nova (NVMI) 15 Feb 242023 Q4 Earnings call transcript

Good day, and welcome to the Nova Limited Fourth Quarter 2023 Results Conference Call. [Operator Instructions] Please note the event is being recorded.

And now I would like to turn the conference over to Miri Segal. Please go ahead.

Thank you, operator, and good day to everybody. welcome Year you Call. XXXX to Quarter Nova's like Full and Financial would all to of Fourth I Results Conference

us CFO. today CEO; line on Waisman, With and President are and Gaby David, Dror the

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

of the the a copy website. of please Investor have Relations you in section not received If company's view the, it

Gaby financials. will with call a business with an update, Dror begin the followed overview by of the

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

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

by and for and you all quarter Miri, I full joining year you, performance will thank our call summarizing highlights. fourth today. Thank today us start the

commentary, my detail. Following and quarterly will the results Dror annual in financial review

exceeding a fiscal than for with and profit, robust delivered our all-time initially of concluding Nova non-GAAP an guidance quarter, higher top note revenue on reaching a high, and the GAAP expected. end EPS year the

technologies. opportunities agile customers, steadfast, our remains and our position diversified to stance Nova strong as in is in with gate-all-around advanced on capitalize model. to seize manufacturing. bandwidth market memory strategic We strength persist and to new of performance showcasing our hybrid our and solidify the markets long-term Nova's its business plans logic across well adoption uniquely positioned accelerate bonding and high to as the through transition

steer forward, outperformance XXXX. growth to of key drivers a and Looking growth that we trends encouraging us expect to we witnessed our across in path

addressing front-end adoption optical of multiple customers. The and chemical metrology base. our proliferation continued and metrology solutions the the the metrology as plays results year our expanding in manufacturing. in control indicative expansion key by materials of IC driven fiscal of in was customer quarter markets a significant myriad this encouraging fourth opportunities evidenced solutions This both aptitude across by back-end performance proficiency and are among the of DRAM and the needs role process of Our quarter leveraging of

standalone and hybrid bonding Nova's secured Raman adoption optical wins and a solutions. Our exit with ancosys growing metrology metrology several of ancolyzer chemical Prism and platforms in-line ELIPSON and customers. XRF we with XXXX VeraFlex, Furthermore, memory, XPS logic

consistent our revenue another service Finally, business reaching annual demonstrated growth, record.

I memory also to we computing the that identify highlight minute take inflection power and solutions surge side. a of The network processing drives want demand industry propellers the advanced for need the Nova's and the technology the and from energy-efficient for drivers to AI-related and some nodes demand growth. as in points growth of accelerates client

Our wafers, advanced customers are a number a well larger and much tolerance enable These number XD and evolutions highly layers as spearheading in packaging logic and memory of integrated a translate process of for that to the transition high-bandwidth advanced growing solutions. more that architectures leap dies in turn circuits require at as into number smaller error. the of complex higher steps the

capitalize XXXX. that opportunities expect in ability a for at quarter the we over need architectures our aimed to design growing materials, reflect XXXX, to the to across challenges with of bonding measuring new to achievements very which to highly built generating They powerful need in controls. Nova's first coupled They on manufacturing for the gate-all-around opportunities with that solve our arise growth. a devices, on and growth of they translates more in and all hybrid guidance the of XD must transistors, a efficient other past process methods ultra-thin wafer and and films, indie, composition memory from power structures backside high delivery, edge. need control high-quality the XD entire now ratios metrology structures. must center for complex quarter, more from Manufacturers on underlayer faster, the strategy cash We aspect diversified of and XXXX variety and wafer the monitor

record lines. XXXX, a new to customers division we the growing promise, in revenues large annual secured in Our a in production global Notably, packaging received on fueled packaging Chemical QX, demand order and by delivered leading several memory Metrology a from for the metrology manufacturer. increasing

applications optical metrology high-bandwidth expanded and memory hybrid Our bonding, into metrology a portfolio. related optical dedicated through

As domain a XX% advanced revenues from packaging approximately result, we the increased our by year-over-year.

devices. addresses Via critical Through-Silicon manufacturing AI-related applications successful such of Our essential the for portfolio

solutions. dedicated collaborating We for have to develop several with been years our customers these

We having to purchased are industry's with the market proud the or either top X in with Nova. first to customers engaged be evaluations

here, global expect has our Nova foundry gate-all-around leading metrology been adoption portfolio, And resulting materials and see of advanced platform. engine mentioned nodes. advanced our earlier advent significantly coming VeraFlex we to and advanced revenues need customer into XXXX. I play. technology in wider already for our for by traction leading process example, METRION manufacturers. an The and a grow growth evaluation ELIPSON the drives memory additional the our packaging unique of from For its Prism with increased selected transition the we in Therefore, to

tool memory already been for orders for repeat placed production who a by advanced tool. the manufacturer, DRAM of Nova a has process has as ELIPSON chosen record leading global

We also additional with this evaluations later year. customers expect other

received footprint availability manufacturers. we platform's leading in of our X Nova and of purchase is end been also strides. expand QX, X memory expect customers of adopted from by recently METRION already second this making the the has We evaluation to and orders we by world's other the Platform year. the announced generation

and productivity customers. approximately application an VeraFlex and from over X improved metrology it manufacturing. industry new offers higher is brings XXX% QX. our X proliferating The measurable VeraFlex and platform true in that year-over-year space that logic landing performance Nova versions, in stable, high-volume and taking to previous newest memory quickly customers proved indeed VeraFlex grew is value an The generation, expanded

importance engines. and Service one the our contracts the X,XXX delivered its as installed revenue increased our surpassed record Finally, XX%, cementing division our growth leveraging expansion of and which by from share performance of of base, tools

segments Beyond growth our and and will our new of we also beyond. focus presence of technologies, new that many XXXX in the building to this dedicated in year on penetration expanding resources support market our infrastructure our

in Israel. a in new an Korea We efficiency and we better of our systems to support opened our presence center In we information opened in invest processes. provide clean closer We plan offices to in our capacity XXXX, to in the innovation increasing the customers, expanded and building room U.S. and and agility and

partners. in to development also our with investments close in and We plan and customers our accelerate collaboration research

and In additional summary exposure to critical applications. of believe customers new help well-established our adjacent will I increase that remarks, opportunities in fundamentals prepared my processes, and markets us additional

our with long-term trajectory In territories. by to market created investment across partnering continuous the we all roadmap and opportunities growth Our by and our strategic the market. customers priorities remain position, our intact with XXXX, expect outperform enhanced on in our resume capitalize

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

annual This previous GAAP quarterly and XX% our quarter record to in quarter to XXXX which XXXX a Good non-GAAP model fourth are for distribution similar the the Memory, metrology, company lower quarter-over-quarter. Product call. Total average. million, company and thank conference gross of Gaby. the from reduced the fourth quarter. you everyone, day, the XX% related company came from and and to was basis. of growing result the end gross guidance XX% XX% than Blended and from XX% X% is fourth is Foundry and in quarter quarter the of and revenues on basis and XX% at on non-GAAP the chemical in approximately fourth at margins revenue for joining Thanks, revenues were margin $XXX exceeding Logic a target lower approximately

expect in gross to the already XXXX. We margins quarter of rebound first

XX% increased expenses GAAP non-GAAP Operating basis on million at million the target basis fourth higher non-GAAP and in operating XX%. to the model GAAP basis in quarter were fourth of reaching $XX and XX% basis. on a on non-GAAP company's end the a expected, As the on quarter, $XX XX% a a margins of

to income to higher the due quarter million. $X continued yields on Financial totaling reserves cash in increase

the As exceeded effective year-end X%, model rate guidance, in customer quarter adjustments were high. share record the expected, management. GAAP portfolio, all-time fourth to an company quarter reflects per per This XX% share and in business company's below of record product financial XX% agile earnings $X.XX of fourth company, the due the per status model to the reduced and the record outcome differentiated to limitation. Earnings a high tax and tax reaching and and per proposition $X.XX. operational a prudent were effective unique earnings effective share with embedding value non-GAAP the diluted combining and approximately share

Operating reflecting of the the high increase in XXXX investment XX% Memory, basis cost GAAP a ability year-over-year, to in margins industry diluted and is end basis ownership. Operating end the on model in basis the Gross the came for decreased the X% Moving expansions the on at industry a implemented beginning for and Annual was similar to XX% on early this the containment of target XX% company's approximately and annual cost in slightly through non-GAAP lower the target a year expenses cycle declining an company testimony combination believe GAAP decreased at margins on and on revenue XX% We reflecting margins financial of $X.XX distribution gross Foundry to at approximately a XXXX. annual leadership and and on XXXX. basis. XX% and the by share a technology identified on Logic at of the initiatives XX%. XXXX. year-over-year, company's to GAAP basis from at a a in approximately $X.XX management high the year XX% XXXX a generally XX% as the XXXX. was a company model calendar basis XX% was basis product non-GAAP of result of non-GAAP at superior able of Revenues in deliver industry to came for year customer as from to value environment. Earnings per to results non-GAAP high X% came in capacity XX%. Year-over-year, by on

flow and company year. of During inventory turnovers presented working XXXX, cash capital and outstanding parameters $XXX a days of sales days XX generated to with in approximately related healthy free approximately management the million Xx

including and open company which investments, of In addition, in manufacturing for the new commenced continues by during chemical capital investments XXXX. the in facility XXXX. elevated end mid-XXXX which anticipate expected XXXX, Room remain in the Israel, is capital the Clean We to to Germany, new throughout and division infrastructure

expenses of earnings for XXXX. of share to non-GAAP per diluted our the following: on to to per increase Operating to range on GAAP end to basis million higher approximately $X XX%. With the Financial to on the like million GAAP of anticipate approximately non-GAAP we a between XX% XXXX call of be and guidance would approximately the $XXX tax be of details to million, a back the $XX the first the increase diluted be at I Gross from turn $X.XX. At and a to a to we basis. I million that, $XX range Gaby. income Currently, estimate, from rate $X.XX, approximately model. to basis and and margins $X.XX basis Gaby? non-GAAP company's to the to to quarter earnings fourth on quarter will to XX% midpoint quarter first the expect $XXX share revenues that share Finally, GAAP non-GAAP the target similar

Dror. you, Thank

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

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

drivers then sustain how you does mix sense to we us that stands -- rebound more shape help that was Just sharp about first, I give should a margin. The the to the you moves of us a thing the give to us gross And help in But the it Good could about is see of this of importantly, margins do can us start you gross think think one XX%. hoping informs growth strong this? mean kind it year. year? your how down? out

Sure.

our increase are quarter in on So obviously, first we revenues the going based to guidance.

impact that necessarily revenues QX. we in arena of has be rebound lower margins, in reduce, percentage the definitely, bit it our in some So packaging a but had it it revenues will the with this of a different. fact QX, mean business will And given working -- expect negative gross do little portion the but doesn't is

the of non-GAAP definitely model target are of whole of the higher range within As portion year, expecting for to year. XX%, we XX%, be hopefully, this the the at

just WFE Okay. And environment. then overall, the

you hoping, So mid-single-digit see was you low heard especially half. leading logic. your sense peers from year environment, how of WFE. far, And then us edge edge growth your a I kind could what we is versus versus for half if trailing give spending to second first Gaby, have the of

shift towards the mentioned first of a on I think you half. leading last the saw edge call, in somewhat you

how right, on already if peers views your this, growth annualize year-on-year the growth. somewhat are to because just overall, industry be you're were I the you just spending starting suggesting with up year, So -- be. shape year to And environment above your already this the above can environment industry where would

there color very helpful. any be So would

it's to second it's towards the say going be we to WFE a the we especially say, growth bottom are WFE number. we've are to lower recovery seeing plan, of mid-single-digit difficult Logic, XXXX, regards going higher So number confident say, Logic a advanced around But so very a side, that and these towards especially second on Naturally, we're are and or the advanced a shift very it's early the but our we nodes, would planning changes to I to investments -- to the that the bit whether of outperform respect. With But with in line outperform on going then think probably it's a ability in to and Foundry is towards and we about higher seen have the part probably low, that part figures. and that of XXXX. start I the to XXXX. trailing nodes, that towards percentage

All I And last one may. right. one, if

spending on views China. customers any Just from in your

So some last How the later year, then an their saw overall in you how down? year? see views demand very for customers? you perspective terms and give China assumptions spending shaping trailing spending a DRAM. up, industry of mix if that what that, WFE of edge year, for in on do your demand China within strong see you us this from your from right could Or are flat, we And

Sure.

XXXX. we So expect continue into to demand

expect very level going the to allow and a the increased change investments West, a diversified we're of China, from later And we stable definitely anytime a have to in us see we at outlook. it's to demand revenue stream, While this to that but don't probably part, kick business starting will more soon. see mix growing in

mix the change -- said advance, second before, the I half. ratio between relates As -- China will as also to which probably and towards mentioned I between the trailing or

from from Shi Needham [Operator question next Instructions] comes Company. Our Charles &

not be that was performance level in color less I some great, in couple color QX. did think little more the a of quarters or Gaby, So reached to any because Nova back through of how this of in million you there. level. the year revenue the maybe year, actually there at QX. progression can Should beyond uptick give you bit around terms $XXX that quarterly last be progression the have going I this look assume we about when of expecting would slight around But we're a because

and investment, this So the in next hybrid obviously, but and moment nodes is which a see bonding half, be as it's tilted advanced give going for memory. insight investments second towards quarters, to at of we probably difficult towards some do the high-bandwidth the the potential to growth result increased

engines kind half growth. towards that for definitely believe a potential of higher the giving some grounds investment second So there to these is

it That's prepared very and noticed there's optic helpful. of is adoption, new like on in release I product for the metrology memory. seems in solutions press high-bandwidth the terms which something your remarks, the

about bit little for also you application, peer of and give the bit it for more what's Your adoption tools -- further happened why of about deploying they new implications? think some kind adoption mentioned little a any the a OCD high-end high-bandwidth Can back. and and Onto, details memory about outlook this I a financial while talk

metrology that to of high-bandwidth hybrid say, for our we very suite, mentioned memory. PRISM well both of and So and terms bonding as those to are higher in portfolio, the product and as the before, those see And I want integrated the a couple order to customized as last make a segments. Obviously, that beginning, a both of adoption have specific a and in we've first including that in continue some I'm we'll that proud to the adopted that optical ongoing adoption were growth answer we customers continuum towards portfolio unique in area a address this is definitely that been we for metrology already as in our evaluations adopted see the years we materializing is And needs higher working with us. been the has I previous engines sure that the of other alluded XXXX. of to customers market the the this than in one

Instructions] [Operator no questions are There at this further moment.

you. CEO Thank So conference Waisman, to turn Nova remarks. the closing of Gaby I will President some for and over

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

has now today's attending for presentation. conference the you And much very Thank concluded.

may disconnect. You your the of now day. rest Enjoy