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Gabi will begin the call with a business update followed by Dror with an overview of the financials. We will then follow with a question- and-answer session. I’ll now hand the call over to Mr. Gabi Seligsohn, Nova’s President and CEO. Gabi, go ahead please.Gabi Seligsohn – President and Chief Executive Officer Thank you, Kenny, and hello, everyone and welcome to our third quarter of 2011 earnings conference call. During the third quarter, we continued to demonstrate solid financial performance with significant net income and gross margins, both within our long-term financial model. We also continued to accumulate positive cash flow of close to $6 million, bringing our overall cash position to $84 million at the end of the quarter. Our penetration efforts continued to bear fruit during the quarter, as we announced having won yet another tool selection for the 2X nanometer technology node in a leading foundry. Since the beginning of the year, we’ve seen a significant shift by our leading edge customers in the direction of the 2X nanometer technology node. Three of our foundry customers and two memory customers have taken both stand-alone and integrated metrology equipment from us to support their transition to the 2X node. Looking at the first three quarters of the year, more than 50% of our revenues have come from this technology node and we expect that number to continue and climb as we move into 2012, given capacity insufficiencies at the highest levels, both in foundry and memory segments. During the quarter, we continued to ship more of our latest stand-alone metrology product, the Nova T600 and it is now installed at four different customer sites, solving the industry’s most complex applications. As planned, we were excited to meet our target and ship our first stand-alone metrology tool for the 3-D interconnect process to one of our leading foundry customers and are preparing to ship to a second customer in the near future. We are convinced that this new tool and technology that we have developed internally provides us with a competitive advantage and lays foundation for significant growth in the future, as more players in the industry become active in implementing and preparing for the move to 3-D packaging.
Our service group continued to deliver robust performance during the quarter with gross margins of 37% despite a decline in revenues of a few percentage points. System upgrades continued to gain traction as many of our customers are looking for means to extend the lifetime of their fleet of tools, while they invest in new tools where they must.Now let me turn to overall market trends as we see them. As mentioned in today’s press release, macroeconomic concerns are weighing on our customer spending patterns. As a result and like many in our industry, we continue to evidence a reduction in bookings during the third quarter. Capacity utilization in foundries has fallen to around 70% and inventories have remained higher than previously anticipated. DRAM continues to suffer from margin degradation and overall DRAM demand is low due to slower growth in PC sales this year. NAND Flash demand remains healthy, but at the same time, several fab expansion projects have been delayed. The transition to the below 3x nanometer technology node offers our customers an opportunity to increase average selling prices and improve on their cost structure as well as improve their technology position with their end customers. This is especially the case in the foundry segment where the pressure is mounting to extract market share away from the market leader. At the same time, it is very difficult for many of the players to meet the yield requirements, given the relatively short development cycles they have gone through. In this state of affairs, the relative spend on process control equipment as a function of overall wafer fab equipment spending must go up. The move to such design rules implies significant changes to process methodologies and materials being used in the process and stabilizing the process with such significant changes in a short amount of time becomes very challenging. It is therefore not surprising that we expect over 70% of our revenues this year to come from that 3x nanometer technology node and below and that much of that spend is directed to the edging and CMP stuffs where many of the process challenges have come from. Read the rest of this transcript for free on seekingalpha.com