Nova Measuring Instruments Ltd. (NVMI) Q2 2012 Earnings Call July 31, 2012 9:00 am ET Executives Kenny Green - CCG Investor Relations Gabi Seligsohn - President & CEO Dror David - Chief Financial Officer Analysts Edwin Mok - Needham & Company Patrick Ho - Stifel Nicolaus Keith Maher - Singular Research Greg Weaver - Invicta Capital Presentation Operator
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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 the question-and-answer session.I will now hand the call over to Mr. Gabi Seligsohn, Nova’s President and CEO. Gabi, please go ahead. Gabi Seligsohn Thank you, Kenny, and hello everyone and welcome to our second quarter of 2012 earnings conference call. The second quarter of 2012 marked the continuation of the positive trend that started December of last year. Strong bookings and aggressive delivery schedules led us to surpassing the top end of our guidance. Continued favorable product mix also led to EPS that modestly exceed our expectation while we continue to ratchet up our operating expenses to prepare for future opportunities. The strong position we have built at foundries over the last several years makes our equipment an integral part of the current ramp of 28 nanometers at three of our leading customers. Having started only late last year our customers are still not able to meet the strong demand from their customers. Most notably our largest customer, TSMC recently reaffirmed commitment to more than double their current 28 nanometer capacity by the middle of next year and communicated their plan to spend most of their CapEx next year on the 20 nanometer technology node, as in the case of 28 nanometer technology node. As in the case of 28 nanometers for which we started preparing three years ago with our customers we are continuing to supply initial units for 20 nanometers and 14 nanometer process development which in turn will allow us to play an integral role in those ramp ups when the time comes. During the quarter, we reported additional technology wins on the memory front which position us well for the below 10 nanometer technology node. We were also very excited to announce the selection of our flagship T600 standalone metrology tool by a leading flash manufacturer for the development of future generation. The early stage at which our tool is being introduced positions us well to provide optical CD solution for multiple steps in their process standing lithography, Etch, CVD and CMP, all of which rely heavily on the unique ability to measure a three-dimensional gate structures.
At SEMICON in middle of July we announced our groundbreaking V2600 standalone metrology tool which is uniquely positioned as the only tool able to provide full profile information of a single via for leading edge three-dimensional packaging. It was exceptionally gratifying to present the capabilities of this product in a co-authored presentation with IBM which focused on the criticality of these measurements for transitioning to high volume manufacturing of three-dimensional interconnects.As stated on many occasions, and as reflected by our results, I believe we have done a great job over the last two years in building our position in foundry segment. Looking at our future challenges and opportunities, it is clear to us that we must continue to invest in high growth potential areas for short, mid and long term growth. We will do so by widening our product offering and expanding our served addressable markets. From the product standpoint, we will continue to rollout new products that have a high software content. Short term aspects tend to be more related to ensuring that we have sufficient field present to support our customer needs on the ground as their deployment of our equipment expands to more areas of the fab. This includes both service as well as application people, the latter of which have become key to the development of metrology solutions for high end applications such as three-dimensional gate structures and other complex patterning schemes. For the mid-term, we see both the increased need for on tool process control solutions in Etch as well as the move to three-dimensional interconnect to start generating initial revenues during the second half of this year and the early part of next year. In the area of on-tool process control solutions for Etch, we will be deepening the work we are doing with our 2H OEMs Lam Research and Applied Materials in order to further mature existing integration schemes and add more features and functionality. This will entail shipping of our evaluation units to customers interested in accessing the usefulness of these solutions. We believe both foundries and memory customers will meet such capabilities for the more challenging processing sets at advanced technology nodes. Read the rest of this transcript for free on seekingalpha.com