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Author has a degree in Engineering and is an avid investor in the market. Experience in industrial materials and structures. In college studied atomic & nuclear physics as well as material engineering. Eastern European
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  • NVMI had .27 eps last qtr trading at only $9.83 0 comments
    Feb 7, 2011 10:21 AM | about stocks: NVMI, NANO, INTC, AMD, TSM, MU, TXN, ERIC, TTMI, KLIC, SNDK, APKT
    Is $NVMI ready to do a $NANO type run?
    Last qtr (NASDAQ:NVMI) reported .27 eps with 25% Revenue growth Qtr over Qtr and 112% revenue growth YOY comparable qtr.

    Forward looking Outlook from last Qtr's Earnings 11/2/10:

    For the fourth quarter of 2010 we expect revenues of 24.5 to 26 million with net profitability of 26% to 29%. In terms of the company’s existing 2010 annual guidance of revenues of 78 to 85 million and net profitability of 21% to 24%, we expect to reach or slightly exceed the top end of this guidance. Having doubled our standalone customer base during the course of the year we believe we have laid solid ground for further growth into the future. We believe the stage is set for a good start for next year given the solid bookings received during the third quarter and in light of the fact that most of the penetrations with standalone will be recognized early next year.

    We believe the adoption rate of optical metrology will continue to grow at a pace that will outgrow the overall equipment market. With several new fabs announced for next year in both the memory and foundry segments we already know the significant role optical metrology plays in these plans, which in turn provides us with a significant growth opportunity. And with that operator, let me now turn it over to Dror for a closer view on the numbers. Dror?

    Dror David

    Thank you, Gabi and welcome everybody to our quarterly conference call. The last few months have been very exciting for us, shifting gears in each important element of our business, which has led us to present record financial performance in all key metrics. Total revenues in the quarter were 24.2 million, up 25% quarter over quarter and up 112% over the comparable quarter of last year.

    Product revenues in the quarter increased by 28% over the second quarter of 2010. Shipment distribution between customer segments was similar to the previous quarter. 75% for the memory segment and 25% for the foundry segment. In parallel the service revenues increased 99% to 3.9 million. During previous discussions on our P&L models we mentioned that we are targeting (inaudible) gross margin of 55% based on product gross margin of 60% and service growth margin of 35%. We are pleased to report that we have hit this target in the current quarter.

    During the quarter (inaudible) gross margins increased by 203 basis points quarter over quarter reaching 56%. Product gross margin increased by 104 basis points to 60% mainly as a result of higher revenues utilizing existing infrastructure. Service growth margin increased from 31% to 34% as a result of the increasing revenues both in service contracts and time and materials. As Gabi mentioned, we have well executed on our penetration plans during recent quarters. As a result our sales and marketing expenses have significantly increased during the third quarter and were the main reasons for the increase in operating expenses to 6.4 million. We believe this investment is imperative to support further customer penetrations with each of our product lines.

    Given the extent of business opportunities we see in front of us and our plans to generate additional growth engines for the company as explained by Gabi, we will further increase our operating expenses during the coming quarter. This increase is already banked into our profitability guidance for the fourth quarter of 2010. Most of the planned increase is expected to be in research and development towards its new and enhanced product development projects.

    During the quarter we reported net income of 7.3 million with net margins at record level of 30%, reflecting our high operational leverage that continues increasing the value we offer to our customers and the rapid increase in business volume.

    EPS in the quarter was $0.27 per diluted share on a share count of 26.5 million shares. Operating cash flow came in at 7.9 million in the third quarter. It is worth noting that the company generated over 20 million in operating cash flow in the last four quarters, reflecting significant operational leverage and effective working capital management.


    Stocks: NVMI, NANO, INTC, AMD, TSM, MU, TXN, ERIC, TTMI, KLIC, SNDK, APKT
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