Nova Ltd. — Earnings Release 2022

Feb 15, 2023

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 OF THE SECURITIES EXCHANGE ACT OF 1934

For the month of February 2023 Commission File No.: 000-30668

NOVA LTD. (Translation of registrant's name into English)

5 David Fikes Street, Rehovot, Israel

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F ☒ Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____

Attached hereto and incorporated by way of reference herein is a press release issued by the Registrant and entitled: "Nova Reports Fourth Quarter and Full Year 2022 Results".

The GAAP financial statements tables included in the press release attached hereto are hereby incorporated by reference into the Registrant's registration statements on Form S-8, filed with the Securities and Exchange Commission on the following dates: November 5, 2007 (File No. 333-147140); October 25, 2012 (File No. 333-184585), March 6, 2015 (File No. 333-202550); and August 25, 2017 (File No. 333-220158).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: February 15, 2023

NOVA LTD. (Registrant)

By: /s/ Dror David

Dror David Chief Financial Officer

—————————————

Company Contact: Dror David, Chief Financial Officer Tel: +972-73-229-5760 E-mail - investors@novami.com Nova website link - https://www.novami.com/

Investor Relations Contact: Miri Segal MS-IR LLC Tel: +917-607-8654 E-mail - msegal@ms-ir.com

Nova Reports Fourth Quarter and Full Year 2022 Results

Rehovot, Israel, February 15, 2023 - Nova (Nasdaq: NVMI) today announced financial results for the fourth quarter and full year ended December 31, 2022.

Fourth Quarter 2022 Highlights:

• Record quarterly revenue of \$151.2 million, up 24% year over year
• GAAP net income of \$36.1 million, or \$1.14 per diluted share, up 56% year over year
• on a per-share basis
• Non-GAAP net income of \$40.8 million, or \$1.28 per diluted share, up 19% year over year
• on a per-share basis
• Record revenues from Chemical Metrology solutions, driven by multiple penetrations to leading front-end customers
• Continued proliferation of our most advanced product portfolio, led by major penetrations of METRION and ELIPSON to leading logic customers

Full Year 2022 Highlights:

• Record annual revenue of \$570.7 million, up 37% year over year
• Record GAAP net income of \$140.2 million, or \$4.40 per diluted share, up 41% year over year on a per-share basis
• Record Non-GAAP net income of \$161.5 million, or \$5.07 per diluted share, up 32% year over year on a per-share basis

GAAP Results (\$K)

	Q4 2022	Q3 2022	Q4 2021	FY 2022	FY 2021
Revenues	\$151,238	\$143,906	\$121,521	\$570,729	\$416,113
Net Income	\$36,098	\$35,075	\$22,226	\$140,213	\$93,101
Earnings per Diluted Share	\$1.14	\$1.10	\$0.73	\$4.38	\$3.12

Non-GAAP Results (\$K)

	Q4 2022	Q3 2022	Q4 2021	FY 2022	FY 2021
Net Income	\$40,778	\$ 39,698	\$32,752	\$161,509	\$114,669
Earnings per Diluted Share	\$1.28	\$1.24	\$1.08	\$5.07	\$3.85

A reconciliation between GAAP operating results and non-GAAP operating results is provided following the financial statements included in this release. See also "Use of Non-GAAP Adjusted Financial Measures" section.

Management Comments

"The fourth quarter was a strong resolution to another record-breaking year for Nova, characterized by notable annual increase in revenue and profitability. Despite the volatility in the markets, the company was able to perform well during the fourth quarter, highlighting the strength of our diversified and agile business model," said Eitan Oppenhaim, President and CEO. "While we remain vigilant in addressing the current challenges, we continue to implement our long-term strategic plans to solidify our position and seize various opportunities, particularly in this dynamic environment."

2023 First Quarter Financial Outlook

Management provided an outlook for the first quarter, the period ending March 31, 2023. Based on current estimates, management expects:

• \$125 million to \$135 million in revenue
• \$0.77 to \$0.98 in diluted GAAP EPS
• \$0.93 to \$1.14 in diluted non-GAAP EPS

2022 Fourth Quarter Results

Total revenuesfor the fourth quarter of 2022 were \$151.2 million, an increase of 5% compared with the third quarter of 2022 and an increase of 24% compared with the fourth quarter of 2021.

Gross margin in the fourth quarter of 2022 was 55%, compared with 57% in the third quarter of 2022 and compared with 56% in the fourth quarter of 2021.

Operating expenses in the fourth quarter of 2022 were \$46.8 million, compared with \$43.2 million in the third quarter of 2022 and \$38.4 million in the fourth quarter of 2021.

On a GAAP basis, the Company reported net income of \$36.1 million, or \$1.14 per diluted share, in the fourth quarter of 2022. This is compared with net income of \$35.1 million, or \$1.10 per diluted share, in the third quarter of 2022, and net income of \$22.2 million, or \$0.73 per diluted share, in the fourth quarter of 2021.

On a non-GAAP basis, the Company reported net income of \$40.8 million, or \$1.28 per diluted share, in the fourth quarter of 2022. This is compared with net income of \$39.7 million, or \$1.24 per diluted share, in the third quarter of 2022, and net income of \$32.8 million, or \$1.08 per diluted share, in the fourth quarter of 2021.

2022 Full Year Results

Total revenues for 2022 were \$570.7 million, an increase of 37% compared to total revenues of \$416.1 million for 2021.

Gross margin in 2022 was 56%, compared with 57% in 2021.

Operating expenses in 2022 were \$172.5 million, compared with operating expenses of \$125.0 million in 2021.

On a GAAP basis, the Company reported net income of \$140.2 million, or \$4.40 per diluted share, in 2022. This is compared with a net income of \$93.1 million, or \$3.12 per diluted share, in 2021.

On a non-GAAP basis, the Company reported net income of \$161.5 million, or \$5.07 per diluted share, in 2022. This is compared with net income of \$114.7 million, or \$3.85 per diluted share, in 2021.

Conference Call Information

Nova will host a conference call today, February 15, 2023, at 8:30 a.m. Eastern Time, to discuss the financial results and outlook. To attend the conference call, please dial one of the following teleconferencing numbers. Please begin by placing your calls five minutes before the conference call commences. If you are unable to connect using the toll-free numbers, please try the international dial-in number.

U.S. TOLL-FREE Dial-in Number: 1-844-826-3035 ISRAEL TOLL-FREE Dial-in Number: 1-80-921-3284 INTERNATIONAL Dial-in Number: 1-412-317-5195

At: 8:30 a.m. Eastern Time 5:30 a.m. Pacific Time 3:30 p.m. Israel Time

The conference call will also be webcast live from a Link on Nova's website at https://www.novami.com/investors/events/.

A replay of the conference call will be available from February 15, 2023, at 11:30 a.m. Eastern Time to February 22, 2023, at 11:59 p.m. Eastern Time. To access the replay, please dial one of the following numbers:

Replay Dial-in TOLL-FREE: 1-844-512-2921 Replay Dial-in TOLL/INTERNATIONAL: 1-412-317-6671 Replay Pin Number: 10174355

A replay will also be available for 90 days on Nova's website link at https://www.novami.com/investors/events/.

About Nova

Nova is a leading innovator and key provider of material, optical and chemical metrology solutions for advanced process control in semiconductor manufacturing. Nova delivers continuous innovation by providing state-of-the-art high-performance metrology solutions for effective process control throughout the semiconductor fabrication lifecycle. Nova's product portfolio, which combines high-precision hardware and cutting-edge software, provides its customers with deep insight into developing and producing the most advanced semiconductor devices. Nova's unique capability to deliver innovative solutions enables its customers to improve performance, enhance product yields and accelerate time to market. Nova acts as a partner to semiconductor manufacturers from its offices worldwide. Additional information may be found on Nova's website link - https://www.novami.com/.

Nova is traded on the Nasdaq and TASE, Nasdaq ticker symbol NVMI.

Use of Non-GAAP Adjusted Financial Measures

This press release provides financial measures that exclude amortization of acquired intangible assets, acquisition-related expenses, inventory step-up and contingent consideration revaluation, stock-based compensation expenses, revaluation of operating lease liabilities, amortization of debt discount and issuance costs, tax effect of non-GAAP adjustment and taxes attributed to one-time elective tax settlement, as applicable, and are therefore not calculated in accordance with generally accepted accounting principles (GAAP). Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding Nova's performance because they reflect our operational results and enhance management's and investors' ability to evaluate Nova's performance before charges or benefits considered by management to be outside Nova's ongoing operating results. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Management believes that it is in the best interest of its investors to provide financial information that will facilitate comparison of both historical and future results and allow greater transparency to supplemental information used by management in its financial and operational decision

making. A reconciliation of each GAAP to non-GAAP financial measure discussed in this press release is contained in the accompanying financial tables.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of safe harbor provisions of the Private Securities Litigation Reform Act of 1995 relating to future events or our future performance, such as statements regarding, but not limited to, anticipated growth opportunities and projections about our business and its future revenues, expenses and profitability. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied in those forward-looking statements. Factors that may affect our results, performance, circumstances or achievements include, but are not limited to, the following: catastrophic events such as the outbreak of COVID-19; increased information technology security threats and sophisticated computer crime; foreign political and economic risks; changes in U.S. trade policies; inability to protect our intellectual property; open source technology exposure; failure to compete effectively or to respond to the rapid technological changes; consolidation in our industry; difficulty in predicting the length and strength of any downturn or expansion period of the market we target; factors that adversely affect the pricing and demand for our product lines; dependency on a small number of large customers; dependency on a single manufacturing facility per product line; dependency on a limited number of suppliers; difficulty in integrating current or future acquisitions; lengthy sales cycle and customer delays in orders; political, economic, and military instability in Israel; risks related to our convertible notes; currency fluctuations; and quarterly fluctuations in our operating results. We cannot guarantee future results, levels of activity, performance or achievements. The matters discussed in this press release also involve risks and uncertainties summarized under the heading "Risk Factors" in Nova's Annual Report on Form 20-F for the year ended December 31, 2021, filed with the Securities and Exchange Commission on March 1, 2022. These factors are updated from time to time through the filing of reports and registration statements with the Securities and Exchange Commission. Nova Ltd. does not assume any obligation to update the forward-looking information contained in this press release.

(Tables to Follow)

NOVA LTD. CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands) - (Unaudited)

2022 2021 ASSETS Current assets Cash and cash equivalents 111,121 126,698 Short-term interest-bearing bank deposits 95,305 221,897 Marketable securities 167,073 61,568 Trade accounts receivable, net 109,320 68,446 Inventories 116,600 78,665 13,527 9,242 Other current assets 612,946 566,516 Total current assets Non-current assets Marketable securities 153,462 137,415 Interest-bearing bank deposits 483 3,672 Restricted interest-bearing bank deposits and restricted cash 1,600 1,600 Deferred tax assets 20,097 6,161 Severance pay funds 1,194 1,327 Operating lease right-of-use assets 44,885 30,627 Property and equipment, net 55,886 34,460 Intangible assets, net 43,586 2,601 Goodwill 49,009 20,114 957 661 Other long-term assets 371,159 238,638 Total non-current assets 984,105 805,154 Total assets LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Convertible senior notes, net - 183,037 Trade accounts payable 42,732 36,218 Deferred revenues 30,543 15,338 Operating lease current liabilities 5,968 4,452 54,825 48,885 Other current liabilities 134,068 287,930 Total current liabilities Non-current liabilities Convertible senior notes, net 196,394 - Accrued severance pay 3,599 3,686 Operating lease long-term liabilities 43,697 33,450 Long-term deferred tax liability 12,190 - 7,194 6,334 Other long-term liabilities 263,074 43,470 Total non-current liabilities 586,963 473,754 Shareholders' equity 984,105 805,154 Total liabilities and shareholders' equity	As of December 31,

NOVA LTD. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(U.S. dollars in thousands, except per share data) - (Unaudited)

		Three months ended		Year ended
		December 31,		December 31,
	2022	2021	2022	2021
Revenues:
Products	123,486	99,898	464,152	337,026
Services	27,752	21,623	106,577	79,087
Total revenues	151,238	121,521	570,729	416,113
Total cost of revenues	67,510	53,272	248,333	178,752
Gross profit	83,728	68,249	322,396	237,361
Operating expenses:
Research and development, net	26,206	20,140	90,458	65,857
Sales and marketing	14,058	11,219	52,122	39,336
General and administrative	5,077	6,262	23,852	17,324
Amortization of intangible assets	1,463	735	6,033	2,458
Total operating expenses	46,804	38,356	172,465	124,975
Operating income	36,924	29,893	149,931	112,386
Financing income (expense), net	2,157	(1,518)	8,478	(3,133)
Income before taxes on income	39,081	28,375	158,409	109,253
Income tax expenses	2,983	6,149	18,196	16,152
Net income for the period	36,098	22,226	140,213	93,101
Earnings per share:
Basic	1.26	0.78	4.89	3.28
Diluted	1.14	0.73	4.40	3.12
Shares used in calculation of earnings per share (in thousands):
Basic	28,731	28,539	28,697	28,372
Diluted	31,737	30,285	31,870	29,816

NOVA LTD. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. dollars in thousands) - (Unaudited)

December 31, December 31, 2022 2021 2022 2021 Cash flows from operating activities: Net income 36,098 22,226 140,213 93,101 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of property and equipment 2,491 1,681 8,621 6,475 Amortization of intangible assets 1,463 735 6,033 2,458
Amortization of premium and accretion of discount on
marketable securities, net (254) 855 1,666 1,708
Amortization of debt discount and issuance costs 322 1,075 1,282 4,229
Share-based compensation 4,381 3,496 16,647 10,488
Net effect of exchange rate fluctuation 412 (694) 4,523 (745)
Changes in assets and liabilities:
Trade accounts receivables, net (9,421) (3,816) (31,634) (5,132)
Inventories (2,168) (5,964) (29,311) (18,457)
Other current and long-term assets 5,926 1,076 (4,223) 192
Deferred tax assets, net (6,598) (741) (13,740) (2,989)
Operating lease right-of-use assets 841 489 3,873 1,680
Trade accounts payables (79) 6,799 5,142 11,697
Deferred revenues 10,492 (16,572) 15,243 10,621
Operating lease liabilities 115 164 (6,351) (904)
Other current and long-term liabilities 5,548 9,587 1,509 17,919
27 (133) 46 (79) Accrued severance pay, net
49,596 20,263 119,539 132,262 Net cash provided by operating activities
Cash flows from investment activities:
Acquisition of subsidiary, net of acquired cash - - (78,469) -
Change in short-term and long-term interest-bearing bank deposits (26,517) 37,223 129,944 (31,456)
Investment in marketable securities (30,064) (6,364) (211,742) (215,091)
Proceeds from maturities of marketable securities 23,390 5,141 81,325 12,862
(8,429) (2,250) (21,314) (4,816) Purchase of property and equipment
(41,620) 33,750 (100,256) (238,501) Net cash provided by (used in) investing activities
Cash flows from investment activities:
Settlement of a contingent consideration liability - - (8,480) -
Purchases of treasury shares (15,000) - (21,416) -
8 - 90 11 Proceeds from exercise of options
(14,992) - (29,806) 11 Net cash used in financing activities
Effect of exchange rate fluctuations on cash and cash equivalents (77) 558 (4,454) 622
Changes in cash and cash equivalents and restricted cash (7,093) 54,571 (14,977) (105,606)
118,814 72,127 126,698 232,304 Cash and cash equivalents - beginning of period
111,721 126,698 111,721 126,698 Cash and cash equivalents and restricted cash - end of period

NOVA LTD. RECONCILIATION OF GAAP TO NON-GAAP RESULTS

(U.S. dollars in thousands, except percentage and per share data) - (Unaudited)

	Three months ended
	December 31, 2022	September 30, 2022	December 31, 2021
GAAP gross profit	83,728	82,130	68,249
Stock-based compensation*	1,148	1,114	803
Non-GAAP gross profit	84,876	83,244	69,052
GAAP gross margin as a percentage of revenues	55%	57%	56%
Non-GAAP gross margin as a percentage of revenues	56%	58%	57%
GAAP operating income	36,924	38,938	29,893
Stock-based compensation*	4,381	4,334	3,496
Acquisition-related expenses and contingent
consideration revaluation	(752)	-	999
Amortization of acquired intangible assets	1,463	1,444	735
Non-GAAP operating income	42,016	44,716	35,123
GAAP operating margin as a percentage of revenues	24%	27%	25%
Non-GAAP operating margin as a percentage of revenues	28%	31%	29%
GAAP net income	36,098	35,075	22,226
Stock-based compensation*	4,381	4,334	3,496
Acquisition-related expenses and contingent
consideration revaluation	(752)	-	999
Amortization of acquired intangible assets	1,463	1,444	735
Amortization of debt discount and issuance costs	322	322	1,075
Revaluation of operating lease liabilities	294	(572)	907
Tax effect of non-GAAP adjustments	(1,028)	(905)	(402)
Taxes attributed to one-time elective tax settlement	-	-	3,716
Non-GAAP net income	40,778	39,698	32,752
GAAP basic earnings per share	1.26	1.22	0.78
Non-GAAP basic earnings per share	1.42	1.38	1.15
GAAP diluted earnings per share	1.14	1.10	0.73
Non-GAAP diluted earnings per share	1.28	1.24	1.08
Shares used for calculation of earnings per share (in thousands):
Basic	28,731	28,685	28,539
Diluted	31,737	31,892	30,285

* Stock-based compensation for the three months ended December 31, 2022 included in – Cost of revenues - 1,148; Research and development, net – 1,856; Sales and marketing – 810; General and administrative – 567.

NOVA LTD. RECONCILIATION OF GAAP TO NON-GAAP RESULTS

(U.S. dollars in thousands, except percentage and per share data) - (Unaudited)

2022 2021 GAAP gross profit 322,396 237,361 Stock-based compensation 4,166 2,160 Acquisition-related inventory step-up 2,972 - Non-GAAP gross profit 329,534 239,521 GAAP gross margin as a percentage of revenues 56% 57% Non-GAAP gross margin as a percentage of revenues 58% 58% GAAP operating income 149,931 112,386 Stock-based compensation 16,647 10,488 Acquisition-related inventory step-up 2,972 - Acquisition-related expenses and contingent consideration revaluation 2,995 999 Amortization of acquired intangible assets 6,033 2,458 Non-GAAP operating income 178,578 126,331 GAAP operating margin as a percentage of revenues 26% 27% Non-GAAP operating margin as a percentage of revenues 31% 30% GAAP net income 140,213 93,101 Stock-based compensation* 16,647 10,488 Acquisition-related inventory step-up 2,972 - Acquisition-related expenses and contingent consideration revaluation 2,995 999 Amortization of acquired intangible assets 6,033 2,458 Amortization of debt discount and issuance costs 1,282 4,229 Revaluation of operating lease liabilities (4,174) 818 Tax effect of non-GAAP adjustments (4,459) (1,140) Taxes attributed to one-time elective tax settlement - 3,716 Non-GAAP net income 161,509 114,669 GAAP basic earnings per share 4.89 3.28 Non-GAAP basic earnings per share 5.63 4.04 GAAP diluted earnings per share 4.40 3.12 Non-GAAP diluted earnings per share 5.07 3.85 Shares used for calculation of earnings per share (in thousands): Basic 28,697 28,372 Diluted 31,870 29,816	Year ended December 31,

* Stock-based compensation for the year ended December 31, 2022, included in – Cost of revenues - 4,166; Research and development, net – 6,861; Sales and marketing – 3,179; General and administrative – 2,441

NOVA LTD. SUPPLEMENTAL INFORMATION - RECONCILIATION OF FIRST QUARTER 2023 GAAP TO NON-GAAP GUIDANCE

(Unaudited)

High
0.98
0.14
0.04
0.01
(0.03)
1.14