Nova Ltd.

and welcome to NOVA's fourth quarter 2020 results. Today's conference is being recorded. At this time, I would like to turn the conference over to Mary Segal of MSIR. Please go ahead.

Thank you, Operator, and good day to everybody. I would like to welcome all of you to NOVA's fourth quarter and full year 2020 financial results conference call. With us on the line today are Mr. Eitan Oppenheim, President and CEO of and Mr. Dror David, CFO. Before we begin, may I remind our listeners that certain information provided on this call may contain forward-looking statements, and the safe harbor statement outlined in today's earnings release also pertains to this call. If you have not received a copy of the release, please view it in the investor relations section of the company's website. Eitan will begin the call with a business update, followed by a drawer with an overview of the financials. We will then open the call for the question and answer session. I'll now turn over the call to Mr. Eitan Oppenheim, NOVA's president and CEO. Eitan, please go ahead.

Thank you, Miri, and thank you all for joining us today. I will start the call by speaking briefly about our fourth quarter results and performance highlights. I will then spend some time summarizing 2020 and our main achievements for the year. Following my commentary, DRAW will review the quarterly and annual financial results in detail, including the guidance for the first quarter of 2021. NOVA reported remarkable results for the fourth quarter, with revenue exceeding the guidance and profitability reaching the high end of the guidance, demonstrating our growing agility and solid execution capabilities. The company resilience amid the pandemic led by our global teams drove exceptional performance in the quarter and throughout the year. Our robust quarterly results concluded a record year representing an annual growth rate of 20% in our revenue and 30% in our non-GAAP earnings. This was a strong conclusion to a well-performed year during which we continue to innovate and extend our differentiated technology to support our customers' growing demand. The positive market reception of our product offering and our sound operational model support our momentum to continue our growth in 2021 as well. The accelerated demand for new complex semiconductors across the industry represent a significant compelling technology event affecting all semi-segments, including Logic, DRAM, and Flash NAND. These trends continue to expand our available markets and increase the attractiveness of our materials and dimensional portfolios in the coming years. Following our successful product introductions in 2020, we believe that NOVA is well-positioned to increase its footprint and market share across multiple customers in 2021. Our accomplishments this year highlight the agility and resiliency that the company developed along the year to support our growing activity despite the challenging environment imposed by the COVID disruptions. Turning now to our quarterly highlights, our performance was driven by a mix of technology enhancement, product introduction, and business wins, reflecting our progress to meet NOVA's long-term organic targets. The revenue for the quarter reached a record high, representing 10% sequential growth from the third quarter of 2020. Based on the recent market dynamics, our quarterly sales were driven primarily by strong demand in logic. The current demand for both advanced and mature logic devices concluded a very healthy year for our logic customers. In the current environment, the leading-edge customers are required to accelerate their advanced node transitions to meet the growing demand for high computing applications like 5G, AI, and HPCs. On the other hand, the acceleration in digital evolution in many applications also drives demand for the more mature nodes across various markets, such as consumers, automotive, and industrial. As a result, our quarterly mix was weighted towards logic, with around 72% of the revenue derived from this segment. Although we just started 2021, we expect the same healthy demand to continue across various logic generations this year as well. Although 2020 was more robust in logic demand, our memory customers also started to increase their investment in the fourth quarter, mainly in DRAM, which grew more than 25% sequentially in our quarterly revenue mix. We expect this moderate growth to continue in 2021 as well in other various memory segments. The evolving semi-market during COVID is also fueling memory demand across broadening application space. As a result of decreasing inventories and more balanced supply-demand levels, we expect a better investment cycle in memory both in NAND and DRAM throughout 2021. Our progress along the year to balance our revenue mix is highlighted also this quarter by the customer mix, which yielded three major customers that contributed more than 10% each to our revenue. This includes a leading foundry manufacturer, a leading memory provider, and a growing foundry in China. One of the more notable achievements in the fourth quarter was the record revenue contribution from our materials metrology sales. During the quarter, we received multiple orders from multiple leading logic customers for our most advanced material metrology solutions. The bookings were for NOVA's VeraFlex materials metrology platform, which provides breakthrough thin-thin thickness and composition process control capabilities for the current and emerging technology nodes. The recent wins marks NOVA's growing penetration into all leading industry manufacturers and cement NOVA's position as a material metrology leader. As part of a consistent approach to expand our exposure to more materials applications, we announced in December the launch of NOVA ELIPSON, a revolutionary materials metrology solution. The new inline stand-alone metrology platform is designed to measure materials properties such as stress, strain, and surface for both memory and logic applications. Following the announcement and the outstanding progress we had with multiple customers, we recognized initial revenues from several accounts already in 2020. Let me now shine some lights on our yearly benefits. Nova's quarterly performance signifies an optimistic end note to a challenging year in which COVID-19 threatened world stability. We concluded the year better than previously anticipated, growing our revenue to a record high, representing a compound annual growth rate of 13% for the past five years. Our profitability continued to strengthen as well, with net income earnings growing significantly also year over year. During this disruptive period, multiple factors contributed to our strong performance in 2020, and I would like to mention four major ones. First is the advanced operational model that we built during this period to allow better agility and resilience, which allow Nova to function well and adopt faster to the changing conditions. This model is currently guiding our product development cycles, go-to-market strategies, flexible lead times, tighter supply chains, a safer environment for our employees, stronger territory support, and robust recovery plans. As a result, we continue our manufacturing plans according to customers' demand and increased capacity by around 25% without a single shutdown date. Additionally, and in light of the continued travel restrictions, we invested significantly this year to strengthen our global teams by increasing professional headcount and expanding the facilities around the globe to shorten customer response and time to service. Second is the enhanced product portfolio we introduced during the year. Our investment in research and development, which grew at around 20% year-over-year, was focused on two main pillars, introducing new product generations, both in the optical and X-ray lines, and the development of entirely new products from the ground up. In light of the technology involvement in the industry, we introduced a new generation platform to all our traditional product lines, including the integrated and standalone OCD, the advanced software package, and XPS. All of them are already installed, accepted, and generating revenues. Regarding our new innovations, we continue to proliferate the newly introduced Prism platform in multiple accounts, gaining share and winning new positions in both memory and logic. On this front, we are also excited this year to introduce the Ellipson, a new materials metrology platform based on Raman technology that aims to deliver additional materials information, like stress and strain, unmatched by any other inline materials metrology system. As a result of these product initiatives, in both our sustained and new innovative portfolio, we could reach record annual revenues in both the standalone and integrated optical CD metrology, growing significantly year over year. The third highlight I would like to mention is the continued diversification of our revenue mix that allows us to mitigate different demand cycles in the industry. Although this year was weighted towards logic with roughly 68% of revenue contribution, we also had significant win and penetration into other customers, including a large IDM, global memory manufacturer, and other accounts in China. This creates a healthy balance mix that will continue to support our long-term strategic targets and interim growth plan in 2021. The last highlight I would like to mention in regard to 2020 is the growing importance we have been given to our social responsibility plans. The reality of COVID-19 solidified our commitment to support communities across the globe. Over the past year, we proactively supported our partners and customers, as well as families, individuals, and health organizations in the communities. Our recently announced corporate social responsibility strategy is a natural evolution of our ongoing practice, aiming to continuously enhance our ethical, social, and environmental performance. We are committed to incorporating social responsibility into our daily operations and business management while inviting all stakeholders into our socially responsible ecosystem. To wrap up and before I hand over the call to draw, let me briefly summarize our results and market position going into 2021. Despite continuous disruptions and growing challenges associated with the pandemic spread, Nova's global teams adapted quickly to the new dynamic environment, performing well and driving a solid growth here. While the industry is going through tremendous structural changes and adjusting to the different demand catalysts as a result of the accelerated transition to a more data-driven world, our offering is rapidly evolving to meet these changes and expand our available markets. Even our agile operational model, innovative portfolio, new product rollouts, and growing exposure to a broader opportunity range, we believe that NOVA is well positioned to continue capitalizing on growth opportunities in 2021 as well. Now let me hand over the call to Dror to review our financial results in detail. Dror?