Nova Ltd.

Please stand by. We're about to begin. Good day and welcome to NOVA's first quarter 2022 results conference call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mary Siegel of MSIR. Please go ahead.

Thank you, operator, and good day to everybody. I would like to welcome all of you to NOVA's first quarter 2022 financial results conference call. With us on the line today are Mr. Eitan Oppenheim, President and CEO, and Mr. Dror David, CFO. Before we begin, I'd like to 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, sold by drawer, with an overview of the financials. We will then open the call for the question and answer session. Now I'll hand 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 our call today. Let me begin by speaking briefly about our first quarter performance highlights. Following my commentary, DRAW will review the quarter's financial results in detail. NOVA delivered a strong opening for the year, exceeding the high end of the revenue and profitability guidance, and by that delivered another record quarter. This robust outcome marks eight consecutive quarters of revenue growth. Our financial results for the March quarter reflect our upward business momentum, driven by our burgeoning position across technology nodes, our expanding customer base, and the proliferation of our increasingly diverse portfolio. As a result of our employees' solid execution, revenue grew 59%, and non-GAAP profitability leaped 86% year-over-year. The outstanding quarter was also distinguished by record bookings, an elevated yearly backlog, improving visibility for the rest of 2022, and cementing our confidence in our continuous profitable growth. The momentum of the first quarter will continue also in the second quarter, even as we navigate through a dynamic macro environment and a persistent supply chain challenge. These stout earnings demonstrate once again our consistent approach to meet customers' demand and delivery schedules without missing a bit. While we are focusing on solving ongoing supply chain disruptions, we continue increasing production capacity for all our product lines across our facilities in Israel, Germany, and in the u.s as a matter of fact our preparations for the coming years demand along with the growing market adoption of our new growth engines propelled more than 60 percent growth in nova's production output in 2021 and led us to invest in two new production facilities opening later this year based on the revenue forecast for the first half of 2022 which is approximately 50% higher than the same period last year, we are proud to outperform the market growth of our peer groups, growing twice as high as the group average. Furthermore, we now expect to realize our NOVA 500 plan ahead of schedule and by the end of 2022. In doing so, we have fulfilled our vision of doubling the company revenue every five years. Encouraged by the expected results for 2022, the company is now working on a new strategic plan to be initiated in 2023. This plan will be built on both our growing organic engines, like the Ellipson, Prism, and Matreon, as well as the newly acquired Ancosys portfolio and new M&A activities. The initial stage supporting our growth is already taking shape this year with major investment in doubling production capacity. We will share more on this later this year when the plan is in progress. Following the recent ANCOSIS acquisition, this is the first quarter that we are consolidating chemical metrology sales results as part of our reporting. During the quarter, we continued to integrate ANCOSIS as a division in NOVA developing a thriving new pipeline of products and opportunities in both the front-end and back-end industry segments. Most of ANCOSYS sales channels have already been incorporating into NOVA to keep utilizing this year momentum and strong demand from various customers. Chemical metrology is becoming a standard process control step in front-end interconnect layer deposition and we expect demand to further increase as the dynamic nature of plating chemistry calls for inline metrology, closer to the manufacturing process. The introduction of increasingly complex materials in both memory and logic devices drives the need for higher sensitivity to purity, particles, and contaminations. As more liquid-based process steps are introduced, it will drive the demand for higher inline chemical metrology intensity. A similar trend exists in advanced packaging where smaller pitches at higher density are used to increase connectivity, which enhance device sensitivity to materials purity. As a result, we see a growing number of applications requiring inline metrology across all advanced packaging segments. Under NOVA's umbrella, ANCOSYS is well positioned to capitalize on the growing demand in the market and take leadership position in liquid chemistry process control. Now let me shine some light on the major business highlights of the quarter. The first highlight is our balanced customer base. Diversification in our customer mix generated five major customers contributing over 10% each. It is especially notable that one of our top customers for the quarter is the world's leading logic IDM, which adopted our standalone OCD and material solutions for its advanced node globally. The balanced mix is a result of close cooperation with our customers at every stage of the production cycle, from early development to high volume manufacturing. These partnership programs with our customers drive unique solutions that later proliferate to other industry leaders as well. One example is our recent award at the SPIE Advanced Lithography Conference for the best metrology paper for our work with IBM. The award was given for demonstrating the value of inline Raman spectroscopy for nanosheet devices using our Nova Ellipson platform. A new device like the nanosheet structure pushes metrology requirement to the limit and requires innovative, out-of-the-box solutions for both materials and dimensions characterizations, which can't be fulfilled today with traditional methods. We are confident, following several demos and evaluations, that our new portfolio can meet these high-end demands and support our customers' manufacturing challenges. Another highlight is NOVA's evolving geographical mix. The revenue distribution from various regions is further evident of our diversified strategy, our products appeal to different methodology steps and nodes, and our actual market share gains. All of this is reflected in the revenue breakdown for this quarter, with China being the biggest contributor, signifying our growing leadership in the region, driven by a combination of market share gains, portfolio adoption, and a vibrant base of more than 13 active customers. While the three big semiconductor territories, China, Taiwan, and Korea, continue to be the majority source for our revenues, Europe and the U.S. are gaining momentum in light of government programs to establish a growing dependency. The most recent example is the EU CHIP Act, whereby 2030 member states will invest more than 43 billion euros in the chip industry in Europe. We strongly believe that our current investment in global R&D and production facilities in different regions will support our growth in the years to come, preparing Nova to various geographical investment scenarios and optional geopolitical developments. Though we continue to see a growing adoption of our hardware products, this quarter's performance also reflects our success in software sales, which rose to a new record high. As customers transition to advanced nodes, their process control requirements expand to new applications, higher sampling, and in-die capabilities at the highest speed possible to maximize productivity and yield. In this environment, where the limits are close to the physical hardware limitations, our software and advanced algorithm solutions, including top-notch machine learning and data training capabilities, provide an additional edge to the productivity and yield improvements that are so crucial to today's markets. Finally, we made another step function with our service revenue, hitting a record high. Revenues in this segment grew by approximately 13% in the first quarter, bolstering our confidence to set another annual record and surpass our expectations. This growth is driven mainly by our customers' urgent need to increase capacity and utilization of the install base to meet market demand. We focus our efforts not only on productivity upgrades, but also on offering other value-added software and hardware solutions to utilize the fleet in better, more accurate, and effective ways. Before I hand over the call to draw, I want to touch on our commitment and progress on the environmental, social, and government fronts. We have been making significant strides in implementing our vision, aiming to create an advanced ethical and sustainable ecosystem that improves communities and the environment. Our program, which was divided into five pillars, diversity, inclusion, ethics community relations and environment is progressing well towards specific targets and elevate investments while we are improving on all fronts i'm really encouraged by the way we opened 2022 with our commitment to a diversity model but by the end of the first quarter 25 percent of our employees and over 40 percent of our board members were females We've been setting clear goals and investing in raising awareness of Nova as a preferred employer for females, a workplace where women are rightfully assuming their place in technical and leadership roles. Later this year, we plan to release our first ESG report, where we'll be able to share more on our progress in this area that is becoming part of our culture. Lastly, I want to recap our Q1 results, and forecast. Despite the market dynamics, political uncertainty, and constant supply chain challenges, we believe that the structural increase in long-term semiconductor demand remains firm. The strength of our various fundamental growth drivers continue to fuel demand for growing computing power, while data centers and intelligent edge applications requiring increasingly more memory and storage to support data incentive workloads. The strong demand for semiconductors is pushing our customers to increase their capacity and technology investment globally for the long term. Engaged in this dynamic environment, Nova remains focused on improving efficiency, solving delivery issues, and meeting all our customers' demands. As we consider our accomplishment in the first quarter and given our guidance, we are striving to outperform the market once again and achieve another record year for NOVA. Now let me hand over the call to Dror to review our financial results in detail. Dror.