Nova Ltd.

Thank you for standing by. This is the conference operator. Good day and welcome to NOVA's second quarter 2022 results conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mary Segal, CEO of MSIR. Please go ahead.

Thank you, operator, and good day to everybody. I would like to welcome all of you to NOVA's second 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 followed by a draw with an overview of the financials. We will then open the call for the question and answer session. I'll now turn the call to Mr. Eitan Oppenheim, NOVA's president and CEO. Eitan, please go ahead.

Thank you all for joining our second quarter financial results conference call. I will start the call today by speaking about our quarterly results and performance highlights. Following my commentary, DRAW will review the quarter's financial results in detail and then conclude with the guidance for the third quarter of 2022. NOVA reported solid results for the second quarter, demonstrating strength in all our product lines across dimensionals, materials, and chemical metrology portfolios. While we keep gaining momentum from multiple industry growth drivers in various semiconductor segments, we continue to expand our portfolio diversification and its market adoption to secure long-term growth and outperformance. These quarter results demonstrate once again the resiliency we are embedding into our operating model, which continues to be strained by multiple elements, including supply chain issues and various other macroeconomics and geopolitical concerns. We believe that the fundamental changes implemented in the company over the last three years to meet our strategic goal of reaching 500 million in revenue will significantly strengthen the company position in multiple verticals and markets in the next few years. For the quarter, our earning results came in well ahead of expectation and at the top end of our guidance, including another sequential quarterly revenue record which represents around 45% growth year-over-year. Reviewing the first half of 2022 shows a significant year-over-year growth space in all financial elements compared with H1 2021, including revenues and profitability growth of 52% and 70% respectively. Our solid performance over the last few quarters demonstrates our operational agility and ability to meet customers' demand in a constantly changing environment without missing a bit. Against the backdrop of the current global economic uncertainties, we still see strong demand for our products as a combination of manufacturing capacity demand, process control intensity growth, technology development in both memory and logic, growing adoption in other market verticals, and continuous proliferation of our new organic growth engines. As a result, our backlog, while exiting the second quarter, reached a record high, enabling further visibility for the second half of 2022 and the first quarter of 2023. Our diversification efforts across markets, segments, and products continues to bear fruit this quarter as approximately 80% of our revenues were generated by 10 different customers compared to just five in the same period last year. Furthermore, these customers are spread throughout four main territories, which contribute more than 15% each. As discussed previously, And after the CHIPS Act approval, we expect significant growth in the U.S. in the coming years with multinational and national companies' investment in the territory. We are already seeing progress this year with a growing contribution from the U.S. that led to a record revenue this quarter. Even more diversification is generated by our newest additional technology, the chemical metrology portfolio. The second quarter is the first in which we report ANCOSYS results in full. We are encouraged by the integration process that led to a record revenue quarter and will drive a significant annual growth this year. In this short period since the acquisition, we have already grown customers' interest in our chemical analysis products, setting in motion intercompany synergies to increase market share still this year. Furthermore, the efforts to diversify our revenue mix with other market segments were validated by the recent selection of our XPS VeraFlex solution by a leading analog device manufacturer. Adopting these multiple tools enables the customer to measure vital parameters unsupported by traditional optical tools. We expect more cases like that as the fast-evolving back-end market will start adopting more metrology steps as part of its developing technology to meet cheap performance requirements. Finally, and as another example of our continuous efforts to differentiate our solution as part of a more diversified portfolio, we saw this quarter record sales from our software and optical CD standalone platforms. The standalone platforms and performance were driven by the growing adoption of Nova Prism in high-end memory as the whole segment is preparing for a larger chip structure with hundreds of memory layers in multiple stacks. Prism is prevailing in this complex high aspect ratio devices where physical limitation prevent traditional optical tools from providing extensive deep measurements. The software portion was driven mainly by growing adoption of our NovaFit machine learning offering, which can now provide real process insight and foresight by connecting fleet different tools in different steps to learn the inefficiency and train the metrology platforms to detect changes in materials and dimensional anomalies faster and more accurately. Highlighting the financial results for the second quarter and given our guidance for the third quarter, we currently aim to grow meaningfully this year as well, overachieving our previous expectations and setting another record outperformance year. With the company revenues exceeding 500 million over the last four quarters, and profitability rates hitting the higher mark established by our planned business model, we can delineate this quarter the realization of our Nova 500 strategic plan, which cemented the fundamentals to support our future organic and inorganic growth. The strong momentum we have demonstrated is a result of our ability to execute a clear long-term strategic plan, which was introduced in 2018. The plan was built on pillars of technology differentiation, increased revenue diversification, and inorganic growth. Our performance in each pillar, including the progress in developing both organic and inorganic engines, our strides in materials and chemical metrology areas, increased capacity in all manufacturing sites, and growing exposure to more customers and segments is paving the path to our next strategic milestone, which we'll be presenting in our upcoming Virtual Analyst Day on September 21st. Before summarizing the second quarter highlights, I would like to refer to the market environment and semiconductor demand as it relates to NOVA's performance. Overall, we believe that the long-term semiconductor demand will persist, driven by several elements, including end-market megatrends applications, complex technology transformations, and semiconductor self-sustained geographical buildups. While we are monitoring the latest issues with some of the consumer markets and IC prices, we continue our delivery plans to accommodate the strong demand for the rest of the year. Although capacity growth is a major factor in our planning, we still anticipate various other catalysts in the next few quarters. The other main contributors are the new fabs and greenfield customers in various territories, major technology developments in both memory and logic, increased metrology attach rate in advanced nodes, expansion of inline materials methodology requirements, proliferation of new methodology methods, growing demand for backend methodology, and finally market share expansion. Those supply chain disruptions remain one of our main concerns. We began to see incremental improvement in lead times by our suppliers this quarter. and therefore expect to meet all our customers' requests during the remainder of the year. Nevertheless, we are closely monitoring the optional delay of other essential process tool suppliers, which may impact overall ramp up of our customers. With that, I would like to recap our second quarter results. Nova had a remarkable first half of 2022, setting multiple records against the backdrop of dynamic markets and an increasingly complex environment. As we consider our accomplishments in the second quarter and given our guidance for the third, we are striving to outperform the market once again and achieve another record year for NOVA. As we aspire to continue our strong momentum in the market, we will announce a new strategic plan during our investor day in September, charting a course towards the $1 billion company in annual revenues. Now let me hand over the call to Dror to review our financial results in detail. Dror?