may 2019 investors presentation

Investors PresentationMay 2019

2

Forward Looking StatementsCautionary Statement Regarding

his presentation includes statements that constitute forward-lookingstatements within the meaning of safe harbor provisions of the PrivateSecurities Litigation Reform Act of 1995 relating to future events or our

future performance, such as statements regarding, but are not limited to,anticipated growth opportunities and projections about our business and itsfuture revenues, expenses and profitability. Forward-looking statementsinvolve known and unknown risks, uncertainties and other factors that maycause our actual results, levels of activity, performance or achievements to bematerially different from any future results, levels of activity, performance orachievements expressed or implied in those forward- looking statements. Youshould not place undue reliance on forward-looking statements since theyinvolve known and unknown risks, uncertainties and other factors which are insome cases beyond our control. Factors that may affect our results,performance, circumstances or achievements include, but are not limited tothe following: our dependency on three product lines; our dependency on asmall number of large customers and small number of suppliers; the highlycyclical and competitive nature of the markets we target and we operate in;our inability to reduce spending during a slowdown in the semiconductorindustry; our ability to respond effectively on a timely basis to rapidtechnological changes;; our dependency on PEMs; risks related to exclusivityobligations and non-limited liability that may be included in our commercialagreements and arrangements; our ability to retain our competitive positiondespite the ongoing consolidation in our industry; risks related to ourdependence on our manufacturing facilities; risks related to changes in ourorder backlog; risks related to efforts to complete and integrate current and/orfuture acquisitions; risks related to the worldwide financial instabilities; risksrelated to our intellectual property; new product offerings from ourcompetitors; unanticipated manufacturing or supply problems; risks related to

government programs we participate in; risks related to taxation; changes incustomer demand for our products; risks related to currency fluctuations; risksrelated to technology security threats and changes in privacy laws; risksrelated to acquisitions we may pursue and risks related to our operations inIsrael. We cannot guarantee future results, levels of activity, performance orachievements. The matters discussed in this presentation also involve risksand uncertainties summarized under the heading “Risk Factors” in Nova’smost recent Annual Report on Form 20-F for the year ended December 31,2018 filed with the Securities and Exchange Commission on February 28,2019. These factors are updated from time to time through the filing ofreports and registration statements with the Securities and ExchangeCommission. Any forward-looking statements contained in this presentationare made as of the presentation date and Nova Measuring Instruments Ltd. isunder no obligation to revise or update these forward-looking statements.This following presentation includes financial measures that are not calculatedin accordance with generally accepted accounting principles (GAAP). Thepresentation of this non-GAAP financial information is not intended to beconsidered in isolation or as a substitute for the financial information preparedand presented in accordance with GAAP. Nova's earning release, including apresentation of the most directly comparable financial measures calculatedand presented in accordance with GAAP and a reconciliation of each GAAP tonon-GAAP financial measure discussed in the presentation is available at theInvestors section of the company’s website.Certain of the information contained herein concerning economic trends andperformance is based upon or derived from information provided by thirdparty consultants and other industry sources. We have not independentlyverified and cannot assure the accuracy of any data obtained by or from thesesources.

KEYFactsLeading

Metrology

Innovator for

Advanced

Process Insight

DUAL-LISTED

EMPLOYEES

GLOBAL PRESENCE

TECHNOLOGIES

METROLOGY

R&D SITES

PROFITABLE GROWTH

NASDAQ / TASE

660

World wide offices

Optical & X-Ray

Dimensions & Materials

USA & Israel

Revenue Growth5Y CAGR – 18%

Operating Income Growth5Y CAGR – 37%

Cash Reserves~$190M

• Non-GAAP Financials

3

Success Tied to

Customers’ partnershipDiversified Portfolio

Disruptive technologies Solid financial model

X-ray & Optical

Dimensions & Materials

Coupling SW & HW

Emerging Metrology needs

Operational efficiency

Growth by investment

Development to Manufacturing

Joint development programs

Revenue

Operatingexpenses

Operatingincome

$112

$149

$251

2013 2015 2018

$45

$59

$79

2013 2015 2018

$14$22

$68

2013 2015 2018

In Million $

In Million $

In Million $

• Non-GAAP Financials4

$121

$149$164

$222

$251

2014 2015 2016 2017 2018

Record High

18% CAGR 5 Years

Q1 2019 Highlights

In Million $

• Non-GAAP Financials5

Revenues of $57M

Gross Margin 57%

Elevated R&D Investment

towards new products

introduction

Operating Margin 20%

Balanced Market Exposure

50% Foundry, 50% Memory

Innovative

Optical / X-Ray Semiconductor Segments

Dimensions / MaterialsParameters

10umPad

5nmPitch

0.5ÅPrecision

300mmWafer

6

Unique Complementary

SoftwarePhysical &Mathematical Models

Fleet Management

Hybrid Ecosystem

DimensionalIntegrated & Standalone

Optical CD

Film Thickness

MaterialsStandalone

Materials Metrology

ServicesInstall Base

Features and Upgrades

7

InterlacingHW & SWsolutions

CMP

Deposition ETCH

Lithography

FLEET MANAGEMENT

Hybrid Metrology

Physical Models

NOVA MARSComplementary Models

NOVA Fit

Inline

Monitor

Train & Retrain

Open Eco System

8

DigitalSemi Market

Wafer Capacity

2000 2010 2020 2025Internet Mobile Internet Connected World Data Economy

Connectivity Mobility Productivity Veracity

2017

60B GB 40% Human

9

Multi Catalysts for Semiconductors Demand

SmartCities

25%CAGR

SmartSensors

30%CAGR

AI

50%CAGR

Cryptonomy

30%CAGR

SmartIndustry

1 PBPer day

AutonomousVehicle

4 TBPer Car

Per Day

AR / VR

70%CAGR

10

GROWING Demand for Data Management & Computing Power

Data Management

Network Infrastructure

Beyond Capacity

Connected Sensors

SemiGrowth

Smart Sensors

Smart Industry

Smart City

Automotive

AIAR / VR

5GCloud

Cryptonomy Smartphones

Wearables RobotsContinuous demand for improvementPerformance Density Scaling Cost

Mobile Devices

11

Requirement Variety

Density

Scaling

storage (capacity)

Energy efficiency

Access speed

Powerful processing (speed)

10,000

100

1

0,01

0,0001

1,000

100

1

0,01

0,000

0,0001 0,01 1 100 10,000

PO

WER

(W

att

)

DA

TA S

TOR

AG

E (G

iga

by

te)

DATA RATE (Giga operations/sec)

HIGH PREFORMANCE

MOBILITY

IoT SENSORS

12

Growth Beyond DemandM

etr

olo

gy In

ten

sity

Complexity

Planar FinFet Nano-Wires

Planar NAND VNAND Gen-1 VNAND Gen-x

DRAM Gen-1 DRAM Gen-X DRAM Gen-Y

METROLOGY INTENSITY

Scaled Devices

3D Profiles

Multiple Parameters

Thinner Films

13

Composition

Stress

Strain

Doping

Chemical State

Unique Differentiation

Parameters Variety

Expanded TAM

Reduce Leakage & Increase performance

Beyond Architectural Changes

48 Elements

26 Elements

13 Elements

14

Enabled by Materials

CHALLENGES

TECHNOLOGYFuture NVM

MRAM

Xpoint

RRAM

FeRAM

Floating Gate

BEYOND TRADITIONAL DIMENSIONAL SCALING15

EnduranceHigh Program VMLC

Cross talkCharge stabilityTLC

Charge densityBit densityTLC

Bit DensityTLC

Bit DensityChannel resistanceQLC

Planar Floating

Gate NAND

High K Blocking Oxide

Doped Floating Gate

Tunnel oxides

Charge Trap layers

ALD gate

Staircase etch

Tunnel Oxides

Charge Trap Layers

ALD gate

Carbon Hard Masks

Tunnel Oxides

Charge Trap Layers

ALD gate

Barrier metal

Next-gen hard mask

METROLOGY

Needs

Low Voltages Fast clock cycles

Multiple Low VTOff state leakage Low drive currentElectro migration fails

Low VT StabilityShort channel failsOff state leakage

Drive CurrentSD resistance

Poly SiON Gate Stack

Strained Silicon

High K Metal Gate

Strained Silicon

B doping

Cobalt EM capping

FinFets

Replacement HKMG

Annealed HK

Gate dopants

Cobalt Contacts

Advanced ALD

Future Designs

Gate All Around

3D Transistors

CFETS

Enabled by Materials

Metrology

Needs

CHALLENGES

TECHNOLOGY

BEYOND TRADITIONAL DIMENSIONAL SCALING16

FromNova200 to

300Reaching revenues

of $300M organically

ShareGains

TAM Expansion

Disruptive Innovation

M&A

Dimensional

Metrology

Services M&AMaterials

Metrology

$300M

$200M

$100M

Inorganic

Process Control > $50M

Organic

$300M

2012 2017 Target

17

Customers

Segments

Mix Nodes

Technology

Geography

Increasing Market Share while Expanding TAM

Diversification

Why do we CONTINUE GROWING?

18

Diversification -Product Revenues Customer Mix

Target Model

5 Large Customers

Additional Memory

Customers

IDM Penetration

TSMC

40%

GLOBAL

FOUNDRIES

25% Other

35%

2014

Foundry Exposure2 major customers

TSMC

15%

SAMSUNG

15%

HYNIX

20%

HUALI

10%

Other

30%

Micron

10%

2018

Memory Growth5 major customers

19

Diversification -

2014 2018

Segment Mix

Memory versus foundry / Logic

Target Model

Segments Balance

Memory Growth

Foundry leadership


20

Diversification -

Target Model

Balanced Territory

3 Large Territories

Regional Mix

Taiwan

45%

USA

25%

Korea

10%

Other

20%

2014

TaiwanExposure

Korea

35%

Taiwan

20%China

30%

Other

15%

2018

DiversifiedTerritory Mix

21

Diversification -

18%

28% 27%

2016 2017 2018

$34$38

$44

2016 2017 2018

R&D Investment(in Million $)

Operating Margin

From single tool to Fleet approach -infrastructure

Invest in Sustainingand Disruptiveinnovation

Compete with unique Coupled HW & SW solutions

lead the Emerging Metrology markets

X-RAY OPTICAL CONVOLUTION

ADVANCED SW CAPABILITIES

LAB TO FAB TECHNOLOGIES

MTROLOGY ECOSYSTEM

MATERIALS ENGINEERING

22


Advanced Nodes - 56%

Nova Performance by Tech-Node$M

2014 2018

MIX nodesTrailing & Advanced

Diversification –

23

Share in Growing Markets

Unique Value

Displacing OtherTechnologies

Emerging Applications

Disruptive Innovation

Addressable Market(In Million $)

Market Share

Expanding TAM Gaining Market Share

$1,200

2014 2017 $300M

model

25%

2014 2017 $300M

model

>

24

2014 2016 2018

Revenue($M)

Operating Profit($M)

Earnings PerShare ($)

2014 2016 2018 2014 2016 2018

25


5 Years CAGR (2013-2018)


5 Years Growth

Achieved 3X CAGR

over Process Control

Grew operating

income at 2X

Revenue CAGR

Generated ~$150M

in Free Cash Flow

Process Control Nova Revenue Nova Op Inc

26

& Operating Margins

2014 2018

Gross Margin (%) Operating Margin(%)

Nova 300 Model Nova300 Model

2014 2018

27• Non-GAAP Financials

Solid Track RecordRevenue Growth $M

Revenue Doubled

Every 5 Years

Expanded technology

base driving TAM increase

Diversified revenue

stream driving wider

market exposure

Solid operational model to

support investment

$20

$58

$96

$222

2002 2007 2012 2017

28

may 2019 investors presentation

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