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INVESTORS PRESENTATION

Q4 2014

Eitan Oppenhaim – CEO & President , Dror David - CFO

Nova confidential & proprietary information 2

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This presentation includes statements that constitute 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 financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievements to be materially different than expressed or implied by these forward looking statements. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are in some cases beyond our control and which could materially affect actual results, level of activity, performance or achievements. These risks and other factors include but are not limited to: our dependency on two product lines; our dependency on a small number of large customers and small number of suppliers; the highly cyclical nature of the markets we target; our inability to reduce spending during a slowdown in the semiconductor industry; our ability to respond effectively on a timely basis to rapid technological changes; our dependency on PEM; risks related to exclusivity obligations and non-limited liability that may be included in our commercial agreements and arrangements; our ability to retain our competitive position despite the ongoing consolidation in our industry; risks related to our dependence on a single manufacturing facility; risks related to the extremely competitive market we are operation in; risks related to changes in our order backlog; risks related to the financial, political and environmental instabilities in Asia; risks related to our intellectual property; new product offerings from our competitors; unanticipated manufacturing or supply problems; changes in tax requirements; changes in customer demand for our products; risks related to currency fluctuations and risks related to our operations in Israel. The matters discussed in this presentation also involve risks and uncertainties summarized under the heading “Risk Factors” in Nova’s most recent Annual Report on Form 20-F filed with the Securities and Exchange Commission. These factors are updated from time to time through the filing of reports and registration statements with the Securities and Exchange Commission. Any forward-looking statements contained in this presentation are made as of the presentation date and Nova Measuring Instruments Ltd. is under no obligation to revise or update these forward-looking statements. This following presentation includes financial measures that are not calculated in accordance with generally accepted accounting principals (GAAP). 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. Nova's earning release, including a presentation of the most directly comparable financial measures calculated and presented in accordance with GAAP and a reconciliation of each GAAP to non-GAAP financial measure discussed in the presentation is available at the Investors section of the company’s website. Certain of the information contained herein concerning economic trends and performance is based upon or derived from information provided by third party consultants and other industry sources. We have not independently verified and cannot assure the accuracy of any data obtained by or from these sources.


A Leading Metrology

Innovator for Advanced

Process Control

Founded in 1993 Dual-listed - NASDAQ / TA100 HQ in Israel 450 employees Global presence - local teams 4 product lines (holistic metrology suite) 12M Trailing Rev - $125M USD Record year – 3rd consecutive year Cash reserve - $114M USD


Pure player in optical metrology for semiconductor process control

Advanced product suite to address industry’s challenging transitions

Strong financial balance sheet to support sustainable growth

Continuous investment in R&D to meet customers’ aggressive roadmap

Strong technical innovation to strengthen market position

Customer partnership from development to production

NOVA’S Fundamentals


Optical CD metrology provides a non-destructive method for controlling critical parameters 3D profiles Complex stacks Multiple parameters High aspect ratio Material characterization Thin layers

Optical CD - Disruptive Technology

Tri-Gate view Using Electron Microscope

Same View Using Optical CD

A8


Semiconductors Everywhere

Continuous demand for improvement High performance Less power Greater functionality More storage Reduced cost

Smart connected

sensors

Data storage

Smart mobile devices

Network infrastructure

Driving Semi

growth


Technology Challenges - Metrology Opportunity

Cost Economics

Efficiency Power

Novel materials Strained Si, High-K MG, eSiGe, III-V

Advanced lithography Multi patterning DSA

Complex 3D structures VNAND memory cell FinFET transistor Nanowire

More design rules &

process steps

More mask layers &

verification steps

More OCD measurements

More parameters to control

Tighter specs

Advanced packaging Through Silicon Via


40nm 28nm 20nm 14/16nm

Increasing Optical CD Intensity

No. of Critical Mask Layers

No. of Process Steps

Increase in Design Rules

* forecast

Proc

ess

Win

dow

[nm

]

Floa

ting

Pa

ram

eter

s

1

2

3

4

5

1

4

7

10

13

40 nm 28 nm 20 nm 14/16 nm

Planar Gate 2D FinFET Gate 3D

100% 128%

155% 186%

40nm 28nm 20nm 14/16nm *

No. of Metrology Steps

x1 x2 x2.5

x4.8

40nm 28nm 20nm 14/16nm

40nm 28nm 20nm 14/16nm


1. More parameters to control 2. Shift from lithography to CVD / ETCH 3. High Aspect ratio 4. Thin layers

Planar 2/1X VNAND 1Y

$15-17M $13-15M

1. More parameters to control 2. Complex Integration – Fin Profile 3. Multi patterning lithography 4. Complex Back End steps

Planar 2X FinFET 1X

$25-30M

$30-36M

Shrink and density along with advanced lithography increase intensity in Foundry

Optical CD Opportunity Growing business opportunity in advanced nodes

Source: Company estimates, Based on 25,000 wafer starts per month capacity


Optical Metrology Market

Optical CD TAM - Growing Market

Disruptive Technology - TAM of $1B USD in 5 years

Total Metrology market

Source: Gartner

0

100

200

300

400

500

600

700

2010 2013 2015F

$M

Optical Metrology

7.2% CAGR

0

500

1,000

1,500

2,000

2,500

2010 2013 2015F

Total Metrology Optical Metrology

4.3% CAGR


Product Portfolio

Fleet Management

45% (LT Target)

45% (LT Target)

10% (LT Target )


In Process

Growing SAM in a Growing TAM

Stand Alone

Advanced Packaging

Thin Film

Integrated

Optical Metrology TAM

2010 2013 2015E 2017E

27% 60%

66% 91%

0

200

400

600

800

Nova’s SAM


Identify key inflection points per node Focus on product and customer strategy Achieve competitive edge

Won first SA selection

Designed into leading processes

Gain in IM & SA OCD MS

Gain in SA OCD MS

Market Share Growth Strategy

FEOL Etch (HKMG)

BEOL Etch

FEOL Etch FinFET

FEOL/BEOL Etch (Triple Patt.)

FEOL/BEOL Litho+Etch (EUV)

Gain in SA MS

28 nm 20 nm 14/16 nm 10 nm 7 nm


Holistic Fab-Wide Strategy De

posi

tion

CMP

Etch

Li

thog

raph

y

From Integrated to Stand Alone

Expansion to all process steps

Move closer to the process

Hybrid with other metrology means

Process

IM

SA - OCD SA - OCD

SA - OCD SA - OCD

IM

Fleet approach (feedback loops)

Hybrid Metrology

Fleet Management

Insitu

Process Process

Process

Insitu

Nova fab share growth – linking all process steps with combined metrology


Record Revenue Levels

$23M $27M $35M

$27M $28M

$33M $24M

$26M

$27M $22M $30M

$25M $96M $112M

$120M

$0M

$20M

$40M

$60M

$80M

$100M

$120M

$140M

2012 2013 2014

Q1 Q2 Q3 Q4

* Q4 2014 based on mid-range of guidance

2014 – on track to another growth year

*

3rd consecutive record year

16 Nova confidential & proprietary information

Outperforming the Peer Group

* 2014 - based on mid range of Q4/2014 guidance. Source: SEC filings & Yahoo Finance.

Revenue Growth FY2011-FY2014

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

2011 2012 2013 2014*

Nova Revenues Average Peer Group**

Peer Group Range

WFE

2014 Nova record

revenues

2011 Previous industry

peak


Broad Adoption in Foundries

Outgrowing the Segment - Triggered by Market Wins in Advanced Nodes

Nova Foundry Revenue by Tech Node Overall Foundry CapEx

2010 2011 2012 2013 E20142010 2011 2012 2013 E2014

40nm 28nm 20nm 14/16nm 10nm


Revenues $96M $112M $120M

Blended GM % 53% 53% 52%

OPEX $41M $47M $47M

Operating Margin 11% 11% 13%

EPS non-GAAP $0.52 $0.52 $0.64

Robust Financial Model

2012 2014* 2013

Target blended GM of >52% Operating margins target model >15%

* 2014 - based on mid-range of Q4/2014 guidance


Financial indicators – last 4 Quarters

60$K

75$K

90$K

105$K

120$K

135$K

Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14

Revenue - Last 4 Quarters

--

0.20

0.40

0.60

0.80

--

5,000

10,000

15,000

20,000

25,000

Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14

Profitability - last 4 quarters

NET INCOME NON-GAAP NON-GAAP EPS

Financial Indicators – Year to Date

Growing revenues combined with profitability growth


Strategic Growth

Next generation Optical CD products (evolution)

Innovative Optical metrology products (revolution)

Organic Growth

Advanced SW modeling solutions

Complete suite for current and emerging markets

Diversified Portfolio

Increasing market share with existing customers

Strengthening position in memory

R&D joint programs

Customer Partnership

Strengthening our position and expand market presence in Process control

Beyond Optical CD

M&A


Investment Value Continuous growth Expanding overall addressable market Increasing market share in Foundry and Memory Leading the emerging metrology markets

Sustainable growth Strong balance sheet without debt Maintaining profitability with solid margins R&D investment for industry leading portfolio

Operating leverage Maintaining tight supply chain to ensure margins Growing proportion of software in revenue mix Continuous design to cost innovation (best COO)

Strong free cash flow generation Well capitalized to fund growth initiatives Strategic acquisitions to supplement organic growth Capital management scheme – Buyback plan in place

THANK YOU

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