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Operator
Ladies and gentlemen, thank you for standing by. Welcome to the Nova Measuring Instruments first-quarter 2007 results conference call. All participants are at present in a listen-only mode. Following management's formal presentation, instructions will be given for the question-and-answer session. As a reminder, this conference is being recorded May 7, 2007.
I would like to remind everyone that forward-looking statements for the respective Company's business, financial conditions, and results of its operations are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated. Such forward-looking statements include, but are limited to, product demand, pricing, market acceptance, changing economic conditions, risks in product and technology development, and the effect of the Company's accounting policies, as well as certain other risk factors which are detailed from time to time in the Company's filings with the various securities authorities.
If you've not received a copy of today's release and would like to do so, please call GK Investor Relations at 1-866-704-6710, or 972-3-607-4717. With us online today are Gabi Seligsohn, President and CEO of Nova, and Mr. Dror David, CFO. I would alike to hand over the call to Mr. Gabi Seligsohn.
Gabi Seligsohn - President, CEO
Yes, thank you, operator, and thank you all for joining our conference call for the first quarter of 2007. Q1 2007 represents a 30% increase in revenues versus the comparable quarter of last year. We are very pleased to be on track with our previously-communicated plan for revenue growth year-over-year in each quarter of 2007 while improving our gross margins.
We have continued to enjoy a strong market position in our core market of integrated metrology in this past quarter and revenues from our leading platform, the NovaScan 3090, exceeded 50% of system revenues, which further demonstrates the position that tool has attained in the marketplace. Results this quarter include revenues from our latest model, the NovaScan 3090Next, which is our leading-edge platform geared towards 45 and 32 nanometer semiconductor manufacturing. 200 millimeter revenues significantly increased this quarter, which is a phenomenon we see every few quarters. We are happy with our ability to support the needs of our long-term customers who are looking to extend the capabilities of their CMP tools for advanced technology generations still being processed on 200 mm wafers.
Our aggressive stand-alone penetration efforts are starting to bear fruits and we have received an important evaluation appeal from a major Asian customer with potential for several more tools in the future. We are encouraged by recent customer interactions for stand-alone optical CD, where we have received acknowledgments of the advantages our tools offer in the areas of cost of ownership as well as tool metrology performance.
Sales of our NovaMARS software package continued to grow, the revenues we will show later. Dror will mention about that in his presentation. We are happy to see that several announcements made by our memory customers who plan further extensions and investments for this year and coming years. We believe we're well positioned to capture these opportunities as they pan out.
Q1 was an all-time record quarter for service revenues, which amounted to $2.9 million of overall revenues. Gross margins have improved to 44% this quarter and our plan calls for further improvement over the next several quarters.
The settlement of all pending lawsuits between us and Nanometrics will significantly reduce our overhead. And with that out of the way, the effects of the cost control program we instigated in the fourth quarter of last year will start to become apparent pretty soon. In this respect, I would like to make clear that contrary to today's publication in The Marker daily financial publication in Israel, the settlement did not include exchange of any moneys between the parties and the cost referenced of $1.4 million was incurred for the ongoing expense of running the three cases, a cost which has now ceased and its elimination will help us reach our goal for 2007, namely moving to profitability.
With respect to the IP modernization initiatives announced last September, we are pleased with the level of interest it has generated. We have been and still are in discussions with both buyers and potential licensees and given the technical nature of these discussions, they have taken longer than we previously expected. Since the process began several months ago, there have also been positive business developments in the particular market of integrated metrology for lithography.
When this process began, we felt this IP was going to be vital longer-term rather than in the near future. With this in mind, we hope to complete this process and coming weeks and decide on the best course of action for the Company and for its shareholders.
With that, I would like to hand over to Dror.
Dror David - CFO
Hi, everyone, and welcome to the call. As Gabi mentioned, we have very well executed our revenue plans for the quarter, presenting 30% increase in Q1 '07 over Q1 '06. And a modest 5% sequential decrease relative to Q4 '06. The revenue increase over past years comparable quarter continues the consecutive increase in our last 12 months trailing revenues that started in Q1 '06, reaching above $51 million in this quarter for last 12 months trailing revenues.
Revenues from the stand-alone optical CD systems accounted for approximately 50% of the systems revenues. As Gabi mentioned, we also received an evaluation order from a new customer in Asia in the first quarter. Revenue recognition from an evaluation order normally takes longer than the regular cycle of three to six months for repeat orders.
Sales by territories did not change significantly relative to previous quarters, with Asia-Pacific accounting for approximately 50% and with some shift from the U.S. to Europe and Japan, U.S. represented 25% in the quarter, Europe 14%, Asia-Pacific 51%, and Japan 10%.
During the quarter we have witnessed increasing demand for 200 mm systems and they accounted for 30% of revenues, relative to 10% in the previous quarter. Service revenues increased to $2.9 million in the first quarter. This is record results for the service division, representing a 12% increase relative to the previous quarter. The increase is attributed to additional service contracts as well as additional spare parts purchases in the quarter.
Gross margins were 44% in the current quarter and increased relative to the 41% gross margin reported in the previous quarter. This increase is related mainly to favorable product mix. Total operating expenses were similar to previous quarter at the $6.6 million level. As mentioned in the press release, these expenses included $1.4 million of IP litigation expenses, which offset the successful results of the cost reduction initiative that was announced in November 2006. Following the settlement of the litigation, IP litigation expenses are expected to be reduced a few hundred thousand in Q2 '07 and will further reduce in the following quarters.
Net loss for the quarter was $0.6 million, an improvement relative to the previous quarter. This is despite the modest reduction in revenues and the increase in IP litigation costs. Non-cash expenses included $0.4 million from stock-based compensation and amortization expenses and $0.3 million in depreciation of fixed assets.
We are very much pleased with the fact that we have presented $1 million of positive cash flow in the quarter. This is related mainly to high collection rates, as can be witnessed in the reduction of accounts receivable. This positive cash flow, together with the proceeds from the recent private placement, increased our cash level to about $21 million, which will enable us to have sufficient financial flexibility as we execute our plans for the coming quarters. Gabi?
Gabi Seligsohn - President, CEO
Thank you, Dror. With that, operator, we would be happy to take some questions.
Operator
(OPERATOR INSTRUCTIONS) Robert [Scott], Sunvest International.
Unidentified Participant
Great quarter. I have a question. What was the book-to-bill in the quarter and could you elaborate a little bit more about guidance that you anticipate for the next few quarters in terms of growth and where in your business you will see that growth coming from?
Dror David - CFO
Book-to-bill in the quarter was higher than 1.
Unidentified Participant
Can you repeat that? (multiple speakers) higher than one is -- can you give a little more color on that? Was it much higher than one, sort of around one --?
Dror David - CFO
1.1.
Gabi Seligsohn - President, CEO
Regarding your question, Robert, the second part was regarding increasing revenue guidance in the quarters?
Unidentified Participant
Just guidance for the upcoming quarter or quarters and where you see that growth coming from, which part of your business.
Gabi Seligsohn - President, CEO
As you know, we continue our practice of not giving guidance. What I will say and reiterate is what we said, and I mentioned at the outset of the call, which is that every quarter this year will be better than its quarter last year, the comparable quarter of the previous year.
As far as generating further growth, I think one of the key elements of that is going to be the stand-alone optical CD and the continued proliferation of the NovaMARS software. Those two things we see as critical for the continued growth of revenues and, of course, as mentioned, the continued increase of market share. And the several announcements we have recently heard that we already seen some truth coming from, primarily, from memory manufacturers continuing to move forward with their plans on fab expansions and new fabs coming online.
In integrated metrology and memory, we are very well positioned in the whole memory segment. So I think the combination of all those will yield continued growth for the business.
Unidentified Participant
Are most of the stand-alone 300 millimeter products? Or do have a lot of 200 millimeters for memory --?
Gabi Seligsohn - President, CEO
The primary focus with stand-alone is 300 millimeter. 200 millimeters is much smaller, as far as we see it right now. The primary source for stand-alone optical CD business is 300 millimeter.
Unidentified Participant
What is the average ASP on that?
Gabi Seligsohn - President, CEO
On the stand-alone OCD?
Unidentified Participant
Yes.
Gabi Seligsohn - President, CEO
Well, it depends on configuration and it depends on the elements that we add to the tool itself, but the range is between 700 to $1.1 million depending on configuration, in some cases $1.2 million.
Unidentified Participant
For the quarter, what was the average? Was it just like (technical difficulty)
Gabi Seligsohn - President, CEO
The average selling price for stand-alone for the quarter?
Unidentified Participant
Yes.
Gabi Seligsohn - President, CEO
It was $750,000.
Unidentified Participant
Thanks a lot, great quarter.
Operator
(OPERATOR INSTRUCTIONS) there are no further questions at this time. Before I ask Mr. Seligsohn to go ahead with his closing statement, I would like to remind participants that a replay of this call will be available in three hours on Nova's web site, www.Nova.co.il. Mr. Seligsohn?
Gabi Seligsohn - President, CEO
Thank you all for joining the call and look forward to speaking to you in the next quarter.
Operator
Thank you very much. This concludes Nova's first-quarter 2007 results conference call. Thank you for your participation. You may go ahead and disconnect.