Camtek Ltd.

Ladies and gentlemen, thank you for standing by. I would like to welcome all of you to Camtech's results Zoom webinar. My name is Kenny Green and I'm part of the investor relations team at Camtech. All participants other than the presenters are currently muted. Following the formal presentation, I will provide some instructions for participating in the live Q&A session. I would like to remind everyone that this conference call is being recorded and the recording will be available later on from Camtech's website. You should have all now received the company's press release. If not, please view it on the company's website. With me on the line today, we have Mr. Rafi Amit, Camtex CEO, Mr. Moshe Eisenberg, Camtex CFO, and Mr. Rami Langa, Camtex COO. Rafi will begin by providing an overview of Camtex results and discuss recent market trends. Moshe will then summarize the financial results of the quarter. Following that, Rafi, Moshe, and Rami will be available to take your questions. Before we begin, I'd like to remind our listeners that certain information provided on this call are internal company estimates unless otherwise specified. This call may also contain forward-looking statements. These statements are only predictions and may change as time passes. Statements on this call are made as of today, and the company undertakes no obligation to update any of that forward-looking statements contained, whether as a result of new information, future events, changes in expectations or otherwise. Investors are reminded that actual events or results may differ materially from those projected, including a result of the effects of general economic conditions, the effects of the COVID-19 pandemic on global markets and on the markets in which we operate, including the risk of continued disruption to our and our customers, providers, business partners and contractors business. risks related to the concentration of a significant portion of cantex expected business in certain countries particularly china from which we expect to generate a significant portion of our revenues for the coming quarters as well as taiwan and korea including the risks of deviations from expectations regarding timing and size of orders from those customers in those countries changing industry market trends reduce demand for our products the timely development of our new products and their adoption by the market increased competition in the industry, price reductions, as well as due to other risks identified in the company's filings with the SEC. Please note that the safe harbour statement in today's press release also covers the contents of this conference call. In addition, during this call, certain non-GAAP financial measures will be discussed. These are used by Chemtech to make strategic decisions, forecast future results, and evaluate the company's current performance. Management believes that the presentation of non-GAAP financial measures are useful to investors' understanding and assessment of the company's ongoing core operations and prospects for the future. A full reconciliation of non-GAAP to GAAP financial measures are included in today's earnings release. I would now like to hand over to Rathi, Camtech CEO. Rathi, please go ahead. Thank you, Kenny. Good morning for everyone.

The last quarter concluded a phenomenal year for Camtech. In Q4, our revenue was $74 million, with operating profit of $21 million and 28% operating margin. 2021 was a record year for CapTech in all aspects. Revenue for the whole year was about $270 million, over 70% growth compared with 2020 and operating profit of $77 million. Since 2017, revenue has multiplied three times and net profit seven times. We also achieved very important goals. We became the main leader in the inspection and metrology for the mid-end segment. We installed our system at all top semiconductors manufacturers. We penetrated the front end segment, which now accounts for 20% of our sales. we reached an installed base of over 1,500 systems at over 130 active customers. With 2021 behind us, 2022 is shaping up to be another growth year. We started the year with a healthy backlog and received over $40 million of order since the beginning of this year. leading to a very good visibility for the first half of 2022, with the second half of the year starting to build up nicely. I expect revenue in the first quarter of 2022 to be between $75 to $76 million, with continued growth in Q2. Last November, we finalized a $200 million convertible notes offering at favorable terms. The main reason for this transaction was to make sure that we have enough cash to support our growth strategy, including inorganic growth. In the fourth quarter, about 50% of our sales were for advanced interconnect packaging mainly for heterogeneous integration and fan-out. 15% of our revenue were for inspecting compound semi-wafers. These wafer are used for power devices and RF devices, which will go into mobile phone and for automotive industry, especially for electric cars. About 20% of our sales were for front-end applications which continue to grow and has become a significant part of our business. In Q4, sales to Europe and U.S. accounted for about 22% of total sales, and I expect these territories to continue to generate significant revenue in the coming years. China continues to be our largest territory this quarter. We have managed to ramp the business by 70% in 2021 and our operations were able to keep up with the pace. We invested in our infrastructure and our facility is ready to support continued strong growth. We are investing substantial efforts to overcome the shortage and long lead times in the supply chain. So far, we have done this successfully. This is the major focus of the company and will continue to be so. We are increasing our R&D investment and we expect to launch several innovative products in 2022. 2021 was an exceptional year for the semiconductor industry as there was a great demand for semiconductor components, but a lack of fab production capacity. At the same time, the COVID-19 epidemic continued to disrupt daily life. Obtaining parts and materials due to the shortage in supply chain was also a challenging issue. Despite all that, Comtech has managed to increase its revenue by 70% compared to 2020. As for 2022, I am extremely encouraged with the strong start for 2022. The shortage in supply chain will continue to be a challenge and risk. However, we are doing all efforts to properly manage the shortage in supply chain and make 2022 another growth year. Regarding the 20 million order for two tier one IDM that we announced earlier this week, these systems provide inspection and metrology solutions to the most challenging applications in the field of advanced interconnect packaging. On this occasion, I would like to thank those customers who trust us and choose us as their main provider for the most challenging applications. and to all our dedicated employees and management for all the hard work, which was crucial in delivering such an amazing performance in 2021. I would like to hand over to Moshe for a more detailed discussion of the financial results. Moshe.

Thank you, Rafi. In my financial summary ahead, I will provide the results on a longer basis. The reconciliation between the gap results and the non-gap results appear in the table at the end of the press release issued earlier today. Fourth quarter revenue came at a record $74.2 million, an increase of 53% compared with the fourth quarter of 2020 and 5% compared with the previous quarter. This marks the seventh consecutive quarter of growth. The geographic revenue split for the quarter was as follows. Asia, 78%, and the rest of the world accounted for 22%. This represents a significant increase in the revenue from US and Europe. Gross profit for the quarter was $37.8 million. The gross margin for the quarter was 50.9% versus 48.2% in the fourth quarter of last year. and 50.9% in the previous quarter. This is the fourth quarter in a row of gross margin of above 50%, a result of the significant increase in the business volume. I remind you that the gross margin also varies as a function of the sales mix, typically within the range of 50.5% to 51.5%. We expect higher than usual gross margin in Q1 of 2022 due to favorable mix. Operating expenses in the quarter were $16.8 million. This is compared with $14.2 million in the fourth quarter of last year and to the $14.3 million reported in the previous quarter. As we said in the previous call, both R&D and sales expenses increased in Q4. This was a result of a planned investment in R&D and the sales channel mix in the quarter. The effect of this was a slight reduction in the operating margin to 28% from 30.6% in the third quarter. We expect further increase in our OPEX in Q1, in particular due to continued expansion in R&D and sales. Yet, with the higher gross margin, I expect operating margin to be similar to the current level. Net income for the fourth quarter of 2021 was 19.7 million dollars or 43 cents per diluted share. This is compared to a net income of 8.8 million dollars or 21 cents per share in the fourth quarter of last year. Total diluted number of shares as of the end of the fourth quarter was 46.3 million. As a result of the successful completion of the convertible notes offering, we need to include the potential shares of 3.3 million shares in the number of the diluted share. As the transaction took place in mid-November, the effect in the fourth quarter is partial. In the first quarter of 2022, there will be further increase. In the company gap results, we recorded a one-time tax expense of $5.3 million with respect to historical exempt income. I would like to provide some more details on this. The company elected to take advantage of the temporary rule, which is applicable to 2022 only, and pay a reduced tax rate on its exempt earnings to allow the company to distribute dividends from these earnings in the future with no additional corporate tax liability. Turning to some high-level balance sheet and cash flow metrics, we generated $21.5 million in cash from operations in the quarter. Following the convertible note transaction in November, total cash and cash equivalents and short-term deposits together with the $32 million cash that we have in the long-term deposits is $430 million. Inventory level was $63.9 million and it went up by $2.1 million over the quarter. This is to support the current demand for our products and to ensure the availability of key components. We monitor the supply chain concerns on an ongoing basis. At this point, we do not foresee any impact on our projected revenues. And finally, guidance. We expect revenues of 75 to 76 million dollars in the first quarter and continued growth in Q2. And with that, Rafi, Rami and myself will be open to take your questions. Kenny?

Thank you, Moshe. We will now open the call for the question and answer session. The way you can ask a question is by raising your hand on the platform. So we'll give a moment to review who wants to ask questions. And our first question will be from Tom O'Malley from Barclays. Tom, you can go ahead and talk.

Hey guys, thanks for taking my question. Congrats on the nice results. The order patterns look good to start the year here. I just wanted to ask a question on the broader year. You've seen a lot of equipment guys report already and talk about a WFE growth rate that's, you know, above 20% for the calendar year 2022. Can you talk about, you know, why advanced packaging would be a greater or lesser growth rate than that for the year? And when you look at, you know, what's maybe limiting you not getting to that greater than 20% growth rate, is it supply or are you guys just being kind of conservative to start the year here?

Okay. Ralph is talking. First of all, you know, we have to distinguish between the front end equipment and the back end and the mid end. there are some always delay between them. If most of the front-end company, they announce about order and growing about 20%, I would say that if we take just specific investment, we can consider having for us the result about a year later. There are always delay between the front-end and the middle, just in general. Now, the advanced packaging and other mid-end applications sometimes do not behave like the front-end. This is from our experience many years that we saw that the front-end was almost, we didn't see any increase. We made an excellent increase. So it is not so easy to find correlation between these two, but in general, I totally agree that the The positive trend in the semiconductor sooner or later will come to our field and we will enjoy it. When exactly will be the timing, we don't know yet. In general, in the mid-end, the delivery time is shorter than the front-end. Our customer can place order six weeks, eight weeks, ten weeks. That's good enough for them. I think the front end delivery time is much longer and it's a matter of infrastructure or building new fabs and expansion. So they know more about the all year plan. Okay, this is just to give you, you know, an idea about.

That's very helpful. I appreciate that. I just have one more. Moshe, you talked about the if-converted method. You saw shares tick up by about half of the amount of the convert that you described. Is a good way to think about the March quarter scenario? having the other half come in. So, you know, close to 48 million shares. And when you just take the midpoint of your guidance, which is out margin and, you know, the 13.6%, you know, percent range, which is where you guys were in the December quarter. It looks like when you do the math there, you have EPS declining slightly. Is that the right way to think about the quarter over quarter because of the change? Do you see some EPS headwind?

First of all, with respect to the number of shares, you are correct. The applicable number of shares for end of Q1 will be approximately 48 million shares. I said that we will see the same margin for the operating margin. That means that on a higher level of revenues, we will see an improvement in the absolute dollar value. And I expect, therefore, that the EPS to be pretty much the same as this quarter.

Thanks, Moshe. Thanks, guys. Appreciate it.

The next question will be from Brian Shin of Stiefel. Brian, you may go ahead and talk.

Great. Can you hear me okay?

Yes, we hear you very well.

All right, perfect. Congratulations on the good results. And thanks for letting us ask a few questions. And maybe just a couple here. To start with the magnitude of growth you're anticipating in the June quarter. I know you gave more of a directional indication, but again. The order intake and backlog does support good business trends. Are we talking maybe, you know, ballpark 10% sequential growth? And I ask because I don't think seasonality is a strong factor for the business per se, but the past few years, Camtech has exhibited very strong sequential growth in prior June quarters.

Regarding, you know, our estimate about the growth rate, again, It is not so simple. As I said before, because we know very well the first app, we don't have enough information for the second app. But in general, I don't see that we are going to lose any competitive position. I don't think we are going to lose any orders. And it doesn't matter when our customer in the mid-end plan to place order. And some of them maybe surprise us and give it later. Some of them We do it in shorter delivery time. So this is why we cannot give enough, I would say, good forecast for the whole year. We can see very good the first half. By the way, a year ago, the maximum we can see is a quarter head. Now we can see two quarter heads. It's excellent. But that's it. We cannot see more than that. But in general, I think the positive environment definitely is can work for us, but we will know later about it, not now.

Okay. Fair enough. And maybe this is a little bit related, but we're clearly beginning to see good order take from the heterogeneous integration applications. If you had to put a finger on it, when do you think the spending has a real chance to begin to accelerate? Do you think second half this year, first half next? And also for Camtech, what do you think the customer breadth should look like, or will it be a little bit more concentrated?

Rami, do you want to share about it? So no doubt that when we look at the advanced packaging as a segment, it is continuing to grow. And out in the advanced packaging, there are two main segments that are growing much faster, and this is the heterogeneous integration and the phenom. As for the heterogeneous integration, this is something that already started in magnitude in 21. And definitely we are seeing this trend growing much faster in 22 and beyond. No doubt the applications are there. It's primarily the high performance computing. And when you look at the breadth of applications from the cloud applications and all the AI that is popping up in many, many applications, definitely this segment is going to grow. One good example is the high-band memory. You can see that growing very fast. So we are seeing the heterogeneous integration really growing in two ways. One, you see it on the general heterogeneous integration, and then you see the high-bandwidth memory also accelerating. We're definitely seeing a lot of DRAM activities this year. I think we mentioned it in previous calls. We will start to ship to the DRAM world, which is very much related to this segment, already in the first quarter of this year. So that's definitely a positive news in the overall advanced packaging environment.

Great. That's very helpful. Maybe just to sneak one last one in. you referenced some new products this year. Can you maybe just talk about how large your existing SAM is and how much these new products could potentially increase your SAM and also whether you expect a meaningful contribution to revenue this year?

Ravi, you continue with that? We look at our SAM and we estimate today at about $800 million. Those products will definitely increase it. And I believe once we will launch them, we'll definitely go beyond the $1 billion mark.

Great. Thank you so much.

Okay. Thanks for that, Brian. Our next question will be from Jamie Zakalik of Bank of America. Jamie, you may go ahead and talk.

Hi, can you hear me okay?

Yes.

Okay, great. Thanks for letting me ask a question. So some of your SEMICAP peers highlighted supply issues in late December that impacted Q1, some of them even up to 10% impact. Does your March quarter guide assume any sort of impact from supply constraints? And if not, what is Camtech doing differently from peers to mitigate these supply issues?

Okay, I think in general, we organized our purchasing and inventory maybe more than a year ago when we just started the beginning of this problem. And we increased our inventory. All the long-lead items were ordered on time. And I think that we have a very good operations system that doing day by day. I couldn't say that we don't have issue and challenge and sometime we have to find the replacement for some component. But in general, I think you, by the way, you can see in the result that our inventory going up and one of the main reason that some need a long lead item, we have to, place order even a year ahead. In the past, we didn't place order so long. So I think we did it on time and we do it day by day. And up to now, we believe we managed it successfully. Hopefully, we continue doing it in 2022 as well.

That's helpful. For my follow-up, you mentioned higher gross margins in Q1. on a favorable mix, which applications are most accretive to margins? And do you expect those markets to be, you know, faster growth markets throughout 2022? So maybe these higher margins could sustain throughout the year?

Moshe, do you want to answer for that? Yes. It's not necessarily, first of all, advanced packaging, you know, we have a nice gross margin on advanced packaging, but then it's not different from previous quarters. It's more like a specific product mix or deal mix that we have in the first quarter that favor or resulting in a favorable gross margin.

And did you quantify, is it still within your long-term range or is it potentially above that?

Our gross margin, typical gross margin varies between 50.5 to 51.5, as I've mentioned in my prepared remarks. This quarter, we expect it to be higher. And overall, we are making efforts and we are increasing, we are making other activities within the operations to make it more productive and to improve the gross margin. To what extent this will have an impact this year, it's too early. The visibility that we have for Q1 shows, indicates a higher gross margin.

That's helpful. And I'll squeeze one more in here and then I'll jump back in the queue. But I wanted to ask some follow-ups about the $20 million design win. Can you give any color on timing? Was anything recognized in Q4? Is it all going to be recognized in 22? And then also geographically, do these wins help expand your exposure to the U.S. and Europe markets?

Well, first of all, this win relates only to 22. And so from that point of view, that's nothing to do with 21. Reza Azard, And no doubt, this is a, as we mentioned, this is a the higher end applications of advanced packaging so so no doubt these these orders are a very important and. Obviously, we are very careful to speak about customers' names and regions, but these are two leading IDMs. They're really in the very top of the list.

Got it. Thanks, guys.

Thanks, Jamie. Our next question is going to be from Charles Shee of Needham. Charles, you may go ahead.

Hi, Anna. Thank you for taking my question, Rafi, Moshe, Rami. Maybe the first question is still a follow-up on the 20 million order you announced earlier. You said it's targeting the most challenging applications coming from two of the tier one IDMs. I know you probably are not going to name the customers, but Can you give us a sense whether the IDMs are in the leading logic or memory or auto industrial or like your traditional market, like a CMOS image sensor, some end market color would be great. Thank you.

You know, Charles, we're very careful about the names of customers. What I can say is what I said in the previous, it really is for the very top names on the list. I can say that it's not related to memory.

So maybe the second question, I look at your order announcements history, seems like every year at the beginning, you have a good visibility into the first half, maybe by the end of March, early April, you start to make new announcements on orders and that could contribute to like a Q3 of the year. My question is, based on what you see in terms of the ordering, are you expecting a similar pace in terms of how your order book is filling up, especially for Q3 this year? And I have a follow up after this.

I mean, well,

I'll tell you a charts. It's very hard to compare it because the mix is different and it's very hard to look at the year before and compare it to this year. I think, as we said, the orders, the flow of the orders. And when we see the applications and we see the market trends, definitely it's a very healthy first half. And we are starting to see a very nice buildup. of applications customers inputs and also backlog into the second quarter and into the second half of 22. it's a little bit too early to give the whole picture of 22 and this is very typical to the kind of business that we're in and the the customers our customers their forecast is a little bit I would say shorter, or the visibility they provide us is shorter than if you compare it to the WFE. But no doubt, it's building up to be a growth.

Got it, got it. So quick follow-up to that, still kind of related to the second half. I know for most of the years in the past, you kind of have a steady, kind of linear growth throughout the year. I mean, maybe with a couple exceptions, like in 2019. So I wonder what's your thinking so far? Because last night, I think ASC, they talked about relatively linear continued growth for their business. I don't know whether that's a good indicator for your business or not, but are you kind of expecting the similar seasonality pattern or revenue profile throughout the rest of 22? If that's going to be a little different, say maybe second half going up or going down? What will decide? What are the leading indicators you're looking at?

Thank you. So first of all, you know, Charles, what differs a company from this market is the fact that we have 130 customers. And we cover quite a few different segments that grow at different pace. And this is why it's sort of hard to say I think that in our prepared notes, we said that we definitely see a growth into the second quarter, and we are behind it. Above that, you know, things are building up positively. It's very, very hard for us to give more accurate projection at this stage. But definitely, it's a very good start for the year.

Thank you, Rami.

That's all from me. Thank you. Thanks, Charles. Next, we'll go to Gus Rashad of Northlands. Gus, please go ahead. Gus, you need to unmute.

My bad, sorry. Thanks for letting me ask question. In advanced packaging, can you give me a sense of how much is a high bandwidth memory? How much is heterogeneous and how much is fan out? Just a relative mix?

How much is it from the mix? I'm trying to think of the numbers. I would say, and, you know, first of all, I want to try and look from, you know, not just a quarter. When you look in a quarter, it's a little bit misleading. But if I look at the entire year, so... No doubt, first of all, you know, there is the broad applications in the advanced packaging of all the different customers. And this would probably, this is still a big portion. If I'm looking at the, it's a significant percent, the heterogeneous integration in the overall business. The fan out is also very significant. The high bank memory, is a little smaller in magnitude. And then comes a lot of different and smaller applications.

Okay. Got it. Got it. And that's just in terms of advanced packaging, correct?

Absolutely. We're talking just about the 50% of our business that is advanced packaging.

Got it. And then could you do the same split foundry, OSAC, in terms of advanced packaging, just to give us a sense of where the revenue in that bucket is coming from?

Well, this is a little bit harder for me just to give you this number from the top of my head, but definitely the IDMs is an important portion. Then comes the OSATs that are very important because there are many of them and they covers a lot of applications. Some of them are not high end application in advanced packaging, but still the quantities are very large. And then obviously it comes the foundries and here it depends, it differs. So it would be very hard at this stage to give you here an accurate number or an accurate indication.

Got it. That's super helpful. Thanks. And then I'm just curious in your front end applications, is that, you know, currently dominated by, you know, discrets or compound? Can you give any color on what sorts of front end customers you have?

Well, the portion that we do is more related to the, what we call the back end of the line of the front end. So here you would see a variety of applications from trailing edges to leading edges. It would be both. It's not just one of them. It would be many applications. And this is, as we said, it's about 20% of our business. This is this portion. And then comes what we call the compound semi that we separated. And we look at it as a separate business. And this is about 15%. And this is definitely growing. A lot of it, obviously, is related to automotive, silicon carbide. But there are applications there like LiDAR, face recognition, which are more slightly different materials, but still in the same market segment.

And then in the 10K, do you disclose urine backlog? And then if you do, can you give us a little preview of what that might be?

No, actually, we do not provide in our 20F, which is the equivalent of 10K for US companies, for foreign issuers. We do not provide any backlog information. So typically, we do not provide it also in our conference calls.

OK, fair enough. Thanks so much. Thank you. Thank you, Gus.

Thanks, Gus. We'll now go back to Jamie Zakalik of Bank of America for a follow-on question. Jamie, you may unmute.

Thanks. Thanks for letting me ask a follow-up. I had a question on OpEx. It looks like it's starting the year pretty high based on my calculations, maybe in the $18 million range. How should we think about OpEx throughout the year? Is this the quarterly rate we should be thinking about? Are you guys going to potentially grow it sequentially each quarter. Basically, how should we think about it throughout the year?

Well, without referring specifically to the number, I think what we plan on OPEX is pretty flat quarters. We do not plan to increase much above and beyond the increase that you already see in Q4 and Q1. So it will be pretty flat-ish OPEX level throughout the year.

And my last one would be, when you're looking at the year from the visibility you have now, if you had to rank order your applications on which could grow fastest and which might be slightly less fast growth this year, how would you rank the applications across advanced packaging, compound semis, front end, et cetera?

So let's go back, no doubt. Front end is 50% of our business. It's a very robust growth. And there are a couple of segments there that are going to grow very fast. And definitely we are going to enjoy them. So there specifically, we talked about the heterogeneous integration. We talked about the fan out. And we talked about the DRAM transition to high bandwidth memory. Definitely, these are three strong trends that are going to be very dominant in 2022, and I believe also in 2023. So definitely, this segment is very strong. It will grow, and we are very confident about it. I think we've grown very fast in the front end. This is 20% of our business. We see continued growth there. We have a nice backlog for the first and second quarter for this segment. And similarly, the compound semi, which is about 15%. So those three segments are definitely very strong. And then there are the others that we didn't talk about. like the CMOS image sensors, an area that we dominate that is around the double digits of our business. This business is definitely going to be there. And I'm expecting that it will be in similar range in this year as well. And if you take 130 customers, so we're very confident that this is going to be a very, it's going to be a good growth year.

Okay.

Great. Thank you, guys. Congrats on the results.

Thank you. Thanks, Jamie. Our next question is from Udi Levin of Accords. Udi, you may go ahead and ask. After you unmute yourself.

Hi. Hello. I just wanted to understand that if the margin of the research and the setting standards supposed to be and still I see that it's kind of lower than the other year and I wanted to ask about the future if you see this continue Udi you came across unclear if you can please repeat the question Rafi did you hear me? do you hear me? yeah we hear you

I hear you, but I couldn't understand your question.

OK. I just wanted to ask about the margin of the research and development cost and the setting and the general administration's cost. If I saw that the margins go lower, and I wanted to know if in 2022, it will continue the same margin that it was 2021. OK.

Actually, we did say in previous calls, Udi, that we plan to increase R&D and sales and marketing, the company is growing and in order to support the growth, we needed to invest more in R&D and in sales channels. So what you have seen in fourth quarter and you will continue to see in the first quarter is somewhat an increase in this level of spending. As I said to Jamie, after this, you will see more like a flourish R&D and sales and marketing for the rest of the year.

Okay. Thank you, Ani. If anybody else has a question they would like to ask, please raise your hand and we'll give a few moments to poll to see if there is any additional questions. So we have a question. No, we do not. Oh, we do have a question from Alon Lars. Alon, you may go ahead and ask.

Hi, thank you for taking my question. You spoke every quarter also about the introduction of new products that are supposed to be in the coming quarters. Could you please provide some details about that? What kind of products are planned to be introduced to what areas and what's the prospect of their selling in the coming year or two?

Okay, I can maybe, you know, we talk about new products. Actually, it's like we call it like ongoing. You know, almost every order we get, there are some special developments, some special features. And many times we develop products and features while we get the order. So there are many, many orders, many features. I would say new product that we launch all the time. We don't announce on any one of them. Only when we go to a new platform or something really major system, we usually make announcement. This is in general. So we always say that the 2022, we plan to launch innovation product, innovative product. We mean definitely it will be some new platforms. more features on the Eagle and the new platforms. So we have a lot of new, I would say, innovative product will be launched next year. And by time, we will definitely talk about it. We'll explain what the purpose of this product and what we expect from such product.

It is a follow-up, and it's related to the R&D intensity. We have seen in 2021 a quite significant decline in the R&D intensity because of the increase in sales, quite robust increase in sales, while R&D was quite flat, which is speaking about the operating leverage. But to what extent this is something which is sustainable, or is there a need to go to somehow – higher levels of R&D intensity in order to support future growth or future prospects of new innovations.

But let me just give you something about your statement. Definitely R&D in the last year should support the sales and most of the R&D efforts were to support the sales. But while we support the sales, many of the support are what we call long-term product, long-term development that we already plan to launch in some time. So I couldn't say that all the efforts just go to support the ongoing without thinking about the long-term. Now, developing a new platform, usually this is the project that takes a few years, okay? In our world, the accuracy, the demand, the application, it takes time, takes time always to come with totally new product or new platform. So this is what we call, we have a dedicated team that working only on the long term. But all together, we definitely have a new product. And even while we put a lot of efforts in 2021, we came with the fourth generation of the Eagle. We came to many feature of side inspection, side edge inspection, and back inspection, and many different sensors. A lot of things that we don't make any announcement for every one of them, but definitely customers are very aware about our capability and what type of product we provided them during this year.

Thank you very much. Just to complete alone the answer, As we said, R&D spending last year was somewhat lower than what we wanted because it took us some time to hire people. There was a big race after talented engineers. So it took us some time to hire the people that we wanted and to increase the level of expenses. which are absolutely mandatory for our continuous growth. And I think that during the fourth quarter and in the first quarter, we have managed to improve this. We have added more people to the R&D team and sales and marketing as well. And as a result, what you will see in 2022 is a higher level of R&D expenses.

Thank you, Alonso.

Thank you.

Okay, thanks. That would end our Q&A session. Before I hand back to Rafi, I just want to remind everybody that in the coming hours, this call, the recording will be uploaded to Camtech's Investor Relations website. And with that, I'd now like to hand over to Rafi for his closing statement. Rafi, please go ahead.

Okay, I would like to thank all of you for your continued interest in our business. Again, I would like to thank all our employees and my management team for their tremendous performance and we look forward to continuing it. To our investor, I thank your long-term support. I look forward to talking with you again next quarter. Thank you very much and goodbye.