Camtek Ltd.

Ladies and gentlemen, thank you for standing by. Welcome to Camtech's third quarter 2022 results conference call. All participants are present in 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. You should have all received by now the company's press release. If you have not received it, please contact Camtech's investor relations team at ekglobalinvestorrelations at 1- 212-378-8040, or view it in the news section of the company's website at www.camtech.com. I would now like to hand over the call to Mr. Ehud Helf of EK Global Investor Relations. Mr. Helf, would you like to begin, please?

Thank you, operator. I would like to welcome all of you to Camtech's third quarter 2022 results conference call. Let me remind you that everyone at this conference call is being recorded, and the recording will be available on ComTech's website within a few hours of the call. With us today on the call we have Mr. Rafi Ahmed, the ComTech CEO, Mr. Moshe Eisenberg, ComTech CFO, and Mr. Rami Langer, the ComTech COO. Rafi will open by providing an overview of the ComTech 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 everyone that certain information provided in this call are internal company estimates, unless otherwise specified. This call may also contain forward-looking statements, and I'll refer you to our safe harbor statement that you can read in our press release. Furthermore, during this call, certain non-GAAP financial measures will be discussed. These are used by management to make strategic decisions, focus future results, and evaluate the company's current performance We believe that the presentation of non-GAAP financial measures is useful to investors' understanding and assessment of the company's ongoing cooperation and prospects for the future. A full reconciliation of non-GAAP to GAAP financial measures is included in today's earnings release. And now I would like to hand over the call to Rafi Amit, Camtex CEO. Rafi, go ahead, please.

Thanks, Ehud. Good morning or good afternoon, everyone. ComTech ended another quarter of continued revenue growth. Third quarter revenues were a record of $82 million. A 16% increase year over year. Gross margin came in at 49% and operating margin at 28.3%. Close to 60% of our revenues came from advanced interconnect packaging applications. Heterogeneous integration and HBN account for over 30% of this segment. We continue to expand our customer base. We sold the system to 42 new customers in the first nine months of this year. Specifically, we are cementing our position in the front end and compound semi segments. These two segments accounted for approximately a quarter of our revenues. As widely reported, consumer demand for PC and mobiles is down. As a result, the contribution of CMOS image sensor related system to this year's revenue will be slightly below 10%. This quarter, we continued to strengthen our position in the U.S. and Europe due to major industry investment made there. U.S. and Europe accounted for 27% of our sales. versus 21% last quarter and 12% in Q3 of last year. Q4 revenues are expected to be similar to those of Q3, translating into record annual revenue of around $320 million for 2022. The company diversifies exposure to multiple customers secular trends and territories contributed to our success. Last month, the U.S. Commerce Department announced new regulations restricting the sales and support of semiconductor equipment for advanced nodes in China in both memory and logic. Our customers in China are mainly OSOT, in the advanced packaging segment or manufacturers of trading edge silicon wafers. We continue to evaluate the impact of such restrictions on ComTech, but based on our initial assessment, we believe that the direct revenue impact will be marginal, if any. The global economy is projected to decline 2023 and expected to affect both wafer fab equipment in general and even more so in the memory segment. 2023 is expected to be a challenging year for the industry with customers being more cautious. We believe that although ComTech's business model is not immune, it is however more resilient. I will point a few reasons. One, we support a technology change in the industry of transition to advanced packaging and integration. 60% of our business is related to these segments. This trend is expected to continue.