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. I'm part of the investor relations team at Camtech. All participants other than the presenters are currently muted. Following the formal presentation, I'll provide some instructions for participating in the live question and answer session. I would like to remind everyone that this conference call is being recorded and the recording will be available on Camtech's website from tomorrow. You should have all received by now the company's press release. If not, please view it on the company's website. With me on the call today, we have Mr. Rafi Amit, Camtech CEO, Mr. Moshe Eisenberg, Camtech CFO, and Mr. Rami Langa, Camtech COO. Rafi will open by providing an overview of Camtech's 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 you that the statements made by management on this call will contain forward-looking statements within the meaning of the federal securities laws. Those statements are subject to a range of changes, risks and uncertainties that can cause actual results to vary materially. For more information regarding the risk factors that may impact Camtex results, I would encourage you to review our earnings release and our SEC filings and specifically the forward-looking statements and risk factors identified in the 2024 annual results PR and such other factors discussed in our annual report on Form 20F as published on March 21st, 2024. Camtech does not undertake the obligation to update these forward-looking statements in light of new information or future events. Today's discussion of the financial results will be presented on a non-GAAP financial basis unless otherwise stated. As a reminder, our detailed reconciliation between GAAP and non-GAAP results can be found in today's earnings release. And with that, I would now like to hand the call over to Mr. Rafi Amir, Camtech's CEO. Rafi, please go ahead.

Okay, thanks, Kenny. Hello, everyone. ComTech ended the fourth quarter and the whole year with record results. Q4 revenue were $117 million, an increase of 32% year over year. The operating income was $36.3 million, 42% improvement year over year. Regarding the all-year results, revenue were $429 million, an increase of 36% year-over-year, and operating income came at $130 million, 56% better than last year. The distribution of revenue for the whole year was around 50% for HPC and 20% for other advanced packaging applications. The rest was divided between CIS, compound semi, front-end, and general 2D applications. We are starting 2025 with strong business momentum and expect 2025 to be a year of growth, well beyond the 5% WFE growth estimates. The main growth driver is expected to be high performance computing or HPC in which we are a key provider. The demand in HPC segment remains healthy And overall, we expect the contribution of HPC to our business to be at least 50% in the first half of 2025. Just this week, we received orders totaling over $10 million for HPC-related products, which reinforce our assessment of continued growth in the demand for this segment. We identify a shift in the market regarding manufacturing and packaging of HPC modules where these model are gradually start to be manufactured not only by IDM and foundries, but also by OSATs. This change in trend is a positive opportunity for us as we have a strong position with OSATs in the different regions. From orders we have on hand, our pipeline, and from discussion with customers, our revenue guidance for the first quarter of 2025 is between $118 to $120 million, close to a 25% increase over Q1 last year. We also estimate that the demand for our systems for HPC-related products will continue into 2025 and beyond. In our last call, we discussed the two new models that we have introduced to the market, the Eagle, G5, and the OCO. The Eagle G5 is currently in operation at multiple customers' production lines, delivering excellent performance that aligns with both our expectations and those of our customers. Meanwhile, the Hawk has successfully completed qualifications with several customers, and we anticipate receiving more orders for it in all markets. future. We plan to officially launch the AUK in Semicon Korea show next week. A few words about the AUK and its distinction from the Eagle. The AUK is a new cutting-edge platform engineered for high-end applications, such as detecting 100 nanometer defects, measuring several hundred of million micro bump at pitch lower than 10 microns, all while performing high throughput. These advanced requirements are beyond the scope of the Eagle platform. Although the Eagle models, especially the Eagle G5, provide excellent performances in a variety of applications. The AUX system has high capabilities but also a high price tag, so there is room for both models. Going back to our opportunity in the HPC segment, a major part of our business supports HPC-related hardware. The growing demand for HPC hardware has placed Camtech in a leading position and allowed us to grow significantly in 2024, much beyond the market growth rate. The use of AI capabilities in large organizations is causing rapid growth in demand for HPC. and we are seeing significant investment in server farms around the world in recent years and expect this trend to continue. Looking into the future, we expect to see AI capabilities penetrate edge computing devices such as automotives, robotics, PC, and eventually mobile phone which require the development of powerful dedicated hardware to be implemented in these edge devices. When this happens, it will be a great opportunity for us. In summary, our primary growth engine for the upcoming years will be advanced packaging, particularly in high performance computing, HPC. We are strongly positioned in this sector and with the introduction of our two new advanced systems, we will reinforce our leadership position. And now Moshe will review the financial result. Moshe.

Thank you, Rafi. In my financial summary ahead, I will provide the results on a non-GAAP basis. The reconciliation between the GAAP results and the non-GAAP results appear in the tables at the end of the press release issue earlier today. Fourth quarter revenues came in ahead of our guidance, at a record $117.3 million, an increase of 32% compared with the fourth quarter of 2023, an increase of 4% from last quarter. This is the fifth consecutive record quarter in revenues, For the year, we ended 2024 at $429.2 million versus $315 million last year, which represents 36% increase year over year. The geographic revenue split for the quarter was as follows. 92% Asia and 8% the rest of the world. Gross profit for the quarter was $59.3 million. The gross margin for the quarter was 50.6%, an improvement from the 49.2% reported in the fourth quarter of last year and similar to the third quarter of this year. Operating expenses in the quarter were $23.1 million compared to $18.2 million in the fourth quarter of last year and similar to the $22.9 million in the previous quarter. Operating profit in the quarter was $36.3 million compared to the $25.5 million reported in the fourth quarter of last year and $34.2 million in the third quarter. The increase is mostly due to the increase in revenue levels and accordingly in the gross profit. Operating margin was 30.9% compared to 28.7% and 30.4% respectively. Financial income for the quarter was $6.2 million, an increase from the $5.7 million reported last year and similar to the $6.4 million in the previous quarter. Net income for the fourth quarter of 2024 was $37.7 million, or 77 cents per diluted share. This is compared to a net income of $28.2 million, or 57 cents per share in the fourth quarter of last year. Total diluted number of shares as of the end of Q4 was 49.5 million. For the year in all, we recorded net income of $139 million, 45% improvement over last year. Turning to some high-level balance sheet and cash flow metrics, cash and cash equivalents, including short and long-term deposits and marketable securities, as of December 31st, 2024, were $501.2 million. This compared with $488.7 million at the end of the third quarter. We generated... $16.2 million in cash from operations in the quarter. And for the whole year, we generated $122 million. Inventory level increased to $123.1 million from 116.3. The increase over previous quarter is to support the anticipated sales growth in the coming quarters. Accounts receivables increased to $99.6 million from $71 million in the previous quarter, mostly due to the timing of collection. We have already recorded strong collections since the beginning of 2025, and we expect account receivable level at the end of Q1 to be in line with revenue. DSO as of the end of Q4 was 77 days, down from 90 days a year ago. With respect to guidance, as Rafi said before, we expect revenue of between $118 to $120 million in the first quarter, and that we look forward to a year of growth in 2025. And with that, Rafi, Rami, and I will be open to take your questions.