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 presentation, I will 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 today on the call, 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 Camtex results and discuss recent quarterly 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 Camtix results, I would encourage you to review are earnings release and SEC filings, and specifically the forward-looking statements and risk factors identified in Camtech's 2024 annual results, PR, and other such risk factors discussed in the latest annual report on Form 20 as published on March 21st, 2024. Five, Camtech does not undertake the obligation to update those forward-looking statements in light of new information or future events. Today's discussion of the financial results were presented on a non-GAAP financial basis unless otherwise specified. As a reminder, a detailed reconciliation between GAAP and non-GAAP financial measures and results can be found in today's earnings release. And now I'd like to hand the call over to Rafi Amin, Camtech CEO. Rafi, please go ahead.

Okay, thanks, Kenny. Hello, everyone. Come to conclude the first quarter with record performance. Q1 revenues reach $119 million, reflecting a year-over-year increase of more than 20%. The quarter also saw a significant improvement in gross margin, which rose to over 52%, contributing to a record operating income of over $37 million, a nearly 30% increase compared to the same period last year. The distribution of revenue was 45 to 50% from high performance computing applications and about 20% from other advanced packaging applications. The remaining revenue was distributed among CMOS image sensor, compound semiconductor, front-end applications and general 2D applications. As OSATs began producing modules for the HPC market, it is challenging to determine which of our systems installed at OSATs were specifically intended for HPC modules versus other advanced packaging applications. As a result, we are providing a range. During the quarter, we sold systems to over 35 different customers, with many purchasing only one or two tools. This highlights the robustness and diversity of our business model. There is a broad consensus that the tariff policy and the geopolitical situation have created some uncertainties in the market environment. However, the tariff policy does not directly affect us in any material way, as most of our sales are not targeted at the US market, and our manufacturing is based in Israel and Europe. That said, the geopolitical issues and tariff policy have been raising concern, particularly regarding their potential negative impact on the global economy and the demand for end products containing electronic components and therefore affects visibility in our market. Regarding the impact on ComTech business, currently we have not seen any impact on our business in terms of delays or order cancellation. We have customer base spread across different regions and we have technological leadership and maintain competitiveness. Regarding our guidance, we continue to see strong momentum heading into the second quarter and based on current orders, our pipeline and ongoing customer engagement, we are guiding Q2 2025 revenue in the range of $120 million to $123 million, representing approximately 18% year-over-year growth compared to the second quarter of 2024. In addition, we have a healthy backlog for Q3 and expect a solid quarter. Regarding HPC segments, We continue to see ongoing investment in the HPC segment with differing momentum across regions, some experiencing slower investment while other progress at a faster pace. Our customers, including OSATs, are consistently expanding their capacity in both coax, coax-like technologies, as well as HBM. Our primary growth engine for the upcoming years will be advanced packaging, particularly in high-performance computing, supporting the AI applications. New technologies are expected to be introduced, for example, HBM device maker are preparing for higher memory content as well as transition to HBM4 next year. The outcome is expected to drive new tools requirements with better technical capabilities. We believe we are in a very strong competitive position supported by the successful launch of two new models, the Eagle G5 and the Oak, both of which have been extremely well received and highly valued by our customers. These two models bring cutting edge technology to the market. and we expect them to account for a significant portion of our revenue this year. This is a significant milestone reflecting the strong confidence our customers have in our latest technologies. A noteworthy example of our customers' recognition and support of our technology is the recently announced Intel EPYC Supplier Aware. The Intel EPYC Aware honor top performances in Intel supply chain for their commitment to EPYC performance. Excellent partnership, inclusion, and continuous improvement. Out of thousands of Intel suppliers globally, only a few hundred qualify to participate in the EPYC supplier program. To earn the Intel EPYC supplier award, companies must not only meet but exceed Intel's highest expectations and achieve ambitious strategic objectives that align with Intel core priorities. In conclusion, we are fully aware of the global business uncertainty, and we remain in close dialogue with our customers to continuously assess and monitor the situation. However, I believe that Camtech diversify customer base, technological edge, and our strong market position in the advanced packaging market provide us with great resilience compared to our peers. We are a leading provider of AOI system offering highly competitive capabilities in the advanced packaging market with a particular focus on the fastest growing segment of the HPC. Our customer base is geopolitically diverse and we are proud to serve over 200 active customers worldwide. The unique combination of scale and flexibility is a key reason why many customers choose to work with us over larger competitors, who are often slower to respond. And now, Moshe will review the financial results. Moshe?

Thanks, Afi. First quarter revenues came in at a record $118.6 million, an increase of 22% compared with the first quarter of 2024. The geographic revenue split for the quarter was Asia, 91%, and the rest of the world, 9%. Gross profit for the quarter was $61.8 million. The gross margin for the quarter was 52.1%, an improvement from 50.6% reported both in the first quarter of last year and previous quarter. This is on the high end of our range supported by a favorable mix in the quarter. Operating expenses in the quarter were $24.4 million compared to $20.2 million in the first quarter of last year and $23.1 million in the previous quarter. In the last few quarters, we have been increasing our R&D and sales and SG&A expenses to support the growth in revenue. Operating profit in the quarter was $37.3 million compared to the $29 million reported in the first quarter of last year and $36.3 million in the fourth quarter. The increase is due to the increase in gross profit partially offset by the increasing operating expenses. Operating margin was 31.5% compared to the 29.9% and 30.9% respectively. Financial income for the quarter was $5.4 million, a decrease from the $5.6 million reported last year and from the $6.2 million in the previous quarter. The decrease was caused by exchange rate differences versus the US dollars. Net income in the first quarter of 2025 was 38.7 million dollars or 79 cents per diluted share. This is compared to a net income of 31.3 million dollars or 64 cents per share in the first quarter of last year. Total diluted number of shares as of the end of the first quarter was 49.3 million. Turning to some high level balance sheet and cash flow metrics. We generated $23.6 million in cash from operations in the quarter. Cash and cash equivalents, including short and long-term deposits and marketable securities as of the end of the quarter were $523 million. This compared with $501 million at the end of the fourth quarter. Inventory level increased to $141.5 million from 123.1. The increase over the quarter is mainly a result of building inventory for the two newly introduced products, the Eagle Gen 5 and Hawk, to support their sales in the coming quarters, which is expected to be significant. Account receivable remains stable at around $100 million, which represents 77 days outstanding. As Rafi said before, we expect revenue of between $120 to $123 million in the second quarter. And with that, Rafi, Rami, and I will be open to take your questions. Tenny?