Camtek Ltd.

Ladies and gentlemen, thank you for standing by. I would like to welcome all of you to Camtech's result 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 question and answer session. I would like to remind everyone that this conference call is being recorded and the recording will be available from the link in the earnings press release and 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, CEO, Mr. Moshe Eisenberg, CFO, and Mr. Rami Langer, COO. Rafi has a cold and has lost his voice, so Rami will be providing the opening remarks, followed by Moshe, who will then summarize the financial results of the quarter. Following that, we will open the call for the question and answer session. 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, please review Camtex earnings release and SEC filings and specifically the forward-looking statement and risk factors identified in the results press release issued earlier today and such other factors discussed in Camtex most recent annual report on SEC Form 20F. Camtex 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 specified. As a reminder, a detailed reconciliation between GAAP and non-GAAP financial results can be found in today's earnings release. And now, I'd like to hand the call over to Mr. Rami Langa, Camtech COO. Rami, please go ahead.

Thanks, Kemi. Hello, everyone. Camtech concluded the fourth quarter and full year with record results. Fourth quarter revenues reached a quarterly record of $128 million, representing an increase of 9% year-over-year. Gross margin was 51%, and operating margin was 29%. For the full year, I am excited with our revenues, which totaled $496 million, reflecting 16% year-over-year growth. Gross margin was 51.6%, and operating margin reached 30%. These results bring us to our milestone of half a billion dollars in revenues. In terms of revenue mix for the full year, Approximately 50% was driven by AI-related products, 20% came from the other advanced packaging applications. The remaining revenue was distributed across CMOS image sensors, compound semiconductors, front-end and general 2D applications. Regarding our outlook for the first quarter of 2026, In our previous meeting, we indicated that we expect our revenues to be more second-half weighted, following a somewhat slower start to the year, and that we expect 2026 to be a growth year compared to 2025. In line with this, our revenue guidance for the first quarter is to be around $120 million. At the same time, I am pleased to share that the months passed since our previous guidance significantly reinforced our confidence in our forecast regarding the strength of the second half and in our ability to achieve a full year growth in 2026. Moreover, at this point of time, we expect 2026 to be another double-digit growth year for ComTech. This confidence is derived from our pipeline of order and backlog, as well as ongoing interaction with our customers. As you are aware, key customers of ours have made public announcements regarding their investment plans for the coming year and are discussing with us about their plans for the latter part of the year in this respect. Customers have been verifying with us ability to ship and install a double-digit number of systems within a relatively short time frame. Certain customers are finalizing development of their next generation devices and want clarity on which of our system models best fit their requirements. The primary growth engine of the semiconductor industry continues to be high-performance computing components designed for AI applications. As I said, the growth curve expected in 2026 is largely linked to the pace of which device manufacturers, particularly memory suppliers, plan to expand their production capacity. As an example, last week we announced a $25 million order received from an IDM customer for multiple Hawk systems. This order is in addition to previous orders placed in recent months by this customer, bringing the total to approximately $45 million. The customer continues to expand its manufacturing capacity by building new fabs to meet growing demand for components produced for AI applications, and we expect additional orders from this customer. We expect additional major customers of ours to expand their production capacity after this year to meet rising demand for their products. Another major factor supporting our outlook is the proven exceptional performance of our systems, particularly the Hawk and the Eagle Gen 5. Both models were launched about a year ago, and we have already installed dozens of systems of each over the past year. Moreover, Since this introduction, we have continued to invest efforts in our R&D and completed the development of new capabilities to meet the requirements of our customers' next generation products. We have already demonstrated these new capabilities to several customers and received strong validation and interest. The transition to HBM4 is already in process and represents a major opportunity for us. We are the tool of reference for 3D metrology at all major players. We have a significant market share in 2D inspection, which we expect to expand in 2026. We therefore expect to not only maintain our market share in AI-related applications, but to increase it meaningfully Moreover, as our products introduce to the market superior new capabilities, we expect them to enable us to penetrate additional production steps and expand our total available market. To summarize, two major developments coincided during the last several months. We have experienced a significantly increased orders flow and pipeline, thus improving our visibility. In parallel, we have completed the development of new capabilities to meet the requirements of our customers' next generation products, which we expect to enable us to increase our market share and our total available market. We are excited with what we can achieve in 2026. And now, Moshe will review the financial results.

Thank you, Rami. Revenue for the fourth quarter came in at a record $128.1 million, an increase of 9% compared with the fourth quarter of 2024. For the full year, revenues came in at $496.9 million, an increase of 16% compared with 2024. The geographic revenue split for the quarter was as follows. Asia was 89% and the rest of the world accounted for the remainder 11%. Gross profit for the quarter was $65.4 million. The gross margin for the quarter was 51.1%, similar to the previous quarter and slightly better than the 50.6% reported in the fourth quarter of last year. Expenses in the quarter were $28.7 million compared to $23.1 million in the fourth quarter of last year and $27.2 million in the previous quarter. Operating profit in the quarter was $36.7 million compared to the $36.3 million reported in the fourth quarter of last year and $37.6 million in the third quarter. Operating margin was 28.6% compared to 30.9% and 29.9% respectively. For the year, operating margin was 30%, similar to 2024. Financial income for the quarter was $8.2 million compared to $6.2 million reported last year and $6.5 million in the previous quarter. Within that, interest income increase due to the increased cash balance from the strong cash generation and the convertible notes issued towards the end of the third quarter. Net income for the fourth quarter of 2025 was $40.7 million or $0.81 per diluted share. This is compared to a net income of $37.7 million or $0.77 per share in the fourth quarter of last year. Total diluted number of shares as of the end of the fourth quarter was 51.3 million. 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 31, 2025, were $851.1 million. This compared with $794 million at the end of the third quarter. The fourth quarter was characterized by a very strong cash generation of $61.2 million from operations. This is the result of a strong collection and reduction in account receivables, as well as optimization in our inventory levels. Accounts receivables were down by $22 million to $90.8 million compared to $112.5 million in the previous quarter. our day sales outstanding decreased to 65 days from 81 days last quarter. Inventory level is down by $15 million. Having increased our inventory level in the last few quarters to support the launch of the Hawk and the Eagle Jane 5, it is now back to the right level to support the expected revenues in the coming quarters. As for guidance, as Rami explained, said before, we expect revenues of around $120 million in the first quarter, with growth expected in the second quarter and more significant growth in the second half of 2026. And with that, Rami and I will be open to take your questions. Can we?