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. 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 Security's 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 statements 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. 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 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. Rafi Amit, Camtech CEO. Rafi, please go ahead.

Thanks, Kenny. Hello, everyone. I will open with a review of the quarterly financial results. First quarter revenue reached $121.7 million, slightly ahead of our guidance. The gross margin was 51% and operating income totaled $31 million. Approximately 50% of revenue was driven by AI-related products, while an additional 20% came from other advanced packaging applications. The remaining revenue was generated across a broad range of applications, with a mix similar to previous quarter. We are excited to report that we have experienced an unprecedented start to the year in terms of incoming orders, and provides a strong foundation as we look ahead of 2027. To provide additional color, we have already received order and forecast from two HBA manufacturers for our 3D metrology and 2D inspection steps, representing expected revenue exceeding the amount of as well as from other HPC players later this year and into 2027, further reinforcing our growth outlook. We see a compelling opportunity in the OSAT domain, which is currently undergoing a significant wave of investment in advanced packages, particularly for AI-related capacity expansion. As the leading provider in this domain for both 2D inspection and 3D methodology, we expect to be a major beneficiary of this trend. Based on our backlog and pipeline, Our revenue guidance for the second quarter is between $129 million to $131 million. In accordance with our new incoming business I mentioned earlier, we can already say that we expect a surge in revenue in the second half of 2026, with over 25% higher revenues compared with the first half. with the potential to see additional upside based on timing of orders and deliveries between Q4 2026 and early 2027. Our goal has been and we have been highly successful in achieving it to maintain our leadership in market share in 3D bump methodology while continuing to gain share in this 2D inspection market. Our recent order wins clearly demonstrate the success of this objective and we are extremely proud of this achievement. Last year we introduced two new systems Eagle 5G and Oak built on state-of-the-art technologies. These products are designed to support the industry's evolving roadmap in both inspection and metrology. As the industry faces increasing complexity, tighter performance requirements, including sub-6 micron bulb height, metrology, and inspection capability down to 100 nanometer, Along with growing demand for higher throughput, CapTest has continued to invest heavily in platform innovation, advanced AI-based algorithms, and software capabilities. Market adoption of these two products has been exceptionally strong. Together, they account for 30% of our revenue last year, and we expect revenue from this platform to double in 2026. Leveraging our dedicated AI expert team and strategic collaboration with VideoLayer, we have developed cutting-edge capabilities in detection, metrology and classification. These two new capabilities are already delivering breakthrough performance, including significantly higher throughput, improved detection sensitivity, reduced force alarm and enhanced measurement accuracy. further strengthening our competitive edge. We have demonstrated these capabilities to strategic customers and received very enthusiastic feedback. The innovations we have developed are expected to enable us to expand our 2D market share, win additional process steps across the manufacturing flow, including the front-end, This is expected to significantly increase our total addressable market to over 2 billion in 2027. Over the coming months, we plan to complete integrating all these new AI features into our system. A few weeks ago, we announced the acquisition of Video Adriers. I am now happy to recall that couple of weeks ago, we have managed to close this production and have already started to fully integrate their technology and capabilities into ComTech products. I would like to provide additional color on the rationale behind this acquisition. Over the past year, we collaborated with Visual Layer on an AI-focused project and integrated its technology into our products. The success of this partnership led us to acquire the company, enabling the full integration of its technology, AI research capabilities and engineering team into ComTech groundbreaking AI initiatives. Through Visual Layer, we plan to further expand our offering by developing a dedicated AI-based software product line. To summarize my script, we entered 2026 with record order intake, significantly strengthening our confidence in strong outlook Demand remains robust across AI, HPM, and advanced packaging, while our continued investment in AI-based inspection and methodology is further reinforcing our technology leadership, expanding our market opportunity, and positioning us as sustained growth. And now Moshe will review the financial statements. Ushe.

Thanks, 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 appears in the table at the end of the press release issued earlier today. First quarter revenues came in at $121.7 million, slightly above the first quarter of 2025. Gross profit for the quarter was $62 million. The gross margin for the quarter was 51%, similar to the previous quarter. I expect the gross margin to improve in the second half of the year, in line with our strong revenue forecast and the contribution of the HOC and the Gen5, which are expected to double in revenues versus last year. Operating expenses in the quarter were $30.9 million, compared to $24.4 million in the first quarter of last year, and $28.7 million in the previous quarter. Operating profit in the quarter was $31.1 million compared to the $37.3 million reported in the first quarter of last year and $36.7 million in the fourth quarter. Operating expenses have been increasing mainly in the R&D and server marketing areas to support the expected strong growth in business volume. In addition, Operating expenses went up due to the weaker US dollar against the shekel. As a result, operating margin was 25.5% compared to 31.5% and 28.6% respectively. We expect operating margin to return to around 30% level in the second half of the year. Financial income for the quarter was $8.1 million, compared to $5.4 million reported last year and $8.2 million in the previous quarter. Net income for the first quarter of 2026 was $35.3 million, or $0.70 per diluted share. This is compared to a net income of $38.7 million, or $0.79 per share in the first quarter of last year. Total diluted number of shares as of the end of Q1 was 51.4 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 March 31, 2026, were $850 million, at a similar level as of year-end. With respect to inventory, In the last few months, we have been working to optimize the level of inventory to the point that it is now $816.7 million. As we are heading into a strong growth period, we expect to see an increase from this level in the coming quarter. Due to timing of collections, Account receivables went up to $131.7 million, compared with $90.8 million in the previous quarter, which resulted in a lower cash generation this quarter. As Rafi said before, we expect revenues of $129 to $131 million in the second quarter. And with that, Rafi, Rami, and I will be open to take your questions. Any questions?