Camtek Announces Record Results for the Second Quarter of 2018

Record revenue of $30.5 million, 34% increase YoY; Expects continued strong growth in the second half of 2018

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Jul 31, 2018, 07:00 ET

MIGDAL HAEMEK, Israel, July 31, 2018 /PRNewswire/ -- Camtek Ltd. (NASDAQ: CAMT); (TASE: CAMT), today announced its financial results for the quarter ended June 30, 2018.

Highlights of the Second Quarter 2018

Revenues were a record at $30.5 million, up 34% year-over-year and ahead of the upper end of the previously-issued guidance range;
Revenues for the first half of 2018 are up over 30% from 2017;
GAAP operating income was $4.7 million and non-GAAP operating income was $5.0 million, representing a margins of 15.5% and 16.3%, respectively; and
GAAP net income was $4.3 million and non-GAAP net income was $4.6 million; representing margins of 14.2% and 15.0%, respectively.

Forward Looking Guidance

Third quarter 2018 revenues are expected to grow to $31-32 million, representing a year-over-year increase of approximately 30% for the third quarter and for the first nine months of 2018.

Management Comment

Rafi Amit Camtek's CEO commented, "2018 continues to be a very strong year with revenue growth of approximately 30% and corresponding improvement in profitability. Our strong results are due to our focus on the fastest growing segments of the semiconductors market, particularly advanced packaging. Furthermore, we are successfully leveraging our strong market position in metrology to grow and capture market share in 2D inspection applications as well. Our backlog at record levels and our improved visibility into the end of the year, give us confidence that we will continue revenue growth and associated improvement in margins and profit in the fourth quarter of 2018."

The financial results and the comparison to 2017 in this press release include only those of the continuing operations.

Second Quarter 2018 Financial Results

Revenues for the second quarter of 2018 were $30.5 million. This compares to second quarter 2017 revenues of $22.7 million, a growth of 34%.

Gross profit on a GAAP basis in the quarter totaled $14.9 million (48.9% of revenues), compared to a gross profit of $11.2 million (49.2% of revenues) in the second quarter 2017.

Gross profit on a non-GAAP basis in the quarter totaled $14.9 million (49.0% of revenues), compared to $11.2 million (49.2% of revenues) in the second quarter 2017.

Operating profit on a GAAP basis in the quarter totaled $4.7 million (15.5% of revenues), compared to an operating loss of $11.0 million in the second quarter 2017. The 2017 operating loss was due to a $13 million settlement payment for IP litigation.

Operating profit on a non-GAAP basis in the quarter totaled $5.0 million (16.3% of revenues), compared to $2.1 million (9.2% of revenues) in the second quarter 2017.

Net income on a GAAP basis in the quarter totaled $4.3 million, or $0.12 per diluted share, compared to net loss from continuing operations of $5.7 million, or ($0.16) per diluted share, in the second quarter 2017.

Net income on a non-GAAP basis in the quarter totaled $4.6 million, or $0.13 per diluted share, compared to non-GAAP net income from continuing operations of $2.0 million, or $0.06 per diluted share, in the second quarter 2017.

Cash and cash equivalents, as of June 30, 2018, were $41.2 million compared to $47.2 million as of March 31, 2018. During the quarter the Company paid a $5.1 million dividend. In addition, the Company reported a negative operating cash flow of $1.0 million during the second quarter to support the working capital requirements.

Conference Call

Camtek will host a conference call today, July 31, 2018, at 10:00 am ET.

Rafi Amit, CEO, Moshe Eisenberg, CFO and Ramy Langer, COO will host the call and will be available to answer questions after presenting the results. To participate, please call one of the following telephone numbers a few minutes before the start of the call.

US:	1-888-668-9141	at 10:00 am Eastern Time
Israel:	03-918-0609	at 5:00 pm Israel Time
International:	+972-3-918-0609	at 5:00 pm Israel Time

For those unable to participate, the teleconference will be available for replay on Camtek's website at http://www.camtek.com beginning 24 hours after the call.

ABOUT CAMTEK LTD.

Camtek is a leading manufacturer of metrology and inspection equipment and a provider of software solutions serving the Advanced Packaging, Memory, CMOS Image Sensors, MEMS, RF and other segments in the mid end of the semiconductor industry.

Camtek provides dedicated solutions and crucial yield-enhancement data, enabling manufacturers to improve yield and drive down their production costs.

With eight offices around the world, Camtek has best-in-class sales and customer support organization, providing tailor-made solutions in line with customers' requirements.

This press release is available at http://www.camtek.com

This press release may contain projections or other forward-looking statements regarding future events or the future performance of the Company. These statements are only predictions and may change as time passes. We do not assume any obligation to update that information. Actual events or results may differ materially from those projected, including as a result of changing industry and market trends, reduced demand for our products, the timely development of our new products and their adoption by the market, increased competition in the industry, price reductions as well as due to risks identified in the documents filed by the Company with the SEC.

This press release provides financial measures that exclude: (i) settlement expenses; (ii) changes in valuation allowance on deferred tax assets; (iii) share based compensation expenses, (iv) discontinued operations, and (v) write off costs with regard to the FIT activities, and are therefore not calculated in accordance with generally accepted accounting principles (GAAP). Management believes that these Non-GAAP financial measures provide meaningful supplemental information regarding our performance. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Management uses both GAAP and non-GAAP measures when evaluating the business internally and therefore felt it is important to make these non-GAAP adjustments available to investors. A reconciliation between the GAAP and non-GAAP results appears in the tables at the end of this press release.

Consolidated Balance Sheets
(In thousands)
	June 30,	December 31,
	2018	2017
	U.S. Dollars (In thousands)
Assets

Current assets
Cash and cash equivalents	41,204		43,744
Trade accounts receivable, net	32,278		23,153
Inventories	23,693		21,336
Other current assets	2,769		3,215
Total current assets	99,944		91,448
Fixed assets, net	15,731		15,503

Long-term inventory	1,466		1,383
Deferred tax asset	3,308		4,067
Other assets, net	153		153
Intangible assets, net	480		482
	5,407		6,085
Total assets	121,082		113,036

Liabilities and shareholders' equity

Current liabilities
Trade accounts payable	15,174		10,502
Other current liabilities	16,552		17,395

Total current liabilities	31,726		27,897
Long term liabilities
Liability for employee severance benefits	870		838
	870		838
Total liabilities	32,596		28,735

Shareholders' equity
Ordinary shares NIS 0.01 par value, 100,000,000 shares authorized at June 30, 2018 and at December 31, 2017;
38,277,165 issued shares at June 30, 2018 and 37,924,507 at December 31, 2017;
36,184,789 shares outstanding at June 30, 2018 and 35,832,131 at December 31, 2017	149		149
Additional paid-in capital	79,820		78,437
Retained earnings (losses)	10,415		7,613
	90,384		86,199

Treasury stock, at cost (2,092,376 as of June 30, 2018 and December 31, 2017)	(1,898)		(1,898)

Total shareholders' equity	88,486		84,301

Total liabilities and shareholders' equity	121,082		113,036

Consolidated Statements of Operations
(in thousands, except share data)
	Six Months ended June 30,			Three Months ended June 30,				Year ended December 31,
	2018	2017		2018		2017		2017
	U.S. dollars			U.S. dollars				U.S. dollars
Revenues	57,736		43,828		30,462		22,682		93,485
Cost of revenues	29,840		22,384		15,563		11,527		47,966

Gross profit	27,896		21,444		14,899		11,155		45,519

Research and development costs	6,955		6,852		3,406		3,413		13,534
Selling, general and administrative expenses	12,664		11,159		6,775		5,754		22,022
Patent litigation expense	-		13,000		-		13,000		13,000

Total operating expenses	19,619		31,011		10,181		22,167		48,556

Operating income (loss)	8,277		(9,567)		4,718		(11,012)		(3,037)

Financial income (expenses), net	436		(209)		146		(56)		(150)

Income (loss) from continuing operations
before income taxes	8,713		(9,776)		4,864		(11,068)		(3,187)

Income tax benefit (expense)	(848)		5,364		(533)		5,404		4,875

Income (loss) from continuing operations	7,865		(4,412)		4,331		(5,664)		1,688

Discontinued operation
Income from discontinued operation
Income before tax benefit (expense)	-		4,339		-		1,981		18,302
Income tax benefit (expense)	-		(505)		-		(194)		(6,028)

Income from discontinued operation	-		3,834		-		1,787		12,274

Net income (loss)	7,865		(578)		4,331		(3,877)		13,962

Net income (loss) per ordinary share:

Basic earnings (loss) from continuing operation	0.22		(0.12)		0.12		(0.16)		0.05

Basic earnings from discontinued operation	-		0.11		-		0.05		0.35

Diluted earnings (loss) from continuing operation	0.22		(0.12)		0.12		(0.16)		0.05

Diluted earnings from discontinued operation	-		0.11		-		0.05		0.34

Weighted average number of
ordinary shares outstanding:

Basic	36,050		35,359		36,090		35,369		35,441

Diluted	36,512		35,359		36,632		35,369		35,964

Camtek Ltd.
Reconciliation of GAAP To Non-GAAP results
(In thousands, except share data)
	Six Months ended June 30,		Three Months ended June 30,			Year ended December 31,
	2018	2017	2018		2017	2017
	U.S. dollars		U.S. dollars			U.S. dollars
Reported net income (loss) attributable to Camtek Ltd. on GAAP basis	7,865	(578)		4,331	(3,877)		13,962
Effect of FIT reorganization (1)	506	-		-	-		-
Share-based compensation	395	184		249	92		426
Settlement expense, net of tax (2)	-	12,025		-	12,025		12,025
Realization of deferred tax assets (3)	-	(4,495)		-	(4,495)		(4,495)
Attributable to discontinued operations	-	(3,832)		-	(1,787)		(12,274)

Non-GAAP net income	8,766	3,304		4,580	1,958		9,644

Non –GAAP net income per share , basic and diluted	0.24	0.09		0.13	0.06		0.27
Gross margin on GAAP basis from continuing operations	48.4%	48.9%		48.9%	49.2%		48.7%
Reported gross profit on GAAP basis	27,896	21,444		14,899	11,155		45,519
Effect of FIT reorganization (1)	205	-		-	-		-
Share-based compensation	44	19		28	9		44

Non- GAAP gross margin	28,145	21,463		14,927	11,164		45,563
Non-GAAP gross profit	48.8%	48.9%		49.0%	49.2%		48.7%

Reported operating income (loss) attributable to Camtek Ltd. on GAAP basis from continuing operations	8,277	(9,567)		4,718	(11,012)		(3,037)
Effect of FIT reorganization (1)	506	-		-	-		-
Share-based compensation	395	184		249	92		426
Settlement expense (2)	-	13,000		-	13,000		13,000
Non-GAAP operating income	9,178	3,617		4,967	2,080		10,389

(1) At the end of the first quarter of 2018, the Company ceased its efforts to utilize the remaining inventory and equipment related to FIT development and recorded a one-time write-off in the amount of $0.5 million, consisting of: (1) inventory write-offs of $0.2 million, recorded under the cost of revenue line item; and (2) fixed asset write-offs of $0.3 million recorded under operating expenses.

(2) During the three and the six months ended June 30, 2017, and the year ended December 31, 2017, the Company recorded a provision of $13 million ($12 million net of tax) in conjunction settlement with Rudolph Technologies Inc.

(3) During the three and the six months ended June 30, 2017, and the year ended December 31. 2017, the Company recorded net income of $4.5 million as a result of a decrease in the valuation allowance on deferred tax assets following the evaluation of the realizability of the assets based on projected future earnings.

Camtek Ltd.
P.O. Box 544, Ramat Gabriel Industrial Park
Migdal Ha'Emek 23150, ISRAEL
Tel: +972-(4)-604-8100
Fax: +972-(4)-644-0523
E-mail: [email protected]
Web site: http://www.camtek.com

Contacts:

CAMTEK LTD.
Moshe Eisenberg, CFO
Tel: +972-4-604-8308
Mobile: +972-54-900-7100
[email protected]

INTERNATIONAL INVESTOR RELATIONS
GK Investor Relations
Ehud Helft / Gavriel Frohwein
Tel: (US) +1-646-688-3559
[email protected]

SOURCE Camtek Ltd.