Camtek (CAMT) closed the most recent trading day at $70.33, moving -4.23% from the previous trading session. The stock trailed the S&P 500, which registered a daily loss of 1.13%. At the same time, the Dow lost 1.79%, and the tech-heavy Nasdaq lost 1.3%. Prior to today's trading, shares of the maker of automatic optical inspection and process enhancement systems had gained 10.42% outpaced the Computer and Technology sector's gain of 7.36% and the S&P 500's gain of 3.55%.The investment community will be payi ...

Camtek (CAMT) Q1 2025 Earnings Call May 13, 2025 09:00 AM ET Company Participants Rafi Amit - Chief Executive Officer and ChairmanMoshe Eisenberg - Chief Financial OfficerRamy Langer - Chief Operating OfficerMatthew Prisco - DirectorBlayne Curtis - Managing DirectorBrian Chin - DirectorCraig Ellis - Director of ResearchMichael Mani - Equity Research AssociateVivek Arya - Managing Director Conference Call Participants Charles Shi - Managing Director - Senior AnalystKyle Bleustein - Equity AnalystGus Richard ...

Financial Data and Key Metrics Changes - Q1 2025 revenues reached $119 million, reflecting a year-over-year increase of over 20% [5] - Gross margin improved to over 52%, contributing to a record operating income of over $37 million, a nearly 30% increase compared to the same period last year [6] - Net income for Q1 2025 was $38.7 million, or $0.79 per diluted share, compared to $31.3 million, or $0.64 per share in Q1 2024 [15] - Operating margin was 31.5%, compared to 29.9% in Q1 2024 [15] Business Line Data and Key Metrics Changes - Revenue distribution: 45-50% from high-performance computing (HPC) applications, about 20% from other advanced packaging applications, and the remainder from CMOS image sensors, compound semiconductors, and general 2D applications [6] - The company sold systems to over 35 different customers, indicating a robust and diverse business model [7] Market Data and Key Metrics Changes - Geographic revenue split for the quarter was 91% from Asia and 9% from the rest of the world [13] - The company has not seen any material impact from geopolitical issues or tariff policies, as most sales are not targeted at the US market [7] Company Strategy and Development Direction - The primary growth engine for the upcoming years will be advanced packaging, particularly in HPC supporting AI applications [9] - The company is positioned strongly in the advanced packaging market, with a focus on technological leadership and competitiveness [12] - New technologies are expected to drive new tool requirements, particularly with the transition to HBM4 [10] Management's Comments on Operating Environment and Future Outlook - Management noted that while there are uncertainties in the market due to geopolitical issues, they have not experienced delays or order cancellations [8] - The company expects Q2 2025 revenue in the range of $120 million to $123 million, representing approximately 18% year-over-year growth [8] - Management remains optimistic about the growth potential in both HPC and advanced packaging markets [48] Other Important Information - The company generated $23.6 million in cash from operations, with cash and cash equivalents totaling $523 million at the end of the quarter [16] - Inventory levels increased to $141.5 million, primarily due to building inventory for newly introduced products [16] Q&A Session Summary Question: Concerns about competition from KLA - Management expressed confidence in their competitive position, highlighting their ability to meet specific market requirements faster than larger competitors [21][22] Question: Product positioning for HBM4 - Management indicated that customers typically prefer to buy new equipment rather than upgrade existing tools, and they are well-positioned with both the Hawk and Eagle product lines [25][26] Question: HPC revenue outlook for the full year - Management expects HPC to continue to be a strong segment, maintaining a similar revenue range as seen in Q1 [28] Question: Growth outlook for the back half of the year - Management is optimistic about growth, supported by a healthy backlog and pipeline [32] Question: Update on new products - Management reported positive customer feedback and increased orders for the new products, expecting significant revenue contributions in 2025 [36][37] Question: Gross margin outlook - Management expects gross margins to remain within the 51-52% range, with improvements anticipated as new products ramp up [40] Question: Impact of tariffs on competition - Management does not foresee any competitive advantage from tariffs, as they are monitoring the situation closely [41] Question: Trends in HPC and COAS - Management noted growth in both HPC and COAS markets, with optimism about future demand [45][46] Question: Market share in HPC - Management believes they have maintained or grown their market share, particularly in 2D applications [64] Question: Order dynamics and visibility - Management indicated that while there is some caution in the market, they have not experienced material impacts on business [70]

Core Insights - Camtek (CAMT) reported quarterly earnings of $0.79 per share, exceeding the Zacks Consensus Estimate of $0.77 per share, and up from $0.63 per share a year ago [1][2] - The company posted revenues of $118.64 million for the quarter, slightly missing the Zacks Consensus Estimate by 0.30%, but up from $97.01 million year-over-year [3] - The stock has underperformed the market, losing about 14.3% since the beginning of the year compared to the S&P 500's decline of -0.6% [4] Earnings Performance - The earnings surprise for the recent quarter was 2.60%, and the company has surpassed consensus EPS estimates in all four of the last quarters [2] - The current consensus EPS estimate for the upcoming quarter is $0.78, with expected revenues of $120.85 million, and for the current fiscal year, the estimate is $3.16 on revenues of $485.55 million [8] Industry Context - Camtek operates within the Zacks Electronics - Measuring Instruments industry, which is currently ranked in the bottom 10% of over 250 Zacks industries [9] - The industry outlook can significantly impact stock performance, with research indicating that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [9] Future Outlook - The estimate revisions trend for Camtek is currently unfavorable, resulting in a Zacks Rank 4 (Sell), indicating expected underperformance in the near future [7] - The upcoming earnings call will be crucial for assessing future earnings expectations and management's commentary [4][5]

Group 1 - Camtek Ltd. will release its financial results for the first quarter of 2025 on May 13, 2025 [1] - A video conference call will be hosted by the CEO, CFO, and COO on the same day at 9:00 am ET to discuss the results [2] - The call will be available for replay shortly after its conclusion through a provided link or on Camtek's website [3] Group 2 - Camtek is a developer and manufacturer of high-end inspection and metrology equipment for the semiconductor industry [4] - The company's systems inspect integrated circuits and measure features on wafers throughout the semiconductor production process [4] - Camtek serves demanding market segments including Advanced Interconnect Packaging, Heterogeneous Integration, and CMOS Image Sensors, among others [4]

Core Viewpoint - The average brokerage recommendation (ABR) for Camtek (CAMT) is 1.33, indicating a consensus leaning towards a "Strong Buy" [2]. However, reliance solely on this recommendation may not be prudent due to potential biases in brokerage ratings [5][10]. Brokerage Recommendations - Camtek has an ABR of 1.33, with seven out of nine recommendations classified as "Strong Buy" and one as "Buy," representing 77.8% and 11.1% of total recommendations respectively [2]. - The ABR is calculated based on recommendations from nine brokerage firms, suggesting a strong positive sentiment towards Camtek [2]. Limitations of Brokerage Recommendations - Studies indicate that brokerage recommendations often lack success in guiding investors towards stocks with the highest price increase potential [5]. - Analysts from brokerage firms may exhibit a positive bias due to vested interests, leading to a higher number of favorable ratings compared to negative ones [6][10]. Zacks Rank vs. ABR - The Zacks Rank, which is based on earnings estimate revisions, is a more reliable indicator of near-term stock performance compared to the ABR [8][11]. - The Zacks Rank is updated more frequently and reflects timely changes in earnings estimates, while the ABR may not always be current [12]. Current Earnings Estimates for Camtek - The Zacks Consensus Estimate for Camtek's current year earnings has decreased by 1.8% to $3.16 over the past month, indicating growing pessimism among analysts [13]. - Due to the decline in earnings estimates, Camtek has received a Zacks Rank of 4 (Sell), suggesting caution despite the favorable ABR [14].

Group 1 - Khaveen Investments is a global investment advisory firm serving high-net-worth individuals, corporations, associations, and institutions [1] - The firm offers comprehensive services including market and security research, business valuation, and wealth management [1] - The flagship Macroquantamental Hedge Fund maintains a diversified portfolio across various asset classes, geographies, sectors, and industries [1] Group 2 - The investment approach integrates top-down and bottom-up analysis, blending global macro, fundamental, and quantitative strategies [1] - Core expertise lies in disruptive technologies such as Artificial Intelligence, Cloud Computing, 5G, Autonomous and Electric Vehicles, FinTech, Augmented and Virtual Reality, and the Internet of Things (IoT) [1]

Core Points - Camtek has been awarded the Intel EPIC Supplier Award for 2025, recognizing its commitment to continuous improvement and performance excellence in the semiconductor supply chain [1][2] - The award highlights Camtek's status as one of only 37 recipients in Intel's global supply chain, emphasizing its role as a top performer [1][2] - Intel's EPIC Supplier Award criteria include excellence, partnership, inclusion, and continuous improvement, with only a few hundred suppliers qualifying for the program out of thousands [2][3] Company Overview - Camtek is a developer and manufacturer of high-end inspection and metrology equipment specifically for the semiconductor industry, focusing on advanced interconnect packaging, heterogeneous integration, memory, and other demanding market segments [5] - The company operates manufacturing facilities in Israel and Germany, along with eight offices worldwide, providing state-of-the-art solutions tailored to customer requirements [6]

Company Performance - Camtek (CAMT) closed at $58.63, reflecting a decrease of -0.63% from the previous day, underperforming the S&P 500 which gained 0.55% [1] - Over the past month, Camtek's shares have declined by 20.83%, significantly more than the Computer and Technology sector's loss of 8.88% and the S&P 500's loss of 6.22% [2] Financial Expectations - Analysts anticipate Camtek will report earnings of $0.77 per share, indicating a year-over-year growth of 22.22%, with expected revenue of $119.15 million, representing a 22.82% increase compared to the same quarter last year [3] - For the entire fiscal year, earnings are projected at $3.16 per share and revenue at $485.55 million, reflecting increases of +11.66% and +13.12% respectively from the previous year [4] Analyst Sentiment - Recent changes in analyst estimates for Camtek are crucial as they often reflect shifts in short-term business dynamics, with positive revisions suggesting a favorable outlook on the company's health and profitability [5] - The Zacks Rank system, which evaluates estimate changes, currently ranks Camtek at 3 (Hold), with the consensus EPS estimate having decreased by 1.78% over the last 30 days [7] Valuation Metrics - Camtek is currently trading at a Forward P/E ratio of 18.67, which is lower than the industry average of 21.3, indicating a potential valuation discount [8] - The company has a PEG ratio of 1.29, compared to the industry average PEG ratio of 1.55, suggesting a more favorable growth outlook relative to its valuation [8] Industry Context - Camtek operates within the Electronics - Measuring Instruments industry, which is part of the Computer and Technology sector, currently holding a Zacks Industry Rank of 44, placing it in the top 18% of over 250 industries [9]

Shareholder Meeting - The Annual General Meeting of Shareholders is scheduled for April 29, 2025, at 4:00 PM (Israel time) to discuss the independent auditor's report and the audited consolidated financial statements for the year ended December 31, 2024[7][20]. - Shareholders eligible to vote must be recorded by March 25, 2025, with each share entitled to one vote[9][24]. - The agenda includes re-electing board members and approving amendments to the Company's Compensation Policy and Articles of Association[11][25]. - A quorum for the meeting requires shareholders holding at least 33% of the voting power to be present[37]. - Proxies must be received at the Company's Offices no later than 24 hours prior to the meeting or 6 hours for electronic voting[15][32]. - The Company may change the meeting format to virtual if necessary, with timely communication to shareholders[10][22]. - Shareholders can vote electronically through the Electronic Voting System up to 6 hours before the meeting[29]. - The Company will bear the costs of proxy solicitation, including postage and printing[35]. - Joint owners of shares must follow specific voting rights as per the Company's Articles of Association[14][31]. Share Ownership - Priortech Ltd. beneficially owns 9,617,787 shares, representing 21.1% of the total shares outstanding[45]. - Chroma ATE Inc. holds 7,817,440 shares, accounting for 17.1% of the total shares outstanding[45]. - The total number of shares beneficially owned by all office holders as a group is 107,768, which is less than 1% of the total shares[45]. - As of March 4, 2025, there are 45,594,474 shares issued and outstanding[47]. - The total number of options and RSUs that may vest within 60 days is 42,024[47]. - The voting agreement between Priortech and Chroma allows them to jointly control the company and nominate directors[52]. Board of Directors - Seven out of eight directors are classified as independent under Nasdaq Listing Rules[63]. - The company plans to re-elect six directors for a term until the conclusion of the 2026 annual general meeting[54]. - Rafi Amit has served on the board since 1987 and has held various leadership roles within the company[56]. - Orit Stav has 20 years of experience in Venture Capital & Private Equity and serves as a managing partner at Israel Innovation Partners[59]. - Mr. Lior Aviram is proposed to be elected as a director for a term until the conclusion of the 2026 annual general meeting[66]. - Mr. Aviram will also serve as Executive Chairman, enhancing the company's growth initiatives and M&A activities[67][97]. Executive Compensation - Each of Mr. Ben-Arie and Ms. Stav will receive cash remuneration of approximately $40,379 annually, plus per-meeting fees[73]. - The annual equity grant for Ms. Stav and Mr. Ben-Arie is valued at $75,000, consisting of options and RSUs[76][80]. - The Compensation Policy aims to link executive pay to performance and attract talented executives essential for growth[93]. - The company plans to amend the Compensation Policy to clarify the role of the Executive Chairman and enhance hiring authority[96][97]. - The majority of executive compensation is variable and linked to the company's performance, subject to financial thresholds[94]. - The company is focused on accelerated growth through both organic means and acquisitions[95]. - The Company has proposed amendments to its Compensation Policy to allow for higher compensation packages to attract new executives, particularly for the Executive Chairman role, which is currently below the median of peer group companies[100]. - The current three-year CEO equity plan will remain subject to existing Compensation Policy caps, ensuring no changes to current executive compensation levels[102]. - The proposed annual base salary for the new Executive Chairman, Mr. Aviram, is NIS 967,000 (approximately US$ 267,867), which is significantly lower than the Company's CEO compensation[126][128]. - The Executive Chairman's cash bonus plan for 2025 is set at an on-target amount equal to 9 months of base salary, with 60% of the targets based on financial metrics and 40% on non-financial metrics[131]. - The Company maintains a total equity grant limit of 3.5% of total issued share capital, with total dilution not exceeding 10%[109]. - The notice period for the termination of Mr. Aviram's position will be structured to provide three months of notice and an additional nine months of garden leave[127]. - The proposed amendments to the Compensation Policy require shareholder approval and will remain in force until September 25, 2027[113]. - The Company emphasizes long-term incentives and pay-for-performance in its compensation practices, aligning with shareholder interests[106]. - The peer group for compensation benchmarking includes 13 Israeli technology companies listed in the U.S. capital markets, ensuring comparability in market cap and compensation practices[104]. - The proposed Executive Chairman Equity Grant for 2025 is valued at approximately US$1,600,000, which is 150% of the cap set on annual equity awards under the Compensation Policy[134]. - 50% of the 2025 Executive Chairman Equity Grant is subject to performance-based vesting criteria, which include revenue growth matching or exceeding the company's market growth and a minimum Non-GAAP operating margin[137][138]. - The total value of the proposed Executive Chairman Compensation Package for 2025 is below the median levels of the Peer Group CEO pay, even considering the higher initial equity award[136][155]. - The annual dilution from the Executive Chairman Equity Grant is capped at 3.5% of the company's total issued and outstanding share capital, significantly below the 10% threshold recommended by ISS[150]. - The performance criteria for equity vesting will be evaluated annually, with measurement dates set for March 31 following each performance year[143]. - The time-based portion of the Executive Chairman Equity Grant will vest over four years, with one-fourth vesting each year starting from the first anniversary of the grant[142]. - The Compensation Committee and Board believe the proposed compensation package aligns the Executive Chairman's interests with those of the company and its shareholders over the long term[153]. Independent Auditor - The independent auditor, Somekh Chaikin, is recommended for re-appointment for the fiscal year ending December 31, 2025, and until the next annual general meeting[170][172]. - The Audit Committee pre-approves all audit and non-audit services provided by the independent auditor, ensuring oversight of service quality and fees[173]. - The Company is seeking shareholder approval for the re-appointment of Somekh Chaikin as the independent auditor for the fiscal year ending December 31, 2025[176]. - The audit fees for the fiscal year ended December 31, 2024, amounted to US$ 360,432, with total fees paid to the auditor Somekh Chaikin reaching US$ 395,407[174]. Financial Performance - The Company's audited consolidated financial statements for the year ended December 31, 2024, will be discussed at the upcoming shareholder meeting[179]. - The Company aims to maintain a compensation policy that allows for attracting and retaining high-quality leadership while ensuring that executive compensation does not exceed 70% of total compensation[190]. - The variable cash incentive plan for executives is designed to motivate performance, with the potential cash incentive capped at 200% of the On Target Cash Plan[193]. - At least 50% of the On Target Cash Plan targets for executives must be measurable, including financial metrics such as revenues and operating income[195]. - The Company’s NON-GAAP Net Profit threshold for cash incentive payments is set at US$ 6,000,000, below which no payments will be made[194]. - The compensation policy will be reviewed every three years to ensure compliance with applicable laws and market practices[187]. - The Company emphasizes a long-term perspective in its business strategy, focusing on growth, profitability, and innovation[185]. - The total fees for audit and tax services reflect the nature and volume of services rendered by the independent auditor[175]. - At least 30% of the On Target Cash Plan for Executives managing a business unit shall be based on measurable targets related to their unit and personal performance[196]. - In the event of a change in control, cash payments to Executives may reach up to 12 monthly Base Salaries if the control event results in a premium of at least 40% above the average closing prices over the preceding 20 trading days[197]. - The total yearly Equity Value granted to the CEO and Executive Chairman shall not exceed 400% of their annual Base Salary, while for other Executives, it shall not exceed 300%[198]. - At least 50% of the Equity Based Components granted to an Executive each year shall be subject to performance-based vesting[198]. - The Compensation Committee may multiply the applicable Equity Cap by 1.5 for new hire Executives for their initial equity award if deemed necessary[198].