Camtek Ltd (CAMT) 0 Q0 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Camtek Ltd. conference call. All participants are at present in a listen-only mode. Following management's formal presentation, instructions will be given for the question-and-answer session. As a reminder, this conference is being recorded April 11, 2007.

This conference call 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. Camtek does 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, as well as increased competition in the industry and price reductions, as well as due to risks identified in the documents filed by the Company with the SEC.

You should have all received by now the Company's press release. If you do not have the press release, please call GK Investor Relations at 1-866-704-6710.

I would now like to hand the call over to Mr. Ehud Helft of GK Investor Relations. Mr. Helft, would you like to begin?

Thank you. Good morning and good afternoon to all of you. I would like to welcome you, all of you, to the Camtek conference call and thank Camtek's management for hosting this call.

With us on the line today are Mr. Rafi Amit, Camtek's CEO, and Mrs. Ronit Dulberg, the CFO of the Company. Mrs. Dulberg will start the call with a short review of the preliminary Q1 revenue figures announced last night. Rafi and Ronit will then answer questions from the participants. I will now hand over the call to Ronit. Ronit, please.

Thank you, Ehud. Hello, everyone, and welcome to our conference call. On behalf of Camtek's management, I would like to thank you all for your interest in Camtek and for joining us on this call on such a short notice. I would like to take this opportunity to apologize for the technical difficulties we experienced in our March 20 conference.

As announced last night, Camtek expects to report revenues of approximately $14 million for the first quarter of 2007. The exact revenue amount is subject to a final adjustment and review by the Company's auditors.

One of the main reasons for the gap between this figure and the guidance of $16 million to $18 million we issued last month was the short period left this year from the Chinese New Year and the end of the quarter. As a result, we couldn't complete the selling cycle of several orders from PCB manufacturers and meet the accounting criteria for recognizing some of the revenues. We believe we will be able to recognize most of these revenues in the coming quarter.

Another reason for the shortfall was the delay in receiving sales and orders for semiconductor inspection systems following the current weakness in this industry. In light of the current environment, we have been reducing our operating costs while continuing to develop our productline in order to maintain and advance our leading position in our markets.

On that note, we will be happy to take any questions that you may have. Operator?

(OPERATOR INSTRUCTIONS). Mary Brixie, Avian Securities.

Good afternoon. I was hoping you could give me a little bit more color on the delay that you are seeing, specifically in your semiconductor business. You noted that it is a delay. Do you see any changes to your customers' forecast or is it just merely a shift out by say like a quarter or several months?

Ronit, do you want me to answer this question?

Yes, please.

Hi, Mary. Rafi speaking.

Hi, Rafi.

Okay. I believe that what is happening at Camtek is happening in, I believe, in any other company that vendors of the back-end industry. What we found that -- most of the customers that is in touch, they predict a growing up. They start to define for us what exactly they want -- capacity, performance, throughput, everything. But most of them mentioned they would like to see installation by end of Q2, by beginning of Q3.

So we start to get it not only from one customer or one territory. I would say that we, in communication with most of our customers and we can see it almost from the U.S., from Asia, Japan.

So this is one of the main reasons why we feel comfortable that all the survey, all the other company announcements, it seems to us from our direct connection with customers that this is going to be happen, that we will start to see more and more installation starting from Q3. While during Q2, we make more negotiations, more technical discussion before we final all the details into orders.

Now is this a significant change from -- now with the call -- from last month when your view of what the semiconductor business was going to do, that has changed pretty significantly then in the last month?

Yes, I would say that -- okay, in general idea -- also they, months ago we [did the call,] the same information. But now every month as we close to this date we start to be more specific. Now they talk about the amount of machine, the amount of (inaudible), more of what type of inspection they would like to see.

So every lead -- every order starts with a lead and then there are some what we call selling process. Now we feel more comfortable when we get -- it's a higher probability that this lead becomes an order. So I believe that (inaudible) making such a call, and months later we feel more comfortable. We get more details. We maybe be more accurate with the amount of machine or exactly what type of machine, etc.

Okay. Thank you very much.

Mahesh Sanganeria, RBC Capital Markets.

Thank you. So can you give us some more, a little bit more quantification of that $3 million miss spread? Which one -- how much is coming from PCB and how much from semiconductor?

I'm sorry. Could you repeat -- about -- what is about PCB and semiconductor?

So you have, you are saying, $3 million less than what you said on March 19. So what I am saying, can you break it out, how much of that miss is due to PCB business and how much is because of semi business?

I'm sorry. It's regarding the Q1? Or in general?

In Q1. I am just saying the change between what you said -- on March 19, you gave the guidance of $16 million to $18 million, right?

Ronit, do you remember? Do you have the number with you?

Yes. Yes, I have the number, but we usually in guidance and forecasts, we don't split between PCB and the ME and the semi.

Right. If you can give us it qualitatively.

Yes. I would say that in the semiconductor, we are about the same as last quarter.

In semiconductor, you are [par to] the last -- so the biggest drop is in the PCB business?

Yes, the major change was in the PCB business. As we said also in last month is we anticipated it will happen because of the Chinese New Year.

I would like to add something. Okay. We have to realize that one, two, three machines of the semiconductor could come to let's say $2 million to $3 million. And to make $2 million to $3 million in PCB you need much more, many more machines to match this number. So definitely also the semiconductor compare with Q3 2006 when we were over $10 million, $12 million a quarter. Definitely we are not there.

But the PCB, what we always, let's say, could be expected in Q1 due to the Chinese New Year is always a risky quarter in PCB because our main market is China. And to export machines to China, there are a lot of procedures regarding the import permit and other; and sometimes it takes more time that you can predict.

In principle, we have about one month to finish all the sale process and to make import permit and to ship machine. We believe that we can do more, but eventually we've got to make all of it within this month.

Okay. So I just want to make sure that I understand. I am trying to understand -- I am only trying to understand what happened between -- what changed between March 19 and March 31, between when you had the conference call last time and the quarter closing. It's looking -- in the 10-day period, you had a pretty big change. So to me, it seems like most of that change was from PCB, because my sense was that semiconductor was already known.

There is two issues. In the guidance, the gap was between the guidance for the PCB and the MEP. It is about the same. We have about half in the ME and half in the PCB when we are talking about the guidance we gave to Q1, okay? But when you are talking -- when you compare it to Q4, you are right. The reduction is mostly in the PCB as anticipated usually when you have such a holiday in Asia.

Okay. Maybe I would like just to add one more very important information. I believe that also in semiconductor, you have to understand the procedure of revenue recognition. Some machines are already installed in customers' sites. We are expecting to get the PO based on the performance, or based on the customer budget, or based on customer approval.

Some of them tell us, okay, it takes a few days, but we believe we can issue the PO before this date. From some reason, they cannot make it and we cannot get the PO until the end of the quarter. Then we said, okay, it will be within a few weeks, but it will be in the second quarter. This also happened and we get this information by the last two days. We expected to get the PO. We didn't get it and it was pushed to Q2.

In PCB, part of it we already get the PO, but we cannot make all the other details. As I mentioned, one of them is import permit or other to make this meeting the criteria of the revenue. It has to be, where we are pushing it over to China, we need the import permit, we have to give installation report, etc. We cannot make it within a few days.

And you can add to all these, in general also customers start to understand the pressure to all the public company by the end of the quarter. Some of them delaying more days in order to get some maybe better payment condition or better other conditions. So the last two weeks of the quarter is always under pressure.

So it might be that we can miss a little bit in this -- the last 10 days. It is not easy to predict even a week before the end of the quarter.

Okay. So now if -- does that mean that there's going to be a jump in the next quarter because some of the things will happen in the next quarter?

I wouldn't say a jump, but, okay, depending (inaudible), of course now we have, let's say, better backlog in Q2 compared with Q1 definitely because some of them pushed to Q2. We still -- the semiconductor is not clear yet. I still believe that most of the installation will not be during Q2. We see them during Q3, okay?

At PCB, we feel more comfortable. We see a lot of most of our customers, they are in high level of utilization of equipment, and they are very busy, and they are investing, so we feel more comfortable with the PCB.

Semiconductor, we see at least one quarter shift from the PCB returning to full capacity.

Okay, thank you.

(OPERATOR INSTRUCTIONS). Olga Levinzon, Lehman Brothers.

Hi, guys. I was wondering on the PCB side if you have seen any shift in marketshare or you are feeling any additional pricing pressure relative to what you saw in '06.

In the PCB?

Yes.

You see when -- okay. When -- especially I would say that always when Q1, with any specific Q, there are less leads than predicted, the competition is tougher and the results are more pressure on prices.

But I would say that this happens always when we feel that the amount of orders is less than we expected. I am not sure and I don't believe that this will continue when it's come back to the same amount of orders that all the leading companies are expected to provide to customers.

So for Q1, we can see hopefully for Q2 a change; and we come back to more I would say reasonable competition prices.

Okay. And then just for the full year, I know there isn't a lot of visibility within the PCB side, but are you sort of making any assumptions for just underlying PCB growth or just how the year will play out versus 2006?

If you talk about the PCB, based on what we see -- and I think that Camtek's in a good position because our installed base is big enough and our connection with the customer on daily basis. So based on that, we can feel very comfortable, and I would say that it looks for a very optimistic situation. We can see a lot of expansion and new facilities.

So it seems to be that from Q two, three and four, it looks like I would say it's in very good position. I couldn't give you a right number because the lower visibility. Most of the PCB customers place orders in the last minute. But based on how much they invest in other equipment prior to the AOI, okay, and the amount of infrastructure, it seems that it could be a very nice second half of this year.

Okay. Great. Thank you very much.

(OPERATOR INSTRUCTIONS). If there are no further questions at this time, Mrs. Dulberg, would you like to make your concluding statement?

I would like to maybe add one more comment. Although we are very optimistic, but in the same time we are doing a lot of effort to monitor our expenses and to cut expenses. Usually the company that we did -- during 2006, we grow over 60%. Always there are some (inaudible) that we have to come back to better situation.

So right now, we try to do both. In one hand, we try to be more efficient and to monitor all our (inaudible). On the same way, we have to keep ourselves in position that we can enjoy the growing trend during the second half of the year. So these two [tasks], we make it together and we make a lot of effort to try to monitor these two tasks.

Thank you. Mrs. Dulberg, would you like to make a concluding statement?

Yes. On behalf of Camtek and the rest of the management team, I would like to thank you for your continued interest in our business and we very much look forward to hosting you in our first-quarter results conference [due] in a few weeks. Thank you and have a good day.

Thank you. This concludes the conference call. You may go ahead and disconnect.