Camtek Ltd (CAMT) 2007 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Camtek second-quarter 2007 results conference call. (OPERATOR INSTRUCTIONS). As a reminder, this conference is being recorded today, August 6, 2007.

I would like to remind everyone that the 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; increased competition in industry and price reductions, as well as due to risks identified in the documents filed by the Company with the SEC. If you have not received a copy of today's release and would like to do so, please call GK Investor Relations at 1-866-704-6710 or 972-360-4717.

I would now like to hand over the call to Mr. Kenny Green, of GK Investor Relations. Please go ahead, sir.

Thank you. I would like to welcome all of you to Camtek's second-quarter 2007 results 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 Ms. Ronit Dulberg, the Company's CFO.

Ronit will start the call by given an overview of Camtek's performance in the second quarter of 2007 and summarizing the financial results. She will also discuss recent developments within the Company and in the marketplace and discuss Camtek's guidance. We will then open the call, and Rafi and Ronit will be happy to answer investor questions.

I will now hand over the call to Ronit. Ronit, please go ahead.

Thank you, Kenny. Hello, everyone, and welcome to our second-quarter conference call. On behalf of Camtek's management, I would like to thank everyone of you for your continued interest in our business and for joining us today. The second quarter presents a turning point for Camtek. While our results are above the last quarter's results, they still reflect the slowdown that begin toward the end of 2006. However, we have been seeing a significant increase in business since the last few weeks of the quarter. This includes several of the orders that had been held back in the previous quarters as well as new business.

Our markets are characterized by a long-standing cycle. Yet once ordered, customer demand start delivery. Our ability to deliver systems within a few weeks provide us with a competitive advantage, especially today as corporations begin to release their capital budgets. We are optimistic about the second half of the year. The interest in orders should contribute to our third-quarter revenue.

In addition, we expect the full impact of our cost-cutting measures of the last few months to improve our results from the third quarter onwards. I will advise our expected revenue range later on.

Over the past three quarters, Camtek like other equipment suppliers felt the impact of the overall downturn in the semiconductor industry and a certain correction of overcapacity in the PCB industry. This softness resulted in a reduced revenue and profit margins compared to 2006. We responded to this development by adopting a thorough but balanced cost-cutting plan. Implementing the plan took several months and included consolidating field operations, applying tighter inventory controls, adjusting production capacity with current volumes and reducing the number of employees. We believe that this plan has not negatively impacted our R&D sales or customer support capabilities, nor has it affected our current or future competitiveness.

In parallel to adjusting our core structure, we continued developing new technologies and enhanced our product performance. For example, our ICU technology, which was integrated into our PCB inspection products and enhanced exception abilities in our Falcon line, have already been implemented in our systems. Other technologies and features supporting our roadmap are in the pipeline.

Our product development strategy has always been evolutionary. We continuously implement improvements to software-intensive open architecture. We believe that this strategy has provided and will continue to provide us with a sustainable technology core advantage. It enables us to leverage our core R&D investments and grow many product lines and generations, while at the same time allows us to better serve our customers.

I now provide more details on the various sectors of our business during the second quarter. First, the semiconductor and packaging market. We generated in the second quarter a total of $4.8 million in revenues from the semiconductor manufacturing and packaging sector. This is below last quarter and 63% below our revenues from this sector for the same quarter last year. It was 31.4% of our total revenue in this quarter.

Market forces say that when demand drops, competition becomes (inaudible). Camtek responds by maintaining tight customer support and delivering superior performance based on continued improvement. We're constantly enhancing the performance of our Falcon line, and we're ready with upgraded detection and throughput as our customers renew procurement.

And now this is the PCB and IC substrate market. During the quarter we generated a total of $10.5 million in revenue from the PCB and IC substrate industry. This was 26.5% higher than last quarter and 29.5% below our revenue from the same quarter last year. It made up 68.6% of our total revenue in this quarter.

During the past two quarters, we observed a decreasing demand for PCB inspection systems, probably due to a certain overcapacity buildup in Q2 2006. Again we felt strong price pressures from competitors, and again we relied on our technological advantages and customer support to maintain our position.

Over the past few months, our significant R&D investments resulted in new developments at our already contributing revenues. Our new third generation lines of the Dragon and Orion families won several evaluations and then also two weeks ago direct new multiple orders. This we expect will contribute to our second-half revenue growth.

Our new IQ technology that powers the 3G line set a new landmark and have presented cultural change in AOI operations. This can ultimately set inspections from methods for best detection results and as an adaptive detection profile. It allows operators to achieve high-end AOI results with little or no prior experience. You can find more details on our website.

I would now like to go over the financials. Revenue for the second quarter of 2007 was $15.3 million, 45% below the $27.9 million reported in the second quarter of 2006 and up 5.5% sequentially from $14.5 million reported in the prior quarter. Revenue breakdown in the second quarter of 2007 was 60.4% PCB, 8.5% IC substrate and 31.1% semiconductor manufacturing and packaging product.

Our geographical breakdown of the revenues for the quarter was. USA 9.5%, Europe 11.7%, the total Pacific Rim 77.2% which consists of Japan 2.3%, China 44%, Taiwan 15.5% and the rest of Asia 15.4%. The rest of the world is 1.6%.

We rerecorded operating expenses of $9.4 million in the quarter compared with $9.8 million in the second quarter of last year and below the $10.4 million of expenses recorded in the previous quarter. As I mentioned we have taken steps to reduce our expense level and better match it to our revenue level. We expect to see a reduction in expenses in the third quarter.

Operating loss for the second quarter of 2007 was $3.2 million. This is compared with an operating income of $5.4 million in the second quarter of 2006 and an operating loss in the previous quarter of $4.4 million.

Finally, second-quarter net loss were $3.5 million or $0.11 per share compared with $5.2 million net income or $0.17 per diluted share in the second quarter of last year. Net loss for the previous quarter was $4.3 million or $0.14 per share.

Now turning to the balance sheet. Our net cash and equivalent at the end of the second quarter stood at $15.5 million compared with $16.3 million at the end of the prior quarter. We had a net (inaudible) of operating cash flow of $1 million in the second quarter. Our DSOs were at 132 days below the 174 days we reported in the previous quarter.

Our visibility is still quite low, but at this point given our current bookings and the intention expressed by customers, we expect revenue in the range of 17 to $20 million in the third quarter.

Camtek comes out of the recent market correction a stronger and more agile company. We offer a leading set of inspection solutions for the semiconductor manufacturing, packaging PCB and IC substrate industries. At the same time, we continuously pursue new opportunities to leverage our core technologies and diversify our product offerings, aiming to generate new growth engines.

I will be representing Camtek in the RBC conference in San Francisco on August 8. With that, Rafi and I will be happy to take your questions. Operator?

(OPERATOR INSTRUCTIONS). There are no questions at this time. Before I ask Ms. Ronit Dulberg to go ahead with her closing statement, I would like to remind the participants that a replay of this call will be available in three hours on Camtek's website, www.Camtek.co.il. Ms. Dulberg?

Ladies and gentlemen, on behalf of Camtek and its management team, I would like to thank you for your continued interest in our business. We look forward to speaking with you again over the next few quarters. Thank you and good-bye.

Thank you. This concludes Camtek's second-quarter 2007 results conference call. Thank you for your participation. You may go ahead and disconnect.