Camtek Ltd (CAMT) 2008 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to Camtek's Fourth Quarter 2008 Results Conference Call. All participants are at present in 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 March 5th, 2009.

Before I turn the call over to Ms. [Fiona Delmon], I would like to remind everyone that statements contained in this conference call which are not historical facts contain forward-looking information with respect to plans, projections or future performance of the Company, the occurrence of which involve certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated.

Such risks and uncertainties [depend upon] economic and political conditions in Israel. And [backing those] competitions, supply constraints as well as certain other risks and uncertainties, which are detailed in the Company's filing with the various security authorities.

I would now like to hand over the call to Mr. Fiona Delmon of TK Investor Relations. Ms. Fiona, please go ahead.

Hello to everybody. I would like welcome you all to Camtek's Fourth Quarter and Full Year 2008 Results Conference Call and thank Camtek's management for holding the call today. With us online are Mr. Rafi Amit, Camtek's CEO, Mrs. Mira Rosenzweig, the Company's CFO, and Mr. Roy Porat, Camtek General Manager of Israel.

Rafi will start the call by discussing recent developments within the Company and in the market and will also discuss the outlook. Mira will then give an overview of Camtek performance in the fourth quarter and summarize the financial results. We will then open the call and Rafi, Mira and Roy will be happy to answer investors' questions.

I would now like to hand over the call to Mr. Amit. Rafi, please go ahead.

Okay. Thank you, Fiona. Hello, everyone, and welcome to our Fourth Quarter 2008 Results 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.

Fourth quarter revenue amounted to $12.4 million revenue, for the entire year were $75.5 million. In 2008, we recorded a net loss of $9.6 million. This loss resulted mainly from a drop in sale in the second half of the year. Inventory and equipment write-off -- sorry -- strengthening of the Israeli shekel against the US dollar and legal expenses related to the ongoing lawsuit with Rudolph Technologies.

A few heard about the current situation. Similar to the rest of the industry, we are being impacted by the global recession. When our customers freeze their purchasing budget, our order flow declines. However, we are focused on market segments that were impacted less than the general market, exploiting our fast response and customization capabilities to win orders.

Together with the cost reduction steps we reported last quarter, we have implemented additional cost cutting and reorganization measures in order to deal with the new reality. This includes, among others, restructuring our R&D organization and global sales force, adjusting our production expenses to the new revenue level. These measures resulted in a production of about 30% of our human resources related expenses.

We are, of course, continuously monitoring our cash flow. Our current inventory should support our expected production needs in 2009 with very little additional cash layout. We believe that the above mentioned action will enable Camtek to redevelop the rough water ahead. We have designed and executed the plan while striving to preserve the Company's technological leadership, customer loyalty and ability to quickly ramp up operations when the storm passes.

We believe we will be able to achieve these goals while retaining our core R&D as well as our services and applications infrastructures. Our R&D team are continuing to develop new products and capabilities to meet the needs of the technology-driven segments. We continue to monitor the situation day by day, ready to respond to changes as needed. We continue to examine corporation and affiliation with strategic partners to leverage technological and marketing synergisms. We are confident that when the economy change its course, Camtek will emerge a stronger and more profitable company.

With that, let me turn the call over to our CFO, Mira Rosenzweig, for reviewing the financials. Mira, please.

Thank you, Rafi. You can find the table with the results at the end of the press release issued earlier today. Revenues for the fourth quarter of 2008 were $12.4 million, 41% below the $21 million reported in the fourth quarter of 2007 and 35% below the $19.1 million reported in the previous quarter. Revenues recorded in 2008 were $75.5 million, 6.3% above the $71 million reported in 2007. The revenue breakdown in the fourth quarter of 2008 was 56% from the PCB and IC substrates industry and 44% from the semiconductor manufacturing and packaging industry.

Our geographical breakdown of the revenues for the quarter was USA, 29%, Europe, 11%, and total Pacific Rim, 60%, which consists of China, 26%, Taiwan 7%, Japan, 1%, and the rest of Asia, 25%. The balance of 1% was to the rest of the world.

Revenues for the fourth quarter of 2008 from sales and service to the semiconductor manufacturing and packaging industries were $5.4 million. This was 24% lower than the previous quarter in which we first noticed the downward trend. Overall, we recognize $30 million from this industry, almost 46% above 2007. We attribute this increase to several multiple orders to technology-driven purchases.

With regard to the PCB and IC substrates inspection, we generated $7 million in revenue during the quarter, contributing about 56% of our total revenue. Throughout 2008, revenues for this industry amounted to $45.5 million, nearly [9.7%] below 2007.

As all of our products serve the supply chain of the electronic and product industry, which is strongly affected by the global economic crisis, it comes as no surprise that our sales to semiconductor and to PCB companies both suffered in the fourth quarter. Our operating expenses in the fourth quarter of 2008 were $8.6 million, [70.3%] below the $10.4 million in the previous quarter.

These operating expenses comprised of $3.3 million R&D and $5.3 million sales and general administrative expenses. This reduction resulted mainly from the decrease in direct sales expenses. Operating loss for the fourth quarter of 2008 was $5.6 million compared to an operating income of $126,000 in the fourth quarter of last year and an operating loss of $3.8 million in the previous quarter.

Our net loss for the fourth quarter of 2008 was $5.5 million or $0.19 per share. This is compared to a net income of $29,000 or $0.00 per share in the fourth quarter of 2007. Net loss in the previous quarter was $4.1 million or $0.14 per share. Net loss in the fourth quarter of 2008 resulted mainly from the decrease in revenue, $1.3 million inventory and equipment write-off and legal fees related to the lawsuit that Rudolph Technologies filed against Camtek.

Our net loss for the year ended December 31, 2008 was $9.6 million or $0.32 per share compared to a net loss of $7.7 million or $0.25 per share for the year ended December 31, 2007. Net loss for the year 2008 resulted mainly from the decline in revenues in the second half of the year, $4.4 million inventory and equipment write-off, the strengthening of the Israeli shekel against the US dollar and legal and professional fees with respect to the lawsuit mentioned above and the potential acquisition that Camtek has pursued but decided to abort during the third quarter of 2008.

As of December 31, 2008, the Company reported net cash and cash equivalents balance of $14.4 million. As we announced last quarter, we have implemented several cost reduction steps. In the fourth quarter of 2008, we reduced our headcount by 12%. Commencing 2009, we have been taking additional measures as Rafi previously explained. We expect all these steps to reduce our 2009 expenses as compared to 2008 by $9 million to $10 million. Our DSOs were 134 days compared to 111 days reported in the previous quarter.

And now, I would like to turn the call back to Mr. Rafi Amit to close the call. Rafi?

Thank you, Mira. In summary, we believe we have taken the necessary actions to ensure the Company's long-term survival and potential growth. Still, as I said several times, we are facing a new reality, which is a trying experience for all of us. Therefore, we are evaluating this situation on a daily basis so we can take immediate action in any scenario as it unfolds. Right now, our internal plan for revenue and expenses is matching the actual events.

We will now open the call for questions. Operator, please?

Thank you. Ladies and gentlemen, at this time, we will begin the question-and-answer session. (Operator Instructions).

There are no questions at this time. Before I ask Mr. Amit, CEO, to go ahead with his closing statement, I would like to remind participants that a replay of this call will be available on Camtek's website, www.camteck.co.il, within 24 hours.

Mr. Amit, would you like to make your concluding statement?

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 the Camtek Fourth Quarter 2008 Results Conference Call. Thank you for your participation. You may go ahead and disconnect.