Camtek Announces Second Quarter 2012 Results

38% sequential revenue growth and Non-GAAP net income of $3.0 million

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Aug 01, 2012, 06:50 ET

MIGDAL HAEMEK, Israel, August 1, 2012 /PRNewswire/ --

Camtek Ltd. (NASDAQ and TASE: CAMT), today announced its financial results for the quarter ended June 30, 2012.

Highlights of the Second Quarter 2012

Revenues of $25.0 million, a 38% growth over the prior quarter and at the top end of previously issued guidance
Gross margin of 48.2% versus 42.0% in the prior quarter
Non-GAAP operating income of $3.4 million; GAAP operating income of $3.3 million
Non-GAAP net income of $3.0 million; GAAP net income of $2.3 million
Third quarter revenue guidance of $23-25 million

Roy Porat, Camtek's Chief Executive Officer, commented, "We are pleased with our second quarter results, showing a solid improvement and meeting the top end of our expectations. We saw improvements, particularly in our semiconductor inspection business, and our gross margin was especially strong in the quarter due to this favorable product mix. We believe that this margin profile is a good indication of our long-term model."

Continued Mr. Porat, "Given the global macroeconomic concerns which have surfaced recently, our industry as a whole sees increased uncertainty ahead. We expect revenues for the third quarter between $23-25 million."

Second Quarter 2012 Financial Results

Revenues for the second quarter of 2012 were $25.0 million. This is a decrease of 13% compared to $28.8 million in the second quarter of 2011 and an increase of 38% compared with $18.2 million in the prior quarter. The sequential growth in the revenues was driven by the sales of our semiconductors inspection products.

Gross profit on a GAAP basis in the quarter totaled $12.1 million (48.2% of revenues). This is compared with $13.0 million (45.3% of revenues) in the second quarter of 2011 and $7.6 million (42% of revenues) in the prior quarter.

Gross profit on a non-GAAP basis in the quarter totaled $12.2 million (48.6% of revenues). This is compared with $13.1 million (45.6% of revenues) in the second quarter of 2011 and $7.7 million (42.5% of revenues) in the prior quarter.

Operating income on a GAAP basis in the quarter was $3.3 million (13.0% of revenues). This is compared with an operating income of $2.8 million (9.7% of revenues) in the second quarter of 2011 and an operating loss of $1.1 million in the prior quarter.

Operating income on a non-GAAP basis, in the quarter was $3.4 million (13.8% of revenues). This is compared to non-GAAP operating income of $3.0 million (10.4% of revenues) in the second quarter of 2011 and an operating loss of $0.9 million in the prior quarter.

Operating income and net income in the quarter included a one-time income of approximately $1 million related to a settlement with a former service provider of the company.

Net income on a GAAP basis in the quarter totaled $2.3 million, or $0.08 per diluted share. This is compared with a net income of $2.2 million, or $0.07 per diluted share in the second quarter of 2011 and a net loss of 1.4 million, or $0.05 per diluted share in the prior quarter.

Net income on a non-GAAP basis, in the quarter was $3.0 million, or $0.10 per diluted share. This is compared with a net income of $2.9 million, or $0.10 per diluted share in the second quarter of 2011 and a net loss of $0.6 million or $0.02 per diluted share in the prior quarter.

Cash and cash equivalents and short-term deposits as of June 30, 2012 were $21.6 million ($15.7 million net of bank loans) compared with $26.0 million ($19.6 million net of bank loans), as of March 31, 2012. As a result of an increase in its business during the second quarter of 2012, the company reported a negative operating cash flow of $3.1 million.

Conference Call

Camtek will host a conference call today, August 1, 2012, at 10:00 am ET.

Roy Porat, Chief Executive Officer and Moshe Eisenberg, Chief Financial Officer, 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:               1 888 407 2553      at 10:00 am Eastern Time
  Israel:              03 918 0609      at 5:00 pm Israel Time
  International:   +972 3 918 0609

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

ABOUT CAMTEK LTD.

Camtek Ltd. provides automated and technologically advanced solutions dedicated to enhancing production processes and increasing yields, enabling and supporting customer's latest technologies in the Semiconductors, Printed Circuit Boards (PCB) and IC Substrates industries.

Camtek addresses the specific needs of these interconnected industries with dedicated solutions based on a wide and advanced platform of technologies including intelligent imaging, image processing, adaptive ion milling (AIM) and digital material deposition (DMD). Camtek's solutions range from micro-to-nano by applying its technologies to the industries' specific requirements.

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

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, intellectual property litigation, price reductions as well as due to risks identified in the documents filed by the Company with the SEC.

Use of non-GAAP Measures

This press release provides financial measures that exclude certain items such as: (i) amortization of acquired intangible assets and revaluation of liabilities with respect to the acquisitions of Sela and Printar; (ii) share based compensation expenses and (iii) certain inventory write-downs, 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,   
                                                                     2012          2011
                                                                U.S. Dollars (In thousands)
    Assets
 
    Current assets
    Cash and cash equivalents                                       13,833        22,185
    Short-term deposits                                              7,800         4,100
    Accounts receivable, net                                        31,115        24,451
    Inventories                                                     25,794        24,355
    Due from affiliates                                                331           388
    Other current assets                                             3,983         3,357
    Deferred tax asset                                                 110           110
 
      Total current assets                                          82,966        79,946
 
      Fixed assets, net                                             14,472        14,577
 
    Long term inventory                                              2,700         1,954
    Deferred tax asset                                                 132           132
    Other assets, net                                                  304           304
    Intangible assets, net *                                         3,986         4,191
    Goodwill                                                         3,653         3,653

                                                                    10,775        10,234
 
      Total assets                                                 108,213       104,757
 
    Liabilities and shareholders' equity
 
    Current liabilities
    Short term bank loans                                            3,000         3,000
    Accounts payable - trade                                        11,429         6,773
    Long term bank loans - current portion                           1,700         1,700
    Due to affiliates                                                  196             -
    Other current liabilities                                       20,228        21,568
 
      Total current liabilities                                     36,553        33,041
 
    Long term liabilities
    Long term bank loans                                             1,242         2,092
    Liability for employee severance benefits                          645           652
    Other long term liabilities *                                    8,728         9,039
                                                                    10,615        11,783
 
      Total liabilities                                             47,168        44,824
 
    Commitments and contingencies
 
    Shareholders' equity
    Ordinary shares NIS 0.01 par value, 
    authorized 100,000,000 shares, 
      31,986,005 issued as June 30, 2012 and
      31,810,340 as of December 31, 2011, outstanding 29,893,629
      as of June 30, 2012 and 29,717,964 as of December 31, 2011       133           133
    Additional paid-in capital                                      61,217        61,014
    Accumulated income                                               1,593           684
                                                                    62,943        61,831
    Treasury stock, at cost (2,092,376 as of June 30, 2012 
    and December 31, 2011)                                          (1,898)       (1,898)
  
    Total shareholders' equity                                      61,045        59,933
 
      Total liabilities and shareholders' equity                   108,213       104,757

(*) Relates to Printar and SELA acquisitions

Camtek Ltd.

Consolidated Statements of Operations

(in thousands, except share data)

                                                                        
                                                             
                                       Six Months ended   Three Months ended   Year ended
                                            June 30,            June 30,      December 31,
                                         2012      2011      2012      2011       2011
                                              
                                          U.S. dollars        U.S. dollars    U.S. dollars
  
    Revenues                            43,211    56,248    25,033    28,778    107,028
    Cost of revenues                    23,506    30,415    12,961    15,752     59,588
 
    Gross profit                        19,705    25,833    12,072    13,026     47,440
 
    Research and development costs       6,645     7,360     3,320     3,581     14,077
    Selling, general and
    administrative expenses             10,923*   12,707     5,488*    6,644     24,341
 
                                        17,568    20,067     8,808    10,225     38,418
 
    Operating income                     2,137     5,766     3,264     2,801      9,022
 
    Financial expenses, net               (986)     (769)     (854)     (361)    (2,900)
 
    Income before income taxes           1,151     4,997     2,410     2,440      6,122
 
    Income tax                            (242)     (370)     (144)     (234)      (744)
 
    Net income                             909     4,627     2,266     2,206      5,378
 
    Net income per ordinary share:
 
    Basic                                 0.03      0.16      0.08      0.07       0.18
 
    Diluted                               0.03      0.15      0.08      0.07       0.18
 
    Weighted average number of
    ordinary shares outstanding:
 
    Basic                               29,803    29,487    29,881    29,641     29,577
 
    Diluted                             30,003    30,017    30,013    29,973     30,009

(*) Including income of approximately 1 million dollars related to a settlement with a former service provider of the company.

Camtek Ltd.

Reconciliation of GAAP to Non-GAAP results

(In thousands, except share data)

                                       Six Months ended   Three Months ended   Year ended
                                            June 30,            June 30,      December 31,
                                         2012      2011      2012      2011       2011
                                              
                                          U.S. dollars        U.S. dollars    U.S. dollars

    Reported net income attributable 
    to Camtek Ltd. on GAAP basis           909     4,627     2,266     2,206      5,378
    Acquisition of Sela and Printar 
    related expenses (1)                 1,170     1,138       596       575      2,377
    Inventory write-downs (2)                -         -         -         -        685
    Share-based compensation               205       235       103       126        416
    Shelf registration expenses             94         -         -         -          -
    Non-GAAP net income                  2,378     6,000     2,965     2,907      8,856
 
    Non-GAAP net income per share, 
    basic and diluted                     0.08      0.20      0.10      0.10       0.30
    Gross margin on GAAP basis            45.6%     45.9%     48.2%     45.3%      44.3%
    Reported gross profit on GAAP basis 19,705    25,833    12,072    13,026     47,440
    Acquisition of Sela and Printar 
    related expenses (1)                   150       160        75        80        331
    Inventory write-downs (2)                -         -         -         -        685
    Share-based compensation                50        54        25        29         97
    Non-GAAP gross margin                 46.2%     46.3%     48.6%     45.6%      45.4%
    Non-GAAP gross profit               19,905    26,047    12,172    13,135     48,553
 
    Reported operating income 
    attributable to Camtek Ltd. 
    on GAAP basis                        2,137     5,766     3,264     2,801      9,022
    Acquisition of Sela and Printar 
    related expenses (1)                   150       160        75        80        331
    Inventory write-downs (2)                -         -         -         -        685
    Share-based compensation               205       235       103       126        416
    Shelf registration expenses             94         -         -         -          -
    Non-GAAP operating income            2,586     6,161     3,442     3,007     10,454

During the three and six months ended June 30, 2012 and 2011 and the twelve months ended December 31, 2011, the Company recorded acquisition expenses of $0.6 million, $1.2 million, $0.6 million, $1.1 million and $2.4 million, respectively, consisting of: (1) inventory written-up to fair value in purchase accounting charges of $0 million, $0 million, $0.01 million, $0.02 million and $0.02 million, respectively. These amounts are recorded under cost of revenues line item. (2) Revaluation adjustments of $0.5 million, $1.0 million, $0.5 million, $1.0 million and $2.0 million, respectively, of contingent consideration and certain future liabilities recorded at fair value. These amounts are recorded under finance expenses line item and (3) $0.07 million, $0.15 million, $0.07 million, $0.14 million and $0.3 million, respectively, with respect to amortization of intangible assets acquired recorded under cost of revenues line item.
During the three months and six months ended June 30, 2012 and 2011, and the twelve months ended December 31, 2011, the Company recorded inventory write down in the amount of $0 million, $0 million, $0 million, $0 million, and $0.7 million, respectively.