Camtek Announces Second Quarter 2017 Results
MIGDAL HAEMEK, Israel, Aug. 3, 2017 /PRNewswire/ -- Camtek Ltd. (NASDAQ: CAMT) (TASE: CAMT), today announced its financial results for the quarter ended June 30, 2017.
Recent Highlights
-- Signed an agreement to sell the PCB business for up to $35 million;
-- Reached final settlement with Rudolph Technologies; and
-- Adjusted FIT related expenses to a run rate of $100-125K per quarter.
Financial Highlights of the Second Quarter 2017
-- Total revenues (including revenue from the discontinued PCB operations)
were $34.3 million, ahead of the guidance range;
-- Record revenues in the semiconductor segment of $22.7 million, up 14%
year over year;
-- GAAP net loss of $3.9 million; mainly due to the $13 million settlement
charge
-- Non-GAAP net income of $3.8 million;
-- Strong operating cash flow of $3.8 million; end of quarter net cash of
$27.1 million;
Guidance for the Second Half of 2017
Due to the significant business changes that Camtek has undergone, Camtek is providing additional metrics to enable investors and analysts to better model the new business structure for the remainder of 2017.
Third quarter revenues (semiconductors only) are expected to be between $23-24 million, a year-over-year increase of 12% with gross margins at around 50% and double-digit operating margins.
Fourth quarter revenues are expected to be slightly higher than those of the third quarter while operating costs are expected to reduce and benefit from the reduction in legal and FIT expenses. Non-GAAP operating margins are expected to improve to an approximately 15% in the fourth quarter of 2017 with continued improvement in 2018.
Due to the expected sale of Camtek's PCB business, the results of this unit ceased to be consolidated into Camtek's financial statements and are accounted for as discontinued operations in both the current period ended June 30, 2017 as well as the comparative periods. Following the settlement with Rudolph Technologies, there is a one-time charge of $13 million on GAAP net income in the second quarter 2017 results. This amount is excluded from the non-GAAP results. A reconciliation between the GAAP and non-GAAP results appears in the tables at the end of this press release.
Rafi Amit, Camtek's CEO, commented, "The past few months have been very significant for Camtek from a strategic perspective. We are divesting our PCB business at a time of positive momentum in that sector, to a Shanghai-based private equity fund. Following our decision to focus on ink development and a strategic cooperation with a world leading ink developer and manufacturer, we managed to adjust our FIT-related expenses. We also settled outstanding IP litigation which has been an overhang for more than a decade, and this allows us to significantly reduce our ongoing legal-related expenses. Following these initiatives, Camtek has now become a focused semiconductor inspection and metrology company. We have a very strong balance sheet, opening up many potential opportunities on which we intend to capitalize. Our goal is to cement ourselves as the leading advanced packaging inspection and metrology Company for the semiconductor industry."
"Looking ahead, we expect to see longer-term higher revenue growth rates for Camtek. Additionally, we expect to demonstrate higher gross margins and lower operating expenses, leading to significantly improved operating margins. This should be evident already in the coming quarters, and we expect our fourth quarter results to demonstrate approximately 15% operating margin with potential for further improvement in 2018," continued Mr. Amit.
Concluded Mr. Amit, "We believe the recent actions we have taken will enable the value in Camtek to become more apparent and increase shareholder value. We look forward to taking our business to the next level over the coming years, with even greater vigor and focus."
Second Quarter 2017 Financial Results
Revenues for the second quarter of 2017 were $22.7 million. This compares to second quarter 2016 revenues of $19.8 million, a growth of 14%. Revenues do not include those of the PCB business, whose sale is expected to close in the third quarter, which are accounted for as discontinued operations.
Gross profit on a GAAP and non-GAAP basis in the quarter totaled $11.2 million (49.2% of revenues), compared to $10.0 million (50.5% of revenues) in the second quarter 2016. The variance in the gross margin is a function of the product and sales mix in the quarter.
Operating loss on a GAAP basis in the quarter totaled $11.0 million, compared to an operating income of $0.8 million (3.9% of revenues), in the second quarter 2016. This includes the one-time $13 million charge for the Rudolph settlement.
Operating profit on a non-GAAP basis in the quarter totaled $2.1 million (9.2% of revenues), compared to $0.9 million (4.5% of revenues), in the second quarter 2016.
Net loss on a GAAP basis in the quarter totaled $3.9 million, or $0.11 per share. This compares to net income of $1.3 million, or $0.04 per diluted share, in the second quarter 2016. This includes a deferred tax income of $5.5 million and the results of the discontinued operations.
Net income on a non-GAAP basis in the quarter totaled $3.8 million, or $0.11 per diluted share. This compares to net income of $1.5 million, or $0.04 per diluted share, in the second quarter 2016.
Cash and cash equivalents as of June 30, 2017 were $27.1 million compared to $24.3 million as of March 31, 2017. The $13 million settlement amount is expected to be paid in the third quarter. The Company reported a positive operating cash flow of $3.7 million during the quarter.
Conference Call
Camtek will host a conference call today, August 3, 2017, at 9:00 am ET.
Rafi Amit, CEO, Moshe Eisenberg, CFO and Ramy Langer, VP Head of the Semiconductors Division 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 9:00 am Eastern
Time
Israel: 03 918 0610 at 4:00 pm Israel Time
International: +972 3 918 0610
For those unable to participate, the teleconference will be available for replay on Camtek's website at http://www.camtek.com beginning 24 hours after the call.
ABOUT CAMTEK LTD.
Camtek Ltd. provides automated and technologically advanced solutions dedicated to enhancing production processes, increasing products yield and reliability, 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 and functional inkjet printing.
This press release is available at www.camtek.com
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: (i) settlement expenses; (ii) tax benefits; (iii) share based compensation expenses; (iv) write off of inventory and fixed-assets related to the discontinued FIT product line; and (v) revaluation of liabilities with respect to the acquisition of Printar, 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.
Camtek Ltd.
Consolidated Balance Sheets
---------------------------
(In thousands)
June 30, December 31,
-------- ------------
2017 2016
---- ----
U.S. Dollars (In
thousands)
----------------
Assets
------
Current assets
Cash and cash equivalents 27,122 19,740
Trade accounts receivable, net 21,371 22,066
Inventories 20,681 16,647
Due from affiliated companies 367 -
Other current assets 1,506 2,039
Deferred tax asset 4,649 894
Current assets held for sale 27,030 25,018
------ ------
Total current assets 102,726 86,404
------- ------
Fixed assets, net 15,618 13,725
------ ------
Long-term inventory 1,390 1,461
Deferred tax asset 4,894 3,179
Other assets, net 270 270
Intangible assets, net 474 519
--- ---
7,028 5,429
----- -----
Total assets 125,372 105,558
======= =======
Liabilities and shareholders' equity
------------------------------------
Current liabilities
Trade accounts payable 12,515 10,304
Other current liabilities 29,308 14,722
Due to affiliated companies - 18
Current liabilities held for sale 9,423 6,482
----- -----
Total current liabilities 51,246 31,526
Long term liabilities
Liability for employee severance benefits 928 667
--- ---
928 667
--- ---
Total liabilities 52,174 32,193
------ ------
Shareholders' equity
Ordinary shares NIS 0.01 par value, 100,000,000 shares authorized at June 30, 2017 and at December 31, 2016; 148 148
37,490,367 issued shares at June 30, 2017 and 37,440,552 at December 31, 2016;
35,397,911 shares outstanding at June 30, 2016 and 35,348,176 at December 31, 2016
Additional paid-in capital 76,874 76,463
Accumulated losses (1,926) (1,348)
------ ------
75,096 75,263
Treasury stock, at cost (2,092,376 as of June 30, 2017 and (1,898) (1,898)
December 31, 2016)
Total shareholders' equity 73,198 73,365
------ ------
Total liabilities and shareholders' equity 125,372 105,558
======= =======
* On July 18, 2017, Camtek signed a definitive agreement with an affiliate of Principle Capital, a Shanghai-based privet-equity fund, to sell its PCB business. In accordance with U.S. generally accepted accounting principles ("U.S. GAAP"), the financial position and results of operations of the PCB business are presented as discontinued operation and, as such, have been excluded from continuing operation for all period presented.
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,
-------- -------- ------------
2017 2016 2017 2016 2016
---- ---- ---- ---- ----
U.S. dollars U.S. dollars U.S. dollars
------------ ------------ ------------
Revenues 43,828 36,669 22,682 19,835 79,228
Cost of revenues 22,384 18,665 11,527 9,828 41,807
Reorganization and impairment - - - - 4,931
--- --- --- --- -----
Gross profit 21,444 18,004 11,155 10,007 32,490
------ ------ ------ ------ ------
Research and development costs 6,852 6,497 3,413 3,295 12,630
Selling, general and administrative expenses 11,159 10,887 5,754 5,936 21,900
Reorganization and impairment - - - - (4,059)
Expenses from settlement 13,000 - 13,000 - -
------ --- ------ --- ---
Operating income (loss) (9,567) 620 (11,012) 776 2,019
------ --- ------- --- -----
Financial expenses, net (209) (379) (56) (160) (847)
---- ---- --- ---- ----
Income (loss) from continuing operations
before income taxes (9,776) 241 (11,068) 616 1,172
------ --- ------- --- -----
Income tax benefit (expense) 5,364 (147) 5,404 (108) (303)
----- ---- ----- ---- ----
Income (loss) from continuing operations (4,412) 94 (5,664) 508 869
====== === ====== === ===
Discontinued operation
Income from discontinued operation
Income before tax benefit (expense) 4,339 1,499 1,981 984 4,450
Income tax benefit (expense) (505) (284) (194) (207) (585)
---- ---- ---- ---- ----
Income from discontinued operation 3,834 1,215 1,787 777 3,865
===== ===== ===== === =====
Net income (loss) (578) 1,309 (3,877) 1,285 4,734
Net income (loss) per ordinary share:
Basic earnings from continuing operation (0.12) 0.00 (0.16) 0.01 0.02
===== ==== ===== ==== ====
Basic earnings from discontinued operation 0.11 0.03 0.05 0.02 0.11
==== ==== ==== ==== ====
Diluted earnings from continuing operation (0.12) 0.00 (0.16) 0.01 0.02
===== ==== ===== ==== ====
Diluted earnings from discontinued
operation 0.11 0.03 0.05 0.02 0.11
==== ==== ==== ==== ====
Weighted average number of
ordinary shares outstanding:
Basic 35,359 35,348 35,369 35,348 35,348
====== ====== ====== ====== ======
Diluted 35,359 35,359 35,369 35,358 35,376
====== ====== ====== ====== ======
* On July 18, 2017, Camtek signed a definitive agreement with an affiliate of Principle Capital, a Shanghai-based privet-equity fund, to sell its PCB business. In accordance with U.S. generally accepted accounting principles ("U.S. GAAP"), the financial position and results of operations of the PCB business are presented as discontinued operation and, as such, have been excluded from continuing operation for all period presented.
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,
-------- -------- ------------
2017 2016 2017 2016 2016
---- ---- ---- ---- ----
U.S. dollars U.S. dollars U.S. dollars
------------ ------------ ------------
Reported net income (loss) attributable to Camtek Ltd. on GAAP basis (578) 1,309 (3,877) 1,285 4,734
Settlement expense, net of tax (1) 12,025 - 12,025 - -
Realization of deferred tax assets (2) (4,495) - (4,495) - -
Effect of FIT reorganization (3) - - - - 872
Acquisition of Sela and Printar related expenses (4) - 183 - 93 183
Share-based compensation 184 173 92 108 363
Attributable to discontinued operations 43 28 22 14 66
Non-GAAP net income 7,179 1,693 3,767 1,500 6,218
===== ===== ===== ===== =====
Non -GAAP net income per share , basic and diluted 0.20 0.05 0.11 0.04 0.18
Gross margin on GAAP basis from continuing operations
48.9% 49.1% 49.2% 50.5% 41.0%
Reported gross profit on GAAP basis 21,444 18,004 11,155 10,007 32,490
Effect of FIT reorganization (3) - - - - 4,931
Share-based compensation 19 17 9 15 31
Non- GAAP gross margin 21,463 18,021 11,164 10,022 47.3%
Non-GAAP gross profit 48.9% 49.1% 49.2% 50.5% 37,452
==== ==== ==== ==== ======
Reported operating income (loss) attributable to Camtek Ltd. on GAAP basis
from continuing operations
(9,567) 620 (11,012) 776 2,019
Settlement expense (1) 13,000 - 13,000 - -
Effect of FIT reorganization (3) - - - - 872
Share-based compensation 184 173 92 108 363
Non-GAAP operating income 3,617 793 2,080 884 3,254
===== === ===== === =====
(1) During the three and the six months ended June 30, 2017, the Company recorded a provision of $13 million ($12 million net of tax) in conjunction settlement with Rudolph Technologies Inc.
(2) During the three and the six months ended June 30, 2017 the Company recorded net income of $4.5 million as a result of a decrease in the valuation allowance on deferred tax assets following the evaluation of the realizability of the assets based on projected future earnings.
(3) During the year ended December 31, 2016, the Company recorded reorganization costs with regard to the FIT activities of $0.9 million, consisting of: (1) inventory and fixed asset write-offs of $4.9 million, recorded under cost of revenues line item; (2) other expenses of $0.1 million, recorded under cost of revenues line item; (3) fixed asset write-offs of $0.7 million, recorded under operating expenses; (4) other expenses of $0.2 million, recorded under operating expenses; and (5) income from write-off of liabilities to OCS $5.0 million, recorded under operating expenses.
(4) During the three and the six months ended June 30, 2016 and the twelve months ended December 31, 2016, the Company recorded acquisition expenses of $0.2 million, $0.1 million and $0.2 million, respectively, consisting of revaluation adjustments of $0.2 million, $0.1 million and $0.2 million, respectively, of contingent consideration and certain future liabilities recorded at fair value. These amounts are recorded under finance expenses line item.
CAMTEK LTD. INTERNATIONAL INVESTOR RELATIONS
Moshe Eisenberg, CFO GK Investor Relations
Tel: +972 4 604 8308 Ehud Helft / Gavriel Frohwein
Mobile: +972 54 900 7100 Tel: (US) 1 646 688 3559
moshee@camtek.com camtek@gkir.com
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SOURCE Camtek Ltd
