Q1 2025 Camtek Ltd Earnings Call

Okay.

Operator: Ladies and gentlemen, thank you for standing by.

Ladies and gentlemen, thank you for standing by welcome all of you to context results Zoom Webinar. My name is Kenny Green and I'm proud of Investor relation FEMA cancer.

Kenny Green: I would like to welcome all of you to Camtek's results Zoom webinar. My name is Kenny Green, and I'm part of the investor relations team at Camtek. All participants, other than the presenters, are currently muted.

Other than the presenters accompany muted following the presentation I will provide some instructions for participating in a live question and answer session.

Kenny Green: Following the presentation, I will provide some instructions for participating in the live question and answer session. I would like to remind everyone that this conference call is being recorded and the recording will be available on Camtek's website from tomorrow.

I would like to remind everyone that this conference call is being recorded and the recording will be available on <unk> website from Tomorrow. You should you should have all received by now the Companys press release, if not please viewed on the company's website, we'd need to down the call. We have Mr. Rafi, Amit <unk> CEO Mr. <unk>.

Kenny Green: You should have all received by now the company's press release, if not, please view it on the company's website.

Kenny Green: With me today on the call, we have Mr. Rafi Amit, Camtek CEO, Mr. Moshe Eisenberg, Camtek CFO, and Mr. Ramy Langer, Camtek COO. Rafi will open by providing an overview of Camtek's results and discuss recent quarterly trends. Moshe will then summarize the financial results of the quarter.

Speaker Change: Eisenberg, <unk> CFO and Mr Rami longer context.

Speaker Change: Rafi will open by providing an overview of <unk> results and discuss recent quarterly trends Moshe will then summarize the financial results of the quarter following that Rafi Moshe and Rami will be available to take your questions. Before we begin I'd like to remind you that the statements made by management on this call will contain forward looking statements within the meaning of the federal.

Kenny Green: Following that, Rafi, Moshe, and Ramy will be available to take your questions. Before we begin, I'd like to remind you that the statements made by management on this call will contain forward-looking statements within the meaning of the Federal Securities Laws. Those statements are subject to a range of changes, risks, and uncertainties that can cause actual results to vary materially.

Speaker Change: Securities laws, such statements are subject to a range of changes risks and uncertainties that can cause actual results to vary materially for more information regarding risk factors that may impact <unk> results I would encourage you to review our earnings release, and SEC filings and specifically the forward looking statements and risk factors identified in <unk>.

Kenny Green: For more information regarding the risk factors that may impact Camtek's results, I would encourage you to review our earnings release and SEC filings, and specifically the forward-looking statements and risk factors identified in Camtek's 2024 annual results, PR, and other such risk factors discussed in the latest annual report on Form 20F, as published on March 21, 2024. 5. Camtek does not undertake the obligation to update those forward-looking statements in light of new information or future events. Today's discussion of the financial results were presented on a non-GAAP financial basis unless otherwise specified.

Speaker Change: <unk> 2020 full annual results BR and other such risk factors discussed in our in the latest annual report on form 20-F as published on March 21, 2020 full five <unk> does not undertake any obligation to update these forward looking statements in light of new information or future events.

Speaker Change: Today's discussion of the financial results were presented on a non-GAAP financial basis, unless otherwise specified as a reminder, a detailed reconciliation between GAAP and non-GAAP financial measures and results can be found in today's earnings release.

Kenny Green: As a reminder, a detailed reconciliation between GAAP and non-GAAP financial measures and results can be found in today's earnings release.

Kenny Green: And now I'd like to hand the call over to Rafi Amit Camtek CEO. Rafi, please go ahead. Okay, thanks, Kenny. Hello, everyone.

Speaker Change: And now I'd like to hand, the call over to Rafi, Amit Amtech CEO Rafi. Please go ahead.

Rafi: Okay. Thanks Kenny.

Rafi: Hello, everyone.

Rafi Amit: Come to conclude the first quarter with record performance. Q1 revenues reach $119 million, reflecting a year-over-year increase of more than 20%. The quarter also saw a significant improvement in gross margin, which rose to over 52%, contributing to a record operating income of over $37 million, a nearly 30% increase compared to the same period last year. The distribution of revenue was 45 to 50% from high performance computing applications and about 20% from other advanced packaging applications. The remaining revenue was distributed among CMOS image sensor, compound semiconductor, front-end applications, and general 2D applications. As OSOT began producing modules for the HPC market, it is challenging to determine which of our systems installed at OSOT were specifically intended for HPC modules versus other advanced packaging applications.

Rafi: To conclude the first quarter was record performance Q1 revenues reach what other domain teamed Midland Dora, reflecting a year over year increase of more than 20% dip.

Rafi: The quarter also saw with significant improvement in gross margin, which rose to over 52% contributing to a record operating income of over 37 million Dora and nearly 30% increase compare to the <unk>.

Rafi: Same period last year.

Rafi: The distribution of revenue was 45% to 50% from high performance computing applications and about 20% from other advanced packaging applications.

The remaining revenue was distributed among Cmos image sensor compound semiconductor front end applications in general <unk> applications.

Rafi: Is all subs begun producing modules for H B C market. It is challenging to determine which of our systems in store. It all sorts, where specifically intended for H B C modules versus.

Rafi: Other advanced packaging application as a result, we are providing a range.

Rafi Amit: As a result, we are providing a range. During the quarter, we sold systems to over 35 different customers, with many purchasing only one or two tools. This highlights the robustness and diversity of our business model.

Rafi: During the quarter, we sold systems to over 35 different customers with many purchasing only one or two tools.

Rafi: This highlights the robustness and diversity of our business model.

Rafi Amit: There is a broad consensus that the tariff policy and the geopolitical situation have created some uncertainties in the market environment. However, The tariff policy does not directly affect us in any material way, as most of our sales are not targeted at the U.S. market, and our manufacturing is based in Israel and Europe. That said, the geopolitical issues and tariff policy have been raising concern particularly regarding their potential negative impact on the global economy and the demand for end products containing electronic components and therefore affects visibility in our market. Regarding the impact on the Camtek business, currently we have not seen any impact on our business in terms of delays or order cancellation.

Rafi: There is a broad contingent that the Tories policy ended Jill political situation if created some uncertainties in the market environment. However.

Rafi: The tariff policy does not directly affect.

Rafi: <unk> does in any material way as the most of our sales are not targeted at the U S market and our manufacturing is based in Israel and Europe.

Rafi: Let's say the geopolitical issues and tariff policy have been raising concern, particularly regarding their potential negative impact on the global economy.

Rafi: And the demand for <unk> broad ducts containing electronic components, and therefore affect visibility in our markets.

Rafi: Regarding the impact on Comtech business currently we have not seen any impact on our business in term of delays or order cancellation.

Rafi Amit: We have customer base spread across different regions and we have technological leadership and maintain competitive.

Rafi: We have customer base spread across different regions and do we have technological leadership and maintain competitiveness.

Rafi Amit: Regarding our guidance. We continue to see strong momentum heading into the second quarter. And based on current orders, our pipeline, and ongoing customer engagement, we are guiding you to 2025 revenue in the range of $120 million to $123 million, representing approximately 18% year-over-year growth compared to the second quarter of 2020. In addition, we have a healthy backlog for Q3 and expect a solid quarter. Regarding HPC segment, We continue to see ongoing investment in the HPC segment with differing momentum across regions. Some experiencing slow investment, while others progress at a faster pace. Our customers, including OSOT, are constantly expanding their capacity in both COAX, COAX-like technologies, as well as HBM.

Rafi: Regarding our guidance.

Rafi: We continue to see strong momentum heading into the second quarter.

Rafi: And based on current orders our pipeline and ongoing customer engagement. We are guiding Q2, a 2025 revenue in the range of 120 million to 123 million Dora representing approximately 18%.

Rafi: Year over year growth compare to the second quarter of 'twenty 'twenty four.

Rafi: In addition, we have a healthy backlog for Q3 and expect a solid quarter.

Rafi: Regarding H B C segment.

Rafi: We continue to see ongoing investment into H B C segment with different with differing momentum across regions, some experiencing slower investment while other progress at the faster pace.

Rafi: Our customers, including offsets are consistently expanding their capacity in both squawks guac slight technologies as well as H P M.

Rafi Amit: Our primary growth. engine for the upcoming years will be advanced packaging, particularly in high performance components. Supporting the AI application. New technologies are expected to be introduced. For example, HBM device makers are preparing for higher memory content as well as transition to HBM4 next year. The outcome is expected to drive new tools requirements with better technical capability.

Rafi: Our primary growth.

Rafi: And Jean before the upcoming views will be advanced packaging, particularly in high performance computing supporting the AI applications.

Rafi: New technological are expected to be introduced for example, H B M device make here are preparing for higher memory content as well as transition to H B M for next year.

Rafi: The outcome is expected to drive new tours requirements with better technical capabilities.

Rafi Amit: We believe we are in a very strong competitive position, supported by the successful launch of two new models, the Eagle G5 and the Hawk, both of which have been extremely well received and highly valued by our customers. These two models bring cutting-edge technology to the market, and we expect them to account for a significant portion of our revenue this year. This is a significant milestone reflecting the strong confidence our customers have in our latest technology. A noteworthy example of our customers' recognition and support of our technology is the recently announced Intel EPYC Supplier Aware. The Intel EPYC award honors top performances in Intel supply chain for their commitment to EPYC performance.

Rafi: We believe we are in a very strong competitive position supported by the successful launch of two new models. The EG five and the hope both of which have been extremely well received and highly valued by our customers.

Rafi: These two models, bringing cutting edge technology towards the market and do we expect them to account for a significant portion of our revenue this year.

Rafi: This is a significant milestone reflecting the strong confidence our customer has in our latest technologies.

Rafi: And not wall for example of our customers the coalition in support of our technology is the recently announced Intel epic supplier aware.

Rafi: The Intel epic aware owner top performances in Intel supply chain for their commitment to epic performance.

Rafi Amit: Excellent. Partnership, Inclusion, and Continuous Improvement. Out of thousands of Intel suppliers globally, only a few hundred qualify to participate in the EPIC supplier program. To earn the Intel EPYC Supplier Award, companies must not only meet but exceed Intel's highest expectations and achieve ambitious strategic objectives that align with Intel's four priorities.

Rafi: Excellent.

Rafi: Barton sheep inclusion and continuous improvement.

Rafi: Out of thousands of instead of supplier globally only a few hundred qualified to participate the epic supplier program.

Rafi: To earn the Intel epic's supplier of weird companies must not only meet but exceed entails.

Rafi: He asked ex expectations and achieve ambition strategic objective that align with Intel or priorities.

Rafi Amit: In conclusion, We are fully aware of the global business uncertainties. and we remain in close dialogue with our customers to continuously assess and monitor the situation. I believe that Camtek diversifies customer base. technological edge and our strong market position in the advanced packaging market provide us with great resilience compared to our peers. We are a leading provider of AI systems, offering highly competitive capabilities in the advanced packaging market. with a particular focus on the fastest-growing segment of the HPV. Our customer base is geopolitically diverse and we are proud to serve over 200 active customers worldwide.

Rafi: In conclusions.

Rafi: We are fully aware of the global business uncertainty.

Rafi: And we remain in close dialogue with our customers to continuously assess and monitor the situation. However.

Rafi: I believe that Comtech diversified customer base technological.

Rafi: Technological edge and our strong market position in the advanced packaging market provide us with great resilience compare to our peers.

Rafi: We are a leading provider of area of alloy system offering ideally competitive capabilities in the advanced packaging market, we with a particular focus on the fastest growing segment of the H P C.

Rafi: Our customer base is geopolitically diverse and we are.

Rafi: Proud to serve over 200 active customers worldwide.

Rafi Amit: The unique combination of scale and flexibility is a key reason why many customers choose to work with us over larger competitors. who are often slower to respond.

Rafi: The unique combination of scale and flexibility.

Rafi: Is a key reason why many customers choose to work with us over larger competitors or offer who are often slower to respond.

Moshe Eisenberg: And now, Moshe will review the financial results. Moshe. Thanks, Rafi. First quarter revenues came in at a record $118.6 million, an increase of 22% compared with the first quarter of 2024. The geographic revenue split for the quarter was Asia 91% and the rest of the world 9%. Gross profit for the quarter was $61.8 million. The gross margin for the quarter was 52.1%, an improvement. from 50.6% reported both in the first quarter of last year and previous quarter. This is on the high end of our range, supported by a favorable mix in the.

Rafi: And now most share will review the financial results Moshe.

Moshe: Thanks Rafi.

Moshe: Quarter revenues came in at a record $118 $6 million, an increase of 22% compared with the first quarter of 'twenty plan or <unk>.

Moshe: Geographic revenue split for the quarter was <unk>.

Moshe: 91% and the rest of the world 9%.

Moshe: Gross profit for the quarter were $61 $8 million the gross margin for the quarter was 52, 1% an improvement.

Moshe: 156% reported both in the first quarter of last year and previous quarter. This is on the high end of our range supported by a favorable mix in the quarter.

Moshe Eisenberg: operating expenses. in the quarter were $24.4 million compared to $20.2 million in the first quarter of last year and $23.1 million in the previous quarter. In the last few quarters, we have been increasing our R&D and sales and FG&A expenses to support the growth in revenue. Operating profit in the quarter was $37.3 million compared to the $29 million reported in the first quarter of last year and $36.3 million in the fourth quarter. The increase is due to the increase in gross profit, partially offset by the increase in operating expenses. Operating margin was 31.5% compared to the 29.9% and 30.9% percent.

Moshe: Operating expenses.

Moshe: For the quarter were $24 4 million compared to 20.2 mineral goes into first quarter of last year and granting $3 1 million in the previous quarter in the last few quarters, we have been increasing our R&D and.

Moshe: SG&A expenses to support the growth in revenue operating profit in the quarter.

Moshe: $7.3 million compared to $29 million reported in the first quarter of last year and $36.3 million in the fourth quarter.

Moshe: The increase is due to the increase in gross profit, partially offset by the increasing operating expenses.

Moshe: Operating margin was 31, 5% compared to the planning, 9.9% and 34, 9% respectively.

Moshe Eisenberg: Financial income for the quarter was $5.4 million, a decrease from the $5.6 million reported last year and from the $6.2 million in the previous quarter. The decrease was caused by exchange rate differences versus the U.S. dollar. Net income in the first quarter of 2025 was $38.7 million or $0.79 per diluted share. This is compared to a net income of $31.3 million or $0.64. per share in the first quarter of last year. Total diluted number of shares as of the end of the first quarter was 49.3 million.

Moshe: Financial income for the quarter was $5 $4 million a decrease from the $5 6 million reported last year and $6 2 million envelope in the previous quarter. The decrease was caused by exchange rate differences gross of net U S. Dollar.

Moshe: Net income in the first quarter for every 25 $138 $7 million or 79 thing.

Moshe: Diluted share this is compared to a net income of $31 3 million or 64 thing.

Moshe: Per share in.

Moshe: In the first quarter of last year.

Moshe: Total diluted number of shows as of the end of the first quarter of $149 3 million.

Moshe Eisenberg: Turning to some high level balance sheet and cash flow metrics, we generated $23.6 million in cash from operations in the quarter. Cash and cash equivalents, including short and long term deposits and marketable securities. As of the end of the quarter, we're at $523 million. This compared with $501 million at the end of the fall. Inventory level increased to $141.5 million from $123.1 The increase over the quarter is mainly a result of building inventory for the two newly introduced products, the Eagle Gen 5 and Hawk. to support their sales in the coming quarters, which is expected to be significant.

Moshe: Turning to some high level balance sheet and cash flow metrics, we generated $23 6 million absorbing cash from operations in the quarter cash.

Moshe: Cash and cash equivalents, including short and long term deposits and marketable securities.

Moshe: As of the end of the quarter were $523 million.

Moshe: This compared with $501 million at the end of the fourth quarter.

Moshe: Inventory levels increased to 141 5 million from 123.1.

Moshe: The increase over the quarter.

Moshe: Is mainly a result of building inventory for the newly introduced product the Eagle Gen five and hope.

Moshe: To support the sales in the coming water, which is expected to be significant.

Moshe Eisenberg: Account receivable remains stable at around $100 million, which represents 77 days out. As Rafi said before, we expect revenue of between $120 to $123 million in the second quarter.

Moshe: Accounts receivable remained stable at around 100 million gloves, which represent 77 days outstanding.

Moshe: As I said before we expect revenue of between having been granted kilometer granted 3 million daus in the second quarter.

Kenny Green: And with that, Rafi, Ramy, and I will be open to take your questions. Kenny? Thank you, Moshe.

Moshe: And with that update I mean, I will be okay. In particular question Kenny.

Kenny Green: Thank you Marcia.

Kenny Green: At this time, we'll begin the question and answer session. If you have a question, please raise your hand by the Zoom platform. I will introduce you and ask you to unmute, after which you may ask your question. As we have a lot of people on the call, I will take a few moments to poll your questions.

Speaker Change: At this time, we'll begin the question and answer session. If you have a question. Please raise your hand Biogen platform I will introduce you and ask you on mute after which you may ask your question have you had a lot of people on the call I will take a few moments.

Kenny Green: Your question.

Charles Shi: Our first question will be from Charles Shi of Neelam. Charles, please go ahead. Thanks, Kenny. Good afternoon, Rafi, Moshe, Ramy. The first question, your competitor reported not long ago, and they talked about KOA, your largest process control competitor, coming into their field more around the submicron defect detection. I believe it's part of the 2D AOI market, and especially around HPC type of applications.

Moderator: Our first question will be from Charles <unk> of Needham Charles Please go ahead.

Charles: Thanks Kenny.

Kenny Green: Good good good afternoon.

Kenny Green: Rafi Moshe Rami.

Speaker Change: The first question your competitor reported not too long ago.

Speaker Change: And they talked about that KLA norge, the largest of process control competitor.

Speaker Change: Coming into their field more around a sub micron defect detection I believe it said, it's part of the two D AI.

Speaker Change: Market and.

Speaker Change: Especially around H P C type of applications.

Charles Shi: Do you or do you not worry about larger competitors like KOA coming after your market, especially 3D metrology? We'd love to hear some of your insights. Thank you.

Speaker Change: Do you or do you not worry about larger competitors like how a company op ignore market high especially.

Speaker Change: Three D metrology will Oh love to hear some of your insights. Thank you.

Ramy Langer: Ramy, could you? Yes, I will. I will.

Speaker Change: Rami could you guess top decile I was the question.

Ramy Langer: So hi, Charles, and thank you for the question. And we've already engaged with KLA on multiple occasions and have consistently demonstrated that our systems are highly competitive. The Advanced Packaging. is a highly dynamic market and demands equipment customizations and I would say very rapidly the response. We are counting. and Mitra is competent. And as such, it is well positioned to better meet the specific requirements of this unique model. On top of it, our latest products, the Hawk and the Eagle G5, offer competitive advantages. And we are confident in our ability to continue and expand our business and market share in this and facing the competition coming from KLE.

Speaker Change: So hi, Charles and thank you for the question.

Charles: And you know we've already engaged with KLA on multiple occasions and have consistently demonstrated with our systems are highly competitive.

Speaker Change: The advanced packaging.

Speaker Change: He is a highly dynamic market and demands equipment customizations and I would say very rapid responses.

Speaker Change: We are context.

Speaker Change: A mid sized company.

Speaker Change: And as such it is well position to better meet the specific requirements of this unique market.

Speaker Change: On top of it all.

Speaker Change: Our latest products, the Hawk and the Eagle G. Five offer competitive advantages and we are confident in our ability to continue and expand our business and market share in this.

Speaker Change: Facing the competition coming from Kelly.

Ramy Langer: And I want to summarize it again. We have a unique combination of scale and flexibility that is a key reason why many customers choose to work with us over the large competitors who are often slower to respond.

Speaker Change: And I wanted to summarize it again you know we have a unique combination of scale and flexibility that is a key reason why many customers chose to work with us over the large competitors, who are often slower to respond.

Speaker Change: Yes.

Ramy Langer: Thank you, Ramy.

Speaker Change: Thank you Rami.

Charles Shi: Another question, Rafi, I think you talked about HBM4, new technical requirement. Want to ask you or anyone on your team, how do you think about the product positioning in HBM4? Because you have two new products, Eagle G5 versus Hawk, and as I understand, the ASP throughput are very different between those two platforms. And more importantly, I think going to HBM4, as your customers look to either upgrade the technology, expand capacity, do you think they're going to lean towards buying new tools from you, especially the new platforms, or do you provide a potentially upgrade path for them to maybe upgrade the existing install base to really meet the new technical requirement?

Speaker Change: A another question.

Speaker Change: Rafi I think they talk about H b M for a new technical requirement.

Speaker Change: Want to ask you or anyone on the team.

Speaker Change: How do you think about the product positioning H B M. Four.

Speaker Change: Is it because you have two new products EOG Fi versus Hawk and as I understand it a S P.

Speaker Change: Throughput are very different between those two platforms and and depth and more importantly, I think are going to H b M for as your customers to look to I mean, either upgrade of technology you expand capacity.

Speaker Change: Do you think that they can are they going to lean towards buying new tools from you, especially the new platforms or do you provide.

Speaker Change: Potentially operate a path for them to maybe operate that existing cup at installed base to really meet the new technical requirement. Thank you.

Rafi Amit: Thank you. So, so, you know, Charles, people here buy new equipment. They don't tend to upgrade the current equipment. But I think we are in a very good position. No doubt, some customers will want the hook in order to provide the best possible performance and specifically throughput at a lower footprint. That's definitely an advantage and one of the reasons we developed the hook. So I think there will be a combination of those customers for specific applications that will take the hook. Well, I think the Eagle with its, you know, very large installed base in this market, I believe some of the customers will still want to go with the new versions of the Eagle.

Speaker Change: So see you know Charles people here are buying new equipment. They don't tend to upgrade the co into quickly.

Speaker Change: And I think we're in a very good position no doubt some customers will want the hawk in order to provide the best possible performance and specifically throughput at a lower footprint.

Speaker Change: Definitely an advantage in one of the reasons, we developed the <unk>. So I think there will be a combination of those customers for specific applications that will take the hook, while I think the email with this you know very large installed base in this market I believe some of the customers will still want to go with.

Speaker Change: New versions of the of the Indian So I think this even puts us in a much better position compared with our competitors that we have here really with multiple selections or multiple products approach as we enter this market.

Rafi Amit: So I think this even puts us in a much better position compared with our competitors that we are here really with multiple selections or multiple products approach as we enter this market.

Speaker Change: Okay.

Charles Shi: Thank you.

Speaker Change: Thank you, maybe lastly add do on AR.

Charles Shi: Maybe lastly, do you want to this every quarter, I think some of us going to ask this question, HPC revenue, 45 to 50% of the total revenue in Q1. What's the what's the current view for the full year? How much will HPC account for the total revenue for the on the full year basis, based on the current outlook right now? Thank you. So, you know, it's very hard to talk, you know, how it looks, but at least in the foreseeable future, I think we'll be in a similar range. You know, this can differ from a quarter to quarter.

Speaker Change: Disappears every quarter I think some of us going to asking his question.

Speaker Change: H P C revenue, a 45% to 50% of the total revenue in Q1, what's the what's the current view for the full year, how much I will at H P. C account for the total revenue for the on a full year basis based on the current outlook right now thank you.

Speaker Change: So as you know.

Speaker Change: It's very hard to talk you know how it all but at least in the foreseeable future I think we'll be in a similar range.

Speaker Change: Now this can differ from a quarter to quarter, it's really based on shipments, but overall the HBC continues to be strong certainly now passing we see D a growth potential.

Rafi Amit: It's really based on shipments. But overall, the HPC continues to be a strong servant of us, and we see the growth potential and There's no further comments on it.

Speaker Change: And.

Speaker Change: There's no further comment on it.

Speaker Change: Okay.

Speaker Change: Thanks.

Charles Shi: Thanks, thanks Charles.

Charles: Thanks. Thanks, Charles our next question is gonna be from from Matt Prisco from Cantor Fitzgerald, not you May go ahead and talk.

Matt Prisco: Our next question is going to be from from Matt Prisco from County Fitzgerald. Matt, you may go ahead and talk. Hey guys, thanks for taking the question. So with the healthy backlog that you have in 3Q, how are you now thinking about growth overall into the back half of the year? Can you maybe walk us through the primary puts and takes you're thinking through today and perhaps what type of visibility you have from customers at this point?

Matt Prisco: Hey, guys. Thanks for taking the question so with the healthy backlog of it you re.

Speaker Change: Q how are you now thinking about growth overall into the back half of the year.

Can you maybe walk us through the primary puts and takes you're thinking through today and perhaps what type of visibility you have from customers at this point. Thanks.

Rafi Amit: So I think we said it very clearly in our prepared notes, and I won't be able to share more. But we gave the guidance of increased revenues in the second quarter. There, obviously, we really understand where the business is going to. As we go into the third quarter, we see a solid business as well, the backlog, the pipeline, and so we feel very comfortable about this as well.

Speaker Change: So I think we said it very clearly in our prepared notes and I won't be able to share more like but you know we we gave the guidance of increased revenues in the second quarter. There. Obviously, we we really understand where the business is going to.

Speaker Change: As we go into the third quarter, we see a solid businesses weighed the backlog the pipeline and so we feel very comfortable about this is way to.

Rafi Amit: To go beyond that, it is very hard in our business and we will be in a better position to discuss the fourth quarter, I believe, in a couple of months. Thank you.

Speaker Change: To go beyond that it is very hard in our business and we will be in a better position to discuss the fourth quarter I believe in a couple of months.

Speaker Change: Thank you and then maybe an update on where you stand on your new products. It sounds like you're calling for now significant revenue in 2025 sounds like a little more than three months ago, and you're talking tens of millions outlined previously so.

Matt Prisco: And then maybe an update on where you stand on your new products. It sounds like you're calling for now significant revenue in 2025. Sounds like a little more than than three months ago. And you're talking tens of millions outlined previously. So I guess what is what has changed versus three months ago there?

Speaker Change: I guess, what is what has changed versus three months ago. There to talk about any new orders customer feedback new applications that may be opening any additional color would be great. Thank you. So so definitely on the DC.

Rafi Amit: Can you talk about any new orders, customer feedback, new applications that may be opening? Any additional color would be great.

Rafi Amit: Thank you. So so definitely on this, on the new products aspect, definitely we have a lot of good news. I think we're seeing performance as we expected from the new machines. They are really meeting exactly the specification in certain cases, even, you know, do even better than what we expected. So, yes, customers are are continuing to order. We've received more orders for both products. And I think on the G5, definitely it provided us a few advantages over the competition in areas that we thought we felt that we were not strong enough. And and I think the market is reacting very, very positively for it.

Speaker Change: On the new products aspect definitely we have a lot of good news I think we're seeing performance as we expected from the new machines, they're really meeting exactly the specification in certain cases, even you know do even better than what we expected so yes.

Speaker Change: Customers are.

Speaker Change: Continuing to order we've received more orders for both products and I think on the G. Five definitely it provided us a few advantages over the competition in areas that we feel we felt that we were not strong enough.

Speaker Change: And pain and I think the market is reacting very very positively for reed and specific applications, we're able to take more business than we expected previously.

Rafi Amit: And specific applications were able to take more business than we expected previously. And on the hook, yes, it's gone through application and through the evaluations. We got excellent feedback from our customers. We got orders, and we are shipping them. And as we said, it will be significant revenues in this year for both product lines. Both product lines will produce significant revenues. And that's definitely a great result. And, you know, it shows also what we discussed a quarter ago, that our customers have confidence in the products that we bring to the market, and we definitely are showing it, and we are shipping those products as well.

Speaker Change: And on the Hawk, Yes, it's gone through application include evaluations and we got excellent feedback from our customers. We got orders and were shipped to them and as we said it will be significant revenues in this field.

Speaker Change: A product lines, both product lines will be will produce significant revenues and that's definitely a great result, and you know we chose also what we discussed a quarter ago that our customers have confidence in the products that we bring to the market and weed death.

Speaker Change: Currently are showing.

Speaker Change: And we are shipping those products as we speak.

Matt Prisco: Great, thank you.

Speaker Change: Great. Thank you.

Matt Prisco: Thanks, Matt.

Matt Prisco: Thanks, Matt.

Tom O'malley: Our next question is from Tom O'Malley from Barclays. Tom, you may go ahead and ask.

Matt Prisco: Our next question is from Tom O'malley from Barclays.

You May go ahead and.

Matt Prisco: Oh.

Kyle Bleustein: Hey, guys, this is Kyle Bleustein on for Tom O'Malley. Thank you for taking our question. So on the gross margin front, you guys talked about being a higher point with new, with new mix, can you kind of talk about some of the puts and takes going forward, and especially as you ramp these new product lines, when you expect them to be accretive to margins and kind of how that shapes through the year? Okay, so. You know, we've mentioned in the prepared remarks that the cross-margin improvement is a result of the product mix. You know, we expect next quarter to be within the 51 to 52 percent range as well.

Matt Prisco: Hey, guys. This is Kyle boosting on for Tom O'malley. Thank you for taking our question.

Speaker Change: On the gross margin front, you guys talked about paying a higher point with a new with new mix can you kind of talk about some of the puts and takes going forward and especially as you ramp these new product lines. When you expect them to be accretive to margins and kind of how that shapes through the year.

Speaker Change: Okay. So.

Speaker Change: We've mentioned in the in the prepared remarks that the gross.

Speaker Change: Margin improvement is a result of the product mix you know, we expect next quarter to be within the 51% to 52% range as well.

Moshe Eisenberg: And as we are starting to ship more and more units from the new products, both the G5 and the Hawk, this will have a positive contribution to the cross-margin gradually. So we expect to see a more significant improvement to the cross-margin only next year. But still, you know, we are definitely on the high end of the cross-margin level.

Speaker Change: And as we are starting to ship more and more a unit from the new products most of the G five and the Hawk.

Speaker Change: This will have a positive contribution to the gross margin gradually so we expect to see a more significant improvement.

Speaker Change: Lost margin only next year, but still you know we are definitely on the high end of.

Speaker Change: The gross margin level.

Moshe Eisenberg: Very helpful. Thank you. And then for my follow up on the tariff point, you guys mentioned that you're not really seeing any headwinds from your business just based off of your manufacturing locations and your customer mix. On the flip side, do you guys see like opportunities for share gains versus some of your competitors that may be having more impacts from tariffs or uncertainty in this environment? I first of all, you know, you've seen the news. I mean, this is something that is changing every day. And I think in this case, there is a 90 days truce by a truce.

Speaker Change: Very helpful. Thank you and then for my follow up on the tariff point, you guys mentioned that youre not really seeing any habits for your business just based off of your manufacturing locations in your customer mix on the flip side do you guys see like opportunities for share gains versus some of your competitors. They may be having more impacts from tariffs or uncertainty in this environment.

Speaker Change: I first of all you know you're you've seen the news that maybe this is something that is changing every day and I think in this case. There is a 90 days through slide. It shows you know what I'd be sided only to go down to 10% of whatever the numbers are so definitely this is something that is changing we don't.

Moshe Eisenberg: You know, they decided only to go down to 10 percent or whatever the numbers are. So definitely, this is something that is changing. We don't see any competitive advantage here or anything that is going to change the picture. And we are monitoring the situation. Thank you. Thanks.

Speaker Change: See any competitive advantage here or anything that is going to change the picture and we are monitoring the situation.

Speaker Change: Thank you.

Speaker Change: Okay.

Blayne Curtis: Our next question is going to be from Blayne Curtis of Jeffries. Blayne, please go ahead. Hey guys, thanks for taking my question. I wanted to go back to HBC. I think you mentioned, maybe you can talk about HBM versus kind of Cobalt's outlook. And you mentioned some different geographic trends. It seems like one of the Korean customers is digesting. Is that what you're seeing? And I guess in HBM, are you seeing strengths elsewhere? You know, these are two questions, but I'll try and bundle them. So obviously, you know, our expectations in both applications, both markets, are based on discussions with customers, market analysts, and, you know, trying and understanding where these markets go.

Speaker Change: Our next question is gonna be from Blayne Curtis of Jefferies. Lange. Please go ahead.

Blayne Curtis: Hey, guys. Thanks for taking my question I wanted to go back to the H B C.

Speaker Change: You mentioned, maybe you can talk about H b M versus kind of Cobalts outlook and you mentioned some different geographic trends. It seems like one of the green customers is digesting that what youre seeing in I guess in APM are you seeing strength elsewhere.

Blayne Curtis: Well.

Blayne Curtis: You know these are two questions, while I try and bundle them. So obviously you know.

Blayne Curtis: Our expectations in both applications both markets are based on discussions with customers market analyst and you know trained and understanding what these market. These go so youre not if I look at the H B M. Definitely there is growth going to be in the forthcoming years and.

Rafi Amit: So, you know, if I look at the HBM, definitely there is growth going to be in the fourth. And you know, the application today is the primarily the AI, the server-based AI, which continues to fuel, you know, the HBMD RAM needs and also, in this case, also the COATS. But if you go down the road and look at the longer term... there are going to be consumer devices such as AI power laptops, smartphones, they're going to enter the market. And these emerging applications are still today in the early stages, but they're expected to generate Substantial demand in the longer.

Blayne Curtis: The application today is the.

Blayne Curtis: It is primarily the AI and the server based AI.

Blayne Curtis: Which continues to fuel <unk>.

Blayne Curtis: <unk> D H b in DRAM needs and also in this case also Nicolas.

Blayne Curtis: But if you go down the road and look at the longer term.

Blayne Curtis: There are going to be consumer devices, such as AI powered laptops smartphones theyre going to enter the market in these emerging applications are still today in the early stages, but are expected to generate.

Blayne Curtis: Substantial demand in the longer term.

Rafi Amit: Now, again, so this is one of. Then there is the transition for HBM-3 to HBM-4. Now, this brings additional opportunities with more inspection and metrology steps in the manufacturing. And when you look at the HBM in 27, there is going to be a major change in the density of the memory. Again, that's going to be a very big opportunity for added capacity. And I think on the co-op, the good news, and I think as we said, as Rafi said in the prepared notes, there is the move from, you know, today the main foundries that dominate the co-op's capacity to the OSOT.

Blayne Curtis: Now game. So this is one aspect then there is the transition to transition for Adrian three to H B M for now.

Blayne Curtis: Now this brings additional opportunities with more inspection and metrology still exceed the manufacturing process.

Blayne Curtis: And when you look at the H D. M. In 27, there is going to be a major <unk>.

Blayne Curtis: Changing the density of the memory again, that's going to be a very big opportunity.

Blayne Curtis: <unk> added capacity.

Blayne Curtis: And.

Speaker Change: I think on the call us the good news and I see I think as we said as Rafi said in the prepared notes there is the move from.

Speaker Change: Today, the main foundries that dominates the nikola capacity to the offsets.

Rafi Amit: We're already getting business from Osa. that are doing similar technology. So definitely, both of these applications are tied together. We are very optimistic about this market.

Speaker Change: We are already getting business from <unk>.

Speaker Change: That are doing similar technologies.

Speaker Change: So definitely both of these applications are tied together.

Speaker Change: We are very optimistic about this market and I want to say something specifically about the HBO, we're shipping tools to H B M cord three D metrology into the inspection in 'twenty five.

Rafi Amit: And I want to say something specifically about the HBM. We're shipping tools to HBM for 3D metrology and 2D inspection in 2025. And we're expecting to ship in 2026 as well. So, so all in all. The building blocks of the HPC are both healthy. Of course, it's too early enough to talk about the growth rates every year. But if we look at the long-term, both. segments are going to grow significantly over the foreseeable future. Thanks for that.

Speaker Change: And we're expecting to ship in 'twenty six is late.

Speaker Change: So all in all.

Speaker Change: To date, you know maybe the building blocks of the HBC are both healthy.

Speaker Change: Of course, you know it's early it's too early enough to talk about the growth rates every year, but if we look at the long term.

Speaker Change: Yeah.

Speaker Change: Segment going to grow significantly over the over the foreseeable future.

Speaker Change: Thanks for that and then maybe I wanted to ask about the trends outside of advanced packaging I guess, if I did the math right. It seems like in the March quarter was up 20% can you maybe just talk about where you're seeing strength in your outlook as you look to the June quarter.

Rafi Amit: And then maybe I wanted to ask about the trends outside of advanced packaging. I guess if I did the math right, it seems like in the March quarter is up 20%. Can you maybe just talk about where you're seeing strengths and kind of your outlook as you look to the June quarter?

Speaker Change: So if we look outside of just the 45% to 50%. So definitely there is the advanced packaging and that's anywhere between 15% to 20% additional business and this goes to the conventional applications and you know if it is.

Rafi Amit: So if we look outside of just the 45% to 50%, so definitely there is the advanced packaging. And that's anywhere between 15% to 20% additional business. And this goes to the conventional applications. And if it is fanned out, it's still a strong market. And there are other applications from BAMP inspection and so forth. So these are applications that will continue to grow. And no doubt, this is a business we're going to enjoy with the city.

Speaker Change: Fan out is staying strong.

Speaker Change: A strong market and our other applications from boundary inspection and so forth. So these are applications that will continue to grow and no doubt. This is a business we're going to enjoin the placebo feature.

Rafi Amit: And then there is something, 35%, what I call 2D application. And it goes from general 2D application to front end, still compound semi, and even got a bit of image sensors. That's a business that they're sort of picking up a little bit this year. So. If you want to look, and I want to talk a little bit, as we've spoken in previous quarters, as you can see, our 2D business is very, very strong. And don't forget that out of the 70% of what we call advanced packaging, a lot of it is inspection. So overall, our inspection business is much larger than our 3D metrology.

Then there is something 35 pursuing what I called two D applications.

Speaker Change: And it goes from general duty application to front end still compound semi and even got some you know a bit of Cmos image sensors, that's a business that they sort of they are picking up a little bit this year.

Speaker Change: So.

Speaker Change: If you want to know can I want to talk a little bit as we've spoken in previous.

Speaker Change: Quarters as you can see our annuity business is very very strong.

Speaker Change: And don't forget that out of the 70% of the would be called advanced packaging and lot of it is inspection. So overall, our inspection business is much larger than our three D metrology business.

Rafi Amit: So that I would give you a little bit and overall about the entire business. And I believe that the next quarter will be similar. Thanks so much.

Speaker Change: That I would give you a little bit in the overall about the entire business and I believe that the next quarter will be similar.

Speaker Change: Thanks, so much.

Speaker Change: Okay.

Speaker Change: Thanks.

Brian Chen: Our next question will be from Brian Chen of CFO.

Speaker Change: Our next question will be from Brian Chin of Stifel. Brian. Please go ahead.

Brian Chen: Brian, please go ahead. Hi, thanks. Good afternoon. Thanks for letting us ask a few questions.

Brian Chin: Hi, Thanks, good afternoon extra layers asking questions.

Brian Chen: Maybe first question, just to clarify, does the solid quarter in respect to third quarter mean flat or higher sequential revenue? And then also following up on the last few questions, is the company expecting year-over-year improvement in logic or co-oss revenue in 2025? And what portion of your HBC advanced packaging revenue is likely to be co-oss versus HBM this year?

Speaker Change: Maybe first question just to clarify the solid quarter and respect the third quarter mean flat or higher sequential revenue and then.

Speaker Change: So following up on the last few questions is the company expecting year over year improvement in logic or <unk> revenue in 2025, and what portion of your H B C. Advanced packaging revenue is likely to be co ops versus H band this year.

Rafi Amit: So let's start from the end and go backwards. So first of all, we don't give details exactly how much the HBM versus the co-op is changing from quarter to quarter, and we just provide the overall number for high-performance computing. But both, as I said in my previous remarks, both segments are As to the revenues from 25, the overall revenues, when we are talking 45 to 50 percent, obviously this is on increased revenues compared to last year. So, you know, we will need to see how much is Q4 coming out, the final, in order to get the numbers, but at least at this stage, the business is higher than was in 25, but obviously we need to see it in 24.

Speaker Change: So let's start from the end and go backwards. So first of all we.

Speaker Change: We don't expect we don't give details exactly how much he H b M versus Nicole this is changing from quarter to quarter and we just provide the over remember for high performance computing.

Speaker Change: Both as I said in my previous remarks, both segments are healthy.

Speaker Change: A as to the revenues from 25, the overall revenues when we are talking 45% to 50%. Obviously this is an increased revenues compared to last year.

Speaker Change: So you know we will need to see how much is Q4 coming out of refineries in order to beat the numbers, but at least at this stage of the business is.

Speaker Change: Higher than was in 'twenty, five, but obviously, we need coffee and 24.

Rafi Amit: As we move forward, we will be able to give you more information. And definitely in Q3, you asked the question. I think it is too early in the game to say exactly how it will be compared to Q2. As we said, it is solid. We are building the backlog. We have the pipeline in place. And so this is very positive.

Speaker Change: We eh.

Speaker Change: Move forward, we will be able to give you more information.

Speaker Change: And definitely in Q3, you asked the question I think it is too early in the game to say exactly how it will be compared to Q2 as we said it is solid we are building the backlog we have the pipeline in place and so this is very positive with <unk>.

Rafi Amit: But to give numbers, we will only provide them. Okay, fair enough.

Speaker Change: <unk>, we would only provide them.

Speaker Change: At the end of the next quarter.

Speaker Change: Okay Fair enough and then just quickly so maybe the follow up.

Brian Chen: And then just quickly, so maybe a follow-up.

Ramy Langer: I think, Ramy, when you spoke about change in HBM density in 2027, are you specifically referring to hybrid bonding? And how would you assess the competitive landscape in Camtek's positioning once that transition occurs?

Speaker Change: I think that Rami when you spoke about change in HBM density in 2027 are you specifically, referring to hybrid bonding and how would you assess the competitive landscape and canpotex positioning once that transition occurs.

Ramy Langer: No, no, I'm referring to something totally different. If you look at the density of the HBM compared for its GPU, so today it's about 2288 gigabytes. It's supposed to go to be closer to a terabyte. So this is from the internal what the NVIDIA GPU will require in order to run optimally. So the memory that is going to be required in 2027 is going to be significantly higher than is currently being.

Speaker Change: Oh, I'm I'm, referring to something totally different bureaus that density.

Off the HBM comparator for a GPU. So it's the move today, it's about 2200 88 gigabyte, it's supposed to go to be closer to terabyte. So this is Frank in terms of what the Nvidia GPU will require in order to run optimally. So so do memory that is going to be required in 2017 is going to be significantly higher than <unk>.

Speaker Change: Currently being use so this is nothing to do with their manufacturing process.

Ramy Langer: So this is nothing to do with the manufacturing process. Regarding hybrid bonding, so as we said in previous scores, I don't think it will be, it will take some time until we should see. hybrid bonding in our market in very high volumes. But once it is here, we see that as an opportunity. We are already supplying machines to pilot lines. We are going to be part of this application. And there are many steps. doing hybrid bonding that I think that we're going to do both in inspection and metrology.

Speaker Change: Regarding hybrid bonding so as we said the egregious scores.

Speaker Change: Don't think it will be it will take some time on <unk>, we should see.

Speaker Change: Hybrid bonding in our markets in very high volumes.

Speaker Change: But one cities here, we see that as an opportunity we are already supplying machines to do pilot lines, we are going to be part of this application.

Speaker Change: There are many steps doing hybrid bonding.

Speaker Change: Things that we're going to do both inspection and metrology.

Brian Chen: Okay, thank you. Thanks, Brian.

Speaker Change: Okay. Thank you.

Speaker Change: Yeah.

Speaker Change: Thanks, Brian.

Gus Richard: Our next question is from Gus Richard of Northland. Gus, you may go ahead and unmute. Yes, thanks for fitting me in.

Speaker Change: Our next question is from Gus Richard of Northland Golf, You May go ahead enough.

Gus Richard: Yeah. Thanks for fitting me in.

Rafi Amit: I was hoping you could give us an idea of what, you know, what your market share in HPC was, say last year, and maybe a few years before and what, what the trajectory has been. Ho. It's a very hard question, Gus. I don't know the number. I look at it, I think... And in most of the cases that I can just recall from the top of my head, I think we have maintained the market or have grown it by going into more and more, I would say, 2D applications. So I think we are on a positive trajectory in this market.

Gus Richard: I was hoping you could give us an idea of what you know what your market share in H P. C was let's say last year and maybe a few years before and what was the trajectory has been.

Gus Richard:

Speaker Change: It's a very hard question Gus I came in I don't know the number.

Speaker Change: I nominate I think.

Speaker Change: And in most of the cases and I can just recall from the total kind of hinted I think we have maintained the market or had grown by going into more and more.

Speaker Change: I would say to the applications.

Speaker Change: So I think we are on a positive trajectory in this market.

Rafi Amit: And I think when we move to the OSOTs, I think this trajectory will be even more positive, as we shall be doing both the 3D metrology and the last of the inspection steps. So looking forward, as I said and I referred to the competition coming with KLA, I think we have a very, very strong market position. We are leveraging a very strong, very, very strong position in the 3D metrology into the inspection portion. And I think we will continue to leverage it and increase our market share as we go along. I definitely, yes, it is competitive.

Speaker Change: I think when we move through the <unk> I think this trajectory will be even more positive as we shall be doing both the three D metrology and the loss of the inspection steps. So looking forward as I said and I referred to the competition coming with gaming I think we are.

Speaker Change: A very very strong market position we.

Speaker Change: We're leveraging very strong very very strong position in the three D metrology.

Speaker Change: The inspection portion and I think we will continue to leverage it and they increase our market share as we go along I definitely a yes. It is competitive I think we're very well positioned from all the different reasons that we discussed earlier.

Rafi Amit: I think we're very well positioned from all the different reasons that we discussed. Got it. That was helpful.

Speaker Change: Got it that was helpful. Thank you and then B you know this.

Rafi Amit: Thank you. And then, you know, this is sort of when I think about you getting designed into a line? When a customer makes a decision, a tool decision, you know, are you getting designed into a full line? Is it specific applications in line or or is it a generational decision where, you know, you know, how do customers split the mix between yourself and and other other vendors in the market? I think that when they start to design the initial one, for the buying reasons, they usually start with certain applications, but they know what you can do.

Speaker Change: This is sort of when I think about.

Speaker Change: You getting design into our line.

Speaker Change: When a customer makes a decision tool decision. You know are you getting designed into a full line is it specific applications online or or is it a generational decision where.

Speaker Change: You know how to customers split the mix between yourself and other other vendors in the market.

Speaker Change: I think that when did designed a start to design the initial one.

Speaker Change: For the buying reason they.

Speaker Change: They usually start with certain applications, but they they know what you can do.

Rafi Amit: And from what I see, our customer is evolving. And I think one of the reasons that we're successful, that our customers know that if there is a new application, even if the machine did not exactly was designed to need some upgrades or changes or upgrades, we will be there to support them. And I think this is a major part in the purchasing decisions that the customer makes when he understands there are a lot of unknowns. So I think from that point of view, I think it's a plus on our side. Got it.

Speaker Change: And from what I see our customer is evolving.

Speaker Change: I think one of the reason that we're successful with our customers know that he's dairies in Europe location, even that the machine did not exactly was designed that need some upgrades or changes or upgrades, we will be there to support them and I think this is a major part.

Speaker Change: Indeed in the purchasing decisions that the customer makes when he understands that there are a lot of unknowns. So I think from that point of view I think it's a plus on our side.

Speaker Change: Got it and that's it for me thank you.

Rafi Amit: And that's it for me. Thank you. Thank you, guys.

Gus Richard: Thanks Gus.

Craig Ellis: Our next question is from from Craig Ellis of B Reilly.

Speaker Change: Our next question is from from Craig Ellis of B Riley Craig. Please go ahead and ask your question.

Craig Ellis: Craig, please go ahead and ask your question. Yeah, thanks for taking the question. And good afternoon, team. I wanted to start out just understanding how order intensity and dynamics are tracking. As we look at what transpired in one queue and, and how things are trending to queue to date and, and with regard to order dynamics, as, as you look at what's coming in, how much of orders are coming in more on a turn basis for current order versus pipelining out to help that solid three queue or even beyond that into four queue? So there is some uncertainty in the market.

Craig Ellis: Yeah. Thanks for taking the question and good afternoon team I wanted to start out just understanding how ordering 10 city and dynamics are tracking.

Craig Ellis: As we look at what transpired Q1N and how things are trending.

Craig Ellis: <unk> you today 10, and with regard to order dynamics as you look at what's coming in how much of orders are coming in more on a turns basis for current quarter verses pipelining out to help that solid three two or even beyond that into port Q.

Craig Ellis: N.

Craig Ellis: So there is some uncertainty in the market.

Ramy Langer: And as usual, during such times, customers are more cautious to release POs well in advance. Now, it's too early to say if this will have any impact on our business. especially given the latest news about the terrorist attack. In any event, when I look at the situation, we have not experienced any material impact on our business in terms of delays or older cancellations. So, I would take this. describes the situation currently. Got it. Thank you, Ramy.

Craig Ellis: And as usual during such times customers are more cautious to release builds winning advance.

Craig Ellis: Now it's too early to say if this will have any impact on our business.

Craig Ellis: Actually given the latest news about the tariff discussions.

Craig Ellis: In any event when I look at the situation, we have not experienced any material impact on our business in terms of delays or older cancellations.

Craig Ellis: So.

Craig Ellis: I would say this describes the situation currently.

Speaker Change: Got it. Thank you Rami and then the second question is really related to the target revenue level. The company has had for some time $500 million. So if we annualized guidance. It looks like were within about 3% about show.

Rafi Amit: And then the second question is really related to the target revenue level that the company has had for some time, 500 million. So if we annualize guidance, it looks like we're within about 3% of that. So congratulations on all the progress made over the last year or two in that regard. But the question team is more about how you're setting the sites and where you're setting the sites for your team as we look out to 2026 and 2027. How should investors and analysts think about the level of revenue that's possible for the business at this point with the 500 million target now getting so close and any color on specific drivers or dynamics like that, that we would get to higher levels of attainment?

Speaker Change: Congratulations on all the progress made over the last year or two in that regard, but the question.

Speaker Change: Team is more about how you're setting the sites and where you're setting the sites for your.

Speaker Change: Your team as we look out to 2026 and 2027.

Speaker Change: How should investors and analysts to think about.

Speaker Change: The level of revenue that is possible for the business at this point with the <unk>.

Speaker Change: 500 million target out getting so close and and any color on specific drivers or or dynamics like that that we would get to higher levels of attainment.

Rafi Amit: So I think there are two aspects for it. the I would say the more a little bit longer term and things that are up to us. We have spent over the last year a lot of efforts in building the infrastructure to manufacture over $500 million in tens of clean rooms here and also in Germany. So from the capability to manufacture from all the different aspects, we're ready. Now, on top of it, we've introduced two products, two new product lines, the G5 and the Hawk that we spoke a lot about. and you can see that within one year of the introduction, we are going to achieve significant revenues of these two products and these two products open to us applications that we couldn't do before.

Speaker Change: So I think that elastic is Florida.

Speaker Change: I would say the more.

Speaker Change: A little bit longer term and things if a rough to us we have spent over the last year a lot of airports and building the infrastructure to manufacture over $500 million intangible clean rooms here and also in.

Speaker Change: In Germany, so so from the capability to manufacture from all the different aspects we're ready.

Speaker Change: Now on top of it we've introduced new products to new product lines. The G. Five into Hawk that we spoke a lot about.

Speaker Change: And you can see that within one year.

Speaker Change: After the introduction, we are going to do to achieve significant revenues of these two products and these two product open to us applications that we couldn't do before so actually what we have done if you take from the from the inspection and metrology equipment, we have meetings.

Rafi Amit: So actually what we have done, if you take from the inspection and metrology equipment we have made in here, the Eagle and the Hawk, are going to be able to address more applications and definitely we can see ourselves growing the business into new applications. And on top of that, we have the acquisition we made at FRT that is also going very well, getting into new applications, doing things that we couldn't do before, and also, and this is very nicely tied into our current business. So, If I look at the things that we have achieved, that I just discussed, I think from a business point of view, we're no doubt positioned to pass this milestone and further improve significantly business over the 500 million mile.

Speaker Change: Here that one of the Eagle and Hawk are going to be able to address more applications and definitely we can see our sales growing the business into new applications.

Speaker Change: And on top of that we have the acquisition. We made at FERC that is also going very well getting into new applications doing things that we couldn't do before and also and this is very nicely tied into our current basis.

Speaker Change: So.

Speaker Change: If I look at the things that we have achieved that I've just discussed.

Speaker Change: From a business point of view, we're no doubt position.

Speaker Change: Two.

Speaker Change: Pass this milestone and tenant and further improve significantly the business over the 500 million milestones and maybe Ravi you want to add something.

Rafi Amit: And maybe, Rafi, you want to add something. The target of 500 million definitely is a target that we will execute. As we always said, it may take a half year, one year, two years, but it definitely depends on the market condition. Assuming the WFE grows and the demand for equipment grows, we definitely can achieve it We maintain our market share, we increase our market share, we haven't lost any market share yet. So in this position, it's just a matter of the semiconductor growth rate, specifically in advanced packaging, and other applications that we are a leading provider.

Speaker Change: Oh the <unk>.

Speaker Change: Target of 500 million of definitely is a target that we will execute.

Speaker Change: As we always said it.

Speaker Change: It may take a you know a half year, one year two years, but it's definitely definitely depend on the market condition and assuming the W. A fee grow and the demand for equipment growth, we definitely can achieve it because we maintain our market share we increased our market share we haven't lost.

Speaker Change: Any market share yet.

Speaker Change: So in this position he just a matter of the.

Speaker Change: Semiconductor growth rate, specifically into advanced packaging and other applications that we are a leading provider.

Rafi Amit: a good position to be in indeed Rafi and if I could ask a follow up to that you're always extremely helpful and commenting on strategic matters and the businesses doing a great job generating cash and we're at 520 ish million in cash and equivalents 320 million net debt the question is how are you thinking about inorganic growth which you've executed well in the past is the team working on a funnel now to what extent could something be actionable help us understand how you're thinking about inorganic avenues to grow the business thank you first of all you know we maintain and we put a lot of focus on on all the opportunity in the organic growth we made one acquisition and this acquisition also performed nicely and maintain our expectation So this is going well.

Speaker Change: Yeah, good to position to be and indeed brought the and if I could ask a follow up to that you're always extremely helpful. On commenting on strategic matters in that business is doing a great job generating cash and we're at 500 twentyish million in cash and equivalents 300.

Speaker Change: 20 million net debt. The question is how are you thinking about inorganic growth, which you've executed well in the past. It is the team working on our funnel now to what extent could something be actionable help us understand how you're thinking about inorganic avenues to grow the business. Thank you.

Speaker Change: First of all you know, we maintain and we've put a lot of focus on on all the opportunity and the organic growth. We made one acquisition and this acquisition also performed nicely and maintain our expectation.

Speaker Change: So this is going well we continue working on additional M in an acquisition.

Rafi Amit: We continue working on additional acquisition. but probably you, you know. It's not a secret. Not so many companies in the semiconductor are for acquisition or for acquiring. So we continue looking for that and maybe, hopefully, we can do something. But without considering the acquisition, we believe we can achieve the $500 million target within this year, the next year, very soon. As I said, as long as the market condition remains stable, we have no insurance for any big crisis. So as all the analysts are expecting that the semiconductor grows by the end of the decade to come to a trillion, definitely, we can do it.

Speaker Change: But probably you will you know it starts it's not a secret it stopped not so many companies did the semiconductor are our four acquisition of requiring so we continue looking for that then maybe hopefully we can do something but but without.

Speaker Change: During the acquisition, we believe we can achieve the 500 million target.

Speaker Change: Within that the.

Speaker Change: This year the next year very soon.

Speaker Change: As I said as long as the market condition remained stable we have no any insurance for.

Speaker Change: Any big crisis. So so is that the you know it is all of the analysts expecting that the the semiconductor growth over <unk>.

Speaker Change: By the end of the decade to come to <unk>.

Speaker Change: And definitely we can we can do it we can do it as I said, we are we are maintaining very good market share we increase our market share.

Rafi Amit: We can do it. We have a very good market share. We increase our market share. And we have a very good relationship with customers. So we can continue to organically grow. In addition to that, hopefully, we can add with any acquisition that we will execute, it will be over this number. Thanks, Rafi.

Speaker Change: And were very good the relationship with customer. So we can continue organically role. In addition to that hopefully we can add with organic.

Speaker Change: With equipped with any acquisition that we will execute it will be although this number.

Rafi: Thanks, Rafi thanks team.

Rafi Amit: Thanks, team. Thank you.

Craig Ellis: Thank you thanks Craig.

Vivek Aryeh: Thanks, Craig. Next question will be from Vivek Aryeh from Bank of America. Vivek, please go ahead.

Speaker Change: Our next question will be from Vivek Arya from Bank of America Bank. Please go ahead.

Vivek Aryeh: Hi, this is Michael Mani on for Vivek Arya. Thank you for taking our questions. To start, I know the company has been talking about TSMC's clean room capacity constraints and how that could be a gating factor to the business in the near term to medium term. So on that front, has the company seen any improvement in those constraints? So I at least what I hear, I don't think there are any constraints now on our customer side to increase the capacity. I don't think this is an issue.

Speaker Change: Hi, This is Michael money on for Vivek Arya. Thank you for taking our questions to start another company has been talking about.

Speaker Change: TSMC is.

Speaker Change: Clean room capacity constraints, and how that could be a gating factor to the business and then near term to medium term.

Speaker Change: So on that front has the company seen any improvement in.

Speaker Change: And those constraints.

Speaker Change: So at least what I hear aim I don't think there are any constraints now on our customers' side to increase the capacity I don't think this is an issue.

Speaker Change: Okay.

Vivek Aryeh: Thank you.

Annie: Thank you Annie.

Vivek Aryeh: Any further questions? Let me just find Vivek again, we lost him for a sec. Vivek, are you still there? Vivek? You're muted.

Speaker Change: Any further questions.

Speaker Change: Yeah.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Let me just.

Speaker Change: Just find him back again, we locked in for a SEC.

Speaker Change: Sure.

Speaker Change: The fact that you still are.

Speaker Change: Yeah.

Speaker Change: Yes.

Speaker Change: Back.

Speaker Change: The muted.

Yeah.

Speaker Change: Okay.

Speaker Change: Okay.

Vivek Aryeh: Let's go back. Sorry, can you hear me? Yeah, we can hear you. Sorry about that. Yeah. Sorry, my system muted itself. Yeah. Okay. Thank you for that clarification. And then for my next question, you know, you've talked about your co-op opportunity expanding to the OSATs. But as we think about the progression of co-ops to, you know, more advanced variations, like, you know, co-ops L, for example, you know, how does that, how does that impact your opportunity? And if you tied that back specifically to, you know, where your Hawk tool, maybe seeing greater traction, that would be great too.

Speaker Change: So let's go heightened sorry can you hear me, yes, Macau Anthony.

Speaker Change: Yeah, sorry by submit itself yeah. Okay. Thank you for that clarification and then for my next question and I've talked about your cost opportunity expanding to be <unk>.

Speaker Change: But as we think about the progression of cost to you know more advanced variations like you know Carlos Al for example, how does that how does that impact your opportunity and if you could tie that back specifically to you know where your hawk tool, maybe seen greater traction that would be great too. Thank you.

Rafi Amit: So, so first of all, the COAS ALE brings to us additional steps and the opportunities. So from our point of view, the new variation of COAS are good news. And so this is from the variation. From the OSOT's point of view, they will have capacity and they will start with a certain version and move to other versions. Some of them have their specific technologies that is similar to co-op. All in all, I don't think that they have any limitations in coming up with very competitive cost technologies. And I can tell you from what I see in the market, I mean, this is volume business and we're shipping quite a few products to these offsets.

Speaker Change: So so first of all nikolas and bring to us additional steps and the opportunities. So from our point of view the new variation of course are good news.

Speaker Change: And so this is from from the variations from the <unk> point of view, they will add capacity and they will start with the certain version and moved to other versions. Some of them have their specific technologies that is similar to cost.

Speaker Change: Owning on aim I don't think that they they have any limitations in coming up with very competitive a.

Speaker Change: Cause technologies aim and I can tell you from what I see in the market.

Speaker Change: It is volume based medicine, we are shipping quite a few products for diesel set. So I think this is already happening it's not something that will happen in the future is already happening as we speak.

Rafi Amit: So I think this is already happening. It's not something that will happen in the future.

Rafi Amit: It's already happening as we speak.

Speaker Change: Great. Thank you and if I could ask a quick follow up on your business related to China.

Rafi Amit: If I could ask a quick follow-up. On your business related to China, what should we expect for your China businesses here? How much is it declining, if at all? I think we've heard from some of your peers in the space that it could be down. They're seeing their sales down like 10% to 20%. Is that the kind of right ballpark to think? And are you seeing more opportunities in that region in general, as some of your peers could be faced with export restrictions and there might be market parts that market they're unable to address.

Speaker Change: What should we expect for your China business. This year you know how much is declining if at all you know I think we've heard from some of your peers in the space that it could be down they're seeing their.

Speaker Change: Their shelves down like 10% to 20% is kind of right ballpark the tank.

Speaker Change: And are you seeing more opportunities in that region in general as some of your peers are could be faced with export restrictions and maybe.

Speaker Change: There might be market parts of that market. They are unable to address. Thank you. So I E. N I, it's very hard for me to say, what we're getting yield versus our peers I can tell you that historically our business in China was strong and it continues to be strong you know when we have one very good market share a specific customer.

Ramy Langer: Thank you. So, it's very hard for me to say what we're getting new versus our peers. I can tell you that historically, our business in China was strong and it continues to be strong. We have one very good market share at specific customer. And as Rafi alluded earlier, we have not lost any market share at any of our major customers. So, I think from that point of view, our business continues to be strong.

Speaker Change: Marin as Rusty alluded earlier, we have not lost any market share at any of our major customers. So I think from that point of view our business continues to be strong Enel Boucher, maybe you can share too no. We don't see it at this point, we definitely don't see any any weakness in this region.

Ramy Langer: Now, Boxin, maybe you can share too. No, we don't see it. At this point, we definitely don't see any weakness in this region. The business still looks healthy in the next few quarters.

Speaker Change: The business you know in the hunting in the next few quarters.

Ramy Langer: Parker, Mike. Thank you.

Speaker Change: Okay.

Speaker Change: Right.

Ramy Langer: That answers all my questions.

Speaker Change: Thank you that answers all my questions.

Operator: Thank you.

Speaker Change: Thanks, Mike Okay. All that will end the question and answer session before I hand, the back of its rapid for his closing statement I would like to let everyone know that in the next few hours, we will upload the recording of the conference call to the Investor Relations section of Capex website at <unk> Com.

Kenny Green: Okay, well, that will end the question and answer session. Before I hand back over to Rafi for his closing statement, I would like to let everyone know that in the next few hours, we will upload the recording of the conference call to the Investor Relations section of Camtek's website at camtek.com. And I would like to thank everybody for joining this call.

Speaker Change: And I would like to thank everybody for joining this call and with that Rafi. Please please.

Rafi Amit: And with that, Rafi, please, your closing statement. Okay, I would like to extend my sincere gratitude to all of you for your continued interest in our business. A special thanks Special thanks goes to our dedicated employees and outstanding management team for their tremendous performance.

Speaker Change: Please with your closing statement.

Speaker Change: Okay, I would like to extend my sincere gratitude to all of you for your continued interest in our business, especially thinks.

Speaker Change: Especially if things goes to our dedicated employees and outstanding management team for their tremendous performance to our investors I deeply appreciate your ongoing long term support I look forward to speaking with you again next quarter.

To our investors, I deeply appreciate your ongoing long-term support. I look forward to speaking with you again next week. Goodbye.

Speaker Change: Goodbye.