Record results for Camtech: earned $21 million in the 3rd quarter - an increase of 12%

Camtech, which develops and manufactures test and measurement equipment for chip manufacturers, also presented record results in the third quarter of 2022 - in which it met the revenue forecast and exceeded the earnings per share forecast.

In the third quarter of 2022, Camtech earned $21 million, which is 43 cents per share based on US GAAP, an increase of 12% compared to the corresponding quarter in 2021. Camtech's revenue, which is managed by Rafi Amit, grew by 16% compared to the corresponding quarter in 2021 - lower than the growth rate of 18% in the second quarter of the year - and amounted to a quarterly record level of 82 million dollars, in accordance with the average of the analysts' forecasts.
"Camtek's business model is built so that we will be less harmed and may even grow even in a year like 2023, when the chip market is expected to decline," said Moshe Eisenberg, the company's CFO, on Thursday, upon the publication of its financial results for the third quarter of 2022.
Eisenberg points out that the company's growth engines in the past quarter were the transition of leading chip manufacturers to the technology of heterogeneous integration (Heterogeneous Integration) in the field of advanced packages. This technology, which is designed to deal with the need to miniaturize and compact the chips, builds a chip that includes chips of different types: memory chips, processing chips and communication chips, which are connected on one substrate and create a chip with computer characteristics. According to Eisenberg, the three manufacturers that are leading this technology are Samsung, TSMC and Intel - and Kamtec cooperates with all three.
The technology intended for applications of supercomputers and artificial intelligence is just at the beginning, so Kemtech has long-term growth potential in this field. Another segment of the advanced cases that drove Camtech's growth was HBM (High Bandwidth Memory), which is high-speed computer memory, designed for graphic accelerators and consisting of eight memory chips, produced by the three major memory manufacturers: Samsung, Hynix and Micron.
Eisenberg estimates that even though the field of memory is suffering from a slowdown, the HBM segment is expected to grow, because it constitutes a technological change. According to him, in both categories, the chips have become more complex - because the manufacturers produce larger and denser chips on a single slice of silicon. This fact requires testing processes of 100% of the chips, as opposed to sample testing as was the case in the past, and makes testing slower, so that a larger number of testing machines are needed to maintain the production rate.
Other factors that supported Camtech's growth were the entry into the field of measurement solutions during the construction phase of the chips on the silicon wafers (Front End), which increased the potential market that the company is dealing with by 250 million dollars per year. Another new area of ​​activity that drove growth was the measurement solutions for composite materials, such as silicon carbide, which are used to manage battery resources in electric vehicles. This market is growing rapidly, and contributed to Kamtec 15% of its revenues in the third quarter.
Camtech's gross profit grew by 11% in the past quarter compared to the corresponding quarter in 2021, that is, at a rate significantly lower than the rate of growth in revenues, and reached $40 million - which is 48.6% of revenues compared to 50.6% of turnover in the corresponding quarter in 2021. Eisenberg explains the erosion in gross profitability by the fact that revenues in the past quarter resulted from large orders, which involved larger discounts, and estimates that this gross profitability rate will also characterize the fourth quarter of 2022.
Camtech estimates that its revenues in 2022 will be 320 million dollars, so that the revenues in the fourth quarter of the year will be 81 million dollars - a figure that is 1% lower than the revenues in the past quarter. Eisenberg also estimates that the company is in a relatively good position for 2023, when investments in chip manufacturing equipment are expected to decrease by 20%-30%. According to him, the company's business model is based on the development of products that support technological changes, and are therefore less exposed to a decrease in investments in expanding production capacity. Other factors that provide Kemtec with relative immunity during a period of downturn in the industry are the geographical dispersion of its revenues, and the fact that the company has 40 customers - and none of them are responsible for more than 10% of its revenues. According to Eisenberg, the geographical dispersion and low concentration of customers will allow the company to balance damage in certain areas of activity with growth in other areas.