Source: Motley Fool transcript (published 08/17/2026)
Kenny Green: Ladies and gentlemen, thank you for standing by. 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. [Operator Instructions] I would like to remind everyone that this conference call is being recorded, and the recording will be available from the link in the earnings press release and on Camtek's website from tomorrow. You should have all received by now the company's press release. If not, please view it on the company's website. With me today on the call, we have Mr. Rafi Amit, CEO; Mr. Moshe Eisenberg, CFO; and Mr. Ramy Langer, COO.
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. Today's discussion of the financial results will be presented on a non-GAAP financial basis unless otherwise specified. As a reminder, a detailed reconciliation between GAAP and non-GAAP financial results can be found in today's earnings release. And now I'd like to hand the call over to Mr. Rafi Amit, Camtek's CEO.
Rafi Amit: Hello, everyone. I am delighted with our second quarter results and even more excited about the exceptional momentum we are seeing across our business. More importantly, the expectation we shared with you on our previous call regarding the second half of 2026 and our leadership position in the Advanced Packaging market are now becoming a reality, as you will hear through today's call.
Let's begin with our second quarter financial results. Second quarter revenue reached a record of $133 million, exceeding our guidance. Gross margin was 51.4% and operating income totaled $36 million. Approximately 75% of our revenue was generated from the Advanced Packaging segment, with the majority supporting AI-related applications. The remaining revenue was generated across a diverse range of 2D inspection applications, including photonic and various 2D inspection applications.
Earlier this year, we communicated that we expected the second half of 2026 to be significantly stronger than the first half. That expectation has materialized. Since the beginning of the year, we have experienced a significant acceleration in order intake, bringing total orders received year-to-date to more than $600 million with deliveries scheduled through the remainder of 2026 and into 2027. This exceptional level of order intake has significantly improved our business visibility for the remainder of 2026 and well into 2027.
Our leading position in the Advanced Packaging market is expected to drive approximately 45% growth in our Advanced Packaging business in the second half of 2026 compared with the first half. Looking at the year from another perspective, we expect our Advanced Packaging revenue in the fourth quarter to be approximately 70% higher than the first quarter, reflecting the strong acceleration in demand.
In the second quarter, approximately 50% of our systems revenue were generated by the new generation platform, the Eagle G5 and the Hawk. We expect the contribution from these products to continue increasing over the coming quarters as customer adoption accelerates.
Let me provide some additional color on the more than $600 million orders we have received since the beginning of the year. Approximately 80% of these orders are Advanced Packaging applications. The industry transition to HBM4 together with continued capacity expansion has resulted in significant orders from multiple leading HBM manufacturers. In parallel, the ongoing expansion of 2.5D and 3D IC packaging capacity is creating a substantial growth opportunity for Camtek, as reflected by the large multisystem orders we have already received from leading foundries, IDMs and OSATs. Notably, OSATs accounted for more than 50% of our total order intake.
Another emerging market meaningfully growing for Camtek is photonics, including silicon photonics and compound semiconductor. We have already received multisystem orders from several customers in this market, and we expect photonics to become an incredibly important contributor to our growth in the coming years.
This brings me to our outlook. We expect third quarter revenue to be in the range of $158 million to $160 million, representing an exceptional 20% sequential increase over the second quarter. Given our strong order momentum and record backlog, we expect to deliver more than 30% growth in H2 2026 versus H1 2026, followed by continued growth into 2027.
It is also important to highlight that we are continuing to expand our core product portfolio with new platform configurations and application-specific modules. Examples include a high-resolution backside inspection module and fluorescence illumination technology for detecting organic residue. In the metrology space, we are also launching a new platform, NanoProf, which will significantly expand our metrology capabilities.
The Hawk, combined with its enhanced optical capabilities and our breakthrough AI technology, is further strengthening our competitive position and enabling us to penetrate additional process steps, including hybrid bonding as well as other fast-growing emerging applications.
Let me conclude by summarizing our key messages. The AI revolution is driving unprecedented demand for data center, compute capacity and power infrastructure. With AI adoption still in its early stage, we believe demand for AI compute infrastructure will continue to grow significantly, supporting sustained investment in AI data centers and advanced semiconductor manufacturing. Camtek is exceptionally well positioned to benefit from the expected growth over the coming years.
Moshe Eisenberg: Thanks, Rafi. In my financial summary ahead, I will provide the results on a non-GAAP basis. Second quarter revenues came in at a record level of $133.2 million, an 8% increase year-on-year and 10% compared with the first quarter of 2026. The geographic revenue split for the quarter was as follows. Asia accounted for 92% and the rest of the world, 8%. Gross profit for the quarter was $68.5 million. The gross margin for the quarter was 51.4%, similar to the previous quarter.
Operating expenses in the quarter were $32.5 million compared to $30.9 million in the previous quarter. The main area which has increased is R&D, around the investment in new technologies and additional resources from the Visual Layer acquisition in order to strengthen our AI offering. Our operating profit in the quarter was $36 million compared to $31.1 million in the first quarter. Operating margin was 27% compared to 25.5%.
Financial income for the quarter was $7 million compared to $8.1 million in the previous quarter. The main reason was devaluation of certain balance sheet items due to the weakness of the U.S. dollar versus the Israeli shekel. Net income for the second quarter of 2026 was $39.4 million or $0.78 per diluted share, compared to a net income of $35.5 million or $0.70 per share in the previous quarter. Total diluted number of shares as of the end of the second quarter was 51.5 million.
Cash and cash equivalents, including short- and long-term deposits and marketable securities as of June 30, 2026, were $815.8 million. We generated $12.2 million in cash from operations in the quarter. As a result of the increased business volume, accounts receivables increased to $153.9 million compared to $131.7 million in the previous quarter. DSO increased to 105 days.
As Rafi said before, we expect revenues of $158 million to $160 million in the third quarter with sequential double-digit growth in Q4 and further growth into 2027. This represents over 30% second half 2026 growth versus the first half.
Before we open the call for questions, I would like to announce that Camtek will be hosting an investors and analyst breakfast presentation at SEMICON West. It will take place on Wednesday, October 14, 2026, at 7:00 a.m.