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0001109138--12-31falseQ220242024-06-30IL
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 6-K
 
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
under the Securities Exchange Act of 1934
 
For the Month of September 2024
 
CAMTEK LTD.
(Translation of Registrant’s Name into English)
 
Ramat Gavriel Industrial Zone
 P.O. Box 544
 Migdal Haemek 23150
 ISRAEL
(Address of Principal Corporate Offices)
 
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
 
Form 20-F ☒   Form 40-F ☐
 
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities and Exchange Act of 1934.
 
Yes ☐   No ☒
 

 
SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. This Form 6-K, including all exhibits hereto, is hereby incorporated by reference into all effective registration statements filed by the registrant under the Securities Act of 1933.
 
 
CAMTEK LTD.
(Registrant)
 
By: /s/ Moshe Eisenberg
——————————————
Moshe Eisenberg,
 Chief Financial Officer
 
Dated: September 10, 2024
 

 
Exhibit
Number
  
Description of Exhibit
 
 
101
  
The following financial information from Camtek Ltd.’s Report on Form 6-K, formatted in XBRL (eXtensible Business Reporting Language): (i) Unaudited interim condensed consolidated balance sheets on June 30, 2024 and December 31, 2023; (ii) Unaudited interim condensed consolidated statements of operations for the six months ended June 30, 2024 and 2023 and the year ended December 31, 2023; (iii) Unaudited interim condensed consolidated statements of comprehensive income for the six months ended June 30, 2024 and 2023 and the year ended December 31, 2023; (iv) Unaudited interim condensed consolidated statements of changes in shareholders’ equity for the six months ended June 30, 2024 and 2023 and the year ended December 31, 2023; (v) Unaudited interim condensed consolidated statements of cash flows for the six months ended June 30, 2024 and 2023 and the year ended December 31, 2023; and (vi) notes to the Unaudited interim condensed consolidated financial statements.
 
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Exhibit 99.1
 
Camtek Ltd.
and its Subsidiaries
 
Interim Condensed Consolidated
Financial Statements
As of June 30, 2024
(Unaudited)
 

Camtek Ltd. and its Subsidiaries
 
Interim Unaudited Condensed Consolidated Financial Statements as at June 30, 2024
Contents
 

F - 2

Camtek Ltd. and its Subsidiaries

 

Interim Unaudited Condensed Consolidated Balance Sheets
 
         
June 30,
    
December 31,
  
         
2024
    
2023
  
   
Note
    
U.S. Dollars (in thousands)
  
                   
Assets
                  
                   
Current assets
                  
Cash and cash equivalents
  
4A
 
    
86,201
      
119,968
  
Short-term deposits
          
256,250
      
215,250
  
Marketable securities
  
4B
 
    
23,615
      
18,816
  
Trade accounts receivable, net
          
68,151
      
87,300
  
Inventories
  
4C
 
    
99,215
      
85,905
  
Other current assets
  
4D
 
    
27,048
      
19,548
  
Total current assets
          
560,480
      
546,787
  
                       
Long term deposits
          
6,000
      
21,000
  
Marketable securities
  
4B
 
    
81,817
      
73,576
  
Long term inventory
  
4C
 
    
9,553
      
9,023
  
Deferred tax assets, net
          
2,642
      
2,642
  
Other assets, net
          
1,947
      
1,370
  
Property, plant and equipment, net
  
4E
 
    
44,246
      
41,987
  
Intangible assets, net
  
4F
 
    
15,145
      
16,937
  
Goodwill
          
74,345
      
74,345
  
Total non-current assets
          
235,695
      
240,880
  
Total assets
          
796,175
      
787,667
  
                       
Liabilities and shareholders’ equity
                      
Current liabilities
                      
Trade accounts payable
          
37,757
      
42,187
  
Other current liabilities
  
4G
 
    
69,777
      
54,487
  
Total current liabilities
          
107,534
      
96,674
  
                       
Long term liabilities
                      
Deferred tax liabilities, net
          
5,845
      
7,541
  
Other long-term liabilities
          
9,988
      
10,473
  
Convertible notes
  
4H
 
    
197,378
      
196,831
  
           
213,211
      
214,845
  
Total liabilities
          
320,745
      
311,519
  
                       
Shareholders’ equity
                      
Ordinary shares NIS 0.01 par value, 100,000,000 shares authorized at June 30, 2024 and at December 31, 2023;
                      
47,410,314 issued shares at June 30, 2024 and 46,993,998 at December 31, 2023;
                      
45,317,938 shares outstanding at June 30, 2024 and 44,901,622 at December 31, 2023;
  
3
      
177
      
176
  
Additional paid-in capital
          
207,615
      
200,389
  
Accumulated other comprehensive income (loss)
          
(534
)
    
129
  
Retained earnings
          
270,070
      
277,352
  
           
477,328
      
478,046
  
Treasury stock, at cost (2,092,376 shares as of June 30, 2024 and December 31, 2023)
          
(1,898
)
    
(1,898
)
                       
Total shareholders' equity
          
475,430
      
476,148
  
                       
Total liabilities and shareholders' equity
          
796,175
      
787,667
  
 
The accompanying notes are an integral part of these interim unaudited condensed consolidated financial statements.
 

F - 3

Camtek Ltd. and its Subsidiaries

 

Interim Unaudited Condensed Consolidated Statements of Operations
(In thousands, except per share data)
 
         
Six months ended
June 30,
    
Year ended
December 31,
  
         
2024
    
2023
    
2023
  
   
Note
    
U.S. dollars
    
U.S. dollars
  
                               
Revenues
          
199,601
      
146,215
      
315,375
  
Cost of revenues
          
103,638
      
77,378
      
167,742
  
                               
Gross profit
          
95,963
      
68,837
      
147,633
  
                               
Research and development costs
          
18,146
      
15,672
      
31,470
  
Selling, general and
                              
 administrative expenses
  
5A
 
    
30,694
      
24,037
      
50,751
  
           
48,840
      
39,709
      
82,221
  
                               
Operating profit
          
47,123
      
29,128
      
65,412
  
                               
Financial income, net
  
5B
      
10,624
      
10,864
      
22,218
  
                               
Income before income taxes
          
57,747
      
39,992
      
87,630
  
                               
Income tax expense
          
(4,984
)
    
(4,208
)
    
(8,998
)
                               
Net income
          
52,763
      
35,784
      
78,632
  
 

F - 4

Camtek Ltd. and its Subsidiaries

 

Interim Unaudited Condensed Consolidated Statements of Operations (contd.)
Net income per ordinary share:
 
         
Six months ended
June 30,
    
Year ended
December 31,
  
          2024     2023     2023  
   
Note
    
U.S. dollars
    
U.S. dollars
  
                         
Basic net earnings per share
          
1.17
      
0.80
      
1.76
  
                               
Diluted net earnings per share
          
1.08
      
0.74
      
1.63
  
                               
Weighted average number of
                              
  ordinary shares outstanding
                              
  (in thousands):
                              
                               
Basic
          
45,160
      
44,562
      
44,725
  
                               
Diluted
          
49,283
      
48,531
      
48,863
  
 
The accompanying notes are an integral part of these interim unaudited condensed consolidated financial statements.
 

F - 5

Camtek Ltd. and its Subsidiaries

 

Interim Unaudited Condensed Consolidated Statements of Comprehensive Income
(In thousands)
 
   
Six months ended
June 30,
    
Year ended
December 31,
  
   
2024
    
2023
    
2023
  
   
U.S. dollars
    
U.S. dollars
  
                   
Net income
    
52,763
      
35,784
      
78,632
  
Other comprehensive income (loss), net of tax:                        
Change in net unrealized gains on available-for-sale marketable securities
     (663 )    
-
       740  
Deferred tax expense
    
-
      
-
      
(611
)
Total other comprehensive income (loss)
    
(663
)
    
-
      
129
  
                         
Total comprehensive income
    
52,100
      
35,784
      
78,761
  
 
The accompanying notes are an integral part of these interim unaudited condensed consolidated financial statements.
 

F - 6

Camtek Ltd. and its Subsidiaries

 

Interim Unaudited Condensed Consolidated Statements of Shareholders’ Equity
 
                           
Accumulated
              
   
Ordinary Shares
    
Number of
          
Additional
    
Other
          
Total
  
   
NIS 0.01 par value
    
Treasury
    
Treasury
    
paid-in
    
Comprehensive
    
Retained
    
shareholders'
  
   
Number of
    
U.S. Dollars
    
Shares
     Shares    
capital
    
Income (loss)
     earnings    
equity
  
   
Shares Issued
    
(in thousands)
          
U.S. Dollars (in thousands)
  
                                                 
Balances at
                                                
December 31, 2022
    
46,505,318
      
175
      
(2,092,376
)
    
(1,898
)
    
187,105
      
-
      
198,720
      
384,102
  
                                                                 
Share-based
                                                                
 compensation
                                                                
 expense
    
-
      
-
      
-
      
-
      
6,521
      
-
      
-
      
6,521
  
Exercise of share
                                                                
 options and RSUs
    
306,186
      
*
      
-
      
-
      
-
      
-
      
-
      
-
  
Net income
    
-
      
-
      
-
      
-
      
-
      
-
      
35,784
      
35,784
  
                                                                 
Balances at
                                                                
June 30, 2023
    
46,811,504
      
175
      
(2,092,376
)
    
(1,898
)
    
193,626
      
-
      
234,504
      
426,407
  
                                                                 
Share-based
                                                                
 compensation
                                                                
 expense
    
-
      
-
      
-
      
-
      
6,077
      
-
      
-
      
6,077
  
Exercise of share
                                                                
 options and RSUs
    
182,494
      
1
      
-
      
-
      
181
      
-
      
-
      
182
  
Share-based
                                                                
 compensation adjustment
    
-
      
-
      
-
      
-
      
505
      
     
-
      
505
  
Unrealised gain on investments
    
-
      
-
      
-
      
-
      
-
      
740
      
-
      
740
  
Deferred tax expense
    
-
      
-
      
-
      
-
      
-
      
(611
)
    
-
      
(611
)
Net income
    
-
      
-
      
-
      
-
      
-
      
-
      
42,848
      
42,848
  
Balances at
                                                                
December 31, 2023
    
46,993,998
      
176
      
(2,092,376
)
    
(1,898
)
    
200,389
      
129
      
277,352
      
476,148
  
                                                                 
Share-based
                                                                

 compensation

                                                                

 expense

    
-
      
-
      
-
      
-
      
7,198
      
-
      
-
      
7,198
  
Exercise of share                                                                
 options and RSUs
    
416,316
      
1
      
-
      
-
      
28
      
-
      
-
      
29
  
Unrealised gain on investments
    
-
      
-
      
-
      
-
      
-
      
(663
)
    
-
      
(663
)
Dividend paid
    
-
      
-
      
-
      
-
      
-
      
-
      
(60,045
)
    
(60,045
)
Net income
    
-
      
-
      
-
      
-
      
-
      
-
      
52,763
      
52,763
  
                                                                 
Balances at
                                                                
June 30, 2024
    
47,410,314
      
177
      
(2,092,376
)
    
(1,898
)
    
207,615
      
(534
)
    
270,070
      
475,430
  
 
The accompanying notes are an integral part of these interim unaudited condensed consolidated financial statements.
 
*Represents an amount less than $1,000
 

F - 7

Camtek Ltd. and its Subsidiaries

 

Interim Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands)
 
   
Six months ended
June 30,
    
Year ended
December 31,
  
    2024     2023    
2023
  
   
U.S. dollars
    
U.S. dollars
  
                   
Cash flows from operating activities:
                  
Net income
    
52,763
      
35,784
      
78,632
  
Adjustments to reconcile net income to net
                        
cash provided by operating activities:
                        
Depreciation and amortization
    
5,040
      
2,406
      
5,784
  
Deferred tax expense
    
(1,696
)
    
280
      
(1,254
)
Amortization of debt issuance costs
    
547
      
547
      
1,094
  
Loss on disposal of fixed assets
    
-
      
233
      
6
  
Share based compensation expense
    
7,198
      
6,521
      
12,598
  
Change in provision for doubtful debts
    
112
      
-
      
100
  
                         
Changes in operating assets and liabilities:
                        
Trade accounts receivable
    
19,267
      
1,829
      
(1,890
)
Inventories
    
(14,467
)
    
171
      
(13,692
)
Due from related parties
    
(1
)
    
-
      
(3
)
Other assets
    
(9,371
)
    
(5,375
)
    
(6,766
)
Trade accounts payable
    
(4,713
)
    
(231
)
    
10,121
  
Other current liabilities
    
15,467
      
(9,449
)
    
(5,406
)
                         
   Net cash provided by operating activities
    
70,146
      
32,716
      
79,324
  
                         
Cash flows from investing activities:
                        
Acquisition of subsidiary consolidated for the first time (a)
    
1,295
      
-
      
(101,781
)
Proceeds from (investment in) short-term deposits
    
(41,000
)
    
57,000
      
36,250
  
Proceeds from (investment in) long-term deposits
    
15,000
      
-
      
58,000
  
Purchase of fixed assets
    
(5,133
)
    
(4,782
)
    
(8,097
)
Purchase of intangible assets
    
(126
)
    
(60
)
    
(173
)
Purchase of marketable securities
    
(25,653
)
    
-
      
(103,528
)
Redemption of marketable securities
    
11,950
      
-
      
11,876
  
                         
Net cash provided by (used in) investing activities
    
(43,667
)
    
52,158
      
(107,453
)
 

F - 8

Camtek Ltd. and its Subsidiaries

 

Interim Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands)
 
   
Six months ended
June 30,
    
Year ended
December 31,
  
   
2024
    
2023
    
2023
  
   
U.S. dollars
    
U.S. dollars
  
                   
Cash flows from financing activities:
                  
Proceeds from exercise of share options
    
29
      
-
      
182
  
Dividend payment
    
(60,045
)
    
-
      
-
  
                         
Net cash provided by (used in) financing activities
    
(60,016
)
    
-
      
182
  
Effect of change in exchange rate on cash and cash equivalents
    
(230
)
    
(243
)
    
(241
)
                         
Net increase (decrease) in cash and cash equivalents
    
(33,767
)
    
84,631
      
(28,188
)
Cash and cash equivalents at beginning of the period
    
119,968
      
148,156
      
148,156
  
Cash and cash equivalents at end of the period
    
86,201
      
232,787
      
119,968
  
 
   
Year ended
December 31, 2023
  
(a) Acquisition of subsidiary, consolidated for the first time:
  
U.S. Dollars
  
Working capital (excluding cash and cash equivalents)
    
(15,288
)
Fixed assets, net
    
(1,615
)
Intangible assets
    
(16,900
)
Goodwill
    
(74,345
)
Deferred taxes liabilities, net
    
7,157
  
Working capital adjustments
    
(1,295
)
     
(102,286
)
Increase in goodwill against share-based compensation
    
505
  
     
(101,781
)
 
   
Six months ended
June 30,
    
Year ended
December 31,
  
   
2024
    
2023
    
2023
  
   
U.S. dollars
    
U.S. dollars
  
                   
Supplementary cash flows information:
                  
   Income taxes paid
    
4,497
      
9,626
      
13,807
  
   Interest received
    
6,125
      
6,911
      
18,685
  
   Lease payments
    
1,040
      
735
      
1,854
  
                         
Non-cash transactions:
                  
Fixed assets purchased with supplier credit
    
550
      
371
      
267
  
 
The accompanying notes are an integral part of these interim unaudited condensed consolidated financial statements.
 

F - 9

Camtek Ltd. and its Subsidiaries

 

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

(Amounts in thousands, except per share data)

Note 1 - Nature of Operations
 
   
Camtek Ltd. (“Camtek” or the “Company”), an Israeli corporation, is jointly controlled 21.2% by Priortech Ltd., an Israeli corporation listed on the Tel-Aviv Stock Exchange and 17.3% by Chroma Ate Inc., a Taiwanese company (“Chroma”). Camtek provides automated and technologically advanced solutions dedicated to enhancing production processes, increasing product yield and reliability, and enabling and supporting customers’ latest technologies in the semiconductor fabrication industry.

 

F - 10

Camtek Ltd. and its Subsidiaries

 

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

(Amounts in thousands, except per share data)

 

Note 2 - Basis of Preparation
 
A. Statement of compliance
 
The accounting policies applied in these interim financial statements are the same as those applied in the Company’s 2023 annual audited consolidated financial statements for the year ended December 31, 2023.
 
The accompanying unaudited condensed consolidated interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and do not include all of the information required for full annual financial statements. The unaudited condensed consolidated interim statements should be read in conjunction with the Company’s 2023 annual audited consolidated financial statements and footnotes, which were filed with the U.S. Securities and Exchange Commission as part of the Company’s Annual Report on Form 20-F for the year ended December 31, 2023.
 
In the opinion of management of the Company, the accompanying unaudited condensed financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position as of June 30, 2024, and its results of operations for the six months ended June 30, 2024, and 2023, and cash flows for the six months ended June 30, 2024, and 2023. The condensed balance sheet at December 31, 2023, was derived from the audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements.

 

F - 11

Camtek Ltd. and its Subsidiaries

 

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

(Amounts in thousands, except per share data)

 

Note 3 - Shareholders’ Equity
 
A. General
 
The Company’s shares are traded on the NASDAQ Global Market under the symbol “CAMT”, and also listed and traded on the Tel-Aviv stock exchange.
 
B. Changes in Stock Options and RSUs
 
The number of stock options exercised in the six-month period ended June 30, 2024, was 416,316.
 
In the first six months of 2024, 183,329 restricted share units (RSUs) were granted by the Company. The RSUs vest over a four-year period.
 
C. Share-based Compensation Expense
 
The total share-based compensation expense amounted to $7,198, $6,521, and $12,598 for the six-month periods ended June 30, 2024 and 2023 and the year ended December 31, 2023, respectively.

 

F - 12

Camtek Ltd. and its Subsidiaries

 

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

(Amounts in thousands, except per share data)

 

Note 4 - Supplementary Financial Statements Information
 
A. Cash and cash equivalents
 
The Company’s cash and cash equivalent balance at June 30, 2024 and December 31, 2023 is denominated in the following currencies:
 
   
June 30,
    
December 31,
  
   
2024
    
2023
  
   
U.S. Dollars
  
             
US Dollars
    
73,637
      
113,190
  
New Israeli Shekels
    
4,065
      
2,795
  
Other currencies
    
8,499
      
3,983
  
                 
     
86,201
      
119,968
  
 
Short-term deposits are bank deposits in US Dollars with an original maturity of more than three months and remaining term at the balance sheet date of no more than twelve months. As of June 30, 2024, the average annual interest rate was 6.11%.
 
B. Marketable Securities
 
Summary of marketable securities amortized cost, unrealized gains, unrealized losses, and fair value as of June 30, 2024 and December 31, 2023:
 
   
June 30, 2024
  
   
U.S. Dollars
  
Marketable Securities
  
Amortized Cost
    
Unrealized Gains
    
Unrealized Losses
    
Fair Value
  
Matures within one year:
                        
Corporate bonds
    
22,645
      
2
      
(32
)
    
22,615
  
Government bonds
    
984
      
16
      
-
      
1,000
  
     
23,629
      
18
      
(32
)
    
23,615
  
Matures after one year:
                                
Corporate bonds
    
73,278
      
111
      
(380
)
    
73,009
  
Government bonds
    
8,798
      
12
      
(2
)
    
8,808
     
82,076
      
123
      
(382
)
    
81,817
  
     
105,705
      
141
      
(414
)
    
105,432
  

 

F - 13

Camtek Ltd. and its Subsidiaries

 

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

(Amounts in thousands, except per share data)

 

Note 4 - Supplementary Financial Statements Information (cont’d)
 
B. Marketable Securities (cont’d)
 
   
December 31, 2023
  
   
U.S. Dollars
  
Marketable Securities
  
Amortized Cost
    
Unrealized Gains
    
Unrealized Losses
    
Fair Value
  
Matures within one year:
                        
Corporate bonds
    
9,821
      
7
      
(9
)
    
9,819
  
Government bonds
    
8,983
      
14
      
-
      
8,997
  
     
18,804
      
21
      
(9
)
    
18,816
  
Matures after one year:
                                
Corporate bonds
    
64,033
      
574
      
(3
)
    
64,604
  
Government bonds
    
8,815
      
157
      
-
      
8,972
     
72,848
      
731
      
(3
)
    
73,576
  
     
91,652
      
752
      
(12
)
    
92,392
  
 
The amortized cost and estimated fair value of marketable securities classified by the maturity date listed on the security, regardless of the Consolidated Balance Sheet classification, is as follows at June 30, 2024 and December 31, 2023:
 
   
June 30, 2024
  
   
Amortized
Cost
    
Fair
Value
  
   
U.S. Dollars
  
                 
Due within one year
    
23,629
      
23,615
  
Due after one through five years
    
52,239
      
51,937
  
Due after five through ten years
    
29,837
      
29,880
  
Total marketable securities
    
105,705
      
105,432
  

 

   
December 31, 2023
  
   
Amortized
Cost
    
Fair
Value
  
   
U.S. Dollars (in thousands)
  
Due within one year
    
18,804
      
18,816
  
Due after one through five years
    
72,210
      
72,908
  
Due after five through ten years
    
638
      
668
  
Total marketable securities
    
91,652
      
92,392
  

 

F - 14

Camtek Ltd. and its Subsidiaries

 

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

(Amounts in thousands, except per share data)

 

Note 4 - Supplementary Financial Statements Information (cont’d)
 
B. Marketable Securities (cont’d)
 
The following table summarizes the estimated fair value and gross unrealized holding losses of marketable securities, aggregated by investment instrument and period of time in an unrealized loss position, at June 30, 2024 and December 31, 2023.
 
   
In Unrealized Loss Position For Less Than 12 Months
  
June 30, 2024
  
Fair Value
    
Gross Unrealized Loss
  
   
U.S. Dollars
  
             
Corporate bonds
    
73,903
      
(412
)
Government bonds
    
2,016
      
(2
)
     
75,919
      
(414
)
 
   
In Unrealized Loss Position For Less Than 12 Months
  
December 31, 2023
  
Fair Value
    
Gross Unrealized Loss
  
   
U.S. Dollars
  
             
Corporate bonds
    
5,154
      
(12
)
     
5,154
      
(12
)

 

The level in the fair value hierarchy within which an asset or liability is classified is based on the lowest level input that is significant to the fair value measurement in its entirety.
 
The following table presents the Company’s assets and liabilities measured at fair value on a recurring basis as of June 30, 2024 and December 31, 2023, aggregated by the level in the fair-value hierarchy within which those measurements fall:
 
   
June 30,
2024
    
Quoted Prices in Active Markets for Identical Assets (Level 1)
      
Significant Other Observable Inputs (Level 2)
    
Significant Unobservable Inputs
(Level 3)
  
                 
                 
Description
                
   
U.S. Dollars
  
                         
Assets
                        
Marketable securities (current assets)
    
23,615
      
1,000
      
22,615
      
-
  
Marketable securities (non-current assets
    
81,817
      
8,808
      
73,009
      
-
  
Total Assets
    
105,432
      
9,808
      
95,624
      
-
  
 

F - 15

Camtek Ltd. and its Subsidiaries

 

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

(Amounts in thousands, except per share data)

 

Note 4 - Supplementary Financial Statements Information (cont’d)
 
B. Marketable Securities (cont’d)
 
   
December 31,
2023
    
Quoted Prices in
Active Markets
for Identical Assets
(Level 1)
      
Significant Other
Observable Inputs
(Level 2)
    
Significant
Unobservable
Inputs
(Level 3)
  
                 
                 
Description
                
   
U.S. Dollars
  
                         
Assets
                        
Marketable securities (current assets)
    
18,816
      
6,988
      
11,828
      
-
  
Marketable securities (non-current assets
    
73,576
      
6,981
      
66,595
      
-
  
Total Assets
    
92,392
      
13,969
      
78,423
      
-
  
 
The Company’s accounting policy is to recognize transfers between levels of the fair value hierarchy on the date of the event or change in circumstances that caused the transfer. In the periods ended June 30, 2024 and December 31, 2023, the Company invested in marketable securities.
 
Marketable securities are classified within Level 2 because these assets are valued using quoted market prices or alternative pricing sources and models utilizing market observable inputs.
 
C. Inventories
 
   
June 30,
    
December 31,
  
   
2024
    
2023
  
   
U.S. Dollars
  
                 
Components
    
60,438
      
55,598
  
Work in process
    
26,817
      
20,038
  
Finished products (including systems at customer locations not yet sold)
    
21,513
      
19,292
  
                 
     
108,768
      
94,928
  
 
Inventories are presented in:
 
   
June 30,
    
December 31,
  
   
2024
    
2023
  
   
U.S. Dollars
  
                 
Current assets
    
99,215
      
85,905
  
Long-term assets
    
9,553
      
9,023
  
                 
     
108,768
      
94,928
  
 

F - 16

Camtek Ltd. and its Subsidiaries

 

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

(Amounts in thousands, except per share data)

 

Note 4 - Supplementary Financial Statements Information (cont’d)
 
D. Other Current Assets
 
   
June 30,
    
December 31,
  
   
2024
     2023  
   
U.S. Dollars
  
             
Interest receivable
    
13,355
      
8,386
  
Due from Government institutions and income tax receivables
    
7,696
      
3,690
  
Prepaid expenses and vendor downpayments
    
4,996
      
5,164
  
Other
    
1,001
      
2,308
  
                 
     
27,048
      
19,548
  
 
E. Property, Plant and Equipment, Net
 
   
June 30,
    
December 31,
  
   
2024
    
2023
  
   
U.S. Dollars
  
             
Land
    
1,401
      
1,401
  
Building
    
21,733
      
20,730
  
Machinery and equipment
    
30,187
      
27,626
  
Office furniture and equipment
    
1,061
      
1,057
  
Computer equipment and software
    
6,386
      
6,542
  
Automobiles
    
431
      
429
  
Leasehold improvements
    
2,237
      
2,100
  
Right of use assets
    
7,002
      
7,187
  
     
70,438
      
67,072
  
                 
Less - accumulated depreciation
    
26,192
      
25,085
  
                 
     
44,246
      
41,987
  
 

F - 17

Camtek Ltd. and its Subsidiaries

 

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

(Amounts in thousands, except per share data)

 

Note 4 - Supplementary Financial Statements Information (cont’d)
 
F. Intangible Assets, Net
 
   
June 30,
    
December 31,
  
   
2024
    
2024
  
   
U.S. Dollars
  
Cost:
            
Patent registration costs
    
2,434
      
2,308
  
Acquired technology
    
12,200
      
12,200
  
Acquired trade names
    
2,700
      
2,700
  
Acquired customer relationship
    
2,000
      
2,000
  
     
19,334
      
19,208
  
                 
Less accumulated amortization
    
4,189
      
2,271
  
                 
Total intangible assets, net
    
15,145
      
16,937
  
 
G. Other Current Liabilities
 
   
June 30,
    
December 31,
  
    2024    
2023
  
   
U.S. Dollars
  
             
Commissions
    
12,617
      
13,588
  
Advances from customers and deferred revenues
    
26,585
      
14,701
  
Accrued employee compensation and related benefits
    
14,362
      
13,137
  
Accrued warranty costs (1)
    
3,713
      
3,397
  
Government institutions and income tax payable
    
7,633
      
5,316
  
Accrued expenses
    
3,133
      
2,661
  
Operating lease obligations
    
1,734
      
1,687
  
                 
(1)         Changes in the accrued warranty costs are as follows:
    
69,777
      
54,487
  

 

   
June 30,
    
December 31,
  
   
2024
    
2023
  
   
U.S. Dollars
  
             
Beginning of period
    
3,397
      
3,161
  
Accruals
    
3,453
      
5,505
  
Usage
    
(3,137
)
    
(5,269
)
                 
Balance at end of period
    
3,713
      
3,397
  

 

F - 18

Camtek Ltd. and its Subsidiaries

 

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

(Amounts in thousands, except per share data)

 

Note 4 - Supplementary Financial Statements Information (cont’d)
 
H. Convertible Notes
 
The Convertible Senior Notes consisted of the following:
 
   
June 30,
    
December 31,
  
   
2024
    
2023
  
   
U.S. Dollars
  
       
Liability:
            
Principle:
    
200,000
      
200,000
  
Unamortized issuance costs
    
(2,622
)
    
(3,169
)
Net carrying amount
    
197,378
      
196,831
  
 
As of June 30, 2024, the debt issuance costs of the Notes will be amortized over the remaining term of approximately 2.5 years.
 
The annual effective interest rate of the Notes is 0.56%. In the six-months ended June 30, 2024, $547 was recorded as amortization of debt issuance costs (In the year ended December 31, 2023 - $1,094).
 
As of June 30, 2024, the estimated fair value of the Notes, which the Company has classified as Level 2 financial instruments, is $441,843 (December 31, 2023 - $258,941). The estimated fair value was determined based on the quoted bid price of the Notes in an over-the-counter market on the last trading day of the reporting period.
 
As of June 30, 2024, the principal amount exceeded the if-converted value of the Notes by $241,843 (December 31, 2023, the principal amount exceeded the if-converted value of the Notes by $58,941).

 

F - 19

Camtek Ltd. and its Subsidiaries

 

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

(Amounts in thousands, except per share data)

 

Note 5 - Statements of Operations
 
A. Selling, general and administrative expenses
 
   
Six months ended
June 30,
    
Year ended
December 31,
  
    2024     2023    
2023
  
   
U.S. Dollars
  
                   
Selling (1)
    
23,004
      
17,910
      
36,896
  
General and administrative
    
7,690
      
6,127
      
13,855
  
                         
     
30,694
      
24,037
      
50,751
  
                         
(1)      Including shipping and handling costs
     2,029       1,025       2,744  
 
B. Financial income (expenses), net
 
   
Six months ended
June 30,
    
Year ended
December 31,
  
   
2024
    
2023
    
2023
  
   
U.S. Dollars
  
       
Interest income
    
11,812
      
11,838
      
24,051
  
Amortization of issuance costs of convertible notes
    
(547
)
    
(547
)
    
(1,094
)
Other, net (1)
    
(641
)
    
(427
)
    
(739
)
                         
     
10,624
      
10,864
      
22,218
  
                         
(1)      Including foreign currency expense resulting from transactions not denominated in U.S. Dollars
    
(313
 )     (172 )     (78 )
 
F - 20
EX-99.2 3 exhibit_99-2.htm OPERATING AND FINANCIAL REVIEW AND PROSPECTS.
Exhibit 99.2

Operating and Financial Review and Prospects.
 
A.
Operating Results
 
General
 
The following discussion of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and the notes to those statements included therein, which have been prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP.
 
Overview
 
We design, develop, manufacture and market automated solutions dedicated for enhancing production processes and yield for the semiconductor fabrication market, principally based on core AOI technology.
 
We sell our systems worldwide. The vast majority of our sales are to manufacturers in the Asia Pacific region, including China, South East Asia, Korea and Taiwan, due to, among other factors, the migration of the electronic manufacturers into this region.
 
In the first half of 2024, our sales to customers in the Asia Pacific region accounted for approximately 89% of our total revenues.
 
In addition to revenues derived from the sale of systems and related products, we generate revenues from providing maintenance and support services for our products. We generally provide a one-year warranty with our systems. Accordingly, service revenues are not earned during the warranty period.
 
Critical Accounting Policies
 
Critical accounting policies are those that are, in management’s view, most important to the portrayal of a company’s financial condition and results of operations and most demanding judgment calls, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. We believe our most critical accounting policies relate to:
 
Revenue Recognition. The Company’s contracts with its customers include performance obligations to provide its products or to service the installed products. A product sale contract may include an extended warranty (that is, for longer than the twelve-month standard warranty) as well as installation, both of which are considered separate performance obligations.
 
The Company recognizes revenue from contracts for sales of products when the Company transfers control of the product to the customer. This generally occurs upon shipment as pre-shipment calibration and testing processes ensure simplified and streamlined installation at the customer site. Revenues from the contract are recognized in an amount that reflects the consideration the Company expects to be entitled to receive once the product is operating in accordance with its specifications and signed documentation of the arrangement, such as a signed contract or purchase order, has been received. Payment terms with customers may vary, but are generally based on milestones within the delivery process such as shipping and installation. Payment terms do not include significant financing components.
 


The Company does not incur costs in obtaining a contract except for agents’ commissions, which are incurred upon the recognition of revenues. Revenues are recognized over a period of less than a year and as such, there are no underlying sales commissions to be capitalized.
 
Service revenues consist mainly of contracts charged under time and material arrangements. Service revenues from maintenance contracts are recognized ratably over the contract period.
 
Contracts with customers may include multiple performance obligations. For such arrangements, the Company allocates revenue to each performance obligation based on its relative standalone selling price. The Company generally determines standalone selling prices based on the prices charged to customers.
 
The Company’s multiple performance obligations consist of product sales, installation services and non-standard warranties. A fixed amount is deferred in respect of installation services for machines that have been recognized but not installed as of the balance sheet date. A non-standard warranty is one that is for a period longer than 12 months. Accordingly, income from a non-standard warranty is deferred as unearned revenue and is recognized ratably as revenue commencing with and over the applicable warranty term.
 
The Company records contract liabilities when the customer has been billed in advance of the Company completing its performance obligations. These amounts are recorded as deferred revenue in the Consolidated Balance Sheets.
 
Valuation of Accounts Receivable.  We review accounts receivable to determine which are doubtful of collection. In making this determination of the appropriate allowance for doubtful accounts, we consider information at hand regarding specific customers, including aging of the receivable balance, evaluation of the security received from customers, our history of write-offs, relationships with our customers and the overall credit worthiness of our customers. Changes in the credit worthiness of our customers, the general economic environment and other factors may impact the level of our future write-offs.
 
Valuation of Inventory.  Inventories consist of completed systems, partially completed systems and components, and are recorded at the lower of cost, determined by the moving – average basis, or market. We review inventory for obsolescence and excess quantities to determine that items deemed obsolete or excess inventory are appropriately reserved. In making the determination, we consider forecasted future sales or service/maintenance of related products and the quantity of inventory at the balance sheet date, assessed against each inventory item’s past usage rates and future expected usage rates. Changes in factors such as technology, customer demand, competing products and other matters could affect the level of our obsolete and excess inventory in the future.
 


In the year 2024 we wrote-off inventory in the amount of approximately $1.5 million. The write-off amounts are included in the line item called "Cost of products sold", in the consolidated statements of operations. The write-offs create a new cost basis and are a permanent reduction of inventory cost. The write-offs in in 2024 were made against excess and slow-moving inventory. In the first half of 2023 there were no write-offs of inventory. Inventory that is not expected to be converted or consumed in the following 12 months is classified as non-current. As of June 30, 2024, a $9.6 million portion of our inventory was classified as non-current. Management periodically evaluates our inventory composition, giving consideration to factors such as the probability and timing of anticipated usage and the physical condition of the items, and then estimates a charge (reducing the inventory) to be provided for slow moving, technologically obsolete or damaged inventory. These estimates could vary significantly from actual requirements based upon future economic conditions, customer inventory levels or competitive factors that were not foreseen or did not exist when the inventory write-offs were established.
 
Intangible assets. Patent registration costs are capitalized at cost and amortized, beginning with the first year of utilization, over its expected life of ten years.
 
We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future cash flows expected to be generated by the asset. If the carrying amount of the long lived asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized as computed by subtracting the fair market value of the asset from its carrying value.
 
Provisions for contingent liabilities. A contingency (provision) in accordance with ASC Topic 450-10-05, Contingencies, is an existing condition or situation involving uncertainty as to the range of possible loss to the entity. A provision for claims is recognized if it is probable (likely to occur) that a liability has been incurred and the amount can be estimated reasonably. Provisions in general are highly judgmental, especially in cases of legal disputes. We assess the probability of an adverse event and if the probability is evaluated to be probable, we are required to fully provide for the total amount of the estimated contingent liability. We continually evaluate our pending provisions to determine if accruals are required. It is often difficult to accurately estimate the ultimate outcome of a contingent liability. Different variables can affect the timing and amount we provide for certain contingent liabilities. Our assessments are therefore subject to estimates made by us and our legal counsel, adverse revision in our estimates of the potential liability could materially impact our financial condition, results of operations or liquidity.
 
Valuation of Long Lived Assets. We apply ASC Subtopic 360-10, "Property, Plant and Equipment".  This Statement requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future cash flows expected to be generated by the asset.  If the carrying amount of the long lived asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized as computed by subtracting the fair market value of the asset from its carrying value. We prepare future cash flows based on our best estimates including projections and financial statements, future plans and growth estimates.
 


Income Taxes. We account for income taxes under ASC Subtopic 740-10 Income Taxes – Overall.  Deferred tax assets or liabilities are recognized in respect of temporary differences between the tax bases of assets and liabilities and their financial reporting amounts as well as in respect of tax losses and other deductions which may be deductible for tax purposes in future years, based on tax rates applicable to the periods in which such deferred taxes will be realized. The rates applied are those enacted in law as of June 30, 2024. In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible and during which the carry-forwards are available. Valuation allowances are established when necessary to reduce deferred tax assets to the amount considered more likely than not to be realized.
 
Our financial statements include deferred tax assets, net, which are calculated according to the above methodology. If there is an unexpected critical deterioration in our operating results and forecasts, we would have to increase the valuation allowance with respect to those assets. We believe that it is more likely than not that those net deferred tax assets included in our financial statements will be realized in subsequent years.
 
Stock Option and Restricted Share Plans. We account for our employee stock-based compensation awards in accordance with ASC Topic 718, Compensation - Stock Compensation. ASC Topic 718 requires that all employee stock‑based compensation is recognized as a cost in the financial statements and that for equity-classified awards such cost is measured at the grant date fair value of the award. We estimate grant date fair value using the Black‑Scholes-Merton option‑pricing model. Forfeitures are recognized when they occur.    
 
Leases. On January 1, 2019, we adopted Accounting Standards Update No. 2016-02, Leases (Topic 842) (ASU 2016-02) using the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial application. Results and disclosure requirements for reporting periods beginning after January 1, 2019 are presented under Topic 842.
 
The adoption did not impact our beginning retained earnings, or prior year consolidated statements of income and statements of cash flows.
 
Under Topic 842, we determine if an arrangement is a lease at inception. ROU assets and lease liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. For this purpose, we consider only payments that are fixed and determinable at the time of commencement. As most of our leases do not provide an implicit rate, we use its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Our incremental borrowing rate is a hypothetical rate based on its understanding of what our credit rating would be (6.0% in 2024). Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. When determining the probability of exercising such options, we consider contract-based, asset-based, entity-based, and market-based factors. Lease agreements may contain variable costs such as common area maintenance, insurance, real estate taxes or other costs. Variable lease costs are expensed as incurred on the consolidated statements of income. Our lease agreements generally do not contain any residual value guarantees or restrictive covenants.
 


Operating lease ROU assets are presented as property, plant and equipment on the consolidated balance sheet. The current portion of operating lease liabilities is included in other current liabilities and the long-term portion is presented within long-term liabilities on the consolidated balance sheet.
 
For operating leases, the ROU asset is subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
 
ROU assets for operating leases are periodically reduced by impairment losses. We use the long-lived assets impairment guidance in ASC Subtopic 360-10, Property, Plant, and Equipment – Overall, to determine whether an ROU asset is impaired, and if so, the amount of the impairment loss to recognize.
 
Comparison of Period to Period Results of Operations
 
The following table presents consolidated statement of operations data for the periods indicated as a percentage of total revenues from continuing operations:
 
   
Six Months Ended June 30,
  
   
2024
    
2023
  
Revenues
   
100.0
%
    
100.0
%
Cost of revenues
   
51.9
%
    
52.9
%
Gross profit
   
48.1
%
    
47.1
%
Operating expenses:
                
Research and development, net
   
9.1
%
    
10.7
%
Selling, general and administrative expenses
    
15.4
%
    
16.4
%
Total operating expenses
    
24.5
%
    
27.2
%
Operating income
    
23.6
%
    
19.9
%
Financial income, net
    
5.3
%
    
7.4
%
Income tax (expenses) benefit
    
(2.5
)%
    
(2.9
)%
Net income
   
26.4
%
    
24.5
%



Six months Ended June 30, 2024 compared to Six months ended June 30, 2023
 
Revenues. Revenues increased by 36.5% to $199.6 million in 2024 from $146.2 million in 2023. The increase is mainly due to the sale of a higher number of tools due to increased demand in the semiconductor market.
 
Gross Profit. Gross profit consists of revenues less cost of revenues, which includes the cost of components, production materials, labor, service related expenses, depreciation, factory and overhead expenses and provisions for warranties. These expenditures are partially affected by sales volume. Our total gross profit increased to $96.0 million in 2024 from $68.8 million in 2023, an increase of $27.2 million, or 39%. Our gross margin increased to 48.1% in 2024, compared to a gross margin of 47.1% in 2023.
 
Research and Development Costs. Research and development expenses consist primarily of salaries, materials consumption and costs associated with subcontracting certain development efforts. Total research and development expenses for 2024 increased to $18.1 million from $15.7 million in 2023 due to increased activity for improving capabilities and developing additional features and products.
 
Selling, General and Administrative Expenses. Selling, general and administrative expenses consist primarily of expenses associated with salaries, commissions, promotion and travel, professional services and rent costs. Our selling, general and administrative expenses increased in 2024 by 27.7% to $30.7 million from $24.0 million in 2023, mainly due to an increase in sales channels activity on increased revenues.
 
Financial Income (Expenses), Net. Financial income/expenses consist of interest, revaluation and other bank fees. We had net financial income of $10.6 million in 2024, compared to net financial income of $10.9 million in 2023.
 
Provision for Income Taxes. Income tax expense was $5.0 million in 2024 compared to expense of $4.2 million in 2023, mainly due to tax on increased income before taxes.
 
Net Income. We realized net income of $52.8 million in 2024 compared to net income of $35.8 million in 2023, in light of the factors discussed above.
 
B.          Liquidity and Capital Resources
 
Our cash and cash equivalent, short-term deposit and short-term marketable securities balances totalled approximately $366.1 million on June 30, 2024 and $354.0 million on December 31, 2023. In addition, there was $87.8 million and $94.6 million, respectively, in long-term deposits and long-term marketable securities. Our cash is invested in bank deposits spread among several banks, primarily in Israel whilst our investments in marketable securities consist of high-grade treasury, corporate and municipal bonds.


 
Our working capital was approximately $452.9 million at June 30, 2024 and $450.1 million at December 31, 2023. The increase is mainly attributed to the increase in short-term deposits and marketable securities, and inventory, offset by the decrease in cash and cash equivalents and trade accounts receivable and the increase in other current liabilities.
 
Our capital expenditures during the first half of 2024 were approximately $5.1 million, mainly in support of our operating activities.
 
Cash flow from operating activities
 
Net cash and cash equivalents provided by operating activities for the six months ended June 30, 2024, totalled $70.1 million. Net cash and cash equivalents provided by operating activities for the six months ended June 30, 2023 totalled $32.7 million.
 
During the first half of 2024, cash provided by operating activities was primarily attributable to the positive net income, the decrease in trade accounts receivable and the increase in other current liabilities, offset by the increase in inventory.
 
Cash flow from investing activities
 
Cash flow used in investing activities in the first half of 2024 was $43.7 million, primarily due to the purchase of short-term deposits and marketable securities, compared to $52.2 million provided in the first half of 2023.
 
Cash flow from financing activities
 
Cash flow used in financing activities the first half of 2024 was $60.0 million due to the dividend paid, compared to zero in the first half of 2023.