Camtek Ltd. — 2021 Annual Report (Form 20-F)
Business context and reporting period. This is an audited annual report for the fiscal year ended December 31, 2021, not a standalone fourth-quarter filing. Camtek develops and sells semiconductor wafer inspection and metrology equipment, primarily its Eagle platform, and provides related services. Financial statements are prepared under U.S. GAAP; amounts below are U.S. dollars unless noted.
Financial performance and position
| Metric | 2021 | 2020 |
|---|---|---|
| Revenue | $269.7 million | $155.9 million |
| Gross profit / margin | $137.3 million / 50.9% | $73.2 million / 47.0% |
| Operating income / margin | $70.9 million / 26.3% | $22.6 million / 14.5% |
| Net income | $60.3 million | $21.8 million |
| Basic / diluted EPS | $1.38 / $1.34 | $0.55 / $0.54 |
| Cash flow from operations | $61.0 million | $25.8 million |
Revenue mix and growth. Revenue increased 73%, principally from higher system unit sales. Product sales were $259.3 million and service fees $10.3 million. Asia Pacific generated $224.9 million, approximately 83% of revenue; the United States generated $28.6 million and Europe $16.1 million. No customer represented more than 10% of 2021 revenue.
Costs and margins. Cost of revenue was $132.3 million. R&D expense rose to $23.5 million from $19.6 million, while SG&A increased to $43.0 million from $31.0 million. Gross and operating margins improved as revenue grew faster than costs.
Liquidity and debt. At year-end, cash and cash equivalents were $241.9 million, short-term deposits $156.0 million and long-term deposits $32.0 million. Working capital was approximately $430.5 million. Current liabilities were $89.7 million. The company issued $200 million of 0% convertible senior notes due 2026; their net carrying amount was $194.6 million. The initial conversion price was approximately $58.45 per share. Management said existing capital resources and operating cash flows should meet liquidity needs for at least 12 months.
Cash flow and investment. Investing activities used $120.2 million, mainly for short- and long-term deposits and capital assets; financing activities provided $194.8 million, mainly from the convertible notes. Capital expenditures were approximately $4.2 million, excluding right-of-use assets and inventory transfers reported separately in the filing.
Material changes versus 2020
- Revenue grew 73%; gross profit increased 88%, and operating income more than tripled.
- Operating cash flow increased to $61.0 million from $25.8 million.
- Cash and deposits rose substantially, principally reflecting the 2021 note offering and stronger operations.
- Income tax expense rose to $11.7 million from $1.6 million, including a one-time $5.3 million charge related to a settlement concerning historical exempt earnings. The settlement was finalized in February 2022 and permits future distributions from those earnings without additional corporate tax liability.
- Inventory increased to $63.9 million from $44.2 million; $5.2 million was classified as non-current. The auditor identified the inventory provision estimate as a critical audit matter.
Outlook, commentary, risks and unusual items
- Management described the outlook for 2022 and beyond as positive, citing semiconductor-market demand trends. It did not provide specific revenue or earnings guidance in the supplied filing text. Management expected 2022 capital expenditures to exceed $7 million, mainly for facilities investment.
- Key risks include continued component shortages, longer supplier lead times and rising input, labor and shipping costs; the company relies on limited- or single-source suppliers for some components.
- Geographic concentration is significant: approximately 83% of 2021 revenue came from Asia Pacific, with China the largest territory. Trade restrictions, tariffs, regional tensions or changes in customer investment could materially affect results.
- COVID-19 had not materially affected reported business activity through the reporting period, but travel, installation, supply-chain and customer risks remained uncertain. The filing also cites geopolitical and security risks, including conditions in Israel and the Russia-Ukraine war.
- Currency exposure includes Israeli shekel costs against predominantly U.S.-dollar revenue. The U.S. dollar weakened 3% against the shekel in 2021; the company reported no open hedges at year-end.
- Camtek reported no material legal proceedings and no significant interest-rate exposure from loans. The financial statements and internal controls received unqualified audit opinions; management reported effective disclosure controls and internal control over financial reporting as of year-end.
Important facts for investors to verify
- Review quarterly results separately: this annual filing reports full-year figures, and the supplied text does not provide a clear standalone Q4 revenue or earnings value.
- Assess whether revenue growth, gross-margin improvement and operating cash generation are sustainable amid component constraints and cost inflation.
- Track inventory composition, utilization and provisioning, including the $5.2 million non-current inventory balance and the auditor’s critical audit matter.
- Evaluate the convertible notes’ potential dilution, conversion terms and 2026 maturity alongside the company’s substantial cash and deposit balances.
- Monitor the one-time tax settlement, future tax expense and any dividend decisions; the filing does not provide specific 2022 earnings or revenue guidance.
- Consider the company’s Asia-Pacific concentration, especially China, and its exposure to export controls, tariffs, currency movements and Israeli operating risks.