Camtek Ltd. — FY 2022 Form 20-F Summary
Reporting period: Fiscal year ended December 31, 2022. Although the request metadata refers to 2022 Q4, this is an annual Form 20-F and does not provide a clear set of standalone fourth-quarter financial results. Financial statements are prepared under U.S. GAAP and audited by Somekh Chaikin, a KPMG member firm.
Business context
Camtek develops and manufactures automated inspection and metrology equipment for semiconductor production, with its Eagle platform serving advanced packaging, heterogeneous integration, memory, image sensors, compound semiconductors and other markets. FY 2022 revenue was primarily from product sales; the installed base exceeded 1,800 systems. One customer represented 11% of revenue, versus no customer above 10% in 2021.
Financial performance
| Metric | FY 2022 | FY 2021 | Change |
|---|---|---|---|
| Revenue | $320.9 million | $269.7 million | +19% |
| Gross profit / margin | $159.9 million / 49.8% | $137.3 million / 50.9% | Profit +16%; margin down 1.1 percentage points |
| Operating profit / margin | $81.5 million / 25.4% | $70.9 million / 26.3% | Profit +15%; margin down 0.9 percentage points |
| Net income / margin | $79.9 million / 24.9% | $60.3 million / 22.4% | +33% |
| Basic / diluted EPS | $1.81 / $1.66 | $1.38 / $1.34 | Higher year over year |
| Operating cash flow | $57.8 million | $61.0 million | Down $3.2 million |
| Cash, cash equivalents and deposits | $478.7 million | $429.9 million | Up $48.8 million |
| Working capital | $468.5 million | $430.5 million | Up $38.0 million |
Research and development expense rose 23% to $28.9 million; selling, general and administrative expense rose 15% to $49.5 million. Management attributed lower gross margin mainly to inflation and supply-chain pressure on the bill of materials. Net financial income increased to $6.7 million, principally reflecting higher interest income, partly offset by convertible-note issuance-cost amortization and other items.
Cash, debt and liquidity
- Operating cash flow was $57.8 million. Investing activities used $150.8 million, mainly for short- and long-term deposits and fixed and intangible assets. Financing cash flow was effectively nil; 2021 financing included $194.5 million net proceeds from convertible notes.
- Cash and cash equivalents were $148.2 million, short-term deposits $251.5 million and long-term deposits $79.0 million at year-end. The decline in cash equivalents partly reflects transfers into deposits.
- The company had $200 million principal amount of 0% convertible senior notes due December 2026, carried at $195.7 million. The initial conversion price is approximately $58.45 per share; year-end share price was $21.96. Management reported no outstanding loans and said resources and operating cash flows should cover liquidity needs for at least 12 months.
- Capital expenditures were $13.4 million, compared with $9.0 million in 2021, primarily supporting production capacity, facilities, R&D, operations and IT.
Material changes, outlook and risks
- Revenue growth was driven mainly by more product units sold. China remained the largest market at $142.0 million, or about 44% of total revenue; Asia Pacific accounted for approximately 77%. China revenue declined from $147.7 million in 2021, while revenue grew in the United States and Korea.
- Management cited a weaker 2023 semiconductor outlook. The filing reports external projections for a 15%–30% decline in wafer-fab equipment spending versus 2022 and an OECD world-GDP forecast stated as a 2.3% decline. These are forecasts, not company guidance; the filing provides no specific Camtek revenue or earnings guidance.
- Key risks include semiconductor cyclicality and customer inventory corrections; elevated component lead times, costs and potential inventory write-offs; competition and pricing pressure; and reliance on Asia, particularly China. U.S. export-control changes introduced in October 2022 restrict the U.S. subsidiary’s ability to serve certain Chinese entities without authorization and may indirectly weaken Chinese demand.
- Additional risks include geopolitical tensions involving China and Taiwan, the Russia–Ukraine conflict and Israel’s security and political environment; inflation and currency movements; dependence on limited-source suppliers and contractors; long customer qualification cycles; cybersecurity and intellectual-property claims; and the possibility of losing Israeli tax benefits if eligibility conditions are not met.
- Inventory was $70.9 million, including $5.4 million classified as non-current; the 2022 inventory write-off was approximately $0.3 million. The auditor identified the inventory provision estimate as a critical audit matter because it depends on assumptions about demand, technology changes and expected usage.
- FY 2021 included a one-time $5.3 million tax expense related to a settlement on historical exempt earnings. The settlement was finalized in February 2022 and allows future dividends from those earnings without additional corporate tax liability. The company reported no material legal proceedings and no impairment in 2022.
- The auditor issued unqualified opinions on the financial statements and internal control over financial reporting. Management and the auditor concluded internal controls were effective at December 31, 2022.
Important facts for investors to verify
- How 2023 demand, orders and customer inventory levels developed relative to the filing’s industry-downturn expectations.
- Whether China export-control licensing requirements or further restrictions affected shipments, customer demand or collections.
- Trends in China and other geographic revenue concentration, including the 11% customer’s ongoing contribution.
- Inventory quality and turnover, receivable collection, and whether supply constraints or slower demand lead to additional reserves or write-offs.
- Liquidity composition and deposit exposure across banks, as well as the company’s plan to address the $200 million notes due in 2026 and potential dilution on conversion.
- Continued eligibility for Israeli tax incentives and any changes in effective tax expense or dividend-related tax obligations.