Ladies and gentleman, thank you for standing by. Welcome to Camtek's fourth quarter and year end 2015 results conference call. All participants are at present in listen-only mode. Following management's formal presentation, instructions will be given for the question-and-answer session. As a reminder, this conference is being recorded. You should have all received by now the company's press release. If you have not received it, please contact Camtek's Investor Relations team at GK Investor Relations or view it in the news section of the company's website, www.camtek.co.il. I would now like to hand over the call to Mr. Ehud Helft of GK Investor Relations. Mr. Helft, would you like to begin, please?

Thank you and good day to all of you. I would like to welcome all of you to Camtek's fourth quarter and full year 2015 results conference call and I would like also to thank Camtek's management for hosting this call. With us on the line today are Mr. Rafi Amit, Camtek's Chairman and CEO and Mr. Moshe Eisenberg, Camtek's CFO. Rafi will provide an overview of Camtek's performance and strategy going forward. Moshe will discuss then the recent development and summarize financial results. We will then open the call to take your questions. Before we begin I would like to remind our listeners that certain information provided on this call are internal company estimates unless otherwise specified. This call also contains forward-looking statements. These statements are only predictions and may change as time passes. Statements on this call are made as of today and the company undertakes no obligation to update any of this forward-looking statements contained whether as a result of new information, future events, changes in expectation or otherwise. Investors are reminded that the actual events or results may differ materially from those projected, including as a result of changing industry and market trends, reduced demand for services and products, the timely development of new services and products and their adoption by the market, increased competition in the industry and price reductions, as well as due to other risks identified in the company's filings with the SEC. Please note that the Safe Harbor statement in today's press release also covers the content of this conference call. In addition, during this call certain non-GAAP measures will be discussed. These are used by management to make specific decisions, focus future results and evaluate the company's current performance. Management believes that the presentation of non-GAAP financial measures is useful to investor understanding and assessment of the company's ongoing co-operation and prospects for the future. A full reconciliation of non-GAAP to GAAP financial measures is included in today's earnings release. And now I would like to hand over the call to Mr. Rafi Amit, Camtek's Chairman and CEO. Rafi, go ahead, please.

Thank you, Ehud. Hello to everyone and thank you for joining us today. We are pleased with our financial results of the fourth quarter and especially our overall performance in 2015 as a whole. Our revenues in the fourth quarter grew by 25% over those of last year to $25.8 million. For the year we reached revenue just shy of $100 million, up 12% over last year and our highest level since 2011. Our non-GAAP operating income was $1.8 million for the quarter, a 151% increase over the fourth quarter of last year. For the year our operating income was $6 million, a 5% increase over last year. Our results in the quarter and throughout 2015 as a whole were driven by strong semiconductor sales, in particular solutions through the advanced packaging market, as well as CMOS Image Sensors and MEMS sectors. In this business, over the past few months we have had number of successful penetrations with our Eagle systems into global customers, especially in Asia to which we have never sold systems in the past. We see the advanced packaging part of the semiconductor space continuing its growth and the increasing demand. In the PCB market, the AOI business remains fairly steady and our focus on high end customers positions as a leading supplier in this segment. With regard to our digital printing technology, we do see very positive progress and result in our four sites that are now running the Gryphon. I will elaborate on these in few moments. Overall looking into 2016 we expect continued double digit growth from our semiconductor business combined with a relatively stable PCB business. We have all heard and read the analyst report with regard to the recent slowdown in sales of the smartphone and tablets which no doubt will have…

Thank you, Rafi. As Rafi mentioned, we are happy with our financial results of the fourth quarter and the full year, which were in line with our strong expectations. We also expect mostly our semiconductor business to continue into 2016 and we look forward to another year of strong growth. Before I will comment the fourth quarter results and provide a summary of the full year financials, I would like first to cover all the one-time expenses and adjustments affecting our results this quarter. The first and the most significant one is the $14.6 million provision with respect to Rudolph litigation as discussed just now by Rafi. This amount will be paid in the next few weeks as required. With regard to the digital printing, as a result of the slower than anticipated penetration process of the FIT technology into the PCB market, we recorded $1 million inventory writedown provision to the one color Gryphon systems. This is the initial model which we have – by now replaced with a new two color model. In addition, we recorded $1.6 million impairment charge against the remaining goodwill and technology included in the Printar acquisition in 2009. Finally, we successfully renegotiated the contingent liability to the shareholders of Printar. Instead of the original $2 million conditional payment, we have paid off the liability with a $400,000 payment mostly in stock. As a result, we recorded an income of $1.4 million. All of these one time expenses and adjustments have been excluded from the non-GAAP numbers which I shall now explain. Unless otherwise stated, I will summarize the rest of the operating results on a non-GAAP basis. You can see the reconciliation between the GAAP and non-GAAP results in the table at the end of the press release issued earlier today. Fourth quarter…

[Operator Instructions] The first question is from Craig Ellis of B. Riley.

Thank you for taking the question, gentlemen. I wanted to follow up on some of the product and regional commentary first. Rafi, you mentioned that in calendar ’16 you expect a substantial inspection share gain. I was hoping to get some color regionally on where you expect to be picking up share?

Look, in general when we analyze the market, and what we call the back end market, we estimate it is something like about close to $200 million per year. Still I would say that most of it is to the surface inspection and the 3D metrology. So right now most of our revenues come from the 3D, I would say Camtek is the leading supplier in this application, practically except the few application like CMOS image sensor, MEMS, most of the 2D inspection, we were not involved and recently we developed a very nice solution for the 2D inspection, so we believe that in 2016 we will take definitely more market share on the 2D application as well. I would say it’s almost every customer, most of this application is for 2D and so actually every customer that we already penetrated with 3D definitely will give us a chance to improve our capabilities in 2D. So it’s not any specific customer, it’s lot of customers.

And then switching gears to the new Eagle product that you will be introducing next month at a trade show. What are the implications for gross margins and is there any operating R&D impact as you transition to that new product line that we should think about as we look at our models for this year?

We’re definitely going to increase some of the operating expenses in 2016 in light of the expected growth in the semiconductor space. Yet, we expected to report the higher revenue and actually higher operating profit this year than last year.

Thanks for that and then lastly from me and then I will get back in the queue. 2015 marked a very successful year for the company with the share gain that picked up in Taiwan. Would you expect to sustain the mix – the geographic mix of business that you had in the fourth quarter through 2016, or should we expect the Taiwan portion would move back towards more historic levels?

The next question is from Brian Kinstlinger of Maxim Group.

Just before maybe you asked the question, Brian, I want to address Craig’s points on Taiwan, and to your point, Craig, the answer is yes. We intend to keep higher portion of our revenue in Taiwan as we had in 2015. We were able to gain a few top tier 1 customers in Taiwan in the last few quarters, and we expect to sell to those customers during 2016.

Based on the additional pending litigations you have talked about, are there any changes to your operations at all in the US?

No, we don’t have because in the last few years we sell Falcon and Condor as we mentioned and discrete, all of them do not make any infringement, and with the new product, the new generation of our Eagle that we introduce next month, definitely I don’t see any reason for Rudolph to file any lawsuit because it’s far away from its patent. So I don’t see any reason that something has changed in the US. In general, US – most of the back end industry moved to Asia, and what’s happened in the US from year to year we can see less and less, this is naturally, but on top of that, we continue it as usual in the US.

And then can you highlight when you expect your next generation printer will be ready for available for sale and then can you talk about the performance and feedback from your one customer where you have it in production right now?

I would say that actually when we introduce it next month it will be ready for sales within weeks, it’s not something – and it will be improved during the 2016 all the time. So we had a lot of feature from hardware and algorithm software and especially light system, light system is definitely different technology. So we got very very good result in the detection false solid, any aspect of the inspection. So that’s why we feel very encouraging to – that we can take more – gain more market share in all the 2D applications especially with this model.

The next question is from Edwin Mok of Needham.

So first, just quick follow up on the Eagle. Rafi, you said that it will be introduced next month. Have you guys placed any evaluation there already and you’ve mentioned you have some customer feedback, maybe just doing customer there already, can you kind of give some color on that, the customer marketing or the customer communication part of it?

We do some – definitely we do some evaluation on customer side. I would say that – as I mentioned there are few models, the optics is one, the algorithm, the software, there are a few elements and every one of them was testing as standalone and altogether we made a few testing and add-on evaluations, so we feel very confident with the results. That’s why I said that it’s almost ready for sales. I believe that by the Q2 we’d see more and more system on this new model.

And then I think on the recurring margin, you mentioned penetrate into your one customer in Taiwan. Just to clarify, is that – are those CMOS image sensor or are those for MEMS customer? I just want to clarify that. And then are those – were those penetration already – did you already decide shipping to those customers or are those – some of those penetration are wins that you expect to develop greater revenue in 2016?

No, when we mention penetration, it means we already sold systems to these customers, and in Taiwan, I would say that right now I think most of the tier 1 customers we’ve already penetrated and a year ago we didn’t fuel them more out of the installed base. Some of there we started with the 3D, Camtek is the leading supplier and later on and in the last few months we made some 2D application and based on the result we believe that now we go also with 2D. So I would say that two, three of them already qualified Camtek also in 2D application. As I mentioned, for every 3D probably you sell two, three 2D. So the potential is huge, if customer opens the budget and start to purchase more systems, probably this is the proportion 2D and 3D. So then we have much more potential to sell to these customers.

Are these OSATs or are these actually –

Both.

I guess I have two other questions. In the fourth quarter, Moshe, on the fourth quarter financials, I noticed that there is a tax gain in the quarter beyond, how to gain from the litigation expense that you guys have. What was the gain?

The gain has to do with some different calculation of the future tax rate and as a result, we had to create a tax asset. And this is the gain.

Can I ask how much was that?

$1 million.

And then lastly on the Gryphon, I think you guys have indicated that you are looking in and talking to strategic investor. Can I ask, how do you guys think about that, is the direction to spin it off, to become a private investment, or is it just specifically on Gryphon, and maybe you give us some color on that, and have you started the process on that, that would be helpful.

I would say right now we cannot make any decision because it portends on the strategic partner, some partners can come and if you look, we need also the marketing organization of the PCB inspection, look, I already sold to this industry, I only mean that this technology, so I would say that this depends on the investor. So it’s too early to say what is going to be the structure. But in general we are open to future combinations but the main target is to reduce the investment in this venture and to get more help on accelerating the penetration to the customer. So if we can find the investor that helped us doing this would be excellent for us.

We have a follow-up question from Craig Ellis of B. Riley.

Thank you. Just following up on Edwin’s last question. With respect to timing on – find a potential strategic investor, can you help us understand the timeframe that you are looking at and would you like to do something in the first half for assist, a longer term desired to get some something done some time in calendar ’16.

Yes, hopefully we do enjoy the 2016. We already started – we’re submitting, I would say that I invest most of our my efforts for this project and hopefully we get result during this year.

Thank you Rafi and then Moshe, can you talk about the post litigation payment, cash position of the company and how you are feeling about the location of cash and use of cash as you continue to grow the business and use working capital to support that growth?

So we ended the year with $38.7 million of cash. The expected payment is around 14.6 million which will leave us with close to $24 million. The business is generating cash. So I feel very comfortable with the cash position that the company has and for now I don’t see any need for any additional cash resources for us.

The next question is from John Art [ph]. Please go ahead.

Hi, could you talk about what your market share and the size of market is for both 3D and 2D inspection, and are you providing any preview at all as to how significant the new 2D capabilities are that you’re going to be announcing next month?

In general, as I mentioned before if I take the Rudolph sales and the Camtek sales together and the rest of the work sales, so we are maybe about 200 million, 220 million, total analytical [ph] data market, and I would say that it’s about, I think 50% goals for 2D and little bit more and maybe 60%, 70% to 2D and the rest is for 3D. This is roughly the market now. So it’s easy for us to collect data because nobody distinguishes between 2D and 3D, they talk about one market, they call it like the back end market. This is our NOI, the way we made the calculation and decision, we figure customer and applications and system. So this is roughly the overall number. As I mentioned, except the CMOS image sensor or MEMS, most of the 2D applications, I would say definitely Rudolph is the dominant player in this area and Camtek is a dominant player in the 3D. And since our system can do both, 2D and 3D and now our 2D capability is superior, I believe that we can start taking more 2D applications and – I’d say based on the evaluation, testing that we did in some customer and we saw results and the appreciation of the customers. So based on this I believe that if we talk – a year from now we can see more market share in 2D compared with this year.

And so when you say your 2D capabilities are now better, is that dependent upon the product announcement at Semicon China or is that already the case?

It’s already the case. What we do in the – there are always ongoing improvements. Even right now we have – when we make some few add-on evaluations, it’s based on the current Eagle. Now the new Eagle that we introduce next month will have more improvements. And it will increase our capability in 2D. That’s what I feel more comfortable when we have the new model next month but even with the current model we definitely will get qualification already by few major customers on the 2D only. So we feel very comfortable with the current capabilities but definitely we have a lot of idea how to make better improvement in the next model and during 2016.

And are you willing to talk about what qualifications you’ve already received for 2D?

What is – name of customers?

Yes. Is that possible?

We couldn’t mention name of customers but I just can tell you there are – one of them is OSAT, the second is also OSAT and two of them provide the product and it was approved by the end user that is a big company. So I would say that the tier 1 and plus that already qualify our capabilities. It is not a minor customer, it’s definitely tier 1 customers. End of Q&A

There are no further questions at this time. Before I ask Mr. Amit to go ahead with his closing statement, I would like to remind participants that a replay of this call will be available on Camtek’s website www.camtek.co.il beginning tomorrow. Mr. Amit, would you like to make your concluding statement?

I would like to thank you for your continued interest in our business. We intend to present to investor and analyst at the Roth Conference in March as well as on a road show in New York and San Francisco. And we look forward to seeing some of you there. To the rest of you, I look forward to talking with you again next quarter. Thank you and good bye.

Thank you. This concludes the Camtek’s fourth quarter 2015 results conference call. Thank you for your participation. You may go ahead and disconnect.