Rafi Amit – Chairman, Chief Executive Officer Moshe Eisenberg – Chief Financial Officer.

Jay Srivatsa – Chardan Capital Markets Krishna Shankar – Roth Capital Patrick Ho – Stifel Nicolaus Gary Anderson – 3DPrintingStocks.

Welcome to Camtek’s first quarter 2014 results conference call. All participants are 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 first quarter 2014 results conference call, and I would like 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, the Camtek CFO.

Rafi will provide an overview of Camtek’s strategy going forward, Moshe will discuss our division development and summarize the financial results in the first quarter. 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 may contain 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 the forward-looking statements contained whether as a result of new information, future events, changes in expectations, or otherwise.

Investors are reminded that 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, timely development of new services and products and the 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 financial 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 this presentation of non-GAAP financial measures is useful to investors’ understanding and assessment of the company’s ongoing core operations and prospects for the future. A full reconciliation of non-GAAP to GAAP financial measures is included in today’s earnings release.

I would now like to hand over the call to Rafi Amit, Camtek’s Chairman and CEO. Rafi, go ahead, please..

Great, thank you, Ehud. Hello everyone and thank you for joining us. We are very pleased with the result of the first quarter, marking strong improvement over last year and good start to the year, given (audio interference).

Revenues were very much in line with our expectations and came in at $22.1 million, within the guidance range of $21 million to $23 million for the quarter. We are especially pleased with our improvement in the operating margins, leading to a good level of net profitability in the quarter.

This improvement was partly as a result of our ongoing focus on efficient operations. As you may remember, in the beginning of the year we discussed our strategy for 2014.

This was to refocus our efforts on areas where we have significant competitive advantages from both a technology standpoint and market position, given our existing large install base.

Part of our improvement in operating margin in the quarter was also the initial fruits of this strategy as we significantly reduced our ongoing investment in Sela product line. We allocated some resources toward our semiconductor segment and our 3D functional inkjet technology, or FIT for short, for the PCB.

We believe that this redirection of resources will allow us to increase our existing addressable markets and market share, our scale and our operating efficiencies. Management attention is at the fore now fully focused on the two main markets where we see the most potential.

These are, first, the semiconductor inspection and metrology market with focus on the advanced packaging, related applications, especially on wafer-level inspection; second, the PCB market – this includes our legacy inspection solutions as well as our new 3D function inkjet technology.

The first product under this technology is targeted for solder mask applications. This product, which we used to call Greenjet, we now named it as Gryphon. As the first company to offer such a system to the PCB market, we are very excited with its great potential.

With this new product soon to be commercialized, Camtek is shifting its position in the PCB market from an inspection-only company to the heart of the PCB production process with (indiscernible) technology and recurring revenue model.

Back to the semiconductor inspection and metrology market, what we are seeing so far in 2014 is signs of a strong year, and we feel this is a good time to invest our growth in this market. We expect double-digit organic growth in this segment.

We recently reported the receipt of multiple orders totaling $4 million for our inspection and metrology systems from a leading global manufacturer. This selection validated our strategy of increasing our focus on advanced packaging applications.

During the first quarter, we also announced our next-generation semiconductor inspection and metrology platform designed for back-end markets and especially for the advanced packaging segment, which we have named Eagle.

This is a milestone event, rejuvenating our semiconductor product line with the latest cutting-edge inspection technologies and expands our total addressable market in both 2D and 3D inspection.

We see the fast-growing advanced packaging market heavily relying on advanced inspection and metrology to achieve the affordability and reliability required for the commercial success of 3D IC. As you may recall, this system has been at customer sites for qualification since the beginning of April 2014.

We are happy to report that the feedback so far has been very positive. We will officially launch the product at Semicon West in July and we expect sales of the new system to begin at the second half of 2014.

In the PCB market as we moved through 2014, our market position in this sector remains strong and our Phoenix platform continues to be perceived as a leading inspection tool in the industry.

In terms of our future, we see great potential for growth once we bring our new 3D functional inkjet technology for solder mask applications, the Gryphon, to full commercialization leveraging our existing install base and marketing channel worldwide.

Our first customer site testing has been going just as planned and we are using the results of the test to make constant improvements and integrate them in the system.

In addition, we just installed for testing the second system at our related company, PCB Technologies, so now we have two systems at customer sites and we are on track for commercialization of the technology in the latter half of this year. All in all, I am very excited with regard to our future.

As we move into 2014 and beyond, I see tremendous potential for Camtek. I would like now to hand over to Moshe for a more detailed discussion of the quarter.

Moshe?.

China was the strongest region during the quarter, representing approximately 28% of overall revenues. Korea was 18%, Taiwan was 13%, and the rest of Asia was 20%. U.S. sales accounted for 8%, European sales accounted for 11%, and the rest of the world was the remaining 2%. I will now summarize the rest of the financial results.

Unless otherwise stated, I will summarize the rest of the results on a non-GAAP basis. The reconciliations between the GAAP and non-GAAP results appear in the tables at the end of the press release issued earlier today. Gross profit for the quarter was $10.2 million, representing a gross margin of 45.9%.

This is compared with a gross margin of 45.8% in the first quarter of last year. The change in gross margin compared with the prior period was mostly due to the change in the revenue level and product mix between quarters. Operating expenses in the quarter were $8.9 million. This is compared with $8.2 million in the first quarter of last year.

R&D expenses were 15% of revenues versus 20% last year and were primarily due to the absence of R&D investment in our Sela product line compared with last year. In addition, the ongoing strength of the Israeli shekel versus the U.S. dollar continued to have a negative impact on our operating expenses across the board.

Operating profit for the quarter was $1.2 million or 5.5% of revenues. This is compared with an operating income of $67,000 in the first quarter of last year. Net income for the first quarter of 2014 was $0.9 million or $0.03 per share. This is compared to a net loss of $244,000 or $0.01 per share in the first quarter of last year.

Net cash and cash equivalents and short-term deposits as of March 31, 2014 were $23.5 million compared with $22.5 million as of December 31, 2013. We generated $1.3 million of cash from operating activities in the quarter. In terms of guidance for the second quarter of 2014, we expect revenues between $22 million and $24 million.

In summary, we are well positioned in our two main markets, semiconductor inspection and metrology and PCB inspection. We also have a lot to look forward in the coming years as our 3D functional inkjet technology is released commercially, and we begin to build our install base and realize revenues. We will now open the call for questions.

Operator?.

Thank you, sir. [Operator instructions] The first question is from Jay Srivatsa from Chardan Capital Markets. Please go ahead..

Yes, thanks for taking my question.

I’m not sure if you mentioned this – what was the split during the quarter between semis and PCB?.

It was 70% semi and 30% PCB..

Okay.

Looking ahead to Q2, how do you see the mix? I mean, are you seeing more strength in semis or do you expect equal growth in the PCB side as well?.

We’re actually going to see growth in both areas, more so in the semi but both of them are expected to show growth over first quarter..

Okay.

Rafi, switching to the 3D printing side, can you give us some sense on how many machines you expect to ship this year, and in terms of the customer base itself, what are some of the challenges they will face in switching from their existing system to the new machine that you are providing?.

Okay. I would say that we assume that we finish all the tests so we can install machines at customers’ sites, something I would say around October this year, and we would like to install a couple machines at the beginning.

We would like maybe to focus in specific territories so we can manage it properly and with our efforts in order to control it and to help the customer to adopt this technology. I would say that in general from the customer point of view, it’s very ease of use.

It saves a lot of footprint, it’s a very simple process and very clean, and it can save a lot of chemical process and other problems with the current technology.

But as I mentioned, this is a new way to implement solder mask on PC board, so we assume that at the beginning there is some curving scale until we come to the point that customers will learn the machine, we narrow the application, so we believe it may take for each customer a few months to complete all the tests and to start to run it on production scale..

Okay.

In terms of the business model with this machine, how do you expect the revenue stream to be in addition to the equipment? Are you expecting a pretty decent revenue stream from the ink? Can you highlight with us how this is going to work as you deploy these machines?.

Yes. In general the first generation, if a customer is going to use it, let’s say, two sheets all the year, he may use something like 2,500 kilos per year roughly - this is the capacity of each machine.

So you can multiply the 2,500 by the price of kilo that can run between—you know, depending on the application, it could be 30, 40, 50, $60 per kilo – we don’t know yet because it’s a matter of quantity and type of material.

So this is what we call the material itself, and of course as a system we are going to sell it the same way as we sell the inspection system. So it will be a combination at the beginning of probably we sell from revenue more systems than material, but within maybe a few months, a year, two years, we see more material than equipment..

Okay. Competitively, you mentioned you don’t see other companies offering a similar product.

Can you highlight some of the advantages of your 3D printing product versus what’s being used currently, and how you see a difference as you push these products into your customers’ hands?.

Okay. In general, the current technology is, I would say, like first you have to apply the full solder in all the areas, all the panels, then you add to your lithography in selective areas, then you have to use the developer to remove all the unused material from the panel, then you have to go to curing, so it takes a few hours.

You waste a lot of material in a lot of areas that you don’t want to stay with this material, so it’s a matter of waste treatment, it’s a matter of labor costs, it’s a matter of energy and a lot of things. In our technology, actually you apply the material with almost zero energy on the area that you want to apply.

Nothing is go to the waste treatment – everything stays on the panel, so from efficiency, from material cost, from every aspect, this is the way to work. This is the clean way, let’s call it, to work efficient, costly and save labor costs. Definitely this is the way.

Hopefully we can implement it in other processes in the PCB, but we start with this specific process..

Okay, last question from me – in terms of the ruling on the lawsuit, can you talk to us about what do you see as the impact to Camtek, if at all, and how do you hope to—do you hope to appeal the lawsuit and give us some sense on what the next step of action is..

As we mentioned, as we announced, of course we are going to—in general, we are going to appeal, definitely. We’re going to do it, like we do it in the past for sure. But on top of that, in general the district court decided that the Falcon was capable of infringing. Now first of all, we talk about very limited systems in the United States.

It’s not for all the systems that we sold – it’s very limited, about 36 systems, something like this. And when I say capable, it means that if a customer works in a special way, in this case it may infringe.

But 99% of our customers do not use it this way, so actually we don’t understand yet what is the meaning of this because practically customers do not make any infringement because they do not use this feature that the court thinks it has the capability of infringement.

So in general, all these features, we stopped selling it years ago, so as I mentioned, it’s only relevant to 36 systems that were installed in the United States, only in the United States.

It is not relevant to other territories, and if you can see how many systems we sell worldwide, most of them are out of the United States, not in the U.S., so we do not see any impact on our business at all.

Definitely of course if you have to pay some penalty, this is a matter of money but it’s far away from the ability of Camtek to continue running its business..

Okay, maybe one more question – back to the inkjet.

Moshe, do you expect any significant increase in CAPEX this year as you roll out these machines; and if so, what level of CAPEX do you foresee?.

For 2014, we don’t see any significant uptick to the CAPEX. If everything goes well and we are successful, at some point in 2015 we may need to do an investment in terms of ink production facility, but this is yet to be decided. It’s not for 2014..

Okay, thank you..

In 2014, we already planned how many machines we would like to install and how many kilos of ink we would like to sell, so we are ready for that. We don’t have to make additional investments. Based on the success then, we have to take a decision how aggressively we have to go in 2015..

Thank you..

You’re welcome..

The next question is from Krishna Shankar from Roth Capital. Please go ahead..

Yes, congratulations on the results and guidance.

Your results in the semiconductor equipment space and guidance also seems to be more positive, so are you seeing more demand for your inspection equipment and advanced packaging applications? Are you seeing broad-based demand there, and can you talk about the kinds of customers who are—where you’re seeing demand from – is it memory, logic, foundry? What areas are you seeing demand in the semiconductor equipment area?.

Okay, maybe I can give you just a few types of applications. If you look on the, I would say, the end user applications, you can see more functions. More functions means more IOs – input/output points. It can be more than 50. Now when you go to more than 50, you have to go to different technology of assembly the chip on substrate.

Instead of wire bond, you have to more to more flip chip. Now, flip chip needs 2D and 3D inspection in metrology of 3D and 2D. This is one, I would say, factor that makes demand for machines, because I think that in 3D we are, I would say, a leading supplier in the market. Now second is what we see a lot of what we call embedded IC on substrate.

This is just the beginning of the process, and in this case customers need few steps of inspection. It’s not like others or in the past – only one pass of inspection. Here we talk about a few steps of inspection, and it’s a combination of 2D and 3D in the same package.

I would say the third factor that we can see is the trend to go to more SSD instead of the R-disc (ph).

In this case, if you go over 500 gigabyte, you have to go again to flip chip instead of wire bond, so if you have to make 10, 12, 16 chips one on top of the other and the connection between them is with micro bumps, we have to measure the height of each bump, so this is again more need for metrology.

So take all of them together and all of them today in trend of growth, we can see demand for our machine..

Great. Then on the PCB product line, have you talked about any sort of estimates or forecast for what you think could be the range of systems that you ship in calendar ’15? I understand that this year you have two installations at advanced development customers, but can you give us some sense of what the revenue ramp could be for the PCB sector—.

We do not expect record revenue on the inkjet system this year, okay, because we understand that we have to educate the market. This is a new technology, so we know that you have to go qualification of the ink, so it takes time.

So we believe that 2014 is—we will focus on more qualification of the ink and installing systems in some key customers, so we do not really expect revenue of this technology this year. But we definitely expect to see installations and start using our technology in production of them..

And as you talk to customers, what kind of figure of merit, what kind of cost of ownership advantage are you seeing with your system versus the conventional PCB manufacturing process? Is there a figure of merit or some percentage—.

I would say there are in general—okay, let’s start to see—there are two benefits that this technology brings to the market. Number one is driven by technology.

When you have to go to more densities but on the other side you have to reduce your cost, so you have to continue producing with large panels because only with large panels you can meet the budget and keep the costs low.

So when you try to make multi-layer in large panels, you have a lot of problems with what we call alignment – mis-registration, because we’re talking about organic material.

In this case, the old way to make solder masks, meaning using a mask or artwork to make the lithography on the panel cannot work anymore because large panels move and everything in each panel doesn’t (indiscernible) the same one. So in this case, you have to make what we call fit to image.

Our capability is to look on the panel on the current image and adjust the mask to the panel, and then we start immediately to print it, so this is what I call technology-driven. Now also LDI, laser-direct image, can make the same, but this tool is about twice as expensive in the investment and also the ongoing is very expensive.

So when customers come to the decision, now I have to face high-density large panel, what am I going to choose – LDI with $1 million cost, or to go to this system that is less than half cost and the ongoing expenses is much less compared with LDI? So we see all the benefit and advantage compared with the alternative, definitely, so customers of course will enjoy it; but first, as I mentioned before, we have to pass through the qualification process because we already checked and tested the ink in some officially lab, and everything looked perfect and all the samples we sent to customers were approved and accepted.

But still, end users would like to make it by their own, so usually it takes a few weeks, sometimes a few months to pass all this process of qualifications. .

Great, that’s very helpful. Thank you. .

You’re welcome..

The next question is from Patrick Ho from Stifel Nicolaus. Please go ahead..

Thank you very much.

Can you first give a little color on the pace of adoption for advanced packaging techniques, how you see the total available market for your semi inspection side, and maybe as a follow-up to that, what are some of the applications that your products will be specifically targeting – 2.5D, opposers (ph), 3D, TSV – what are some of those applications that you believe your products are best suited for?.

I would say since our system can make what we call 2D inspection and metrology and 3D metrology, so this is definitely suitable to all these types of advanced packaging.

And our new platform, our new system that we just announced two months ago, I think that this system with its IO throughput and very, very extreme accuracy just to, I would say, (indiscernible) they definitely match this industry.

So I believe that we can cover all types of applications, and right now in some customers we work in the R&D stage because they develop the process of embedded ICs or other types of process.

Some customers already run it in production lots, and of course we are there, so the fact that we are also the few customers uses right now our systems in the R&D stage, we believe when we finish the process, they will continue using our system in the production lot. So as I mentioned, some of the advanced packaging is already in production.

Some of it is still in R&D stage, and during 2014 and ’15 we can see, I believe, more and more in production..

Great, that’s helpful.

Maybe going to the inkjet side for a second, what are the lead times for your Gryphon product right now, and as you go into 2015 and seed the market more with more systems, how do you plan to manage inventory as well as gross margins as we look into next year?.

Okay, now we are talking about the third generation system, and this system is, I would say, more suitable for customers with, I would say low to mid lot size.

When we see that this technology is getting more adopted by customers, we have to move to more high-throughput systems – it’s like a system with multiple heads that can make higher throughout the same as the conventional throughput today, and we are already in connection with a company who builds printers like we are looking for, so we believe that when we move to high volume, probably we’ll use a subcontractor to build the machines.

But for this generation, we already developed the system. We also intend to use a subcontractor to build the major part of the machine.

We will do mainly the integration and the fine-tuning of the machine before it will be shipped to customers, so we do not expect a lot of working capital to build the machines but definitely for the first five, 10 systems, we are going to do it by ourselves. .

Great, thank you very much..

The next question is from Gary Anderson of 3DPrintingStocks. Please go ahead..

Hi guys. Congratulations on a good quarter. What were your R&D expenditures for Q1 this year versus last year? I didn’t get a chance to look at the whole filing yet..

Our R&D this quarter was $3.4 million versus $3.65 in the first quarter of 2013. The main reason for the reduction between 2013 and 2014 is the discontinuation of a product line related to the Sela operations..

Okay, and the Greenjet is patented, correct? I’m pretty sure it is, you have a patent for that technology..

The Gryphon..

Pardon me?.

No, I said the new name is Gryphon, but never mind. Okay, go ahead. Sorry. .

So your technology is patented, correct?.

Sure..

Okay. All right, that’s it. Thanks..

Thank you. If there are any additional questions, please press star, one. If you wish to cancel your request, please press star, two. Please stand by while we poll for more questions. 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 you concluding statement?.

Okay, I would like to thank you for your continued interest in our business. I look forward to talking with you again next quarter. Thank you and goodbye..

Thank you. This concludes the Camtek first quarter 2014 results conference call. Thank you for your participation. You may go ahead and disconnect..