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Edited Transcript of CAMT.TA earnings conference call or presentation 6-Aug-19 2:00pm GMT

Q2 2019 Camtek Ltd Earnings Call

Migdal Haemek Sep 6, 2019 (Thomson StreetEvents) -- Edited Transcript of Camtek Ltd earnings conference call or presentation Tuesday, August 6, 2019 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Kenny Green

GK Investor & Public Relations - Co-Founder and Managing Partner

* Moshe Eisenberg

Camtek Ltd. - VP & CFO

* Rafi Amit

Camtek Ltd. - Chairman of the Board & CEO

* Ramy Langer

Camtek Ltd. - VP & COO

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Conference Call Participants

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* Auguste Philip Richard

Northland Capital Markets, Research Division - MD & Senior Research Analyst

* Craig Andrew Ellis

B. Riley FBR, Inc., Research Division - Senior MD & Director of Research

* Quinn Bolton

Needham & Company, LLC, Research Division - Senior Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, thank you for standing by. Welcome to Camtek's Second Quarter 2019 Results Conference Call. (Operator Instructions) 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 & Public Relations at 1(646)688-3559 or view it in the news section of the company's website, www.camtek.com.

I would now like to hand over the call to Mr. Kenny Green of GK Investor Relations. Mr. Green, would you like to begin, please?

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Kenny Green, GK Investor & Public Relations - Co-Founder and Managing Partner [2]

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Thank you, and good day to all of you. I'd like to welcome all of you to Camtek's Second Quarter 2019 Results Conference Call, and I would also like to thank Camtek's management for hosting this call. With us on the line today are Mr. Rafi Amit, Camtek's CEO; Mr. Moshe Eisenberg, Camtek's CFO; and Mr. Ramy Langer, Camtek's COO.

Rafi will provide the overview of Camtek's results and discuss the market trends; Moshe will then summarize the financial results of the quarter. We will then open the call to take your questions.

Before we begin, I would like to remind all our listeners that certain information provided on this call are internal company estimates, unless otherwise specified. This call may also 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 (inaudible) results may differ materially from those projected, including as a result of changing industry and market trends, reduced demand for services and products, the timing, 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 statements in today's press release also cover the contents of this conference call. In addition, during this call, certain non-GAAP financial measures will be discussed. These are used by management to make strategic decisions, forecast future events and evaluate the company's current performance. Management believes that the 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 are included in today's earnings release.

And with that, I would now like to hand the call over to Mr. Rafi Amit, Camtek's CEO. Rafi, please go ahead.

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Rafi Amit, Camtek Ltd. - Chairman of the Board & CEO [3]

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Okay. Good morning, and thank you for joining our call today. Camtek's second quarter results reflect our strong track record of execution. The company showed record revenue of $34.3 million in the second quarter, up 12% over Q2 of 2018, with $7 million in operating profit presenting margins of over 20%. In addition, the company generated $7.3 million in cash from operations, bringing our total cash position to over $85 million.

The healthy financial position allows the company to share the worth of our success with our shareholders by distributing $6.5 million in dividend. I would first like to stress a few events during the second quarter. We closed the Chroma transaction and received $16 million and have begun the operation. In addition, we received an earn-out payment of $1.3 million from the sales of the PCB division.

Regarding our ongoing business. The transition of the DRAM to advanced packaging is ongoing. A key example was the major order we recently received and announced from the market leader in this space. We have started installation in the first quarter and during the third quarter we will complete the installation of the machine. This order eventually amounted to approximately $20 million.

We continue our efforts to extend our presence in the RF space. A major achievement this quarter was the penetration into a new RF customer where we installed systems at 2 different locations. And we have been qualified for production at both sites. These machines will support the 5G ramp-up.

In the advanced packaging segment, we installed multiple machines, a tier 1 OSAT for Fan-Out applications which supports a major global semiconductor company. Another significant milestone we have achieved in the field of Fan-Out is receiving an order for inspection machine for 24 by 24-inch panels. We expect to install it within the next few months.

In the CMOS Image Sensors space, the number of cameras in smartphones continues to increase and smaller pixel size requiring new capabilities and more inspection. Our CIS business shows strength this year. We have received multiple orders for systems for this segment which will be installed in Q3.

The Chinese market is continuing to increase capacity, as we discussed in previous calls, and we expect a similar trend to continue in the second half of the year. Orders in China are coming from various segments, including advanced packaging, new customers for Front-End Macro Inspection as well as new customers opening new facilities and purchasing the first tools with potential for further expansion.

Overall, 2019 is shaping out to be a challenging year for the industry, driven by slower demand for end user products. Also, the trade conflict between U.S. and China and between Japan and Korea contributes to the uncertainty in the global economy in general and specifically to our industry. This uncertainty means most of our customers are only ordering equipment for short-term production needs and with shorter lead time. As a result, for Q3 2019, we expect a solid level of revenue between $31 million and $33 million.

In our industry, demand for equipment is driven not only by capacity but also by introduction of new technologies, as shown by our impressive results in the first half of 2019. During this period, we achieved revenue of $68.3 million, a 10% higher than the first half of 2018, which was a record year for Camtek and the semiconductor industry as a whole. This performance demonstrates Camtek's strong position in the market. In general, market drivers supporting demand for our equipment have not changed.

Our addressable market continues to grow as a result of the increased semiconductor devices for AI, 5G, Big Data, automotive and others. IC and packaging designs for the above applications are more complex and have smaller geometries, which require inspection and metrology on inspection machines with higher optical magnification and higher scaling accuracy, translating to more tools for production.

Furthermore, advanced packaging is key to the expansion of these applications and continues to be the fastest growing segment. We are well positioned in this market, diversified with approximately 100 active customers worldwide and an installed base of over 1,000 systems. We are gaining market share and penetrating new market segments such as the front end.

In summary, we have developed new capabilities and expanded our penetration into key customers and are prepared for the demand that will come with the introduction of new products. Our position in the market is very strong, and we are ready to lead the market and continue to grow rapidly as the market ramps up.

With that, I would like to hand over to Moshe for the more detailed financial discussion of the financial results. Moshe?

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Moshe Eisenberg, Camtek Ltd. - VP & CFO [4]

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Thanks, Rafi. Camtek showed strong results in the quarter, in line with our guidance, with revenue up 13% and operating margin up 42% year-over-year. This growth demonstrates the operating leverage inherent in our business model.

In my financial summary ahead, I will provide the results on a non-GAAP basis. The reconciliation between the GAAP results and the non-GAAP results appear in the tables at the end of the press release issued earlier today. Second quarter revenues came at $34.3 million, up 13% year-over-year and an impressive 18% growth for the first half of the year. The results were driven by strong demand across all our segments and applications, with 93% of sales from Asia.

Gross margin for the quarter was 48.4% versus 49% in the second quarter of last year. This fluctuation in the gross margin is mainly a function of the product or sales mix delivered as well as the leverage we have in our financial model.

I note that this quarter the gross margin was on the lower end of the range we would typically expect. For the year as a whole, we see the margins averaging around 60% level. Longer term, as we grow our revenues, we expect that our margins will continue to trend upwards.

Operating expenses in the quarter were $9.6 million. This is below the $10 million in the second quarter of last year. Operating profit in the quarter was $7 million, an increase of 42% over the $5 million reported in the second quarter of last year.

Operating margin was 20.5%, a strong improvement versus the 16.3% in the second quarter of last year. Net income for the second quarter of 2019 was $6.7 million or $0.18 per diluted share. This is compared to a net income of $4.6 million or $0.13 per share in the second quarter of last year. With the completion of the Chroma transaction in mid-June, the total number of shares have increased by 1.7 million, and will impact earnings per share from the third quarter onward by about 2% to 3%.

Turning to some high-level balance sheet and cash flow metrics. We generated $7.3 million in cash from operations. Our quarter-end cash balance was $85.3 million versus $54.9 million at the end of 2018.

During the second quarter, we have received $60 million cash payment from Chroma and an additional $1.3 million in earnout payments from our sale of the PCB business last year. In terms of guidance, we expect third quarter revenues to be between $31 million and $33 million.

And with that, Rafi, Ramy and myself will be open to take your questions. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question is from Craig Ellis of B. Riley.

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Craig Andrew Ellis, B. Riley FBR, Inc., Research Division - Senior MD & Director of Research [2]

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Gentlemen, congratulations on good second quarter execution in a tough environment. The first couple inquiries were just clarifications on the quarter and the guidance. So in the quarter, Moshe, you were clear that the year-on-year variance in gross margins was mix. If we look at it on a quarter-on-quarter basis, is it the same thing, or was there potentially anything that was more of a one-off in the quarterly variance of 1Q, 2Q?

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Moshe Eisenberg, Camtek Ltd. - VP & CFO [3]

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No. I mean it was -- we definitely don't see the gross margin trends as a trend but more as the sales mix that took place in the quarter. And it was just a mix of things that pushed the gross margin down versus last quarter.

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Craig Andrew Ellis, B. Riley FBR, Inc., Research Division - Senior MD & Director of Research [4]

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Okay. That's helpful. And then, with respect to the view for the third quarter, with the midpoint at $32 million, can you just help us understand some of the gives and takes across the different areas of the business? Or would you expect the business to be down moderately across image sensors and High-Bandwidth Memory, MEMS, et cetera, or there are some parts of the business that you'd expect to grow while others decline? Just some granularity on the underlying dynamics Q-to-Q would be helpful.

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Rafi Amit, Camtek Ltd. - Chairman of the Board & CEO [5]

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Ramy, could you answer for that?

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Ramy Langer, Camtek Ltd. - VP & COO [6]

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Yes. I will answer that. I don't think that there is a major difference in the various segments that we address in the market. I think we also said it in the text, in general, we are selling -- we saw in this quarter and during this quarter we sold more or less to the same applications. The question is, and I think Rafi went over it, is the -- what we have looking forward is the visibility and the lead times that customers are requesting. So people are not -- just ordering what they need for the short term. And they are very hesitant about placing larger orders, they will wait until the last minute. And this is what differs basically the next quarter from the first 2 quarters or the first -- or the last few quarters, where customers were very confident of the business and ordered machines also anticipating the growth. This is the major difference.

From applications point of view, we are seeing more or less the same applications, the same mix across the market. And I think Rafi mentioned the -- from the DRAM, it continues moving to advanced packaging. We saw orders for Fan-Out applications, the CMOS Image is strong, once we got orders from the RF. So there isn't here a segment that we can say is different or we see different as we move along.

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Craig Andrew Ellis, B. Riley FBR, Inc., Research Division - Senior MD & Director of Research [7]

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That's helpful, Ramy. And just to clarify that comment, is the lower visibility that you're getting from customers something that's changed very recently, for example, as a byproduct of the threat that the further increase is U.S. import tariffs on China or is that something that just started to emerge in the business through the month of July and has persisted in August?

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Ramy Langer, Camtek Ltd. - VP & COO [8]

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It's hard for me to say whether it's July or June, but it is definitely -- it's very recent that we saw the markets becoming so volatile. It wasn't like this, if I can say, when we talked 3 months ago, it wasn't like that. And definitely more volatility. Now to explain what is exactly the reason, whether it's the trade wars or other things that are worrying our customers, I think it's everything together.

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Craig Andrew Ellis, B. Riley FBR, Inc., Research Division - Senior MD & Director of Research [9]

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Got it. Thank you. And now to some forward-looking questions that are more intermediate term. Rafi, you've mentioned on this call and previous calls, the High-Bandwidth Memory was an area of strength in the business and it's well-exemplified by the $20 million order that you mentioned. The question is, as you look at the customer base and their intermediate- to longer-term plans in this area, what inning are we in with the strength that you're seeing in High-Bandwidth Memory? Are we still early in adoption or are we moving in the latter stages or somewhere in between?

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Rafi Amit, Camtek Ltd. - Chairman of the Board & CEO [10]

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Well, okay. I'm not sure about the High-Bandwidth Memory by itself. Definitely -- I would say, we can see in general the trend. We definitely understand the benefit and the advantage of all these new packaging technologies. And we are very confident that all of them will ramp up very soon. Is it going to be Q4, Q1 or Q2? I don't know yet. But it is a must because it brings a lot of benefit and we've placed a lot of investment in the R&D to make this process better with high yield. So when it moves to production, not easy for us to predict. We see a very limited angle of the overall decision. But definitely, we are still very confident with it.

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Ramy Langer, Camtek Ltd. - VP & COO [11]

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Let me elaborate a little bit your question regarding the High-Bandwidth Memory. Where are we in moving -- in memory and in DRAM moving to advanced packaging. We are -- we are not at the beginning but we are definitely not at the end, we're somewhere in the middle. So I don't know if the penetration is about 40% or 50%, we are -- but we are more or less in this range. There is definitely in the DRAM space a lot more to go until this move from wire bonding to advanced packaging will be completed.

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Rafi Amit, Camtek Ltd. - Chairman of the Board & CEO [12]

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Yes. And we also, by the way, we start to see the beginning for NAND to adapt that technology, not (inaudible). I don't know how they accelerated process, but definitely we see it also in the NAND.

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Craig Andrew Ellis, B. Riley FBR, Inc., Research Division - Senior MD & Director of Research [13]

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Got it. And then moving on to RF and your comments about a new customer there for a 5G application, can you just provide us some visibility into what you'd expect next year as we move into the first wave of real, significant smartphone rollouts for most manufacturers? I think a lot of the industry sources I've seen are looking for something around 150 million 5G units, but what can RF mean for Camtek next year for -- if we're moving to that level of production in smartphones?

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Rafi Amit, Camtek Ltd. - Chairman of the Board & CEO [14]

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Ramy, could you?

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Ramy Langer, Camtek Ltd. - VP & COO [15]

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Yes. We -- definitely, this is going to be a major segment for us. And I see -- from our predictions point of view, we expect that there are going to be multiple machines ordered from several customers. So definitely this is something that we believe will contribute to the strength of 2020.

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Craig Andrew Ellis, B. Riley FBR, Inc., Research Division - Senior MD & Director of Research [16]

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Thank you. And then lastly for me, just on cash, the company's done an excellent job positioning itself for a stronger cash position. A couple of questions. One, there was modest help from an earnout, are there any potential earnouts coming? And then there is a special dividend coming in the quarter, but beyond that, how should we think about how the company plans to deploy its $85 million in cash?

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Ramy Langer, Camtek Ltd. - VP & COO [17]

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With respect to the earnout payment, which is the final earnout payment, this is actually a full earnout payment adjusted by the working capital ratio that we had agreed upon in the deal. So we have enjoyed the full benefit of it.

With respect to the dividend, the dividend will be paid early September. At this point, our priority in terms of the cash is twofold: one is to try to utilize it for potential M&A and the other one is looking -- considering dividend from time to time as we find it necessary or suitable for the shareholders.

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Operator [18]

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The next question is from Quinn Bolton of Needham & Company.

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Quinn Bolton, Needham & Company, LLC, Research Division - Senior Analyst [19]

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Congratulations on the nice results. Wanted to just follow up on the image sensor business, some of the DRAM guys, especially the Koreans, have talked recently about potentially taking some of the older DRAM capacity, converting it over to image sensors. Wondering if you see that in the near-term order book or whether that's a tailwind for you, but a little bit further out? And then I've got a couple of follow ups.

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Rafi Amit, Camtek Ltd. - Chairman of the Board & CEO [20]

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Ramy, please.

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Ramy Langer, Camtek Ltd. - VP & COO [21]

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Yes. Look, in general, we don't see the capacity. We're not aware whether the capacity was a move from DRAM to CMOS Image Sensors. Of course, we understand that some of those -- that some capacity can be moved from one product to another. And we definitely see the increase in the capacity, and we mentioned that our CMOS Image Sensors is strong on a global basis. And -- so yes, we see the increase in CMOS Image Sensors. Whether it's coming from the DRAM -- the old DRAM capacity that was converted to CMOS Image Sensors, that's something that we are not exposed to.

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Quinn Bolton, Needham & Company, LLC, Research Division - Senior Analyst [22]

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But if you're converting older DRAM, I assume that that's probably got DRAM going into High-Bandwidth Memory applications, I take that they were doing that. That's probably a net positive because they would need the equipment on the CMOS Image Sensor side, right?

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Ramy Langer, Camtek Ltd. - VP & COO [23]

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Of course. I mean you are talking about totally different nodes. When you talk about CMOS Image Sensors, they do not need the nodes that are required on the DRAM, on the modern DRAM, the latest DRAMs that are going to the very extreme nanometers.

So definitely, that's a different -- in the CMOS -- in the basic CMOS process that is different from CMOS Image Sensors and DRAM. The older DRAM with some modifications can be appropriate for the current CMOS Image Sensors. And that's something very technical.

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Quinn Bolton, Needham & Company, LLC, Research Division - Senior Analyst [24]

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Second question, just wanted to follow up on Craig's question around the RF application for 5G. Can you give us a little bit more detail? Was that for component level, was that for module level assembly? And if it's module, are you just seeing a greater number of modules where advanced packages going into 5G phones or is there a particular driver as we convert from 4G to 5G?

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Ramy Langer, Camtek Ltd. - VP & COO [25]

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From our point of view, what we see, we are not -- we are talking about the device level. And what we see is a lot more wafer and devices going into the 5G compared to the 4G. Anyways, so it's a magnitude level. It's many more filters that are required for the larger bandwidth. With this, we'd obviously go into more modules and so forth. But from our point of view, it would be the number of wafers that we are going to inspect is going to be significantly larger.

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Quinn Bolton, Needham & Company, LLC, Research Division - Senior Analyst [26]

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And those are more filters? The application is more filter rather than, say, PAs or switches, or is it across all 3 of those component types?

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Ramy Langer, Camtek Ltd. - VP & COO [27]

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It's across although 3 of them, but we were primarily referring in this quarter filters.

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Quinn Bolton, Needham & Company, LLC, Research Division - Senior Analyst [28]

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Got it. Great. And then, last question, some of the other equipment vendors have noted, I know there's uncertainty in China with the trade situation, but some of the indigenous Chinese manufacturers have potentially accelerated some demand. Just wondering if you could talk about what you're seeing on the China front going forward, whether you've seen any sort of pull-ins from China here into the second half of 2019?

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Ramy Langer, Camtek Ltd. - VP & COO [29]

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You want to discuss it, Rafi?

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Rafi Amit, Camtek Ltd. - Chairman of the Board & CEO [30]

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No. No, it's good. [Continue].

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Ramy Langer, Camtek Ltd. - VP & COO [31]

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Look, in general, what we see -- our Chinese business is very stable. It's very stable. It has shown growth throughout the last few quarters and it's continuing to grow. I don't see a major change in the China market or pull-ins. It is stable. We see a lot of new customers, a lot of new faces that are ordering machines that we -- we expect will order multiple machines as time goes by. Overall, the China semiconductor market at this stage is healthy.

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Operator [32]

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The next question is from Gus Richard of Northland Securities.

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Auguste Philip Richard, Northland Capital Markets, Research Division - MD & Senior Research Analyst [33]

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Could you talk a little bit about your manufacturing cycle time as your customers try to pull in shorter lead times in terms of equipment delivery and sort of -- do you configure the system right before it goes out the door? How difficult is that change going to make predicting revenue and shipments in the quarter?

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Ramy Langer, Camtek Ltd. - VP & COO [34]

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All right. First of all, Gus, this is -- in general, our business is to provide machines at shorter lead times. And our production is built around the capability to be able to configure machines very quickly up to a certain point. And the question is, how short is the lead time? And in the past, we've been very successful to come up with these machines and provide all the requirements from our customers. What is happening today because of the shorter lead times, that's limiting our visibility, and of course this is the reason for the forecast that we've given for the next quarter.

In general, the ability, and I would say the lead time, is in line with the complexity of the machine. If the machine is not very complex, obviously we'll be able to provide it at very short lead times. If the complexity is higher, obviously, this will require some additional time, and this would make the differences. But I would say, in general, this is the -- the rules, or how we manage our operation just in a few sentences.

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Rafi Amit, Camtek Ltd. - Chairman of the Board & CEO [35]

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Yes. I would like to add one more sentence about it. If -- you have to remember that in our arena, we face, I would say, many new technologies of packaging. And some of them are really mature enough to start to move to production. Now when we talk about new technologies, it also means we have to make sometimes special development for machine or special feature or special optic part or special mechanical part, so -- and we have to do it still with very short delivery times. So it's not just to produce or to build the machine; sometimes in parallel we have to develop the solution for the customer. So this makes it more tough. And this is the reason why our visibility is not clear as in the past because we have to put another factor to the question, we have to consider if we can complete the R&D on time and to ship it during the current quarter. So this is also part of the difficulty we face because the amount of new technologies in our segment.

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Auguste Philip Richard, Northland Capital Markets, Research Division - MD & Senior Research Analyst [36]

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I understand. And then just sort of can you give a reference to what your lead times are currently or what sort of demands customers are making? Is it 4 weeks, 8 weeks?

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Rafi Amit, Camtek Ltd. - Chairman of the Board & CEO [37]

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I would tell you, in general, most of the customers fall between 6 to 8 weeks. This is their expectation today.

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Auguste Philip Richard, Northland Capital Markets, Research Division - MD & Senior Research Analyst [38]

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Okay. And then on the High-Bandwidth Memory, are you working with all the major DRAM manufacturers at this point?

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Ramy Langer, Camtek Ltd. - VP & COO [39]

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Yes we are.

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Auguste Philip Richard, Northland Capital Markets, Research Division - MD & Senior Research Analyst [40]

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Okay. And the OSAT that is doing -- that ordered some equipment for a Fan-Out, is that also for a mobile processor or is that another application?

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Ramy Langer, Camtek Ltd. - VP & COO [41]

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It's -- well -- I would be very hesitant to answer because we may disclose some information that we're not supposed to. So I prefer not to answer the question.

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Rafi Amit, Camtek Ltd. - Chairman of the Board & CEO [42]

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But -- not specifically for our customer, in general, we can see Fan-Out moving -- I would say more rapidly to power devices because probably the complexity is not as -- if you go to different applications, some other, for logic and more complex application, not everyone can do it. And this is made only by a few customers that develop their own packaging technologies. But if we talk about in general, most of the OSAT that try to make Fan-Out, I would say the entry level is more for power devices, and then they will continue and develop it to more applications.

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Auguste Philip Richard, Northland Capital Markets, Research Division - MD & Senior Research Analyst [43]

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Got it. And then are you seeing any demand for chiplets at this point, chiplet packaging?

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Rafi Amit, Camtek Ltd. - Chairman of the Board & CEO [44]

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What?

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Auguste Philip Richard, Northland Capital Markets, Research Division - MD & Senior Research Analyst [45]

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Are you seeing any demand for chiplets? Effectively some of the microprocessor guys are moving to heterogenous processes with multiple dies on a silicon substrate.

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Ramy Langer, Camtek Ltd. - VP & COO [46]

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You're talking about -- what we call 2.5 -- 2.5D IC.

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Auguste Philip Richard, Northland Capital Markets, Research Division - MD & Senior Research Analyst [47]

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Yes.

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Ramy Langer, Camtek Ltd. - VP & COO [48]

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Yes. Definitely, that's a market that is growing. We are doing these applications, and it's definitely a market, when you talk about advanced packaging, that's going to be a big market.

(Operator Instructions) The next question is from Craig Ellis of B. Riley.

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Craig Andrew Ellis, B. Riley FBR, Inc., Research Division - Senior MD & Director of Research [49]

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The question is on one of the areas of the business where there's been some expansion this year and it's on Front-End Macro Inspection. One, can you just give us an update on how that's progressing? And then to put some of the earlier comments around 5G and customer expansion in the business next year in better context, can you help us understand as we look to 2020 what the incremental opportunity is in the RF customer expansion that you're seeing versus what you've been accomplishing in Front-End Macro?

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Rafi Amit, Camtek Ltd. - Chairman of the Board & CEO [50]

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Ramy, maybe you'll start with everything (inaudible)

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Ramy Langer, Camtek Ltd. - VP & COO [51]

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Yes, I will start. So first of all, on the Front-End Macro Inspection, we are -- we have been able to -- we've discussed I think last year, we had the first big order and since then we were able to penetrate into multiple new customers. And definitely, the Macro Inspection is continuing to grow, and we see this as a viable business moving in towards 2020. That's definitely good news. Our machines are performing well, and we are able to maintain very nice market share. Obviously, it's only beginning, but I think we can still further grow this business.

Regarding the RF, I think I mentioned -- I want to be very careful, Craig, of putting an accurate number, but definitely the RF filters is going to be -- and as I said, it's going to be multiple machines for multiple customers. Is that good enough or you're trying -- you'd like me to quantify it more?

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Craig Andrew Ellis, B. Riley FBR, Inc., Research Division - Senior MD & Director of Research [52]

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That's good enough. We'll follow up on it in 3 months as we get closer to 2020 and hopefully we can quantify it little bit more specifically. I'll ask one more question, and I wanted to go back to a prepared remark with respect to the Chroma ATE transaction closing. One of the things that seemed appealing with that transaction was the opportunity for some incremental revenue streams either with licensing or non-semi revenues, and I'm just hoping the team can give us an update on anything that you're seeing as you begin some work with Chroma ATE.

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Ramy Langer, Camtek Ltd. - VP & COO [53]

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Rafi, you want to elaborate on it?

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Rafi Amit, Camtek Ltd. - Chairman of the Board & CEO [54]

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No. No, Ramy, I think (inaudible) Chroma.

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Ramy Langer, Camtek Ltd. - VP & COO [55]

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On the Chroma, we have started the corporation, as we mentioned. Until we will see revenues from this agreement, I think it will take some time. We've started the work, I would expect it at least to be in the latter part of 2020 where we will be able to assess this business. I would not -- I don't think this is something in the short term that we'll be able to really understand and give -- to really forecast for what we expect there. Yes, there is an opportunity, but it will take a little while.

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Operator [56]

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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.com, beginning tomorrow.

Mr. Amit, would you like to make your concluding statement?

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Rafi Amit, Camtek Ltd. - Chairman of the Board & CEO [57]

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

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Operator [58]

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Thank you. This concludes the Camtek Second Quarter 2019 Results Conference Call. Thank you for your participation. You may go ahead and disconnect.