Earnings Call
Camtek Ltd (CAMT)
Earnings Call Transcript - CAMT Q4 2021
Kenny Green, Investor Relations
Ladies and gentlemen, thank you for standing by. I would like to welcome all of you to Camtek’s Results Zoom Webinar. My name is Kenny Green and I am part of the Investor Relations team at Camtek. All participants other than the presenters are currently muted. Following the formal presentation, I will provide some instructions for participating in the live Q&A session. I would like to remind everyone that this conference call is being recorded and the recording will be available later on Camtek’s website. You should have all received by now the company’s press release, if not please view it on the company’s website. With me today on the line, we have Mr. Rafi Amit, Camtek’s CEO; Mr. Moshe Eisenberg, Camtek’s CFO; and Mr. Ramy Langer, Camtek’s COO. Rafi will begin by providing an overview of Camtek’s results and discuss recent market trends, Moshe will then summarize the financial results of the quarter. Following that, Rafi, Moshe, and Ramy will be available to take your questions. Before we begin, I’d like to remind 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 that forward-looking information 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 our result of the effects of general economic conditions, the effects of the COVID-19 pandemic on global markets and on the markets in which we operate, including the risk of continued disruption to our and our customers, providers, business partners and contractors business. Risks related to the concentration of a significant portion of Camtek’s expected business in certain countries, particularly China from which we expect to generate a significant portion of our revenue for the coming quarters, as well as Taiwan and Korea, including the risks of deviations from our expectations regarding timing and size of orders from those customers in those countries, changing industry and market trends, reduced demand for our products, the timely development of our new products and their adoption by the market, increased competition in the industry, 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 contents of this conference call. In addition, during this call, certain non-GAAP financial measures will be discussed. These are used by Camtek to make strategic decisions, forecast future results and evaluate the company’s current performance. Management believes that the presentation of non-GAAP financial measures are useful to investors for understanding and assessment of the company’s ongoing operations and prospects for the future. A full reconciliation of non-GAAP to GAAP financial measures are included in today’s earnings release. I would now like to hand over to Rafi, Camtek’s CEO. Rafi, please go ahead.
Rafi Amit, CEO
Thanks, Kenny. Good morning everyone. The last quarter concluded a phenomenal year for Camtek. In Q4, our revenue was $74 million with operating profit of $21 million and a 28% operating margin. 2021 was a record year for Camtek in all aspects. Revenue for the whole year was above $270 million, over 70% growth compared to 2020, an operating profit of $77 million. Since 2017, revenue has multiplied three times and net profit, seven times. We also achieved a very important goal. We became the main leader in inspection and metrology for the mid-end segment. We installed our system at all top semiconductor manufacturers. We penetrated the front-end segment, which now accounts for 20% of our sales. We reached an installed base of over 1,500 systems at over 130 active customers. With 2021 behind us, 2022 is shaping up to be another growth year. We started the year with a healthy backlog and received over $40 million in orders since the beginning of this year, leading to very good visibility for the first half of 2022. The second half of the year is starting to build up nicely. I expect revenue in the first quarter of 2022 to be between $75 million to $76 million with continued growth in Q2. Last November, we completed a $200 million convertible notes offering at favorable terms. The main reason for this transaction was to ensure we have enough cash to support our growth strategy including inorganic growth. In the fourth quarter, about 50% of our sales were for advanced interconnect packaging, mainly for heterogeneous integration and fan-out. 15% of our revenue came from compound semiconductor wafers. These wafers are used for power devices and RF devices, which will go into mobile phones and the automotive industry, especially for electric cars. About 20% of our sales were for front-end applications which continue to grow and have become a significant part of our business. In Q4, sales to Europe and the US accounted for about 22% of total sales and I expect these territories to continue to generate significant revenue in the coming years. China continues to be our largest territory this quarter. We managed to ramp the business by 70% in 2021 and our operations kept up with this pace. We invested in our infrastructure and our facility is ready to support continued strong growth. We are making substantial efforts to overcome the shortages and long lead times in the supply chain. So far, we have managed this successfully, and this is a major focus for the company that will continue to be so. We have increased our R&D investment and expect to launch several innovative products in 2022. 2021 was an exceptional year for the semiconductor industry, with a great demand for semiconductor components, but a lack of fab production capacity. At the same time, the COVID-19 epidemic continued to disrupt daily life. Obtaining parts and materials due to the shortage in the supply chain was also a challenging issue. Despite all that, Camtek managed to increase its revenue by 70% compared to 2020. As for 2022, I am extremely encouraged by the strong start to the year. The shortage in the supply chain will continue to be a challenge and risk. However, we are doing everything possible to manage the supply chain effectively and make 2022 another growth year. Regarding the $20 million order for both Tier 1 IDM that we announced earlier this week, these systems provide inspection and metrology solutions to the most challenging applications in the field of advanced interconnect packaging. I would like to thank those customers who trust us and choose us as their main provider for these challenging applications, and to all our dedicated employees and management for all their hard work, which was crucial in delivering such an amazing performance in 2021. I would like to hand over to Moshe for a more detailed discussion of the financial results. Moshe?
Moshe Eisenberg, CFO
Thank you, Rafi. 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 appears in the table at the end of the press release issued earlier today. Fourth quarter revenue came in at a record $74.2 million, an increase of 53% compared to the fourth quarter of 2020 and 5% compared to the previous quarter. This marks the 7th consecutive quarter of growth. The geographic revenue split for the quarter was as follows: Asia at 78%, and the rest of the world accounting for 22%. This represents a significant increase in revenue from the US and Europe. Gross profit for the quarter was $37.8 million. The gross margin for the quarter was 50.9% versus 48.2% in the fourth quarter of last year and 50.9% in the previous quarter. This is the fourth consecutive quarter of gross margins above 50%, a result of the significant increase in business volume. I'll remind you that the gross margin also varies as a function of the sales mix typically within the range of 50.5% to 51.5%. We expect higher-than-usual gross margin in Q1 of 2022 due to favorable mix. Operating expenses in the quarter were $16.8 million, compared with $14.2 million in the fourth quarter of last year and $14.3 million reported in the previous quarter. As we said in the previous call, both R&D and sales expenses increased in Q4; this was a result of planned investments in R&D and the sales channel mix in the quarter. The effect of this was a slight reduction in operating margin to 28% from 30.6% in the third quarter. We expect further increases in our OpEx in Q1, particularly due to continued expansion in R&D and sales, yet with the higher gross margin, I expect operating margin to be similar to the current level. Net income for the fourth quarter of 2021 was $19.7 million or $0.43 per diluted share, compared to a net income of $8.8 million or $0.21 per share in the fourth quarter of last year. The total diluted number of shares as of the end of the fourth quarter was $46.3 million. As a result of the successful completion of the convertible notes offering, we need to include the potential share of 3.3 million shares in the number of diluted shares. As the transaction took place in mid-November, the effect in the fourth quarter is partial. In the first quarter of 2022, there will be further increases. In the company's GAAP results, we recorded a one-time tax expense of $5.3 million with respect to historical exempt income. I would like to provide some more details on this. The company elected to take advantage of the temporary rule which is applicable to 2022 only and pay a reduced tax rate on its exempt earnings to allow the company to distribute dividends from these earnings in the future with no additional corporate tax liability. Turning to some high-level balance sheet and cash flow metrics. We generated $21.5 million in cash from operations in the quarter. Following the convertible note transaction in November, total cash and cash equivalents, and short-term deposits, together with the $32 million cash that we have in long-term deposits, is $430 million. Inventory levels were $63.9 million, which went up by $2.1 million over the quarter. This is to support the current demand for our products and to ensure the availability of key components. We monitor the supply chain closely on an ongoing basis. At this point, we do not foresee any impact on our projected revenues. Finally, guidance: we expect revenues of $75 million to $76 million in the first quarter and continued growth in Q2. With that, Rafi, Ramy, and I will be open to take your questions. Kenny?
Kenny Green, Investor Relations
Thank you, Moshe. We will now open the call for the question-and-answer session. The way you can ask a question is by raising your hand on the platform. So give a moment to review who wants to ask questions. And our first question will be from Tom O'Malley from Barclays. Tom, you can go ahead.
Tom O'Malley, Analyst
Hey, guys. Thanks for taking my question. Congrats on the nice results. The order patterns look good to start the year here. I just wanted to ask a question on the broader year. You've seen a lot of equipment guys report already and talk about a WFE growth rate that's above 20% for the calendar year 2022? Can you talk about why advanced packaging would be a greater or lesser growth rate than that for the year? And when you look at what's maybe limiting you from not getting to that greater than 20% growth rate is it supply, or are you guys just being kind of conservative to start the year here?
Rafi Amit, CEO
Okay. Rafi is talking. First of all, we have to distinguish between the front-end equipment and the back-end and the mid-end. There are always delays between them. If most of the front-end companies announce about orders and growing about 20%. I would say that if we take just specific investments we can consider having for us the result about a year later. There are always delays between the front-end and the mid-end. From our experience, we have noted that we saw that while the front-end did not show any increase, we made an excellent increase. So it is not easy to find correlation between these two. But in general, I totally agree that the positive trend in the semiconductor market will eventually benefit our field and we will enjoy it, but the timing is uncertain. In general, in the mid-end, the delivery time is shorter than the front-end. Our customers can place orders six weeks, eight weeks, or ten weeks, which is good enough for them. I think in the front-end, the delivery time is much longer, and it's a matter of infrastructure or building new fabs and expansion.
Tom O'Malley, Analyst
That's very helpful. I appreciate that. I just have one more. Moshe, you talked about the if-converted method; you saw shares tick up by about half of the amount of the convert that you described. Is a good way to think about the March quarter having the other half come in so close to 48 million shares? And when you just take the midpoint of your guidance which is operating margin in the 13.6% range, which is where you guys were in the December quarter, it looks like when you do the math there you have EPS declining slightly. Is that the right way to think about the quarter-over-quarter because of the change do you see some EPS headwind?
Moshe Eisenberg, CFO
First of all, regarding the number of shares, you are correct. The number of shares for Q1 will be approximately 48 million. I mentioned that we will observe the same operating margin, which means at a higher revenue level, we should see an improvement in the absolute dollar value. Consequently, I expect the EPS to remain largely the same as this quarter.
Kenny Green, Investor Relations
The next question will be from Brian Chin of Stifel. Brian, you may go ahead to talk.
Brian Chin, Analyst
Great. Can you hear me okay?
Rafi Amit, CEO
Yes, we hear you very well.
Moshe Eisenberg, CFO
Yes.
Brian Chin, Analyst
All right. Perfect. Congratulations on the good results and thanks for letting me ask a few questions. To start with the magnitude of growth you're anticipating in the June quarter. I know you gave more of a directional indication. But again, the order intake and backlog support good business trends. Magnitude-wise, are we talking maybe ballpark 10% sequential growth? I ask because I don't think seasonality is a strong factor for the business per se but the past few years Camtek has exhibited very strong sequential growth in prior June quarters?
Moshe Eisenberg, CFO
Regarding our estimate about the growth rate, again it’s not so simple as I said before because we know very well the first half, we don't have enough information for the second half. But in general, I don't see that we are going to lose any competitive position. I don't think we will lose any orders, and it doesn’t matter when our customers in the mid-end plan to place orders; some of them may surprise us and place orders later. Some of them will do it in shorter delivery times. So this is why we cannot give a solid forecast for the whole year. We can certainly see very good visibility for the first half. A year ago, the maximum we could see was the quarter ahead. Now we can see two quarters ahead, which is excellent. But that’s it; we cannot see more than that. But in general, I think the positive environment definitely can work for us, but we will know more later about it.
Brian Chin, Analyst
Okay. Fair enough. And maybe this is a little bit related, but clearly beginning to see good order intake from the heterogeneous integration applications. If you had to pinpoint it, when do you think the spending has a real chance to begin to accelerate? Do you think the second half of this year or the first half next? And also for Camtek, how do you think the customer breadth should look like, or will it be a little bit more concentrated?
Rafi Amit, CEO
Ramy, do you want to share about it?
Ramy Langer, COO
Yeah. There's no doubt that when we look at advanced packaging as a segment, it is continuing to grow. Within the advanced packaging set, two main segments are growing much faster, and they are heterogeneous integration and fan-out. As far as heterogeneous integration, this trend already started in magnitude in 2021, and we definitely are seeing this trend growing much faster in 2022 and beyond. The applications are primarily high-performance computing and when you look at the breadth of applications from cloud applications and AI that are popping up across many applications, definitely this segment is going to grow. One good example is high band memory, which you can see is growing very fast. So we are seeing heterogeneous integration growing in two ways: one is general heterogeneous integration and second is high bandwidth memory also accelerating. We are definitely seeing a lot of DRAM activities this year. And I think we mentioned it in previous calls; we will start to ship to the DRAM world that is closely related to this segment already in the first quarter of this year. So that’s definitely positive news in the overall advanced packaging environment.
Brian Chin, Analyst
Okay. Great. That’s very helpful. And maybe just to sneak one last one in. You referenced some new products this year. Can you maybe just talk about how large your existing SAM is? And how much of these new products could potentially increase your SAM? And also whether you expect a meaningful contribution throughout this year?
Rafi Amit, CEO
Ramy, you continue with that?
Ramy Langer, COO
We look at our SAM, and we estimate today at about $800 million and those products will definitely increase it. I believe once we launch them, we will definitely go beyond the $1 billion mark.
Kenny Green, Investor Relations
Okay. Great. Thank you so much. Okay. Thanks for that, Brian. Our next question will be from Jamie Zakalik of Bank of America. Jamie, you may go ahead.
Jamie Zakalik, Analyst
Hi. Can you hear me okay?
Rafi Amit, CEO
Yes.
Moshe Eisenberg, CFO
Yes.
Jamie Zakalik, Analyst
Okay, great. Thanks for letting me ask the question. Some of your semi-cap peers highlighted supply issues in late December that impacted Q1, some of them even up to 10% impacts. Does your March quarter guide assume any sort of impact from supply constraints? And if not, what is Camtek doing differently from peers to mitigate these supply issues?
Rafi Amit, CEO
Okay. I think, in general, we organized our purchasing inventory maybe more than a year ago when we started at the beginning of this problem. We increased our inventory and ordered all the raw material items at one time. I think we have a very good operations system that works day-by-day. I can't say that we don't face issues and challenges at times; we have to find replacements for some components. But overall, I believe you can see in the results that our inventory is increasing, one reason being that we have to place orders for some raw material items even a year ahead. In the past, we didn't place orders that far in advance, so I think we did it on time and we manage this effectively day by day. For now, we believe we've managed it successfully, and hopefully, we will continue doing it in 2022 as well.
Jamie Zakalik, Analyst
That's helpful. For my follow-up, you mentioned higher gross margins in Q1 on a favorable mix. Which applications are most accretive to margins? And do you expect those markets to have faster growth throughout 2022 so these higher margins could sustain throughout the year?
Rafi Amit, CEO
Moshe, do you want to answer for that?
Moshe Eisenberg, CFO
Yes. While advanced packaging has a good gross margin, it hasn't changed compared to previous quarters. The difference lies in the specific product or deal mix we had in the first quarter, which led to a better gross margin.
Rafi Amit, CEO
And did you quantify? Is it still within your long-term range, or is it potentially above that?
Moshe Eisenberg, CFO
Our typical gross margin varies between 50.5 and 51.5%, as I mentioned earlier. This quarter, we expect it to be higher. Overall, we are making efforts to enhance productivity in our operations to improve the gross margin. It's too early to determine the extent of this impact for the year. However, our visibility for Q1 indicates signs of a higher gross margin.
Jamie Zakalik, Analyst
That's helpful. And I'll squeeze one more in here and then I'll jump back in the queue. But I wanted to ask some follow-ups about the $20 million design win. Can you give any color on timing? Was anything recognized in Q4? Is it all going to be recognized in 2022? And also, geographically, do these wins help expand your exposure to the U.S. and Europe markets?
Rafi Amit, CEO
Well, first of all, this win relates only to 2022. From that point, it has nothing to do with 2021. No doubt, as we mentioned, this is for the higher-end applications of advanced packaging. These orders are very important. Obviously, we are careful about sharing specifics about customers' names and regions, but these are two leading IDMs and they are really at the very top of the list.
Jamie Zakalik, Analyst
Got it. Thanks, guys.
Kenny Green, Investor Relations
Thanks, Jamie. Our next question is from Charles Shi of Needham. Charles, you may go ahead.
Charles Shi, Analyst
Hi. Thank you for taking my question, Rafi, Moshe, Rami. Maybe the first question, so a follow-up on the $20 million order you announced earlier. You said it's targeting the most challenging applications coming from two of the Tier 1 IDMs. I know you probably are not going to name the customers, but can you give us a sense whether the IDMs are in leading logic or memory or automotive industrial or like your traditional market like a CMOS image sensor? Some end market color would be great.
Rafi Amit, CEO
Charles, we are very careful about naming our customers. What I can say is what I said previously; it is indeed for the very top names on the list. It is not related to memory.
Charles Shi, Analyst
So maybe the second question. I look at your order announcements history. It seems like every year at the beginning you have good visibility into the first half; maybe by the end of March, early April, you start to make new announcements on orders, and that could contribute to Q3 of the year? My question is, based on what you see in terms of the ordering, are you expecting a similar pace in how your order book is filling up, especially for Q3 this year? And I have a follow-up after this.
Rafi Amit, CEO
Ramy?
Ramy Langer, COO
Well, I'll tell you Charles, it's very hard to compare because the mix is different and it's difficult to look at the year before and compare it to this year. I think we said the order flow, the applications, and the market trends are all very healthy for the first half, and we are starting to see a nice buildup of applications, customer inputs, and backlog into the second quarter and the second half of 2022. It’s too early to give the whole picture of 2022, and this is very typical for the type of business we are in. Our customers usually provide shorter forecasts and visibility compared to WFE, but no doubt, we’re experiencing a very healthy first half.
Charles Shi, Analyst
I understand. I have a quick follow-up related to the second half. Historically, you've experienced steady growth throughout the year, with a few exceptions like 2019. I'm curious about your current thoughts since ASC mentioned a generally linear growth for their business. I’m not sure if that reflects your business situation as well, but are you seeing a similar seasonality pattern or revenue profile for the remainder of 2022? If the second half is expected to trend differently, what factors will influence that, and what indicators are you monitoring?
Ramy Langer, COO
First of all, what differentiates Camtek from this market is the fact that we have 130 customers. We cover a variety of segments that grow at different paces, so it’s hard to say. I think we indicated in our prepared notes that we see growth into the second quarter, and we are confident about that. Things are building positively, but it’s very difficult to give a more accurate projection at this stage. That said, we are just getting a great start for the year.
Charles Shi, Analyst
Thank you, Ramy. That’s all from me. Thank you.
Kenny Green, Investor Relations
Thanks, Charles. Next, we’ll go to Gus Richard of Northland. Gus, please go ahead.
Gus Richard, Analyst
My bad. Sorry. Thanks for letting me ask a question. In advanced packaging, can you give me a sense of how much is high bandwidth memory, how much is heterogeneous, and how much is fan-out, just a relative mix?
Rafi Amit, CEO
How much is it from a mix? I'm trying to think of the numbers. I would say that first of all, I want to clarify this; when you look in the quarter, it's a little misleading. If I look at the entire year, there are broad applications in the advanced packaging and this would probably constitute a big portion among different customers. It’s a significant percentage in the overall business of heterogeneous integration. The fan-out is also very significant. However, high band memory is a little smaller in magnitude, and then we have a lot of different smaller applications.
Gus Richard, Analyst
Okay. Got it. Got it. And that's just in terms of advanced packaging, correct?
Rafi Amit, CEO
Absolutely. We are talking just about the 50% of our business that is advanced packaging.
Gus Richard, Analyst
Got it. And then could you do the same slit: foundry OSAT IDM? In terms of advanced packaging just to give us a sense of where the revenue in that bucket is coming from?
Moshe Eisenberg, CFO
Well, this is a little bit harder for me just to give you this number from the top of my head. But definitely, IDMs represent an important portion. Then come OSATs, which are essential because there are many of them, and they cover several applications. Some of them are not high-end applications in advanced packaging but still, the quantities are large. It would be very hard at this stage to give you an accurate number or indication.
Gus Richard, Analyst
Got it. That's super helpful. Thanks. And then I'm just curious about your front-end applications. Is that currently dominated by discretes or compounds? Can you give any color on what sorts of front-end customers you have?
Rafi Amit, CEO
Well, the portion that we do is more related to the back-end of the line of the front-end. So here you would see a variety of applications from trailing edges to leading edges. It will be both, not just one. This encompasses many applications. This area accounts for about 20% of our business. The compound semi portion is about 15% and this is also definitely growing. A lot of it is related to automotive, silicon carbide, but there are applications such as LIDAR and face recognition that utilize slightly different materials, but still remain within the same market segment.
Gus Richard, Analyst
And then in the 10-K, do you disclose year-end backlog? And if you do, can you give us a little preview of what that might be?
Rafi Amit, CEO
No, actually we do not provide that in our 20-F, which is the equivalent of a 10-K for US companies or foreign issuers. We do not disclose any backlog information. We typically do not provide that in our conference calls either.
Gus Richard, Analyst
Okay. Fair enough. Thanks so much.
Rafi Amit, CEO
Thank you.
Moshe Eisenberg, CFO
Thank you. Gus.
Kenny Green, Investor Relations
Thanks, Gus. We’ll now go back to Jamie Zakalik of Bank of America for a follow-on question. Jamie, you may unmute.
Jamie Zakalik, Analyst
Thanks. Thanks for letting me ask a follow-up. I had a question on OpEx. It looks like it's starting the year pretty high based on my calculations, maybe in the $18 million range. How should we think about OpEx throughout the year? Is this the quarterly rate we should be thinking about? Are you guys going to potentially grow it sequentially each quarter? Basically, how should we think about it throughout the year?
Rafi Amit, CEO
Well, without referring specifically to the number, I think what we plan on OpEx is pretty flat quarters. We do not plan to increase much above and beyond the increase that you already see in Q4 and Q1. So it will be a relatively flat OpEx level throughout the year.
Jamie Zakalik, Analyst
Okay. My last question is about the visibility you have now for the year. If you had to rank the applications based on their growth potential, which ones do you think could grow the fastest and which might see slightly slower growth this year, specifically across advanced packaging, compound semiconductors, front end, and so on?
Rafi Amit, CEO
So let's go back. No doubt, front end is 50% of our business. It's a robust growth area with several segments that are going to grow very fast, and we’ll enjoy it. Specifically, we talked about heterogeneous integration, fan-out, and the transition of DRAM to high bandwidth memory. These three trends are strong and will be dominant in 2022 and I believe into 2023. The front-end segment is very strong and will continue to grow. We have a solid backlog for the first and second quarter for this segment. Similarly, the compound semi, which is about 15% of our business, also shows continued growth. Those three segments are definitely strong.
Jamie Zakalik, Analyst
Okay, thank you guys. Congrats on the results.
Rafi Amit, CEO
Thank you.
Kenny Green, Investor Relations
Thanks Jamie. Our next question is from an unidentified analyst. You may go ahead and ask after you unmute yourself.
Unidentified Analyst, Analyst
Hello. I just wanted to understand if the margin of the research and selling is supposed to stay, I see that it's kind of lower than the other areas, and I wanted to ask about the future. If you see this continuing?
Rafi Amit, CEO
You came across unclear. If you can, please repeat the question?
Unidentified Analyst, Analyst
Okay. I just wanted to ask about the margin of the research and development costs and the selling and general administration costs? I show that the margins are lower, and I wanted to know if in 2022 it will continue the same margin like it was in 2021?
Rafi Amit, CEO
Actually, we did say in previous calls that we are planning to increase R&D and sales and marketing. The company is growing and in order to support growth, we need to invest more in R&D and in sales channels. So, what you have seen in the fourth quarter, you will continue to see in the first quarter is an increase in this level of spending. After this, we will see more of a flat R&D and marketing level for the rest of the year.
Unidentified Analyst, Analyst
Okay.
Kenny Green, Investor Relations
Thank you. If anybody else has a question they would like to ask, please raise your hands. And we'll give a few moments to call to see if there are any additional questions. So we have a question, no we do not, or we do have a question from Alan Lars. Alan, you may go ahead and ask.
Unidentified Analyst, Analyst
Hi. Thank you for taking my question. You talked about the introduction of new products that are supposed to be in the coming quarters. Could you please provide some details about it? What kind of products are planned to be introduced? In what areas? And what's the prospect of selling them in the coming year or two?
Rafi Amit, CEO
Okay. I can mention that we continually talk about new products. It’s almost every order we get there are some special developments. Many times, we develop products and features based on the order received. So we have many new products that we launch all the time. We don't announce every single one of them. Only when we move to a new platform or something major, we clearly make announcements. We’ve always said that we plan to launch innovative products in 2022, which means we will definitely see some new platforms with more features on the Eagle and new platforms. We anticipate launching a lot of innovative products next year. Over time, we will provide explanations regarding the purpose of these products and what we expect from them.
Unidentified Analyst, Analyst
I had a follow-up, and it's related to the R&D intensity. We saw in 2021 a significant decline in R&D intensity because of the robust increase in sales while R&D was relatively flat. This speaks to operating leverage. To what extent is this sustainable? Is there a need to go to higher levels of R&D intensity to support future growth or the prospects of new innovations?
Rafi Amit, CEO
Let me clarify your statement. Certainly, R&D last year should support sales, and most of the R&D efforts were to support sales. But while supporting, many of the efforts are what we call long-term product developments that we planned to launch eventually. It takes time to come out with a totally new product or platform, usually, this is a multi-year project. The demand for accuracy takes time, and we have a dedicated team working on long-term projects. We have many innovative products coming, and mentioning that we've launched the fourth generation of the Eagle; we developed many features of site inspection, side edge inspection, back inspection, and various sensors. While we haven't made announcements about every single one, our customers are well aware of our capabilities and product offerings.
Unidentified Analyst, Analyst
Thank you very much.
Moshe Eisenberg, CFO
To answer Alan's question, R&D spending last year was somewhat lower than we had hoped because it took us some time to hire skilled engineers. We needed time to bring in the right people and reach the expense level necessary for our growth. However, during the fourth and first quarters, we have successfully increased our R&D and sales and marketing hires. Consequently, you can expect to see a higher level of R&D expenses in 2022.
Rafi Amit, CEO
Thank you, Alan.
Unidentified Analyst, Analyst
Thank you.
Kenny Green, Investor Relations
Okay. Thanks. That would end our Q&A session. Before I hand back to Rafi, I just want to remind everybody that in the coming hours, this call recording will be uploaded to Camtek's Investor Relations website. With that, I would now like to hand over to Rafi for his closing statements. Rafi, please go ahead.
Rafi Amit, CEO
Okay. I would like to thank all of you for your continued interest in our business. Again, I would like to thank all our employees and my management team for their tremendous performance and we look forward to continuing it. To all investors, I thank you for your long-term support. I look forward to talking with you again next quarter. Thank you very much, and good-bye.