We will be hosting a conference call for investors at 9:30am ET today, February 8, 2017, and all are welcome to dial in: +1 888 668 9141. For those that miss it, the recording will be available on our website a few hours after the call, and Seeking Alpha typically transcribes it.
We wanted to provide a short summary of the results, and look at some of the highlights.
It was indeed a great quarter, and actually 2016 was the best year in our history. Fourth-quarter revenues were up 14% over Q4 last year, coming in at $29.3 million, which was in the upper quadrant of our guidance range ($28.5-$29.5 million) and full year revenues were ~$110 million, up 10% year-over-year.
The first quarter is seasonally slower and the weakest of the year for us because it includes the Chinese New Year. This is a long holiday that always falls in the first quarter and slows business significantly in China and elsewhere in Asia, the region where a large portion of our revenues are generated. However, despite the holiday season, we have seen an unusually good start to 2017, and we expect continued strength in the first quarter with revenues at around or even slightly higher than the fourth quarter levels, representing year-over-year growth of 20%. All signs point to another year of solid growth for Camtek, driven by continued double-digit growth of our semiconductor business.
Our revenue strength has been driven primarily by strong performance of our semiconductor business and in particular by systems for the advanced packaging market, which is one of the fastest growing areas of the semiconductor manufacturing industry. This is due to the significant improvements in performance and efficiencies, as well as cost savings it can bring to semiconductor components at current technology nodes (given the current chip gate sizes).
Looking ahead, another growth engine that we believe will benefit us in 2017 is from our investments in the past year in advancing superior 2D semiconductor inspection technology and capabilities. We believe this will allow us to capture and increase our market share in the 2D inspection space (we are already the lead supplier in the 3D inspection segment).
Another growth engine that we have identified for 2017 is our new software solution for managing semiconductor manufacturing yields, something that some of our customers have requested from us. We are selling this product under a partnership with a leading company in this space called BISTel, and we believe this will already start to contribute to our results this year.
Our other business segment, inspection for PCB, remained solid overall. This business segment contributed 27% of our revenues in the quarter and 28% in the year overall. In the fourth quarter of 2016 it showed strength that we expect to continue into the first quarter of 2017. We won some new key accounts which potentially will open the door for further growth in the future.
Looking further down our income statement, our gross margin was very good this quarter at 45.8%, at the high-end of what we have seen over the past few years, mainly due to product mix. A significant factor, which already benefited us in Q4 and will benefit us ahead into 2017, is the improvement we have made to our operating cost structure by reducing substantially the expenses of the digital printing.
Overall, in terms of profits, we reported a good fourth-quarter operating income of $3.0 million (10% of revenues), which is the highest reported quarterly level in 4 years (non-GAAP; GAAP was $2.8 million). Full-year operating income was $7.9 million, the highest level in 5 years (non-GAAP; GAAP was $6.6 million).
Fourth-quarter net income was $2.5 million (non-GAAP; GAAP was $2.3 million) and for 2016, net income was $6.2 million, the highest level in 5 years (non-GAAP; GAAP was $4.7 million).
In summary, the end markets of the semiconductor space where we focus are all growing robustly and analysts expect this to continue in 2017. We aim to capitalize on this growth and continue our solid performance in 2016 into next year.
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