Q1 2025 ACM Research Inc Earnings Call
Thank you very much.
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and Gary Dvorchak. Thank you. Thank you.
Speaker Change: Good day, ladies and gentlemen. Thank you for standing by and welcome to the ACM Research First Quarter 2025 Earnings Conference Call.
Speaker Change: Currently, all participants are in a listen-only mode. Later, we will conduct a question in the answer session, and instructions will follow at that time. As a reminder, we are recording today's call. If you have any objections, you may disconnect at this time.
Speaker Change: Now I will turn the call over to Mr. Steven Pelayo, Managing Director of the Blue Shirt Group. Steven, please go ahead.
Speaker Change: Good day everyone. Thank you for joining us to discuss First Quarter 2025 results which we released before the US market open today. The release is available on our website as well as from Newswire Services.
Speaker Change: There's also a supplemental slide deck posted to the investor section of our website that we will reference during our prepared remarks. On the call with me today, our CEO David Wang, our CFO Mark McKechnie, and Lisa Fang, our CFO of our operating subsidiary ACM Shanghai.
Speaker Change: Before we continue, please turn to Slide 2. Let me remind you that remarks made during this call may include predictions, estimates, or other information that might be considered forward-looking. These forward-looking statements represent ACM's current judgment for the future. However, they are subject to risks and uncertainties that could cause actual results to differ materially.
Speaker Change: Those risks are described under risk factors and elsewhere in ACM's filings with the Securities and Exchange Commission.
Speaker Change: Please do not place undue reliance on these forward-looking statements which reflect ACM's opinions only as of the date of this call. ACM is not obliged to update you on any revisions to these forward-looking statements.
Speaker Change: Certain of the financial results that we provide on this call will be on a non-GAAP basis which includes stock-based compensation, a partner which excludes stock-based compensation, and an unrealized game and loss on short-term investments.
Speaker Change: for our gap results and reconciliations between gap and non-GAAP amounts. You should refer to our earnings release, which is posted on the IR section of our website and the slide 13. Also, unless otherwise noted.
Speaker Change: The following figures refer to the first quarter of 2025 and comparisons are with the first quarter of 2024. I will now turn the call over to David Wang. David?
David Wong: Thanks, Steven. Hello, everyone, and we're come to ACM Research, first quarter, Ernie Conference Corps.
David Wong: We've adjusted completely another important quarter, not only in terms of performance, but also in how we are advancing our position in this global semiconductor industry.
David Wong: Before I reveal the results, I would like to highlight a few recent developments and reflect the momentum where beauty and the direction we're hitting.
David Wong: We were pleased to see ACM Research recently appeared on the list of the top 20 global semiconductor Equimentary Company for 2024 as a publisher by a leading third-party market research firm.
David Wong: That recognition reflects the steady progress we have made over the year, and the growing impact of our innovative products.
David Wong: In China, we estimate our market share in both wafer, convenient and pre-teen reach more than 25%, which we translate to more than 9% global for each product category. Let's speak to their trust.
David Wong: We have earned from leading customers and also strengths of product portfolio.
David Wong: A panel-level packaging tool received a 3D insight, technology, and environmental award. As a reminder, panel-level packaging is the next generation solutions for high-performance AI chip packaging.
David Wong: This award is yet another great validation of ACM commitment to delivery innovative and enabling technology to our customers.
David Wong: At the same time, we are all aware that global trade environment is shifting with new turf and evolving policies, we are operating in a more complex and less predictable environment.
Innocent New Period [inaudible]
David Wong: We think the strategy we set a force many years ago, developer award class tours.
David Wong: established on-dead and production in key countries where major semiconductor customers are located and the folks' self-effort on a global market becomes even more important for our future success.
David Wong: ACM is a U.S. company with the Deep Operations Transit Asia.
David Wong: We are in a unique position. We have rebuilt a successful business in Asia by delivering all the cost to all. As a multi-product company, we are expanding our tool, offering to better support our customer in Asia.
David Wong: We are now taking important steps to expanding our business into a global market. In the U.S., we are investing in Oregon facility, starting with the class 100, clean for wafer demo and R&D activities.
David Wong: And we are laying the ground work for initial production capacity in our Oregon facility.
David Wong: We currently believe this is the best way to reduce terrible uncertainty for the U.S. customer.
David Wong: and it is also a good business to establish production close to a customer.
David Wong: We believe that ACM position as the only US company with a full top to bottom Canadian product line combined with technology lab and the commitment to production in Oregon put us in a good position to take out the global market.
David Wong: Now, onto our business results. Please do slide three.
David Wong: For the first quarter of 2025, we deliver a revenue of 172 million after 13% over a year.
David Wong: Shimen, where 177 million, down 36%, we know that Shimen in Q1 of 2020-24 was especially strong due to customer demand, so this was another tough comparison.
David Wong: We anticipate a return to year-over-year shim and the growth in the second quarter.
Gross Margin was a 4.82
David Wong: 48.2%, exceeding our target range of 42% to 48%. We ended the quarter with a net cache of 271 million upper from 29 million in the year end, 2024.
David Wong: Now, I will provide a detail on product. Please turn to slide 4.
David Wong: Revenue from single wafer Canadian, Pao and semi-critical Canadian tours grow 18% and represent a 75% of the total revenue.
David Wong: Gross was led by a strong demand for our staff and table to platform, as well as continue momentum without your C.B. backside cleaning tool.
David Wong: In Q1, we qualify our high-temperature SPM tour with a leading logic custom in China and the achieved customer acceptance for our backend Babel Edge Tour from U.S.
David Wong: Looking ahead, in Knining, we expect to see a strong product cycle across high temperature SPM, Tahoe, and other Knining segments.
David Wong: We believe our top-to-bottom Canadian portfolio put us in a strong position to continue gaining share, both in China and the expanding of global markets.
David Wong: Revenue for ECP, Phones, and other technology equal 7%, and we present a 16% of a total revenue.
David Wong: We saw strong momentum in the ECP tool for advanced packaging, and we are excited about the initial response to a new ultra-ECP APP tool.
David Wong: As I mentioned before, ACM Ultra ECP APP panel level plating tool received the 2025 3D Insights Tagalology Abumant Award in the United States.
David Wong: We believe ACM is the first and only supplier to offer rotating or rental plating approach for the panel level of packaging.
David Wong: The industry is now aggressively migrating from wafer-level packaging to panel-level packaging as one of the leading solutions for the next generation of AI chips.
David Wong: The reason is simple. You get a better utilization with a square panel versus a circular wave.
David Wong: As a result, we are now experienced a lot of interest from several major players in the industry.
David Wong: This product highlights ACM technology leadership in both front-end processing and amongst packaging applications.
David Wong: We believe this will allow us to play the key role as global industry demand innovations to support even involving semiconductor requirements for AI. We further...
David Wong: For our front-end product, continue to gain traction. Our view is that, Mark is an increasingly high-temperature and neonion solution, particularly for power semiconductor IGPT devices.
David Wong: Our outdoor FN Vertical Furnace Tour is a proprietary quartz-based design that reaches temperature of up to 1200, 50 degrees C, without distorting the wafer surface.
David Wong: WBD, no other supplier currently achieved this temperature level in a vertical platform, and this is yet another good example of ACM technology leadership. We expect a ruminant contribution from our furnace product line, including LPCVD.
David Wong: Oxygenation, and ARD, so I consider being fully in 2025, expanding from a relatively small base in 2024.
David Wong: Revenue from Advanced Packaging, which is include ECP, but including surveys and the spell was down 10.5% and representing 9% revenue.
David Wong: We're making a good progress with a new track and PSVD platforms.
David Wong: Both of this product come with ACM innovative and differentiated platform.
Design that allow for process for flexibility and high throughput
David Wong: We had a solid list of ongoing demonstration and evaluation for both track and DCVD. For track, we plan to deliver our 300 WPH in my KRF Beta Tour in Mido 2025.
David Wong: for our new platform, Track and PSVD. We expect some initial revenue contribution in 2025 with more in 206 and BR.
David Wong: To rep up to the product, we have been on a strong growth path for the past five years with new product, including Paho SPM.
and a furnace in 2025.
David Wong: followed by our panel-level packaging tools, Track and PSVD in 2026 and beyond.
David Wong: We remain committed to a high-gross model for the next five years. As a reminder, our three billion long-term revenue target anticipate a 1.5 billion from China and 1.5 billion from the global market.
Next, let me provide an update on our production facility.
David Wong: First is the Lingam, please turn to slide 8 Our state of art, Lingam, production, and R&D center is nearly completed The site including two production buildings with the first now in production and the second now available for future expansion
David Wong: Each of the two production buildings can support up to 1.5 billion of their annual production capacity. Combined, we believe we can eventually support three billion of the production and link.
David Wong: Next, our Oregon facility, pretend to slide 8. As I mentioned before, we are investing in our US footprint.
David Wong: Our Oregon facility is a 40,000 square feet, where building out a demo lab in a creed room and the plan to add initial manufacturing to support our global customers.
David Wong: Now, I will provide an outlook for the full year, 2035. Please turn to slide 8, 310.
David Wong: We are maintaining our 205 revenue outlook in a range of 850 million to 950 million. This implies 15% year-over-year growth at the middle point.
David Wong: In closing, our folks remain on delivering differentiated emberning technology that will solve our global customer's most critical process challenges.
David Wong: Now, let me pin the call over to the Servo Mark, who are revealed in detail of our first quarter results. Mark, please.
Mark Mckechnie: Thank you, David. Good day, everyone. Please turn to slide 11. Less I don't otherwise, I will refer to non-GAAP financial measures which exclude stock-based compensation, unrealized gain loss on short-term investments.
Mark Mckechnie: Reconciliation of these non-GAAP measures, the comparable GAAP measures is included in our earnings release. Also, unless otherwise noted, fallen figures refer to the first quarter of 2025 in comparisons are with the first quarter of 2024.
Mark Mckechnie: I will now provide financial highlights. Revenue was 172.3 million of 13.2 percent. Total shipments were 157 million versus 245 million in Q1 of 2024 and 264 million in Q4 of 2024.
David Wong: David noted shipments in the first quarter of 2024 were especially strong during Customers' Mands, so this was a tough year on year compare.
David Wong: We also had some pull-ins in the fourth quarter of last year, begging for a tough quarter on quarter from a pair. For reference, combined total shipments for the fourth quarter of 2024 and the first quarter of 2025 still increased by 8.9% versus the prior year periods.
David Wong: We do anticipate a return to year of your shipment growth in the second quarter.
David Wong: Gross margin was 48.2%, versus 52.5%, this exceeded our long-term business model target range of 42 to 48%. We do expect gross margin to vary from period to period due to a variety of factors including sales volume, product mix and currency impacts. We do expect gross margin to vary from period to period due to a variety of factors including sales volume, product mix and currency impacts.
David Wong: Operating expenses are 47.5 million of 18.4%. For 2025, we plan for R&D in the 13-14% of revenue range, sales and marketing in the 7% range, and GNA in the 5-6% range.
and Gary Dvorchak. Thank you. Thank you.
David Wong: Operating income was 35.6 million down 10.6%. Operating margin was 20.7% versus 26.2%. Income tax expense was 2.2 million versus 4.4 million. For 2025, we expect our effective tax rate in the 10 to 15% range.
David Wong: Net income attributable to ACM Research was 31.3 million versus 34.6 million. Net income per diluted share was 46 cents versus 52 cents. Our non-GAAP net income excluded 9.8 million in stock-based compensation expense for the first quarter.
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We now review selected balance sheet and cash flow items.
David Wong: Cash, Cash Equivalents, Restricted Cash and Time Departments for $498.4 million at the end of the first quarter versus $441.9 million at the end of last year. Net Cash, which is a short-term and long-term debt, was $271 million up from $259 million at the year end of 2024.
and Gary Dvorchak. Thank you. Thank you.
David Wong: Total inventory was $609.6 million versus $598.0 million at year-end 2024.
David Wong: This included raw materials and working process of 310.8 million, and finished goods inventory of 298.8 million.
David Wong: Finnish Goods Inventory primarily consists of first tools under evaluation at our customer sites along with Finnish Goods located at ACM's facilities.
David Wong: Cash Flow from Operations was a positive $5.3 million versus a negative $9 million in the year-go quarter. Capital expenditures were $17.1 million versus $26.1 million in the year-go quarter. For the full year 2025, we expect to spend about $70 million in capital expenditures.
David Wong: That concludes our prepared remarks. Let's open the call for any questions that you may have. Operator, please go ahead.
Speaker Change: Thank you. At this time, we will conduct the question-and-answer session. To ask a question, you need to press star 11 on your telephone and wait for your name to be announced.
David Wong: To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.
Thank you for your time.
Speaker Change: Our first question is from Charles Shee with Need Him and Company. Your line is now open.
Speaker Change: © 2018 University of Georgia College of Agricultural and Environmental Sciences UGA Extension Office of Communications and Creative Services
Speaker Change: Good evening, maybe good morning, Mark David. My first question, I do want to...
Speaker Change: I asked you guys about shipment and figures. We understand, yeah, this is a very lumpy metric. You can't really look at it on a quarter to quarter basis.
Speaker Change: But I think one quarter go management that for the full year shipment, you're expecting shipment growth over last year's level.
Speaker Change: given that the pulling effect that from March into December last year.
Speaker Change: for the next three quarters. I did here in the preparing marks. Management has committed to Q2 shipment of young year growth, but any thoughts on the full year shipment, especially compared with the last year's shipment. Thank you.
Speaker Change: Sure, thanks Charles. And actually, you know, the last year's SHIM is really, I mean, extremely high, right? We're going to increase the, uh, compared to 2003, we're in more than 60 percent.
Speaker Change: So, you know, that high number, you know, that put a pressure this year. But anyway, I also a question directly. We're still expecting this year's shipment will over the last year's
Speaker Change: and they're probably, you know, one other as high as the last year, right? So that's their, you know, answer to your question.
Speaker Change: Charles, let me clarify that. So yeah, shipments we expect to grow in 2025 but the growth rate of shipments, we're not, we're not necessarily saying that the growth rate of shipments will be higher than the growth rate of revenue for this year.
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and Gary Dvorchak. Thank you. Thank you.
Speaker Change: God, God, okay, that's that's helpful color higher in shipment dollars compared with last year in terms of a girl's percentage.
Speaker Change: Feels like you're saying it's lower than last year, probably lower than this year's revenue growth, but still positive direction.
That's right.
Yeah, we'll see you all
Speaker Change: Thank you. Thank you. Maybe a question on the terrace. I know you probably don't have a lot of content imports from the US.
Speaker Change: but since China does put the pretty high tariffs on the U.S. imports,
Speaker Change: I wonder if there's any impact on the profitability wise or anything that could cause some issues for you guys going forward.
and Gary Dvorchak. Thank you. Thank you.
That's right in our tour.
Speaker Change: made in China and France. And so I think this is an important part of the U.S. and France or Paris, the China. I mean, not Impact Glass. I said, you know, we're going to spend more of it. I call it by more of our parts locally and also by, you know, third parties, countries, and France, right?
Speaker Change: And so, I think the impact was, it's a pretty minimize.
Speaker Change: But maybe I'll cost them all, right? There's a lot of different questions
Speaker Change: In terms of 2026, I know it's way too early for you guys to really talk about 26.
Speaker Change: Any initial facts there in terms of your growth, in terms of the overall market growth and any color will be helpful. Thank you. At this point, I know it's early.
Speaker Change: That's our job to want to push you to keep us up and more sure sure and actually you know that you know as we stay there you know maybe cover quarter
Speaker Change: And so we think at 2725, getting into the plato, right? This kind of plato stage.
Speaker Change: Yeah, I mean, this moment is too early to say it on your six.
Speaker Change: Even some people say this year down, you know, maybe 20% or 10%, right? However, we're looking at our revenue, our customer pocketed less.
The continued expandee.
Speaker Change: And so now, when you look at, you know, I mean, Archie Man, look at all their POs, we feel true Q2, Q3.
Speaker Change: and still something we need to feel cure for, but we're also to see some, you know, Shimo coming to cure one of next year.
Speaker Change: So, our growth strategy is, even say, China W. Market is a flattened, or is a, you know, plateau.
Speaker Change: As you mentioned, this ultra-high temperature neophosphate comes out. A lot of potential ITPT, of the kitchen in China, the demand high-temperature neophonus, right? 1250 degrees.
Speaker Change: It's really, you know, a champion, I call the temperature, we can do also without distorting of the surface structure.
Speaker Change: So that can be the continuous innovation product driving our growth.
Speaker Change: Further, I want to say a panel product, you know, where I mentioned today.
It's another bigger, I quote, growing for international market.
and also we see some demands in market, too.
Speaker Change: And plus, you know, we have for the other phonists, you need to develop them in.
Speaker Change: and their all-piece CBD and the track, especially the track we've got there probably middle of this year was shaping our, you know,
Speaker Change: Beta Tour, Caroline, 380ph, right to the one with the customer.
Speaker Change: So, I want to say our continuum momentum to have our PCVD and track and first join our revenue stream.
so it's still very high confidence.
Speaker Change: We're still growing and this market, you know, in our market share in China, so we still have a high confidence as we exclusion of being strategy, qualifier or new product, I'm still looking at the next five years, I go.
Speaker Change: I stated maybe Gary squeezing one more since you mentioned about good number of attractions on the new products.
Speaker Change: Yeah, please Charlie. Yeah, yeah, yeah, so there, you know, at Semicol China, there has been a lot of more product announcements from...
Speaker Change: And there's kind of heightened domestic competition there and we definitely are hearing rumors that there seems to be a likely consolidation for the Chinese semi equipment sector.
Speaker Change: coming up. So, I wonder if you have any thoughts there and where does ACM Shanghai stand in terms of domestic competition and potential consolidation with your peers. Thank you.
Speaker Change: Okay, well, let's talk about competition first, right? I think at ACM today, we've got a full product, right? Continuing to all and top the bottom, you know, basically we can supply almost 90, 95% process of the application. It was for the memory of the logic.
Speaker Change: So, we have a restaurant provision cleaning, right? Plus, same thing, cover painting, we cover almost all the cover painting products, right, damaging, and TSV.
Speaker Change: The Bones Packaging, you know, this, like a three-five compound semiconductor, and also panel level packaging. So I've raised some position for those portions.
Speaker Change: And more important, I want to see that is ACM, a real innovation technology, right? And
At the Wang's technology product, they're not only, you say, by pricey [inaudible]
Okay, so you're out of fans, you're there.
Speaker Change: We're not too much worried about no copier competing the price with us. I just said again, right? This is a real technology game, or technology winning game, not only by pricing.
Speaker Change: and so, you know, we feel our innovation product, you know, our IP protection and can avoid anybody carve your tool in China.
Speaker Change: And that's really our strong position, because our tour never copied anybody's tour in the tour.
Speaker Change: If we start copying anybody else, then, you know, then they can copy us, right? We have nothing to say. But now, actually, in last many years, we're really innovation and IEP with actions where a very strong confidence, you know, no, any, you know, appeared in China can copy our tool.
They're very strong full-printer technology.
Speaker Change: So that's our strong. The next thing you talk about is consolidation.
Speaker Change: Yeah, I think it's going to happen, right? This is Mark Happy in the US, in Japan.
Speaker Change: and they probably, you know, as they're in touch moving forward, a lot of some accompany probably have to be, you know, merged with the big eye.
Speaker Change: And so, I mean, we're still on a happen and then we love to see that happen.
Speaker Change: And there's so ACM was still, you know, very strong in the market.
Speaker Change: and this moment I said that we have a lot of organic growth with our new product. We can invasion the product we're doing ourselves. So probably we're not trying to, you know, combine or merge out of company growth in this.
Speaker Change: This moment most important was folks on own, you know, technology development, you know, are a product for you. There's a lot of revenue, you know, for us to gain a market share. So that's a big advantage. So Mark, anything on the air on air?
Mark Mckechnie: Yeah, now I think Charlie Charles, you brought up a good point and it's something that we consider a lot when you think about consolidation. Big picture, we have pretty aggressive revenue targets obviously you know we talked about a billion and a half in China and that's assuming very low market share for some of our newer platforms. [inaudible]
Mark Mckechnie: He's trying to step back and think about, OK, there will be some consolidation. Stay China is a 30 or 40 billion dollar WFE, you know.
Mark Mckechnie: The top ten players are going to be three to four billion dollars a piece, you know, we feel pretty confident we can grow to those levels organically I think is the point that David's David and the team are really focused on doing so it's
Thank you.
Speaker Change: As a reminder to ask a question you need to press Star one one on your telephone and wait for your name to be announced our next question comes from Kieran Haldane with surge equity research. Your line is now open.
Speaker Change: Yeah.
Speaker Change: Hello, Karen.
Speaker Change: We cannot hear your voice.
Speaker Change: Yeah Yeah.
Speaker Change: E Mail your speaker.
Speaker Change: Alright.
Speaker Change: Thank you seeing no more questions in the queue at this time I will turn the call back to David Wang for closing remarks.
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Speaker Change: Okay. Thank you thank.
Speaker Change: Thank you operator.
Speaker Change: Thank you operator, and thank you all of their participating to today's call and for your support before we close Stephen is going to mention our upcoming investor relation.
Speaker Change: Events, Steve please.
Speaker Change: Thanks, David before I conclude I just wanted to give everyone. A quick reminder, on our upcoming investor conferences on June 25th we will present at the 15th annual Roth London Conference at the four seasons Park Lane, London attended that conference is by invitation only for interested investors. Please contact your respective sales representative to register and <unk>.
Speaker Change: One on one meetings with the management team. This concludes the call and you may now disconnect take care.
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