Q3 2025 ACM Research Inc Earnings Call

Good day, ladies and gentlemen. Thank you for standing by and welcome to the ACM research. Third quarter 2025 earnings conference. Call currently all participants are in a listen-only mode. Later, we will conduct a question and 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 now. I'd like to turn the call over to Stephen paleo managing director of the blue shirt group, Steven, please go ahead.

Which we released before the US market open today, the release is available on our website as well as from newswire services. 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 are CEO Dave Dr. David Wong. Our CFO Mark mckenley and Lisa Fang, our CFO of our operating subsidiary. ACM Shanghai.

Before we continue, please turn the slide. To let me remind you that the remarks made. During this call, may include predictions estimates or other information that might be considered. Forward-looking these forward-looking statements represent acms current judgment for the future. However, they are subject to risks and uncertainties that could cause actual results to differ materially. Those risks are described under a risk factors and elsewhere and acms filings with the Securities and Exchange Commission. Please, do not Place undue Reliance on these forward looking statements, which reflect ATMs of opinions, only as of the date of this. Call ASM is not obliged to update. You on any revisions to these forward-looking statements, certain Financial results that we provide on. This, call will be on a non-gaap basis, which excludes stock-based compensation, and unrealized gains and losses on short-term Investments for our Gap. Results and Reconciliation between gaap and non-gaap amounts. You should refer to our earnings release, which is posted on the IR section of our website and on, slide 13 also, unless otherwise noted

The following figures refer to the third quarter of 2025 and comparisons are with the third quarter of 2024 and with that. I'll now turn the call over to David Wong. David

Thanks Stephen. Hello everyone and welcome to ACN third quarter early conference call.

I'm very pleased to report another strong quarter for ACM Revenue growth, 32% year-over-year to a new quarterly record reflecting.

Broader demand across our Innovation product portfolio across industry, Ai and data center investment are accelerating semiconductor. And wafer Fab equipment is spending, AI is also demanding new Innovations, many of which have yet to be developed. We Believe

this Trends are driving in the market toward us.

ASM strategy remains a focus on building a multi product portfolio, of world class tools, like expander, our service market, and the play, a critical role in enabling the next generation of cheap making

Technology for panel level packaging and we plan to ship our first system in a fourth quarter.

In cleaning, our high temperature. SPM platform is reaching industrial leading performance as our proprietary nozzle design achieving performance at a 19. Nano particle size down to single digit particle counts. We believe this will lead to higher product yield.

For our customers further, with no need to clean the outer chamber. The tool requires significant lower maintenance. This is truly world class tool and our team has road map to even lower particle. Size down to 70. Nano 50, Nano and 30. Nano to support the next field. Generation technology nodes.

In track with shift, our first kif High, throughput tracks platform. This quarter further, broadening our reach, into the lithography adjacent applications, which demonstrate acms, the ability to grow into new product categories.

together with the Innovations such as

Nitrogen, bubbling cleaning and edges, and a high temperature furnace, discussed last quarter, this at the advancement, reflect ACM commitment, to continuous innovation and the, the tangible performance Improvement. We are delivered to customer

in September. Our ACM Shanghai subsidiary complete, its second capital Rising on stock market, we see net proceed, approximately 623 million

ACM has the technology, the customers, the capacity and Global reach. And now additional Capital to pursue our mission to become a key supplier to Major global

Semiconductor producers.

This funds strengthening our balance sheet and will be used for additional investment in our lingo mini line and to expand our Global Production capacity. We also plan to accelerate our R&D investment. This will advance our existing cleaning and electrical plating tool for Next Generation process.

It will also speed up the development. For our new product categories, including furnace PCV, track and panel, level, packaging, tools. And we also investing in new products that we have not announced, not announced yet.

ACM is committed to world class.

Product for both China and Global customer our tools enable Next Generation devices, architecture, and help solve our customer complex process challenging across from and back-end applications. We have a world-class technology and a strong, it position customers around the world come to us for our technology rather for low price. We believe this is the right combination to grow our business and maintain our growth margin targets. We feel that ACM is now a infection point in which innovation will win the game and drive significant shifts in the market share.

Now on to our business results, please send to slide 3.

For the third quarter of 2025, we deliver revenue of 2069 million up to 32% year-over-year.

Humans were too sick. 263 million, upper 1% year-over-year gross. Margin was 42.1%. This was at the low end of our Target due in part to product mixing inventory, provision and other adjustment. There's no changes to our Target Model range of 42 to 48%.

We ended the quarter with a net cash 811 million US dollar versus 206 Million last quarter, and 2059 million, and a year end of 2024.

Now, I will provide detailed on product, please send to slide 4.

Revenue from single wafer, cleaning Tahoe, and semi critical Canadian tool, grow 13% and represent 68% of total revenue.

We believe our top bottom cleaning portfolio, is a world class and put us in a strong position to gain additional share both in China's expanded to a global market.

The 13% year-over-year growth was mainly from our traditional cleaning products.

Cm haho and super critical CO2 is still fairly small. We expect this new platform in special SDM to contributing more Revenue in 2026 and Beyond. We estimate a incremental opportunity of more than 1 billion dollar, for those new cleaning products from the mainland China Market alone,

we remain confident in our Target for 60% market, share in China market and we expect a higher growth rates for cleaning next year and Beyond,

Revenue from ECP furnace and other technological 73% and represent 22% of the total revenue.

We had a record Revenue quarter for ECP front end tool, which we represent about 60% of the mix for this group. This group, including our map map plus ECP 3D and ECP G3 products. All of which grow from last year, ECP back and tools were about 40% of the mix for the quarter.

Revenue from furnace was a small for their quarter and a year to date. That said, we are making good technical progress, across a range of a customer and a multiple product offering this including our ultra high temperature and new furnace, which operate at the more than 120050 degrees C.

Our lpcvd oxidation.

And ARD for both thermal and plasma. We continue to focus on qualification and the key customers and we anticipate incremental Revenue contribution from foreigners in 2026.

And as I noted earlier, we are seeing very strong interest in our panel. Level plating tool for the Vance packaging from both China and the global customers we were shipped our first panel level packaging tool in Q4,

Revenue for advanced packaging, which exclude ECP, but including a service and spell was upper 2031 percent and represent the 10% of Revenue.

About 2/3 of their this group for this quarter is small tools for advanced Packaging.

This including coder developer at a steeper and were level packaging tool that around

around 5 UK to 1 million dollar each. We had a good contribution, the quarter from a handful of different customers.

Although we include plating products.

For advanced, packaging in the ECP group and combination is very powerful.

It appear, it provide ACM is valuable insight into the challenge.

Challenges of Next Generation packaging as AI drives industry towards 2.5d and 3D integration stacking Dyer with the through silicon via PSV, and the integrated memory and the logic in a single Packaging.

We also ship the advanced packaging tool in Q3 to 2, new customer in the US. And we expect the installation and then 2 Acceptance in next couple of quarter.

We are making good progress with a new track and PCB platforms. I already mentioned the shipment of our first career track tool,

We believe our high throughput.

Design position. This platform to complete effectively with the increment in incubator suppliers.

Our proprietary pcbd platform with 3 trucks for chamber gives the flexibility to support a wide range of processes with the same Hardware. We feel good about our positioning as a team. Continued to work through the technical detail with a few tool in our lingo mini lab running wafer test and the Eva tools plan to ship in the near term.

To close on product. As in the C culture of innovation continue to deliver industrial leading performance across the broader portfolio.

Customer engagement is deepening as a team maker look for partner that can enable their next Generation processes.

Please send to slide 6.

Global WF.

Depend continue to be filled by investment in Ai and data center infrastructure, particularly in advanced logic and memory. While China Market in our view remains stable,

Estimate 2.5, billion dollar contribute from China and 1.5 billion from Global markets.

Next, let me provide an update on our production facility.

First is lingam, please send to slide 8, a Leo income production and R&D Center is now fully up and running the site's first.

building is already in volume production while the secondary

providing additional room for future expansion together.

The 2 building can support up to 3 billion in annual output position. ACM to meet growing customer demand and support our long-term growth plans.

We plan allocate part of the proceeds from ACM Shanghai, secondary Capital racing to expand our mini line and linggong to strengthen, our process development capability and enable on-site customer evaluation on the Fab like condition.

This will accelerate product validation, shorten developer cycle, and enhance collaboration with the key customer as we expanding our portfolio of next generation tools.

tend to,

our Oregon site, please send to slide 9

This facility will allow customer to test wafer locally on ACM tool and will serve as our initial base for production and Technology development in the United States. Our Global customers are encouraging by our commitment, which we believe will help them to choose ACM as a key supplier to scare production,

Now, I will provide a outlook for the full year 2025. Please send to slide 10.

We have a narrow our 2025 Revenue, Outlook to range of 875 million.

US dollar to 925 million versus prior range of 80050 million to 950 million.

This imply, 15% year-over-year, growth and the Middle Point.

We made a greater progress with several major product line, this year, including single wafer, SPM Tahoe, Pano level plating, furnace track pcbd. We believe this new product, providing a solid foundation for multiple major new product cycle.

For the continued growth in the coming years. Now, let me turn the call over to our CFO Mark who were revealed detail of our third quarter results. Mark please.

Thank you, David. Good day, everyone. Please turn to slide 11. Unless, I know otherwise I will refer to 9 gaap. Financial measures, which excludes stock-based compensation unrealized gain loss, on short-term Investments. A Reconciliation of these 9 Gap, measures to comparable. Gaap measures is included in our earnings release. That's otherwise noted the following figures refer to the third quarter of 2025 in comparisons or with the third quarter of 2024, I'll now provide financial highlights, Revenue was 269.2 Million up 32%.

Total shipments for 263.1 million of 28% sequentially. And up 7% year-over-year, gross margin was 42.1% versus 51.6%. This is the low end of our Target Model adding color to David's earlier remarks reattribute this to 2, key factors, first product mix, our Q3 sales included, a high number of smaller front-end tools, which had, uh, Force margins, and that contributed about 200 basis points of the headwind to the gross margin. Uh, second.

We had a higher level of inventory provisions and other adjustments, which hit our cogs for the quarter. Contributed about 300 basis points negative impact. I want to reiterate, there's no change to our Target model of 42 to 48%. ACM is fully committed to developing world-class tools that enable our customers to scale production of Leading Edge. Semiconductor devices, we believe this creates a healthy pricing environment for our tools, which we combined with an efficient cost structure. It results in good profitability.

Operating expenses are 76.9 million of 56.3%, R&D was 14% of sales, sales sales, and marketing was 7.7% of sales and GNA was 6.9% of sales.

For 2025, we continue to plan for R&D in the 14- 16% range, sales and marketing in the 8% range and G&A in the 6% range.

In the 7 to 8% range. Net income attributable to ACM. Research was 24.8 Million versus 42.4 million.

Net income for diluted, share was 36 Cents versus 63 cents. Our non-gaap, net income excluded 7.6 million in stock-based, compensation, expense for the third quarter, and 18.7 million in unrealized gain on short-term Investments.

I remind the analysts that a result of the second capital raise of 632 million. Uh, net buyers, subsidiary, ACM, or acms ownership. In ACM Shanghai is now 74.6% versus 81.1% at the end of the last quarter.

I will now review selected balance sheet and cash flow items: cash and cash equivalents, restricted cash, and time deposits for $1.1 billion at the end of the third quarter, versus $483.9 million at the end of the second quarter. Net cash, which excludes the short-term and long-term debt, was $811 million, or about $12 per share, versus $205.8 million at the end of the second quarter. Total inventory net was $676.4 million, versus $648.3 million at the end of the second quarter. Raw materials were $326.2 million of $40.6 billion. Quarter over quarter, we made additional strategic purchases to support production plans and to mitigate any potential supply chain risk. Work in progress was $59.5 million.

Down 1.2 million quarter and quarter.

Finished goods inventory was 290.7 Million down 11.3 million quarter over quarter. Finished goods, inventory, primarily consists of first tools, under evaluation, at our customer sites, along with finished goods, located at acms facilities,

Cash flow used by operations was 4.6 million for the third quarter and 44.4 million year to date. Capital expenditures were 43.2 million for the full year. We expect to spend about 60 to 70 million in capital expenditures,

that concludes our prepared remarks. Let's open the call for any questions that you may have operator. Please open up the call for questions.

Certainly, ladies and gentlemen, if you have a question at this time, please press star 1, 1 1 on your telephone. If your question has been answered and you'd like to remove yourself from the queue. Simply press star, 1, 1 1. Again, our first question comes from the line of suji D Silva from Roth Capital your question, please.

Good morning, David Mark, go to the progress here. Um, can you talk about the shipments? Um, and the growth there. Are there any factors puts and takes in terms of what we should expect in terms of your visibility, the next 4 quarters,

Yeah, the as a shipment there, uh, we see there's some customer getting, you know, asking for delaying for the, you know, maybe the q1 next year and also the certain parts were shortage, right? We cannot fully complete the order.

Uh as a a man manufacturer final testing but those product probably were still you know getting into the q1 shipment and there was still expecting, you know, next year you know uh shipments still continue to grow.

Um, these parts charges David. How long do you expect that to persist? Is that a multi-quarter effect or is that?

Short term. Um, it's not really I think, uh, you know, the certain parts were using right now and they're, uh, what kind of, you know, replace some parts. What, what kind of and they're looking for new supplier and those thing has been uh qualified, you know, in their customer and process. And so those parts qualify I finish then we can use more of their

I want to say domestic and made in China parts, so that's probably a portion of their fact there.

I see, okay. Yeah. Hey, suji 1, other thing. Yeah. 1 other thing I'd add to the uh, to the shipments for the uh, for the quarter and and even for the year. Um, we talked about this before, but, um, some of the newer products, um, that we would be shipping a, you know, that David talked about in his prepared remarks, um, some of those, you know, probably a little more fell into is going to fall into next year versus, uh, versus this year.

Okay, helps Mark, thanks. And then my final question is on the, um, the panel tools. Can you talk about the opportunity as you, uh, ramp maybe into the hbm, memory, or AI memory, uh, opportunity? How how how much that can grow as a percent of revenues and, you know, how how quickly that can ramp? Thanks.

Wow. Okay, so if our panel packaging, right?

Panel business. Uh, we believe panel is a way to solving this large area, AI chip, right packaging with the hbm together. So, all the way for level is cut. A lot of, you know, I call the uh, area. So we we start efficiency of the using the area. So panel, packaging. The 1 key is a, a plating technology, right? Is, um, I should say, a lot of people in, in the, in the car plating for panel is a vertical style, and we are probably the first 1 proposed their horizontal and Kara plating for the panel. Uh, which is also we got the, uh, 3D inside the award innovation technology of award in front of USA. Um, we be, we are really have a good solution and they can play their panel uniformly. And there will be a few, uh, requirements of all this. Um, either 3 10 by 310 or 5,

515 by 510, uh, by the way, we're going to ship 1 of the panel plate in tool in the fourth quarter. And also we're we're engaging with multiple customer uh for the panel uh, packaging business and in Taiwan and us. And also, you know, in the in the in China in China,

Okay, sounds very exciting. Thanks guys, I'll pass it along.

Yep. Thanks.

Thank you. And our next question comes from the line of Charles Sher from

Needam and Company your question, please.

Hey, uh, good evening. Um, David Mark, um, a couple questions here. Um, the first 1, a follow up to, uh, suji's question on on shipment. Um, so sounds like, um, it's more of a customer push out and partly due to parts of footage. Um and sounds like the implied message. It seems like it's not a reflection of the ad market demand. Uh, but 1 day, can you kind of uh uh uh quantify a little bit that what's the expectation for Q4 shipment and um maybe on a full year basis as well? Uh, looks like a shipment probably is going to be down this year. This this is probably the first time in many years, you should manage that on a full year basis. Thank you.

David, do you want to take that or you want me to start on that? Yeah, yeah, go go ahead. Mark, you go ahead. Do it.

Yeah, hey Charles, so so I think your your Read's good. We're not really making a call on the end markets here. Um, you know, it's hard to say, companies specific versus and markets. Um, but but yeah, in terms of our shipments, um, the uh, you know, Q4 it'll probably be down from Q3. Um, so you know, you you could have the uh, the full year would be down, uh, year on Year and that is different than, uh, than what we had. Had expected. I think I would point out that, um,

Shipments, uh, were pretty heavy last year as we know and, um, uh, you know, some of the, uh, the the reasons that we talked about for the, um, the the deferments and shipments, uh, we should we should start seeing those picked back up in the first half of next year. Um, I think David in his, uh, prepared remarks talked about an inflection point, um, where you know, we're still shipping a lot of our, uh, our our current products. And and a lot of the newer products, uh, we expect to to really start kicking in and contributing more next year. You know, the SPM the furnace and uh this panel level packaging, uh, product line.

Yeah, actually, including web publishing a few P. PCV tool. And we see that, what we, you know, definitely contributing uh in uh, Revenue in the next year.

So, I, I think that there it's kind of a we're in the time of infection point, right? And the new product come out,

And also we expecting some new cleaning tool come out too to contribute in on their um our our shipment and revenue. Especially as I mentioned, this proprietary design and SPM special nozzle and reach a very excellent result. And which is a, you know, with single container gain a lot of market share, but SPM process

Yeah, and, uh, may I ask if the write down is related to, uh, inventory. You have

At your own facility or this is about some of the write down of the evaluation to evaluation tools at your customer sites. And uh, if the letter, uh, what's the reason for that? Thank you. Yeah, no, thanks for the question. Charles on that. So, you know inventory, uh, you you always have a pretty thorough process internally to, to kind of value the inventory on your books. And so, a big piece of it is is related to the Aging of our uh, of some of our raw materials. Um, and it's interesting uh we we think that and it's so it's just kind of a, a formula. You apply to the uh the age profile of your of your raw materials. Um and uh, on the other side. Um the you know, there were some uh some finished goods that that we took a right down on. Um and these were I think these were mostly uh at our own uh internal. I see these were tools that I'm pretty sure were that we had internally. Uh and so we're not really disclosing it internal versus um uh

end customers. Yeah.

Uh, great. Thanks. Um, um, so they, they might last question. Um, I think you, you spoke you, we probably have, um, uh, discuss about this along the same line before. But, uh, but you, you talk a lot about Innovation, but, uh, uh, develop better products than your

Global competitors, uh, Wing market share. Uh, but I, I think what I am hearing is the domestic customers. Probably more looking for

Simply matching the global, Baseline like a matching. What what? The global tools they already have for given restrictions given self-sufficiency, or all kinds of reasons. Um, at this point of time, um, like trying to do a lot of product Innovation, do you think you may be missing out some near-term opportunities? Uh, I understand. You said that you're going to win in the long term, but uh, do you think that you're going to? I mean, because your tool, even though it's performing better, maybe it will perform differently from their Global. Baseline your customers scope Global Baseline. Could you could that cost you some business in the near term? Thank you.

Yeah. Actually, uh, the the, the, the actually, you know, we are winning the short time, you know, in other words, I give this example, uh, this, uh, you know, uh, 5 minutes SPM process, right? And with all special proprietary design, uh, we can real control the other Pi temperature, SPM a splash out of the chamber and also the vapor, you know, into the into that environment. So therefore we control the environment very well, that's why I said, there are 99, Nano body, go down to a single digit number, you know, busy lesson, you know, 5, so it's

We are better than even top tier player, you know, today in SPN process also, uh, because we control environment, we think about even 79 or 59 or even 30 Nano we can control better. So, answer your question is, um, yeah, there's a certain domestic player going there. All these, you know, other, uh, first tier, you know, C, uh, I mean, uh, to a vendor, uh, still say in China. But there I said, we're in the best performance and also we think the, you know, the custom in China or outside China is still desire in the past performance. Right. Let's go to the small geometry, those 999 or 79 particle, real matter their yield loss. So that's why, you know, we think that we really gain our market share both in China or outside China. Yeah, we still strongly believe our Innovation product has been heavily bad patent in inner China. Also, you know, in global uh semiconductor countries

In the area. Uh, we have a confidence, you know, nobody or coffee our, our our providers, the technology or pattern, the technology. So that's why we have the confidence to maintain our. Our continued to increase our market share, maintain our gross margin. And, uh, I still think, you know, AI driving a lot of innovation and the customer desire new technology and every, you know, those customer maybe prefer more technology other than low price, right? So that's really

Um I think a strong point and also I want to see a lot of existing product cannot meet customer future requirement. And so that's another uh reason we have companies out

To.

Our next question comes from the line of Mark Miller from The Benchmark company. Your question, please.

Thank you for the question. I was just wondering if you give us some color on what you expect for mocvd next year and also uh, give us an update on what's going on with skynyx.

okay, well actually maybe uh meet a

I want to make sure this is not well, not make ammo cvd, or make a p cvd.

Okay. So anyway, uh, you know, PVD has the, you know, bigger Mark a lot of, you know, mortgage marketer, uh, size, uh, with the, you know, the PCV, uh, almost the phone 5 years ago, right? And we're choosing again, you know, Innovation approach and we're different from, you know, major player in the SPD, you know, 2 big player now. And for example, like our chamber has a 3 track, my other other people has a 4 or either 2. So we believe 3 Chalk in 1 chamber can do their, almost all the process and therefore customer buying 1 platform, we can do the, you know, almost every PCB process, right? And then, for other reasons, that we also have a lot of control a chamber power supply, or other differentiation come here. So we believe our pcbd will be uh, was shipping. You know, you know, probably 2 this quarter or can you ship me more next quarter?

And I want to see the other pcbd it's like getting into their uh, uh, market. And also expecting those pcbd, will be, you know, generator, uh, Revenue next year. And also we have a really high, uh, expectation. And those PCV are not only a service in China, you know, where we're expecting to go Korea and also, you know, go to Global Market.

If you can, uh, comment, please on on hinex and any developers, sir.

Chinese is our customer. Right is a long, long long customer, and will engage with the multi tool, like cleaning obviously, and also other product, you know, we're still thinking Kind real innovator, uh, you know, leading customer and we're continue to engage with them on Multi product right now. And they're, um, as I said, again, you know, a lot of our new stuff where develop right now, and they are very interested, right? And because they're, they're also leading all the HPM needing everything, right, you know, even the DM in the field, so their desire more of advanced technology.

Uh, also, we have a Korean team and the Shanghai team together. So, it's working very well, and a lot of our technology actually was invented and developed in in the Korea, too. So, that's really feeding, uh, you know, their their requirements locally, you know, manufactured locally R&D. So we still see a lot of our, uh, potential.

We can provide in good technology to our customer in Korea.

so is is the your your panel uh,

Packaging tool is out of interest to hanout.

Uh, yeah, not only packaging, right? Also you talked about front end too.

Right. And uh, you know, in all level of the engagement and including, you know, we talked about there are are are foreigners pcbd track and all other even, you know, product any developer.

What about your cleaning tools? Have you been able to penetrate hinu with the cleaning tools? So, well, we are, you know, we have a sad tool has been sold many tool right in hand already and now, obviously, we have a new new Canadian tool engage with them.

And why is our our property, you know, Angel body and Tool and which really take care. Uh you know probably more than 5 layer of you know 3D and that and the orders of 1 of the major application. You know we think will be contributing to their uh customers in the future uh 399 or technology.

Thank you.

Thank you. Thank you.

Thanks Mark.

Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Stephen paleo for any further remarks.

Contact your respective sales representative to register and schedule 101 meetings with management. This concludes the call, you may now disconnect take care.

Thank you, ladies and gentlemen for your participation. In today's conference, this does conclude the program. You may now disconnect good day.