ACMR - Earnings call transcript Q1 2019

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Operator

Good day, ladies and gentlemen, thank you for standing by. And welcome to the ACM Research first-quarter 2019 earnings conference call. [Operator instructions]. I will now turn the call over to Mr. Gary Dvorchak, managing director of The BlueShirt Group Asia. Mr. ahead. go please Dvorchak,

Gary Dvorchak

The remarks. Thank also financial joining during website, quarter prepared performance after on from portion closed released everyone. website, investor on call well the supplemental as XXXX. on we'll slide to that our results as yesterday. market U.S. discuss for services. the our is you morning, reference available us our There's for Newswire today's We release a Good of the posted first deck

On me officer; Wang, Feng, vice Interim with the and chief president Mark finance. and and David call Dr. are today officer, chief McKechnie, Lisa executive of CFO; president accounting

continue, turn please X. Slide we Before to

might represent Let for remarks may during me predictions, call ACM's the you looking. future. this made that These forward-looking considered current be forward information judgment statements estimates remind that include, or other

of ACM's forward-looking the only provide reflect non-GAAP basis this date compensation. not revisions stock-based obliged Certain and with to of statements described risks could of statements. are place filings ACM's which factors risks to actual they call opinions on update risk the be financial any Commission. Exchange on undue results, ACM on a call. of Those you under uncertainties this However, materially. as reliance to forward-looking we are do these will Please results the and that not Securities is in differ elsewhere subject in cause these which and excludes

CEO, With reconciliations the let turn refer David GAAP should me You our amounts. our for over results, press to that, Wang. to call between GAAP release and non-GAAP our and now

David Wang

today's call. everyone welcome And for Gary. Thanks,

we excellent XXXX. revenue products. into to We first are ECP delivered new a or and to plating the to growth, It the is momentum greater introduce electrical continue We off a quarter. solid profitability, key start

a the operating tools grew cash. than Revenue ended last XX.X% production quarter include demonstrate of the over up Product revenue the operating more margin gross competitive We year, solid leverage and another double year technical with million expertise. would recognized our period deliver strength million, scale. $XX as differentiation of margin which XX% $XX year. results of of and shipment year from XX.X%. First-quarter Total where the same

portfolio financial operational about good addition, progress made products of completed a technology At quite to a we we which would Orders a results, two planned were show we moment. and In March, the to strong, a in SEMICON talk with quarter. in all China more launched ACM unique I electroplating delivers.

first we X. Now I will the quarter, From slide go to highlight three achievements. operations

new become typical of Tahoe saving customers than can also $XX meet the Reducing more tremendous a advanced cleaning eventually We faced the major three around used delivers empty Tahoe month. post around notice. environmental positive. a million savings. Tahoe customer the help will quite move patent product excellent well an later from the using a is Tahoe Tahoe by First, estimate on deliver our We the is oppose important first use we the cost the are the wafer of are solve tool seeing customers, a we evaluation sulfuric benefits, typically Ultra-C that other competing environment mainstream tremendous offerings requirements testing acid is year challenges product world. and unplanned that the in to Because tools. as on interest believe action now use Feedback We facts in customer differentiated track of wafer on for cost Tahoe an example will Tahoe acceptance Ultra-C and to for we prospects. year. one strategic and customer clean. protected or single per acid several cleaning of hand single as sulfuric tenths our by by focus

products and redistribution plating AP stands area ECP Ultra out also is SEMICON electro- die technology ultra application, Slide proprietary ECP Advanced deliver range backhander more by at of Furthermore, for This AP, wafers AP the fabrication X. is Packaging. Second, product including [indiscernible]. delivers in ECP a uniform nickel soda tin, to advanced plain The tool before we better the the mantle a show greater solutions level our solution at due assembly This to efficiency, the and packaging wide March. a packaging. support layer, layers process. China Their two technologies. on fan or for AP, bumpy copper, Caterpillar, match AP first will incorporating introduce bump, a throughput used yield, Ultra higher

acceptance ultra for Ultra fabrication technology process ECP XX in also electrochemical nano plating plating proprietary for wafer at ECB wafer for new in delivering products week's and the order this first our excited Market thin MAP This We the and coming in to of customer. seed We by for used tours and a copper solutions. purchase In repeater from single And Plating. to we is Partial demonstrate our tool high-performance the to introduce commitment tool Multi interconnect markets growth of key gas proprietary ECP our advanced We XX a the nano, our cost one stands two deliver, major our copper performance water we tool. The Ultra back a represent front deliver packaging the improved this foundry We're feeding in [indiscernible]. to months. is leadership mission nodes cleaning capitalize. tool MAP first MAP. QX, order from advanced plating the other They new innovative are in AP use layer. technology for tools, the our one by ECP deliver Anode about applications. This for offers tool purchase is customers. quarter MAP believe a position opportunity critical palladium Ultra in of us, received promising. new great already two for great ECP

Slide remains products team our X, and through are strength. productive innovations new our additional research on is on electro-plating engineering we new Beyond show working solution, this as

standing our mounting order our are in upon We need need. further competitive to investment in our

in quarters ahead. product the tuned more from stay announcements So for exciting us new

Third.

remaining as new a QX. Slide common of Shanghai in date production factory A for Our as shown majority X. on a plan new is

For ramp, QX, new the new All in for and QX handle We the to we expect of new comparison the on all intend be factory will regional used full over development substantially XX% factory small Based production demand will course be production. XXXX. our the on in our the factory in and activities. advanced factory to to support made beyond. tools, ship

our win new expanded ability to large our our believe and will to customers. we forward, Going capacity support scale production efforts

our will which a achieve us goal factory shows commitment to the Our major our in capacity scale new player industry. help becoming of

a to want Before I over call broader the industry. few Lisa, the about to words turn I say

the monitoring trends the are We industry in just spending everyone like else.

based While we another in semi-industry solid XXXX our volatile, about customers. is of optimistic are year orders capital growth spending on from a

and so our orders of a are capacity. cycle. have of production to their on based several Most customer tied internal impact the in less the our expand and customers. up early by investment We to forecast They're firm though of a top products plan, ramping specific as stage multi-year

and to PC example, production ramped. our improve XD it one tool is a how For line yield of being is using NAND in

in and On is customer build excellent Furthermore, adding can effect as actively fab billion cycle we to out we have room capacity is of products meters all [indiscernible] the stage. a fulfill new we're we we X by years body Today, of dampen speak. which come. a example new in MID conclude, believe we their delivering of grow plenty dissipate Another order position addressable expansion. at To the a over planned have generation of next to market. for multi-year

capacity. a We customer have a proximity large technology leadership to and production

to solid our We we customer tools three most line. advanced strategic architectures. a who as a And with production industrial foundation to the build at in world deploying a some win new semiconductor advanced around of progresses nodes a customer and more dimensional a have skier expect their are

discuss to the now more call results over detail. in Lisa, turn who will financial me Let

Lisa Feng

David. And everyone. Thank good you, a day,

All Almost to financial first are comparisons the state discuss Our our last highlights outlook. I all review back turned and to against and period same the then year. David otherwise. figures of quarter

I'm non-GAAP comparable last financial night guide results results earnings directly the a see Please discussing release. of results. reminder, most for financial the compensation to stock-based non-GAAP the reconsideration excluding As financial

will our prior reconciliations yesterday. we $XX quarter. XXX%. customer shipments that tools was periods. X-K shipments end the and The the cleaning shipments as single tool. the You website. in by equipment in current compared a year-ago $XX.X the find with also And are tools demand the at our start solid Revenue to acceptances $XX acceptance. first in will was Total quarter, back driven a that for $XX and it X, of Growth Form SEC a to were up had last posted where reorganized pending shipped million Investor as Slide the and Relations section with the including to on the the plus revenue Please had shipped the go a our million, exhibit in we Total we wafer customer quarter, including revenues. million million, report filed

in prior-year December period normal on margins. two quarter. XX% first XX.X% Gross a to was due our XX%. increase XX.X Gross quarter expectation tools XX.X% of higher We for to deliveries. certain was a high with solid the the expect margin compares was the in a of based the second This our year SAP the the a in commanded repeated which which ago, two concentration elevated and shipments and significant margin in to demand

was and were on million, development. Growth We expenses manufacturing in last million, and the XXXX. expect same primarily million vary the Operating operating million expenses investment $X.X due same year, in a a million, of quarter product year. in $X.X to utilization. period operating by last GAAP new $X.X last down to continue up X% operating of as income from basis $X.X mix, was expenses compared $X.X loss increase from to period the Non-GAAP the first was a $X.X in driven we they're GAAP to quarterly down million the operating gross margin from quarter. product our R&D, the

to year, Our a XX.X% our in stronger X.X% dollar. million the same a margin $X.XX, compared income $XXX,XXX due million loss of quarter. ago. diluted $X.X income approximately the in same Non-GAAP million based to $X.X and year, the working expenses quarter quarter. $X.X the per foreign income was a versus to of share and last non-GAAP compared last net was R&D net to the million net period. Research our XX.X% was a was year loss GAAP last exchange impact income a in and compared last of period. year-ago a was non-GAAP diluted compared operating Non-GAAP quarter. compared to of million million. Stock $X.X capital compared net margin of loss income quarter. to Non-GAAP last net $X operating ACM And resulting the was $X.X net year-ago -XX.X% the year. to loss the GAAP million, XXX%, million, last the was net quarter operating Other non-GAAP income million in $X.X compensation $X.X of net $X.XX, $X.XX was to $X.XX The $X.X the per of year, last GAAP the versus XX% the of income last treatable share a

quarter in review ended $X.X the million was with essentially quarter over last quarter X will the I Now million cash We with borrowings, We a outperformed million quarter. $XX.X short-term quarter. $XX.X the flat the sheet. ended balance

inventory inventory. let due quarter. million, a fourth compared to to -X as to acceptances The shipments good flow the with discuss me ended a the was first strong We in the customer to $X.X million, was the intended inventory to decrease the fulfill million flow exceeding to $XX.X operation primary was demand. million quarter the increase the finish quarter. of to a Cash $XX decrease cash during two quarter from Now expected due

We also use cash with payables. to to deal do this

call from for back will to year. cash the discuss expenditures operation David, X, I positive to turn were quarter outlook. and $XXX,XXX. the our full now expect Capital We flow in a

David Wang

the Thank slide Lisa. to X. go Please you,

our pleased with are We results.

our We the are from semiconductor market. forecast in optimistic strong customers. monitoring and we as are But trends broader receiving are orders production

production are a customers, business and excited committed our new more to by with products, share remain prospects We and new steps. gaining

strong maintaining continue a We existing of demand up our We'll revenue highly the our XXXX. which for the customers. year XX% are full for to reflects million expect guidance from

our are Importantly, to major growth To new and improved participating visibility executing solid orders solid a for the of show in during that strategy, due we the customer conclude, a our full-year QX. [indiscernible]. we our are results forecast

semiconductor We strong remain of market. vision new beyond. deliver to are achieving to to become year in a factory, We ramping production at major the and committed we in We player our forward results of a and our continue continuing deliver new and products. look innovative this to balance equipment

the Let's for you now call Operator, that have. any please ahead. may open questions go

Operator

now Ladies will you. and we begin the session.[Operator gentlemen, Thank Q&A instructions].

from question comes Capital. from first Suji Our Roth DeSelva

Suji DeSelva

Hello Congratulations the all David, progress Lisa. on here.

question first is on So question is inventory. the--Hi, my David. first My on the

the up what visibility non the you sequential there dynamics a goods much backlog pipeline down there kind to based the the talked dynamics went up, just so the the quarter finished be given quarter. quarter on of up rebuild. inventory strong and an for the in have overall goods inventory second bit about elaborate expect you're finished You but inventory Can building came and the on went second you

Lisa Feng

inventory went much have quarter revenue of and a the higher. Quarter then quarter revenue that $XX Second about quarter, the the quarter for in strong the in X, will about X, up substance shipment we participating lot are X. forecasted finish the and well shipment. be high million, as X, reason in we go for we as the demand And realized that

Suji DeSelva

Okay, then remarks prepared did to you. rebound so it Lisa. did And the I ask That's nicely. clear. want helpful, detail in you this cover shipments Thank be to on David,

with not plans forecasts memory customers macro have. ago everything have you as the Given months of environment, versus seeing or across any moving logic. you the along three the Or any are customer changes capacity just or perhaps changed

David Wang

so Actually delivery is existing no this with moment. time, almost changing customer far order with and our

away phone As much--be deliver moms this and and see look don't our tool year, customer QX, pretty And phone call last for earlier call. much Delia we existing I mentioned the might I asking this the from we in even now had changing are one moment seen QX, when customer. have their their

looking as expansion customer plan some just some for. probably in plan mentioned year and their plan So before, about a production killed their I scale. we're and for and looking our customer their is their expanding It customer to capacity yield

Suji DeSelva

and curious lastly, customer Well, the new that's sap the existing there then or good at Tahoe it of the And new product. are Tahoe SAP's it's taking an existing the the a and there is I of today how or are base rate. ones product stores if customers the so, news. prospects Tahoe attach capsules is. and I'm about is same if whether it--are one the to one not if customers notion is David are tools how to to think ramps. Is

David Wang

first Actually, customer. is to in Tahoe Tahoe, our our existing customary integrity invasion

the for interest we tremendous. also from of the reason Tahoe attention thing there customer for potential ship testing. and Tahoe interest So and same is we showed high the is tool. The because that the tool show tool site we gather obviously, receive a and their also now in the showed existing and other other there for initial the customer customer tool And the

their fundamental demand So CV core or could GAAP. customer a pressure our in that's ask their their and fundamental we performance this if

right. concern your Following

of As you is in ad we probably Can the a read new of chemistry process see probably I the chemistry be any most there. one all can the neutralized. call sand the

severe customer with protection. a and However, only reduce are cost for That's really on acid a to Tahoe for it you lot tremendous only think be sulfuric we that right more to mostly That's to Again, reduce usage. the important, expecting reduce putting a pressure a will moment, just treatment. be neutralize dump of ground. tremendous we not sulfuric our reduction will go the acid, to sulfuric deep pressure the you a concern cannot field has deal have acid

Suji DeSelva

many of would there that it. the a notion every is for about stool SAP think Tahoe I or David, is tools solve how not way

David Wang

like market aside market as that Tahoe we're about high Actually billion. price this and a you take should size it of market product. I to and can million, And big almost for $XXX is very opposed [indiscernible]. at XX% saw the expect applications paying or about moment, post as all we We and market. a a [indiscernible] actually most also roughly there asked order I expectation their as most this to $X

Operator

from Our next Quinn from [indiscernible]. comes Bolton question

Unidentified Analyst

to the us some you updates. give wanted up Tahoe, follow I if Ultra-C wondering I'm on

Tahoe, think delivering January. QX, tool in then I revenue in you tools you additional here recognize you to talked customers QX it in this for eval least that will be Tahoe. Do delivered about year. from other And second the interest question, expect second quarter for of three at you the

David Wang

doing are tool time testing we right a Actually, question. and as their right iconic customer a general in shipping now a first two initial now. line Good there's

expecting out build timeline. new in probably marketing or with to proving that their come , more obviously and a will come those gathering data to out. will QX I'm data there And be other So aggressive and And data the customer.

of So end the ship can to a Tahoe to customer, tool additional the year their tool we either give existing shipping we repeating their new this year, or or expecting probably to maybe next customer. tool

So basically, a Revenue next of million part the the quarter projection, the be in sales. would I revenue will expect in can but what XXXX much not year. she year come $XXX in

Unidentified Analyst

new the And question tools. then similar electro-plating for

revenue mentioned tools tool. end in those March of Are the eval the in the shipment front or packaging of quarter. those tools You'd advance one are shipped X for

David Wang

repeat [indiscernible] Great. call this Okay. AP tool packaging Actually is the right that order. the

existing our base be shipment. the repeat revenue revenue will recognition, upon So to customer order to the on sale, recognized

first existing our is revenue tool covering I'll show either issue This end for tool our and can connect ACP MAP you the recognize our is year. the upon customer. which that front which we application. is shipment to So for Then

process. to for six say one than a first as year tool. even sometimes the new validation will longer through the evasion year probably tool process, The months this or new go I tool. So should one typical

So XXXX. probably I well actual revenue the year call will plating regular the MAP not the until

Unidentified Analyst

And you of a about then saw business coming that the of if just more really order also through XD current demand foundry order customers. some and strength market. talk QX, could strength. you noted nice from the uptick at you in from you Is that wondering participation talked Are expansions capacity your first in shipments quarter DRAM in by the side seeing your and NAND in the

David Wang

very and all organize busy And tool month manufacture a also we're of the their Great. up are portfolio order XD much QX this the tool, foundry. this until customer even and pretty way receive we that we Actually the full to NAND put you QX the a wait pretty And including of web see on slots. timeline a a this in shipment and QX DRAM, most month. QX customer or QX pretty time for in a balanced. in and in divided. this or banners It's like last

Unidentified Analyst

for just margin can electro-plating what us in question electro-plating the gross compare last new business. or some the Is sense you. you the about line to on thinking how give When corporate then Queen of the those it And the you of margins side the me look Thank with average the tools, at to that be tools. does tools. the how

David Wang

which violence a the put with also MEP a margin. end the B within tool. that for there of they're production. company are front It's the range month one should the and margin a an You anyway early of high-end plating and the actually for have a couple forecast look application in I packages our and that's say in application a you and gross leading not margin is--I a is copper got regular the connectors

give our good waste acceptance. So, improving the to backing and us customer as deploy pretty scale it's a a to more margin

So the tool. anyways technological both innovative

Unidentified Analyst

David. you, Thank Great.

Operator

Thank you.

line of Miller Our Mark Benchmark. next the comes from from question

Mark Miller

in stand me where customers on the terms tools. of and evaluations you customers Can new tell current and any you

David Wang

have plating to is in packaging coming And tools some talk obviously there repeat evaluation. couple especially previous Well, has for our tool as the fall. of it other a order as tool, and advanced won't you'll well out shipping be evaluation. we about small mean I see is that connect mapping packaging the QX timeline. also answer just any mentioned to we And this a the we are tool by Tahoe also

as And that some new invasion too. is new existing or as I recognizing a and I can tool. revenue we're customer a Well their to mean see or customer. of the evaluation this other as tool tool keeping the mature tool new to as our maybe tool procedure

going So we're QX, expecting to tool there in be be there's to also evasion in continue QX timeline.

Mark Miller

factory in your And new that that terms and how margins. of absorption or terms curious about overhead. What factory factory help in of plays just margins. hurt Does one the our

David Wang

New full factory, right spacing wider had obviously, assembly. clean now. much final and which the efficient we a Also more on area

us the on So our I'll and guy how manufacturing also much and is as and there say quality and to high increase should come their more also our course somebody spacing on convenient, And we give the it better and also margin really give more their of more of a their for load a to increase tool. depends increasing, loading of we tool I wider efficiency our has efficiency that work capacity, as margin. margin would

Mark McKechnie

here. year on Mark just the add We're we're XX% I something on gross the XX% margin front. to talking not McKechnie margin. still the throughout might

in up of better hope if product margins margins both course, some mix term have some the impact absorption products. And from and bigger a longer drift to the certainly newer we'd you on I can scale term. think for near our our at look of

Operator

[indiscernible]. instructions] comes Our next [Operator question

Unidentified Analyst

to or either tools great have David a fab start tell a by Tahoe the follow year. the on guys you Ultra-C XX,XXX quick XXX,XXX be starts. two can would I just many wafer Congratulations ups. us in

However, is the easiest. MAP the

David Wang

XXX,XXX wafer tool estimate. on the load we FAB. to our about take it rate of from DRAM That's of their that between anywhere talk FAB and too. number XX Let's the example Typically, was XX

Unidentified Analyst

the can Perfect. for what ASP product that you be. And typical would us remind

David Wang

other different acid real pricing combination. than father Obviously, chemistry even CX, say configurations chemistry range. a dependent or has And as sulfuric or his you so different add a

probably range. $X their talking about million $X we're to about million there over think range I

Unidentified Analyst

about visibility. give of ways then And comment would you of little any clarity but details or be quarter appreciated. give there a clarity improved couple any about during visibility improved been it's your asked it's just bit you on the could whether from different know [indiscernible] lastly that I a more visibility can further type your increase Perfect. other

David Wang

lots the call. earnings there's in Obviously,

be some hasn't verbal as appeal to due has real have to people customer after receiving QX most some more at materialized. of moment, But on the by clear QX. over a We this mentioned also of you We is we're to time kind before told has us. and lot LOI the their maturity oh that QX, and deliver

are year. we also QX. and QX in busier. this busy, shipped going our been even obviously But revenue based our busy and really some and tool them recognized and thought a spot out And very spot be still there some we is is So this open on quarter QX of there to some which year has the forecast is QX, last

$XXX fully So revenue a are where about confident in we million XXXX.

Unidentified Analyst

Fabulous. Thanks, other no questions.

Operator

at questions I'll [Operator the hand to further time. instructions] Please No now continue. David. this call back

David Wang

you, And all and thank operator. Thank for call support. for today's on your participating you

upcoming is we events. going relations please. Gary Before mention Gary, close, to our investor

Gary Dvorchak

host Conference in Investor Thanks the On David Craig-Hallum will meetings with May Institutional . Minneapolis. XX,

attend conferences meeting This concludes or schedule contact Cross only, at June so we a respective Attendance your want In call. addition, again. to in Thank the for please meeting. Sector you one-on-one these the one-on-one Boston. Conference host sales Insight all, invitation representative if from on XX, will you is people

disconnect. now may You

Operator

Thank and sir. Ladies that our for you, gentlemen, for participating. concludes you today. conference Thank

may You now. disconnect

ACM Research (ACMR) 11 May 192019 Q1 Earnings call transcript