ACMR - Earnings call transcript Q4 2019

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Operator

Good day, ladies and gentlemen. Thank you for standing by and welcome to the ACM Research Fourth Quarter and Fiscal Year 2019 Earnings Conference Call. At this time, 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.

objections, may any time. at have you please disconnect you this If

please I over The Director Dvorchak, call turn Blueshirt ahead. Mr. Mr. Now the Managing to will Gary Dvorchak, Group. go of

Gary Dvorchak

you Good quarter the our available fourth XXXX U.S. for morning, closed fiscal the a well that of everyone. on our joining on The to and also deck results today’s released from We yesterday. reference us results. market as will discuss our website call There’s after is Thank as remarks. supplemental our Investor posted during to website services. newswire slide release portion we prepared

On McKechnie; ACM the Dr. Mark and CEO, Lisa our Feng, Shanghai. of me call subsidiary, today the are Operating CFO, David Wang; our CFO with our

X. turn Slide we please Before continue, to

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

ACM uncertainties of differ they that Factors in However, risks the actual ACM’s under Commission. filings Those Securities and are materially. results not Risk which reflect elsewhere Please with as are statements. described cause forward-looking could place these of update Exchange the on obliged not statements, date to risks undue this only opinions and do these subject forward-looking to to ACM’s reliance and call. you is revisions on any to

be call certain a that Also this provide basis, will on results which of the stock-based financial non-GAAP on excludes compensation. we

press amounts. and between non-GAAP reconciliations to refer results our GAAP should for release non-GAAP our You and

begin Dr. with to call will me Slide who that, now let With the Wang, over turn X. David? David

David Wang

XXXX achievement ACM welcome Research. for growth year and of another everyone marked Thanks to today’s call. Gary and

delivered supplier position. mission a operational meaningful to financial great solid in semiconductor progress of results We industry. in major We have equipment ended and year for made the the capital a become our

me Let shown on our X. as accomplishments some XXXX Slide of review in

in XX% than additional with by We in non-GAAP operational flow reserve into and million equity We $XX of from the to was per private cash proceeds delivered grew performance an the ACM million more financial cash our earnings excellent. our ended of $X.X with $XX $XXX.X and First, share. topline funding of $X.XX Shanghai. million cash million generated year

of the showed to our for [ph] team running than our production winning manufacturing important we ship Second, achievement. were factors demonstrates new expertise. $XXX factory one more Throughout is million production our equipment able year two critical scale second of ran $XXX our to several operations we facilities business. of ability is million It an with which

customer the is Third, to world. customers. In base and IC China a to That local manufacturers. we near expanded total our September, A our X major to newest some are we first of fab advanced in advantage most player. new brought X DRAM delivered the our major tool the we that key front-end

important this the a world, to DRAM Wuxi, addition foundry SK strategically and Huali China SMIC and now the DRAM we customer, YMTC are to emerging NAND foundries. new Huahong local in the number player, growing In XD X are player supplying Hynix,

progress Fourth, introducing market in products on our making roadmap. we and products expanded R&D our new opportunity by other

review me during Let the progress our year.

plating ECP assembly a tool metal introduced more much metal we back-end shown uniformed delivers a performance Advanced layer advanced Slide QX new a is tools ap Packaging plating The X. for with at Level as few on in Wafer Ultra that First, better [indiscernible]. or

for that is more ECP is Anode applications. or and Ultra critical world-class as fab front-end becoming This XX plating interconnect Plating copper nano node migrate delivers Multi a map The Partial to tool below.

TAM This adds cleaning for of to $X market estimated have core TAM tools. in tools Our our million. billion ECP $XXX single-wafer

and revenue tool XXXX. in to are off delivered including We tools The a four them start. both of evaluation. first ECP the four great Our delivers

Next, to X. Tahoe, let's turn Slide

first delivers use. we half late environment sulfuric competitors, our that. acceptance in performance will last customer of the They year. on is but the believe XXXX to Our first confirmed This Tahoe achieved soon tool for that the production friction repeat follow in equivalent acid of track very results with Tahoe encouraging order just a and

We later rest is see in advanced are tool lead of optimistic Tahoe environment cost. year. the first our discussions customers We a are calling several with [ph] and the of the will advantage to orders this great in

North new and with Taiwan, Europe. We customers potential will America begin discussions in

TEBO. Next,

We great In of XD their QX small for during removal met TEBO confirmed on both our we damage-free big TEBO made and structure. technical XXXX. have requirements that particles progress lead with customer patterned

our result, higher fine was particles for for without particle TEBO removal cleaning a several with efficiencies qualified production tool damages. As steps

from We this leading repeat customer order see year. expect to this

platform. of Yesterday first This we is stress announced technology this in ap the combines product, new on Ultra polishing is advanced world. X. packaging. tool the SFP the We proprietary main its for believe one another Slide shown free SFP CMP electro-polishing The into kind and ACM

Ultra a to our CMP. and quarter delivered versus first of leading Chinese a ap wafer-level recycle building The electrolyte We system. by during reviews tool It SFP XX% conventional XXXX [indiscernible] packaging incorporates fourth customer. reuse the

recommend expect to upon We customer year this acceptance. revenue

general, our on are In line. we focused broadening product

cover our market. cleaning for our additional of in more as wet gaining TAM SAPS, scale tools and to committed grow XX% billion Tahoe as market are share of customer We gaining cleaning and the achieved TEBO ACM We our customers. $X production would tools. this than that single-wafer We believe estimate plus share

larger wafer to adding our new adjacent combination TAM. and of another markets SFP products also the a spend. of incremental $XXX million total products in estimate are We new ECP our address add to expanding through fab opportunities the more We even [ph]

of the strategic I the ACM more build will are we to discuss objectives. some on, to term now longer Moving making efforts achieve foundation

million raised we balance our in sheet. $XX capital U.S. added equity on follow offering the First, the to

and America, Southeast We are North regions, in the customer new Asia. in Europe deploying the the invest proceeds in to development including

sales a those push began also support growing in direct our significant We marketing efforts. to regions

framework expect definitive a to in entered XX middle agreement land from agreement region for acquire ACM the Shanghai, the complete our year By miles to land. rights headquarters. of Second, into we Lingang we

We begin new R&D and later a that this at expect factory construction XXXX. a to facility start end at center production initial of year of and

Finally, we market listing. for STAR Shanghai up our gearing are

listing are for two pursuing reasons. We the

we want to raise regional First, chain. our the and our profile supply with customers

local launch reached at Second, the $XXX [indiscernible]. capital million. $XX we this at independent meet We in China the added local million valuation. several raise listing, to ACM spend X.X% pre money requirement primary year want to of To investor market of the strategic our This op sold Shanghai for the attractive investors. we by of

to listing the the middle the and on track submit our of We transaction XXXX end for application year. are for the in price to

like the returned report of you work. which make a early than stocks to Luna none of the work took are from before on turn New over how unreasonable that thankful actions X. to February facilities, to Year impact situation operations at XX% our outlook. and both and and to I Slide arrive employees to Shanghai I in shown coronavirus on our back to We sure are the more Before risk proud took would to I our update Mark, back am

be with safe ensure to reported falling. workplace We steps cases of new appears number took a point, to upon COVID-XX At stabilizing also Shanghai this return.

an and chain to Our issue. our does supply be production appear staring to lines are now not back normal

We prepare heavy and QX. in are to capacity working for to manufacturing loading our QX increase

We contact particular our have with customers, been in constant in YMTC.

all uninterrupted YMTC you is committed and are they Luna of to first New many in operations continue and production. fully of the factory know, As through in scaling center fabs customers Year to fact are of after. their YMTC the and its Wuhan. run And our

have to close support a team in member We provide service local YMTC. to Wuhan

supporting We challenging YMTC have the been onsite times. during

day-by-day the situation a on basis. monitoring are We

YMTC shipped as YMTC into tool begins relax city appear am say quarter, fourth the our lockdown. We to but of operation number otherwise the to have recovering be to from pleased deliver the second its I the quarter with

Meanwhile, other and managing cities less been in returned customers work. affected to already have

business our become of with the normal to the factor to QX during return expect on business. operation constraints less a We

we looking remain As ahead, optimistic.

outlook current shipments X. on shown revenue virus. impacted and as Slide been by share me QX Let the our have

internal for include QX Although part from forecasts of strong business QX QX, demand growth. and our [ph] and are our significant demand shipped for

visibility good as to well due number orders acceptance. firm customer tools QX forecast, of and have awaiting as in We

year XXXX full Our is outlook unchanged.

$XXX We midpoint. expect million as we revenue represents to on to million announced the $XXX XX% January XX. This be in range the at of growth annual

based is on couple outlook Our important assumptions. a of

the First, steadily situation virus world. and in in to of rest China the stabilizes improve continued

assuming low customers. revenue end range and contribution from of the maybe the muted DRAM revenue Second, new recovering

dedication and continued employees this to Research. to for I section, my partners for I and shareholders conclude the To want would support thank and our our time. challenging thank their hard confidence their in work ACM customers, especially like during

control. Our on what entire we team focused is can

current enhance new are and We to investing products to R&D develop in products.

In our penetrate to in production fulfill building coming. demand global the the are wave are We scaling to sales customers marketing new capacity new order of are regions we we infrastructure. seeing and new

fast [indiscernible] deliver [indiscernible] profits and maximum profitability investment our current the balance growth. committed between that shareholders. the believe our As are with we to value We growing will to

in who I the the financial over will to will discuss more Mark call results now turn detail.

Mark McKechnie

another you, high a everyone. and ending with David, Thank strong good QX quarter was profitability. good day at note XXXX

ago. including at $XX sheet factory. exposure $XX year and We several good our with year a second our we grew key up million from on customer business million cash for the products significantly had year increased plating. metal ECP of our tools advanced We the full with new For market production share, expanded our closed balance

I measures Now these A to financial I'll comparable release. Unless will measures put included our in is note reconciliation refer some XXXX I details non-GAAP GAAP full results. earnings non-GAAP otherwise, our around to of measures.

shown for on basis breakout XX%. an full X. results our calls. on quarterly color our was the of on up and XX% highlights We customers will $XXX.X, provide year occasional annual Revenue First, Slide

which for on had three see revenue I now can you will As describe. XX% Slide customers XXXX XX, we

of revenue our penetration additional Wuxi Huali was customer at revenue by we to XX.X% contributor Huali of Huahong XXXX. versus XX% versus Huahong grew Wuxi. First, YMTC for XXXX. in a of Shanghai good expanded XX.X% largest XX.X% as in of in fabs accounted to factories growth XX.X% They

significantly, about subscale unchanged Our ramped during YMTC was level. XXXX the revenue Even was year-over-year, the tools increased the wafer at number to XX,XXX per starts our wafer of from due month month tools per from utilization XXXX initial expected per YMTC wafer the to its same of as though the month's year. production

both Hynix for years. half revenue versus SK Revenue contributors for SK second accounted in big a in SMIC Hynix first contributor larger to than due year-over-year. market XXXX. XX.X% XX% XX.X% fell less the the but and and SK revenues XXXX off in from to XXXX, DRAM as conditions. was up half in XX% challenging were of was JCAP Hynix compared customers

$XXX were a versus mix. shipments XXXX. above the compared to expectations was product XX% of year margin favorable million in This Total for due XX.X% normal million XX.X%. to $XX was Gross to our XX%

gross expect quarterly continue vary manufacturing on due a basis to to margin product to mix utilization. We and

XX.X% This compared gain to in fluctuations attributable a which Operating income and Net included million foreign or results. $X.X of release income or effect currency benefit million realized million. year was versus benefit nature. a on ACM Research of valuation the XXXX million the was to a includes $X Operating of a for ACM $XX.X of $X allowance two benefit million a from operating for considers the net tax year year our ago. margin million. one-time $XX.X income XX.X% $X.X versus was items

was share net Net $X.XX to This diluted and of the benefit includes income currency compared in share tax per discussed a for above, per as items. $X.XX XXXX. $X.XX

to quarter $XX the were Total XX, shown XXXX. and as quarter up on in $XX.X XX% due the million, Keep unusually of shipments shipments the from was number million quarter the For $XX acceleration XXXX. quarter million of mind been the of of Slide third from the quarter. of quarter versus ‘XX million a had XXXX in $XX shipments fourth fourth million revenue third fourth in strong, fourth

ago year was versus period. year Operating XX.X% up XX.X% the period. $X.X Operating prior was in XX.X% year was $X.X million, prior million from in Margin XX% period. income in the margin XX.X% versus the Gross

$X.XX tax Net in was This XXXX. currency includes a on income the Research release XXXX. of attributable from $X.X tax $X.XX income for the share to $X.X per includes million compared and a aggregate impact fluctuations items This diluted to benefit $X.XX and operations. our was an the currency in ACM benefit of versus of million million valuation $X.X for Net foreign quarter.

we'll the Now balance review sheet.

last $XX.X of XXXX. year. and balance cash The end up at end driven our the cash $XX.X million flow Our raised $XX was quarter, last capital million XXXX. the up million and the end in year of Cash August the of positive increase from of was from was free by for

restricted year-end. rounds. to ACM submit cash This We million be cash IPO its private proceeds we two the equity funding when $XX.X Shanghai in is held at from unrestricted application. our restricted China for will The

at borrowings from Short-term year-end $XX.X from down of of the $X.X XXXX. million the at at up were end million QX, $XX.X and end million,

Total inventory the to from customers. potential $XX.X the deployment year-end, a XXXX. million million grew addition inventory the at of third end positive year-end. systems at We $XX.X up of finished it Finished first of goods quarter, $XX.X as view was $XX.X end and million the to at as reflects of indicator, inventory goods at increase fool in the million

the for the full-year for Capital quarter, $X.X operations XXXX. from million flow were the for was million quarter for and million Cash the million $X.X $X.X year. expenditures fourth and $XX.X

we executing conclude, strategy. To our on are

of We fabs. IC the new are participating growth major in

are new continue to we innovative products. develop deliver production and and We ramping

We expansion our and of are opportunities positive in outside China on the China.

to committed major are our equipment mission We semiconductor to in achieve market. the become player a

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

Operator

comes go ahead. first Securities. from from of Our Instructions] [Operator Donnie question line Teng Certainly. Please the Nomura

Donnie Teng

you, And the and for year. XXXX my taking very outlook Congratulations shipment result. sales management question. this to first regarding on is question Thank strong our my

the like and calculated the million XXXX, shipment still So since accumulated I probably that third we of I sales quarter backlog. found $XX have

also is seeing is whether shipment the mainly very question. momentum This wondering is you. or a Thank this are growth if largely sales year? backlog strong I'm we this So my first by driven our intact year

David Wang

Okay. you. Hi, thank

there's last also were maybe year, this year, deferred revenue Actually, So year, estimated first, then go million for yes, then a and even like $XX I and Mark give will I will we pointing obviously. revenue this more. you're record out,

same than much even through also revenue more So seeing more year, the XXXX. more obviously, see by as year. we're last will projections, of all shipment I kind this be mind my in deferred

answer than if yes to anything to Hi, shipments more you question, your Mark So see we better more year. last have? add

Mark McKechnie

Yes, question. the for the only and David, add. would Thanks, Donnie I thing thanks

inventory million. So look goods of that, inventory, so at finished finished yes, the ended opportunity goods that's $XX.X at year reported cost. the you and if We the carried revenue so at

it's on we we value yes, as $XX see, adds of get kind could that million accepted the do to so. and a shipments you to products. it's, So you of know, obviously grow or quick to conversion And, to some revenue that said, take our expect about those we revenue David visibility revenue as

Donnie Teng

And question Okay of strong on us year mentioned applications coronavirus? as customer YMTC tell what of regarding to our like you you still great. second still despite kind this think, track. going Could my is growth is are is outlook. I

in and is growing Huahong their mentioned up, for think strong Wuxi is have YMTC earnings I as they So very and fab they call. ramping

out CapEx they nm of $X there. CapEx like capacity, billion But curious becauseSMICspent $X SMIC, XX spent the most I'm their of about is on billion

driver important nm other in from gross our purely us Tianjin also and is mainly or from their their wondering SMIC I'm from very if Thank XX SMIC for just X-inch growth fabs? So you. is or whether

David Wang

of see questions. Okay, bottom like we also too. the we have from XX year from continued Hynix, Wuxi YMTC investing thank fabs. from the second also type and you property and you fab transaction demand see some SK half demand for their nano also And right [indiscernible]. or Actually, we Their mentioned this initial from

that nano fab their research renminbi. too. in the to participate year of also also As that beyond Beijing demand with yes, And renminbi, R&D from get have they this a the XX-inch a for the SMIC, and matter lot [Indiscernible]

expect increased year I should in revenue more last SMIC from than be So year. this

Donnie Teng

Got it.

for is as SMIC well So like in XX-inch XX like basically in Beijing. fab both it from nm Shanghai, as

David Wang

Yes, that's as I see that. Yes.

Donnie Teng

last my customer. DRAM question it. to And regarding a Got is

that do So maintained our is you terms uncertainties amount as XXXX case, in end some you or…? I compared think most DRAM Under can still think sure. causing stable bearish coronavirus customer the U.S. absolute from dollar be with know, sales of for on demand

David Wang

clear did for technology like, our tool, certain do of advanced transition some is and moment, not more to is real They nodes. need capacity upgrade amazing. technology and they We more see certain this expansion right. I the very another say This from

waiting we right in matter were a this So as say, said now. And see half. we're we're of second coming real we orders for sign I that cautiously capacity and and expansion, I watching, should the still their did, carefully customer moment,

Operator

the Capital. questions. ahead. The Instructions] question next line ROTH of from for comes Thank go Desilva you Sujeeva from Please [Operator the

Sujeeva Desilva

know there. and Hi David. work safe to staff back good Mark is Hi, and to your

David Wang

Thank you, Suji.

Sujeeva Desilva

first can few that factors pricing about whether that Yes, elements question next the target, to in the persist talk will normal those or drove the and what gross above there quarters? margin, the revert on you are

David Wang

since said, Okay, still I next beyond which gross is self we combination or XX% we of a technology them. we combination really for so even Right? consider still the actually our year, last to Suji, maybe matter XX% tool are growing one the still year, I quarter, XX% our It yes, is as feel of margin is normal and range. our to the future, our with of is in this XX%. believe, range,

and still next year that accepted, the tools more margin the later, can higher, level. now, couple be as Obviously, thinking moving beyond ranges, I a right but some can when advanced lower, have be gross are think some year obviously, and we about year discussing for we're we

that? add Mark, that's assessment right to now. anything So our you want on

Mark McKechnie

a other. confident take But way lot quarter the you know our one long-term or margin It's our customer it are we some gross the very in mix can shift you model. yes, and well. every to of it No, mix covered just doesn't I product think variants, you have tools

Sujeeva Desilva

be the as in non-SAPS And on helpful color core stream Okay, your diversify the for revenue? revenue about that, revenue, of guidance then SAPS – we you there. XX the it's would mix you XX can are that talk the from a

David Wang

Yes actually.

Suji coming have and today, line last customer environment existing probably [indiscernible] multiple a toggle protected see real So of more product powerful we the can customer I can interested year, as introduced there as large right, see I for positive you and we repeat of year, in this the because we their on are product have quantity see this and and is mean that which we market order see being the that the also the and for Tahoe. to

Beyond tool there plating and also seeing that, I buying customer can tool that have see probably of is more front-end. also we and are both for the a back-end

you additional So seeing that to is $XX add million probably new are about sale. $XX the which know year, product, this beyond more all will add the together fabs you million

I potential, which so new growth new product customer our see additional and driving us And that's is revenue a stream. give gain

Operator

questions. the for Thank you

Next from from the question Craig-Hallum. ahead. of line comes Schwab Please Christian go

Christian Schwab

how many opportunity after execution extremely is for this first congratulations the great, the there? tools Hi, on acceptance one tools, Two at is time. challenging Tahoe solid many how quick questions,

David Wang

see Okay, Right? we and come customer, we possibly give few, the or have customer do great, time is more is will us right first repeating orders three customer from deal mean, that conditional customers. the which at least existing a Tahoe think I new Tahoe first I but a and deal, customers, our in interests have then

so by we recognize know, all the that two this expecting working, the deliver. we're about year mean, add But another and will see this for one, end year, and or I if right. Tahoe five not revenue four of tool four of we're and lucky, obviously, So you maybe this probably

can deliver we qualifying that for for on that year. So be the depends and this really new we revenue will and account the how how customer tools

Christian Schwab

actually Is that National estimates upside outlook begins Industry And the could I that about the Investment off local my as great. in capital your to IC investment your be Okay, solid to this or second question, second big think in marketplace? year Fund is phase to chip big China. the guys of for to flow the there kick then of supportive fund it's

David Wang

or and is mentioned couple [indiscernible] under Huali actually a customer know, for YMTC you boosting really called measures, – fab customers at expansion and it we or China the expansion you too. fab either new as building SMIC Huahong the actually plan, really Group plan, other and or and DRAM and times Yes they're the multi-year

obviously improving So customer and is the this expansion [indiscernible] give have our more to definitely the in they a founding be new we multiyear an of plan, will side us visibility and and opportunity.

cover I also gaining wise quality [indiscernible]. should that, fab Beyond the some say also it's the

So that new expansion fab new a or us we too. give opportunity will see

Operator

Thank you.

comes Ho Please Stifel. go ahead. question Next with Patrick the from

Patrick Ho

guess and Thank have of fine discuss of that congratulations, few and third terms now first you very months, that's it's you source prepared I and reason the deliveries you you you're pushing why you have the whether use in and the that and second gives the well. into Can some remarks is last confidence any the chain glad third that to system Maybe resolved of quarters. did on where much, mentioned part everyone to, don't hear what well. everything suppliers? over or supply And you out off potential going the disruptions it's second

David Wang

some the that from probably pouring outside which I chain and At Okay, probably probably supply come from distribution. in Japan less most XX% supply China from import supply I great, moment, Korea. And have in Europe, should probably for just are and XX% than from say of in call from our that's XX% chain our China EBITDA also we do major this line about from them and actually the first. U.S.

machine a China, two Right? obviously suppliers machine job. have this see you our and the on the supply see have moment not time, return that Until people chain line In we shop three months, in China We on the didn't last been to some time suffer. for - or shop know, gather delay. in months, are got do to At any already.

the tool - tool major YMTC, do manpower Wuhan they see QX cannot to suppose yet some So that's pushing Right? have was is the see That's the QX. as reason. they we is you QX the YMTC that so or in why go in subcontract, our to Wuhan pushed to to from ship that is the restrictions, our major obviously I customer QX their the

you supply that since lucky to kind our we few for of and are will months out coronavirus Japan to chain stable see know, see obviously, watch Korea and is hopefully and has stable. and we're in So, now spread Europe U.S. carefully going however a get we

we So moment. real cautious We feel and probably far for are call for it so I a long, okay watching. this imported components at

Patrick Ho

Great, you terms third color that's signed helpful. CapEx for for in how maybe XXXX? especially question year, bit going invest give much And get of CapEx a you this of Mark, little for and process you're you to a in there, the as on think facility the potentially begin can

Mark McKechnie

the Patrick, thanks for Yes, question. hey

CapEx know, and other you rate second floor $X at looking second million the XXXX, $X just at run factory million So our for is some production normal to upgrades. operations, it's to a adding we're what

normal our rate. of kind that's So run

and about did We production in R&D out Lingang. our site there talk the for new land

So we might can some the there year. if some we money that, reach down that, see putting on and this even we spend construction agreement site for on

when on million on it depending on million know the order to could $X land spending million of that it depends but on and starts. you when So, starts, construction, $XX exactly maybe be $XX of

Operator

Thank you.

question from Morgan Stanley. line from Next of Please the go Charlie comes Chen ahead.

Charlie Chen

and Nice you online. David Hi, Mark. meet to

ready your congratulations enter give you think X you the also X about and do great great Thank customers' to question will logic color could whether and really during overseas for [ph] environments. of the baseline you. higher customer for be to your your all, some foundry X us guess, opportunity? opportunity. So, you for nm My X baseline, of Can and current chance first kind so products? is is results I for So, you these nm to able your the nm performance please nm my question, execution change use it

David Wang

anyway. should you. thank not day each the Charlie, I do one really you, other I way, thank seen and Okay, have By

moment a the And about been for tier So of thank you the actually, you in customer. was a you and top industry. very have with know, ACM mentioned question. real the three, pool engaged this hard, top working has guy

give and our tier are vendor believe to $XXX even to year the employee me first let at top million moving revenue higher. guy, you the you So, ACM have for about more which we as this is right? certain be size, get the preparation, this also want We a one moment

are balance sheet for So call it process. also leading this, we having strong penetration I

So cash we we'll China get more from have also the of $XXX hopefully about end currently million and and year. this IPO

So is, demand, big be able spot we're to the the and right site that guys as I supporting see in guys to call big I it requirement.

and importantly X, enhance X, of have the a also SAPS the economical for be Tahoe, coming as as we those our the for yield critical definitely kinds especially spending, and technology yield guy their map we line confidence come nano improvement to [ph] their X their acid most smaller with sulfuric the of technologies and and to geometry - next So technology TEBO is and ramping up. will needed reduce for top is tier

very have confidence. we So strong

is a very working possibly we're- bring year matter this one we're one break And we're And hopefully and another we'll you'll customers and of these is this two time one year. a together, break hoping matter this year. more should And that over to but see of I hard. right can two have as even next

North on. in power, third, America. in So And that's strategy we also and actually our also hire force sales both Taiwan put high

power assume in very American market. U.S. additional our high sales to help There's we North and the what announcement one

on penetrate hard top said, So all anything will add and know, with to we're that want you you to those ACM tier be being customers. and very working positive Mark, that?

Mark McKechnie

- balance we're and the summarized everything it putting player, David, plans, no, do realize ACM resources pretty in here we some developing I broaden or product sheet become our capacity at line, think place is really to well. a serious major goals. we're mean, you to I our

Operator

Thank question ahead. Please from from Instructions] go Next of Mark the Miller [Operator line you. comes Benchmark.

Mark Miller

the for you Thank questions.

with situation the of I'm with situation customers, your some respect major in to to mentioned are just coronavirus, back they the but what's You wondering, normal? your

David Wang

thanks Miller. Okay,

actually - even As timeline. is, I YMTC – our production call manufacturing Wuhan, customer stopped full today. in they're I in Luna New Obviously, the they there the permission Year never the said in

As want reveal, they can a XD new matter of are - waiting if in. and get to Right? for move to a they people tool the install

Hopefully, they in install have that happen people those service tool. Wuhan worst still to without do we and possible. then probably this things service that kind I Wuhan is of guys they confirmation to install XX still case, And moving the can can about see I even and can guy have a

saw be the pace, You situation. but worst little and slow the may tool bit a case that's

cities like customer have Wuxi, other and sent to and SK normal in I Beijing their we and you those right visiting know become customer, Hynix can open now. there. and engineers Huahong are they far also our now, and have pretty you Wuxi, Huali, so Shanghai, to am that's but all our know In right SMIC going

Mark Miller

schedules any Just production customers the be adjusting XX% are may know second was smartphone this your in also wondering around about? quarter, be you the their of quarter supposed year-over-year production to softer down

David Wang

the to matter a buyer technology. to generation you moving still as any They're have in This our moment deliver advanced still or as slowdown you buying as expand see they're not plan the customer, the is are time I of our mode. some on As tool schedule. for there Right? the – production DRAM major new customer, new mentioned, still to there are yet. based our trends know, there seen And we

not cautious still capacity a for right wise, and a we're we're clear So watching yet. in sign getting the now

Mark Miller

in I What am compensation quarter? missed this. sorry was stock the I if based fourth

David Wang

Mark. Hi

Mark McKechnie

up. release. our on it look can I It's the table in Yes, earnings

Mark Miller

presentation slides? the In

Mark McKechnie

earnings and yes, stock the for granted options the The some actually to China our reason quarter the quarter in looks is was in based the big employees. year. we it was jump. compensation like high but the it $XXX,XXX $X.X it's third a the believe for had million IPO table call, I We here that of and Yes,

for China that. the regarding know, bump there IPO, You was a

Mark Miller

did they effective add terms tax they for by Dave, do $X.X the how year. million you that the quarter were in of indicated positive and in they were exchange quarter? of the increase for benefit What foreign

David Wang

Yes, nickel. for it quarter, the about was a

about you to valuation QX, you XX% are full the release relative partial the rate, we on We tax. So the if in for - million did a you tax had and $X.X release year. had adjusted

exchange And had we in about about a $XXX,XXX. then operations it's $X.X million foreign from loss delta of So actually QX.

net-net a that So, a earnings, but would be headwind was to it and QX, our earnings non-GAAP was nickel there $X.XX we lower. apples-to-apples reported in

So one-time if items. been those would number out $X.XX a you it like took have

Operator

Next Instructions] Morgan Chen Thank Stanley. from Please you. go [Operator comes Charlie from ahead. question

Charlie Chen

follow for Thanks my taking up question.

bit export fancy, little your China I your know David, pension like of the potential related China also is to on these China U.S. but given address the the YMTC, SMIC, potential the and So Thank exposure you how your your to company to going do is Government potential circumstance IPO, from China, risks? technology customer customers consider restriction a U.S. and to big you.

David Wang

Right? is We think well, I XX Shanghai. Charlie. And markets developed actually years wafer question right community. in in technologies technology. now Those good Okay, to have were in XX last a technology the selling the most basically we're

in our right not the talking U.S., lawyer is category export of that So, technology on in restriction the based category the our with now.

components. far environment. or this is make we choice dynamic XX%. that grow continue also know to to we protect do those there, the our in some to you seen yes, and components, interest find you immunity try if kind investors to if XX% supply kind right heard, of that Right? we company have that happens even our a U.S. a replace However, so rule, as challenges shaping either of product components, the the import I will you probably, real, down know XX% have alternative some see to have With we use That and chain do strategy challenge to

Charlie Chen

thanks. Okay, your question if is I And competitors. my pricing versus about value next your and key may

some didn't this. do you versus Japan I discounts U.S. to you know Sorry, your or when need But about process approach vendors customers?

David Wang

purchase our You customer. - sure you mean selling our make I components the price pricing mean or our from of question, to the pricing

Charlie Chen

rough Your us to you market customer, share give in pricing China? the and selling a can if

David Wang

is I And customer challenge, of pricing get Okay, pricing. we well, the pressure and mean lower kind constantly always from right? obviously,

know, in China, Korea, service value our improved, better potentially quality customer, in customer say trying specials you However, sell I and really product product excellent, for have for added by is Taiwan. think other in also and the our and our to strategy local

reasonable added better So we the looking products. customer. value Again, for we're for offer quality and and obviously pricing

selling our To So strategy now. really ownership moreover, of and to price. yes, right that's you consider cost we're their trying answer value your question, not sell the know, justify added

strategy. our that's So

Charlie Chen

please. in market Hi Okay, and yes, China? Mark, your share

Mark McKechnie

hey that add don’t add. would I to a with if but would look Yes, growing – I some big small just you mind just Yes, with like, we're company is, aspirations. bigger David,

of innovations So, the to do little the every have and and performance one team, have side. a backed better we David products our by patents on some

teeth our with product that yields cut performance, Tahoe we're SK going Hynix the at steps, acid the we amount the of but sulfuric proving the use. reduce to So, similar

innovative we that. drive to bit more So price products a always customers we offer something get and for use our a that to the we good can have feel and

Charlie Chen

Thank you.

David Wang

to word I win-win add or company share certain pricing not maybe and profitability leave out maintain We the operation arm the want believe certain I was one our to Yes, Charlie, R&D market that pricing. pushing are feel we give sustaining other more coming. some here. strategy. company, get down to a our sustaining of and We rather market We more competitors situation that's share. do real

Operator

you. Thank

Bolton line from last & a the Needham ahead. Quinn of line Company. question go Please the We from have of

Quinn Bolton

me squeezing Hi, here. for guys, thanks in

listing restricted transaction? STAR successful timing becomes on on the question filing you restricted of cash. say you unrestricted of the upon the just Mark, of the it cash have market or to access that First the a listing, that transaction that or a clarification Did

Mark McKechnie

so you Yes. I'm [ph]. Hi, Charlie that. Yes, asked glad

that we to So submit yes, yes. as achieve when listing, we're the we the unrestrict on did opposed when we that call the Quinn, say the going to application, cash

Quinn Bolton

you from a Great revenue result from the dollar of may have that the and guys tools just shifted of any sense second us the question can number or give me, Coronavirus as effects? then QX of to QX

David Wang

projection quarter fluctuation XX% give we're coming a normally coming the is it cause moment not wire, us and on delivered general projection or sometimes is one because say may But call, quarter. earnings the the put That the to for for real we that q tool XX%. Quinn, very as for for versus difficult. guidance good is give question. it's next reason the to for we right? earnings QX rule gives clear next q, - be the and do this in set going The if QX Okay, not will the That's we why

give much time However, gets million, maybe projection $XX million, if we see quarter, accuracy. tool $XX one can then maybe our final quarterly gets our that say or not to more that $XX delay revenue, come clear, in or case we up to million impact per

hope know, situation. in So, I really we're you that other understand you and

you can strong that is we we maybe our QX, and or depends be will higher the the QX deal. maybe And maybe higher so quarter lowest highest QX can but now, see on know you is we than right as QX I However, see maybe QX, QX be it know and demand, right? far is QX the whole know can think QX than in year, QX don't QX don't or

our that's revenue. assessment so year's for this And

Operator

hand back like to Thank closing for you. Wang call would I the With management, remarks. that to Mr.

David Wang

support. the call operator may participating and disconnect. you all call Okay, today's and on and for you concludes you thank for thank This all your now

Operator

thank for gentlemen, you and Ladies participating.

lines. You may now your disconnect

ACM Research (ACMR) 19 Mar 202019 Q4 Earnings call transcript