ACMR - Earnings call transcript Q4 2020

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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 2020 Earnings Conference Call. [Operator Instructions] As a reminder, we are recording this call.

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

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

Gary Dvorchak

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

On Lisa are Wang; the subsidiary, our CEO, our CFO, with me call today CFO operating Dr. Mark Fang, our Dave McKechnie; of Shanghai. and ACM the

Before we Slide X. please to turn continue,

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

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

non results GAAP GAAP and GAAP our reconciliations amounts. and For between

will let of With earnings on begin is our with posted David? the who X. to the which that, IR turn our section You now over Wang, call should Slide David refer to website. me release,

David Wang

XXXX a Thanks, Good morning, year call. very welcome, today's ACM. to productive and was Gary. everyone, for

We challenges these customer managed and in COVID-XX expanded several customers. positive capacity. progress overcame tensions. We made good products, our introduced execution and could focused we and new what such a our and with trade as control. We We through we faced challenges, semiconductor hard executed deliveries. the on are tailwind industry. pandemic great chain. work new We We supply China We

We long-term also moved forward for plan with [apartment] Lingang completed housing the facility in development. our and employee

their getting Before and for dedication. would confidence Research. I thank thank also their and support ACM customers, employees hard for want I into to partners and our in detail, like our shareholders to continued work

$XXX.X Non-GAAP our from year, and record million, full million, shipment was in a the Market up the holdings we XX.X%, a shares. SMS, XXX ended of For $XX.X we million year up a revenue of additional $XX.X STAR with cash XX% record of and XX%. had operating margin and million

Slide turn X. customer. to starts Our Please our success with

We have DRAM customers X several well as and major back-end as and across wafer customers. packaging foundry front-end assembly

Our own markets. the analog of semiconductor manufacturer optimize today's in ACM excellence We'll they devices, operational choose to they to new global them achieve production compete customer, needed capability. help technology their

Huagong Semiconductor, and Let known foundry a Group. are advanced Huali I They also in with XX. of Huali progress great good neighbors a Shanghai are and and making on leader expansion, They Shanghai production XXXX near capacity headquarters. sales. XX% customers multiyear is our total the in of and leading our me China customers. Huali start key with as customers will discuss Shanghai Huagong in

of by major truly and last Asia. XX,XXX capacity from end fab edge are While more will capacity Their up month products month devices, power year, end in is on XX,XXX of per the be and is semiconductor this per adding than CIS and year. at

projects. both in participating are We

of system group offerings. our in for Huali first demo product several have newer We some -- first

Next, XX% contributing of in total the XXXX. to customer, largest sales seventh is YMTC. YMTC our the

and Public reports XXXX, YMTC and to Wuhan. to support closely to give wafer working month production layers capacity its a fab. supplier. are number XX,XXX expected layers. We say being XX to too XD add they are XX,XXX employed XXXX another to ACM XX,XXX convert in line cleaning in significant that are, from in they YMTC production are of the YMTC, in XXX per We largest single-wafer mass believe

come. in from to YMTC China. was we digits strong largest and continue foundry in So single in the the XXXX. major expect they scale production facilities customer It Wuhan XX% from other of capacity SMIC, XXXX, demand their as up largest in sales further to is ACM's

While to ship SMIC, suppliers to to the it's business new own depends in other to flexibility deliver and on tools AMC. their Shanghai license gather our level also

a but SMIC, well SMIC just are outlook. from in in factoring small XXXX tool with We our positioned are range a of amount the

started Now steps at let's with a few Hynix, with customers. was I cleaning our yields. SK on SK ACM's DRAM the customers, production We SK proven will global production #X touch a other to ability major significant strong and improve to fast Hynix. just our supplier. Hynix begin testament technology first

of in Now more our than less customer pause SK expect through technology more Hynix in capacity and as and expected Hynix XXXX, progress for additions. advanced steps XXXX as DRAM several XXXX, than implemented cycle. tools in technology we in them to to a as sales was XXXX, a upgrades to and our XX% return SK due updates from XX% beyond down XX nodes. used are about XX%

first is map. nonChina-based of select for technology recommend compelling production early They entrant Next, stage a improve multiyear a and tool XXXX to acceptance. in preparation, the the plan. them in XXXX value DRAM revenue in and later to of proven industry. XMP us in solid We XMP, SAPS-V road to upon QX ability deliver yields our

they positioned pools, SAPS, cleaning up ECP other to when participate very the tools scale critical and XXXX beyond. in We and in Tahoe, are

in XXXX and X some have delivered of -- the customers. quarter we Finally, in tool IC recognized third new analog quarter We third QX. multiple fourth and first revenue power

add of this, nodes in tools X remaining We significant of the SAPS [indiscernible] and can represent buying Ultra I'm opportunity tools alone our we products. a tools Furnace base these ultra China. including them think The in opportunity. our key Slide CIS Please and cleaning expect other additional and players expansion of With scrubber, receive of with X. for capture believe to ACM. penetrated our to will come, are middle tools, large a tool or of year. solid to years X as more enable customers products. and and improved and stage these backside we still cleaning from multiyear turn and active X market ACM first us to FM friction wafer, customer tool, with for We this growth Innovation PIC see capacity orders have all customers buy in process. the edge are cleaning manufacturing semi them current alone fabs support critical early Many cleaning and are happy our to very capacity for production new just

As an suppliers, emerging advanced technology cost. on delivering we're at focused competitive

a opportunity. semicon the projects strong have employees We this semiconductor a of Korea, This equipment in R&D newer consider one largest team on planet. near puts teams and Shanghai for and and critical great China. the service of some a We larger the of in mass

in scale share a by landgrab line not gain major products the new yet We their and intend market our semiconductor produce, few period, to business China. to next stretched analog have our build expanding expand their as both the We and our years, foundry, scope business product China USD We address NAND, of world. around DRAM, market. our current applications. XD and wafer cleaning the portfolio new in X devices customers product power gaining and product about the line billion includes global estimate build This

XX% our of total TEBO and Our billion cleaning wafer cleaning start tools. or tools flagship, with our with coupled billion our Tahoe, course, a $X.X market. semi-critical adjust We cleaning of about $X SAPS,

XXXX, and $X.X added our wafer million by more equipment, polishing including $X coder, another product products, developer, billion, scrubber strategy than by by $XX $X.X new billion advanced ECP, TEBO other XX% our enabled including and our process Furnace from levels. ECP million $XX sales [indiscernible], packaging to and That and and In products. million manufacturing XXXX Our beyond Furnace, recently, about we us R&D, SAPS [indiscernible]. and spending XX% Tahoe, spend most offering of expand semi-critical tools, up in or

we very greater tool contribution packaging In first a are revenue tools to XXXX, of handful off had a ECP front-end and year. customers the back-end Our a for and delivered to good start.

products, front end. key for ECP advanced for AP ECP including and Our packaging [indiscernible] copper interconnections, ECP for MAP

is secret provide Our the force uniform center layer. ability playing outer to

tools, applications the preparation profile for copper major Historically the SAPS due high For high rates mass top transfer with [indiscernible] advanced packaging, To a and today. or a around carboplatin generally we the metal significantly have challenge developed pillar. trading XD pillar plating. a a patent of is place uneven pending rate limitation that at proprietary reduced plating to better copper [indiscernible] film pillar reformatting and speed improve high-speed technology to and plating

technology products delivering packages. the plating the solved will the and SAPS high-speed pool, while copper achieving best advanced coming major quality X% CCGT in mass challenges together less than is in polishing The profile high heights a high-speed new as as pillar well throughput. rate, plating with transfer our for Our better XD become wining

a plan to We full companies, they jointly in process and year. and Shanghai customer Both first solve to including has their teams They beta quarter foster Chuansha to and and requirements. made opportunities deliver of improving been more are cleaning team. process. the have alpha developed vacuum significant also delivered tools progress our several a cleaning this high in by teaming excited worked and about the X Furnace seamlessly to process, this HDL, issues in XXXX. have Furnace We our meet tool

buses. [indiscernible] to oxidation and Our teams develop continue high-temperature

step manufacturing most separation, layer Our promising challenging develop advanced nodes. next process, product is is and which such autonomous the ALD for

products implemented near Furnace, as strategy come portfolio in have and expanding to make and vertical our our which more our first product product with to and the SAPS, We entry from multiple successfully wet dry joint product products future. wet

total to than our to to ahead, we from XX% plan XXXX, sales, $X today $XX prepare our new For billion. R&D redoubling of opportunity by more billion accelerate market addressed products our about to for

to to major serving years. products see $XX addressable the our next I growth are us work We offer couple that early begun can details. has market the that billion in close too get of on can team new

Next, on tier customers. on winning of I will first new efforts comment major our

well as sell our sales global steady are of hired several progress, hires. other XXXX April in team as making team a US-based key of we in investments Our

the discussion The the players. pipeline year, such customer labs, in to as U.S. engagement, with that service is we During process. QX. Thanks separate building team to Taiwan first its regular the win and tool, the technology actively revenues equipment the team, very we booked and with with formally own the in delivered of cleaning a the of few a accepted in lab execution player sales greater needs our the

copper high-speed more during we as and We Tahoe will need wins major at of ambitions, well first-tier as secure plating our one SAPS, growth are fulfill in To capacity. or confident that, fact, TEBO, can we customers XXXX.

our Let progress. to on Please me turn X. Slide update

and added space. capacity floor leasing revenue annual Shanghai We remains. prototyping of Our We at QX production original to stated our The now we additional during a XXXX. headquarter quickly that our that in facility the and products. have XXXX. by production factory Tensa Shanghai. million is We further and capacity more than believe started in new production September of of at second SG&A in expand of It second in X we to We R&D, tensa. can million revenue see XXX includes

space. million facility Our growth will include square with new planned X and space of Lingang R&D a production

We will have to to production X.X increase ability our capacity billion.

purchased XXXX, land During in XX-year Lingang. rights we

architectural work is operation Lingang initial design first production in XXXX. in XXXX of housing. half in with Ventures and the expect low-cost later We employee our additional expected

it key managers attract and We our expected U.S., particularly technology large for We of practice need a a keep to future than to housing our employees While growth many the and Shanghai. not maintain and is common train experienced China, key more decade. in to companies key as these offer development. in in We secure employees. and engineers

ACM towards a loan units. Shanghai of cash with facility. for $XX We XX-year financed these the balance. XXX half deposit We amount are of other half housing over from the paid the XXXX, -- During million purchasing we

from Before slower XXXX our of discuss let's I of expected. ACM the Star Market in steady the Shanghai. provide outlook, than status IPO Progress

events X, on Soon the in with Stock by by lawsuit the 'XX, issued It IPO. sale stated the X SEC followed Shanghai complication is delay in XX, Exchange a XX, or of caused after December U.S. XXXX. XXXX, October -- report on short a Commission September Shanghai class-action XXXX,

report. is U.S. previously largely this substance and have not The short disagreements We want short SEC, the which a familiar better we, our there to and seller legal of based process. lawsuit discredited therefore, understanding the with which the report, sale with losses, on is to believe kind report no is

also accepted report report. XX, have responded U.S. on As and the seller a with [indiscernible] by the the we we verification And both previously December SEC in released short publicly X points to described, XXXX China report was and

application as be administration with civil China SEC information. would additional filed Regulatory Commission, our should require ran that we or CSRC, was and suit the however, Before Securities the fired, again

Our the in of report secondary plan action team process now providing to SEC lawsuit. response class to is the to

We are will does would the complete not the predict and with confident us enable timetable this us go SEC this to for that over review precise IPO. we hurdle provide But our and timing.

Slide on let's to XXXX Now our X. move outlook

guidance early preliminary our optimism reflect for prospects about is offer values XXXX. Our report we which January, unchanged. The growth in that

be million, to revenue in business. annual XX% expect present growth of range to the $XXX which million $XXX in cleaning We

several XXXX is on key outlook assumptions. based Our

First, stabilize; range of U.S.-China spending outcomes customer production the of for improves the tool. in recovery; the range scenarios and second, in DRAM a key trade a for months; lending finally, variance the first of third, situation timing of acceptance COVID-XX coming the the global trajectory of customers; of fourth, policy

results outlook the demonstrate our execution and successful of Our strategy.

providing the growth strong is R&D Our in spending products. our to capability accelerate new

customers global our scaling building penetrate long-term in marketing to new to a plan. regions are we're sales and We production growth resource and capacity support new

increasing We advantage growth their opportunity take to operation ahead. are spending of

the over major Mark I now in equipment to Our the to global to remains will call discuss to more mission become results detail. the industry. turn financial semiconductor a supplier

Mark McKechnie

was Thank Good you, for year everyone. quarter, QX a day, tremendous strong capping another David. off ACM.

million For including full semi-critical and a solid significantly introduced factory. grew customer sheet, we with SAPS, share, our Furnace, trading stockholders. for $XX We balance expanded at exposure advanced our including lines, year, the in the extensions launched an $XX.X year product of of closed a cash the business securities our increased and of second market number million several and production packaging. ECP We with good additional SMIC cleaning, major

some financial in stock-based of in put is full our in detail liability reconciliation I value to securities. I'll these note results. which non-GAAP measures will GAAP A release. our I measures, compensation, Now to refer gain and otherwise, of non-GAAP earnings change included Unless around fair financial trading year XXXX comparable excludes measures unrealized

customers X. million, and quarterly Slide We for XXXX, the break full on XX%. occasional highlight provide year First, annually results on the $XXX.X shown Revenue calls. XX% and color up out was our

As David noted on Slide X, we had X XX% revenue customer for XXXX.

XXXX. together Group XX.X% largest in of Shanghai customer XXXX. for and YMTC versus penetration expanded additional XX% Huali XX% from Huahong quality the accounted to XXX%, First, was of revenue a Wushi. grew Huahong by in at we in fabs That of contributor versus factories big as XX.X% revenue second our growth

margin was growth. XXXX, was month of sales to expectation XXXX expand XX% increased our from drove YMTC as sales help cleaning back-end and per starts To front-end due shipments XXXX. and from by in successful digits for million and their Hynix YMTC XX% versus summit XX% was XX% sales XX.X% the other ability $XXX improved revenue of our other versus SMIC's This in XX.X% single SMIC were XX.X%. to with SMIC in steps less gain services SK This Our was and pause in compared expected recognition the of part processing little in $XX,XXX a additional XXXX. than was of to XXXX. Revenue versus XXXX in into the to XX.X% to nicely Total by due wet year-over-year. XX% XX% participation, to normal scale. in of XX%. year within expand share wafer revenue packaging, revenue in million was effort $XXX to XXXX. XXXX versus to DRAM Gross Revenue advanced spending. cleaning tool spares of from and was a processing XX.X% in

costs. America XX.X% additional results and to spending items $XX.X were was manufacturing We below basis stock-based The compared R&D ago. Operating continue to to product sales and line margin XX.X% operating million. products, the line. year expect due increase on $XX.X income higher expenses $XX.X to million, exclude was Non-GAAP new mix million million $XX.X Two operating due increased to versus to gross in a vary on quarterly IPO-related a compared was utilization. Operating strained North margin compensation.

The a liability first is of change million. fair loss financial book in noncash of nonoperating value $XX as a

a XXXX As upon XXXX QX IPO described item our impacted in in STAR in of issuance after restructured previous to related and income calls, the The longer no in statement this of and which liability our was with connection terminated investments an became it Market QX ACM prior in our balance equity IPO. to warrant, was beyond. sheet and

traded the an increase SMIC the of IPO. original in STAR at is from the $XX.X from IPO in The value investment gain Market gain unrealized Second was securities to investment million mark-to-market price. prior our of the and reflects year-end,

We exclude the from is income to $XX.X we Research diluted sell Net share versus $X.XX respectively, benefit per and fluctuation income or shares. provided and $X.XX results to XXXX realized million when ACM XXXX, this the until items will Net exchange $XX.X per gain $X.X and if was the non-GAAP item million. of respectively. on in attributable $X.XX $X.XX results compared share per Tax $X.X foreign XXXX. million a effects share, million and net in of was and operating

shown was XX.X% up securities, from $X.X that exchange excluded benefit Revenue the gain of provisions quarter net was XXXX. in margin of income per was per share the in effective share XX.X%. versus third fourth million $X.X fluctuation in $X.X ACM in the on to benefit of diluted results were $X non-GAAP $XX million. income for the versus expenses $X.XX above, was Operating $XX in of XX.X% quarter a were our Unrealized X. $X.X in trading of provided versus margin items mentioned $XX is in million versus Net Operating XXXX. fourth XX.X%. million $X.X $X.XX million, quarter $X.X in the versus was XXXX. share million million or of fourth Net or fourth Tax per Now net operating XX.X% was on of shipments fourth quarter income the foreign Research Operating million. million up $XX Total million $X.XX $X.X million, million $XX.X as Gross versus Slide on quarter, versus million XXXX. XX.X%. and attributable XXXX. $X.XX XXXX quarter a XXXX and

sheet. Now will versus balance at versus was Short-term XXXX, couple year-end XXXX. million borrowings XXXX. $XX.X were million million and $XX.X in review by was the I $XX.X good end inventory. in million. million Cash was driven finished in First, inventory the The balance borrowings were long-term million inventory $XX.X at factors: of $XX.X Total increase at of year-end $XX.X a

represents up end rights to includes XXXX, was Cash fund process that This XXXX for new deploy million on grew XXXX. $XX our our sales Lingang-related XXXX. tools inventory year. a to key goods flow in for million used XX-year support million to growth used the $X growth raw delivered versus total housing. Cash awaiting million Finished year at million million and due in for to tools growth mainly In were Capital we $X.X ACM, $X.X investments. of for XXXX. our evaluation $XX.X was in acceptance. were to deposits land from of for employee first the first The and remaining for the million and in spent products and expenditures $XX.X customers. For customers to $XX.X in million materials work at the by the $XX.X for and year-end, operations

million $XX for For XXXX, $XX is spending capital to case million. our base

factory capacity and planning be initial Our R&D balanced at in as second spending Chuansha, well programs increases investments XXXX on investments our will our to support between as some Lingang.

upwards We strategy. to IPO. expect our To capital conclude, after on we to spending China our execute adjust continue our

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

positive ramping of production products. continues We're opportunities expansion are our deliver on We and our develop China and and China. innovative in to outside

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

Operator

question first [Operator Instructions] from Ho from We have line Patrick of Stifel. J the the

Patrick Ho

potential on Can Congrats Chinese just robust Mark, going to a David potentially on thoughts give year. ahead,at your and memory versus of the or domestic year. between Maybe, one finish be looking foundry segment is both local you at another you the color of strong, the logic bit breakdown weighted it in areas? growth other? more or trailing spending, nice a edge spending the little Or whether looking to we're on see spending

David Wang

Okay. Huali. in good Thanks, have also also and XD and availability NAND [XQX] we Patrick. our Actually, Huagong very basic

side they we -- fab, that their NAND also to right? call also side, of edge, continuing logic their get quickly advanced tier, there, And see rest Huali we X already. this And Onion memory also XD both group, the in have so the second-tier foundry in this so the we demand, And spending we year, tier. it, -- the Huagong will the acquire And customer the plus, the second for got customer. I companies X, call what who training X additional

I -- will course, So to they're we're And Mark, be. there are going -- say on? XX%, come top number customers. the expanding favor cannot XX%, mature to And the you lately. they new year, obviously, We more of anything region or probably precise we're quickly. customers X of a from But building than X additional that seeing first this add their fab. next what give want expanding still

Mark McKechnie

prepared We're relative mean, trailing think No. DRAM remarks. growth the as YMTC you Thanks, it them. capacity from you memory XD a versus expecting big I adds. anticipating SK there, I so we're to Yes. a their customer, And asked is grow David about Hynix, to recovery David, in know, edge. NAND Huahong, Huali mentioned the Patrick. and

they in And were than XXXX. less XX% so

show expect in decent kind -- And XXXX. them get so of some here we'd of to growth kind

Patrick Ho

as And Great. you, question for That's maybe Mark. helpful. follow-up my

that at gross your with? get within and you normal, costs, to facility new ranges the I margins to How as ramped do are quickly some typically get begin do startup you guess, given that there you up,for corporate As underutilization factory facility production, ramps? look that how

Mark McKechnie

Yes, you bet.

outlook, capacity the XX% So we capacity, Lingang XX% -- Patrick, going bit start the and There's obviously that's year. production a our throughout the margin of on to pretty mix, we're that -- we're the the The up. dependent really when driver. a at Relative modify lot quickly. We've XXXX pretty gross facility, not right? Chuansha, to biggest that kind product to looking that got here. said demand kicking we're really adding end of is would good range, for

really don't be any impact that Lingang. and we will anticipate So to our beyond. gross margin in That there XXXX from out

Operator

the have Capital, of We the please. De from Suji question next Silva from ROTH line

Suji De Silva

congratulations Mark, Just the for. end listing. magnitude sense much David, a give STAR sort of the of versus how report the on just us the filed? give here sense Can they're strong a review of additional question some looking more requested level qualitatively you us quick this SEC of A original detail in year. the you on of

David Wang

there's lawyer in the up, anyway, the to the out, their right, now. call stated, right come short we're report And And pretty taking spent almost then in we're X hired for got we very but much and substance also then to finish no CSRC, and lawyer a accepted, it come registration just seller starting almost And right? to acquire months lawsuit told we Okay. I report. us like we had care, U.S. this now experienced lawsuit we

legal again, is SEC, -- in going response what give process what to with the going is detail U.S. to the the on, in to them so report And we're

about we to process in their for I then soon, continuing [indiscernible] probably a If CSRC. think think the going the it can and start registration we're is this. positive they response, how very waiting report, then it's

again, long we couldn't how to we're there our So timing that's And But IPO. think second now. for know the we why precisely I that's the report. resume confident. right But timing don't give of

pretty XX% over a and with them China. should are of already, We IPO in get been have the X% remaining we confident. success almost think I XX%, based we down

Suji De Silva

have guidance entering do into a Maybe of versus, for perhaps the 'XX. more the that have you tools placed then those customers have -- given and year And a tools curious, XX customers with visibility products? financials, you I'm on from higher more ago, say, Okay. your you percent

David Wang

see looking on And can are better and year, really I year QX. [indiscernible] projection. the also, we're our as capability. is plating the very Yes. and Even you at QX, stretching manufacturing than that right, aware, very kind obviously last of this we're busy

hire people path to and start also more New people we also So final the training to more to and Chinese Year.

So at it's very moment, QX this QX, QX. including busy

we're call, very for confident -- year. very So for our -- this projection I in

Mark McKechnie

Yes. obviously year, of right, at of look inventory, the finished the level goods And end could Suji, end you at last the XXXX. the of

And so it grew $XX million. about from, what, $XX million to

-- So cost. at carried that's and

corporate be an assume margin for would So gross for our much visibility how to get there. revenue that idea

Operator

We have for next line our the question from of Chan Charlie Morgan Stanley.

Charlie Chan

So my customers' question is about contribution. China your

they think do X.X that how because Do year? their what the spend SAPS the And But USD billion this driver issue? want company you to you to about for be going Huahong. a and is given And progress announced around about also you growth for YMTC about mentioned SMIC? expansion You capacity think significant CapEx.

David Wang

Okay.

SMIC, with we have it, we semi-critical I have, for And there And and years. so think in with process and key call last positioned our is a X also SMIC. sold the have and well we pretty X then or product a cleaning also -- I SAPS. and to process worked also, I we're got do being

too. have Furnace do plus also SMIC feature the our position TSV And also also and right? into copper also -- tool We tool, our plating

for now. revenue probably their expansion very the I expanding their XXX-nano So XX,XXX their, looking market for it announcement, technology. positioned all in we're they're think the And per call, month of

be can see in too. if of licensing this So we Again, we for quite front are opportunity us. a positioned can that tremendous solved quickly,

it's and still this the of to even just customers. difficult, and there just quickly, expanded ran this are anyway, watching However, them and -- down kind cautious for of moment, working stuff. So obviously, closely and very And our [indiscernible] we without were right? license be moment, help

the supporting good, making we're for company. So service

Mark McKechnie

a wildcard, we're outlook. of I amount I'd their got right? really -- other a depends mentioned Yes. with of But visibility Charlie, a top it's ability David our customers. really mean, for U.S. number in bit manufacturers. SMIC, It right? factoring on a I our thing significant one mean, from we've tools add, get good obviously to not

we're and pretty but our think how too And across depending spending. outlook. of that hard much up step in may they into not we also may for other mixed is So tell, some their capacity much that, demand add It's them, manufacturers factor strong on board. to the -- the it's going add, and China to

Operator

question comes Needham Quinn Bolton & Company. from next the The of from line

Quinn Bolton

about once So congratulations response outlook more wanted the finish or the SEC that would action folks SEC can a David, about long your let CSRC kind review. get how to sense I long Suji's So take Any the that of will registration couple for to has my review, strong might you're SEC the me an and it question of thoughts Is weeks? for it complete, the helpful. with look And you a it it have review don't the the -- to once completed take how process? provide know us once is to that. to SEC its be of of review around you can line what XXXX. typically follow-up on you IPO could does like? time, order walk understand through months? the that time class through But Is lawsuit. file you information receive -- nice

David Wang

days Okay. the good time second statistic so-called I actually, so a SEC say, registration data when Quinn, the CSRC, averaging -- XX for getting registration about then should the review to report, finished we're in days. the into And And by for XX CSRC. very I show a as said, far, question.

be the that, I another because probably the after down the time. period. time that the we're we'll or X months, about weeks spend registration right, X kind X for That we decision road answer acceptance So other weeks, And shows. will secondary Did question? finish assets seeing can the approving after the X -- or IPO to That's you report.

Quinn Bolton

versus you say $XX clean? Mark, $XX good the majority down that It's your very us, critical tools? million. I perfect, believe the of to the Furnace, to the job a be Obviously, I'm much composition a -- broader the tools break you question how Or making? some pretty kind kind And you into gives much shipments of of that your traditional XXXX. starting it. are still yes. wondering newer ECP you're Got you shipments of fourth for clean see critical nice were quarter. is the if in some might able Is heard visibility I second million on of semi-critical

David Wang

XX%, general. the the I give I have total occupy our tools, call, also, XX% application coming, the Yes. plating. together. I flagship, XX%, we is rest XX%, couldn't in Probably our, sort new give And a detailed Maybe it, you cleaning semi-critical numbers. The about XX%, cleaning of of -- they copper you can also application. I call products packaging

that XX-XX gives the So probably ballpark, you divided.

Operator

Tsai The Jefferies. line of next question comes Chi the from from

Chi Tsai

XXXX. indicate And in million you $XX more -- XXXX? And to think range? think this expanding right, million backlog, shipments backlog that $XXX well, if you're in you getting and see I'm you would $XXX the do expecting deliver than I Or backlog. I similar $XX have think So reported million now I XXXX, in

Mark McKechnie

Yes. a Yes, few things. correct let just me

value look tools way that of not right? the awaiting look would But over shipped our you goods So inventory was number little we the You'd finished that at acceptance, that's year. that at to at inventory goods million, right? in cost. carried the want the a $XX finished So level, are the

the idea get margin an potential So to that. revenue would of assume the in corporate level that's gross for

And don't this you overall on guidance we shipment. additional to tools year. delivery I we But our for what would of shipments demo think shipments anticipate strong asking, really be again -- so XXXX, may give

David Wang

but a this too, customer new revenue recognized, we obviously, customers I we're expecting year, Well, come revenue will not we coming call, especially, have in, product this more there's our recognize SAPS, -- and new immediate acceptance. Furnace other, upon new additional year, product recorded more and come which upon shipment, also Yes. out deferred in also in, is

deferred the So to this first could expect of be year, year, tool year. this the next much I end more

Chi Tsai

is plan I My expansion due bridge year like first capacity to expansion kind were a half you question second XXXX additional in plan, think last I half? outlook lot see. second revenue half second and can shortage. of of opacity that, made in of the the Because

So I think second more in capacity will be delivered half.

on and give first will how half half you some year? in can idea us second think, look I this So

Mark McKechnie

Yes.

mean, I I year is outlook. QX But in right? Years that. weakest full seasonally we can there. address a quarter, think give Chinese I typically typically our You got New

traditionally decline our QX. then quarter, So nice biggest in a been generally good slight QX yes, and snapback we in a -- a get has QX.

kind the balance we're that's the nothing out But think at the And in looking from it. more last a bit you're in the way. half of little seen than half, seasonality second you've first of year. the I traditionally that correct, So ordinary how

Operator

Company. question Miller comes the Mark from next Benchmark of from The line

Mark Miller

indicated Hynix first a Is XX% you return customer. half to the second half return? that or expect more You of a of type

David Wang

Okay.

I at recovered And will second have look, also in that we the And the of I probably think year. -- the coming do to quite DRAM order people think, in be compared half the look some project that this last and year. QX. market,

So coming order of the some this other we're into year. half second expecting

Mark Miller

Do sales were as somewhat you the expenses sequentially in well up fourth marketing as XXXX? sales quarter. -- into and sorry, trend significantly lower up were to expenses expect sales despite I'm significantly, Your this continue R&D your

David Wang

Yes.

we're X% about that the number, our think will continue. range I marketing, XX%. sales to And keep -- using

R&D. do we probably, X-point add and year, this for However, additional, more

because mentioned, as very totaled we R&D a efforts it pivotal plus year. about XX% So and it's

And strongly spending And product more give the few So come market, develop it's Asian for year outs. flow. are R&D. in ACM a and those we why new investing to it's that's more critical for we're positioned

Mark Miller

sales said be about roughly? So you XX% will

David Wang

the R&D And XX% That's the of Yes. more we're G&A. the sales spending the business brand. It's total until XX%, marketing. for then funding

Mark McKechnie

the make was Yes, non-GAAP, you. you're that excluding giving those Mark, just compensation, this aligned, Dave is to sure right? So the stock-based we're percentages

Mark Miller

Yes.

What comp last You stock was mentioned quarter? base stock-based.

Mark McKechnie

the $X.X stock-based $X.X for was QX comp year. million, million

Operator

from We Stanley. Charlie follow-up have Chan for Morgan a

Mark McKechnie

think we you. cut we lost you maybe off or somehow Charlie, Yes. I

Charlie Chan

yes. Yes,

from disconnected, got I home. Sorry, working

another year. about other maybe here? So progress. major this follow-up TSMC be customers? is Chinese probably But for will customer I or you XX% how progress Any other U.S. Hynix -- international about know Huagong, your

David Wang

Charlie. Great.

the today maybe or the plan, years outlook we're hard looking And and our for and also expensive, in always customers. on also gain these coming probably trend talk me real what's the is to big come industry, limitation let loss too. and X next about to people all ahead, the the elaborate, XD nano, So nano really Charlie, X very when the to technology

people XD. on So the

talking. is XD talking XD And are people NAND structure say the DRAM and advanced people of can I about are Now packaging.

So I positioned the huge technology really ahead. well trend trend. look ACM at is for this

particle change other the we're deep only right? As JetX that's market, cleaning. can our where good cleaning or never for reassess as structure, a tiny And technology ], also, megasonic you Then part only in positioned that. tiny that this out can particles. can is available one corner world of And TEBO deep [ That's ], get tool, and out. like So graduate the SAPS, by limitation. make a of [ particle tiny arrear ]. [ the the the you technology for really we is of kind today to TEBO those inside our clean in the [indiscernible]

of the X.X XD, XD also road, one, and XD see Second applications the connectors, major TFTE the down the lot that a DRAM. interconnection for multilayer I including

quarter copper one that I another than there, their We customers. should side. to think oxidation LPCVD, I And real efficiency, XD future for [indiscernible]. there's traditional, But point can copper We tool because a real getting consumable can the talk product polishing. right? all for call role our their polishing in going tier We key less very recent another And that covered also And of and A technology that. a progress right on top other a about are the aiming But good it, Furnace reach projects. very say, was very, for top-tier process. profile. And [indiscernible] of ARD to intention attractive for saving our So costs that, we is very ARD. play and from the positioned to this think for focus, much polish It's and is as ARD I compared XX% the plating. X% the more XD bigger high-speed previous is

R&D our we'll few target with we of demo giving even the soon. next announce potential technology mean, now. -- I that new we're And the ACM At develop going now, try core the this which our U.S. ahead, Taiwan to is is and differentiation is portion a manufacture pretty product semiconductor see looking Anyway, customer point. it's also we're moment, key right heavily very customers. engaged to to trends. So for Further, in are years, for right in important

our time, this And thing by top copper this -- I penetrate can takes year, we the year. confident are advanced our think X the high-speed and side. advanced of more but goal cleaning tier customers, we side, that's copper our also plating

So anything on Mark, you that? want add to

Mark McKechnie

-- factor outlook. -- The these we this from only any into is this year, add, customers Yes. I'd revenue big that wouldn't from this we year's new thing customers didn't Charlie,

Charlie Chan

Okay.

really question this very Okay. is questions. Sure. Mark. And X for I guess, -- a

is impact new to the be the that for business And postponement business guidance the or Any how the impact Mark plan? your for for IPO et operation? you X the to of And OpEx impact that new all, guidance your trends, or op or of that question margin quick before needs think funding, second First year half to ratio the something funding your the of coming years. about do ready cetera. really this soon

Mark McKechnie

that. Great. I'll Great. hit Yes,

So timing, as the -- on David our the China progress IPO said, under control. it's is not

in $XX talked $XX it year. Hopefully, to plan require plan, will about business would our we're So we CapEx an We're plenty We're funded, here. doesn't quite we'll our after complete And got be Chuansha. support. our feel and it. doesn't We like the at what options immediate doing, well upwards Lingong. we IPO. it to this we to there. million right, IPO of feel soon. we've spend plan more But million, capacity for other to what on the doing looking can adjust we confident immediate funds require we're And But add room

the on to levels XX% about about you year. for the kind our XX% gross non-GAAP to model, think op about you of In for XXXX, margin. a to terms R&D on It got talked David a of XX% the margin gets the basis OpEx

Charlie Chan

Okay.

So that XX%? around is OpEx means ratio the

Mark McKechnie

right. be Yes. Yes. would That

David Wang

few higher R&D. good Again, we bit our rate. the really lead reduced will points moment, this Yes. market At And our little behind for be growth rather That straight And a and our spend also think, that, I it. versus we for balance visibility. grabbing really position. philosophy -- then I a profitable to

Operator

the from line question question next Craig-Hallum from from the have Christian We Capital.

Christian Schwab

had. the few last Actually, I the questions questions were Great.

I great a have on time. outlook. this congratulations don't to So ask any questions further at

David Wang

Great. you. Thank Okay.

Operator

Thank our to call back remarks. closing you. the on like the some for I are questions presenters no to would hand there more Seeing queue,

Gary Dvorchak

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

Mark McKechnie

Okay. Thanks, everybody.

Operator

conclude you. the for Ladies today. Thank that does you conference and gentlemen, participating. Thank for

all disconnect now. may you. Thank You

ACM Research (ACMR) 27 Feb 212020 Q4 Earnings call transcript