ACM Research, Inc.

Welcome to the ACM Research first quarter 2021 earnings conference call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker for today, Gary Dvorak. Thank you. Please go ahead.

Good morning, everyone. Thank you for joining us on today's call to discuss first quarter 2021 results. We released results after the U.S. market closed yesterday. The release is available on our website as well as from Newswire Services. There is also a supplemental slide deck posted on the investor portion of our website that we'll reference during our prepared remarks. On the call with me today are our CEO, Dr. David Wong, our CFO, Mark McKechnie, and Lisa Fong, the CFO of our operating subsidiary, ACM Shanghai. Before we continue, please turn to slide two. Let me remind you that remarks made during this call may include predictions, estimates, or other information that might be considered forward-looking. These forward-looking statements represent ACM's current judgment for the future. However, they are subject to risks and uncertainties that could cause actual results to differ materially. Those risks are described under risk factors and elsewhere in ACM's filings with the Securities and Exchange Commission. Please do not place undue reliance on these forward-looking statements, which reflect ACM's opinions only as of the date of this call. ACM is not obliged to update you on any revisions to these forward-looking statements. Certain of the financial results that we provide on this call will be on a non-GAAP basis. which excludes stock-based compensation, a loss relating to the change in fair value of a financial liability, and an unrealized gain in trading securities. For our GAAP results and reconciliations between GAAP and non-GAAP amounts, you should refer to our earnings release, which is posted on the IR section of our website. With that, let me now turn the call over to David Wong, who will begin with slide three. David?

Thanks, Gary, and good day, and welcome to today's call. We are off to a great start with solid results for the first quarter. We delivered strong revenue growth, record achievements, and excellent profitability. First quarter results demonstrate the competitive strength of our technical expertise, breadth of our product portfolio, and our growing production skills. Revenue grew to $43.7 million upper 80% year-over-year. Sharements were $74 million up from $67 million last quarter and up from $12 million in the first quarter of 2020. We deliver a good balance of growth and profitability with a 41.4% growth margin and 11% operating margin. We are committed to deliver profitable growth as we continue to invest in R&D for new products and global sales and marketing. On the bottom line, we report 35% of net income per dilute share, up from 11% in the same quarter last year. We ended the quarter with $79 million of cash. We also hold SMSC stock market share worth $27 million U.S. dollar equivalent as of quarter end. I will now discuss recent operation highlights on slide four. First, our Q1 revenue growth was a broader basis, driven by current and new products and customers. Our wet cleaning and other front-end process tools represent 73 percent of total sales in Q1 and grew by 42 percent. Our advanced packaging and other process tools and service and spare business accounted for remaining 27%, with revenue up more than six times year over year. As highlighted on slide five, we have five major front-end customers in Foundry, 3DNet, and DRAM. We also have several back-end wafer packaging, and assembly customers. Our newer customers manufacture power and analog devices. As we discussed on our last call, we had penetrated two of the five key training edge nodes of analog power IC and the CIS manufacturer in China. I'm excited to share with you that during the first quarter, we received orders from additional one of the five key trading edge node customers. We are actively engaged with the remaining two players with the goal of receiving orders from one or both of them later this year. On top of that, during the first quarter, we also penetrate two additional advanced packaging houses and one compound semiconductor IC manufacturer. Looking forward, we believe our existing front-end and back-end customers alone represent a significant opportunity for ACM. Most of them are still in early or middle stage of multi-year capacity expansions, and we expect to continue adding more new customers as we believe every major semiconductor manufacturer can benefit from all technologies. Second, We delivered total shipments of $74 million in the first quarter, another record for the company. This is a major accomplishment, especially during the Lunar New Year holiday period. It is a strong testament to our production team, which has been aggressively adding capacity to meet a strong customer demand. As shown on slide six, our original facility in Zhangjiang includes our R&D, SG&A, and prototyping, and production of newer products. During the first quarter, we expanded the production capacity by leasing a second building at our factory in Quanzhou. This will provide us with enough floor space to gradually increase our production capacity to more than 500 million, upper from current level of 350 million. Our long-term plan is to build a production and army center in the Ninggang region of Shanghai. The 1 million square feet of the floor space will enable us to increase our annual production capacity to $1.5 billion. We expect additional architectural and design work to be completed this quarter with initial production target by the end of 2022. Third, we invested in our global sales team. Since hiring James Strong to head our U.S. and Europe sales effort last year, we have added several other senior employees in the business development and service team. Yesterday, we announced the addition of Eli Laudler, a 21-year veteran of major USME cap equipment makers. Elon will lead our U.S. service and delivery team. We now have a seasoned team of world-class industry veterans to drive our effort to expand our business to additional major customers beyond our base in Asia. Our team remains deeply engaged in technology discussions and evaluation with U.S. and Taiwan-based semiconductor manufacturers. We are making good progress and are confident that we can secure one or more first-tier customers during 2021. Fourth, we continue to gain traction with our ECB tools. We are especially bullish on our opportunity for our ECB product line. In the front end, smaller geometry requires advanced plating solutions. Meanwhile, Back-end and advanced packaging has become more important as industries shift to packaging innovation to drive higher performance as industries move into post-moisture. Our ECP product line includes the MAP for dimethyl copper interconnection, the TSV for through silicon via for front-end, and the AP for advanced packaging. MAP products present alternative, differentiated solutions that can provide a uniform plating on ultra-thin C layer. During the first quarter, we introduced a proprietary high-speed copper plating technology that can deliver improved uniformity at a high throughput. It is essentially important for advanced packaging customers. The high-speed capability, combined with our proprietary technology to improve uniformity at a large area, give our ECP AP system a strong competitive position to win the market. The tool supports copper pillar bump for copper, nickel, and tin silver, thin plating, and high-density fan-out warped wafers. The CCPAP with a high speed plating rate together with our SAP copper polishing tool position us to grow and become an important provider in 3D advanced packaging. According to your development status of advanced packaging industry 2020 report, the market size of 3D stacking and fan out will increase annually by 16 to 21 percent over the next four years. We believe the total global market for ECP will expand faster by up to 3x from the present $5 million to up to $1.5 billion in the near future. Fifth, we recently broadened our Ultra FN Furnace dry process tool portfolio. We added the different semiconductor manufacture process, including undoped poly low-pressure chemical vapor deposition, or LPCVD, and the doped poly LPCVD. This new capability built on the configurable systems previously announced, oxide, silicon nitride, LPCVD, and high vacuum alloy annealing process capability. The Ultra FN Furnace platform was designed from the grounder up to meet customer best-in-class requirements, as devices continue to shrink and increase in complexity. Because today's devices are designed with complex, fine geometry, providing consistent and stable heat control is paramount in maintaining wafer integrity. To meet this demand, the Ultra-FN Heater features proprietary control algorithm, which provides stable temperature control. We've delivered several first tools supporting this new application in Q1 and expect to deliver additional units as we progress through the year. We also plan to add a high temperature oxidation and annealing capability to our furnace product line in the third quarter. The next major development in our furnace roadmap is a batch atomic layer depletion, or ALD process, which we view as the most challenging and promising product for advanced manufacturers. Putting it all together, we are making great progress, growing our business with new product line. Please turn to slide seven. As noted in the prior records, our current products address a market of more than $5 billion. ACM is committed to become a multi-product company. We are positive on the growing opportunity from our core Canadian tools, including SAP, Table, Tahoe, and our semi-critical Canadian tools. We are also beginning to see meaningful contribution from newer products offering starting with the ECP, which you will expect ramping in 2021 and beyond, followed by our furnace product, which you expect to ramp in 2022 and beyond. As we mentioned last quarter, we have begun significant R&D investment in two major new product categories to achieve our long-term goal to double the total addressable market of our product from $5 billion today to more than $10 billion. As the ACM policy, we will provide more detail on this new product categories after we secure custom orders for first-tool delivery. Before I provide an updated 2021 outlook, let's discuss the status of the stock market IPO of ACM Shanghai. We continue to make progress. Our team submitted a second verification report to the Shanghai Stock Exchange Commission, or SSEC, in late March. This report explains the class action lawsuit that was fired in the U.S. last year related to the short-term report published on October 8th, 2020. We are responding to other important and manageable inquiries. We remain confident that we will receive approving from SSEC and then moving to CSRC registration process to complete ITL. But consistent with this practice, the SSEC has not provided us with a timetable that would enable us to predict the precise timing of IPO. Now let's move into our 2021 outlook on page eight. Our guidance reflects optimism about our growth opportunity for 2021. We are reaffirming our guidance of revenue in a range of $205 million to $30 million representing 39% annual growth at the middle point. Our outlook for 2021 is based on several key assumptions. First, the global COVID-19 situation continues to improve. Second, stability in the U.S.-China trade policy. Third, a range of spending scenarios for the production ramps of key customers. Fourth, variance in the trajectory of DRAM recover end. Finally, a range of outcomes for timing of customer acceptance of first tool. Our results and outlook demonstrate a successful execution of our strategies. Our stronger growth is supporting acceleration in R&D spending and new product. We are building our global sales marketing resource to penetrate the new customer in new region. And we are scaling production capacity to support our long-term growth plan. Our mission to become a major equipment supplier to the global semiconductor industry remains on track. To conclude, I would like to thank our employees for their hard work and dedication. I also want to thank our customers, partners, and shareholders for their continued support and confidence in ACM research. I will now turn the call over to Mark to discuss the financial results in more detail. Mark.