ACM Research, Inc.

Good day, ladies and gentlemen. Thank you for standing by, and welcome to the ACM Research Fiscal Third Quarter 2024 Earnings Conference Call. Currently, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. As a reminder, we are recording today's call. If you have any objections, you may disconnect at this time. Now, I'll turn the call over to Mr. Gary Dvorak, Managing Director of the Blue Shirt Group. Gary, please go ahead.

Good day, everyone. Thank you for joining us to discuss third quarter 2024 results, which we released before the U.S. market opened today. The release is available on our website as well as from Newswire Services. There's also a supplemental deck, slide deck, posted in the investor section 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 Fung, 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 opinion 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 and an unrealized gain loss in short-term investments. 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 and on slide 13. And refer to slide 13. Let me now turn the call over to David Wong, who will begin with slide three.

David. Thanks, Gary. Hello, everyone. And welcome to ACM Research Third Quarter 2024 Earnings Conference Call. Please turn to slide three. For the third quarter, revenue was $204 million, upper 21%. Assumments were $261 million, upper 23%. Profitability was good, with a gross margin of 51.6% and operating margin of 27.5%. And we ended the quarter with approximately $369 million of cash and time deposit, with a positive cash flow from operations for the quarter. Revenue for the first nine months of the year was $558.6 million, upper 44%. Year-to-date shipments were $709.7 million, upper 56%. We believe this growth is significant, demonstrate market share gain for ACM and their contribution from new product cycle. Now I will provide the detail on product. Please turn to slide four. Revenue from single-wafer cleaning, Tahoe, and the semi-critical cleaning product grew 22% in Q3 and represented 79% of total revenue. ACM offers a comprehensive top-to-bottom cleaning portfolio. We estimate the global total available market, or TAN, for the cleaning is close to $6 billion, and ACM products support more than 90% of all cleaning process steps. in both memory and logical manufacturing. Our factor in the figure proxy mixing, or SPM, have led to increased competence toward our target for continued market share gain in cleaning. As a reminder, we estimate SPM process represent about 25% of total front end cleaning market, but so far it has been a small contributor to our business. During prior report, we announced a technical progress in our high-temperature SPM solution. Recall that only one other major Canadian pool supplier services the high-temperature market for SPM. During our first quarter call, I reported a technical breakthrough that could enable us to be the second player. We are now in later stage evaluation and a number of key customers, and we are committed to become the second supplier in the world supporting commercial high temperature SPM cleaning. That's not all. Today we issue a press release marking a major performance breakthrough for Tahoe, ACM's environment solution for the middle and low temperature SPM segment. The Ultra-C Tahoe now achieves the performance of a standalone single wafer cleaning tool on low to high temperature SPM process. The Tahoe platform's advanced cleaning capabilities have achieved an average particle count of less than 6 particles at 26 nanosites, meeting the strategic requirements for advanced node manufacturing. The tool is also capable of removing 1x nanoparticles for the most advanced logic memory applications. with additional of a smaller particle filtering system. Tahoe's patented hybrid architecture is among the first in the industry to combine batch wafer process and a single wafer cleaning chamber into the same SCM tool. The hybrid architecture delivers enhanced cleaning performance, high throughput, and process flexibility with up to 75% reduction in chemical consumption. ACM estimates cost savings of up to $500,000 per year from fabric assets alone, with the additional environment and the cost benefit from reduced fabric assets and treatment and disposal. With the rise of AI to the forefront of the consumer mind, we expect to increase public attention on the environmental impact of semiconductor chip manufacturing. We believe ACM Ultra OC Tahoe is well positioned to help customer increase production of advanced AI chips but with reduced footprint on the environment. Put another way, Tahoe is good for customer and good for planet. We believe Ultra OC Tahoe is another example of excellency from ACM innovation and world-class R&D team and demonstrate how innovation can achieve the information, economy, and protect the environment. We also announced today that the UpGrid Ultra-C Tahoe is now in mass production at several high-volume customer facilities in China, and under evaluation at additional logic and memory customers. We expect to deliver more units by end of year. The market opportunity for Tahoe is quite large, as the middle and low temperature is more than 80% of their SPM market, and thus about 20% of their overall cleaning total towards the market. We believe ACM's cleaning portfolio, including SAP's Tebow, Tahoe, Semicritical, together with SPM and Supercritical CO2 drying, puts ACM in world-class status. We see good opportunity for continual market share gain in mainland China, and we are confident we have what it takes to scare major customer in international markets. Revenue from ECP, furnace, and other technology grew 36% in Q3 and represented 17% of total revenue. Momentum for our plating tool remained solid for both front-end and back-end tools. I'm pleased with the revenue performance. I also noted that shipment for the ECP furnace category grew by 67% year-to-date. Our furnace product cycle is also gaining traction with other memory and logic customers. Overall, we now anticipate having 17 furnace customers by the end of this year, upper from the nine at the end of last year. We expect a contribution to revenue from furnace to accelerate in 2025. Revenue from advanced packaging. which is crude ECP, but includes service and a spell, declined by 21% for Q3, and was up 3% year-to-date, and represented 4% of revenue. This category includes a range of packaging tools, including coder, developer, scrubber, PR sweeper, and web adders, and also service and spell paths. and we are exploring new products and technologies to participate in the next generation of advanced packaging. We believe ACM is one of the only companies that offers a full set of wet tools, cover plating tools, and polish tools for advanced packaging. Year-to-date, growth of advanced packaging was low. We attribute this to slower growth for China-based packaging firms who are more exposed to broader-end market trends. We also know this category does not include our ECB tool for the advanced packaging. In early September, we announced purchasing orders for four wafer-level packaging tools from U.S. customers and U.S. R&D centers. These tools are scheduled for delivery in the first half of 2025. about our fan-out panel-level packaging tools. We have recently announced three panel-level packaging tools, including Vacuum Flask Clean tool for chiplet, the Horizontal Plating tool, and the Bevel Edge tool. These three new panel tools make a strong offer by ACM to address the advanced panel-level packaging market. We have been developing this technology for years, and I believe the market is now coming to us. Our technology is applicable to micro-order pitch, high-density packaging. This is especially relevant to AI packaging of a GPU at a high-density, high-bandwidth memory HBM. We see a large global opportunity as several major American leaders have chosen Pano for their AI chip packaging solution. Finish up on the product. We are making good progress with our TRAC and the PCVD platforms. Both of these products have innovation and differentiated platform design and allow for process flexibility and high throughput. We have a solid list of ongoing demonstrations and evaluations for both TRAC and PCVD. Further progress for both PCB and the track over the next year with the revenue likely later 2025 and more and more contribution in 2026 and beyond. Moving on to the customer, please turn to slide 7. In Q3, we saw broader demand for foundry logic, power, and memory. We had a full 10% customer for the period. We present 63% of the revenues. In China, we have a leading position in cleaning and target additional market share gains. We believe we have become a world-class multi-product company with a competitive product in the market for plating and we have a solid evaluation pipeline for tracking PCB. In the U.S., we continue to make steady progress. I already mentioned the order for four WIP tools scheduled for delivery in 2025. In addition, activity with our major U.S. customers continues to progress. Both of our SAP tools have already achieved supplier qualification, and we have moved to the production qualification process. And the backside of the Bible Edge tool, and we did major in this year, is in the later stage of the supplier qualification. In Europe, We are also in a later stage of qualification of R2C Step 5 Canadian Tool, which we delivered to a major global semiconductor manufacturer in Q3 of 2023. In Korea, we remain engaged with the customer for a range of tools. To support the growth, we made progress on our facility expansion in China and other regions. Please turn to slide 8. On October 20th, our subsidiary ACM Shanghai hosts the opening ceremony for the Lingang Production and Army Center that is gathering employees, customers, suppliers, and local officials. The first of two modern manufacturing floors including state of art automation system and has been initial operation. During the third quarter, we also moved into the new ACM Shanghai headquarters The facility is also in the Shanghai high-tech Zhangjiang Science Park and offers a great work environment for our engineering team. In the U.S., on October 1st, we completed the purchasing of our new Oregon facility, which includes 5,200 square feet cleaning room. We plan to move in early next year. We plan to deliver several tools in 2025 to provide the easy access to major customers for advanced tools evaluation. ACM is building a strong footprint in the U.S., including our own clean room, our new lab, and the growing service team. We see this as a great opportunity to participate in the market growth of U.S. semiconductors. I will now provide our outlook. Listen to slide 10. We have reached our 2024 revenue outlook to be in the range of $725 to $745 million versus prior range of $695 to $735 million. In the middle point, our revised outlook represents 32% year-over-year growth compared to 28% previously. Shimmer activity remains strong, and we continue to expect a full-year shimmer growth rate to outpace the revenue growth rate. Our visibility for the remainder of the year is largely driven by our current order book and the qualification and the customer acceptance of previously shipped evaluation tools to a range of customers. From our perspective, we believe WFE spending in mainland China will remain at a high level as the country continues on its goal to match the production capacity with under-market consumption. We continue to focus on market share gain, new product, and increase the localization to drive our growing objective in China market. Further, we are expanding our business to new customers in the U.S., Korea, Taiwan, Europe, and other Asian markets. Our long-term target is to generate half of our revenue from outside of China. Now let me turn the call over to our CFO Mark. who will reveal the details of our third quarter results. Mark.