Outlook

ACM has raised its revenue guidance range for fiscal year 2024 to a range of $725 million to $745 million from the prior range of $695 million to $735 million. This expectation is based on ACM management’s current assessment of the continuing impact from international trade policy, together with various expected spending scenarios of key customers, supply chain constraints, and the timing of acceptances for first tools under evaluation in the field, among other factors.

Operating Highlights and Recent Announcements

• Shipments. Total shipments in the third quarter of 2024 were $261 million, up 23% from the third quarter of 2023. Total shipments include deliveries for revenue in the quarter and deliveries of first tool systems awaiting customer acceptance for potential revenue in future quarters.

• Major Performance Breakthrough for Flagship Ultra C Tahoe Cleaning Tool. The upgraded Ultra C Tahoe now achieves the performance of standalone single-wafer cleaning tools on low-to-medium temperature sulfuric peroxide mix (SPM) processes. The hybrid architecture delivers enhanced cleaning performance, high throughput, and process flexibility, with an up to 75% reduction in chemical consumption. The upgraded Ultra C Tahoe is now in production at several high-volume customer facilities in mainland China. Additional logic and memory customers are evaluating the tool, and we expect to deliver additional units through the end 2024.
• Launched Ultra C bev-p Panel Bevel Etching Tool for Panel-Level Packaging Applications. The new tool is specifically designed for bevel etching and cleaning in copper-related processes and is capable of handling both the front and back side etching within a single system. This capability enhances process efficiency and product reliability.
• Received Orders for Wafer-Level Packaging Tools from U.S. Customer and R&D Center. ACM has received purchase orders for four wafer-level packaging tools, including two from a U.S.-based customer and two from a U.S.-based research and development (R&D) center. The four tools support a range of advanced packaging processes and are scheduled for delivery in the first half of 2025.
• Completed Purchase of Commercial Facility in Oregon. On October 1, 2024, ACM completed the purchase of a 39,500 square foot facility, including a 5,200 square foot functional clean room. This facility is intended to augment ACM’s current Oregon facility and further expand ACM’s R&D and demonstration capability in the U.S. market.

• Opening of R&D and Production Facility. On October 20, 2024, ACM Shanghai celebrated the official opening of its new R&D and production facility in Lingang, China.
  

Third Quarter 2024 Financial Summary

Unless otherwise noted, the following figures refer to the third quarter of 2024 and comparisons are with the third quarter of 2023.

• Revenue was $204.0 million, up 21%, reflecting higher sales of single wafer cleaning, Tahoe and semi-critical cleaning equipment and ECP (front-end and packaging), furnace and other technologies, partly offset by lower sales of advanced packaging (excluding ECP), services & spares.
• Gross margin was 51.4% versus 52.5%. Non-GAAP gross margin, which excludes stock-based compensation, was 51.6% versus 52.9%. Gross margin exceeded ACM’s long-term business model range of 40% to 45%. ACM expects gross margin to vary from period to period due to a variety of factors, such as product mix, currency impacts and sales volume.
• Operating expenses were $60.7 million, an increase of 10%. Operating expenses as a percentage of revenue decreased to 29.7% from 32.8%. Non-GAAP operating expenses, which exclude the effect of stock-based compensation, were $49.2 million, up 8.5%. Non-GAAP operating expenses as a percentage of revenue decreased to 24.1% from 26.9%.
• Operating income was $44.2 million, compared to $33.2 million. Operating margin was 21.7% compared to 19.7%. Non-GAAP operating income, which excludes the effect of stock-based compensation, was $56.1 million, compared to $43.8 million. Non-GAAP operating margin, which excludes stock-based compensation, was 27.5% compared to 26.0%.
• Unrealized gain (loss) on short-term investments was $0.4 million, compared to an unrealized gain (loss) of $(1.3) million. Unrealized gain (loss) reflects the change in market value of the investments by ACM’s principal operating subsidiary, ACM Research (Shanghai), Inc. The value is marked-to-market quarterly and is excluded in the non-GAAP financial metrics.
• Income tax expense was $4.0 million, compared to $0.7 million.
• Net income attributable to ACM Research, Inc. was $30.9 million, compared to $25.7 million. Non-GAAP net income attributable to ACM Research, Inc., which excludes the effect of stock-based compensation and unrealized gain (loss) on short-term investments, was $42.4 million, compared to $37.6 million.
• Net income per diluted share attributable to ACM Research, Inc. was $0.45, compared to $0.39. Non-GAAP net income per diluted share, which excludes the effect of stock-based compensation and unrealized gain (loss) on short-term investments, was $0.63, compared to $0.57.
• Cash and cash equivalents, plus restricted cash and short-term and long-term time deposits were $369.1 million at September 30, 2024, compared to $366.8 million at June 30, 2024.
  

Conference Call Details

A conference call to discuss results will be held on Thursday, November 7, 2024, at 8:00 a.m. Eastern Time (9:00 p.m. China Time). To join the conference call via telephone, participants must use the following link to complete an online registration process. Upon registering, each participant will receive email instructions to access the conference call, including dial-in information and a PIN number allowing access to the conference call. This pre-registration process is designed by the operator to reduce delays due to operator congestion when accessing the live call.

Online Registration: https://register.vevent.com/register/BIcf4dbc584cf54892966d5353590ab648

Participants who have not pre-registered may join the webcast by accessing the link at ir.acmrcsh.com/events.

A live and archived webcast will be available on the Investors section of the ACM website at www.acmrcsh.com.

Use of Non-GAAP Financial Measures

ACM presents non-GAAP gross margin, operating expenses, operating income, net income attributable to ACM Research, Inc. and basic and diluted earnings per share as supplemental measures to GAAP financial measures regarding ACM’s operational performance. These supplemental measures exclude the impact of stock-based compensation, which ACM does not believe is indicative of its core operating results. In addition, non-GAAP net income attributable to ACM Research, Inc. and basic and diluted earnings per share exclude the effect of stock-based compensation and unrealized gain (loss) on short-term investments, which ACM also believes are not indicative of its core operating results. A reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure is provided below under “Reconciliation of GAAP to non-GAAP Financial Measures.”

ACM believes these non-GAAP financial measures are useful to investors in assessing its operating performance. ACM uses these financial measures internally to evaluate its operating performance and for planning and forecasting of future periods. Financial analysts may focus on and publish both historical results and future projections based on the non-GAAP financial measures. ACM also believes it is in the best interests of investors for ACM to provide this non-GAAP information.

While ACM believes these non-GAAP financial measures provide useful supplemental information to investors, there are limitations associated with the use of these non-GAAP financial measures. These non-GAAP financial measures may not be reported by competitors, and they may not be directly comparable to similarly titled measures of other companies due to differences in calculation methodologies. The non-GAAP financial measures are not an alternative to GAAP information and are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures. They should be used only as a supplement to GAAP information and should be considered only in conjunction with ACM’s consolidated financial statements prepared in accordance with GAAP.