ACM Research, Inc. (“ACM” or the “Company”) (NASDAQ:ACMR), a
leading supplier of wafer cleaning technologies for advanced
semiconductor devices, today reported financial results for its
first fiscal quarter ended March 31, 2020.
ACM’s President and Chief Executive Officer Dr. David Wang
commented, “I am pleased with our first quarter results. With
the COVID-19 pandemic partially impacting operations, we focused
our efforts on firming up the year, achieving customer acceptances
for first tools, and the introduction of new products. We remain
optimistic about our outlook for the year, with visibility
extending into the fourth quarter.”
Dr. Wang continued, “We are executing our strategy, and are
committed to becoming a major player in the semiconductor equipment
market. We are investing in R&D to enhance our product
portfolio, we have added key sales resources to penetrate new
customers in new geographies, and we are moving forward with plans
to expand our long-term production capacity.”
|
Three Months Ended March 31, |
|
GAAP |
|
Non-GAAP(1) |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
|
(dollars in thousands, except per share data) |
Revenue |
$ |
24,348 |
|
|
$ |
20,479 |
|
|
$ |
24,348 |
|
|
$ |
20,479 |
|
Gross margin(2) |
|
42.0 |
% |
|
|
43.1 |
% |
|
|
42.2 |
% |
|
|
43.2 |
% |
Income from operations(2) |
$ |
1,218 |
|
|
$ |
2,251 |
|
|
$ |
1,907 |
|
|
$ |
2,995 |
|
Net income attributable to ACM
Research, Inc.(2) |
$ |
1,705 |
|
|
$ |
1,857 |
|
|
$ |
2,394 |
|
|
$ |
2,601 |
|
Basic EPS(2) |
$ |
0.09 |
|
|
$ |
0.12 |
|
|
$ |
0.13 |
|
|
$ |
0.16 |
|
Diluted EPS(2) |
$ |
0.08 |
|
|
$ |
0.10 |
|
|
$ |
0.11 |
|
|
$ |
0.14 |
|
(1) Reconciliations to U.S. generally accepted
accounting principles (“GAAP”) financial measures from non-GAAP
financial measures are presented below under “Reconciliation of
GAAP to Non-GAAP Financial Measures.”(2) Non-GAAP
financial measures exclude stock-based compensation.
Outlook
For fiscal year 2020, the Company continues to expect revenue to
be in the range of $130 million to $150 million. This view
assumes the COVID-19 situation continues to improve in China and
stabilizes in the coming months on a global basis.
Q1 Operating Highlights and Recent
Announcements
- Shipments. Total shipments in the first
quarter of 2020 were $12 million, versus $14 million in the first
quarter of 2019 and $25 million in the fourth quarter of
2019. Total shipments include deliveries for revenue in the
quarter, and deliveries of systems awaiting customer acceptance for
potential revenue in future quarters.
- Ultra Furnace Product Introduced. On
April 28, 2020, ACM introduced the Ultra Furnace. The initial
system was developed for low-pressure chemical vapor deposition
(LPCVD), and is intended to serve as a base platform for other dry
processing applications, including oxidation, annealing processes,
and atomic layer deposition (ALD). This achievement is the
result of a two-year collaboration between ACM’s R&D teams
located in China and Korea.
- Broadened product offering with a suite of
Semi-Critical Cleaning Systems. On May 6, 2020, ACM
announced a suite of three Ultra™ C wet cleaning tools: the “Ultra
C b” for backside clean, “Ultra C wb” automated wet bench, and
“Ultra C s” scrubber for front and backside processes.
- Expanded Global Sales Effort. In April 2020,
ACM announced the appointment of Jim Straus as Vice President of
Sales for North America to accelerate the effort to expand adoption
of ACM's core technologies at major semiconductor companies in
North America.
- ACM Shanghai Pre-IPO activities. Plans
remain on track to submit ACM Shanghai’s application for an initial
public offering of its shares on the Shanghai Stock Exchange’s STAR
Market in mid-2020, and to price the transaction by year-end
pending timely approvals.
- Proposed R&D and Production Center in Shanghai’s
Lingang Region. In December 2019, ACM Shanghai
entered into a framework agreement to acquire land rights in the
Lingang region of Shanghai, for the construction of a new R&D
center and production facility on the land. The Company
expects to finalize a definitive agreement for land rights for the
proposed site in the near future, followed by plans to start
construction activities in late 2020, with initial production
activities to commence in late 2022.
Financial Summary
The following figures refer to the first quarter of 2020, unless
noted otherwise. All comparisons are with the first quarter
of 2019, unless otherwise noted.
- Revenue was $24.3 million, up 18.9%,
reflecting an increase in revenue from single wafer wet cleaning
and other front-end processing equipment, offset in part by a
decrease in revenue from back-end wafer assembly and packaging
equipment.
- Gross margin was 42.0%, compared to 43.1% in
the first quarter of 2019. Gross margin was within the range
of 40.0% to 45.0% set forth in the Company’s long-term business
model. The Company expects gross margin to vary from period
to period due to a variety of factors, such as sales volume and
product mix.
- Operating expenses were $9.0 million, an
increase of 37%. Non-GAAP operating expenses, which remove
stock-based compensation, were $8.4 million, up 43%. Non-GAAP
operating expenses as a percent of revenue increased to 34%,
compared to 29% in the first quarter of 2019. Higher spending
on new products and sales-related activities, preparation for the
STAR Market IPO, and COVID-19 related items contributed to the
increase from the prior-year period.
- Operating income of $1.2 million declined 46%
due to the increase in operating expenses, which represented a
substantial investment in the development and marketing of new
product introductions.
- Net income
attributable to ACM Research, Inc. was $1.7
million, compared to $1.9 million in the first quarter of
2019. Non-GAAP net income attributable to ACM Research, Inc.
was $2.4 million, compared to $2.6 million in the first quarter of
2019. Tax expense versus a normalized 12% tax-rate, and the
effects of foreign-exchange fluctuations on operating results
provided a net benefit of $0.6 million in the first quarter of
2020, and a net expense of $0.1 million in the first quarter of
2019.
- Net income per diluted share
attributable to ACM Research, Inc. was $0.08,
versus $0.10 in the first quarter of 2019. Non-GAAP net
income per diluted share attributable to ACM Research, Inc. was
$0.11, versus $0.14 in the first quarter of 2019. Tax expense
versus a normalized 12% tax rate, and the effects of
foreign-exchange fluctuations on operating results provided a net
benefit of $0.03 per share in the first quarter of 2020, and a net
expense of $0.01 in the first quarter of 2019.
- Cash and equivalents at quarter-end were $52.3
million, versus $58.3 million at the end of the fourth quarter of
2019 and $27.4 million at the end of the first quarter of
2019. The quarter-on-quarter decline was primarily due to the
reduction of short-term borrowings, net of positive cash flow from
operations and other items during the quarter.
Conference Call Details
A conference call to discuss results will be held on Thursday,
May 7, 2020, at 8:00 a.m. Eastern Time (8:00 p.m. China
Time).
Please register in advance to join the conference call using the
link provided below and dial in 10 minutes before the call is
scheduled to begin. Conference call access information will
be provided upon registration.
Participant Online Registration:
http://apac.directeventreg.com/registration/event/1594794
A recording of the webcast will be available on the investor
page of the ACM website at www.acmrcsh.com for one week following
the call.
Use of Non-GAAP Financial Measures
ACM presents non-GAAP gross margin, operating income, net income
(loss), 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. A reconciliation of
each non-GAAP financial measure to the most directly comparable
GAAP financial measure is provided below under “Reconciliation of
Non-GAAP to 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.
Forward-Looking Statements
Information presented in the second and third paragraphs of this
press release and under the heading “Outlook” above contains
forward-looking statements for purposes of the safe harbor
provisions of the Private Securities Litigation Reform Act of
1995. Actual results may vary significantly from ACM’s
expectations based on a number of risks and uncertainties,
including but not limited to the following, any of which could be
exacerbated even further by the continuing COVID-19 outbreak in
China and globally: anticipated customer orders or identified
market opportunities may not grow or develop as anticipated;
customer orders already received may be postponed or canceled;
suppliers may not be able to meet ACM’s demands on a timely basis;
volatile global economic, market, industry and other conditions
could result in sharply lower demand for products containing
semiconductors and for the company's products and in disruption of
capital and credit markets; ACM’s failure to successfully manage
its operations; and trade regulations, currency fluctuations,
political instability and war may materially adversely affect ACM
due to its substantial non-U.S. customer and supplier base and its
substantial non-U.S. manufacturing operations. ACM cannot
guarantee any future results, levels of activity, performance or
achievements. ACM expressly disclaims any obligation to
update forward-looking statements after the date of this press
release.
About ACM Research, Inc.
ACM develops, manufactures and sells single-wafer wet cleaning
equipment, which semiconductor manufacturers can use in numerous
manufacturing steps to remove particles, contaminants and other
random defects, and thereby improve product yield, in fabricating
advanced integrated circuits.
© ACM Research, Inc. The ACM logo, SAPS, TEBO and ULTRA C are
trademarks of ACM Research, Inc. For convenience, these
trademarks appear in this press release without ™ symbols, but that
practice does not mean that ACM will not assert, to the fullest
extent under applicable law, its rights to the trademarks.
This press release also contains other companies’ trademarks,
registered marks and trade names, which are the property of those
companies.
For investor and media inquiries, please
contact:
In the United
States: |
The Blueshirt
Group |
|
Ralph Fong |
|
+1 (415) 489-2195 |
|
ralph@blueshirtgroup.com |
|
|
In China: |
The Blueshirt Group Asia |
|
Gary Dvorchak, CFA |
|
+86 (138) 1079-1480 |
|
gary@blueshirtgroup.com |
ACM RESEARCH,
INC.Condensed Consolidated Balance
Sheets
|
|
|
March 31,
2020 |
|
December 31,
2019 |
|
(Unaudited) |
|
(In thousands,
except share and per share data) |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash
equivalents |
$ |
52,283 |
|
|
$ |
58,261 |
|
Restricted cash |
|
58,726 |
|
|
|
59,598 |
|
Accounts receivable, less allowance for doubtful accounts of $0
as of March 31, 2020 and $0 as of December 31, 2019 |
|
37,260 |
|
|
|
31,091 |
|
Other receivables |
|
3,236 |
|
|
|
2,603 |
|
Inventories |
|
44,987 |
|
|
|
44,796 |
|
Prepaid expenses |
|
1,985 |
|
|
|
2,047 |
|
Total current assets |
|
198,477 |
|
|
|
198,396 |
|
Property, plant and equipment, net |
|
3,495 |
|
|
|
3,619 |
|
Operating lease right-of-use assets, net |
|
3,547 |
|
|
|
3,887 |
|
Intangible assets, net |
|
307 |
|
|
|
344 |
|
Deferred tax assets |
|
5,212 |
|
|
|
5,331 |
|
Long-term investments |
|
6,015 |
|
|
|
5,934 |
|
Other long-term assets |
|
155 |
|
|
|
192 |
|
Total assets |
|
217,208 |
|
|
|
217,703 |
|
Liabilities, Redeemable Non-controlling Interest and
Stockholders’ Equity |
|
|
|
Current liabilities: |
|
|
|
Short-term borrowings |
|
3,892 |
|
|
|
13,753 |
|
Accounts payable |
|
18,616 |
|
|
|
13,262 |
|
Advances from customers |
|
9,236 |
|
|
|
9,129 |
|
Income taxes payable |
|
3,347 |
|
|
|
3,129 |
|
Other payables and accrued expenses |
|
14,331 |
|
|
|
12,874 |
|
Current portion of operating lease liability |
|
1,345 |
|
|
|
1,355 |
|
Total current liabilities |
|
50,767 |
|
|
|
53,502 |
|
Long-term operating lease liability |
|
2,202 |
|
|
|
2,532 |
|
Other long-term liabilities |
|
5,830 |
|
|
|
4,186 |
|
Total
liabilities |
|
58,799 |
|
|
|
60,220 |
|
Commitments and contingencies |
|
|
|
Redeemable Non-controlling interests |
|
59,467 |
|
|
|
60,162 |
|
Stockholders’ equity: |
|
|
|
Common stock – Class A, par value $0.0001: 50,000,000 shares
authorized as of March 31, 2020 and December 31, 2019; 16,317,346
shares issued and outstanding as of March 31, 2020 and 16,182,151
shares issued and outstanding as of December 31, 2019 |
|
2 |
|
|
|
2 |
|
Common stock–Class B, par value $0.0001: 2,409,738 shares
authorized as of March 31, 2020 and December 31, 2019; 1,862,608
shares issued and outstanding as of March 31, 2020 and December 31,
2019 |
|
- |
|
|
|
- |
|
Additional paid in capital |
|
84,351 |
|
|
|
83,487 |
|
Accumulated surplus |
|
17,212 |
|
|
|
15,507 |
|
Accumulated other comprehensive loss |
|
(2,623 |
) |
|
|
(1,675 |
) |
Total stockholders’ equity |
|
98,942 |
|
|
|
97,321 |
|
Total liabilities, redeembable non-controlling
interests, and stockholders' equity |
$ |
217,208 |
|
|
$ |
217,703 |
|
ACM RESEARCH,
INC.Condensed Consolidated Statements of
Operations and Comprehensive Income
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
|
|
|
|
|
(Unaudited) |
|
( In thousands, except share and per share data) |
Revenue |
$ |
24,348 |
|
|
$ |
20,479 |
|
Cost of revenue |
|
14,120 |
|
|
|
11,653 |
|
Gross profit |
|
10,228 |
|
|
|
8,826 |
|
Operating expenses: |
|
|
|
Sales and marketing |
|
3,005 |
|
|
|
1,869 |
|
Research and development |
|
3,677 |
|
|
|
2,765 |
|
General and administrative |
|
2,328 |
|
|
|
1,941 |
|
Total operating expenses, net |
|
9,010 |
|
|
|
6,575 |
|
Income from operations |
|
1,218 |
|
|
|
2,251 |
|
Interest income |
|
335 |
|
|
|
9 |
|
Interest expense |
|
(111 |
) |
|
|
(139 |
) |
Other income
(expense), net |
|
677 |
|
|
|
(261 |
) |
Equity income
in net income of affiliates |
|
148 |
|
|
|
116 |
|
Income before income taxes |
|
2,267 |
|
|
|
1,976 |
|
Income tax expense |
|
(304 |
) |
|
|
(119 |
) |
Net income |
|
1,963 |
|
|
|
1,857 |
|
Less: Net income attributable
to redeemable non-controlling interests |
|
258 |
|
|
|
- |
|
Net income
attributable to ACM Research, Inc. |
$ |
1,705 |
|
|
$ |
1,857 |
|
Comprehensive income: |
|
|
|
Net income |
|
1,963 |
|
|
|
1,857 |
|
Foreign currency translation adjustment |
|
(1,900 |
) |
|
|
657 |
|
Total comprehensive income |
|
63 |
|
|
|
2,514 |
|
Less: Comprehensive income
attributable to redeemable non-controlling interests |
|
(694 |
) |
|
|
- |
|
Total comprehensive income
attributable to ACM Research, Inc. |
$ |
757 |
|
|
$ |
2,514 |
|
|
|
|
|
Net income attributable
to ACM Research, Inc. per common share : |
|
|
|
Basic |
$ |
0.09 |
|
|
$ |
0.12 |
|
Diluted |
$ |
0.08 |
|
|
$ |
0.10 |
|
|
|
|
|
Weighted
average common shares outstanding used in computing per share amounts: |
|
|
Basic |
|
18,120,363 |
|
|
|
16,044,655 |
|
Diluted |
|
21,066,636 |
|
|
|
18,225,317 |
|
ACM RESEARCH,
INC.Reconciliation of GAAP to Non-GAAP Financial
Measures
As described under “Use of
Non-GAAP Financial Measures” above, ACM presents non-GAAP gross
margin, operating income and net income (loss) as supplemental
measures to GAAP financial measures, each of which excludes
stock-based compensation (“SBC”) from the equivalent GAAP financial
line items. The following table reconciles gross margin,
operating income and net income (loss) to the related non-GAAP
financial measures:
|
Three Months Ended March 31, |
|
2020 |
2019 |
|
Actual |
SBC |
Adjusted |
Actual |
SBC |
Adjusted |
(GAAP) |
(Non-GAAP) |
(GAAP) |
(Non-GAAP) |
|
(In thousands) |
|
|
|
|
|
|
|
Revenue |
$ |
24,348 |
|
$ |
- |
|
$ |
24,348 |
|
$ |
20,479 |
|
$ |
- |
|
$ |
20,479 |
|
Cost of revenue |
|
(14,120 |
) |
|
(45 |
) |
|
(14,075 |
) |
|
(11,653 |
) |
|
(30 |
) |
|
(11,623 |
) |
Gross profit |
|
10,228 |
|
|
(45 |
) |
|
10,273 |
|
|
8,826 |
|
|
(30 |
) |
|
8,856 |
|
Operating expenses: |
|
|
|
|
|
|
Sales and marketing |
|
(3,005 |
) |
|
(94 |
) |
|
(2,911 |
) |
|
(1,869 |
) |
|
(34 |
) |
|
(1,835 |
) |
Research and development |
|
(3,677 |
) |
|
(187 |
) |
|
(3,490 |
) |
|
(2,765 |
) |
|
(86 |
) |
|
(2,679 |
) |
General and administrative |
|
(2,328 |
) |
|
(363 |
) |
|
(1,965 |
) |
|
(1,941 |
) |
|
(594 |
) |
|
(1,347 |
) |
Income from operations |
$ |
1,218 |
|
$ |
(689 |
) |
$ |
1,907 |
|
$ |
2,251 |
|
$ |
(744 |
) |
$ |
2,995 |
|
Net income attributable to ACM Research,
Inc. |
$ |
1,705 |
|
$ |
(689 |
) |
$ |
2,394 |
|
$ |
1,857 |
|
$ |
(744 |
) |
$ |
2,601 |
|
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