Good day and thank you for standing by. Welcome to the ACM Research First Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speakers today, Steve Pelayo, Managing Director of The Blueshirt Group. Please go ahead.

Good day, everyone. Thank you for joining us to discuss first 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 is also a supplemental slide deck posted to the investors section of our website that we will reference during our prepared remarks. On the call with me today are our CEO, Dr. David Wang; our CFO, Mark McKechnie; and Lisa Feng, our CFO of our operating subsidiary ACM Shanghai. Before continue, please turn to Slide 2. Let me remind you that the 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 Risks Factors and elsewhere in ACM's filings with SEC. 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 the call will be on a non-GAAP basis, which excludes stock-based compensation and an unrealized gain and loss on 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 to Slide 12. Let me now turn the call over to David Wang, who will begin with Slide 3. David?

Thanks, Steven. Hello, everyone and welcome to ACM Research the first quarter 2024 earnings conference call. Please turn to Slide 3. I'm pleased with our results, solid start to the year for the first quarter. Revenue was $152.2 million, up 105.0% profitability was good and gross margin of 52.5% and operating margin of 26.2%, and we ended the quarter with just over $288 million of cash and time deposits. Shipments for the first quarter were $245 million, up 175%. As expected, first quarter shipments were higher due to delivery of our finished goods that were not shipped in the fourth quarter of last year. And we also had an exclusion from our production team during the Lunar New Year holiday period. I will now provide the detail on products. Please turn to Slide 4. Revenue from the single wafer cleaning Tahoe and a semi-critical cleaning product grow 199% in Q1 and represent 72% of the total revenue. ACM offers what we believe is the industry's most comprehensive cleaning portfolio. We support nearly 90% of all cleaning process SAPS for memory and logic devices. At the high end, we believe our flagship SAPS Tahoe and TEBO single wafer cleaning products deliver technical feature not available from any of our competitors. At the lower end, our semi critical tools including auto bench have trading incremental growth for our cleaning category over the past two years. We have recently made progress in SPM market which we believe was resulting sheer gain and growth in our cleaning business starting this year. Let me provide more detail. SPM stands for sulfuric acid peroxide mixing. These SAPS are normally used to clean wafer after photoresist removal process and post CMP cleaning. We estimate the total available market for the SAM of our SPM tool is 25%…

Thank you, David, and good day, everyone. Please turn to Slide 11. Unless I note otherwise I'll refer to non-GAAP financial measures, which excludes stock-based compensation and unrealized gain and loss on short-term investments. Reconciliation of these non-GAAP measures comparable to GAAP measures is included in our earnings release. Unless otherwise noted, the following figures refer to the first quarter of 2024 and comparisons are with the first quarter of 2023. I will now provide financial highlights for the first quarter of 2024. Revenue was $152.2 million for the first quarter, up 105%. Revenue for single wafer cleaning Tahoe and semi-critical cleaning was $109.5 million, up 199%. Revenue for ECP, furnace and other technologies was $25.8 million, down 3%. As David noted, we anticipate good growth for the full year 2024 in this category. Revenue for advanced packaging, excluding ECP services and spares was $16.9 million, up $53.2%. Total shipments were $245 million for the first quarter, up 175%. Gross margin was 52.5% versus 54%. This exceeded our normal expected range of 40% to 45%. For the full year, we now expect gross margins to fall in the upper end of our target range. We do continue to expect gross margin to vary from period-to-period due to a variety of factors such as sales volumes, product mix and currency impacts. Operating expenses were $40.1 million for the first quarter, up from $29.2 million. R&D was $19.4 million versus $13.3 million. The year-over-year increase reflects additional personnel and other expenses to support our product development pipeline, the decline versus Q4 ’23 was primarily due to reduced spending on internal R&D development tools. Sales and marketing was $11.1 million versus $8.9 million and G&A was $9.5 million versus $6.9 million. For 2024, we plan for R&D expenses in the 13% to 15%…

[Operator Instructions] Thank you. Our first question comes from line of Suji Desilva from Roth. You're now connected.

Hi David. Hi Mark. Congratulations on the progress here.

Hi, Suji.

Just a couple. Hey guys. Maybe some high level questions, so outside of the core SAPS products, which of the new product categories is going to help drive the highest growth in ’24, just to understand are you diversifying the product categories?

Yeah, good. And obvious that you had I mentioned cleaning tools has continued our major portion of the revenue. And we see that there is this dimension is SPM tool with a cover middle and lower temperature by Tahoe and also single wafer. And also we have our mega breakthrough in a high temperature SPM tool and that's going to be also another driving factor. And plus also have this - our bevel etcher and also continues aware of growing our auto bench for the mature auto nodes. And then looking the real next year, by looking for property are semi-critical CO2 will start contributing on our revenue too. So that's the one on the cleaning side and they are looking the - our ECP will continue to see that growth and both in the front end and also on the advanced packaging side and we have in the quite good backlog in ECP. And also we see the furnace was that contributing for our revenue too in this year and also continuing next year. And we have basically our PECVD and the AOD starting evaluation. And others vacuum [Indiscernible] continue to get into market. So that's a major driving force this year for our revenue contribution. Mark, anything you want to add on that?

Yeah, no, thanks. David and thanks, Suji. I think one of the things we wanted to stress on this call is, within cleaning, even though we've been doing cleaning for a while, we have a few pretty strong product cycles underneath that that can drive additional growth. And then, when we start looking internationally, it's hard to say how our mix is going to play out between products as we go out late this year and into 2025. Because it seems like a lot of our new customers might be starting with cleaning, as well. So I'll leave it at that, Suji.

Okay. Great, yeah, now my second question was going to be similar on the geographic diversification, maybe I can hone in on the US customer and perhaps you can give us a sense of what some of the next milestones or steps are as you seem to making good progress there.

Yeah, as I mentioned, we're continuing marketing spending on our customer base in the US. And we have our one key customer going to shipping our second tool - second type of tool with bevel and wet etch to this key customer. Meanwhile, we also are talking just kind of multiple customer in the US both for the front end and also for the packaging side. So, we see the potential and globe - in the US market. And meanwhile, we'll also access the market in the Singapore and also European, right? Well, our first tool has been delivered to the one key US – I mean, European customer. And we think that will be in the qualification phase now. We are expecting this first tool while resulting the second repeat order. I think, that's it, right? Hey Mark, anything you want to add?

Yeah, yeah. So, no, thanks. International I think when we talked about our guidance when we first presented it last quarter, we got at it to a lot about how much would contribute from international. This year it’s still a build year. We're hopeful that we can get following the qualification of the US customer, we're hoping that we can get some orders here soon. We're not certain how much will fall into this year versus next and that's always been the plan but so and even for the European. So we probably expect some contribution, but really this is a build here and any significant orders would probably be for shipments next year.

Okay. Thanks, David. Thanks, Mark. I'll pass it along.

Thank you.

Thank you one moment for our next question. Our next question will come from the line of Christian Schwab from Craig-Hallum. Your line is open.

Hey great. Thanks for taking my question. I just have one follow up to the earlier conversation. Now that you're seeing broadening potential success in the international market, it seems that on a bigger picture multi-year area, I know you've outlined $1 billion of sales in China and the market outside of China for your products is materially greater. On a multi-year outlook, you have increased conviction now that this business can be much bigger than $1 billion.

Yeah, actually in their - on our layout, we're pretty confident we're going to reaching even beaten down a market by only China market. And obviously at the same time we're penetrate or exploring international market with our differential technology. So we see that the trend continue accelerating. So as I said, we're looking to the key customer in the US and they're probably their manufacturing in Singapore and also we're looking with the Taiwan customer too, plus recent, right, we hired our key - a core key account manager in the Korean operation and which David Kim, he is a real veteran of SK Hynix. And so we're really put effort and marketing and sell our product in global. So we're saying obviously, the international revenue and the contribution were getting to our total growth. As I said, in the long term we want to have their revenue come from China and half of them from outside China. So that's a goal still in our – is to continue our goal here.

Fantastic. No other questions. Thanks.

Thank you. Next question.

Thank you. One moment for our next question. [Operator Instructions] Our next question comes from the line of Ross Cole from Needham. Your line is open.

Great. Thank you guys for taking my question on behalf of Charles here today. So shipments in the first quarter were pretty high. And I know you don't typically guide shipments, but do you have any thoughts on the rest of the year? Or do you expect the Q1 shipment level to sustain through a similar level or possibly go higher or lower in the next three quarters?

Yeah, okay, let me answer, maybe Mark can follow. Obviously, first quarter shipments higher is partially contributed by our delayed shipment in Q4 of last year, right? So that's why part of the reason, plus also our manufacturing on the difficult job in the Lunar New Year. So we will say probably Q2 was slightly lower than Q1, but also continue to see that a growth and in Q2 and Q3 and Q4. So, Mark anything you want to comment?

Yeah, no, thanks. And Ross, appreciate the question. Yeah, so, we still - we certainly expect shipments to growth up to be higher than our revenue growth for the year. I mean it's a pretty solid shipment year. But yes, as David noted, Q2 they probably normalize a bit relative that an inventory piece, but we'd expect it to kind of shift back up in Q3 and Q4.

Great. Thank you. That was my only question.

Great. Thanks, Ross.

Thank you. One moment for our next question. Our next question will come from the line of Charlie Chan from Morgan Stanley. Your line is open.

Hi, David, Mark, thanks for taking my question and also congrats for very good results inclusion et cetera. So I'm not sure, but I feel like this time around you are more open to talk about Hynix, SPM business no matter claiming or the ECP business opportunity. May I know, if you have a significant revenue there. I remember you kind of have some demo tool there, but you said that now are confident project wins in the recurring order may come from that.

Yeah, actually Hynix is one of our key customer, right? And they are also is a real long-term customer too. Then we now we add them one of our obviously our flagship SAPS megasonic cleaning can offer much uniform megasonic or energy contribution. So therefore, you can clean every via of the wafer, which is a very important for TSV and the process. And second one real copper plating, right. It's really either packaging, 3D, 2.5, 3-D and also in the PSV. So we're engaging with the customer and which we think about the potential of the product and definitely can be the potential choice for them to take. So, we are doing the important right now.

Okay. Okay. In, [Indiscernible] there is a kind of a key technology right? It can be used in advanced packaging from simple or TSMC’s SOIC. So, just my understanding, I think it's not just a TSMC can provide the colors of FD advanced packaging I think Intel even the Encore may have advanced packaging stuff, right? So, are you guys going to supply to those opportunities?

Yeah, obviously like you said, definitely our copper plating can using for the other customers, right, for this advanced packaging process. And so we're approaching multiple other customer right now. And I think this market obviously only a few player. And we can get an alternative choice for them to take. Also, we do have some differential technology, what differential outperformance with other guys? So we're very confidence and we can get it in the market and for the outside China market.

Okay. Yeah, and actually my second question is about this - also international markets. I remember four years ago that to cover the stock. Over that has the question when we're going to get in TSMC, right? And four years later, I feel like TSMC business to be very, very important target. They continue to open a new fabs not just in the US, but also Japan and next will be Germany including both the mature nodes and the leading edge. So my question is that, what do you need to do, right, to really win this customer? Can you give us some color whether it's a technology or kind of production location or pricing, whatever what’s the issue right now?

Yeah, well, I mean, obviously, like you said, TSMC is one of our key customer target. And we're working with them more than a year. And we are still engaging with them, by the way. And so, we're in evaluation talking process right now, right? As I said, all cleaning, also a couple braking definitely is one of the key product right, differentiate with other players. So we are confident, right? In the – anyway probably I cannot tell what's going on, but that we are fully engaged with TSMC is our potential target obviously.

Okay. Okay yeah, that's all the question I have. Thank you for your time. Thank you.

Thank you.

Thank you. One moment for our next question. And our next question will come from Mark Miller from the Benchmark Company. Your line is open.

Well, congratulations on another upside report. Just wondering if you're seeing any impacts such as push outs from slowing of EB [Ph] demand from China?

Okay, that's a good question. Actually, we see there a field - I mean, quite the customer focus on their IGBT production line. And we see that is continual growth because anyway IGBT for largely in China is still early stage, right? So, we see the customers continuing spending and for this IGBT investments. And also we do have a very good product in cleaning and also in furnace, right of supporting this IGBT, just wondering how cash how cash flow went during the quarter? Did you consumed cash?

Yeah, hey Mark. I'll take that. So and it'll show up in our Q, but cash flow from operations was. $9.6 million. We used nine about $9.6 million, yes.

Thank you.

Thank you. And I'm not showing any further questions in the queue. I’d like to turn the call back over to Steve for any closing remarks.

Okay. Thank you, operator and thank you, all for participating in today's call and for your support. Before we close, let me just mention a couple of upcoming Investor Relations events. On May 29th, we will present at Craig-Hallum’s 21st Annual Institutional Investor Conference in Minneapolis. From June 25th to 26th, we will present at the 10th Annual Roth London Conference at the Four Seasons Park Lane, London. Attendance at the conference is by invitation only where interested investors, please contact your respective sales representatives to register and schedule one-on-one meetings with the management team. This concludes today's call and you may now disconnect.

Thank you for your participation in today's conference. This concludes the program. You may now disconnect. Everyone have a great day.