ACM Research, Inc. (ACMR) Earnings Call Transcript & Summary

Proposal #1 is the election of directors. At ACM, the entire Board of Directors is elected annually. Each director must be elected by a plurality of votes present in person or represented by proxy at this meeting and entitled to vote on the matter. The 5 nominees for election at this meeting are: David H. Wang, Haiping Dun, Chenming C. Hu, Tracy Liu and Yinan Xiang. Proposal 2 is amendments to certificate of incorporation. The amendments are principally to increase the numbers of authorized share of common stock. For approval, this vote requires the affirmative vote of stockholders representing a majority of the voting power of the outstanding capital stock voting together as a single class on an as converted basis. Proposal #3 is the ratification of the Audit Committee's appointment of BDO China Shu Lun Pan Certified Public Accountants as ACM's independent auditor for 2021. This ratification requires approval by affirmative votes constituting a majority of votes present in person or by proxy. Proposal #4, the final matter, is the approval of our 2020 executive compensation. This advisory vote requires approval by affirmative votes constituting a majority of the votes present in person or by proxy. This concludes the business items on the agenda for this annual meeting. The polls are now closed. The inspector of elections has advised us in her report of the following voting results. There are present at this meeting, in person or by proxy, the holder of shares of Class A and Class B common stock entitled to cast 42,807,616 votes -- I'm sorry, 42,807,616 votes, representing 81.3% of the voting power of the stock entitled to vote at this meeting. First, a plurality of votes in the election of directors have been cast for the election of each nominee. Second, a majority of the voting power of the outstanding capital stock has voted for the amendments to our certificate of incorporation, principally to increase the numbers of authorized shares of common stock. Third, the majority of the votes cast on the matter have been cast for the ratification of the appointment of BDO China Shu Lun Pan Certified Public Accountants as our independent auditor for 2021. Fourth, a majority of the votes cast on the matter have been cast for the approval of the compensation paid to our executives in 2020. Based on the report of the inspector of elections, I declare that all of the proposals have been approved. As Secretary, I'll incorporate the formal report of the inspector of elections, including the results of the votes, in the record of this meeting. I will now hand the meeting back to the Chair, David Wang.

Thank you for taking time to attend our 2021 Annual Meeting. There being no further business to come before the meeting, I hereby adjourn the meeting. Now I would like to take a few minutes to review some of our key achievements in 2020 and to date in 2021. 2020 was a very productive year for ACM. We faced several challenges, such as COVID-19 pandemic and trade tensions. We overcame these challenges through hard work and good execution and positive tailwind in the China semiconductor industry. We focus on what we could control. We managed our supply chain. We executed on customer deliveries. We expanded capacity. We introduced new products, and we made great progress with new customers. We also moved forward with our long-term facility plan in Lingang with purchasing 50-year land rights, initial planning for the R&D and production site and the deposit for our employee housing development. For the full year 2020, we had a record revenue of $156.6 million, up 46% year-over-year, and record shipment of $182 million, up 58% from 2019 level. Building on a strong business momentum from last year, we are off to a great start of 2021, with solid results for the first quarter. Q1 revenue was $43.7 million, up 80% year-over-year. Shipment was $74 million, up from $67 million in Q4 2020, and up from $12 million in the first quarter of 2020. We delivered a good balance of growth and profitability with a 41.4% gross margin and 11% operation margin. We ended the quarter with $79 million of cash, with additional USD 27 million equivalent from our investment in SMIC's share listed under Shanghai Stock Exchange stock market. First quarter results demonstrate ACM technology leadership, our broader technology portfolio and our increased production scale. I will now discuss some of our key strategic initiatives. First, ACM's success starts with our customers. We have 5 major front-end customer in foundry, 3D NAND and DRAM. We also have several back-end wafer packaging and assembly customers, our newer customers manufacture power and analog devices. In 2020, we had penetrated 2 of the 5 key leading-edge node of analog power IC and CIS manufacturers in China. In the first quarter of 2021, we received orders from additional 1 of the 5 key leading-edge node customers. We are actively engaged with the remaining 2 player with the goal of receiving orders from 1 or both of them later this year. On top of that, during Q1, we also penetrate 2 additional advanced packaging house and 1 compound semiconductor IC manufacturer. Second, we are expanding our production capacity. During Q1, we expanded production capacity by leasing a second building in our factory in Chuansha. This will provide us with enough floor space to gradually increase our production capacity to more than $500 million, up from current level of $350 million. Our long-term plan is build production in our new center in the Lingang region of Shanghai. The 1 million square feet of the floor spacing will enable us to increase our annual production capacity to $1.5 billion. We are busy with additional architecture and design work this quarter, with initial production targeted by the end of 2022. Third, we have established a strong team to helping expand ACM customer base to additional major customers. Since hiring Jim Straus to head our U.S., European sales effort last year, we have added several other senior employee in the business development and service team, including a 21-year industry veteran to lead our U.S. service and delivery team. We now have a seasoned team of world-class industry, weathering to drive our effort to expand our business to additional major customers beyond our base in Asia. Our team remains deeply engaged in technology discussion and evaluation with the U.S. and Taiwan-based semiconductor manufacturers. We are making good progress and are confident that we can secure win with 1 or more first-tier customer during 2021. Fourth, we are expanding our production offering with new product line. Our current products add a market of more than $5 billion. ACM committed to become a multi-product company. We are positive on growing opportunity from our core cleaning tools, including SAPS, TEBO, Tahoe and our semi-critical cleaning tools. We are also beginning to see a meaningful contribution from our newer product offerings, starting with ECP, where we expect to ramp in 2021 and beyond, followed by our furnace product, which we expect to begin contributing in 2022 and beyond. Additionally, we have started significant R&D investment in 2 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. Fifth, we are making slow, but steady progress on the stock market IPO of China Shanghai subsidiary. As discussed on our Q1 earnings conference call, our team submitted a second verification report to the Shanghai Stock Exchange Commission or SSEC in later March. This report explains the class action lawsuit that was filed in the U.S. last year related to the short seller report published in early October. We are responding to their other important, but manageable inquiry. We remain confident that we will receive approval from SSEC, then move on to the China Security Regulatory Commission registration process to complete IPO. However, consistent with this practice, SSEC has not provided us with the timetable that would enable us to predict the process timing. Before I turn to Q&A session, I would like to thank our employees for their hard work and their dedication. I also want to thank our customers, partners and shareholders for their continued support and confidence in ACM Research. Our strong growth is supporting acceleration in R&D spending on new products. We are building a global sales and marketing resource to penetrate 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 remain on track. With that, Mark and I will now take any business-related questions that you may have.

Okay. At this time, I don't see any questions in the queue. So thank you again for the participation and support. The webcast is now completed.

Thank you.