NASDAQ:ACMR ACM Research Q3 2024 Earnings Report $21.23 +0.35 (+1.68%) Closing price 04:00 PM EasternExtended Trading$21.28 +0.05 (+0.26%) As of 05:56 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast ACM Research EPS ResultsActual EPS$0.63Consensus EPS $0.28Beat/MissBeat by +$0.35One Year Ago EPS$0.41ACM Research Revenue ResultsActual Revenue$204.00 millionExpected Revenue$191.18 millionBeat/MissBeat by +$12.82 millionYoY Revenue Growth+21.00%ACM Research Announcement DetailsQuarterQ3 2024Date11/7/2024TimeBefore Market OpensConference Call DateThursday, November 7, 2024Conference Call Time8:00AM ETUpcoming EarningsACM Research's Q1 2025 earnings is scheduled for Thursday, May 8, 2025, with a conference call scheduled at 8:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q1 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by ACM Research Q3 2024 Earnings Call TranscriptProvided by QuartrNovember 7, 2024 ShareLink copied to clipboard.There are 8 speakers on the call. Operator00:00:00Good day, ladies and gentlemen. Thank you for standing by, and welcome to the ACM Research Fiscal Third Quarter 20 24 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. Operator00:00:19If you have any objections, you may disconnect at this time. Now I will turn the call over to Mr. Gary Dvorchak, Managing Director of The BlueShark Group. Gary, please go ahead. Speaker 100:00:31Good day, everyone. Thank you for joining us to discuss Q3 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. Speaker 100:00:44There's also a supplemental deck slide deck posted in the Investors section of our website that we'll reference during our prepared remarks. On the call with me today are our CEO, Doctor. David Wong our CFO, Mark McKechnie and Lisa Feng, the CFO of our operating subsidiary, ACM Shanghai. Before we continue, please turn to Slide 2. Let me remind you that remarks made during this call may include predictions, estimates or other information that might be considered forward looking. Speaker 100:01:13These 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. Speaker 100:01:43Certain 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 and 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 3. David? Speaker 200:02:10Thanks, Gary. Hello, everyone, and welcome to ACM Research Third Quarter 2024 Earnings Conference Call. Please turn to Slide 3. For the Q3, revenue was $204,000,000 up 21%. Shipments were $261,000,000 up 23%. Speaker 200:02:31Profitability was good with a gross margin of 51.6% and operating margin of 27.5%. And we ended the quarter with approximately $369,000,000 of cash and time deposit with a positive cash flow from operations for the quarter. Revenue for the 1st 9 months of the year was $558,600,000, up 44%. Year to date, shipments were $709,700,000, up 56%. We believe this growth is a significant demonstrated market share gain for ACM and their contribution from new product cycle. Speaker 200:03:18Now I will provide the detail on product. Please turn to Slide 4. Revenue from single wafer cleaning, Tahoe and the semicritical cleaning product grew 22% in Q3 and represented 79% of total revenue. ACM offer comprehensive top to bottom cleaning portfolio. We estimate that global total available market or 10 for the cleaning is close to $6,000,000,000 and ACM products supporting more than 90% of all cleaning process steps in both memory and logical manufacturing. Speaker 200:03:55Our factor in Sofaker 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 cleaning pool supplier service the high temperature market for SDN. During our Q1 call, I reported a technical breakthrough that could enable us to be the 2nd player. Speaker 200:04:43We are now in later stage evaluation at a number of key customer, and we are committed to become the 2nd supplier in the world supporting commercial high temperature SPM cleaning. That's not all. Today, we issued a press release making a marking a major performance breakthrough for Tahoe, ACM's environment solution for the middle and the low temperature SPM segment. The Ultra C Tahoe now achieved the performance of a standalone single wafer cleaning tool on low to high temperature SPM process. The Tahoe platform advanced cleaning capability have achieved average particle accounts of less than 6 particles at 26 nano size, meeting the stringent requirement for the advanced node manufacturing. Speaker 200:05:40The tool is also capable of removing yx nanoparticle 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 deliver 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 sulfuric acid alone, with additional environment and the cost benefit from reduced supric acid and treatment and disposal. With the rise of AI to the front to forefront of the consumer mind, we expect increased public attention on the environmental impact of semiconductor chip manufacturing. Speaker 200:06:48We believe ACM Ultra C 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 the Ultra C Tahoe is another example of excellency from ACM innovation and world class R and D team and demonstrate how innovation can achieve the information, economy and the protected environment. We also announced today that the upgrade Ultra C Tahoe is now in mass production and several high volume customer facility in China and on the evaluation of additional logic and memory customers. We expect to deliver more units by end of the year. Speaker 200:07:39The 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 tools market. We believe ACM cleaning portfolio, including SAPS, TEBO, Tahoe, Semi Critical, together with SPM and Supercritical CO2 dry, put ACM in water class status. We see good opportunity for continued market share gain in Mainland China, and we are confident we have what it will take 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 remains solid for both front end and back end tools. Speaker 200:08:35I'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 customer. Overall, we now anticipate of having 17 furnace customers by the end of this year, upper from 9 at the end of last year. We expect a contribution to revenue from furnace to accelerate in 2025. Speaker 200:09:11Revenue from advanced packaging, which excludes ECP but includes service and spell, declined by 21% for Q3 and was up 3% year to date and represented 4% of revenue. This category including a range of the packaging tools, including coater, developer, scrubber, PR stripper and wet hatchers and also service and spare parts. And we are exploring new product and technology to participate in the next generation of advanced packaging. We believe ACM is one of the only company that offers a full set of wet tool, cover plating tool and a polished tool for advanced packaging. Year to date, growth of advanced packaging was low. Speaker 200:09:59We attribute this to slower growth for China based packaging firm who are more exposed to a broader end market trend. We also know this category does not include our ECP tool for the advanced packaging. In early September, we announced purchasing orders for 4 wafer level packaging tools from U. S. Customer and U. Speaker 200:10:24S. R and D center. These tools are scheduled for delivery in the first half of twenty twenty five. We are very optimistic about our fan out panel level packaging tools. We have recently announced 3 panel level packaging tools, including vacuum flask clean tool for chiplets, the horizontal plating tool and the bevel etch tool. Speaker 200:10:49These 3 new panel tools makes a strong offer by ACM to address 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 applicable to microorder pitch, high temperature high density packaging. This is especially relevant to AI packaging of a GPU at high density, high bandwidth memory HBM. We see a large global opportunity as several major academic leaders have chosen panel for their AI chip packaging solution. Speaker 200:11:29Finish up on the product. We are making good progress with our TRAC and the P and C platforms. Both of these products have innovation, a differentiated platform design and allow for process flexibility and a high throughput. We have a solid list of ongoing demonstration and evaluation for both TRAC and the TCVD. We expect further progress for both TCVD and TRAC over the next year with the revenue likely in later 2025 and more and more contribution in 2026 and beyond. Speaker 200:12:03Moving 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, representing 63% of the revenue. In China, we have a leading position in cleaning and target additional market share gains. Speaker 200:12:26We believe we have become a world class multiproduct company with a competitive product in the market for plating key furnace, and we have a solid evaluation pipeline for tracking the PCB. In the U. S, we'll continue to make steady progress. I already mentioned the order for 4 WIP tools scheduled for delivery in 2025. In addition, activity with our major U. Speaker 200:12:52S. Customer continues to progress. Both of our SaaS tool have already achieved supplier qualification, and we have moved to their production qualification process. And the backside of the Babble Edge tool and with the measurement of this year is in the later stage of a supply qualification. In Europe, we are also in the later stage of qualification of Ultra C Step V cleaning tool, which we delivered to a major global semiconductor manufacturer in Q3 of 2023. Speaker 200:13:28In 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. In China, on October 20, our subsidiary, ACM Shanghai, hosted opening ceremony for the Lingang Production and R and D Center that are gathering employees, customers, supplier and local officials. The first of 2 modern manufacturing floor, including state of the art of automation system and has been initial operation. Speaker 200:14:08During the Q3, we also moved into the new ACM Shanghai headquarters. The facility is also in the Shanghai High-tech Zhangjiang Science Park and offer a great work environment for our engineering team. In the U. S, October 1, we completed the purchasing of our new Oregon facility, which including 5,200 square feet cleaning room. We plan to move in early next year. Speaker 200:14:38We plan to deliver several tools in 2025 to provide their easy access to major customers for advanced tools evaluation. ACM is building a strong footprint in the U. S, including our own cleanroom army lab and the growing service team. We see this a great opportunity to participate in the market growth of U. S. Speaker 200:15:00Semiconductor. I will now provide our outlook. Please turn to Slide 10. We have raised our 2024 revenue outlook to be in the range of $725,000,000 to $745,000,000 versus prior range of $695,000,000 to $735,000,000 In the middle point, our revised outlook represented 32% year over year growth compared to 28% previously. Shipment activity remains strong, and we continue to expect the full year shipment growth rate to outpace the revenue growth rate. Speaker 200:15:41Our visibility for the remainder of the year is largely driven by our current order book and the qualification and 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 its goal to match the production capacity with end market consumption. We continue to focus on market share gain, new product and the increased localization to drive our growth objective in China market. Further, we are expanding our business to new customer in the U. S, Korea, Taiwan, Europe and other Asian markets. Speaker 200:16:29Our 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 review detail of our Q3 results. Mark? Speaker 300:16:44Thank you, David. Good day, everyone. Please turn to Slide 11. Unless I note otherwise, I refer to non GAAP financial measures, which exclude stock based compensation and unrealized gain loss on short term investments. Reconciliation of these non GAAP measures to comparable GAAP measures is included in our earnings release. Speaker 300:17:03Also, unless otherwise noted, the following figures refer to the Q3 of 2024 comparisons or with the Q3 of 2023. I'll now provide financial highlights. Revenue was $204,000,000 up 21%. Revenue for single wafer cleaning Tahoe and semi critical cleaning was 161,000,000 dollars up 21.6 percent. Revenue for ECP, Front End Packaging, furnace and other technologies was $34,600,000 up 35.6%. Speaker 300:17:39Revenue for Advanced Packaging excluding ECP services and spares was $8,400,000 Speaker 200:17:45for Speaker 300:17:45the 3rd quarter, down 21.0 percent, but for the 1st 9 months of the year, it grew by 2.9%. Total shipments for the quarter were $261,000,000 up 23%. Gross margin was 51.6% versus 52.9%. This exceeded our long term gross margin target of 40% to 45%. For the full year, we expect our gross margins above the high end of the range. Speaker 300:18:11This is due to year to date gross margins of about 50% and our expectation for gross margin in the upper end of our 40% to 45% target range for Q4. We continue to expect gross margin to vary from period to period due to a variety of factors such as sales volume, product mix and currency impacts. Operating expenses were $49,200,000 up from $45,300,000 R and D was $24,500,000 versus $22,700,000 Sales and marketing was $13,200,000 versus $14,300,000 and G and A was $11,600,000 versus $8,400,000 For 2024, the full year, we plan for R and D in the 12% to 13% range, sales and marketing in the 7% to 8% range and G and A in the 5% to 6% range. Operating income was $56,100,000 versus 43,800,000 Operating margin was 27.5 percent versus 26.0 percent. Realized gain from the sale of short term investments was $200,000 versus $700,000 Recall that unrealized gain is not included in non GAAP earnings. Speaker 300:19:21Income tax expense was $4,000,000 versus $700,000 For the full year, we now plan for an effective tax rate on non GAAP pre tax income in the 12% to 14% range. Net income attributable to ACM Research was $42,400,000 versus $37,600,000 Net income per diluted share was $0.63 versus $0.57 Our non GAAP net including our non GAAP net income excluded $11,900,000 or $0.18 per share in stock based compensation expense. Stock based compensation expense declined sequentially in Q3 and due to the accelerated amortization for the ACM Shanghai Stock Option grants, we expect SBC to decline again in the Q4. I will now review selected balance sheet and cash flow items. Cash, cash equivalents, restricted cash and time deposits ended the 3rd quarter at $369,100,000 versus $366,800,000 at the end of last quarter. Speaker 300:20:25Inventory net was $628,700,000 versus $602,900,000 at the end of last quarter. This included raw materials and work in process of $329,800,000 and finished goods inventory of 298,900,000 dollars Finished goods inventory mainly includes First Tools under evaluations at our customers and it also includes finished goods at ACM's facilities. Cash flow from operations was $11,900,000 for the Q3 and $63,900,000 for the 1st 9 months of the year. Capital expenditures were $33,400,000 for the Q3, dollars 73,000,000 for the 1st 9 months of the year. For the full year 2024, we expect to spend about $100,000,000 in capital expenditures. Speaker 300:21:10That concludes our prepared remarks. Let's open the call for any questions that you may have. Operator, please go ahead. Operator00:21:17Thank you. At this time, we will conduct the question and answer Our first question comes from the line of Charles Hsie of Needham and Company. Your line is now open. Speaker 400:21:43Hi, good evening, David and Mark. Maybe the first question, I think I heard you talking about the wet clean product portfolio you have right now covers 90% of the overall worldwide wet clean market, which includes all kinds of devices. But I want to ask specifically on 3 d NAND, what's that coverage percentage number look like? Are you able to cover 100% of all the 3 gs NAND applications? Thank you. Speaker 200:22:22Okay. Charles, very good question. Well, actually, we're as I said, our typical process cleaning will cover almost 90%. And this moment, I want to say, is the only single wafer phosphoric asset. We're not there putting in the market yet. Speaker 200:22:40So basically, the rest of their tool and we are either in R and D with the customer, also we're putting in production, right? And even including all this phosphatic action for the Via and the 3 d NAND and also high temperature of their SPM process, right, and the most of the also other TMAR process. So we're pretty fully engaged regarding this 3 d NANDER, a wide process, I call it, the penny. Speaker 400:23:17Got it. So basically, there is still some gaps, but you're engaged this comment would apply to 3 gs NAND as well. Speaker 200:23:29Yes. I should say probably by end of this year, we should be qualified all the process and including we already put in production existing process, right? So we have made a lot of progress. Speaker 400:23:44Thanks. This is very helpful. The second question I have, I think you said that China WFE, you think it will remain at the high level next year, but 2 parts there's a 2 part question. So number 1, in terms of the change from this year's level, you remain at this year's already at a pretty high level, right? But I want to understand when you say remain at a high level, you're expecting flat to up or what's the expected range here? Speaker 400:24:20That's one part. But the other part of the question, obviously, with the U. S. Election that happened a couple of days ago there, obviously, it's pretty uncertain at this point where the trade policy of the new U. S. Speaker 400:24:37Administration can go, but does that comment include any of the potential new impact of any of the new tightening or you are assuming the or the international export control rules remain the same as of today? Speaker 200:24:58Okay. Let's come to the first question, right? I should say, last full year, you can see the China WFE market growing quite steadily, right? And I would say, probably next few year, we still, however, see the strong demand in China market. Why there's still a lot of memory and also logic or foundry IGBT market still there is still the building process for their fab. Speaker 200:25:27So we will come to the next year and it's hard to really give you number. We're thinking about something that and might be a little bit low, might be a little bit up, really hard to really predict at this moment. But I want to say that strong still in next few years, the building process is to keep going, right? You're looking at all other foundry business, they have upper time, their utilization of the mines are pretty heavy. So I won't say we're still kind of positive, right, about growing in the China market. Speaker 200:26:09Any question for the first one before I answer your second question? Speaker 400:26:12Yes, please continue. Okay. Speaker 200:26:15I mean, there's only one day, right? I mean, it's hard to predict. I mean, we're really whatever we have to follow the rule of the other countries, all the regulation come out new or changing. And basically, we're going to really support all production ramping of a case customer in the global. Speaker 400:26:37Thanks, David. Operator00:26:41Thank you. Speaker 200:26:43Thank you. Operator00:26:46Our next question comes from the line of Mark Miller of The Benchmark Company. Your line is now open. Speaker 500:26:53Congratulations on another strong quarter. I'm just wondering, you've been consistently posting gross margins above your target range for this year. It sounds like they were expecting the margins to come back down to the high end of the range of December quarter. Looking at your backlog, are we going to go back to your target range in 2025 for gross margins? Speaker 300:27:16David, let me take that if you don't mind. Yes. Yes. It's a good I appreciate it, Mark. And I think you did. Speaker 300:27:23Yes, Q3 another good quarter year to date, just above 50%. I mean, it really has to do with our product mix. And we've been we have a lot of differentiation and we've done well on that front. Foreign exchange has helped. I think, but longer term and we're not going to give guidance obviously for next year, but in general longer term our target remains 40% to 45%. Speaker 300:27:51And the mix can that can change given a broad product line. Our backlog, the margins for that without giving too much, I mean they're pretty good, they're pretty healthy. And so I'll leave it at that, Mark. I think we're sticking to our 40% to 45% target. Speaker 500:28:12Okay. You announced the orders from a U. S. Customer for delivery in the second first half of next year. Any thoughts of where we can expect in terms of your sales outside of China? Speaker 500:28:23Is that going to be significantly increasing next year? Speaker 300:28:29David, do you want to take that or do you want me to hit on that? Speaker 200:28:31Yes. I mean, I can add on that. Go ahead. Yes. Speaker 300:28:35I think our business outside of China, obviously, it's a corporate focus. We believe that we've really scaled up our business in Mainland China. The model is scale it up near some of these the larger customers these activities that have been going on and this is where the spending has been and then expand that into the global markets. And we're planning for good growth in China alone next year. International really depends on our customers and the evaluation status. Speaker 300:29:11It's kind of see where they are with their projects and what have you. We've got a few demos in later stage, a lot of focus from the company. I think this clean room in Oregon is a good commitment. So I think when we give our 2025 outlook range, when we give that early next year, we'll probably include some. But it's right now, we don't want to say exactly how much mix, but we'd expect some contribution next year from the non China markets. Speaker 300:29:39Anything to add, David? Speaker 200:29:42Yes. Well, actually, we do see some customer, obviously, interest into our cleaning and also copper cleaning tool. And we see that a big potential, especially our SAPS megasonic and also this Tahoe tool, right, which can saving sulfuric acid up to 75%. So we see a lot of opportunity for our differentiated product and get into the global market, right? So we're expecting those our differentiated product will be more of a in a state of accelerating, right, get into their customer outside China. Speaker 300:30:21Thank you. I would add, Mark, just I mean, the activity means is good. I mean, we're I know we're all looking for orders, but we're getting with our we've got a pretty good sized team U. S, Europe, other areas. And so we're pretty heavily engaged with a lot in a number of other customers that we haven't spoken about here. Operator00:30:56Our next question comes from the line of Suji Desilva of ROTH Capital. Your line is now open. Speaker 600:31:03Hi, David, Mark, Lisa, congratulations on the progress here. Maybe following up on Mark's question there. The global customers that you expect to contribute in 2025, what geography do you think is the near term opportunity across Europe, U. S, Korea and Taiwan? Speaker 200:31:23Yes. It's hard to give you that precisely right now. And obviously, we see the opportunity in the U. S. As we have our full advanced packaging tool. Speaker 200:31:34We got this year. We're shipping first half next year. We continue to see that opportunity. And also, we see there are and we already have a 3 tool. 1 of the key logic customer, they are evaluation of the product on a different process step. Speaker 200:31:53And also, we see other interest in the body and actually in Asia. So we're engaged with those customer. And next year, we see that CapEx continue kind of going on with their projection or their plan. So we're really excited and engaging with those big guys and also China really try to penetrate our differential product in the production line. As I said, a lot of our tools were off of the market and get the yield improved and also get a big asset saving, at the same time providing excellent during the particle removing performance. Speaker 200:32:37So we'll see that there, as I said, our differentiated product, Galekas ready, right, for the market. Speaker 700:32:45Okay. Speaker 600:32:46And then on the high temperature SPM solutions, it sounds like you have technical advantage there. What are the specific specs that you can come in to compete with the incumbent there? Is it throughput or the less more efficient? Any color there would be helpful. Speaker 200:33:05Yes. Well, actually, let me put this way. Our SPM product, I have 2, right? 1 is the high temperature SPM single wafer tool, which is a handle 170 degree higher sulfuric acid, right? And then these 2 actually, we did a breakthrough, as I mentioned before. Speaker 200:33:24We can much control our chemical splash outside chamber. So therefore, we have a better cleaning environment. And with our cleaning chamber, we don't need much time spending on cleaning the chamber itself. So that will give you uptime better, right, and also give the good particle performance. Our second one is real Tahoe tool, right. Speaker 200:33:48They're actually targeting lower and middle level temperature of SPM. This is a has been our flagship tool and they're combined batch and single. And the real perform breakthrough this year is we have excellent particle and we move efficiency, right? As I said, 26 nano particle adding about 6 particles only. So that's definitely equivalent to the single wafer process capability. Speaker 200:34:18So with the continued, I'd say, improving the filtering system, and this tool can be further used into the removing 1x nano particle, which is really demand, right, for all the advanced nodes, memory and DRAM, so and also logic. So we see that they're both tool and working in the market in China, also outside China. As everybody in a sulfuric acid process, they're actually very hadic about their waste treatment, right, also handle their this catalytic material in the fab environment. So that's really what giving a good performance and also environment, I call it, protection saving for the other fab in the world. So we see that there are bigger opportunities for our top Speaker 600:35:13Okay. Thank you, Dave. Thanks. Speaker 200:35:16Thank you. Operator00:35:19Thank you. Our next question comes from the line of Edison Li of Jefferies. Your line is now open. Speaker 700:35:28Hi, David and Mark here. Congrats on the great results in 3Q. I just have a quick question because you did mention that the advanced packaging market in China is slowing down. And I think maybe you can actually help us understand whether that should be a leading indicator for front end spending in China, whether we should be worried about front end spending in China as a result of the slowdown in advanced packaging in China. So how should we think about it? Speaker 200:35:58Yes. Well, I want to say that is really looking at last year, right, and also in the first half this year, it gives kind of a slow. However, we see that a gradual pickup, right, in Q3, Q4. And we do have other order coming. So you look in the other market in the foundry business, they pick up. Speaker 200:36:18I think from now on, they're gradual pickup on their this advanced packaging WAP spending. So we are positive, I should say, Q4 and the next year. But then total path, right? Our revenue is really represented last 4 months and last year, all their tour was shipping. So that's our view about this advanced packaging status. Speaker 700:36:48Do you think that the Chinese packaging companies are actually doing something different versus the past? Are they moving into HBM? Or are they moving into like more cobalt type of packaging that requires different equipment? What is happening there? Speaker 200:37:05Well, I mean, obviously, there's a quite different company, right? And there are certain company moving to this high density packaging. And obviously, also, we see the company also moving the panel, too. So it's a lot of people and work on this advanced packaging, I call it the technology and also the process development. Speaker 700:37:32Okay, that's great. Thanks a lot, David. Speaker 300:37:37Thanks, Harrison. Operator00:37:38Yes. Thank you. Thank you. Seeing no more questions in the queue, let me turn the call back to David Wang for closing remarks. Speaker 200:37:58Okay. Thank you, operator, and thank you all for participating on today's call and for your support. Before we close, Gary is going to mention our upcoming investor relations event. Gary, please. Speaker 100:38:12Thanks, David. Before we conclude, I just want to give everyone a quick reminder on our upcoming investor conferences. On November 19, we will present at Craig Hallum Capital's 15th Annual Alpha Select Conference in New York. On November 20, we will present at the ROTH 13th Annual Technology Conference also in New York. And on December 4, we'll present at the UBS Global Technology and AI Conference in Scottsdale, Arizona. Speaker 100:38:39Finally, on December 17, we'll present at the 13th Annual New York City NYC Summit in New York. Attendance of the conferences are by invitation only. For interested investors, please contact your respective sales representative to register and schedule 1 on 1 meetings with the manager team. This concludes our call. You may all now disconnect and have a good day.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallACM Research Q3 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) ACM Research Earnings HeadlinesACM Research, Inc. 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Sign up for Earnings360's daily newsletter to receive timely earnings updates on ACM Research and other key companies, straight to your email. Email Address About ACM ResearchACM Research (NASDAQ:ACMR), together with its subsidiaries, develops, manufactures, and sells single-wafer wet cleaning equipment for enhancing the manufacturing process and yield for integrated chips worldwide. It offers space alternated phase shift technology for flat and patterned wafer surfaces, which employs alternating phases of megasonic waves to deliver megasonic energy in a uniform manner on a microscopic level; timely energized bubble oscillation technology for patterned wafer surfaces at advanced process nodes, which provides cleaning for 2D and 3D patterned wafers; Tahoe technology for delivering cleaning performance using less sulfuric acid and hydrogen peroxide; and electro-chemical plating technology for advanced metal plating. The company markets and sells its products under the SAPS, TEBO, ULTRA C, ULTRA Fn, Ultra ECP, Ultra ECP map, and Ultra ECP ap trademarks through direct sales force and third-party representatives. 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There are 8 speakers on the call. Operator00:00:00Good day, ladies and gentlemen. Thank you for standing by, and welcome to the ACM Research Fiscal Third Quarter 20 24 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. Operator00:00:19If you have any objections, you may disconnect at this time. Now I will turn the call over to Mr. Gary Dvorchak, Managing Director of The BlueShark Group. Gary, please go ahead. Speaker 100:00:31Good day, everyone. Thank you for joining us to discuss Q3 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. Speaker 100:00:44There's also a supplemental deck slide deck posted in the Investors section of our website that we'll reference during our prepared remarks. On the call with me today are our CEO, Doctor. David Wong our CFO, Mark McKechnie and Lisa Feng, the CFO of our operating subsidiary, ACM Shanghai. Before we continue, please turn to Slide 2. Let me remind you that remarks made during this call may include predictions, estimates or other information that might be considered forward looking. Speaker 100:01:13These 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. Speaker 100:01:43Certain 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 and 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 3. David? Speaker 200:02:10Thanks, Gary. Hello, everyone, and welcome to ACM Research Third Quarter 2024 Earnings Conference Call. Please turn to Slide 3. For the Q3, revenue was $204,000,000 up 21%. Shipments were $261,000,000 up 23%. Speaker 200:02:31Profitability was good with a gross margin of 51.6% and operating margin of 27.5%. And we ended the quarter with approximately $369,000,000 of cash and time deposit with a positive cash flow from operations for the quarter. Revenue for the 1st 9 months of the year was $558,600,000, up 44%. Year to date, shipments were $709,700,000, up 56%. We believe this growth is a significant demonstrated market share gain for ACM and their contribution from new product cycle. Speaker 200:03:18Now I will provide the detail on product. Please turn to Slide 4. Revenue from single wafer cleaning, Tahoe and the semicritical cleaning product grew 22% in Q3 and represented 79% of total revenue. ACM offer comprehensive top to bottom cleaning portfolio. We estimate that global total available market or 10 for the cleaning is close to $6,000,000,000 and ACM products supporting more than 90% of all cleaning process steps in both memory and logical manufacturing. Speaker 200:03:55Our factor in Sofaker 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 cleaning pool supplier service the high temperature market for SDN. During our Q1 call, I reported a technical breakthrough that could enable us to be the 2nd player. Speaker 200:04:43We are now in later stage evaluation at a number of key customer, and we are committed to become the 2nd supplier in the world supporting commercial high temperature SPM cleaning. That's not all. Today, we issued a press release making a marking a major performance breakthrough for Tahoe, ACM's environment solution for the middle and the low temperature SPM segment. The Ultra C Tahoe now achieved the performance of a standalone single wafer cleaning tool on low to high temperature SPM process. The Tahoe platform advanced cleaning capability have achieved average particle accounts of less than 6 particles at 26 nano size, meeting the stringent requirement for the advanced node manufacturing. Speaker 200:05:40The tool is also capable of removing yx nanoparticle 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 deliver 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 sulfuric acid alone, with additional environment and the cost benefit from reduced supric acid and treatment and disposal. With the rise of AI to the front to forefront of the consumer mind, we expect increased public attention on the environmental impact of semiconductor chip manufacturing. Speaker 200:06:48We believe ACM Ultra C 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 the Ultra C Tahoe is another example of excellency from ACM innovation and world class R and D team and demonstrate how innovation can achieve the information, economy and the protected environment. We also announced today that the upgrade Ultra C Tahoe is now in mass production and several high volume customer facility in China and on the evaluation of additional logic and memory customers. We expect to deliver more units by end of the year. Speaker 200:07:39The 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 tools market. We believe ACM cleaning portfolio, including SAPS, TEBO, Tahoe, Semi Critical, together with SPM and Supercritical CO2 dry, put ACM in water class status. We see good opportunity for continued market share gain in Mainland China, and we are confident we have what it will take 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 remains solid for both front end and back end tools. Speaker 200:08:35I'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 customer. Overall, we now anticipate of having 17 furnace customers by the end of this year, upper from 9 at the end of last year. We expect a contribution to revenue from furnace to accelerate in 2025. Speaker 200:09:11Revenue from advanced packaging, which excludes ECP but includes service and spell, declined by 21% for Q3 and was up 3% year to date and represented 4% of revenue. This category including a range of the packaging tools, including coater, developer, scrubber, PR stripper and wet hatchers and also service and spare parts. And we are exploring new product and technology to participate in the next generation of advanced packaging. We believe ACM is one of the only company that offers a full set of wet tool, cover plating tool and a polished tool for advanced packaging. Year to date, growth of advanced packaging was low. Speaker 200:09:59We attribute this to slower growth for China based packaging firm who are more exposed to a broader end market trend. We also know this category does not include our ECP tool for the advanced packaging. In early September, we announced purchasing orders for 4 wafer level packaging tools from U. S. Customer and U. Speaker 200:10:24S. R and D center. These tools are scheduled for delivery in the first half of twenty twenty five. We are very optimistic about our fan out panel level packaging tools. We have recently announced 3 panel level packaging tools, including vacuum flask clean tool for chiplets, the horizontal plating tool and the bevel etch tool. Speaker 200:10:49These 3 new panel tools makes a strong offer by ACM to address 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 applicable to microorder pitch, high temperature high density packaging. This is especially relevant to AI packaging of a GPU at high density, high bandwidth memory HBM. We see a large global opportunity as several major academic leaders have chosen panel for their AI chip packaging solution. Speaker 200:11:29Finish up on the product. We are making good progress with our TRAC and the P and C platforms. Both of these products have innovation, a differentiated platform design and allow for process flexibility and a high throughput. We have a solid list of ongoing demonstration and evaluation for both TRAC and the TCVD. We expect further progress for both TCVD and TRAC over the next year with the revenue likely in later 2025 and more and more contribution in 2026 and beyond. Speaker 200:12:03Moving 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, representing 63% of the revenue. In China, we have a leading position in cleaning and target additional market share gains. Speaker 200:12:26We believe we have become a world class multiproduct company with a competitive product in the market for plating key furnace, and we have a solid evaluation pipeline for tracking the PCB. In the U. S, we'll continue to make steady progress. I already mentioned the order for 4 WIP tools scheduled for delivery in 2025. In addition, activity with our major U. Speaker 200:12:52S. Customer continues to progress. Both of our SaaS tool have already achieved supplier qualification, and we have moved to their production qualification process. And the backside of the Babble Edge tool and with the measurement of this year is in the later stage of a supply qualification. In Europe, we are also in the later stage of qualification of Ultra C Step V cleaning tool, which we delivered to a major global semiconductor manufacturer in Q3 of 2023. Speaker 200:13:28In 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. In China, on October 20, our subsidiary, ACM Shanghai, hosted opening ceremony for the Lingang Production and R and D Center that are gathering employees, customers, supplier and local officials. The first of 2 modern manufacturing floor, including state of the art of automation system and has been initial operation. Speaker 200:14:08During the Q3, we also moved into the new ACM Shanghai headquarters. The facility is also in the Shanghai High-tech Zhangjiang Science Park and offer a great work environment for our engineering team. In the U. S, October 1, we completed the purchasing of our new Oregon facility, which including 5,200 square feet cleaning room. We plan to move in early next year. Speaker 200:14:38We plan to deliver several tools in 2025 to provide their easy access to major customers for advanced tools evaluation. ACM is building a strong footprint in the U. S, including our own cleanroom army lab and the growing service team. We see this a great opportunity to participate in the market growth of U. S. Speaker 200:15:00Semiconductor. I will now provide our outlook. Please turn to Slide 10. We have raised our 2024 revenue outlook to be in the range of $725,000,000 to $745,000,000 versus prior range of $695,000,000 to $735,000,000 In the middle point, our revised outlook represented 32% year over year growth compared to 28% previously. Shipment activity remains strong, and we continue to expect the full year shipment growth rate to outpace the revenue growth rate. Speaker 200:15:41Our visibility for the remainder of the year is largely driven by our current order book and the qualification and 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 its goal to match the production capacity with end market consumption. We continue to focus on market share gain, new product and the increased localization to drive our growth objective in China market. Further, we are expanding our business to new customer in the U. S, Korea, Taiwan, Europe and other Asian markets. Speaker 200:16:29Our 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 review detail of our Q3 results. Mark? Speaker 300:16:44Thank you, David. Good day, everyone. Please turn to Slide 11. Unless I note otherwise, I refer to non GAAP financial measures, which exclude stock based compensation and unrealized gain loss on short term investments. Reconciliation of these non GAAP measures to comparable GAAP measures is included in our earnings release. Speaker 300:17:03Also, unless otherwise noted, the following figures refer to the Q3 of 2024 comparisons or with the Q3 of 2023. I'll now provide financial highlights. Revenue was $204,000,000 up 21%. Revenue for single wafer cleaning Tahoe and semi critical cleaning was 161,000,000 dollars up 21.6 percent. Revenue for ECP, Front End Packaging, furnace and other technologies was $34,600,000 up 35.6%. Speaker 300:17:39Revenue for Advanced Packaging excluding ECP services and spares was $8,400,000 Speaker 200:17:45for Speaker 300:17:45the 3rd quarter, down 21.0 percent, but for the 1st 9 months of the year, it grew by 2.9%. Total shipments for the quarter were $261,000,000 up 23%. Gross margin was 51.6% versus 52.9%. This exceeded our long term gross margin target of 40% to 45%. For the full year, we expect our gross margins above the high end of the range. Speaker 300:18:11This is due to year to date gross margins of about 50% and our expectation for gross margin in the upper end of our 40% to 45% target range for Q4. We continue to expect gross margin to vary from period to period due to a variety of factors such as sales volume, product mix and currency impacts. Operating expenses were $49,200,000 up from $45,300,000 R and D was $24,500,000 versus $22,700,000 Sales and marketing was $13,200,000 versus $14,300,000 and G and A was $11,600,000 versus $8,400,000 For 2024, the full year, we plan for R and D in the 12% to 13% range, sales and marketing in the 7% to 8% range and G and A in the 5% to 6% range. Operating income was $56,100,000 versus 43,800,000 Operating margin was 27.5 percent versus 26.0 percent. Realized gain from the sale of short term investments was $200,000 versus $700,000 Recall that unrealized gain is not included in non GAAP earnings. Speaker 300:19:21Income tax expense was $4,000,000 versus $700,000 For the full year, we now plan for an effective tax rate on non GAAP pre tax income in the 12% to 14% range. Net income attributable to ACM Research was $42,400,000 versus $37,600,000 Net income per diluted share was $0.63 versus $0.57 Our non GAAP net including our non GAAP net income excluded $11,900,000 or $0.18 per share in stock based compensation expense. Stock based compensation expense declined sequentially in Q3 and due to the accelerated amortization for the ACM Shanghai Stock Option grants, we expect SBC to decline again in the Q4. I will now review selected balance sheet and cash flow items. Cash, cash equivalents, restricted cash and time deposits ended the 3rd quarter at $369,100,000 versus $366,800,000 at the end of last quarter. Speaker 300:20:25Inventory net was $628,700,000 versus $602,900,000 at the end of last quarter. This included raw materials and work in process of $329,800,000 and finished goods inventory of 298,900,000 dollars Finished goods inventory mainly includes First Tools under evaluations at our customers and it also includes finished goods at ACM's facilities. Cash flow from operations was $11,900,000 for the Q3 and $63,900,000 for the 1st 9 months of the year. Capital expenditures were $33,400,000 for the Q3, dollars 73,000,000 for the 1st 9 months of the year. For the full year 2024, we expect to spend about $100,000,000 in capital expenditures. Speaker 300:21:10That concludes our prepared remarks. Let's open the call for any questions that you may have. Operator, please go ahead. Operator00:21:17Thank you. At this time, we will conduct the question and answer Our first question comes from the line of Charles Hsie of Needham and Company. Your line is now open. Speaker 400:21:43Hi, good evening, David and Mark. Maybe the first question, I think I heard you talking about the wet clean product portfolio you have right now covers 90% of the overall worldwide wet clean market, which includes all kinds of devices. But I want to ask specifically on 3 d NAND, what's that coverage percentage number look like? Are you able to cover 100% of all the 3 gs NAND applications? Thank you. Speaker 200:22:22Okay. Charles, very good question. Well, actually, we're as I said, our typical process cleaning will cover almost 90%. And this moment, I want to say, is the only single wafer phosphoric asset. We're not there putting in the market yet. Speaker 200:22:40So basically, the rest of their tool and we are either in R and D with the customer, also we're putting in production, right? And even including all this phosphatic action for the Via and the 3 d NAND and also high temperature of their SPM process, right, and the most of the also other TMAR process. So we're pretty fully engaged regarding this 3 d NANDER, a wide process, I call it, the penny. Speaker 400:23:17Got it. So basically, there is still some gaps, but you're engaged this comment would apply to 3 gs NAND as well. Speaker 200:23:29Yes. I should say probably by end of this year, we should be qualified all the process and including we already put in production existing process, right? So we have made a lot of progress. Speaker 400:23:44Thanks. This is very helpful. The second question I have, I think you said that China WFE, you think it will remain at the high level next year, but 2 parts there's a 2 part question. So number 1, in terms of the change from this year's level, you remain at this year's already at a pretty high level, right? But I want to understand when you say remain at a high level, you're expecting flat to up or what's the expected range here? Speaker 400:24:20That's one part. But the other part of the question, obviously, with the U. S. Election that happened a couple of days ago there, obviously, it's pretty uncertain at this point where the trade policy of the new U. S. Speaker 400:24:37Administration can go, but does that comment include any of the potential new impact of any of the new tightening or you are assuming the or the international export control rules remain the same as of today? Speaker 200:24:58Okay. Let's come to the first question, right? I should say, last full year, you can see the China WFE market growing quite steadily, right? And I would say, probably next few year, we still, however, see the strong demand in China market. Why there's still a lot of memory and also logic or foundry IGBT market still there is still the building process for their fab. Speaker 200:25:27So we will come to the next year and it's hard to really give you number. We're thinking about something that and might be a little bit low, might be a little bit up, really hard to really predict at this moment. But I want to say that strong still in next few years, the building process is to keep going, right? You're looking at all other foundry business, they have upper time, their utilization of the mines are pretty heavy. So I won't say we're still kind of positive, right, about growing in the China market. Speaker 200:26:09Any question for the first one before I answer your second question? Speaker 400:26:12Yes, please continue. Okay. Speaker 200:26:15I mean, there's only one day, right? I mean, it's hard to predict. I mean, we're really whatever we have to follow the rule of the other countries, all the regulation come out new or changing. And basically, we're going to really support all production ramping of a case customer in the global. Speaker 400:26:37Thanks, David. Operator00:26:41Thank you. Speaker 200:26:43Thank you. Operator00:26:46Our next question comes from the line of Mark Miller of The Benchmark Company. Your line is now open. Speaker 500:26:53Congratulations on another strong quarter. I'm just wondering, you've been consistently posting gross margins above your target range for this year. It sounds like they were expecting the margins to come back down to the high end of the range of December quarter. Looking at your backlog, are we going to go back to your target range in 2025 for gross margins? Speaker 300:27:16David, let me take that if you don't mind. Yes. Yes. It's a good I appreciate it, Mark. And I think you did. Speaker 300:27:23Yes, Q3 another good quarter year to date, just above 50%. I mean, it really has to do with our product mix. And we've been we have a lot of differentiation and we've done well on that front. Foreign exchange has helped. I think, but longer term and we're not going to give guidance obviously for next year, but in general longer term our target remains 40% to 45%. Speaker 300:27:51And the mix can that can change given a broad product line. Our backlog, the margins for that without giving too much, I mean they're pretty good, they're pretty healthy. And so I'll leave it at that, Mark. I think we're sticking to our 40% to 45% target. Speaker 500:28:12Okay. You announced the orders from a U. S. Customer for delivery in the second first half of next year. Any thoughts of where we can expect in terms of your sales outside of China? Speaker 500:28:23Is that going to be significantly increasing next year? Speaker 300:28:29David, do you want to take that or do you want me to hit on that? Speaker 200:28:31Yes. I mean, I can add on that. Go ahead. Yes. Speaker 300:28:35I think our business outside of China, obviously, it's a corporate focus. We believe that we've really scaled up our business in Mainland China. The model is scale it up near some of these the larger customers these activities that have been going on and this is where the spending has been and then expand that into the global markets. And we're planning for good growth in China alone next year. International really depends on our customers and the evaluation status. Speaker 300:29:11It's kind of see where they are with their projects and what have you. We've got a few demos in later stage, a lot of focus from the company. I think this clean room in Oregon is a good commitment. So I think when we give our 2025 outlook range, when we give that early next year, we'll probably include some. But it's right now, we don't want to say exactly how much mix, but we'd expect some contribution next year from the non China markets. Speaker 300:29:39Anything to add, David? Speaker 200:29:42Yes. Well, actually, we do see some customer, obviously, interest into our cleaning and also copper cleaning tool. And we see that a big potential, especially our SAPS megasonic and also this Tahoe tool, right, which can saving sulfuric acid up to 75%. So we see a lot of opportunity for our differentiated product and get into the global market, right? So we're expecting those our differentiated product will be more of a in a state of accelerating, right, get into their customer outside China. Speaker 300:30:21Thank you. I would add, Mark, just I mean, the activity means is good. I mean, we're I know we're all looking for orders, but we're getting with our we've got a pretty good sized team U. S, Europe, other areas. And so we're pretty heavily engaged with a lot in a number of other customers that we haven't spoken about here. Operator00:30:56Our next question comes from the line of Suji Desilva of ROTH Capital. Your line is now open. Speaker 600:31:03Hi, David, Mark, Lisa, congratulations on the progress here. Maybe following up on Mark's question there. The global customers that you expect to contribute in 2025, what geography do you think is the near term opportunity across Europe, U. S, Korea and Taiwan? Speaker 200:31:23Yes. It's hard to give you that precisely right now. And obviously, we see the opportunity in the U. S. As we have our full advanced packaging tool. Speaker 200:31:34We got this year. We're shipping first half next year. We continue to see that opportunity. And also, we see there are and we already have a 3 tool. 1 of the key logic customer, they are evaluation of the product on a different process step. Speaker 200:31:53And also, we see other interest in the body and actually in Asia. So we're engaged with those customer. And next year, we see that CapEx continue kind of going on with their projection or their plan. So we're really excited and engaging with those big guys and also China really try to penetrate our differential product in the production line. As I said, a lot of our tools were off of the market and get the yield improved and also get a big asset saving, at the same time providing excellent during the particle removing performance. Speaker 200:32:37So we'll see that there, as I said, our differentiated product, Galekas ready, right, for the market. Speaker 700:32:45Okay. Speaker 600:32:46And then on the high temperature SPM solutions, it sounds like you have technical advantage there. What are the specific specs that you can come in to compete with the incumbent there? Is it throughput or the less more efficient? Any color there would be helpful. Speaker 200:33:05Yes. Well, actually, let me put this way. Our SPM product, I have 2, right? 1 is the high temperature SPM single wafer tool, which is a handle 170 degree higher sulfuric acid, right? And then these 2 actually, we did a breakthrough, as I mentioned before. Speaker 200:33:24We can much control our chemical splash outside chamber. So therefore, we have a better cleaning environment. And with our cleaning chamber, we don't need much time spending on cleaning the chamber itself. So that will give you uptime better, right, and also give the good particle performance. Our second one is real Tahoe tool, right. Speaker 200:33:48They're actually targeting lower and middle level temperature of SPM. This is a has been our flagship tool and they're combined batch and single. And the real perform breakthrough this year is we have excellent particle and we move efficiency, right? As I said, 26 nano particle adding about 6 particles only. So that's definitely equivalent to the single wafer process capability. Speaker 200:34:18So with the continued, I'd say, improving the filtering system, and this tool can be further used into the removing 1x nano particle, which is really demand, right, for all the advanced nodes, memory and DRAM, so and also logic. So we see that they're both tool and working in the market in China, also outside China. As everybody in a sulfuric acid process, they're actually very hadic about their waste treatment, right, also handle their this catalytic material in the fab environment. So that's really what giving a good performance and also environment, I call it, protection saving for the other fab in the world. So we see that there are bigger opportunities for our top Speaker 600:35:13Okay. Thank you, Dave. Thanks. Speaker 200:35:16Thank you. Operator00:35:19Thank you. Our next question comes from the line of Edison Li of Jefferies. Your line is now open. Speaker 700:35:28Hi, David and Mark here. Congrats on the great results in 3Q. I just have a quick question because you did mention that the advanced packaging market in China is slowing down. And I think maybe you can actually help us understand whether that should be a leading indicator for front end spending in China, whether we should be worried about front end spending in China as a result of the slowdown in advanced packaging in China. So how should we think about it? Speaker 200:35:58Yes. Well, I want to say that is really looking at last year, right, and also in the first half this year, it gives kind of a slow. However, we see that a gradual pickup, right, in Q3, Q4. And we do have other order coming. So you look in the other market in the foundry business, they pick up. Speaker 200:36:18I think from now on, they're gradual pickup on their this advanced packaging WAP spending. So we are positive, I should say, Q4 and the next year. But then total path, right? Our revenue is really represented last 4 months and last year, all their tour was shipping. So that's our view about this advanced packaging status. Speaker 700:36:48Do you think that the Chinese packaging companies are actually doing something different versus the past? Are they moving into HBM? Or are they moving into like more cobalt type of packaging that requires different equipment? What is happening there? Speaker 200:37:05Well, I mean, obviously, there's a quite different company, right? And there are certain company moving to this high density packaging. And obviously, also, we see the company also moving the panel, too. So it's a lot of people and work on this advanced packaging, I call it the technology and also the process development. Speaker 700:37:32Okay, that's great. Thanks a lot, David. Speaker 300:37:37Thanks, Harrison. Operator00:37:38Yes. Thank you. Thank you. Seeing no more questions in the queue, let me turn the call back to David Wang for closing remarks. Speaker 200:37:58Okay. Thank you, operator, and thank you all for participating on today's call and for your support. Before we close, Gary is going to mention our upcoming investor relations event. Gary, please. Speaker 100:38:12Thanks, David. Before we conclude, I just want to give everyone a quick reminder on our upcoming investor conferences. On November 19, we will present at Craig Hallum Capital's 15th Annual Alpha Select Conference in New York. On November 20, we will present at the ROTH 13th Annual Technology Conference also in New York. And on December 4, we'll present at the UBS Global Technology and AI Conference in Scottsdale, Arizona. Speaker 100:38:39Finally, on December 17, we'll present at the 13th Annual New York City NYC Summit in New York. Attendance of the conferences are by invitation only. For interested investors, please contact your respective sales representative to register and schedule 1 on 1 meetings with the manager team. This concludes our call. You may all now disconnect and have a good day.Read morePowered by