(2) Prior period results have been adjusted to reflect the three-for-one stock split effected in the form of a stock dividend in March 2022.
Outlook
The Company is maintaining its revenue guidance range of $515 million to $585 million for fiscal year 2023. This expectation is based on ACM management’s current assessment of the potential impact from current US-China trade policy and together with various expected spending scenarios of key customers, supply chain constraints, and the timing of acceptances for first tools under evaluation in the field, among other factors.
Operating Highlights and Recent Announcements
- Shipments. Total shipments in 2022 were $539 million, versus $372 million in 2021. Total shipments in the fourth quarter of 2022 were $197 million, versus $117 million in the fourth quarter of 2021. Total shipments include deliveries for revenue in the quarter and deliveries of first tool systems awaiting customer acceptance for potential revenue in future quarters.
- Received Purchase Order for SAPS Tool from Major European Global Semiconductor Manufacturer. ACM announced the receipt of a first tool order for its Ultra C SAPS-V cleaning tool from a major Europe-based global semiconductor manufacturer. The tool is expected to be shipped to the prospective customer’s European facility in the fourth quarter of 2023.
- First MLO-capable Ultra C pr Tool Qualified and in Mass Production at Power Semiconductor Manufacturer in China. ACM expanded its Ultra C pr product offering to include metal lift-off (MLO) capabilities for power semiconductor manufacturing and wafer level packaging (WLP) applications. MLO can be used to save an etch process step, reducing cost, optimizing cycle times and sharply reducing chemical demand at high temperatures. The first MLO-capable Ultra C pr tool has been qualified and released to mass production at a power semiconductor manufacturer in China.
- Introduced Track Tool to Support Lithography for Semiconductor IC Manufacturing. ACM introduced its Ultra LithTM Track tool, marking its entry into the track market. ACM’s participation in this new product category is a natural evolution of its expertise in cleaning, coating and developing systems. The first Ultra LithTM Track Coater/Developer ArF tool was delivered to a domestic Chinese customer in the fourth quarter of 2022, an i-line model is planned for delivery in 2023, and ACM also has begun development of a KrF model.
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Introduced PECVD Tool to Support Logic & Memory Manufacturing. ACM introduced its Ultra PmaxTM Plasma-Enhanced Chemical Vapor Deposition (PECVD) tool as another major new product category, marking its entry into chemical vapor deposition (CVD) market.
Full Year 2022 Financial Summary
Unless otherwise noted, the following figures refer to the full year of 2022 and comparisons are with the full year of 2021.
- Revenue was $388.8 million, up 49.7%, reflecting continued share gains by our flagship cleaning products and strong growth from our new products, particularly ECP tools.
- Gross margin was 47.2%, up from 44.2%. Non-GAAP gross margin, which excludes stock-based compensation, was 47.4%, up from 44.4%. Gross margin exceeded the range of 40% to 45% reflected in the Company’s long-term business model. The Company expects gross margin to vary from period to period due to a variety of factors, such as sales volume, product mix and favorable currency impacts from a stronger dollar versus the Chinese RMB.
- Operating expenses were $124.6 million, an increase of 63.6%. Non-GAAP operating expenses, which exclude the effect of stock-based compensation, were $117.4 million, up 64.3%. Operating expenses as a percent of revenue increased to 32.0% from 29.3%. Non-GAAP operating expenses as a percent of revenue increased to 30.2% from 27.5%.
- Operating income was $59.0 million, up from $38.7 million. Non-GAAP operating income, which excludes the effect of stock-based compensation, was $66.8 million, up from $43.8 million.
- Unrealized loss on trading securities was $7.9 million. The loss reflects the change in market value of the indirect investment by ACM Shanghai in the STAR Market IPO shares of Semiconductor Manufacturing International Corporation (“SMIC”). The value is marked-to-market quarterly and is excluded in the non-GAAP financial metrics.
- Realized gain from sale of trading securities was $1.1 million due to the sale of a portion of ACM Shanghai’s shares of SMIC, which generated net proceeds of $4.5 million.
- Income tax expense was $16.8 million, up from $0.1 million. As a result of a change in Section 174 of the U.S. Internal Revenue Code of 1986 that became effective on January 1, 2022, the effective tax rate for 2022 has increased, primarily due to a new requirement to capitalize and amortize previously deductible research and experimental expenses.
- Net income attributable to ACM Research, Inc. was $39.3 million, compared to net income of $37.8 million. Non-GAAP net income attributable to ACM Research, Inc., which excludes the effect of stock-based compensation and unrealized loss on trading securities, was $54.8 million, as compared to non-GAAP net income of $42.3 million.
- Net income per diluted share attributable to ACM Research, Inc. was $0.59, compared to $0.58. Non-GAAP net income per diluted share, which excludes the effect of stock-based compensation and unrealized loss on trading securities, was $0.83, compared to $0.65.
- Cash and cash equivalents were $248.0 million at December 31, 2022, versus $336.3 million at September 30, 2022. Cash and cash equivalents, plus restricted cash and time deposits were $420.9 million at December 31, 2022, versus $473.2 million at September 30, 2022.
Fourth Quarter 2022 Financial Summary
Unless otherwise noted, the following figures refer to the fourth quarter of 2022 and comparisons are with the fourth quarter of 2021.
- Revenue was $108.5 million, up 14.1%, reflecting continued share gains by our flagship cleaning products and contribution from our new products, particularly ECP tools.
- Gross margin was 49.6%, up from 47.8%. Non-GAAP gross margin, which excludes stock-based compensation, was 49.7%, up from 47.9%. Gross margin exceeded the range of 40% to 45% reflected in the Company’s long-term business model. The Company expects gross margin to vary from period to period due to a variety of factors, such as sales volume, product mix and favorable currency impacts from a stronger dollar versus the Chinese RMB.
- Operating expenses were $37.1 million, an increase of 41.1%. Non-GAAP operating expenses, which exclude the effect of stock-based compensation, were $34.8 million, up 38.4%. Operating expenses as a percent of revenue increased to 34.2% from 27.7%. Non-GAAP operating expenses as a percent of revenue increased to 32.0% from 26.4%.
- Operating income was $16.7 million, down from $19.1 million. Non-GAAP operating income, which excludes the effect of stock-based compensation, was $19.2 million, down from $20.4 million.
- Unrealized loss on trading securities was $1.7 million. The loss reflects the change in market value of the indirect investment by ACM Shanghai in the STAR Market IPO shares of SMIC. The value is marked-to-market quarterly and is excluded in the non-GAAP financial metrics.
- Income tax expense was $2.7 million, compared to $3.2 million. As a result of a change in Section 174 of the U.S. Internal Revenue Code of 1986 that became effective on January 1, 2022, the effective tax rate for 2022 has increased , primarily due to a new requirement to capitalize and amortize previously deductible research and experimental expenses.
- Net income attributable to ACM Research, Inc. was $11.8 million, compared to net income of $15.6 million. Non-GAAP net income attributable to ACM Research, Inc., which excludes the effect of stock-based compensation and unrealized loss on trading securities, was $12.6 million, as compared to non-GAAP net income of $18.1 million.
- Net income per diluted share attributable to ACM Research, Inc. was $0.18, compared to $0.23. Non-GAAP net income per diluted share, which excludes the effect of stock-based compensation and unrealized loss on trading securities, was $0.19, compared to $0.27.
