Good day ladies and gentlemen. Thank you for standing by and welcome to the ACM Research First Quarter 2026 Earnings Conference Call. Currently, all participants are in listen-only mode. Later, we'll conduct a question and answer session and instructions will follow at that time. As a reminder, we're recording today's call. If you have any objections, you may disconnect at this time. Now I'll turn the call over to Mr. Stephen Palao, Manager and Director of the Blue Shirt Group. Stephen, please go ahead.

We released first quarter 2026 results before the U.S. market opened today. The release is available on our website, as well as from Newswire Services. There's also a supplemental slide deck posted to the investor section of our website that we will reference during our prepared remarks. On the call with me today are our CEO, Dr. David Wong, our CFO, Mark McKechnie, and Lisa Fang, our CFO of our operating subsidiary ACM Shanghai before we continue please turn to slide two let me remind you that 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 uncertainty 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 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 financial results that we provide on this 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 reconciliation 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 also unless otherwise noted the following figures refer to the first quarter of 2026 and the comparisons are to the first quarter of 2025 so with that I'm going to now turn the call over to David one David thanks Stephen hello everyone and welcome to ACM first quarter 2026 earnings conference call

We started the year with a solid Q1 report with revenue up 34% and gross margin above the middle point of our long-term target range. Revenue growth for the quarter was driven by the continuous strength in our ECP and advanced packaging business. With the global boom in AI, the market is demand solution for enabling high speed, high density and low power consumption semiconductor devices manufacturing many have not yet been invented it is clear that acn focus on world-class differentiated tool based on our own ip is right strategy to win in global market we're happy to see 2006 as a big year for new product our investment in our proprietary R&D over the past five years together with our fully function is beginning to deliver significant benefit for instance we now have an industrial leading offering cross multiple product category data enable our global customer to effectively solving their evolving production challenges as we progress through 2026 we expect to see an increased impact to our financials from new product with regard to revenue we anticipate incremental contribution from new product cycle from tahoe single wafer spm and our vertical furnace product with regarding to the shipment we expect the increased shipment of our evaluation tool across a range of customer for our panel level horizontal plating panel low pressure flux cleaning high throughput track and pe cvt tours this quarter at semiconductor china we announced the acm planetary family this organized acm tool portfolio into a product family aligned with the key step in the semiconductor manufacturing process this represents acm's comprehensive world-class multi-product offering and the global reach of our company we encourage you to view the video on our IR website. Now on to our business results. Please turn to slide three. First quarter revenue was $231 million, upper 34%. The ECP category was a primary growing driver, with revenue up more than three times year over year. Next, advanced packaging services spell pass category was grow 62 percent this was a positive offset by cleaning which declined by six percent we had a little contribution from new cleaning product in our q1 2026 revenue but as i will discuss later in a call we have a significant ramp ahead for our single wafer spm tools we need delivering in q1 shipment for the first quarter were 241 million upper 54 percent the solid growth reflect strong customer demand and the execution across our product portfolio and it also includes contribution from the initial ramp of a single wafer SPM tools for reference shipment of the cleaning category grow by 32 percent for the quarter i also know that about 15 percent of q1 shipment were from catch up of a product that had been rescheduled from q4 of last year for 2026 we continue to expect the shipment growing to outpace revenue growth growth margin was 46.5 percent for the first quarter above the middle point of our long term range 42 to 48 percent we ended the first quarter with a gross cash of 1.3 billion and net cash 924 million this balance including 110 million of gross proceeds from February sale of ACM Shanghai shares the capital providing a solid foundation for continued investment in our global operations now I I will provide a detail on product. Please turn to slide four. Revenue from single wafer cleaning Tahoe Semicritical Cleaning Tool was down 6%. We continue to believe ACM's full product offering in cleaning is amongst the best in the world. As noted in a prior course, we believe cleaning technology becomes even more important as industry moving to more advanced production technology. this trend play directly to acm strengths particularly in differentiated technology such as n2 bubbling weather single wafer spm cleaning tahoe and others i'm pleased to announce today that we expect a significant significant production ranking of our production product line with more than 15 to 20 units to be delivered by year and across our customer base this is a result of many years r d by our team to develop a better solution than their current market leader as a noted for the past several investor call asian proprietary approach delivered the excellent particle performance with a few than 15 particle at 15 nanometer much better than market leader while other players need a periodical DI water cleaning of the process chamber and the surrounding environment to remove a residue generated by their hot SPM films our system does not instead our unique nozzle design providing a maintenance free solution as the chamber does not need to be taking taken offline for a periodical DI water cleaning this not only improve tool uptime but also enhance particle cleaning performance at the 13 nanoparticle and beyond such fine particle removal is very critical for manufacturer advanced node gaa logic devices and memory devices such as hdm it is no surprise that we're also seeing strong interest in our spm tool from multiple global customers spm cleaning process tool has occupied 30 percent of the cleaning market we believe our innovative hot spm tool will take a significant market share in the next few years the revenue for ecp furnace and other technology grow 205 percent growing was driven by strong momentum in electroplating, supported by our leading position and expanding engagement across both front end and advanced packaging applications. In advanced packaging, our panel level horizontal plating solution is gaining additional traction in Asia and with global customers. We began development of our panel level horizontal electroplating platform in 2022. second we're ahead of the industrial and deliver the water first horizontal plating tool 515 by 510 millimeter to a customer in the fourth quarter last year since then we will continue to expand customer engagement and build a backlog supporting both 515 by 510 millimeter and the 310 by 310 millimeter format panels in april we present a keynote at the taiwan electronic equipment forum on 3d ic packaging technology highlighting a role in enabling next generation ai driving packaging solutions we are confident that a successful customer evaluation will lead to volume production order for $5.15 by $5.10 and additional evaluation of $3.10 by $3.10 later this year. For a vertical furnace business, tools are under evaluation at multiple customer sites, and we continue to expect more meaningful revenue contributions later this year. We continue to see solid demand across key applications, including LPCVD, oxidation, thermal ALD, PLD, and the ultra-high temperature anneal, supporting by our ongoing technology development. Revenue from advanced packaging, which is called ECP, but including service and the spell, was up 62%. The scouting including coders, developer, etcher, stripper, scrubber, and vacuum cleaning flux tools. Supporting a broader range of advanced packaging application we're also providing back-end plating tool including in the ect category last quarter we announced multiple advanced packaging equipment orders from leader leading global customers in q1 we ship our panel level vacuum cleaning system to a leading global semiconductor packaging manufacturer outside in china we also complete shipment of a multiple wafer level advanced packaging system to a leading offset customer in singapore acm is unique is you you need uniquely position with a comprehensive set of wet process solution and pleating technology to address key process staff in advanced packaging our integrated process capability provide valuable insight into next generation packaging challengers as industry involved towards 2.5d and 3d integration including in TSV-based architecture and heterogeneous integration, we believe our capability position us to supporting this increasingly complex requirements. We are making good progress with our new track and PCVD platforms. In April, we shipped our first PCVD silicon carbon nitride system to a semiconductor manufacturer. Now in customer evaluation process, this is a big deal. We achieved a greater result in our mini line, and the tool is now being evaluated as a customer site. The system incorporated ACM proprietary three-station rotating architecture, and one station, one RF technology, enabling strong film uniformity, interface control, process stability and a small full printer we believe this position us for growth in back end of the line and the advanced packaging for high throughput 300 WPH KF track tool we deliver our first tool evaluation last September and are progressing towards mass production qualification this year and we continue to see growing interest for multiple customers for both standalone and their configuration integrate with the scanner. ACM culture is deeply rooted in differentiated R&D. We bring innovative solutions to the ever-involving challenges faced by major global semiconductor manufacturers. Our current success is driven by good decision-making and the future of success depends on today's innovation. we are committed to our strategy to providing a long-term roadmap of world-class tool across our growing product portfolio we remain confident in our 4 billion revenue target and our longer term goal of becoming a top-tier supplier of capital equipment to the global semiconductor industry next let me provide an update on our production facility First, on Lingang, please turn to slide eight. The first building is in volume production, and we plan to open the second building later this year. To get the two facilities, we can support up to $3 billion in annual output. On strategic note, I will now discuss our Lingang mini line, which went into full operation in the second half of last year. We now have a fully experiment R&D line in a class 100 environment, running our own tool and those of other vendors. This is a big deal. It is accelerating our own R&D effort, and it will also speed up our joint R&D collaboration with our customer in Asia. We expect this to have a meaningful impact on our operating model for new product rather than delivering multiple tools for expander for extended customer evaluation we now process custom wafer our new product in a lean gun mini line to validate the tool to meet the customer specific requirement before shipment we expect this approach to shorten qualification cycle of a new product at the customer site shorten the time of conversion to revenue and enhance overall capital efficiency we are now already see early benefit across multiple product I will give a few example our first shipment of the PCVD silicon carbon nitride a system complete the customer specific validation and Linda to a shipment we expect that this to reduce on-site qualification time and enable faster ramps to product production we tested and improve our single wafer SPM tool for several months, hand in hand with our leading customer and confirm 50 nanoparticle performance, this due to volume orders from numerous different customers. We are confident that we can produce each customer-specific production environment in our lab, resulting in shorter qualification and order a few quarters rather than more than a year. Next, our Oregon facility present to slide nine. We continue to advance investment in Oregon. We remain on track for in-house demo lab with multiple tools and the capability to produce US-made tool in Oregon by year end of 2026. This is important for our global customer, and we believe it will strengthen our position as a key local partner at Z-Scare production. Our global initiatives are beginning to take off. By the end of 2026, we expect to have more than 20 tools installed outside of the mainland China market. This including about 10 customers in five countries are still early days for our global deployment. Our engagement are growing, and we remain confident that our investment in global sales and the service team will deliver good data ACM Shanghai continue to play a critical role in our overall strategy serving as a leading supplier to the semiconductor industry in Asia and as a key source of capital to support a global expansion we complete a minority share sell last February generating approximately 110 million in growth policy proceeds and enable this fund our U.S. account. We intend to deploy this capital to supporting our U.S. expansion and broader global growth initiatives. In April, ACM Shanghai announced a proposed each year secondary listing in Hong Kong. Now we're coming to our outlook for the full year, 2026. Please listen to slide 10. In middle of January, we introduced our 2026 revenue outlook in the range of 1.08 to 1.175 billion this implying 25 percent 25 percent year-over-year growth and in a point we even iterate this is our look today we are expecting our annual shipment growth or outpace our rem growth in 2026 now let me turn the call over to our CFO mark who are revealed details of our first quarter results. Mark, please.

Thank you, David. Good day, everyone. Please turn to slide 11. Unless I note otherwise, I will 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. Also, unless otherwise noted, the following figures refer to the first quarter of 2026, and comparisons are with the first quarter of 2025. I will now provide the financial highlights. Revenue was $231.3 million, up 34.2%. Revenue for single wafer cleaning, Tahoe, and semi-critical cleaning was $122.5 million, down 5.5%, and it represented about 53% of sales for the quarter. David noted this included very little contribution from new products. We expect significant shipments of SPM to ramp through the year, followed by revenue contribution in later quarters. For the full year 2026, we do anticipate the mix and cleaning will normalize towards the 65% level, similar to the mix in 2025. Revenue for ECP front-end packaging, Vernis, and other technologies was $84.2 million, up 204.9% and represented 36.4% of sales for the quarter. The majority was ECP front end, and we had very little contribution from Furnace. Revenue from advanced packaging, excluding ECP services and spares, was $24.5 million, up 62%, and represented 10.6% of sales for the quarter. Total shipments were $240.7 million, up 53.6%. As David noted, this was driven by solid demand and good execution, and also cleaning shipments grew by 32%. Approximately 15% of the shipments were catch-up from tools that were originally scheduled for Q4 delivery. For 2026, we continue to expect shipment growth to outpace revenue growth. Gross margin was 46.5% versus 48.2%. Q1 gross margin was above the midpoint of our long-term target model of 42 to 48 percent and a good recovery from the low 40 percent range in Q3 and Q4 of 2025. Favorable product mix and a slightly lower impact from the inventory provision led to the recover. We maintain our 42 to 48 percent target range and note that product mix can cause fluctuations on a quarterly basis. Operating expenses were $65.8 million, up 38.5 percent. R&D was 15% of sales, sales and marketing was 8.3% of sales, and G&A was 5.1% of sales. For 2026, we planned for R&D in the 16% to 18%, sales and marketing in the 8% to 9% range, and G&A in the 5% to 6% range. Operating income was $41.8 million versus $35.6 million. Operating margin was 18.1% as compared to 20.7%. Long-term, we look to grow our R&D spending in line with revenue, but to show operating leverage in SG&A. Income tax expense was $3.8 million versus $2.2 million. For 2026, we expect our effective tax rate in the 8% to 10% range. Net income attributable to ACM research was $24.3 million versus $31.3 million. Net income was $24.3 million versus $31.3 million. I just said that. Our non-GAAP net income excluded $5.6 million in stock-based compensation expense for the first quarter. We anticipate SBC will increase in Q2 due to option grants related to ACM Shanghai stock that were granted in Q1. Net income for the diluted share was $0.34 versus $0.46. Now on to the balance sheet and cash flow items. Cash and cash equivalents, restricted cash, and time deposits were $1.25 billion at the end of the first quarter of 2026 versus $1.13 billion at the end of 2025. Net cash, which includes short-term and long-term debt, was $924.2 million at quarter end versus $844.5 million at year-end 2025. Total inventory was $738 million versus $702.6 million at year-end 2025. Raw materials were $377.9 million, up $28.3 million quarter over quarter. We made additional strategic purchases to support production plans and to mitigate potential supply chain risk. Work in process was $81.6 million, up $22.2 million quarter over quarter. Finished goods inventory was $278.4 million, down $13.1 million quarter over quarter. Finished goods inventory primarily consists of first tools under evaluation at our customer sites, along with finished goods located at ACM's facilities. Cash used by operations was $29.5 million. Capital expenditures were $22 million. For the full year 2026, we now expect to spend about $175 million in capital expenditures. That includes our prepared remarks. Let's open the call for any questions that you may have. Operator, please go ahead.

Thank you. At this time, we'll conduct the question and answer session, as mentioned. As a reminder, you'll need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile our questions. Your first question comes in line with Roth Capital. Your line is now open.

Hi, David. Hi, Mark. Can you talk about the cleaning segment and what drove the decline year-over-year in 1Q and then how it's going to ramp up, what caused that pause? It would be helpful to understand that.

Okay, thanks, Suji. Actually, let's put this away. And, you know, the 2025, we start to see our cleaning product, you know, has been going to their many applications, right, including those material nodes and all the advanced nodes. So the 2025, we do facing some, you know, difficulty and also problem, right, for those new applications. And with their 12 months, you know, our problem solving with the customer, especially most important in their lean-gown production and start using so those kind of problem actually we're mostly solving already and that they're really show that is a you know I want to say a lot of whole year progress and also are difficult that's why I can see impact our Q1 revenue however as I said since we're solving most of the issue even today our performance you know some to perform even out of pace of leading supplier in front global so we see that they're really growing for revenue they can see that their first quarter or revenue or revenue and as they are shipment from the Canadian product is a 32 percent increase year over year right right give another picture a probably backlog increase from there this first six months versus you know last one year for six months were almost like a 50% increase too for the PO receiving so that's really show the momentum continually and also in my script I specifically mention about this SPM process it's really our proprietary technology real gaining custom interest especially reach your excellent result at the 50 nanoparticle size that's really show our technology is better than the leading supplier. So we have a confidence you can take your significant market share in the SPM business, right? We're expecting 15 to 20 tools will deliver to the customer in Asia or in China, too. So anyway, that's, I think, the answer for you.

Very helpful caller. And then, David, just kind of following through on that, with shipments expected to outpace revenue in 26, would we think that 27 should be an above-trend year? I mean, obviously, you're not guiding, but just trying to understand if the implications are that.

Well, I mean, 27 is a little bit far away, right? But I want to see that our length is way. 2026, we're getting a lot of sheer, I mean, appeal or custom interest for our Canadian tool, obviously, cover-plating tool, right? cover plate you can see it grows a lot and also we see the interest you know people were inches our furnace and the PCVD and the track system so I want to see that the 2027 we see our new product including for rental you know cover plating for panel 2 we're getting to their revenue and achievement you know picture in the 2027 so as I mentioned in a couple of our earnings call with our new product sort of paying into our our you know the product line we see a lot of a bigger you know growth and in next few years and we will supporting ACM's and multi-product you know strategy and continue to grow our long-term revenue thanks David that helps pay a picture I'll pass it on thanks Suji yeah oh next question operator please yeah yes thank you your next question comes a line of Dennis Patachin with Needham and Company your line is now open how much appreciated just one question from us today so it

looks like a ECP the front-end packaging for us another technology segment has been seeing pretty sustained strength you know um very significantly both year over year and quarter over quarter can tell us more about you know what's doing well in that segment what kind of customers are adopting which tools just a similar color would be great. Thank you.

Yeah, I want to see that this, you know, plating business has been growing a lot, right? Obviously, front end growing, and also can see HDM is also driving, and obviously advanced packaging, you know, for all the 2.5D and application also growing and driving too. So that's really driving factor for the cover plating and also the, you know, our advanced packaging web process tool, including code developer, web etcher, PR stripper, and cleaning.

I much appreciate it. Thank you. Thank you. Great. Thanks, Dennis.

Okay. Thank you. Seeing no more questions in the queue, let me turn the call back to Stephen Palao for closing remarks.

Great. Thank you. Before we conclude, I just want to give everyone a quick reminder on our upcoming investor conferences on june 17th we will present at the 16th annual roth london conference at the four seasons park lane in london attendance at the conference is by invitation only for interested investors please contact your respective sales representative to register and schedule one-on-one meetings with the management team this concludes the call and you may now disconnect take care