ACM Research, Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. This is an annual report, not a standalone fourth-quarter report; the filing text does not provide a clear Q4-only financial results summary. Amounts below are U.S. dollars unless stated otherwise.
Business context
ACM develops and sells semiconductor manufacturing equipment, principally wet-cleaning and other front-end processing tools, as well as advanced-packaging and related tools. Operations are concentrated in mainland China, with ACM Shanghai as the principal operating subsidiary. ACM Shanghai completed a STAR Market listing and IPO in November 2021; ACM Research retained approximately 82.5% ownership.
Key financial metrics
| Metric | FY2021 | FY2020 |
|---|---|---|
| Revenue | $259.8 million | $156.6 million |
| Gross profit / gross margin | $114.9 million / 44.2% | $69.6 million / 44.4% |
| Operating income / margin | $38.7 million / 14.8% | $21.5 million / 13.7% |
| Net income | $42.9 million | $21.7 million |
| Net income attributable to ACM Research | $37.8 million; diluted EPS $1.73 | $18.8 million; diluted EPS $0.89 |
| Net cash from operating activities | $(40.1) million | $(13.5) million |
| Cash and cash equivalents at year-end | $563.1 million | $71.8 million |
| Total borrowings at year-end | $35.0 million | $45.7 million |
| Working capital at year-end | $886.7 million | Not stated in the cited summary table |
Revenue rose 65.8% year over year. Front-end wet-cleaning and other processing tools generated $202.3 million, or 77.9% of revenue; advanced packaging, other processing tools, services and spares generated $57.5 million, or 22.1%. Revenue from mainland China was $258.6 million, nearly all consolidated revenue. Company-reported adjusted EBITDA, a non-GAAP measure, was $50.2 million versus $25.5 million.
Changes versus FY2020
- Revenue increased by $103.1 million, with growth in both front-end tools (+$66.0 million) and advanced packaging and related revenue (+$37.2 million).
- Gross margin edged down 0.2 percentage points to 44.2%; management attributed the decline primarily to product mix. Operating margin increased to 14.8%.
- Operating expenses rose 58.3% to $76.2 million. R&D expense increased 78.9% to $34.2 million as the company expanded development and staffing.
- Operating cash use widened by $26.5 million, notably reflecting increases in accounts receivable and inventory. Year-end inventory increased to $218.1 million from $88.6 million.
- Cash increased substantially following the $545.5 million net proceeds from ACM Shanghai’s STAR IPO. ACM Research’s share of ACM Shanghai declined from 91.7% to 82.5%.
- Reported net income included $4.6 million of equity-method income and a $0.6 million unrealized trading-securities gain. FY2020 included a $12.6 million trading-securities gain and a $12.0 million non-cash charge related to a financial liability.
Outlook, risks and unusual items
- Management expects gross margin of 40%–45% for the foreseeable future. It expects R&D expense to increase in absolute dollars and as a share of revenue, and sales and marketing and general and administrative expenses to rise in absolute dollars. The filing provides no specific company revenue or earnings guidance.
- Management said cash, operating cash flows and ACM Shanghai borrowing capacity should be sufficient for anticipated needs for at least 12 months. IPO proceeds are intended for the Lingang development and production center, product development and working capital; PRC restrictions mean subsidiary funds may not be freely transferable to the U.S. parent.
- The planned Lingang facility is approximately 1 million square feet, with production targeted to begin in 2023. The land grant includes investment, construction, production and tax milestones; failure to meet certain terms could result in penalties or loss of land-use rights. Open capital commitments were $5.5 million at year-end.
- Two customers represented 48.9% of FY2021 revenue. Customer concentration, long qualification cycles, customer acceptance of first tools, and dependence on a limited number of suppliers—including a sole supplier of megasonic transducers—could affect revenue, deliveries and margins.
- Other material risks include U.S.–China trade and export restrictions, PRC regulatory and fund-transfer risks, currency exposure without hedging, semiconductor cyclicality, COVID-19-related operating and supply-chain disruption, and the inability of the PCAOB to inspect the company’s PRC-based auditor.
- Government subsidies recognized as reductions of expenses totaled $11.3 million in FY2021, compared with $2.7 million in FY2020. The amount and timing of future grants are uncertain.
- The securities class action was dismissed with prejudice on January 10, 2022. The independent auditor issued unqualified opinions on the financial statements and internal control over financial reporting; management also concluded controls were effective at year-end.
Important facts for investors to verify
- Whether shipped first tools and the $91.7 million of first-tool finished goods inventory at year-end are accepted by customers and convert to revenue and cash.
- Whether the sharp increases in receivables and inventory reverse into operating cash flow, and whether reported growth is sustained without margin deterioration.
- How much of reported earnings depends on government grant expense offsets, equity-method income and investment valuation changes.
- Progress and funding of the Lingang project, compliance with its milestones, and the practical availability of STAR IPO proceeds to ACM Research outside the PRC.
- Changes in major-customer concentration, critical component supply, export-control exposure and auditor-inspection or U.S. listing requirements.