ACM ResearchACMR

ACM Research earned $0.61 per share last quarter, which was well ahead of the $0.42 analysts expected. Revenue grew 36 percent to $290 million. This growth was driven by massive demand for its electrochemical plating tools, which are machines used to deposit thin layers of metal onto wafers to create electrical connections. Sales in that category rose 168 percent.

The company ended the quarter with $1 billion in cash and no debt. This financial strength is important because it allows the company to keep investing in new products even if the chip market goes through a quiet period. The stock rose about 4 percent following the report, as the business continues to prove it can sell more than just its original cleaning machines.

See the full quarter, and how our tracked metrics did

Source: 8-K filing

Key highlights

• Revenue outlook raised: Management raised the full year revenue guidance to a range between $1.125 billion and $1.175 billion, a bump from the previous $1.08 billion floor. The company expects to grow between 25% and 30% for the year as it rolls out new products like high temperature cleaning and advanced packaging tools.
• New product categories surging: Revenue from newer technologies including furnace and plating systems grew 168% to $128.5 million, now making up 44% of total sales. This shift away from older cleaning tools, which saw sales drop 14%, shows the company is successfully becoming a broader supplier to chipmakers.
• Shipment growth slowing: Total shipments grew 36.4% to $281.5 million, which is a drop from the 53.6% growth rate seen just last quarter. While this still shows healthy demand, the pace at which the company is sending out new equipment for customer approval is beginning to cool.
• Gross margins tightening: Profit margins on goods sold fell to 46.0% compared to 48.7% a year ago, primarily due to a change in the mix of products being sold. Even with this dip, the figure remains within the company target of 42% to 48% and helped drive a 36% jump in operating income.
• Strong cash position: The company ended the quarter with $1.0 billion in net cash, which is the money left after subtracting all bank debt. This provides a deep safety net and the funds needed to build out the new Oregon facility as the business tries to expand beyond the China market.

Our take: A very strong quarter that proves the company is no longer just a one product story. The 168% growth in new categories like electroplating is the standout here, as it diversifies the business and makes the case for a $4 billion revenue goal look much more realistic over the long term.