Daqo New Energy Announces Unaudited Second Quarter 2023 Results
- Polysilicon production volume increased by 11,458 MT, reaching 45,306 MT in Q2 2023.
- Polysilicon sales volume more than doubled, reaching 51,550 MT in Q2 2023.
- Average total production cost decreased by $0.63/kg to $6.92/kg in Q2 2023.
- Average cash cost decreased by $0.56/kg to $6.05/kg in Q2 2023.
- Revenue decreased to $636.7 million in Q2 2023.
- Gross profit decreased to $258.9 million in Q2 2023.
- Net income attributable to Daqo New Energy Corp. shareholders decreased to $103.7 million in Q2 2023.
- None.
Second Quarter 2023 Financial and Operating Highlights
- Polysilicon production volume was 45,306 MT in Q2 2023, compared to 33,848 MT in Q1 2023
- Polysilicon sales volume was 51,550 MT in Q2 2023, compared to 25,284 MT in Q1 2023
- Polysilicon average total production cost(1) was
/kg in Q2 2023, compared to$6.92 /kg in Q1 2023$7.55 - Polysilicon average cash cost(1) was
/kg in Q2 2023, compared to$6.05 /kg in Q1 2023$6.61 - Polysilicon average selling price (ASP) was
/kg in Q2 2023, compared to$12.33 /kg in Q1 2023$27.83 - Revenue was
in Q2 2023, compared to$636.7 million in Q1 2023$709.8 million - Gross profit was
in Q2 2023, compared to$258.9 million in Q1 2023. Gross margin was$506.7 million 40.7% in Q2 2023, compared to71.4% in Q1 2023 - Net income attributable to Daqo New Energy Corp. shareholders was
in Q2 2023, compared to$103.7 million in Q1 2023$278.8 million - Earnings per basic American Depositary Share (ADS)(3) was
in Q2 2023, compared to$1.35 in Q1 2023$3.56 - Adjusted net income (non-GAAP)(2) attributable to Daqo New Energy Corp. shareholders was
in Q2 2023, compared to$134.5 million in Q1 2023$310.2 million - Adjusted earnings per basic ADS(3) (non-GAAP)(2) was
in Q2 2023, compared to$1.75 in Q1 2023$3.96 - EBITDA (non-GAAP)(2) was
in Q2 2023, compared to$230.0 million in Q1 2023. EBITDA margin (non-GAAP)(2) was$490.2 million 36.1% in Q2 2023, compared to69.1% in Q1 2023
Three months ended | |||
US$ millions except as indicated otherwise | Jun. 30, | Mar. 31, | Jun. 30, |
Revenues | 636.7 | 709.8 | 1,244.1 |
Gross profit | 258.9 | 506.7 | 946.9 |
Gross margin | 40.7 % | 71.4 % | 76.1 % |
Income from operations | 213.9 | 463.8 | 927.6 |
Net income attributable to Daqo New Energy Corp. | 103.7 | 278.8 | 627.8 |
Earnings per basic ADS(3) ($ per ADS) | 1.35 | 3.56 | 8.36 |
Adjusted net income (non-GAAP)(2) attributable to | 134.5 | 310.2 | 630.3 |
Adjusted earnings per basic ADS(3) (non-GAAP)(2) | 1.75 | 3.96 | 8.39 |
EBITDA (non-GAAP)(2) | 230.0 | 490.2 | 955.4 |
EBITDA margin (non-GAAP)(2) | 36.1 % | 69.1 % | 76.8 % |
Polysilicon sales volume (MT) | 51,550 | 25,284 | 37,545 |
Polysilicon average total production cost ($/kg)(1) | 6.92 | 7.55 | 7.26 |
Polysilicon average cash cost (excl. dep'n) ($/kg)(1) | 6.05 | 6.61 | 6.51 |
Notes:
(1) Production cost and cash cost only refer to production in our polysilicon facilities. Production cost is calculated by the inventoriable costs relating to production of polysilicon divided by the production volume in the period indicated. Cash cost is calculated by the inventoriable costs relating to production of polysilicon excluding depreciation cost and non-cash share-based compensation cost, divided by the production volume in the period indicated.
(2) Daqo New Energy provides EBITDA, EBITDA margins, adjusted net income attributable to Daqo New Energy Corp. shareholders and adjusted earnings per basic ADS on a non-GAAP basis to provide supplemental information regarding its financial performance. For more information on these non-GAAP financial measures, please see the section captioned "Use of Non-GAAP Financial Measures" and the tables captioned "Reconciliation of non-GAAP financial measures to comparable US GAAP measures" set forth at the end of this press release.
(3) ADS means American Depositary Share. One (1) ADS represents five (5) ordinary shares.
Management Remarks
Mr. Longgen Zhang of Daqo New Energy, commented, "Efficient operation of our polysilicon facilities in the second quarter of 2023 resulted in a production volume of 45,306 MT, representing an increase of 11,458 MT as compared to the previous quarter, as our Phase 5A 100,000 MT polysilicon project in
"With the addition of our new Inner Mongolia Phase 5A facility, our total annual polysilicon nameplate capacity has expanded to 205,000 MT. For the third quarter, we expect total polysilicon production volume to be approximately 55,000 MT to 57,000 MT, representing an increase of
"The polysilicon industry experienced increased challenges and substantial price volatility during the second quarter. As several new polysilicon facilities and new entrants finally started production with some reaching full production in the first half of this year, the shortage of polysilicon of the past two years came to an end. The increased supply ultimately led to relative oversupply and excess industry inventory. In an effort to gain market shares with inferior-quality products, new entrants and some established industry players engaged in aggressive pricing. Expectations of lower future pricing in the market led to delays and reductions of downstream customer orders, as well as aggressive pricing requests by customers. The situation worsened significantly in the second half of May, as inventory reduction efforts by leading producers led to a race to the bottom that saw polysilicon prices decline by approximately
"We shipped 53,502MT of polysilicon in Q2, meaningfully more than our production level and a substantial increase over Q1 shipments. Polysilicon inventory at our original
"For the second quarter we recorded approximately
"Regarding the Company's share buyback program, at the end of July, the Company had already repurchased 4.16 million ADSs for approximately
"The continuous cost reduction in solar PV products and the associated reduction in solar energy generation cost are expected to create substantial additional green energy demand, which is likely to exceed most analysts' expectations. It is generally expected that solar PV will eventually become one of the most important energies to power the world. In addition, as solar PV technology keeps evolving, we believe that the increasing needs for polysilicon of very high purity, such as our N-type polysilicon, will help differentiate us from our competitors. While most of our competitors will likely struggle in the current market environment, Daqo New Energy has one of the best balance sheets in the industry with no financial debt, and this will help us weather the current market environment successfully. We are optimistic that as the solar end market continues to grow, and as our customers continue to expand capacity particularly for N-type solar products, prices will improve. We will continue to maintain solid growth and capture the long-term benefits of the growing global solar PV market."
Outlook and guidance
The Company expects to produce approximately 55,000MT to 57,000MT of polysilicon during the third quarter of 2023. The Company expects to produce approximately 193,000MT to 198,000MT of polysilicon for the full year of 2023, inclusive of the impact of the Company's annual facility maintenance.
This outlook reflects Daqo New Energy's current and preliminary view as of the date of this press release and may be subject to changes. The Company's ability to achieve these projections is subject to risks and uncertainties. See "Safe Harbor Statement" at the end of this press release.
Second Quarter 2023 Results
Revenues
Revenues were
Gross profit and margin
Gross profit was
Selling, general and administrative expenses
Selling, general and administrative expenses were
Research and development expenses
Research and development (R&D) expenses were
Foreign exchange loss
Foreign exchange loss was
Income from operations and operating margin
As a result of the abovementioned, income from operations was
Operating margin was
Net income attributable to Daqo New Energy Corp. shareholders and earnings per ADS
As a result of the abovementioned, net income attributable to Daqo New Energy Corp. shareholders was
Earnings per basic American Depository Share (ADS) was
Adjusted income (non-GAAP) attributable to Daqo New Energy Corp. shareholders and adjusted earnings per ADS(non-GAAP)
As a result of the aforementioned, adjusted net income (non-GAAP) attributable to Daqo New Energy Corp. shareholders, excluding non-cash share-based compensation costs, was
Adjusted earnings per basic American Depository Share (ADS) was
EBITDA(non-GAAP)
EBITDA (non-GAAP) was
Financial Condition
As of June 30, 2023, the Company had
Cash Flows
For the six months ended June 30, 2023, net cash provided by operating activities was
For the six months ended June 30, 2023, net cash used in investing activities was
For the six months ended June 30, 2023, net cash used in financing activities was
Use of Non-GAAP Financial Measures
To supplement Daqo New Energy's consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles ("US GAAP"), the Company uses certain non-GAAP financial measures that are adjusted for certain items from the most directly comparable GAAP measures including earnings before interest, taxes, depreciation and amortization ("EBITDA") and EBITDA margin; adjusted net income attributable to Daqo New Energy Corp. shareholders and adjusted earnings per basic and diluted ADS. Our management believes that each of these non-GAAP measures is useful to investors, enabling them to better assess changes in key element of the Company's results of operations across different reporting periods on a consistent basis, independent of certain items as described below. Thus, our management believes that, used in conjunction with US GAAP financial measures, these non-GAAP financial measures provide investors with meaningful supplemental information to assess the Company's operating results in a manner that is focused on its ongoing, core operating performance. Our management uses these non-GAAP measures internally to assess the business, its financial performance, current and historical results, as well as for strategic decision-making and forecasting future results. Given our management's use of these non-GAAP measures, the Company believes these measures are important to investors in understanding the Company's operating results as seen through the eyes of our management. These non-GAAP measures are not prepared in accordance with US GAAP or intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with US GAAP; the non-GAAP measures should be reviewed together with the US GAAP measures, and may be different from non-GAAP measures used by other companies.
The Company uses EBITDA, which represents earnings before interest, taxes, depreciation and amortization, and EBITDA margin, which represents the proportion of EBITDA in revenues. Adjusted net income attributable to Daqo New Energy Corp. shareholders and adjusted earnings per basic and diluted ADS exclude costs related to share-based compensation. Share-based compensation is a non-cash expense that varies from period to period. As a result, our management excludes this item from our internal operating forecasts and models. Our management believes that this adjustment for share-based compensation provides investors with a basis to measure the Company's core performance, including compared with the performance of other companies, without the period-to-period variability created by share-based compensation.
A reconciliation of non-GAAP financial measures to comparable US GAAP measures is presented later in this document.
Conference Call
The Company has scheduled a conference call to discuss the results at 8:00 AM
The dial-in details for the earnings conference call are as follows:
Participant dial in (
Participant international dial in: +1-412-902-4272
Please dial in 10 minutes before the call is scheduled to begin and ask to join the Daqo New Energy Corp. call.
You can also listen to the conference call via Webcast through the URL: https://event.choruscall.com/mediaframe/webcast.html?webcastid=z300CxHq
A replay of the call will be available 1 hour after the conclusion of the conference call through August 10, 2023. The dial in details for the conference call replay are as follows:
International toll: +1-412-317-0088
Replay access code: 4139151
To access the replay through an international dial-in number, please select the link below:
https://services.choruscall.com/ccforms/replay.html
Participants will be asked to provide their name and company name upon entering the call.
About Daqo New Energy Corp.
Daqo New Energy Corp. (NYSE: DQ) ("Daqo" or the "Company") is a leading manufacturer of high-purity polysilicon for the global solar PV industry. Founded in 2007, the Company manufactures and sells high-purity polysilicon to photovoltaic product manufactures, who further process the polysilicon into ingots, wafers, cells and modules for solar power solutions. The Company has a total polysilicon nameplate capacity of 205,000 metric tons and is one of the world's lowest cost producers of high-purity polysilicon.
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the
Daqo New Energy Corp. | ||||||||||
Unaudited Condensed Consolidated Statement of Operations | ||||||||||
(US dollars in thousands, except ADS and per ADS data) | ||||||||||
Three months ended | Six months ended | |||||||||
Jun 30, | Mar 31, | Jun 30, | Jun 30, | Jun 30, | ||||||
Revenues |
|
$ 1,346,558 |
$ 2,524,409 | |||||||
Cost of revenues | (377,816) | (203,102) | (297,220) | (580,918) | (763,987) | |||||
Gross profit | 258,908 | 506,732 | 946,866 | 765,640 | 1,760,422 | |||||
Operating expenses | ||||||||||
Selling, general and administrative expenses |
(43,257) | (41,284) |
(14,430) |
(84,541) |
(29,913) | |||||
Research and development expenses | (2,169) | (1,938) | (2,711) | (4,108) | (4,790) | |||||
Other operating income/(expense) | 385 | 292 | (2,143) | 677 | (1,205) | |||||
Total operating expenses | (45,041) | (42,930) | (19,284) | (87,972) | (35,908) | |||||
Income from operations | 213,867 | 463,802 | 927,582 | 677,668 | 1,724,514 | |||||
Interest income/(expense), net | 12,751 | 11,947 | (3,677) | 24,698 | (5,146) | |||||
Foreign exchange loss | (19,714) | - | - | (19,714) | - | |||||
Investment income | 8 | 13 | 34 | 21 | 1,529 | |||||
Income before income taxes | 206,912 | 475,762 | 923,939 | 682,673 | 1,720,897 | |||||
Income tax expense | (44,730) | (81,067) | (143,460) | (125,797) | (273,368) | |||||
Net income | 162,182 | 394,695 | 780,479 | 556,876 | 1,447,529 | |||||
Net income attributable to non-controlling |
58,459 | 115,891 |
152,662 |
174,350 |
283,871 | |||||
Net income attributable to Daqo New |
|
|
|
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Earnings per ADS |
1.35 |
3.56 |
8.36 |
4.93 |
15.53 | |||||
Basic | ||||||||||
Diluted | 1.34 | 3.52 | 8.18 | 4.89 | 15.17 | |||||
Weighted average ADS outstanding | ||||||||||
Basic | 76,762,451 | 78,298,405 | 75,119,100 | 77,526,150 | 74,915,182 | |||||
Diluted | 77,031,850 | 78,839,166 | 76,756,442 | 77,931,229 | 76,719,978 |
Daqo New Energy Corp. | ||||||
Unaudited Condensed Consolidated Balance Sheets | ||||||
(US dollars in thousands) | ||||||
Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | ||||
ASSETS: | ||||||
Current Assets: | ||||||
Cash, cash equivalents and restricted cash | 3,169,724 | 4,130,549 | 3,284,251 | |||
Short-term investments | 2,757 | 5,823 | 11,392 | |||
Notes receivable | 798,463 | 791,346 | 1,269,314 | |||
Inventories | 159,494 | 191,708 | 52,264 | |||
Other current assets | 137,288 | 70,223 | 39,533 | |||
Total current assets | 4,267,726 | 5,189,649 | 4,656,754 | |||
Property, plant and equipment, net | 2,920,163 | 2,884,700 | 1,763,632 | |||
Prepaid land use right | 94,606 | 80,221 | 38,196 | |||
Other non-current assets | 42,532 | 35,672 | 25,549 | |||
TOTAL ASSETS | 7,325,027 | 8,190,242 | 6,484,131 | |||
Current liabilities: | ||||||
Short-term borrowings | - | 140,000 | - | |||
Accounts payable and notes payable | 104,617 | 97,402 | 115,337 | |||
Advances from customers-short term portion | 199,396 | 184,936 | 375,410 | |||
Payables for purchases of property, plant and |
256,278 | 266,164 |
94,113 | |||
Other current liabilities | 152,956 | 252,400 | 250,805 | |||
Total current liabilities | 713,247 | 940,902 | 835,665 | |||
Advance from customers – long term portion | 128,842 | 160,267 | 95,647 | |||
Other non-current liabilities | 31,722 | 105,792 | 42,850 | |||
TOTAL LIABILITIES | 873,811 | 1,206,961 | 974,162 | |||
EQUITY: | ||||||
Total Daqo New Energy Corp.'s shareholders' equity |
4,866,541 | 5,063,463 |
4,050,213 | |||
Non-controlling interest | 1,584,675 | 1,919,818 | 1,459,756 | |||
Total equity | 6,451,216 | 6,983,281 | 5,509,969 | |||
TOTAL LIABILITIES & EQUITY | 7,325,027 | 8,190,242 | 6,484,131 |
Daqo New Energy Corp. | |||||
Unaudited Condensed Consolidated Statements of Cash Flows | |||||
(US dollars in thousands) | |||||
For the six months ended June 30, | |||||
2023 | 2022 | ||||
Operating Activities: | |||||
Net income | |||||
Adjustments to reconcile net income to net cash provided by |
139,052 |
67,106 | |||
Changes in operating assets and liabilities | 90,373 | (385,807) | |||
Net cash provided by operating activities | 786,301 | 1,128,828 | |||
Investing activities: | |||||
Net cash used in investing activities | (495,702) | (80,337) | |||
Financing activities: | |||||
Net cash (used in)/provided by financing activities | (477,477) | 1,579,279 | |||
Effect of exchange rate changes | (163,749) | (67,485) | |||
Net (decrease)/increase in cash, cash equivalents and restricted cash | (350,627) | 2,560,285 | |||
Cash, cash equivalents and restricted cash at the beginning of the period |
3,520,351 |
723,966 | |||
Cash, cash equivalents and restricted cash at the end of the period | 3,169,724 | 3,284,251 |
Daqo New Energy Corp. | ||||||||||
Reconciliation of non-GAAP financial measures to comparable US GAAP measures | ||||||||||
(US dollars in thousands) | ||||||||||
Three months ended | Six months ended | |||||||||
Jun 30, 2023 | Mar 31, 2023 | Jun 30, 2022 | Jun 30, 2023 | Jun 30, 2022 | ||||||
Net income | 162,182 | 394,695 | 780,479 | 556,876 | 1,447,529 | |||||
Income tax expense | 44,730 | 81,067 | 143,460 | 125,797 | 273,368 | |||||
Interest (income) expense, net | (12,751) | (11,947) | 3,677 | (24,698) | 5,146 | |||||
Depreciation & Amortization | 35,835 | 26,399 | 27,765 | 62,234 | 56,124 | |||||
EBITDA (non-GAAP) | 229,996 | 490,214 | 955,381 | 720,209 | 1,782,167 | |||||
EBITDA margin (non-GAAP) | 36.1 % | 69.1 % | 76.8 % | 53.5 % | 70.6 % |
Three months ended | Six months ended | ||||||||||
Jun 30, 2023 | Mar 31, 2023 | Jun 30, 2022 | Jun 30, 2023 | Jun 30, 2022 | |||||||
Net income attributable to Daqo New | 103,723 | 278,804 | 627,817 | 382,526 | 1,163,658 | ||||||
Share-based compensation | 30,824 | 31,401 | 2,512 | 62,225 | 4,869 | ||||||
Adjusted net income (non-GAAP) |
134,547 |
310,205 |
630,329 |
444,751 |
1,168,527 | ||||||
Adjusted earnings per basic ADS (non-GAAP) |
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Adjusted earnings per diluted ADS (non-GAAP) |
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SOURCE Daqo New Energy Corp.
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