SHANGHAI, April 29, 2024 /PRNewswire/ -- Daqo New Energy Corp. (NYSE:DQ) ("Daqo New Energy," the "Company" or "we"), a leading manufacturer of high-purity polysilicon for the global solar PV industry, today announced its unaudited financial results for the first quarter of 2024. First Quarter 2024 Financial and Operating Highlights Polysilicon production volume was 62,278 MT in Q1 2024, compared to 61,014 MT in Q4 2023 Polysilicon sales volume was 53,987 MT in Q1 2024 compared to 59,906 MT in Q4 2023 Polysilicon average total production cost(1) was $6.37/kg in Q1 2024 compared to $6.50/kg in Q4 2023 Polysilicon average cash cost(1) was $5.61/kg in Q1 2024, compared to $5.72/kg in Q4 2023 Polysilicon average selling price (ASP) was $7.66/kg in Q1 2024, compared to $7.97/kg in Q4 2023 Revenue was $415.3 million in Q1 2024, compared to $476.3 million in Q4 2023 Gross profit was $72.1 million in Q1 2024, compared to $87.2 million in Q4 2023. Gross margin was 17.4% in Q1 2024, compared to 18.3% in Q4 2023 Net income attributable to Daqo New Energy Corp. shareholders was $15.5 million in Q1 2024, compared to $53.3 million in Q4 2023 Earnings per basic American Depositary Share (ADS)(3) was $0.24 in Q1 2024, compared to earnings per basic ADS of $0.76 in Q4 2023 Adjusted net income (non-GAAP)(2) attributable to Daqo New Energy Corp. shareholders was $36.0 million in Q1 2024, compared to $74.3 million in Q4 2023 Adjusted earnings per basic ADS(3) (non-GAAP)(2) was $0.55 in Q1 2024, compared to $1.06 in Q4 2023 EBITDA (non-GAAP)(2) was $76.9 million in Q1 2024, compared to $128.2 million in Q4 2023. EBITDA margin (non-GAAP)(2) was 18.5% in Q1 2024, compared to 26.9% in Q4 2023   Three months ended US$ millions except as indicated otherwise March. 31, 2024 December. 31, 2023 March. 31, 2023 Revenues 415.3 476.3 709.8 Gross profit 72.1 87.2 506.7 Gross margin 17.4 % 18.3 % 71.4 % Income from operations 30.5 83.3 463.8 Net income attributable to Daqo New Energy Corp. shareholders 15.5 53.3 278.8 Earnings per basic ADS(3) ($ per ADS) 0.24 0.76 3.56 Adjusted net income (non-GAAP)(2) attributable to Daqo New Energy Corp. shareholders 36.0 74.3 310.2 Adjusted earnings per basic ADS(3) (non-GAAP)(2) ($ per ADS)  0.55 1.06 3.96 EBITDA (non-GAAP)(2) 76.9 128.2 490.2 EBITDA margin (non-GAAP)(2) 18.5 % 26.9 % 69.1 % Polysilicon sales volume (MT)  53,987 59,906 25,284 Polysilicon average total production cost ($/kg)(1) 6.37 6.50 7.55 Polysilicon average cash cost (excl. dep'n) ($/kg)(1) 5.61 5.72 6.61   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. Xiang Xu, CEO of Daqo New Energy, commented, "During the first quarter, we continued to optimize our manufacturing operations and made improvements in both yield and throughput at our two polysilicon facilities. Total production volume for the quarter was 62,278 MT, which was above our expectations and represented an increase of 1,264 MT compared to the previous quarter. Our Inner Mongolia 5A facility contributed 46% of our total production volume for the first quarter. Through achievements in R&D and significant purity improvements at both facilities, we further increased our N-type product mix from 60% in December last year to 72% in March. Compared to the end of last year, our production cost trended down over the quarter, decreasing further by 2% from Q4 2023 to an average of $6.37/kg in Q1 2024. For the quarter, we generated $77 million in EBITDA. By the end of 1Q 2024, the Company maintained a strong cash balance of $2.7 billion and a combined cash and bank note receivable balance of $2.9 billion." "We expect Q2 2024 total polysilicon production volume to be approximately 60,000 MT to 63,000 MT, similar to that of Q1 2024 as the Company maintains full production. We expect to finish construction and begin initial pilot production at our new Inner Mongolia Phase 5B facility in Q2 2024 and expect to ramp up to full production level by the end of Q3 2024. As a result, we anticipate full year 2024 production volume to be in the range of 280,000 MT to 300,000 MT, approximately 40% to 50% higher than that of 2023. With more than 15 years of experience in polysilicon production, as well as a fully digitalized and integrated production system that optimizes operational efficiency, we will continue to increase N-type production in the product mix." "During the first quarter, the solar market initially showed signs of strength as we headed into the Chinese New Year holiday in February. Despite production cuts and down time, as usual, during the holidays, polysilicon demand had been strong pre-holiday as wafer manufacturers kept utilization rate unchanged or even higher, in anticipation of higher demand and better product pricing post-holidays. The general polysilicon price range was RMB 65-70/kg for n-type and RMB 55-60/kg for p-type during this period. However, with weaker-than-expected production plans downstream starting in March, the wafer sector faced significant pressure from accumulated inventories and negative margins. Market sentiment shifted significantly in mid-March with widespread expectations of falling prices throughout the value chain, particularly for polysilicon. As a result, downstream manufacturers began to lower utilization, reduce inventory and delay orders to minimize the impact of falling prices. In April, further pressure on polysilicon prices emerged as the issues of excess inventory among wafer manufacturers worsened and wafer customers further delayed orders and product delivery. Thus, polysilicon prices dropped further by late-April to RMB 47-54/kg for Tier-1 producers, at the industry's cash break-even cost. At this level, we believe the entire solar value chain, including polysilicon, is likely to be loss-making in general and that a large number of polysilicon producers are currently unprofitable. The solar industry has gone through multiple cycles in the past and, based on our previous experience, we believe that the current low prices and market downturn will eventually result in a healthier market, as poor profitability and losses, as well as cash burn, will lead to many market players exiting the business with some possible bankruptcies. This will bring the inevitable capacity rationalization and solve the overcapacity issue we are currently experiencing. And as demand growth resumes after excess inventories are depleted in the short-run and on the backdrop of positive policies pushing renewable installations in the long-run, the solar PV industry will return to normal profitability and achieve better margins. We believe that at the end of the quarter, we had one of the industry's lowest levels of finished goods inventory, with approximately two weeks of production." "2023 marked a step change for renewable power growth, with China's newly installed solar PV capacity reaching a record high of 216.9GW, representing a 148% year-over-year growth. We continued to see strong growth in solar PV installations in China during the first quarter of 2024, which reached an aggregate of 45.7GW, representing a 36% year-over-year growth rate. Solar has become one of the most competitive forms of power generation, and continuous cost reductions in solar PV products and associated reductions in solar energy generation costs are expected to create substantial additional demand for solar PV. With 2023 setting the stage for gradually phasing out P-type products, we believe that 2024 will be the year when N-type products dominate the industry. We are optimistic that we will capture the long-term benefits of the growing global solar PV market and maintain our competitive advantage by enhancing our higher-efficiency N-type technology and optimizing our cost structure through digital transformation and AI adoption. As one of the world's lowest-cost producers with the highest quality N-type product, a strong balance sheet and no financial debt, we believe we are very well positioned to weather the current market downcycle and emerge as one of the leaders in the industry to capture the market's future growth." Outlook and guidance The Company expects to produce approximately 60,000MT to 63,000MT of polysilicon during the second quarter of 2024. The Company expects to produce approximately 280,000MT to 300,000MT of polysilicon for the full year of 2024, 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. First Quarter 2024 Results Revenues Revenues were $415.3 million, compared to $476.3 million in the fourth quarter of 2023 and $709.8 million in the first quarter of 2023. The decrease in revenues compared to the fourth quarter of 2023 was primarily due to a decrease in the ASP. Gross profit and margin Gross profit was $72.1 million, compared to $87.2 million in the fourth quarter of 2023 and $506.7 million in the first quarter of 2023. Gross margin was 17.4%, compared to 18.3% in the fourth quarter of 2023 and 71.4% in the first quarter of 2023. The decrease in gross margin compared to the fourth quarter of 2023 was primarily due to lower ASP, which was partially mitigated by lower production cost. Selling, general and administrative expenses Selling, general and administrative expenses were $38.4 million, compared to $39.0 million in the fourth quarter of 2023 and $41.3 million in the first quarter of 2023. SG&A expenses during the first quarter included $19.6 million in non-cash share-based compensation cost related to the Company's share incentive plans, compared to $19.6 million in the fourth quarter of 2023. Research and development expenses Research and development (R&D) expenses were $1.5 million, compared to $3.3 million in the fourth quarter of 2023 and $1.9 million in the first quarter of 2023. Research and development expenses can vary from period to period and reflect R&D activities that take place during the quarter. Income from operations and operating margin As a result of the foregoing, income from operations was $30.5 million, compared to $83.3 million in the fourth quarter of 2023 and $463.8 million in the first quarter of 2023. Operating margin was 7.3%, compared to 17.5% in the fourth quarter of 2023 and 65.3% in the first quarter of 2023. Foreign exchange loss Foreign exchange loss was $0.3 million, compared to a loss of $0.8 million in the fourth quarter of 2023 attributed to the volatility and fluctuation in the USD/CNY exchange rate during the quarter. Net income attributable to Daqo New Energy Corp. shareholders and earnings per ADS As a result of the aforementioned, net income attributable to Daqo New Energy Corp. shareholders was $15.5 million, compared to $53.3 million in the fourth quarter of 2023 and $278.8 million in the first quarter of 2023. Earnings per basic American Depository Share (ADS) was $0.24, compared to $0.76 in the fourth quarter of 2023, and $3.56 in the first quarter of 2023. 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 $36.0 million, compared to $74.3 million in the fourth quarter of 2023 and $310.2 million in the first quarter of 2023. Adjusted earnings per basic American Depository Share (ADS) was $0.55 compared to $1.06 in the fourth quarter of 2023, and $3.96 in the first quarter of 2023. EBITDA EBITDA (non-GAAP) was $76.9 million, compared to $128.2 million in the fourth quarter of 2023 and $490.2 million in the first quarter of 2023. EBITDA margin (non-GAAP) was 18.5%, compared to 26.9% in the fourth quarter of 2023 and 69.1% in the first quarter of 2023. Financial Condition As of March 31, 2024, the Company had $2,689.3 million in cash, cash equivalents and restricted cash, compared to $3,048.0 million as of December 31, 2023 and $4,130.5 million as of March 31, 2023. As of March 31, 2024, the notes receivables balance was $194.1 million, compared to $116.4 million as of December 31, 2023 and $791.3 million as of March 31, 2023. Notes receivables represent bank notes with maturity within six months. Cash Flows For the three months ended March 31, 2024, net cash used in operating activities was $115.9 million, compared to net cash provided by operating activities of $807.0 million in the same period of 2023. For the three months ended March 31, 2024, net cash used in investing activities was $190.5 million, compared to $268.9 million in the same period of 2023. The net cash used in investing activities in the first quarter of 2024 was primarily related to the capital expenditures on the Company's 5A and 5B polysilicon expansion projects in Baotou City, Inner Mongolia. For the three months ended March 31, 2024, net cash used in financing activities was $6.0 million, compared to net cash provided by financing activities of $59.9 million in the same period of ...