Daqo New Energy Reports Second Quarter 2024 Financial Results
Intellectia.AI Updated: 2024-08-26
Daqo New Energy Reports Second Quarter 2024 Financial Results
Daqo New Energy Corp. (NYSE:DQ), a leading manufacturer of high-purity polysilicon for the global solar PV industry, reported its financial results for the second quarter ending June 30, 2024.
Key Financial Metrics
| Metric | Q2 2024 | Q1 2024 | Q2 2023 | YoY Change | QoQ Change | Consensus Estimates |
|---|---|---|---|---|---|---|
| Total Revenue | $220 million | $415.3 million | $637 million | -65.5% | -47% | $337.13 million |
| Earnings per Share (EPS) | -$1.81 | $0.24 | $1.35 | -234.1% | -854.2% | -$0.56 |
| Gross Profit (Loss) | -$159 million | $72 million | $259 million | -161.4% | -320.8% | |
| Gross Margin | -72% | 17.4% | 40.7% | -112.7 ppt | -89.4 ppt |
Despite a challenging quarter where market prices fell below production costs across the solar value chain, Daqo New Energy maintained a strong balance sheet, free of financial debt. The company faced significant non-cash inventory impairment expenses, which impacted its cost of revenue, gross loss, operating loss, and net loss.
Key Developments and Operational Highlights
- Inventory Impairment: Recorded a non-cash inventory impairment expense of $108 million due to the falling market prices of polysilicon.
- Balance Sheet: Strong balance sheet with no financial debt, a cash balance of $997 million, and $1.1 billion in combined cash and bank note receivables.
- Short-term Investments: Purchased $1.4 billion in short-term investments and fixed-term deposits.
- Operational Efficiency: Production cost trended downwards by 3% from Q1 2024 to an average of $6.19/kg.
- Phase 5B Project: Initial production at the 100,000 metric tons Phase 5B polysilicon project commenced as planned.
- R&D Achievements: Achieved an N-type product mix of 73%, with efforts continuing towards reaching 100% by the end of the next year.
Officer Comments
Xiang Xu, CEO, explained the adverse impact of the significant drop in market prices that led to the necessity of recording inventory impairment. Xu highlighted the proactive measures taken, including starting initial production at the new Phase 5B polysilicon project and maintaining a robust production volume amidst challenging market conditions. CFO Ming Yang emphasized the focus on maintaining cash liquidity and strategic investments to optimize financial outcomes.
Dividends and Share Repurchase Program
The company reported a continuation of its $100 million share repurchase program, authorized in July, indicating a strategic intent to repurchase shares opportunistically based on market conditions.
Forward Guidance
Daqo New Energy has provided a guidance range for Q3 2024, expecting total polysilicon production volume to be approximately 43,000 to 46,000 metric tons. The full year 2024 production volume is anticipated to fall between 210,000 to 220,000 metric tons. Information for consensus estimates for forward guidance was not provided.
Stock Price Movement
Following the earnings release, Daqo New Energy's stock saw an after-event percentage decrease of -3.36%.
In summary, despite facing substantial market pressures and required inventory impairment, Daqo New Energy is leveraging its strong balance sheet and focusing on operational efficiency and strategic investments to navigate the challenging solar market landscape.
