EX-99.1 2 tm1922705d1_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

Daqo New Energy Announces Unaudited Third Quarter 2019 Results

 

Shihezi, China—November 12, 2019—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 third quarter of 2019.

 

Third Quarter 2019 Financial and Operating Highlights

·Polysilicon production volume of 9,437 MT in Q3 2019, compared to 7,151 MT in Q2 2019
·Polysilicon sales volume of 9,238 MT in Q3 2019, compared to 7,130 MT in Q2 2019
·Polysilicon average total production cost(1) of $6.97/kg in Q3 2019, compared to $8.12/kg in Q2 2019
·Polysilicon average cash cost(1) of $5.85/kg in Q3 2019, compared to $6.65/kg in Q2 2019
·Polysilicon average selling price (ASP) was $8.99/kg in Q3 2019, compared to $9.10/kg in Q2 2019
·Revenue from continuing operations was $83.9 million in Q3 2019, compared to $66.0 million in Q2 2019
·Gross profit from continuing operations was $18.1 million in Q3 2019, compared to $8.6 million in Q2 2019. Gross margin from continuing operations was 21.5% in Q3 2019, compared to 13.0% in Q2 2019
·EBITDA (non-GAAP)(2) from continuing operations was $19.7 million in Q3 2019, compared to $10.2 million in Q2 2019. EBITDA margin (non-GAAP)(2) from continuing operations was 23.5% in Q3 2019, compared to 15.5% in Q2 2019
·Adjusted net income (non-GAAP)(2) attributable to Daqo New Energy shareholders was $9.5 million in Q3 2019, compared to $2.3 million in Q2 2019 and $4.3 million in Q3 2018.
·Adjusted earnings per basic American Depository Share (ADS) (non-GAAP)(2) was $0.69 in Q3 2019, compared to $0.17 in Q2 2019, and $0.33 in Q3 2018.
·Net income from continuing operations was $4.9 million in Q3 2019, compared to net loss from continuing operations of $2.7 million in Q2 2019 and net income from continuing operations of $4.2 million in Q3 2018.
·Net income from discontinued operations was $0.1 million in Q3 2019, compared to net income from discontinued operations of $0.5 million in Q2 2019 and net loss from discontinued operations of $22.4 million in Q3 2018.
·Net income attributable to Daqo New Energy shareholders was $5.0 million in Q3 2019, compared to net loss attributable to Daqo New Energy shareholders of $2.2 million in Q2 2019 and net loss attributable to Daqo New Energy shareholders of $18.3 million in Q3 2018.
·Earnings per basic ADS was $0.37 in Q3 2019, compared to loss per basic ADS of $0.16 in Q2 2019, and loss per basic ADS of $1.39 in Q3 2018.

 

   Three months ended 
US$ millions
except as indicated otherwise		  Sep 30, 2019   Jun 30, 2019   Sep 30, 2018 
Revenues   83.9    66.0    67.4 
Gross profit   18.1    8.6    12.8 
Gross margin   21.5%   13.0%   19.1%
Income / (loss) from operations   8.8    (0.4)   4.0 
Net income / (loss) from continuing operations   4.9    (2.7)   4.2 
Income / (loss) from discontinued operations, net of tax   0.1    0.5    (22.4)
Adjusted net income (non-GAAP)(2) attributable to Daqo New Energy Corp. shareholders   9.5    2.3    4.3 
Adjusted earnings per basic ADS (non-GAAP)(2) ($ per ADS)   0.69    0.17    0.33 
Net income / (loss) attributable to Daqo New Energy Corp. shareholders   5.0    (2.2)   (18.3)
Earnings / (loss) per basic ADS ($ per ADS)   0.37    (0.16)   (1.39)
EBITDA (non-GAAP)(2) from continuing operations   19.7    10.2    14.8 
EBITDA margin (non-GAAP) (2) from continuing operations    23.5%   15.5%   22.0%
Polysilicon sales volume (MT)   9,238    7,130    6,199 
Polysilicon average total production cost ($/kg)(1)   6.97    8.12    8.94 
Polysilicon average cash cost (excl. dep’n) ($/kg)(1)   5.85    6.65    7.12 

 

Notes:

(1) Production cost and cash cost only refer to production in our Xinjiang polysilicon facilities. Production cost is calculated by the inventoriable costs relating to production of polysilicon in Xinjiang divided by the production volume in the period indicated. Cash cost is calculated by the inventoriable costs relating to production of polysilicon excluding depreciation expense, divided by the production volume in the period indicated.

(2) Daqo New Energy provides EBITDA from continuing operations, EBITDA margin from continuing operations, adjusted net income attributable to Daqo New Energy Corp. shareholders and adjusted earnings per 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.

 

 

 

 

Management Remarks

 

Mr. Longgen Zhang, CEO of Daqo New Energy, commented, "We had an outstanding quarter in which we reached record-high production volume of 9,437 MT while achieving the lowest production cost in the Company’s history of $6.97/kg. Our results for the quarter reflect the full production capacity and cost structure that our original 35,000 MT facility is able to generate. In mid-September, we successfully completed the construction and installation of our new Phase 4A expansion project and now are currently working to ramp up production of its additional 35,000 MT of capacity. We expect Phase 4A to reach full production capacity by the end of 2019, approximately three months ahead of schedule. With Phase 4A’s additional capacity quickly coming online, we expect production volumes during the fourth quarter of 2019 to be approximately 14,000 to 15,000 MT. Our production costs would be further reduced to approximately $6.5/kg upon Phase 4A running at full capacity.”

 

“We continue to enhance mono-grade product quality and are optimizing our product portfolio towards it in order to maintain higher ASPs. We sold approximately 86% of our products to mono-wafer customers during the quarter. Once Phase 4A is fully ramped up, we expect mono-grade products to account for approximately 90% of our total production volumes. With our downstream mono-wafer customers expected to rapidly expand their capacities for next year, we believe this will lead to continued increase in mono-grade polysilicon demand, which should lead to improvement in the price of mono-grade polysilicon for next year."

 

“During the first three quarters of 2019, China installed approximately 16 GW of new solar PV projects, significantly below the market’s expectations. We believe the primary reason is the long-delayed announcement of a subsidy policy which has rippled downwards, forcing many project developers to postpone project completion dates and extend the time needed for planning, preparation, permit applications, and procurement. It is possible that many of the 22.8 GW of subsidized projects, which were originally expected to be installed in the fourth quarter of 2019, could be delayed to the first half of year 2020. Despite softening demand from China’s downstream market, demand from overseas markets remains robust and could possibly reach 85 GW this year, a significant increase from approximately 60GW in 2018. With the Chinese downstream market expected to rebound next year and overseas demand continuing to grow, we believe global solar PV demand could exceed 140GW in 2020, a significant acceleration when compared to 2019.”

 

“Solar energy is now one of the most competitive forms of energy generation, even when compared with traditional fossil fuel in many markets. When combined with efficient methods to store power, solar energy has the potential to become a sustaining baseload power. As the economics improve and governments pass more policies to tackle climate change, we believe we are at the cusp of major changes in the market which will create enormous opportunities for us over the next several years. We are confident in our ability to navigate this temporary downturn in the market and are ready to take advantage of the recovery next year when the market will continue advancing towards grid parity.”

 

“As one of the lowest-cost polysilicon producers with the highest standards for quality, we are among the very few polysilicon manufacturers who are able to generate a profit in the current challenging market environment. For the first three quarters of this year, our net cash provided by operating activities was approximately $100 million. Once Phase 4A is operating at full capacity, we expect to make further improvements in product quality and cost structure so as to enhance our leadership position in the industry.”

 

Outlook and guidance

 

The Company expects to produce approximately 14,000 to 15,000 MT of polysilicon during the fourth quarter of 2019 and sell approximately 12,500 to 13,500 MT of polysilicon to external customers during the fourth quarter of 2019.For the full year of 2019, the Company expects to produce approximately 39,300 to 40,300 MT of polysilicon, 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.

 

 

 

 

Third Quarter 2019 Results

 

Revenues

 

Revenues were $83.9 million, compared to $66.0 million in the second quarter of 2019 and $67.4 million in the third quarter of 2018. The increase in revenues was primarily due to higher polysilicon sales volumes which were offset by slightly lower ASPs. In RMB-terms, the Company’s polysilicon ASPs during the third quarter of 2019 were slightly higher than during the second quarter in 2019. In USD-terms, the Company’s polysilicon ASPs fell as a result of the depreciation of the RMB against the USD.

 

Gross profit and margin

 

Gross profit was $18.1 million, compared to $8.6 million in the second quarter of 2019 and $12.8 million in the third quarter of 2018. Gross margin was 21.5%, compared to 13.0% in the second quarter of 2019 and 19.1% in the third quarter of 2018. The increase in gross margin was primarily due to lower production costs despite a slight decrease in ASPs.

 

Selling, general and administrative expenses

 

Selling, general and administrative expenses were $8.2 million, compared to $7.8 million in the second quarter of 2019 and $7.6 million in the third quarter of 2018. This quarter’s SG&A expenses include $4.0 million of non-cash share-based compensation costs related to the Company’s share incentive plan. The increase in SG&A was primarily due to an increase in shipping costs as a result of higher sales volume.

 

Research and development expenses

 

Research and development (R&D) expenses were $1.2 million, compared to $1.5 million in the second quarter of 2019 and $1.4 million in the third quarter of 2018. R&D activities during the quarter included efforts and initiatives to reduce carbon and metal content in the manufacturing system to improve polysilicon purity. Research and development expenses could vary from period to period and reflect R&D activities that took place during the quarter.

 

Income / (loss) from operations

 

As a result of the foregoing, income from operations was $8.8 million, compared to loss from operations of $0.4 million in the second quarter of 2019 and income from operations of $4.0 million in the third quarter of 2018.

 

Interest expense

 

Interest expense was $2.6 million, compared to $1.9 million in the second quarter of 2019 and $2.1 million in the third quarter of 2018.

 

EBITDA

 

EBITDA from continuing operations was $19.7 million, compared to $10.2 million in the second quarter of 2019 and $14.8 million in the third quarter of 2018. EBITDA margin was 23.5%, compared to 15.5% in the second quarter of 2019 and 22.0% in the third quarter of 2018.

 

 

 

 

Income from discontinued operations, net of tax

 

During the third quarter of 2018, the Company decided to discontinue its solar wafer manufacturing operations. Net income from discontinued operations was $0.1 million in the third quarter of 2019, compared to $0.5 million in the second quarter of 2019 and net loss from discontinued operations of $22.4 million in the third quarter of 2018. Net income from discontinued operations during the second and third quarter in 2019 resulted from the disposal of fixed assets which were impaired in 2018 and previous years.

 

Net income / (loss) attributable to Daqo New Energy Corp. shareholders and earnings / (loss) per ADS

 

As a result of the aforementioned, net income attributable to Daqo New Energy Corp. shareholders was $5.0 million in the third quarter of 2019, compared to net loss attributable to Daqo New Energy Corp. shareholders of $2.2 million in the second quarter of 2019 and $18.3 million in the third quarter of 2018.

 

Earnings per basic ADS of $0.37, compared to loss per basic ADS of $0.16 in the second quarter of 2019, and $1.39 in the third quarter of 2018.

 

Financial Condition

 

As of September 30, 2019, the Company had $68.2 million in cash, cash equivalents and restricted cash, compared to $79.6 million as of June 30, 2019 and $113.2 million as of September 30, 2018. As of September 30, 2019, the accounts receivable balance was $0.1 million, compared to $0.1 million as of June 30, 2019 and $1 thousand as of September 30, 2018. As of September 30, 2019, the notes receivable balance was $4.3 million, compared to $9.4 million as of June 30, 2019 and $22.5 million as of September 30, 2018. As of September 30, 2019, total borrowings were $248.8 million, of which $163.5 million were long-term borrowings, compared to total borrowings of $243.2 million, including $151.5 million long-term borrowings, as of June 30, 2019 and total borrowings of $165.3 million, including $119.4 million long-term borrowings, as of September 30, 2018.

 

Cash Flows

 

For the nine months ended September 30, 2019, net cash provided by operating activities was $101.6 million, compared to $63.6 million in the same period of 2018.

 

For the nine months ended September 30, 2019, net cash used in investing activities was $202.3 million, compared to $99.9 million in the same period of 2018. The net cash used in investing activities in 2019 and 2018 was primarily related to the capital expenditures on Xinjiang Phase 3B and 4A polysilicon projects.

 

For the nine months ended September 30, 2019, net cash provided by financing activities was $76.6 million, compared to net cash used in financing activities of $84.3 million in the same period of 2018.

 

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 the non-operational polysilicon assets in Chongqing. Such costs mainly consist of non-cash depreciation costs, as well as utilities and maintenance costs associated with the temporarily idle polysilicon machinery and equipment, and the Company had removed this adjustment from the non-GAAP reconciling item since the fourth quarter of 2018, because as of the end of the third quarter of 2018, all of the polysilicon machinery and equipment had been either relocated to Xinjiang, disposed, or planned to be disposed of in due course. Adjusted net income attributable to Daqo New Energy Corp. shareholders and adjusted earnings per basic and diluted ADS also 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 Eastern Time on November 12, 2019. (9:00 PM Beijing / Hong Kong time on the same day).

 

The dial-in details for the live conference call are as follows:

 

Participant dial in (toll free): +1-888-346-8982

 

Participant international dial in: +1-412-902-4272

 

China mainland toll free: 4001-201203

 

China Beijing local toll: +86-105-357-3132

 

Hong Kong toll free: 800-905945

 

Hong Kong-local toll: +852-301-84992

 

 

 

 

You can also listen to the conference call via Webcast through the URL:

 

https://services.choruscall.com/links/dq191112.html

 

A replay of the call will be available 1 hour after the end of the conference through November 19, 2019.

 

The conference call replay numbers are as follows:

 

US Toll Free: +1-877-344-7529

 

International Toll: +1-412-317-0088

 

Canada Toll Free: 855-669-9568

 

Replay access code: 10136595

 

 

To access the replay using an international dial-in number, please select the link below.

 

https://services.choruscall.com/ccforms/replay.html
Participants will be required to state their name and company 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 2008, the Company is one of the world’s lowest cost producers of high-purity polysilicon. Daqo’s highly-efficient and technically advanced manufacturing facility in Xinjiang, China currently has a nameplate annual polysilicon production capacity of 70,000 metric tons.

 

For more information, please visit http://ir.xjdqsolar.com/

 

Safe Harbor Statement

 

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Among other things, the outlook for the fourth quarter and the full year of 2019 and quotations from management in this announcement, as well as Daqo New Energy’s strategic and operational plans, contain forward-looking statements. The Company may also make written or oral forward-looking statements in its reports filed or furnished to the U.S. Securities and Exchange Commission, in its annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the demand for photovoltaic products and the development of photovoltaic technologies; global supply and demand for polysilicon; alternative technologies in cell manufacturing; the Company’s ability to significantly expand its polysilicon production capacity and output; the reduction in or elimination of government subsidies and economic incentives for solar energy applications; and the Company’s ability to lower its production costs. Further information regarding these and other risks is included in the reports or documents the Company has filed with, or furnished to, the U.S. Securities and Exchange Commission. All information provided in this press release is as of the date hereof, and the Company undertakes no duty to update such information or any forward-looking statement, except as required under applicable law.

 

 

 

 

Daqo New Energy Corp.

Unaudited Condensed Consolidated Statement of Operations and Comprehensive Income

(US dollars in thousands, except ADS and per ADS data)

 

   Three months ended   Nine months ended 
   Sep 30, 2019   Jun 30, 2019   Sep 30, 2018   Sep 30, 2019   Sep 30, 2018 
Revenues   $83,909   $65,959   $67,390   $231,072   $225,997 
Cost of revenues   (65,834)   (57,390)   (54,543)   (186,087)   (144,821)
Gross profit   18,075    8,569    12,847    44,985    81,176 
Operating expenses                         
Selling, general and administrative expenses   (8,178)   (7,806)   (7,567)   (23,920)   (18,837)
Research and development expenses   (1,228)   (1,527)   (1,437)   (4,052)   (1,767)
Other operating income   145    365    138    579    650 
Total operating expenses   (9,261)   (8,968)   (8,866)   (27,393)   (19,954)
Income / (loss) from operations   8,814    (399)   3,981    17,592    61,222 
Interest expense   (2,551)   (1,889)   (2,126)   (6,461)   (8,872)
Interest income   193    258    276    775    795 
Foreign exchange gain (loss)   -    (1)   1,937    (189)   1,938 
Income / (loss) before income taxes   6,456    (2,031)   4,068    11,717    55,083 
Income tax (expense) / benefit   (1,561)   (662)   87    (3,652)   (10,154)
Net income / (loss)from continuing operations   4,895    (2,693)   4,155    8,065    44,929 
Net income / (loss) from discontinued operations, net of tax   88    504    (22,410)   1,370    (17,612)
Net income / (loss)   4,983    (2,189)   (18,255)   9,435    27,317 
Net income attributable to non-controlling interest   -    -    41    -    575 
Net income / (loss) attributable to Daqo New Energy Corp. shareholders  $4,983   $(2,189)  $(18,296)  $9,435   $26,742 
                          
Net income / (loss)   4,983    (2,189)   (18,255)   9,435    27,317 
Other comprehensive (loss)/ income:                         
Foreign currency translation adjustments   (21,337)   (12,271)   (18,706)   (20,594)   (27,291)
Total other comprehensive loss   (21,337)   (12,271)   (18,706)   (20,594)   (27,291)
Comprehensive (loss)/income   (16,354)   (14,460)   (36,961)   (11,159)   26 
Comprehensive income / (loss) attributable to non-controlling interest   -    -    (34)   -    432 
Comprehensive loss attributable to Daqo New Energy Corp. shareholders  $(16,354)  $(14,460)  $(36,927)  $(11,159)  $(406)
                          
Earnings / (loss) per ADS                         
- continuing operations   0.36    (0.20)   0.32    0.60    3.63 
- discontinued operations   0.01    0.04    (1.71)   0.10    (1.44)
Basic   0.37    (0.16)   (1.39)   0.70    2.19 
- continuing operations   0.34    (0.20)   0.31    0.59    3.45 
- discontinued operations   0.01    0.04    (1.67)   0.10    (1.37)
Diluted   0.35    (0.16)   (1.36)   0.69    2.08 
Weighted average ADS outstanding                         
Basic   13,634,401    13,492,010    13,122,403    13,496,614    12,208,626 
Diluted   14,219,008    13,936,671    13,444,935    13,751,923    12,829,410 

 

 

 

 

Daqo New Energy Corp.

Unaudited Consolidated Balance Sheets

(US dollars in thousands)

 

   Sep 30, 2019   Jun 30, 2019   Sep 30, 2018 
ASSETS:               
Current Assets:               
Cash and cash equivalents  $26,985   $31,250   $110,322 
Restricted cash   41,192    48,375    2,913 
Short-term investment   -    -    14,561 
Accounts receivable, net   129    86    1 
Notes receivable   4,294    9,435    22,500 
Prepaid expenses and other current assets   24,176    13,765    9,029 
Advances to suppliers   7,823    8,688    2,225 
Inventories   21,023    19,871    17,021 
Amount due from related parties   3,492    4,572    4,560 
Current assets associated with discontinued operation   414    1,133    9,641 
Total current assets   129,528    137,175    192,773 
Property, plant and equipment, net   883,084    763,388    536,131 
Prepaid land use right   21,030    22,029    22,415 
Deferred tax assets   790    823    676 
Long-term equity investments   625    651    651 
Operating lease right-of-use assets   211    158    - 
Non-current asset associated with discontinued operation   6,804    55,175    62,454 
TOTAL ASSETS   1,042,072    979,399    815,100 
                
Current liabilities:               
Short-term borrowings, including current portion of long-term borrowings   85,278    91,760    45,867 
Accounts payable   20,070    11,106    9,580 
Notes payable   62,287    73,135    5,237 
Advances from customers - short term portion   21,218    25,654    16,380 
Payables for purchases of property, plant and equipment   81,709    25,213    39,097 
Accrued expenses and other current liabilities   12,071    9,340    8,356 
Amount due to related parties   16,787    683    1,925 
Income tax payable   3,437    1,975    3,821 
Lease liabilities-short term portion   81    115    - 
Current liabilities associated with discontinued operation   1,087    6,879    23,228 
Total current liabilities   304,025    245,860    153,491 
Long-term borrowings   163,519    151,475    119,399 
Advance from customers – long-term portion   9,092    3,496    9,028 
Amount due to related parties – long-term portion   15,387    16,022    - 
Other long-term liabilities   20,876    21,213    21,642 
Deferred tax liabilities   1,145    1,159    - 
Lease liabilities – long-term portion   74    58    - 
Non-current liabilities associated with discontinued operation   -    702    744 
TOTAL LIABILITIES   514,118    439,985    304,304 
EQUITY:               
Ordinary shares   35    34    33 
Treasury stock   (1,749)   (1,749)   (1,749)
Additional paid-in capital   382,660    377,767    363,312 
Retained earnings   180,834    175,851    160,017 
Accumulated other comprehensive loss   (33,826)   (12,489)   (14,041)
Total Daqo New Energy Corp.’s shareholders’ equity   527,954    539,414    507,572 
Non-controlling interest   -    -    3,224 
Total equity   527,954    539,414    510,796 
TOTAL LIABILITIES & EQUITY   1,042,072    979,399    815,100 

 

 

 

 

Daqo New Energy Corp.

Unaudited Consolidated Statements of Cash Flows

(US dollars in thousands)

 

   For the nine months ended 
   Sep 30, 2019   Sep 30, 2018 
Operating Activities:          
Net income   9,435    27,317 
Less: Income / (loss) from discontinued operations, net of tax   1,370    (17,612)
Net income from continuing operations   8,065    44,929 
Adjustments to reconcile net income to net cash provided by operating activities:          
Share-based compensation   13,436    9,510 
Inventory write-down   247    - 
Depreciation of property, plant and equipment   32,101    20,368 
Depreciation of operating lease right-of-use assets   30    - 
           
Changes in operating assets and liabilities:          
Accounts receivable    1,049    699 
Notes receivable   3,658    (2,973)
Prepaid expenses and other current assets   (14,427)   (3,417)
Advances to suppliers   (4,816)   (773)
Inventories   (6,665)   (4,000)
Prepaid land use rights   393    414 
Operating lease right-of-use assets   (251)   - 
Accounts payable   11,697    (9,201)
Notes payable   40,035    (11,286)
Accrued expenses and other current liabilities   3,023    (2,001)
Income tax payable   (1,888)   (9,159)
Advances from customers   14,059    10,445 
Amount due to related parties   (15)   5,566 
Deferred tax liabilities   5    - 
Deferred government subsidies   (431)   (461)
Lease liabilities   162    - 
Net cash provided by operating activities-continuing operations   99,467    48,660 
Net cash provided by operation activities-discontinued operations   2,138    14,939 
Net cash provided by operating activities   101,605    63,599 
           
Investing activities:          
Purchases of property, plant and equipment   (226,567)   (74,774)
Withdraw/ (Purchase) of short-term investment   21,869    (15,373)
Acquisition of Xinjiang Daqo Investment   631    - 
Net cash used in investing activities-continuing operations   (204,067)   (90,147)
Net cash provided by/ (used in) investing activities-discontinued operations   1,791    (9,783)
Net cash used in investing activities   (202,276)   (99,930)
           
Financing activities:          
Proceeds from related parties loans   20,522    35,358 
Repayment of related parties loans   (20,522)   (35,358)
Proceeds from bank borrowings   146,614    27,979 
Repayment of bank borrowings   (59,307)   (38,741)
Proceeds from exercise of options   138    685 
Proceeds from follow-on offering   -    113,541 
Issuance cost   -    (6,919)
Net cash provided by financing activities – continuing operations   87,445    96,545 
Net cash used in financing activities – discontinued operations   (10,843)   (12,271)
Net cash provided by financing activities   76,602    84,274 
           
Effect of exchange rate changes   (2,582)   (5,636)
Net (decrease)/ increase in cash, cash equivalents and restricted cash   (26,651)   42,307 
Cash, cash equivalents and restricted cash at the beginning of the period   95,120    72,667 
Cash, cash equivalents and restricted cash at the end of the period   68,469    114,974 

 

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the statement of financial position that sum to the total of the same such amounts shown in the statement of cash flows.

 

   Sep 30, 2019   Sep 30, 2018 
Cash and cash equivalents   27,277    111,956 
Restricted cash   41,192    3,018 
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows   68,469    114,974 

 

 

 

 

Daqo New Energy Corp.

Reconciliation of non-GAAP financial measures to comparable US GAAP measures

(US dollars in thousands)

 

   Three months Ended   Nine months Ended 
   Sep 30, 2019   Jun 30, 2019   Sep 30, 2018   Sep 30, 2019   Sep 30, 2018 
Net income / (loss) from continuing operation   4,895    (2,693)   4,155    8,065    44,929 
Income tax expense   1,561    662    (87)   3,652    10,154 
Interest expense   2,551    1,889    2,126    6,461    8,872 
Interest income   (193)   (258)   (276)   (775)   (795)
Depreciation & Amortization   10,878    10,637    8,891    32,524    27,679 
EBITDA from continuing operation (non-GAAP)   19,692    10,237    14,809    49,927    90,839 
EBITDA margin from continuing operation (non-GAAP)   23.5%   15.5%   22.0%   21.6%   40.2%

 

   Three months Ended   Nine months Ended 
   Sep 30, 2019   Jun 30, 2019   Sep 30, 2018   Sep 30, 2019   Sep 30, 2018 
Net income / (loss) attributable to Daqo New Energy Corp. shareholders   4,983    (2,189)   (18,296)   9,435    26,742 
Share-based compensation   4,476    4,486    4,267    13,436    9,510 
Costs related to the Chongqing polysilicon operations   -    -    128    -    968 
Impairment of long-lived assets   -    -    18,221    -    18,221 
Adjusted net income (non-GAAP) attributable to Daqo New Energy Corp. shareholders   9,459    2,297    4,320    22,871    55,441 
Adjusted earnings per basic ADS (non-GAAP)   0.69    0.17    0.33    1.69    4.54 
Adjusted earnings per diluted ADS (non-GAAP)   0.67    0.16    0.32    1.66    4.32 

 

For further information, please contact:

Daqo New Energy Corp.

Investor Relations Department

Phone: +86-187-1658-5553

Email: dqir@daqo.com

 

Christensen


In China
Mr. Christian Arnell
Phone: +86-10- 5900-1548
E-mail: carnell@christensenir.com

 

In US
Mr. Tip Fleming
Phone: +1-917-412-3333
Email: tfleming@Christensenir.com

 

For more information about Daqo New Energy, please visit http://www.dqsolar.com