Daqo New Energy (DQ) Q2 2024 earnings summary

Executive summary

• Q2 2024 saw significant challenges as polysilicon prices fell below production costs, resulting in a $108 million inventory impairment and a net loss of $119.8 million.

• Despite market headwinds, liquidity remained strong with $2.5 billion in quick assets, $997 million in cash, and no financial debt.

• Production volume exceeded expectations at 64,961 MT, aided by the ramp-up of the Inner Mongolia Phase 5B project, which contributed 12% of output.

• Sales volume dropped to 43,082 MT as market demand weakened and inventory accumulated.

Financial highlights

• Revenue was $219.9 million, down 47% sequentially and 65% year-over-year.

• Gross loss reached $159.2 million, with a negative gross margin of -72.4%.

• Net loss attributable to shareholders was $119.8 million, compared to net income of $15.5 million in Q1 2024.

• Adjusted net loss (non-GAAP) was $98.8 million; adjusted loss per ADS was $1.50.

• EBITDA (non-GAAP) was -$144.9 million, with an EBITDA margin of -65.9%.

Outlook and guidance

• Q3 2024 polysilicon production expected at 43,000–46,000 MT; full-year 2024 guidance at 210,000–220,000 MT.

• Utilization rates have been reduced to preserve cash and support pricing.

• Management expects further price recovery in the second half of 2024 and normalization by mid-2025, with industry consolidation anticipated.

• Cost per kilogram is expected to remain around $6 or slightly lower.