Daqo New Energy(US:DQ)2024-04-29 15:21Financial Data and Key Metrics Changes - Revenues for Q1 2024 were $415.3 million, down from $476.3 million in Q4 2023 and $709 million in Q1 2023, primarily due to lower average selling prices and reduced polysilicon sales volume [15][18] - Gross profit decreased to $72 million with a gross margin of 17.4%, compared to $87 million and 18.3% in Q4 2023, and $506 million and 71.4% in Q1 2023 [15][18] - Net income attributable to shareholders was $15.5 million, down from $53.3 million in Q4 2023 and $278.8 million in Q1 2023, with earnings per basic ADS at $0.24 compared to $0.76 and $3.56 respectively [18] - EBITDA for the quarter was $76.9 million, down from $128 million in Q4 2023 and $490 million in Q1 2023, with an EBITDA margin of 18.5% [18] Business Line Data and Key Metrics Changes - Total production volume for Q1 2024 was 62,278 metric tons, an increase of 1,264 metric tons from the previous quarter, with the Inner Mongolia 5A facility contributing 46% of total production [7][8] - The N-type product mix increased from 60% in December 2023 to 72% in March 2024, reflecting improvements in R&D and purity [7] Market Data and Key Metrics Changes - Polysilicon prices dropped significantly, with prices for Tier-1 producers falling to RMB47 to RMB54 per kilogram by late April, indicating a challenging market environment [10][11] - The solar market in China saw strong growth, with newly installed solar PV capacity reaching a record high of 216.9 gigawatts in 2023, and Q1 2024 installations at 45.7 gigawatts, a 36% year-over-year growth [12] Company Strategy and Development Direction - The company plans to maintain full production with an expected Q2 2024 production volume of approximately 60,000 to 63,000 metric tons, and anticipates full-year production of 280,000 to 300,000 metric tons, a 40% to 50% increase from 2023 [8][9] - The company is strategically considering potential expansions outside of China, including the U.S. and Middle East, while postponing non-polysilicon manufacturing capacity expansion plans to conserve capital [25][26] Management's Comments on Operating Environment and Future Outlook - Management noted that the current low prices and market downturn could lead to capacity rationalization and the exit of unprofitable players from the market, ultimately resulting in a healthier market [11][12] - The company remains optimistic about long-term growth in the solar PV market, driven by increasing demand and favorable policies for renewable installations [14] Other Important Information - The company had a strong cash balance of $2.7 billion and a combined cash and bank note receivable balance of $2.9 billion by the end of Q1 2024 [8] - Capital expenditure plans have been reduced to approximately $700 million for the year, down from a previous estimate of $1.1 billion to $1.2 billion [22] Q&A Session Summary Question: Guidance on buyback or dividends planned for this year - Management indicated that the Board is considering share repurchase but is prioritizing capital conservation due to current market conditions [25] Question: Current inventory levels and sales volume - The company reported approximately two weeks of finished goods inventory, one of the lowest in the industry, and noted that sales volume was impacted by delayed orders from customers [30] Question: Future polysilicon pricing outlook - Management believes current pricing is unsustainable for most producers, and expects to see shutdowns in the industry if low prices persist [36][53] Question: Capacity in the system and future outlook - Current capacity in the system is estimated at around 1.8 million to 2 million tons per year, with expectations for continued cost reductions [62]