omniture

Daqo New Energy Announces Unaudited Third Quarter 2019 Results

2019-11-12 19:00 4677

SHIHEZI, China, Nov. 12, 2019 /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 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

Cision View original content:http://www.prnewswire.com/news-releases/daqo-new-energy-announces-unaudited-third-quarter-2019-results-300956228.html

Source: Daqo New Energy Corp.
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