Home PV Manufacturing Daqo New Energy Announces Unaudited First Quarter 2019 Results
Daqo New Energy Announces Unaudited First Quarter 2019 Results

Daqo New Energy Announces Unaudited First Quarter 2019 Results

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SHIHEZI, China: 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 first quarter of 2019.

First Quarter 2019 Financial and Operating Highlights

  • Polysilicon production volume of 8,764 MT in Q1 2019, compared to 7,301 MT in Q4 2018
  • Polysilicon external sales volume of 8,450 MT in Q1 2019, compared to 7,030 MT in Q4 2018
  • Polysilicon average total production cost(1) of $7.42 /kg in Q1 2019, compared to $7.94/kg in Q4 2018
  • Polysilicon average cash cost(1) of $6.20/kg in Q1 2019, compared to $6.64/kg in Q4 2018
  • Polysilicon average selling price (ASP) was $9.55/kg in Q1 2019, compared to $9.69/kg in Q4 2018
  • Revenue from continuing operations was $81.2 million in Q1 2019, compared to $75.6 million in Q4 2018
  • Gross profit from continuing operations was $18.3 million in Q1 2019, compared to $16.9 million in Q4 2018. Gross margin from continuing operations was 22.6% in Q1 2019, compared to 22.4% in Q4 2018
  • EBITDA (non-GAAP)(2) from continuing operations was $20.0 million in Q1 2019, compared to $29.5 million in Q4 2018
  • EBITDA margin (non-GAAP)(2) from continuing operations was 24.6% in Q1 2019, compared to 39.1% in Q4 2018
  • Adjusted net income (non-GAAP)(2) attributable to Daqo New Energy shareholders was $11.1 million in Q1 2019, compared to $15.7 million in Q4 2018 and $32.9 million in Q1 2018
  • Adjusted earnings per basic American Depository Share (ADS) (non-GAAP)(2) of $0.83 in Q1 2019, compared to $1.18in Q4 2018, and $3.03 in Q1 2018
  • Net income from continuing operations was $5.9 million in Q1 2019, compared to $17.1 million in Q4 2018 and $29.9 million in Q1 2018
  • Net income from discontinued operations was $0.8 million in Q1 2019, compared to net loss from discontinued operations of $5.7 million in Q4 2018 and net income from discontinued operations of $2.1 million in Q1 2018
  • Net income attributable to Daqo New Energy shareholders was $6.6 million in Q1 2019, compared to $11.4 million in Q4 2018 and $31.6 million in Q1 2018.
  • Earnings per basic ADS was $0.50 in Q1 2019, compared to $0.86 in Q4 2018, and $2.91 in Q1 2018

Three months ended

US$ millions

except as indicated otherwise

Mar 31, 2019

Dec 31, 2018

Mar 31, 2018

Revenues

81.2

75.6

95.6

Gross profit

18.3

16.9

43.1

Gross margin

22.6%

22.4%

45.0%

Operating income

9.2

20.3

39.2

Net income from continuing operations

5.9

17.1

29.9

Income (loss) from discontinued operations, net 
of tax

0.8

(5.7)

2.1

Net income attributable to Daqo New Energy 
Corp. shareholders

6.6

11.4

31.6

Earnings per basic ADS ($ per ADS)

0.50

0.86

2.91

Adjusted net income (non-GAAP)(2) attributable 
to Daqo New Energy Corp. shareholders

11.1

15.7

32.9

Adjusted earnings per basic ADS (non-GAAP)(2) 
($ per ADS)

0.83

1.18

3.03

EBITDA (non-GAAP)(2) from continuing 
operations

20.0

29.5

48.6

EBITDA margin (non-GAAP) (2) from continuing 
operations

24.6%

39.1%

50.8%

Polysilicon sales volume (MT) 

8,450

7,030

5,411

Polysilicon average total production cost 
($/kg)(1)

7.42

7.94

9.19

Polysilicon average cash cost (excl. dep’n) 
($/kg)(1)

6.20

6.64

7.53

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 in Xinjiang, 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

“We are very pleased to report solid operational and financial performance for the first quarter of 2019, during which we achieved record-high production and sales volumes, as well as our most competitive cost structure,” commented Mr. Longgen Zhang, CEO of Daqo New Energy. “During the quarter, our polysilicon facilities were running at full capacity and produced 8,764 MT and sold 8,450 MT of polysilicon. We were also able to successfully reduce our total production cost and cash cost to $7.42/kg and $6.20/kg, respectively, our lowest ever.”

“We are currently undertaking a capacity debottlenecking project to gradually upgrade several older CVD furnaces with improved technology, allowing us to increase production capacity by additional 5,000 MT. This project is progressing well and we expect to complete the project ahead of schedule in early June 2019. The ramp-up process of this debottlenecking project will temporarily impact production volumes and cost and as a result we expect to produce approximately 7,200 to 7,400 MT of polysilicon at total production cost of $8.0~8.5/kg during the second quarter of 2019. Once our facilities are fully ramped up in June, we anticipate our total annual production capacity will reach 35,000 MTand our production costs will return to the current level of approximately $7.5/kg.”

“Our Phase 4A project is also progressing smoothly and remains on schedule. The foundation work has been completed and the construction of various buildings and structures are progressing as planned. The initial equipment installation has already begun and is planned to continue through the third quarter of 2019. Based on our current assessment, we expect to complete Phase 4A by the end of 2019 and ramp up to full capacity of 70,000 MT by the end of the first quarter of 2020.”

China installed approximately 5.2GW of new solar PV installations during the first quarter of 2019. While installation numbers for the second quarter of 2019 haven’t been released yet, we believe they will likely be even lower. Installations should significantly pickup in the second half of this year as China’s solar PV policy is gradually rolled out. Grid parity projects will be the first batch to start installations and then followed by subsidized projects which will bid for the total three billion RMB of subsidy. Market consensus indicates that China will install approximately 35-40 GW in 2019, which means solar project installation volumes during the second half could potentially double or even triple those in the first half. As polysilicon is the key raw material of solar PV modules, we believe demand for polysilicon will significantly increase in the second half of 2019.”

“We are optimistic about China’s booming demand for solar PV in the second half of this year. Since May, the market conditions for polysilicon have shown signs of improvement as prices appear to have bottomed out. While Daqo remained solidly profitable in the first quarter with our low cost and high mix of mono-grade polysilicon products, we believe the current challenging pricing environment for polysilicon has resulted in serious financial losses for many of the existing polysilicon producers. According to news from China Silicon Industry Association, at least three major Chinese polysilicon producers have shut down their facilities for maintenance since April and May, resulting in reduced supply. In addition, the ramp-up process of other Chinese players’ new capacities have not been as fast and smooth as they expected, including production delays and unscheduled shutdowns. Furthermore, these new capacities are generally unable to immediately produce high quality mono-grade polysilicon due to quality issues. This has resulted in increased pricing spread between mono-grade and multi-grade polysilicon. Looking into the future, we believe current oversupply will be alleviated by a reduction in supply from high cost players. For the second half of 2019, we anticipate the booming demand from China’s domestic PV market will significantly improve the overall supply-demand situation, particularly for the tightly-supplied mono-grade polysilicon.”

“We are confident to overcome the temporary market challenges with our low cost structure and first class product quality. Moreover, our Phase 4A project is expected to double our capacity and reduce our cost even further, strengthening our leading position as one of the world’s most competitive polysilicon manufacturers.”

Outlook and guidance

Due to the significant pricing spread between mono-grade and multi-grade polysilicon, the Company is currently maximizing the amount of mono-grade polysilicon as percentage of our total production volume to approximately 80% in April and May. In addition, the ramp up process of the Company’s debottlenecking project is expected to take place ahead of schedule in early June. As such, the Company may see some impact on production volume and cost structure in the second quarter.

The Company expects to produce approximately 7,200 to 7,400 MT of polysilicon with total production cost of $8.0~8.5/kg during the second quarter of 2019 and sell approximately 7,100MT to 7,300MT of polysilicon to external customers during the second quarter of 2019. The Company expects the total production cost will come back to normal at the level of $7.5/kg in the third quarter of 2019. For the full year of 2019, the Company expects to produce approximately 37,000 to 40,000 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.

First Quarter 2019 Results

Revenues

Revenues were $81.2 million, compared to $75.6 million in the fourth quarter of 2018 and $95.6 million in the first quarter of 2018. The sequential increase in revenues was primarily due to higher polysilicon sales volumes partially offset by lower ASPs.

Gross profit and margin

Gross profit was $18.3million, compared to $16.9 million in the fourth quarter of 2018 and $43.1 million in the first quarter of 2018. Gross margin was 22.6%, compared to 22.4% in the fourth quarter of 2018 and 45.0% in the first quarter of 2018. The sequential increase was primarily due to lower average polysilicon production cost, partially offset by lower ASPs.

Selling, general and administrative expenses

Selling, general and administrative expenses were $7.9 million, compared to $8.2 million in the fourth quarter of 2018 and $3.8 million in the first quarter of 2018. The year-over-year increase in SG&A was primarily due to an increase in non-cash share-based compensation costs related to the Company’s share incentive plan.

Research and development expenses

Research and development (R&D) expenses were $1.3 million, compared to $1.0 million in the fourth quarter of 2018 and $0.1 million in the first quarter of 2018. Research and development expenses could vary from period to period and reflected R&D activities that took place during the quarter.

Income from operations and operating margin

As a result of the foregoing, income from operations was $9.2 million, compared to $20.3 million in the fourth quarter of 2018 and $39.2 million in the first quarter of 2018.

Operating margin was 11.3%, compared to 26.8% in the fourth quarter of 2018 and 41.0% in the first quarter of 2018.

Interest expense

Interest expense was $2.0 million, compared to $1.9 million in the fourth quarter of 2018 and $3.7 million in the first quarter of 2018.

EBITDA

EBITDA from continuing operations was $20.0 million, compared to $29.5 million in the fourth quarter of 2018 and $48.6 million in the first quarter of 2018. EBITDA margin was 24.6%, compared to 39.1% in the fourth quarter of 2018 and 50.8% in the first quarter of 2018.

Income(loss) 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 $0.8 million in the first quarter of 2019, compared to net loss from discontinued operations of $5.7 million in the fourth quarter of 2018 and net income from discontinued operations of $2.1 million in the first quarter of 2018. The net income from discontinued operations during the quarter was mainly due to the disposal of fixed assets which were impaired in 2018 and previous years.

Net income attributable to Daqo New Energy Corp. shareholders and earnings per ADS

As a result of the aforementioned, net income attributable to Daqo New Energy Corp. shareholders was $6.6 million, compared to $11.4 million in the fourth quarter of 2018 and $31.6 million in the first quarter of 2018.

Earnings per basic ADS of $0.50, compared to $0.86 in the fourth quarter of 2018, and $2.91 in the first quarter of 2018.

Financial Condition

As of March 31, 2019, the Company had $113.7 million in cash, and cash equivalents and restricted cash, compared to $94.0 million as of December 31, 2018 and $79.0 million as of March 31, 2018. As of March 31, 2019, the accounts receivable balance was $2.2 million, compared to $1.2 million as of December 31, 2018 and $12 thousand as of March 31, 2018. As of March 31, 2019, the notes receivable balance was $0.7 million, compared to $8.1 million as of December 31, 2018 and $45.2 million as of March 31, 2018. As of March 31, 2019, total borrowings were $193.0 million, of which $149.7 million were long-term borrowings, compared to total borrowings of $171.5 million, including $133.3 million long-term borrowings, as of December 31, 2018 and total borrowings of $189.6 million, including $106.8 million long-term borrowings, as of March 31, 2018.

Cash Flows

For the three months ended March 31, 2019, net cash provided by operating activities was $48.5 million, compared to $22.0 million in the same period of 2018.

For the three months ended March 31, 2019, net cash used in investing activities was $38.6 million, compared to $11.8 million in the same period of 2018. The net cash used in investing activities in 2018 and 2017 was primarily related to the capital expenditure on Xinjiang Phase 3B and 4A polysilicon projects.

For the three months ended March 31, 2019, net cash provided by financing activities was $7.2 million, compared to net cash used in financing activities of $2.4 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 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 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, since 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 time. Adjusted net income attributable to Daqo New Energy Corp. shareholders and adjusted earnings per basic 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 its 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 May 21, 2019. (8:00 PMBeijing / 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

Participants please dial in 10 minutes before the call is scheduled to begin and ask to be joined into the Daqo New Energy Corp. call.

You can also listen to the conference call via Webcast through the URL: https://services.choruscall.com/links/dq190521.html

A replay of the call will be available 1 hour after the end of the conference through May 27, 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:

10131478

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 30,000 metric tons, and the Company is undergoing a debottlenecking project and a capacity expansion project and expects to increase its annual polysilicon production capacity to 70,000 metric tons in the first quarter of 2020.

For more information, please visit http://daqo.gotoip1.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 second 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 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

Mar 31, 
2019

Dec 31, 
2018

Mar 31, 
2018

Revenues    

$81,204

$75,603

$95,644

Cost of revenues

(62,863)

(58,665)

(52,560)

Gross profit

18,341

16,938

43,084

Operating expenses

Selling, general and administrative expenses

(7,935)

(8,240)

(3,753)

Research and development expenses

(1,297)

(970)

(121)

Other operating income, net

70

12,527

32

Total operating (expenses) /income

(9,162)

3,317

(3,842)

Income from operations

9,179

20,255

39,242

Interest expense

(2,021)

(1,891)

(3,663)

Interest income

324

441

144

Foreign exchange loss

(189)

(102)

(3)

Income before income taxes

7,293

18,703

35,720

Income tax expense

(1,429)

(1,563)

(5,864)

Net income from continuing operations

5,864

17,140

29,856

Income/(loss) from discontinued operations, net of tax

778

(5,693)

2,117

Net income

6,642

11,447

31,973

Net income attributable to non-controlling interest

66

339

Net income attributable to Daqo New Energy Corp. 
     shareholders

$6,642

$11,381

$31,634

Net income

6,642

11,447

31,973

Other comprehensive income:

Foreign currency translation adjustments

13,014

935

14,826

Total other comprehensive income

13,014

935

14,826

Comprehensive income

19,656

12,382

46,799

Comprehensive income attributable to non-controlling 
     interest

69

446

Comprehensive income attributable to Daqo New Energy 
     Corp. shareholders

$19,656

$12,313

$46,353

Earnings/(loss) per ADS

-Continuing operations

0.44

1.29

2.71

  -Discontinued operations

0.06

(0.43)

0.20

 Basic

0.50

0.86

2.91

-Continuing operations

0.42

1.27

2.60

  -Discontinued operations

0.06

(0.42)

0.19

 Diluted

0.48

0.85

2.79

Weighted average ADS outstanding

Basic

13,360,729

13,237,220

10,853,166

Diluted

13,749,959

13,455,067

11,341,860

Daqo New Energy Corp.

Unaudited Consolidated Balance Sheets

(US dollars in thousands)

Mar 31, 2019

Dec 31, 2018

Mar 31, 2018

ASSETS:

Current Assets:

Cash and cash equivalents

$65,111

$65,419

$60,791

Restricted cash

48,560

28,609

18,185

Short-term investments

21,807

Accounts receivable, net

2,204

1,181

12

Notes receivable

714

8,111

45,237

Prepaid expenses and other current assets

9,717

10,336

7,030

Advances to suppliers

2,846

3,328

1,110

Inventories

18,882

15,449

16,045

Amount due from related parties

4,179

815

1,538

Current assets associated with discontinued 
     operation

2,748

5,014

19,586

Total current assets

154,961

160,069

169,534

Property, plant and equipment, net

686,056

611,616

508,341

Prepaid land use right

22,669

22,249

24,818

Deferred tax assets

842

821

740

Investment in an affiliate

666

650

712

Non-current asset associated with discontinued 
     operation

58,868

59,524

95,285

TOTAL ASSETS

924,062

854,929

799,430

Current liabilities:

Short-term borrowings, including current portion 
     of long-term borrowings

43,210

38,206

82,872

Accounts payable

9,926

9,195

19,949

Notes payable

66,322

29,209

26,232

Advances from customers – short term portion

9,658

10,214

9,662

Payables for purchases of property, plant and 
     equipment

25,085

27,221

15,766

Accrued expenses and other current liabilities

9,330

9,418

12,318

Amount due to related parties

2,143

2,260

1,684

Income tax payable

6,293

5,455

11,650

Current liabilities associated with discontinued 
     operation

7,591

18,676

43,891

Total current liabilities

179,558

149,854

224,024

Long-term borrowings

149,744

133,312

106,766

Advance from customers – long term portion

5,364

7,269

Amount due to related parties – long term 
     portion

16,390

15,992

Other long-term liabilities

21,848

21,463

24,004

Deferred tax liabilities

1,174

1,185

Non-current liabilities associated with 
     discontinued operation

721

723

2,451

TOTAL LIABILITIES

374,799

329,798

357,245

EQUITY:

Ordinary shares

34

33

27

Treasury stock

(1,749)

(1,749)

(1,749)

Additional paid-in capital

373,156

368,681

247,935

Retained earnings

178,040

171,398

164,907

Accumulated other comprehensive 
     (loss)/income

(218)

(13,232)

27,826

Total Daqo New Energy Corp.’s shareholders’ 
     equity

549,263

525,131

438,946

Non-controlling interest

3,239

Total equity

549,263

525,131

442,185

TOTAL LIABILITIES & EQUITY

924,062

854,929

799,430

Daqo New Energy Corp.

Unaudited Consolidated Statements of Cash Flows

(US dollars in thousands)

For the three months ended

Mar 31, 2019

Mar 31, 2018

Operating Activities:

Net income

$6,642

$31,973

Less: Income from discontinued operations, net of tax

778

2,117

Net income from continuing operations

5,864

29,856

Adjustments to reconcile net income to net cash provided by 
     operating activities:

   Share-based compensation

4,474

859

   Depreciation of property, plant and equipment

8,698

3,040

      Changes in operating assets and liabilities:

   Accounts receivable                               

(989)

705

   Notes receivable

7,556

(23,384)

   Prepaid expenses and other current assets

872

(197)

   Advances to suppliers

562

517

   Inventories

(3,031)

213

   Amount due from related parties

(464)

   Prepaid land use rights

133

141

   Accounts payable

499

(72)

   Notes payable

21,850

2,212

   Accrued expenses and other current liabilities

(320)

1,084

   Income tax payable

698

(2,000)

   Advances from customers

(2,880)

(7,222)

   Amount due to related parties

(16)

(5)

   Deferred tax liabilities

(40)

   Deferred government subsidies   

(148)

(157)

Net cash provided by operating activities-continuing operations

43,782

5,126

Net cash provided by operating activities-discontinued operations

4,699

16,839

Net cash provided by operating activities

48,481

21,965

Investing activities:

Purchases of property, plant and equipment

(57,462)

(7,356)

Purchases of land use right

(4,271)

Repayment of short-term investment

22,224

Proceeds from disposal of investment

642

Net cash used in investing activities-continuing operations

(38,867)

(7,356)

Net cash provided by/(used in) investing activities-discontinued 
     operations

232

(4,476)

Net cash used in investing activities

(38,635)

(11,832)

Financing activities:

Proceeds from related parties loans

1,482

Proceeds from bank borrowings

51,856

2,359

Repayment of bank borrowings

(34,788)

(4,718)

Cash received from exercise of options

104

Net cash provided by/(used in) financing activities – continuing 
     
operations

18,550

(2,255)

Net cash used in financing activities – discontinued operations

(11,382)

(173)

Net cash provided by/(used in) financing activities

7,168

(2,428)

Effect of exchange rate changes

2,429

2,606

Net increase in cash, cash equivalents and restricted cash

19,443

10,311

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

114,563

82,978

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.

Mar 31, 2019

Mar 31, 2018

Cash and cash equivalents

65,999

62,386

Restricted cash

48,564

20,592

Total cash, cash equivalents, and restricted cash shown in the 
statement of cash flows

114,563

82,978

Daqo New Energy Corp.

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

(US dollars in thousands)

Three months Ended

Mar. 31, 2019

Dec. 31, 2018

Mar. 31, 2018

Net income from continuing operations

5,864

17,140

29,856

Income tax expense

1,429

1,563

5,864

Interest expense

2,021

1,891

3,663

Interest income

(324)

(441)

(144)

Depreciation & amortization

11,010

9,386

9,349

EBITDA (non-GAAP)

20,000

29,539

48,588

EBIDTA margin (non-GAAP)

24.6%

39.1%

50.8%

Three months Ended

Mar. 31, 2019

Dec. 31, 2018

Mar. 31, 2018

Net income attributable to Daqo New Energy 
     Corp. shareholders

6,642

11,381

31,634

Share-based compensation

4,474

4,278

859

Costs related to the Chongqing polysilicon 
     operations

389

Adjusted net income (non-GAAP) 
     attributable to Daqo New Energy Corp. 
     shareholders

11,116

15,659

32,882

Adjusted earnings per basic ADS (non-
     GAAP)

$0.83

$1.18

$3.03

Adjusted earnings per diluted ADS (non-
     GAAP)

$0.81

$1.16

$2.90

Source: Daqo New Energy Corp.

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Anand Gupta Editor - EQ Int'l Media Network