Daqo New Energy Corp. (NYSE:DQ) shares are trading lower after the company missed second-quarter EPS and sales estimates.
Revenue of $219.9 million, down from $636.7 million in the year-ago quarter, missed the consensus of $337.1 million. Adjusted loss per ADS of $1.50 missed the consensus loss of $0.56.
Polysilicon's average selling price (ASP) was $5.12/kg in the second quarter, vs. $7.66/kg in the first quarter of 2024. The company's average production cost declined by 3% Q/Q to $6.19/kg in the quarter.
Polysilicon production volume stood at 64,961 MT, which was above its expectations and represented an increase of 2,683 MT versus the previous quarter.
In the quarter, Daqo commenced production at its 100,000 MT Phase 5B polysilicon project in Inner Mongolia, contributing about 12% of the total production volume.
The company reported a gross loss of $159.2 million, compared to a gross profit of $258.9 million in the second quarter of 2023. The gross margin was negative 72.4% vs. positive 40.7% in the prior-year quarter.
In the quarter, EBITDA (non-GAAP) stood at negative $144.9 million, down from a postive $76.9 million in the first quarter of 2024, with margin declining to -65.9% in the second quarter vs. 18.5% in the last quarter. As of June-end, the company held $997.5 million in cash, cash equivalents, and restricted cash.
Xiang Xu, CEO of Daqo New Energy, said, "The solar industry experienced significant challenges during the second quarter, as market prices fell across the solar value chain to below production costs for nearly the entire industry."
"As end-of-quarter polysilicon ASP fell below our production cost, we were required in accordance with accounting rules to record a non-cash inventory impairment expense of $108 million because our inventory market value fell below book value. This had a significant negative impact on our cost of revenue, gross loss, operating loss and net loss."
Outlook: Daqo expects Polysilicon production volume of around 43,000 MT – 46,000 MT in the third quarter. The company now forecasts the Polysilicon production volume of 210,000 MT to 220,000 MT (vs. 280,000 MT – 300,000 MT earlier).
"This year will be challenging for China's solar PV industry, as solar manufacturers along the value chain experience weak margins driven by oversupply, excessive inventory, and lower prices," Xiang Xu added.
"In light of the current market conditions and pricing, we have adjusted our target production utilization rate for the third quarter and our production plan for the full year."
In July, the company approved a $100 million share repurchase program, effective until June 30, 2025.
Investors can gain exposure to the stock via ProShares S&P Kensho Cleantech ETF (NYSE:CTEX).
Price Action: DQ shares are down 7.24% at $14.10 premarket at the last check Monday.
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