Daqo New Energy Reveals Financial Results and Future Outlook for 2024

Daqo New Energy Corp. (NYSE: DQ), a prominent player in the production of high-purity polysilicon for the solar photovoltaic (PV) industry, has disclosed its unaudited financial results for the fourth quarter and overall fiscal year 2024. Given the current economic climate, the company is set to navigate various challenges while outlining its operational strategies and market expectations moving forward.

Financial Overview of Q4 2024

The financial analysis for the fourth quarter shows that Daqo faced significant market pressure. As of December 31, 2024, the company reported a total cash and investment balance of $2.2 billion, slightly down from $2.4 billion at the end of Q3. Notably, polysilicon production dropped to 34,236 metric tons (MT) in Q4 from 43,592 MT in the previous quarter. Despite this decline in production, sales volume remained stable at 42,191 MT, reflecting a slight increase over the previous quarter.

The average total production cost for polysilicon was noted at $6.81 per kilogram, up from $6.61 the previous quarter. Conversely, the average selling price (ASP) was $4.62 per kilogram, showing a decrease from $4.69 in Q3. This discrepancy led to a revenue of $195.4 million for the quarter, down from $198.5 million in Q3, and Daqo reported a gross loss of $65.3 million, worsening from a loss of $60.6 million in the prior quarter.

One of the critical challenges cited was the decline in gross margin, which fell to -33.4% from -30.5% in Q3. This represents the continuous pressure on prices due to oversupply issues in the solar PV sector. Moreover, the company recorded a non-cash impairment charge of $175.6 million on long-lived assets, reflecting the ongoing challenges in the polysilicon market.

Annual Performance Highlights for 2024

For the entire fiscal year 2024, Daqo's polysilicon production amounted to 205,068 MT, a slight increase compared to 197,831 MT in 2023. However, polysilicon sales volume decreased to 181,362 MT from 200,002 MT the previous year. Revenue was significantly impacted, dropping to $1,029.1 million from $2,307.7 million in 2023, following lower ASPs and sales volumes.

The gross loss for 2024 hit $212.9 million, contrasting sharply with a gross profit of $920.7 million in 2023. The gross margin reflected this change, dipping to -20.7%. Net losses for the company attributed to Daqo shareholders reached $345.2 million, down from a net income of $429.5 million in the prior year, leading to a loss per American Depositary Share (ADS) of $5.22 compared to earnings of $5.75 previously.

Management Insights and Strategic Forward Planning

Xiang Xu, the Chairman and CEO, acknowledged the difficult market conditions, citing overcapacity in the solar PV industry that has precipitated price declines. He remarked on the company’s proactive measures to curtail polysilicon production and reduce cash expenditures during Q3 and Q4 2024. Daqo aims to maintain lower production rates until market conditions stabilize. For Q1 2025, the company is predicting a polysilicon production volume between 25,000 to 28,000 MT, expecting to total 110,000 to 140,000 MT for the whole year.

Moreover, Daqo has experienced a noteworthy increase in its N-type polysilicon production, which now constitutes approximately 70% of its total production, demonstrating a strategic shift to higher-efficiency product offerings. Despite the challenges, Daqo’s strong liquidity positions it well for resilience and potential future growth.

As the company looks ahead, it targets advancing its N-type technology and optimizing operational efficiencies through digital transformation and artificial intelligence. Daqo remains committed to capitalizing on long-term market growth, enhancing its competitive edge within the solar industry.

Overall, while 2024 presented formidable hurdles for Daqo New Energy Corp., the company's strategic outlook appears focused on navigating market volatility while preparing for potential recovery in the global solar PV sector.