Daqo New Energy Corp · NYSE:DQ

Daqo New Energy — Q3 2014 Earnings Presentation

18 slides from Daqo New Energy's earnings presentation, Nov 13, 2014

  1. Slide 1: Q3 2014 Financial Results Presentation

    Daqo New Energy Corp. Q3 2014 Financial Results Presentation November 13, 2014

  2. Slide 2: Safe Harbor Statement

    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”, “antici

  3. Slide 3: Agenda

    Agenda  Business Highlights and Summary  Financial Results and Update  Q&A PRIVATE & CONFIDENTIAL P. 3

  4. Slide 4: Business update and Q3 2014 highlights

    Business update and Q3 2014 highlights  Record-high polysilicon production volume in Q3 2014 of 1,748 MT, up from 1,504 MT in Q2 2014  Record-high polysilicon shipments in Q3 2014 of 1,598 MT, up from 1,436 MT in Q2 2014  Continued cost reduction – total production cost (including depreciation) o

  5. Slide 5: Market update

    Market update  Q4 2014 demand for PV modules is very strong driven by accelerating build-out of solar power plants. The positive trend is likely to continue into Q1 2015  Polysilicon ASPs declined from $22.04/kg in Q2 2014 to $21.50/kg in Q3 2014 ‒ Despite ASP declines, Daqo New Energy has continu

  6. Slide 6: Market price trend (PV Insights)

    Market price trend (PV Insights) Polysilicon price ($ / kg) Wafer ASP ($ / piece) $0.94 $21.37 $21.61 $20.83 $17.87 $0.90 $17.45 $16.78 $16.94 $15.96 $0.88 $0.85 $0.85 $0.84 $0.84 $0.82 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 PRIVATE & CONFIDEN

  7. Slide 7: Xinjiang polysilicon facilities update

    Xinjiang polysilicon facilities update Q3 2014 key facts Outlook  1,748 MT production  2014 annual cost target (incl. dep’n): <$14.00 / kg  1,598 MT shipment to customers Cash cost <$11.30 / kg  Solar Grade I: 100% in Q3 2014  Expected shipment in Q4 2014: 1,500MT–1,550MT  Q3 2014 production c

  8. Slide 8: Polysilicon manufacturing overview

    Polysilicon manufacturing overview Production Volume (MT) Production cost, SG&A, interest ($/kg) 1,748 $26.51 2.88 1,517 1,504* 1,445 $20.76 1,311 1,211 7.80 $18.81 3.12 $18.30 1,143 46 $16.94 1,088 2.83 $16.47 1,041 2.55 $15.45 962 2.45 2.34 5.43 4.16 3.77 2.40 2.74 2.65 2.33 617 15.83 12.21 11.82

  9. Slide 9: Continued focus on quality improvement

    Continued focus on quality improvement Daqo New Energy polysilicon monthly quality data (1) 99.3% 99.5% 100.0% 100% 100% 92.5% 88.3% 94.7% 95.8% 95.0% 90.7% 84.3% 85.3% 67.5% Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Electronic grade Solar grade 1  Rigorous quality control standards a

  10. Slide 10: Wanzhou wafer facilities update

    Wanzhou wafer facilities update Q3 2014 key facts Outlook  18.5 million pieces shipped to customers  Q4 2014 wafer shipment expected to be 16.8 –17.0 million pieces PRIVATE & CONFIDENTIAL P. 10

  11. Slide 11: Historical shipments and Q4 2014 outlook

    Historical shipments and Q4 2014 outlook Q4 2014E Shipments Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 guidance Polysilicon (MT) 1,288 1,271 1,391 1,436 1,598 1,500 – 1,550 Wafer 7.5 16.7 16.8 17.6 18.5 16.8 – 17.0 (million pieces) Ingot & block (MT) 6.6 - - - - - PRIVATE & CONFIDENTIAL P. 11

  12. Slide 12: Agenda

    Agenda  Business Highlights and Summary  Financial Results and Update (Mr. Bing Sun, CFO)  Q&A PRIVATE & CONFIDENTIAL P. 12

  13. Slide 13: Q3 2014 financial highlights

    Q3 2014 financial highlights  Revenues were $47.3 million, an increase of 8.2% compared with $43.7 million in Q2 2014  Continued cost reduction – total production cost (including depreciation) of $13.05 / kg and cash cost of $10.72 / kg in Q3 2014, compared with $14.13/kg and $11.48/kg in Q2 2014,

  14. Slide 14: P&L summary (Q3 2014 vs. Q2 2014)

    P&L summary (Q3 2014 vs. Q2 2014) US$ in millions Q3 2014 Q2 2014 Change Analysis Revenues 47.3 43.7 3.6 Poly :Sales volume↑ Cost of revenues (35.7) (33.6) (2.1) Gross profit (loss) 11.6 10.1 1.5 Poly: Cost ↓ Gross margin 24.5% 23.1% 1.4% Poly: Cost ↓ Non-GAAP Gross margin (1) 31.7% 30.9% 0.8% Subse

  15. Slide 15: Non-GAAP reconciliation – EBITDA and gross margin

    Non-GAAP reconciliation – EBITDA and gross margin US$ in millions Q3 2014 Q2 2014 Change Net income (loss) 5.9 4.5 1.4 Income tax expenses - - - Interest Expense 3.6 3.9 (0.3) Interest income (0.16) (0.01) (0.15) Depreciation 7.0 6.9 0.1 EBITDA (1) 16.4 15.2 1.2 EBITDA margin (1) 34.7% 34.9% (0.2%)

  16. Slide 16: Balance sheet summary

    Balance sheet summary Change US$ in millions 9/30/2014 6/30/2014 (Q3 2014 vs Q2 2014) 9/30/2013 Cash and restricted Cash 30.0 77.7 (47.7) 19.5 Accounts receivable 6.8 6.8 - 11.8 Notes receivable 36.8 33.6 3.2 11.9 Inventories 11.3 12.1 (0.8) 11.8 Prepaid land use rights 29.5 29.3 0.2 36.8 Net PP&E 5

  17. Slide 17: Cash flow summary

    Cash flow summary Nine months ended Nine months ended US$ in millions September 30, 2014 September 30, 2013 Change Net cash provided by (used in) operating activities 47.7 (16.8) 64.5 Net cash used in investing activities （81.0） （12.1） （68.9） Net cash provided by financing activities 38.1 33.1 5.0 E

  18. Slide 18: Agenda

    Agenda  Business Highlights and Summary  Financial Results and Update  Q&A PRIVATE & CONFIDENTIAL P. 18

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