Daqo New Energy Corp · NYSE:DQ
Daqo New Energy — Q3 2016 Earnings Presentation
20 slides from Daqo New Energy's earnings presentation, Nov 15, 2016
Slide 1: Unaudited Q3 2016 Financial Results Presentation
Daqo New Energy Corp. Unaudited Q3 2016 Financial Results Presentation November 15, 2016
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation 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
Slide 3: Agenda
Agenda Business Highlights and Summary Financial Results and Update Q&A PRIVATE & CONFIDENTIAL P. 3
Slide 4: Business update and Q3 2016 highlights
Business update and Q3 2016 highlights Polysilicon Cost Structure (1) -- total production cost (including depreciation) of $8.66/kg in Q3 2016, compared to $9.43/kg in Q2 2016 -- cash cost (excluding depreciation) of $6.88/kg in Q3 2016, compared to $7.42/kg in Q2 2016 Polysilicon production vol
Slide 5: Phase 2B Existing and Phase 3A Polysilicon Facilities
Phase 2B Existing Polysilicon Facilities Phase 3A Polysilicon Facilities Under Construction PRIVATE & CONFIDENTIAL P. 5
Slide 6: Market update
Market update •In the third quarter of 2016, downstream solar end market and polysilicon market experienced significant volatility. Due to a slow-down in China end market demand and installation activities after China’s FIT adjustment at the end of June 2016, the market saw lower levels of demand to
Slide 7: Daqo's quarterly polysilicon Average Selling Prices
Daqo’s quarterly polysilicon Average Selling Prices Quarterly Polysilicon ASPs($/kg) $21.63 $22.04 $21.50 $20.47 $18.67 $17.98 $18.09 $17.24 $16.71 $15.95 $15.64 $14.98 $13.86 $13.72 Q2 2013 Q3 Q4 Q1 2014 Q2 Q3 Q4 Q1 2015 Q2 Q3 Q4 Q1 2016 Q2 Q3 PRIVATE & CONFIDENTIAL P. 7
Slide 8: Xinjiang polysilicon facilities update
Xinjiang polysilicon facilities update Q3 2016 key facts Outlook Production volume of 3,636 MT Annual maintenance successfully completed. External sales volume of 2,838 MT Production resumed to full capacity in early Nov. Average total production cost : $8.66/kg 2016 Average cash cost: $6.
Slide 9: Polysilicon manufacturing overview
Polysilicon manufacturing overview Production Volume (MT) 3,547 3,570 3,636 3,405 2,689 1,748 1,791 1,801 1,734 1,445 1,517 1,504 1,311 962 Q2 2013 Q3 Q4 Q1 2014 Q2 Q3 Q4 Q1 2015 Q2 Q3 Q4 Q1 2016 Q2 Q3 Cash cost and Depreciation ($/kg)* Cash cost Depreciation 17.64 15.98 15.75 14.49 14.13 5.43 13.05
Slide 10: Chongqing wafer facilities update
Chongqing wafer facilities update Q3 2016 key facts Q4 2016 sales volume outlook Low utilization rate due to volatility in Resume production to full capacity in wafer market Nov. with improving market situations 14.4 million pieces sold to customers Q4 2016 wafer sales volume: 20.0 ~21.0 mil
Slide 11: Sales volume in Q3 2016 and outlook for Q4 2016
Sales volume in Q3 2016 and outlook for Q4 2016 Q4 2016E Sales Volume Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 guidance Polysilicon 2,200~ 2,277 3,092 2,905 2,931 2,838 (MT) 2,300 Wafer 19.1 21.0 22.1 25.0 14.0 20.0~21.0 (million pieces) PRIVATE & CONFIDENTIAL P. 11
Slide 12: Agenda
Agenda Business Highlights and Summary Financial Results and Update Q&A PRIVATE & CONFIDENTIAL P. 12
Slide 13: Q3 2016 financial highlights
Q3 2016 financial highlights Revenue of $54.3 million in Q3 2016, compared to $71.0 million in Q2 2016 Gross profit of $20.1 million in Q3 2016, compared to $29.4 million in Q2 2016; Non-GAAP gross margin (1) of 39.9% in Q3 2016, compared to 43.9% in Q2 2016; Income from operations of $16.4
Slide 14: P&L Summary (Q3 2016 vs. Q2 2016)
P&L Summary (Q3 2016 vs. Q2 2016) US$ in millions Q3 2016 Q2 2016 Change Analysis Polysilicon: Ext. sales volume ↓ , ASP↓ Revenues 54.3 71.0 (16.7) Wafer: Sales volume ↓, ASP↓ Polysilicon: Production cost ↓ Cost of revenues (34.2) (41.6) 7.4 Wafer: Sales volume ↓ Gross profit 20.1 29.4 (9.3) Gross m
Slide 15: Balance sheet summary
Balance sheet summary Change (Q3 2016 vs. US$ in millions 9/30/2016 6/30/2016 Q2 2016) 9/30/2015 Cash and restricted Cash 29.2 42.9 (13.7) 68.7 Accounts receivable 4.6 10.1 (5.5) 15.4 Note receivables 17.0 14.8 2.2 16.5 Inventories 14.9 9.5 5.4 12.2 Prepaid land use rights 26.0 26.2 (0.2) 27.9 Net P
Slide 16: Cash flow summary
Cash flow summary 9 months ended 9 months ended US$ in millions Sep. 30, 2016 Sep. 30, 2015 Net cash provided by operating activities 70.9 65.6 Net cash (used in) investing activities (51.2) (82.7) Net cash used in (provided by) financing activities (12.3) 38.1 Effect of exchange rate changes (0.3)
Slide 17: Non-GAAP reconciliation – EBITDA and gross margin
Non-GAAP reconciliation – EBITDA and gross margin US$ in millions Q3 2016 Q2 2016 Change Net income 11.3 20.0 (8.7) Depreciation 8.5 8.6 (0.1) EBITDA (1) 25.0 34.7 (9.7) EBITDA margin (1) 46.0% 48.9% (2.9%) Costs related to Chongqing poly 1.5 1.8 (0.3) facilities Non-GAAP gross profit (2) 21.6 31.2
Slide 18: Non-GAAP reconciliation – Adjusted Net Income and EPS
Non-GAAP reconciliation – Adjusted Net Income and EPS US$ in millions (except per ADS data) Q3 2016 Q2 2016 Change Net income attributable to Daqo New Energy Corp. 11.2 19.8 (8.6) shareholders Costs related to Chongqing poly 1.5 1.8 (0.3) facilities Share-based compensation 0.5 0.4 0.1 Adjusted Net
Slide 19: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures To supplement Daqo’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 comp
Slide 20: Agenda
Agenda Business Highlights and Summary Financial Results and Update Q&A PRIVATE & CONFIDENTIAL P. 20