DQ — Daqo New Energy Corp.

Summary of Daqo New Energy Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Revenue: $26.7 million, a significant decline from $221.7 million in Q4 2025 and $124 million in Q1 2025.
• Gross Loss: $139.4 million, compared to a gross profit of $15.4 million in Q4 2025 and a gross loss of $81.5 million in Q1 2025.
• Gross Margin: -521%, down from 7% in Q4 2025 and -65.8% in Q1 2025.
• Net Loss: $88.4 million, worsening from $7.3 million in Q4 2025 and $71.8 million in Q1 2025.
• Loss per ADS: $1.31, compared to $0.11 in Q4 2025 and $1.07 in Q1 2025.
• Cash Position: $559.4 million in cash and equivalents, down from $980 million at the end of Q4 2025.

2. Strategic Updates and Business Highlights

• The company maintained a 0 debt balance and a strong liquidity position with total assets convertible to cash amounting to $2 billion.
• Production volume reached 43,402 metric tons, exceeding guidance of 35,000-40,000 metric tons.
• The company adhered to self-regulation guidelines by avoiding below-cost sales, resulting in a sales volume of 4,482 metric tons.
• Average selling price increased by 2.3% sequentially to $5.96 per kilogram.
• Daqo is focused on high-efficiency N-type technology and cost optimization through digital transformation and AI.

3. Forward Guidance and Outlook

• Q2 2026 production volume is expected to be 35,000 to 40,000 metric tons.
• Full-year production guidance remains at 140,000 to 170,000 metric tons.
• Market conditions are expected to improve as government authorities are anticipated to enforce anti-involution policies to address industry overcapacity, potentially stabilizing prices.

4. Bad News, Challenges, or Points of Concern

• The solar PV industry is facing cautious market sentiment, seasonal softness, and elevated inventory levels, exacerbated by geopolitical tensions and rising module prices.
• Polysilicon prices have dropped significantly, with some prices falling below production costs, leading to operational and net losses.
• Industry overcapacity continues to exert downward pressure on pricing, with average industry utilization rates at only 39%.
• The company is navigating a challenging demand environment, with low transaction volumes and uncertainty in market pricing.

5. Notable Q&A Insights

• Management expressed cautious optimism regarding potential price stabilization, with expectations for new pricing guidelines from the government by June 2026.
• If no policy changes occur, the company may lower its production utilization rate and adjust its sales strategy to align with market pricing.
• There is a consensus that enforcement of price laws could lead to a recovery in prices, but the timing and effectiveness of such policies remain uncertain.
• The company is monitoring inventory levels closely, with Tier 1 producers holding significant stock, which could impact future sales strategies.

Overall, while Daqo New Energy is facing significant challenges in the current market environment, its strong financial position and proactive strategies may position it well for recovery as industry conditions improve.