Daqo New Energy (NYSE:DQ) held its first-quarter earnings conference call on Wednesday. Below is the complete transcript from the call.
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Summary
Daqo New Energy reported a net loss of $88.4 million in Q1 2026, compared to a net loss of $7.3 million in Q4 2025, primarily due to decreased sales volumes and increased provisions for inventory impairment.
The company maintained a strong balance sheet with cash and equivalents totaling $559.4 million and zero debt, providing liquidity to navigate market challenges.
Production exceeded guidance with 43,402 metric tons of polysilicon produced, though sales volume declined due to low market prices.
Daqo New Energy expects Q2 2026 polysilicon production to be between 35,000 and 40,000 metric tons, with full-year guidance remaining at 140,000 to 170,000 metric tons.
Management is optimistic about future market recovery and aims to maintain competitive advantage through technology and cost optimization, despite current industry overcapacity and geopolitical tensions.
Full Transcript
OPERATOR
Good day and welcome to the Dawnergy first quarter 2026 results conference call all participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touchtone phone. To withdraw your question, please press Star then two. Please note this event is being recorded. I would now like to turn the conference over to Jesse Zhao, Director of Investor Relations. Please go ahead.
Jesse Zhao (Director of Investor Relations)
Hello everyone. I’m Jesse Zhao, the Investor Relations Director of Daqo New Energy. Thank you for joining our conference call today. Daco New Energy just issued its financial results for the first quarter of 2026 which can be found on our website at www.daqosolar.com. today, attending the conference call, we have our Deputy CEO, Ms. Anita Xu, our CFO, Mr. Mingyang and myself. Our Chairman and CEO, Mr. Xiang Xu is on a business trip now, so Ms. Anita Xu will deliver our management remarks on behalf of Mr. Xiang Xu. Today’s call will begin with an update from Mr. Xu on market conditions and company operations and then Mr. Yang will discuss the company’s financial performance for the quarter. After that, we will open the floor to Q and A from the audience. Before we begin the formal remarks, I would like to remind you that certain statements on today’s call, including expected future operational and financial performance and industry growth are forward looking statements that are made under the safe harbor provisions of the U.S. private securities led Litigation Reform act of 1995. These statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward looking statement. Further information regarding this and other risks is included in the reports or documents we have filed with or furnished to the securities and Exchange Commission. These statements only reflect our current and preliminary view as of today and may be subject to change. Our ability to achieve these projections is subject to risks and uncertainties. All information provided in today’s call is as of today and we undertake no duty to update such information except as required on the applicable rule. Also during the call, we will occasionally reference monetary amounts in US dollar terms. Please keep in mind that our 5 functional currency is the Chinese RMB. We offer these translations into US dollars solely for the convenience of the audience. Now I will turn the call to our Deputy CEO, Ms. Anita Xu. Ms. Hsu, please go ahead.
Anita Xu (Deputy CEO)
Thank you, Jesse. Hello everyone, this is Anita. I’ll now deliver our management remarks on behalf of our CEO, Mr. Xiang Xu in the first quarter of 2026, market sentiment across the solar PV industry remained cautious amid seasonal softness and elevated inventory levels. It was further exacerbated by rising module prices driven by higher silver, aluminum and glass costs, which led to market slowdown in China. Geopolitical tensions in the Middle east also weighed on end market demand in the region. Against this backdrop, persistent industry overcapacity continued to exert downward pressure on polysilicon prices, resulting in quarterly operating and net losses. Notwithstanding these headwinds, we continue to maintain a robust and healthy balance sheet with zero debt. As of March 31, 2026, we held a cash balance of US$559.4 million, short term investments of US$288.3 million, bank notes receivable of 20.8 million, held-to-maturity investment of 50.3 million and a fixed term bank deposit balance of US$1.1 billion. In total, these assets that can be converted into cash stood at US$2 billion, providing us with ample liquidity. This solid financial position gives us the confidence and strategic flexibility to navigate the current market downturn. On the operational front, we continue to take proactive measures to navigate challenging market conditions and weak selling prices. With name plate capacity utilization rate operating at about approximately 57%, total production volume at our two Polysilicon facilities was 43,402 metric tons for the quarter, exceeding our guidance range of 35,000 metric tons to 40,000 metric tons. With market prices for polysilicon experiencing a notable decline to be below production costs during the quarter, we adhered to the Chinese Authority self regulation guidelines but declining to increase engaged in below cost sales, we adopted a disciplined wait and see approach pending further implementation of the national anti evolution policies we highlighted last quarter. As a result, our sales volume dropped to 4,482 metric tons while average selling price increased 2.3% sequentially to 5.96 US dollar per kg. On the cost side, total production and cash cost increased marginally by 2% and 3% respectively on a sequential basis primarily driven by exchange rate movements. However, despite higher silicon metal costs, manufacturing costs in R and B terms actually declined slightly on a sequential basis, reflecting our continued improvements in manufacturing efficiency. In light of the current market dynamics, we expect total polysilicon production volume in the second quarter of 2026 to be approximately 35,000 metric ton to 40,000 metric tons. For the full year of 2026, we expect production volume to remain in the range of 140,000 to 170,000 metric tons with the solar market impacted by seasonality surrounding the Chinese New Year holiday and the absence of concrete updates, capacity rationalization policies, capacity transactions and shipment volumes remained low during the quarter. Intact Polysilicon prices dropped from 48 to 55 RMB per kg at the end of 2025 to 35 to 37 RMB per kg by the end of the first quarter. However, Polsicum prices heading into the second quarter are showing signs of bottoming out with weekly declines gradually easing. While producers awaited clear guidance guidelines from authorities to tackle the capacity, a weak demand outlook and industry inventory buildup and financial pressure forced several peers to adjust their production pricing strategies toward a more market oriented approach. As a result, industry level policy monthly supply fell to approximately 93,000 metric times in the quarter, representing an industry average utilization rate of just 39%. Looking ahead, we expect government authorities to strengthen the anti evolution policies necessary to address these industry wide overcapacity issues. As an encouraging move April 17, the Ministry of Industry and Information Technology, the National Development and Reform Commission, the State Administration for Market Regulation, the National Energy Administration and other key national departments showing you how the symposium on regulating market competition within the solar PV sector, reinforcing the urgent need to address irrational competition and curb destructive evolution. Additionally, all relevant authorities are not required to deploy concerted measures to strengthen industry governance and promote the high quality development of the solar PV industry, including in respect of capacity regulations, standards, guidelines.
OPERATOR
Pardon me, ladies and gentlemen, it’s appeared we’ve lost connection to our speakers. Please stand by while we reconnect. Pardon me, this is the operator. We have reconnected the speakers and will continue. Please proceed.
Anita Xu (Deputy CEO)
Okay, okay, thank you. Sorry, apologies, my line got disconnected. So, continuing with the April 17 symposium, all relevant authorities are now required to deploy concerted measures to strengthen industry governance and promote the high quality development of the solar PV industry, including in respect of capacity, regulation, standards guidance, innovation driven development, price, law enforcement, quality supervision, mergers and acquisitions and intellectual property rights protection. More broadly, the solar PV industry continues to exhibit compelling long term growth prospects. Growing vulnerabilities in global energy markets have sparked widespread concerns about national energy security in which the solar PV and renewable energy sectors can play a crucial role. As one of the world’s lowest cost producers of the highest quality N type pulse silicon, backed by a robust balance sheet and zero debt, we remain optimistic about the sector and are well positioned to capitalize on the anticipated market recovery and long term growth opportunities. We’ll continue to strengthen our competitive edge through advancements in high efficiency N type technologies and cost optimization via digital transformation AI adoption. As the world accelerates its transition to clean energy, we are confident in our ability to play a leading role in shaping that future. So now I’ll turn the call to our CFO, Mr. Ming Yang, who will discuss the company’s financial performance for the quarter min. Please go ahead.
Ming Yang (Chief Financial Officer)
Thank you Anita and hello everyone. This is Ming Yang, CFO of Daqo New Energy. We appreciate you joining our earnings conference call today. I will now go over the company’s first quarter 2026 financial performance. Revenues were 26.7 million compared to 221.7 million in the fourth quarter of 2025 and 124 million in the first quarter of 2025. The decreasing revenue compared to the fourth quarter of 2025 was primarily due to a decrease in sales volumes. The company reduced sales in light of the relatively low selling prices. Gross loss was 139.4 million compared to a gross profit of 15.4 million in the fourth quarter of 2025 and gross loss of 81.5 million in the first quarter of 2025. Gross margin was negative 521% compared to 7% in the fourth quarter of 2025 and negative.65 point in the first quarter of 2025. The decrease in gross margin compared …
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