Q1 2025 Daqo New Energy Corp Earnings Call
Operator: Good day and welcome to the Daqo New Energy first quarter 2025 results conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.
Good day and welcome to the Dakota, New Energy first quarter 2025 results conference call.
All participants will be in a listen only mode.
Should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on a touch-tone phone. To withdraw your question, please press star, then... Please note this event is being recorded.
After todays 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.
Jessie Zhao: I would now like to turn the conference over to Jessie Zhao, Investor Relations Director. Please go ahead.
Jessie: I would now like to turn the conference over to Jessie shall Investor Relations Director. Please go ahead.
Jessie Zhao: Hello everyone, I'm Jessie Zhao, the Investor Relations Director of Daqo New Energy. Thank you for joining our conference call today. Daqo New Energy just issued its financial results for the first quarter of 2025, which can be found on our website at www.dqsolo.com.
Sure.
Speaker Change: Hello, everyone I'm Jessie Joe at the Investor Relations director of charcoal in your energy. Thank you for joining our conference call today, several new energy just issued its financial results for the first quarter of 2025, which can be found on our website at www dot things they could sell or don't sell com.
Jessie Zhao: Today, attending the conference call, we have our Chairman and CEO, Mr. Jiang Xu, our Deputy CEO, Mr. Anita Zhu, our CFO, Mr. Ming Yang, and myself. Today's call will begin with an update from Mr. Xu on market conditions and company operations, followed by a translation from Ms. Zhu for Mr. Xu, and then Mr. Yang will discuss the company's financial performance for the quarter.
Today attending the conference call, we have all watched him, but let's see.
Speaker Change: Well look at the 17 CEO Mr. Neither too.
Speaker Change: So Neil and myself today's call will begin with an update to tell me, so cheap market conditions and company operation.
By a translation from.
Speaker Change: Mystery for Mr. Hu, <unk> and then Mr. Yao will discuss the company's financial performance for the quarter.
Jessie Zhao: After that, we will open the floor to Q&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 the industry growth, are further-looking statements that are made under the safe harbor provisions of the U.S. Private Securities Latigation 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 report or documents we have filed with or furnished to the Securities and Exchange Commission.
Speaker Change: After that we will.
Speaker Change: And I applaud you currently installed we all it is people would begin the formal remarks I want to remind you that certain statements on today's call, including expected future operational and financial performance and the industrial growth.
Speaker Change: So looking segment.
Speaker Change: Made under the Safe Harbor provisions of the U S private securities.
Securities Litigation Reform Act.
Speaker Change: These statements involve inherent risks and uncertainties Nobel sectors could cause actual results to differ materially from those contained in any forward looking statements.
Speaker Change: Information regarding these and other risks is included in both the reports or documents, we have filed with or furnished to the securities and Exchange Commission.
Jessie Zhao: 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 will undertake no duty to update such information except as required under applicable law. Also, during the call, we will occasionally reference monetary amounts in U.S. dollar terms. Please keep in mind that our functional currency is the Chinese RMB. We offer these translations into U.S. dollars solely for the convenience of the audience.
Speaker Change: Statements only reflect our current and the preliminary view as of today and maybe subject to change.
Speaker Change: Looking to achieve this objection projections is subject to risks and uncertainties. All information provided in today's call is that that's a day and we're with undertakes no duty to update such information, except as required under applicable law.
Speaker Change: Also during the call we will occasionally with reference monetary amounts.
Speaker Change: S dollar time place keeping in mind that our functional currency is the Chinese RMB. We offer these translations into U S dollars solely for the convenience of the audience now I will turn the call to our chairman and CEO, Mr. John <unk>. Mr. Chute, we're still ahead.
Jiang Xu: Now, I will turn the call to our Chairman and CEO, Mr. Jiang Xu. Mr. Xu, please go ahead.
Jiang Xu: 现在请董事长开始您的发言 Good evening, everyone. I'm Xu Xia, the CEO of Xiyu Energy. I'd like to invite all of you to participate in the annual meeting of 2025.
Speaker Change: Don't use applications.
Speaker Change: Isn't that cool when you used to live.
Speaker Change: Sure.
Speaker Change: Familiar this is Doug.
Speaker Change: Thank you <unk>.
Speaker Change: Oh did.
Anita Zhu: I'd like to invite Anita and other people in the company to participate in the meeting. We can improve the efficiency of Xiyu Energy because of the language problem.
Speaker Change: Could you be ready to delivery, whereas the choosy.
Speaker Change: Well of course, I mean, if you want.
Sean: No once you Sean.
Anita Zhu: Hello, everyone. This is Anita. So thank you for joining our conference today, and I'll now deliver some management remarks on behalf of Mr. Xu.
Speaker Change: Sure.
Speaker Change: Oh I.
Anita: Hello, everyone. This is anita so thank you for joining our conference today and I'll now imagine remarks on behalf of Mr. Hu <unk>.
Anita Zhu: So in the first quarter of 2025, the solar PV industry continued to face significant challenges. Overcapacity persisted, and polysulfone prices stayed below cash cost levels. Although this caused Daqo New Energy to sustain quarterly operating and net losses, our losses narrowed sequentially, and we continued to maintain a strong and healthy balance sheet with no financial debt. As of March 31, 2025, the company had a cash balance of $792 million, short-term investment of $168 million, bank notes received both $63 million, and a fixed-term bank deposit balance of $1.1 billion. In total, our quick assets readily convertible into cash if needed stood at $2.15 billion USD, providing us with ample liquidity.
Anita: The first quarter of 2025, the solar PV industry continues to face significant challenges.
Anita: Our capacity purchase it and polysilicon prices stay below cash cost level. Although this call, California, why don't you take the same quarterly operating and net losses I losses narrowed sequentially and we continue to maintain a strong and healthy balance sheet and financial debt as of March 31, 2025, The company had a cash balance of 792.
Anita: U S dollar and short term investments of 168 million U S dollars Bank notes receivable of 63 million and a fixed term bank deposit balance was $1 1 billion U S dollars and total earthquake assets readily and convertible into cash if need it stood at 215 billion USD, providing us with ample liquidity with no financial debt.
Anita Zhu: With no financial debt, our solid financial position gives us the confidence that we'll remain strategically resilient and well-positioned to overcome the current market downturn.
Anita: Our solid financial position gives us the confidence that we will remain strategically resilient and well positioned to overcome the current market downturn.
Anita Zhu: On the operational front, the company operated at a reduced utilization rate of approximately 33% of our nameplate capacity in response to challenging marketing conditions and weak selling prices. Total production volume out of two post-account facilities for the quarter was 24,810 metric tons, slightly below our guidance range of 25,000 metric tons to 28,000. However, sales volume reached 28,008 metric tons, exceeding production and enabling us to reduce inventory to a healthier level. As a result of lower utilization across our factories, idle facility related cost for the quarter was approximately $1.58 per kilogram, which was primarily related to non-cash depreciation expenses.
Anita: On the operational front the company operate out of out of reduced utilization rate of approximately 33% of our nameplate capacity in response to challenging market conditions that we selling prices.
Anita: Total production volume allowed us to post some facilities for the quarter was 24810 metric tons slightly below our guidance guidance range of 25000 metric tons to 28000.
Anita: However, sales volume reached 28008 metric tons.
Anita: <unk> production and enabling us to reduce inventory to a healthier level as a result of lower utilization across our factories idled facility of the latest cost for the quarter was approximately $1 five $8 per kilogram, which was primarily related to noncash depreciation expenses.
Anita Zhu: Overall, polysilicon unit production cost increased by 11% sequentially to an average of $7.57 per kilogram, primarily due to higher unit depreciation cost as a result of lower production. Our cash cost increased by 5% to $5.31 per kilogram quarter over quarter, primarily due to maintenance and facilities related cost during the quarter.
Overall policy unit production cost increased by 11% sequentially to an average at some point once all five seven U S. Dollar per kilogram, primarily due to higher depreciation costs as a result of lower production our cash costs increased by 5% to five point 31 U S dollar per kilograms.
Anita: Brook quarter, primarily due to maintenance and facilities related costs during the quarter in light of the current market conditions. We expect our total production volume in the second quarter of 2025 to be in the range of 25000 to 20000 metric tons. As a result, we anticipate our full year 2025 production volume to be in there.
Anita Zhu: In light of the current market conditions, we expect our total production volume in the second quarter of 2025 to be in the range of 25,000 to 28,000 metric tons. As a result, we anticipate our full year 2025 production volume to be in the range of 11,000 and 10,000 to 140,000 metric tons.
Anita: Range of a.
Anita: One.
Anita: 10200, 41000 metric tons during.
Anita Zhu: During the first quarter, polysilicon producers implemented self-discipline measures to mitigate the impact of irrational competition amid falling prices, resulting in industry-wide capacity utilization of approximately 50%. According to industry data, domestic polysilicon production volume came in at 105,500 metric tons in March and below 100,000 metric tons for both January and February. Consequently, supply in the first quarter fell short of demand, gradually reducing industry inventory levels.
Anita: During the first quarter polysilicon producers implemented self discipline measures to mitigate the impact of the rational competition in menthol and prices, resulting in industry wide capacity utilization of approximately 50%.
Anita: According to industry data domestic polysilicon production volume came in at 105.
Anita: And 500 metric tons in March and below 100000 metric tonnes, but both January and February Consequently supply in the first quarter fall short of demand gradually reducing industry inventory levels. All February 9th Chinese Authority has introduced some market based reform policy for new energy tariffs to promote the high quality.
Anita Zhu: On February 9th, Chinese authorities introduced a market-based reform policy for new energy on-grid tariffs to promote the high-quality development of the renewable energy sector. All on-grid electricity generated from renewable energy, such as wind and solar power, will be traded through market mechanisms with prices determined by supply and demand. This policy aims to balance grid load more effectively. As mandated in the policy, the cut-off date that distinguishes new projects from existing projects, May 31, 2025, and new energy projects that commence operations on and after June 1, 2025, will be subject to a provincial-level competitive bidding process.
Anita: All of the renewable energy sector.
Speaker Change: Oh I'm good electricity generated from renewable energy, such as wind and solar power will be trade up through market mechanisms with price is determined by supply and demand. This policy aims to balanced threat load more effectively.
Speaker Change: I've mandate and the policy of the cutoff date that distinguishes new projects from existing projects May 31, 2025, and new energy projects that commenced operations on an after June <unk> 2025 will be subject to a provincial level competitive bidding process as a fixed tariff structure for renewable energy.
Anita Zhu: As a fixed tariff structure for renewable energy electricity transitions to a market-based pricing mechanism, uncertainties around future electricity prices and revenue generations have emerged. In response, project developers and investors are accelerating project completions ahead of the June 1 deadline in order to secure current policy benefits, which have led to a surge in downstream installations. So fueled by this front-loading, market prices of solar products have trended upward, narrowing losses across the value chain, particularly for end products. However, given the relatively high level of policy inventory held by wafer manufacturers, price increases have yet to fully materialize in the policy focus segment.
Speaker Change: Electricity transitions to a market based pricing mechanism all certainties around future electricity prices and revenue generation have emerged or small project developers and investors are accelerating project completion is ahead of the June 1st that line in order to secure a current policy benefits, which has led to a surge.
Speaker Change: In Dallas human installations.
Speaker Change: Fueled by the front loading market prices solar products have trended upward narrowing your losses across the value chain, particularly for end products. However, given the relatively high level of policy inventory held by wafer manufacturer price increases have yet to fully materialize in the polysilicon segment polysilicon prices.
Anita Zhu: Post-circum prices remain stable throughout the quarter at approximately 37 to 42 RMB per kilogram.
Speaker Change: Stable throughout the quarter at approximately 37 to 42 RMB per kilogram.
Anita Zhu: In the medium to long term, however, we believe current low prices and market downturn will eventually result in a healthier and more sustainable industry. As ongoing losses for profitability and cash for less competitive players to exit the market, we expect overcapacity to be ultimately eliminated, bringing the solar PV industry back to normal improved profitability and healthier margins.
Speaker Change: In the medium to long term false. However, we believe current low prices the market downtown where eventually resulting a healthier and more sustainable industry as ongoing losses poor profitability, our cash burn for less competitive player to exit the market, we expect overcapacity to be ultimately eliminated when he left solar PV and.
Speaker Change: Does she back to normal improved profitability and healthier margins.
Anita Zhu: The solar PV industry continues to show promising prospects. China's new solar PV installations reached 59.71 gigawatt in the first quarter, a robust 30.5 percent year-on-year growth. In the long run, as one of the most cost-effective and sustainable energy resources worldwide, solar power is expected to remain a key driver of the global energy transition and sustainable development.
Speaker Change: The solar PV industry continues to show promising prospects, China's new solar PV installations reached $59 seven one gigawatt in the first quarter, a robust 35% of your of your growth.
Speaker Change: In the long run as one of the most cost effective and sustainable energy resources worldwide Solar power is expected to remain a key driver of the global energy transition and sustainable development looking ahead stuck when your energy is well positioned to capitalize on the long term growth in our global solar PV market and.
Anita Zhu: Looking ahead, Daqo New Energy is well-positioned to capitalize on the long-term growth in the global solar PV market and strengthen its competitive edge by enhancing its higher-efficiency end-type technology and optimizing its cost structure through digital transformation and AI adoption. As one of the world's lowest-cost producers with the highest-quality end-type product, a strong balance sheet with no financial debt, we're confident in our ability to weather the current market downturn and emerge as a leader in the industry, ready to capture future growth.
Speaker Change: [laughter] thing as a competitive edge by enhancing its higher officials.
Speaker Change: N type technology, and optimizing <unk> cost structure through digital transformation and AI adoption.
Speaker Change: One of the world's lowest cost producer with the highest quality on type product is shown balance sheet with no financial debt, we're confident in our ability to weather the current market downturn and emerge as a leader in the industry ready to capture future growth. So now I will turn the call to our CFO, Mr. Ming Yang who'll discuss self help.
Ming Yang: So now I will turn the call to our CFO, Mr. Ming Yang, who will discuss the possible financial performance for the quarter. Ming, please go ahead. Thank you, Anita, and hello, everyone.
Speaker Change: Financial performance for the quarter Min. Please go ahead.
Ming Yang: Thank you Anita and Hello, everyone.
Ming Yang: This is Ming Yang, CFO of Daqo New Energy. We appreciate you joining our earnest conference call today. I will now go over the company's first quarter 2025 financial program. Revenues were $123.9 million compared to $195.4 million in the fourth quarter of 2024 and $415 million in the first quarter of 2024. The decreasing revenue compared to the fourth quarter of 2024 was primarily due to a decrease in sales volume. Gross loss was $81.5 million compared to $65.3 million in the fourth quarter of 2024 and gross profit of $72 million in the first quarter of 2024. Gross margin was negative 66 percent compared to negative 33 percent in the fourth quarter of 2024 and 17.4 percent in the first quarter of 2024.
Ming Yang: This is Ming Yang CFO of <unk> energy.
Ming Yang: Appreciate you joining our earnings conference call today.
Ming Yang: I will now go over the company's first quarter 2025 financial performance.
Ming Yang: Revenues were $123 9 billion compared to $195 4 million in the fourth quarter of 2024, and 415 million in the first quarter of 2024.
Ming Yang: The decrease in revenue compared to the fourth quarter of 2024 was primarily due to a decrease in sales.
Ming Yang: Gross loss was 81 5 million compared to $65 3 million in the fourth quarter of 2024 gross profit was 72 million the first quarter of 2024.
Ming Yang: Gross margin was negative 66% compared to 33 person in the third and fourth quarter of 2024, and 17, 4% in the first quarter of 2024.
Ming Yang: The decreasing growth margin compared to the fourth quarter of 2024 was primarily due to a lower average selling price, a higher production cost. The Q&A expenses were $35.1 million compared to $29.4 million in the fourth quarter of 2024 and $38 million in the first quarter of 2024. The human expenses during the first quarter included $18.6 million in non-cash, share-based compensation costs related to the company's sharing incentive plans, compared to $14.9 million in the fourth quarter of 2024. Our new expenses for the quarter were $0.5 million compared to $0.4 million in the fourth quarter of 2024 and $1.5 million in the first quarter of 2024.
Ming Yang: The decrease in gross margin compared to the fourth quarter of 2024 was primarily due to a lower average selling price and higher production costs.
Ming Yang: G&A expenses were $35 1 million.
Ming Yang: <unk> 29 for Formula in the fourth quarter of 2024, and 38 million in the first quarter of 2024.
Ming Yang: The higher expenses during the first quarter included $18 6 million.
Ming Yang: Noncash share based compensation costs.
Ming Yang: Related to the company assuring centers plans compared to $14 9 million in the fourth quarter of 2024.
Ming Yang: R&D expenses for the quarter were <unk> 5 million compared to zero point is formulated in the fourth quarter of 2024, and one 5 million in the first quarter of 2024.
Ming Yang: R&D expenses converted from peer-to-peer and reflect R&D activities that take place during the quarter. And as a result of the foregoing, loss from operations was $114 million compared to loss of $200 million in the fourth quarter of 2024, and income from operations of $30 million in the first quarter of 2024. The decrease of loss from operations in the first quarter of 2024 compared to the fourth quarter of 2024. First Quarter 25 earlier, was also attributable to the long-lived asset impairment of $125.6 million assets and allowance for expected credit loss of $18 million recorded in the Fourth Quarter 25.
Ming Yang: R&D expenses can vary a computer.
Ming Yang: R&D is to reduce that take place during the quarter.
Ming Yang: So soho to foregoing loss from operations was 114 million compared to loss of 200 million in the fourth quarter of 2020 toward the E.
Ming Yang: <unk> from operations was 30 million in the first quarter of 2024.
Ming Yang: The decrease loss from operations in the first quarter of 2024 compared to the fourth quarter was 124.
Ming Yang: Political was 125.
Ming Yang: Also attributable to the law.
Ming Yang: Pasadena, Paramount $155 6 million.
Ming Yang: The allowance for expected credit loss of $18 million recorded in the fourth quarter of 2024.
Ming Yang: Operating margin was negative 92 percent, compared to negative 154 percent in the fourth quarter of 2024 and 7.3 percent in the first quarter of 2020. Net loss attributable to Daqo New Energy shareholders was $71.8 million compared to $180 million in the fourth quarter of 2024, a net income of $15.5 million in the first quarter of 2020. Loss per basic ADS was $1.07 compared to $2.71 in the fourth quarter of 2024 and earnings per basic ADS of $0.24 in the first quarter of 2020. Non-GAAP-adjusted net loss has grown to Daqo New Energy shareholders excluding non-cashier-based compensation costs worth $53 million compared to $170.6 million in the fourth quarter of 2024 and adjusted net income of $36 million in the first quarter of 2021.
Ming Yang: Operating margin was 892% compared with negative 154 person in the fourth quarter of 2024, and seven 3% to 3% in the first quarter of 2024.
Ming Yang: Net loss attributable to tackle new energy shareholders was 71 8 million compared to 180 million here in the fourth quarter of 2024.
Ming Yang: E Com was $15 five in the first quarter of 2020.
Ming Yang: Loss per basic 80 S.
Ming Yang: So my son compared to $3 can be one cents in the fourth quarter of <unk> 24.
Ming Yang: Earnings per basic 80, 224 times in the first quarter of 2020.
Ming Yang: Yes.
non-GAAP adjusted net loss attribute to talk with you.
Ming Yang: Shareholders, excluding noncash share based compensation costs.
Ming Yang: The $3 million compared to 176 million in the fourth quarter of 2024 net.
Ming Yang: Net income was 36 million in the first quarter of 2024.
Ming Yang: Justin's loss per basic ADS was $0.80, compared to $2.56 in the fourth quarter of 2024. Justin's earnings per basic ADS was $0.55 in the first quarter of 2024. EBITDA was negative $48 million compared to negative $236 million in the fourth quarter of 2024 and $76.9 million in the first quarter of 2024. If the margin was negative 39%, compared to negative 121% in the fourth quarter of 2024, and 18.5% in the first quarter of 2024.
Ming Yang: So said loss per basic Ats was 80 880 cents.
Ming Yang: Compared to $2.06 in the fourth quarter of 2024.
Earnings per basic eight years with 55 cents in the fourth.
Ming Yang: First quarter of 2024.
Ming Yang: [noise] EBITA was negative 48 million compared to negative 236 million in the fourth quarter of 2024 seven.
Ming Yang: $76 9 million in the first quarter of 2024.
Ming Yang: The margin was negative 39% contributor compared to negative $1, 21% in the fourth quarter of 2024 and 18, 5% in the first quarter of 2020.
Ming Yang: Now on the company's financial... As of March 31st, 2025, the company had $792 million in cash, cash equivalent to cash, compared to $1.04 billion as of December 31st, 2024, and $2.7 billion as of March 31st, 2024. and as of March 31, 2025, their total receivable balance was $62.7 million, compared to $55 million as of December 31, 2024, and $194 million as of March 31, 2024. NodesSucceivable represents bank notes with maturity within six months. and as of March 31, 2025, the balance of fixed-term deposits within one year was $1.12 billion compared to $1.09 billion as of December 31, 2024, and nil as of March 31, 2024.
Ming Yang: No on the company's financial condition.
Ming Yang: Most of March 31st 2025 years, the company had 192 million in cash cash equivalents and usually the cat ginger compared to Israel.
Ming Yang: One point over $4 billion with December 31st one court and $2 7 billion once 31st 2020 level.
Ming Yang: And as of March 31st 2025.
Ming Yang: Notes receivable balance was $62 7 million compared to $55 million could be similar 31st 2024.
Ming Yang: $194 million 30 March 31 2024.
Ming Yang: So Super Bowl.
Ming Yang: The Central Bank notes with maturity within six months.
Ming Yang: And it took them watch 31st 2025.
Ming Yang: With fixed term deposits within one year was 112 billion compared to $1 nine.
Ming Yang: I'd go in December 31, 2024.
Ming Yang: No.
Ming Yang: The March 31 2024.
Ming Yang: and now on the company's cash flow. For the three months ended March 31, 2025, net cash used in operating activities was $38.9 million compared to $116 million in the same period of 2024. And for the three months ended March 31, 2025, net cash used in investing activities was $211 million compared to $190.5 million in the same period of 2024. The net cash used in investing activities in the first quarter of 2025 was primarily related to the purchase of short-term investments and fixed-term deposits. And for the three months ended March 31st, 2025, NETCASC used to invest in financial activities with NIL compared to $6 million in the same period of time.
Ming Yang: No all of the company's cash flow.
Ming Yang: For the three months ended March 31, 2025, net cash used in operating activities was $38 9 million compared to 116 million in the same period of 2024.
Ming Yang: And for the three months ended March 31, 2025, net cash used in investing activities was $211 million compared to $1 95 million. The same period in 2024, the net cash used in investing activities.
Ming Yang: First quarter of 2025.
Ming Yang: It was primarily related to the purchase of short term investments.
Ming Yang: Term deposits.
Ming Yang: So for the three months ended March 31st 2025, net cash to see financing activities compared.
Ming Yang: Compared to 6 million in the same period of point in 'twenty four.
Operator: That concludes our prepared remarks. We will now open the call to Q&A from the audience. Operator, please begin. We will now begin the question and answer session. To ask a question, you may press star and 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the button. If at any time your question has been addressed, and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster.
Ming Yang: And that concludes our prepared remarks, we will now open the calls to Q&A from the audience.
Ming Yang: Operator, let's please begin.
Ming Yang: We will now begin the question and answer session.
Speaker Change: To ask a question you May Press Star then one on your Touchtone phone.
Ming Yang: If youre using a speakerphone please pick up your handset before pressing the keys.
Ming Yang: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
Ming Yang: At this time, we will pause momentarily to assemble our roster.
Ming Yang: Yeah.
Phil Shen: The first question today comes from Phil Shen with Roth Capital Partners. Please go ahead. Hi, everyone. Thank you for taking my questions. In your prepared remarks, you talked about... over capacity ultimately being eliminated. I was wondering if you could talk through when you think that could happen and you also mentioned less competitive players will exit the market. Who have you seen exit thus far? And then what... Which exits do you think might...
Speaker Change: The first question today comes from Phil Shen with Roth Capital Partners. Please go ahead.
Speaker Change: Hi, everyone. Thank you for taking my questions.
In your prepared remarks, you talked about.
Speaker Change: Overcapacity.
Speaker Change: Italy.
Speaker Change: Being eliminated I was wondering if you could talk through when you think that could happen and you also mentioned.
Less competitive players Oh, well exit the market.
Speaker Change: Who have you seen exit thus far and then what.
Speaker Change: Which exits do you think might be a near term. Thanks.
Anita Zhu: Thank you, Phil. So in terms of the rebalancing of supply and demand, to give a quick recap, so back in 2024, the total polysilicon production volume is around 1.82 million metric tons. And the nameplate capacity production capacity of polysilicon of all completed projects, regardless of whether it's completed or temporarily shut down, exceeded 1,400 gigawatts, which is roughly 3.2 million metric tons. That's more than double of demand. And what we've seen in this cycle compared to the previous cycle is that the incumbents and even some of the new players, they either have a very solid shareholder base.
Speaker Change: Oh, Thank you Phil so in terms of the rebalancing of supply and demand are like to give a quick recap back in 2020 for the total policy count production volume at around 182 million metric tons and the nameplate capacity production.
Speaker Change: But I think about the Apollo silicon up all completed projects, regardless of whether it's completed or temporary shut down.
Speaker Change: <unk> exceeded 1400, Gigawatts, which is roughly $2 2 million metric tons, that's more than double up off the mat and what we've seen in this cycle compared to the previous cycle is that are there.
Speaker Change: Incumbents and even some of the new players.
Speaker Change: Or have a very solid shareholder base.
Anita Zhu: that in the worst case, can they inject asset or have other sources of financing. For instance, recently, we've seen Tongwei announcing 10 billion RRB and fundraising at its Yongjiang subsidiary. So I think that's just one case that signals the rebalancing of supply and demand will take longer than expected compared to the previous cycles. And we've seen that the overall industry utilization rate is currently at around 40% to 50%, and we actually haven't seen any companies completely exiting the market. Most of them are either lowering their utilization rate or undergoing this temporary shutdown.
Speaker Change: M D.
Speaker Change: That you know worst case can they inject asset or have other sources of financing for instance, recently are we seeing totally announcing 10 billion RMB fundraising at it.
Speaker Change: Our subsidiary So I think that's just one case that signal is the rebalancing of supply and demand will take longer than expected compared to the previous cycles.
Speaker Change: And Oh, we have seen that the overall industry utilization rate is currently at around 40% to 50% and we actually haven't seen any company.
Speaker Change: Lately exiting the market most of them are.
Speaker Change: Either lowering their utilization rate or undergoing to temporarily shut down so it's hard to say when exactly where you would see those players exiting but.
Anita Zhu: So it's hard to say when exactly we would see the players exiting, but as we are still transacting at prices below most of the company's cash costs, it will be relatively difficult for some of the companies to sustain the current situation. Thank you, Anita. That's helpful. So you mentioned the industry utilization rate is between 40 and 50 percent. Can you tell us what you expect that to trend or how you expect it to trend? of China. Yes, sure. So... Thank you. In the first quarter, the monthly domestic production actually came in to around 90,000 to 100,000 metric tons per month.
Speaker Change: We are still transacting at prices below most of the company's cash cost it will be a relatively difficult for some companies to sustain the current situation.
Thank you need Oh, that's a helpful. So you mentioned the industry utilization rate is between 40 and 50% are can you tell us what do you expect that to trend or how do you expect it to trend.
Speaker Change: By quarter through this year do you think it goes above 50% by Q4 or do you think we're well below that.
Speaker Change: Sorry, 50%.
Speaker Change: Even in Q4 thanks.
Speaker Change: Oh, yeah sure so.
Speaker Change: In the first quarter the monthly domestic production actually came in to around 90000 to 100000 metric tons per month, and we have seen a slight shortage in supply compared to the market demand and the inventory depletion of polysilicon.
Anita Zhu: And we've seen a slight shortage in supply compared to the monthly demand. And the inventory depletion of polysilicon is actually happening at a very slow pace. However, because of the high level of inventory in polysilicon, we've seen almost, I would say, 400,000 metric tons in total at the poly manufacturer and at the ingot manufacturer, as that would cross the averaging. We think the inventory depletion will take at least four months, assuming the most extreme case of zero production per month and also a monthly production of 950,000 metric tons. And because of that, the Poly prices actually remained relatively stable during the first quarter, trading at 38 to 42 RMB per kilogram, with N-Type from the top players actually coming in at 41 to 42.
Speaker Change: Actually happening at a very slow pace pause or because of the high level of England, Troy and Paul Silicon always Siena, almost I would say 400000 metric tonnes in total a pollyanna at the polling manufacturer and at that you can get manufactured that that's across the analogy.
Speaker Change: We think the inventory depletion that would take at least a four month, assuming the most extreme case of zero production per month, and also a monkey production of 950000 metric tons.
Speaker Change: And because of that the poly prices after you've remained relatively stable during the first quarter.
Speaker Change: Trading at 38 to 42 RMB per kilogram with N type from the top players actually coming in at 41 to 42, and if we were looking at the second quarter and maybe going forward.
Anita Zhu: And if we're looking at the second quarter and maybe going forward, we believe the prices will be supported at the current level because of the policy that was rolled out in February. So we expect price level to sustain at the current range before the policy cutoff date of May 31st. Especially because we expect strong April and May demand at around 55 to 65 gigawatts, which will translate to a home demand of around $125,000. But we do see a potential downside risk, both coming from the policy change, also coming from external tension, especially from the Trump administration's trade war 2.0.
Speaker Change: We believe the prices will be supported.
The current level because of the policy that was rolling out in February So we expect price level to sustain at the current range before the policy cut off date of May 31st.
Speaker Change: Especially because we <unk>.
Speaker Change: We expect strong April and May demand at around 55 to 65 lots, which will translate to all with the amount of around 125000.
Speaker Change: But we do see a potential downside with both coming from the policy change also coming from external tension, especially from the Trump administration.
Speaker Change: <unk> Trade War 2.0.
Anita Zhu: So after the rush installation, we see demand would trend down slightly.
Speaker Change: So after the rush installation, all we see demand one trend down slightly.
Anita Zhu: And that's why we maintain cautious and expect pricing to be relatively suppressed at the low price range of $35 to $40 RMB per kilogram throughout the remaining of 2025. Okay, great. So, again, a lot of information there. Thank you. So, you said demand in China after May would be down slightly, but I think you mentioned 55 gigawatts for those April-May. What's your expectation for after May 31st, how much demand, how much lower could demand be on a monthly basis in China? I think overall, the whole year of 2025, we believe China's demand will still come in relatively strong in the range of 250 to 300 gigawatts, which would be roughly equivalent to 1.4 to 1.6 million metric ton of poly demand.
Speaker Change: Yeah.
Speaker Change: That's why we maintain cautious and expect pricing to be relatively surprised that the loan price range of 35 to $40 per kilogram.
Speaker Change: The remaining of 2025.
Speaker Change: Okay.
Speaker Change: Great. So again a lot of information there. Thank you.
Speaker Change: So you said demand in China. After a man it would be down slightly but I think you mentioned 55 Gigawatts Hum for those people may have.
Speaker Change: What what's your expectation for after may 31st how much demand how much lower could demand be on a monthly basis.
Speaker Change: Thanks.
Speaker Change: Oh, I think overall the whole year of 2025, we believe China's demand will stay still come in.
Speaker Change: The relatively strong in the range of $2 50 to 300 Gigawatts.
Speaker Change: Would it be roughly equivalent to one four to $1 6 million metric tonne of poly demand.
Anita Zhu: Although compared to 2024, it may seem more stagnant, primarily because of the potentially deteriorating solar project returns, which was impacted by the new policy in February, primarily because of the uncertainty in calculating the yield. But in the long run, we are encouraged to see that renewable energy is actually transitioning to a more market-driven and heading into a more sustainable and high-quality development compared to being subsidized by the government with more guaranteed on-grid volume price for all incremental renewable energy projects. So, yeah, I think overall, this year in China, it would still be relatively supported at 250 to 300 gigawatts.
Speaker Change: Although compared to 2024 and they've seen.
Speaker Change: More stagnant, primarily because of the potentially deteriorating solar project returns, which was impacted by the new policies and February primarily because of balanced certainty in calculating the yelp Buddy.
Speaker Change: But in the long run we are encouraged to see that renewable energy is actually transitioning to a more market driven and heading into a more sustainable and high quality development compared to being subsidized by the government with more guaranteed on good volume price for all incremental renewable energy projects.
Speaker Change: So yeah I think overall this year in China, It would still be a relatively supportive at $2 15 to 300.
Operator: Okay, great. I appreciate the time and taking my questions. Thanks. Thank you, Phil. Once again, if you would like to ask a question, please press star and 1 to join the question queue.
Speaker Change: Okay, Great I appreciate the time and taking my questions. Thanks, I'll pass it on.
Speaker Change: Thank you Phil.
Speaker Change: Once again, if he would like to ask a question. Please press Star then one to join the question queue.
Alan Hong: The next question comes from Alan Hong with J.P. Morgan. Please go ahead. Hi, management. Thank you for taking my questions.
Speaker Change: The next question comes from Alan Hahn with J P. Morgan. Please go ahead.
Alan Hahn: Hi management. Thank you for taking my questions. My first question would just be got it.
Alan Hong: My first question is regarding ADR, delisting risk. I mean, what is the strategy? I mean, you're looking for to employ or what do you think? Like, how should we encounter the ADR, delisting risk? Thank you, Alan. So first of all, we fully understand our investor concern over the risk of forcing the ADR to delist from the U.S. amidst the heightened U.S.-China trade war. Personally, although I think that we would remain vigilant and consider the delisting of all ADRs a relatively low probability, I do acknowledge that the Trump administration is putting all options on the table, and because of that, this will be a key stake for negotiation as decoupling from the two largest economies spread to the financial sector.
Speaker Change: You just can't risk I mean.
Speaker Change: What is the strategy I mean do you looking for or what do you think like how should we encounter a distinguished.
Speaker Change: Okay.
Alan Hahn: Oh, Thank you Alan Oh, So first of all we fully understand our investor concern over the risk of forcing that ETR to delist from the U S.
Speaker Change: And mid to high 10 U S. China Trade war, although we.
Speaker Change: Personally, although we I think that we would remain vigilant and considered as a delisting of all 80 are you a relatively low probability I do acknowledge that the Trump administration is putting all options on the table and because of that this would be a mistake for a negotiation as decoupling.
Speaker Change: The off the two largest economies spread to the financial sector.
Anita Zhu: And we actually considered a potential dual listing of returning to the Hong Kong exchange back in 2022 as some background information because of the risk arising from the Holding Foreign Companies Accountable Act. But that issue was effectively resolved in the same year after PCAOB determined at the end of 2022 that it was able to inspect and investigate all the firms in mainland China and Hong Kong completely. So it vacated its 2021 determination. And this is why our listing in Hong Kong was held off. And we decided to keep our ADRs because the trading volume is much higher for the ADRs compared to the Hong Kong listing.
Speaker Change: And we actually consider it a potential through a lift in it I've been trying to the Hong Kong exchange back in 2022, as some background information because of the risk of rising from the holding company.
Speaker Change: Companies accounted what but that issue was effectively be resolved after the thing you're after a P. P. L. B a determined at the end of 2022 that it was able to inspect and investigate audit firms in mainland China and Hong Kong completely so it didn't vacate at this point.
Speaker Change: My determination and this is why our listing on the Hong Kong, what's how it off and we decided to keep our ADR because the trading volume is much higher for the ADR as compared to the Hong Kong listing.
Anita Zhu: And based on our understanding, I think for a Hong Kong listing, it would take maybe around six months depending on regulatory approvals of the market conditions and our internal readiness. And to be fully transparent to our investors, while we have no immediate plan in place amid the current situation, we are definitely closely monitoring the market and the regulatory developments. And we want to assure you that we remain fully committed to driving the long-term value for our stakeholders and also executing our long-term growth vision. And it's very unfortunate for us to see tensions escalating.
Speaker Change: And based on my understanding I think boy, a Hong Kong listing.
Speaker Change: Hey, maybe around six months, depending on regulatory approval, it's also market conditions, and our internal readiness and to be fully transparent to our investors.
Speaker Change: While we have no immediate plans.
Speaker Change: And that the current situation, we are definitely closely monitoring the market and the regulatory developments.
Speaker Change: We want to assure you that we remain fully committed to driving the long term value for.
Speaker Change: Our stakeholders and also executing our long term growth vision and it's very unfortunate for us to see tensions escalated, but if circumstances do you like exacerbate two the most extreme case of before steel is C O R.
Anita Zhu: But if certain stances do exacerbate to the most extreme case of a forced dual listing, our management team will definitely evaluate all strategic options to protect the interests of our shareholders, such as a listing in Hong Kong, or seek other means to return capital to our shareholders. Thank you very much.
Speaker Change: Management is most definitely a valued all strategic options.
Speaker Change: Protect our interests of our shareholders such as the listing in Hong Kong or seek other means to return capital to our shareholders.
Anita Zhu: And my next question is regarding cash cost. I know that like the cash production cost in first quarter has edged up a little bit from fourth quarter last year, and there you mentioned about like a maintenance cost. Just want to like get a feeling about like the outlook on cash cost, I mean, in the subsequent quarters in the year. Okay, Alan, thanks for your question. So, cash costs did trend up slightly this quarter. I guess about 5 to 6 percent compared to the previous quarter. It's primarily due to two primary reasons. Okay, the first reason is that I think since December of last year, our Inner Mongolia Phase 2 was shut down completely, and then went into what's called in Chinese Weibo or maintenance of the facilities for a longer term.
Speaker Change: Thank you very much and my next question is regarding cash cost I looked at like the cash flow doesn't even cost in the first quarter has jumped.
Speaker Change: A little bit off from fourth quarter last year, and then you mentioned about like a maintenance cost just wanted to get a feeling about like the outlook on the cash cost I mean in the subsequent quarters in the year.
Speaker Change: Right.
Speaker Change: Okay, Oh my thanks for your question.
Speaker Change: So our cash cost the trend up slightly.
Speaker Change: This quarter, I guess about five 6% compared to the previous quarter.
Speaker Change: Primarily due to two primary reasons. Okay. The first reason is that I think since December of last year, our inaugural Golia phase two was shut down.
Speaker Change: Clearly and then Wayne into.
Speaker Change: What's called in Chinese wasteful or maintenance and.
Speaker Change: And also facilities vessel for a longer term so it's incurring equivalent to roughly 20 sons.
Anita Zhu: So, it's incurring equivalent to roughly 20 cents per kilogram of cost this quarter. Okay, even though there's no production, there's that additional cost related to, for example, the electricity, the air, and the people, employees that's necessary to maintaining facilities. So, that actually adds roughly 20 cents in cash costs. Because if you look at the way that we record cash costs, it's actually all of the cash costs that occur for the facilities. So, not just for production, but also for the maintenance. Okay, and then we subtract out the depreciation and the non-cashier-based compensation to arrive at the cash costs.
Speaker Change: Kilogram of cost this quarter, okay, even though theres no production there that additional cost relative are related.
Speaker Change: Related to for example, the electricity the the air and the people.
Employee that's necessary, it's necessary to maintaining them first of all so that actually adds roughly 20 spent in.
Speaker Change: <unk> cash cost because if you look at the way that.
Speaker Change: With record cash causes actually all of the costs that occur for the facility not just for production both supporting the maintenance okay.
Speaker Change: Then we subtract all debt depreciation and noncash share based compensation to arrive at a cash cost.
Anita Zhu: Okay, so there's that $0.20 additional impact because of the maintenance. related to the facility that's now being shut down. And then there's another roughly $0.10 of cost related to the maintenance of facility. In the Mongolia, I went to maintenance in roughly the second half of March. Okay, so as you can see, it had some impact on production for the quarter. And for example, if you compare it to the previous quarter, right, I mean, we produced around 34,000 metric tons, right? And for this quarter, we only produced roughly 24,800 metric tons. But, you know, we incurred a relatively similar level of employees in terms of staffing costs, right?
Speaker Change: So so theres about 20 cents.
Speaker Change: Additional impact because of the maintenance.
Speaker Change: Two the facility that's now being shut down and then there is another roughly kind of center of cost related to the maintenance.
Speaker Change: First of all to you in the Mongolia, all went to maintenance.
Speaker Change: Roughly the second half.
Speaker Change: Of March Okay. So as you can see it has some impact on production.
Speaker Change: For the quarter and before assemblies are compared to the.
Speaker Change: Previous quarter right I mean, we produced around 34000 metric tons right and for this quarter you will we only produce roughly 24800 metric ton, but you know we incurred relatively similar level of employees in terms of staffing costs, but I think that's the part.
Anita Zhu: I think that's the part that has to be kind of amortized over a fewer amount of production. So there's that $0.10 impact of cost that we have. I think if we remove these impacts, I think we would have roughly... I think going forward for Q2, I think, again, I think depending on production level, but I think based on current guidance, we should probably have similar to slightly lower cash costs compared to the current. We got it. Thank you. And I'll pass it on. Thank you, Alan. Thank you.
Speaker Change: Uh huh.
Speaker Change: It's more that has to be kind of amortized over a fewer amount of production. So it's a little bit about 10 cents.
Speaker Change: The impact of car that we have I think if you remove these impact I think we would have roughly.
Speaker Change: $5.
Speaker Change: Well I think going forward for.
Speaker Change: Our Q2, I think again I think depending on all production level, but I think based on current guidance, we should probably have similar to slightly lower.
Speaker Change: Cash costs compared to the current quarter.
Speaker Change: Got it thank you and I'll pass it on.
Speaker Change: Great. Thank you.
Operator: As a reminder, if you would like to ask a question, please press star then 1 to join the question queue. Once again, that's strar than one to ask a question. This concludes our question and answer session.
Speaker Change: Yes.
Speaker Change: As a reminder, if you would like to ask a question. Please press Star then one to join the question queue.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Once again, that's star then one to ask a question.
Speaker Change: Yes.
Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Jesse Xiao for any closing remarks.
Jessie Zhao: I would like to turn the conference back over to Jessie Zhao for any closing remarks. Thank you everyone again for participating in today's conference call. Should you have any further questions, please don't hesitate to contact us. Thank you and have an awesome day. Goodbye. The conference is now concluded.
Jesse Xiao: Thank you everyone again for participating in today's conference call should you have any further questions. Please don't hesitate to contact us. Thank you.
Jesse Xiao: And to have an awesome day goodbye.
Operator: Thank you for attending today's presentation. You may now disconnect. Sattar Sattar END
Jesse Xiao: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Jesse Xiao: Okay.
Jesse Xiao: [music].