Daqo New Energy Corp ADR

Good day and welcome to the DACO Energy First Quarter 2020 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. Please note this event is being recorded. I would now like to turn the conference over to Kevin He, Investor Relations. Please go ahead.

Hello, everyone. I'm Kevin He, the investor relations of DarkQ New Energy. Thank you for joining our conference call today. DarkQ New Energy just issued its financial results for the first quarter of 2020, which can be found on our website at www.dqsolar.com. To facilitate today's conference call, we have also prepared a PPT presentation for your reference. Today, attending the conference call, we have Mr. Longgen Zhang, our Chief Executive Officer, and Mr. Min Yang, our Chief Financial Officer. The call today will feature an update from Mr. Zhang on market and operations, and then Mr. Yang will discuss the company's financial performance for the first quarter of 2020. 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 industry growth are forward-looking statements that are made under the safe harbor provisions of the U.S. Private Securities Mitigation 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 these and other risks is included in the reports or documents we have filed with or furnished to the Security and Exchange Commission. These statements only reflect our current and preliminary views 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 under applicable law. Also, during the call, we will occasionally reference monetary amounts in US dollar terms. Please keep in mind that our functional currency is the Chinese RMB. We offer these translations into US dollars solely for the convenience of the audience. Without further ado, I now turn the call over to our CEO, Mr. Zhang. Please, Mr. Zhang.

Thank you, Kevin. Hello, everyone. Thank you for joining our conference call today. We are pleased to report an outstanding quarter with excellent financial and operational results. I would like to thank our entire team for their hard work and dedication to make these outstanding results possible. Despite the outbreak of COVID-19 in China in January and the subsequent domestic lockdown and travel restrictions that created a particularly difficult environment for securing raw materials, managing on-site operations, and facilitating product shipments and logistics. We overcame these challenges successfully and operated at full capacity during the quarter. The company produced record volume of 19,777 metric tons for the quarter and sold 19,101 metric tons of polysilicon. Thanks to growing economies of scale, significant savings on energy consumption, and improved operational efficiency, our total production cost decreased to $5.86 per kg during the quarter, a decrease of 8% from $6.38 per kg in Q4 2019. Our cash cost during the quarter also decreased to $5.01 per kg down from $5.47 per kg in Q4 2019. In addition, we continue to make improvements in quality and were able to sell approximately 95% of our products to modern waiver customers. All in all, we are very proud of the achievements we made in expanding production volume, optimizing our cost structure, and enhancing quality within only two quarters following the start of Phase 4A pilot production. Our exceptional results this quarter reflect the strong capabilities of our Xinjiang facilities at full production following the completion of the Phase 4A expansion project. We believe this also demonstrates our extensive experience and expertise in polysilicon manufacturing and further solidifies our position as a global leader in the industry. Despite the challenging market environment, we successfully extended our growth margin by further optimizing our cost structure during the quarter. Growth margin during the quarter was 33.5% compared to 29.5% in the fourth quarter of last year. An expanding gross margin and increasing sales volume resulted in 63.1 million in EBITDA, up 39% sequentially, and 37.7 million in adjusted net income, up 53.5% sequentially. Towards the end of this quarter, the spread of COVID-19 globally and related lockdowns particularly in the U.S., Europe, and certain other emerging markets, resulted in significant disruptions to end market demand for solar PV products. This has created short-term market uncertainty and volatility across the solar PV industry during the second quarter, with significant impact to our customers' orders and pricing. Fortunately, the spread of COVID-19 has begun to ease in May and things are gradually returning to normal across all works of life, particularly in China. We expect to see some rush orders from solar PV developers in China for legacy projects delayed from last year in order to meet the grid connection deadline set for the end of June. However, a recovery of demand from markets outside of China is critical going forward as overseas markets currently account for approximately 75% of total global solar and market demand. With many economics beginning to reopen, we expect to see a gradual recovery of solar PV demand in the third quarter as the impact from COVID-19 fades over the next two to three months. We are optimistic that the long-term solar PV growth prospects remain intact. Despite the near-term challenge in market environmental, a solar PV allergy continues to attract investors seeking to benefit from lower cost and interest rates. We are also confident in our ability to navigate this challenging environmental leveraging our competitive advantages in product quality and cost structure. Now I will discuss outlook and guidance for our company. We are currently conducting scheduled annual maintenance for parts of our Xinjiang facility. Our facility has grown significantly over the years, and for this year we will be conducting annual maintenance by project phases on a rolling basis. starting with early phases of the Xinjiang facilities, which had conducted its previous scheduled maintenance in the second quarter of last year. As such, we expect to produce approximately 15,500 metric tons to 16,500 metric tons of polysilicon and sell approximately 14,500 metric tons to 15,500 metric tons of polysilicon to external customers during the second quarter of 2020. For the fall year of 2020, the company expects to produce approximately 73,000 metric tons to 75,000 metric tons of polysilicon, inclusive of the impact of the company's annual fertility maintenance. reflects DACA's new elegance current and preliminary view as of the date of this press release and may be subject to change. The company's ability to achieve these projections is subject to risks and uncertainties. Now I will turn the call over to our CFO, Mr. Yang, who will discuss the company's financial performance for the first quarter of 2020.