Daqo New Energy Announces Unaudited First Quarter 2013 Results

        Daqo New Energy Announces Unaudited First Quarter 2013 Results

PR Newswire

CHONGQING, China, June 7, 2013

CHONGQING, China, June 7, 2013 /PRNewswire/ -- Daqo New Energy Corp. (NYSE:
DQ) ("Daqo New Energy" or the "Company"), a leading polysilicon manufacturer
based in China, today announced its unaudited financial results for the first
quarter of 2013.

First Quarter 2013 Financial and Operating Highlights

  oPolysilicon shipments were approximately 706 metric tons, or MT, of which
    30 MT were shipped by the end of the first quarter of 2013 but will be
    recognized as revenue upon completion of inspection in the second quarter
    of 2013. Wafer shipments were 2.21 million pieces*. We also shipped 72 MT
    of multi-crystal silicon blocks to our customers. Revenues were $14.5
    million, compared to $6.2 million in the fourth quarter of 2012 and $32.0
    million in the first quarter of 2012.
  oGross loss was $12.9 million, compared to $11.1 million in the fourth
    quarter of 2012 and $9.9 million in the first quarter of 2012.
  oGross margin was negative 89.0%, compared to negative 178.5% in the fourth
    quarter of 2012 and negative 30.9% in the first quarter of 2012.
  oOperating loss was $16.6 million, compared to $55.9 million in the fourth
    quarter of 2012 and $10.8 million in the first quarter of 2012.
  oNet loss attributable to Daqo New Energy Corp. shareholders was $18.7
    million, compared to$75.6 million in the fourth quarter of 2012 and $13.7
    million in the first quarter of 2012.
  oEarnings per fully diluted ADS were negative $2.70, compared to negative
    $10.90 in the fourth quarter of 2012, and negative $1.95 in the first
    quarter of 2012.

*Beginning from the first quarter of 2013, we will report wafer shipments in
units of "million pieces" instead of "MW." We believe such units for reporting
wafer shipments more accurately present our operation performance. The wafers
we ship are multi-crystal silicon wafers at the size of 156mm X 156mm. Each
piece of our standard wafer represents approximate 4 watts while each piece of
our high efficiency wafer represents approximate 4.2 watts.

"In the first quarter of 2013, we have been running our Xinjiang polysilicon
facilities successfully and have achieved our initial targets for cost
structure, capacity, and quality. As a result, our Xinjiang facilities have
started to contribute positive cash flow since the first quarter of 2013 in
this challenging market," Commented Dr. Gongda Yao, Chief Executive Officer of
the Company. "In April, we conducted several process optimization projects in
our Xinjiang facilities. This enabled us to further reduce our total
production cost to approximate $18/kg by the end of May."

"We have seen average selling prices stabilizing across the solar PV value
chain. The current improved financial performances of the downstream entities
indicate the start of stabilization in the market. We believe today's
challenging situation is only temporary. We are confident that the political
leaders of China and European Union have competence to manage the
international trading conflict in the solar PV industry, so as to enable the
industry to achieve a healthy and sustainable growth in the future," Dr. Yao
concluded.

First Quarter 2013 Results

Revenues

Revenues were $14.5 million, compared to $6.2 million in the fourth quarter of
2012 and $32.0 million in the first quarter of 2012.

The Company generated revenues of $11.3 million from 676 MT polysilicon sold,
compared to revenues of $4.7 million from 266 MT of polysilicon sold in the
fourth quarter of 2012, and revenues of $25.7 million for 964 MT of
polysilicon sold in the first quarter of 2012. The increase from the fourth
quarter of 2012 was primarily due to the fact that in the fourth quarter of
2012, Xinjiang facilities were in the stage of pilot production and did not
contribute to revenues during this period.

The Company generated $1.7 million from sales of wafers, compared to $0.8
million in the fourth quarter of 2012 and $6.3 million in the first quarter of
2012. The increase from the fourth quarter of 2012 was primarily due to higher
sales volume. The decrease from the first quarter of 2012 was primarily due to
lower sales volume combined with lower average selling price.

The Company also generated $1.5 million from other businesses, such as sales
of multi-crystal silicon blocks and etc.

Cost of Revenues

Cost of revenues in the first quarter of 2013 was $27.4 million, compared to
$17.2 million in the fourth quarter of 2012.

The cost related to idle Wanzhou polysilicon facilities was included in the
cost of revenues as $10.4 millionand $9.7 million in the fourth quarter of
2012 and first quarter of 2013, respectively.

The depreciation of Xinjiang facilities of $5.9 million was also recorded in
the cost of revenues in the first quarter of 2013, while Xinjiang facilities
were not depreciated during the pilot production in the fourth quarter of
2012.

Gross loss and margin

Gross loss was $12.9 million, compared to $11.1 million in the fourth quarter
of 2012 and $9.9 million in the first quarter of 2012.

Gross margin was negative 89.0%, compared to negative 178.5% in the fourth
quarter of 2012 and negative 30.9% in the first quarter of 2012.

Gross margin improved from the fourth quarter of 2012 as a result of increased
revenues generated from Xinjiang polysilicon sales and lower polysilicon
production cost.

The decrease in gross margin compared to the first quarter of 2012 was
primarily due to lower average selling price for polysilicon.

Selling, general and administrative expenses

Selling, general, and administrative expenses were $4.1 million in the first
quarter of 2013, compared to $1.8 million in the fourth quarter of 2012 and
$2.4 million in the first quarter of 2012.

The increase in selling, general and administrative expenses from the fourth
quarter of 2012 was primarily due to a $1.2 million increase in bad debt
provision combined with a $0.4 million increase in shipping expense related to
larger shipment in the first quarter of 2013.

Research and development expenses

Research and development expenses were $0.4 million in the first quarter of
2013, compared to $2.8 million in the fourth quarter of 2012 and $0.6 million
in the first quarter of 2012. In the fourth quarter of 2012, the Company
incurred additional research and development expenses for our Xinjiang Phase
II polysilicon facilities, which didn't recur in the first quarter of 2013.

Other operating income

Other operating income was $0.8 million in the first quarter of 2013, compared
to $2.5 million in the fourth quarter of 2012 and $2.1 million in the first
quarter of 2012. Other operating income was mainly composed of unrestricted
cash incentives that the Company received from local government authorities,
which fluctuates from period to period.

Operating loss and margin

As a result of the foregoing, operating loss was $16.6 million in the first
quarter of 2013, compared to $55.9 million in the fourth quarter of 2012 and
$10.8 million in the first quarter of 2012.

Operating margin was negative 114.7%, compared to negative 902.5% in the
fourth quarter of 2012 and negative 33.8% in the first quarter of 2012.

The operating loss in the fourth quarter of 2012 was significantly impacted by
the $42.8 million in long lived asset impairment charges recorded in that
period. The operating loss increase in the first quarter of 2013 compared to
the fourth quarter of 2012 was primarily due to $1.2 million increase in bad
debt provision combined with $1.8 million increase in gross loss which already
included depreciation of Xinjiang facilities in the first quarter of 2013.

Net Interest expense

Net interest expense was $5.3 million in the first quarter of 2013, compared
to $3.4 million in the fourth quarter of 2012 and $3.6 million in the first
quarter of 2012. In the first quarter of 2013, the interest expense related to
Xinjiang facilities was no longer being capitalized after such facilities
commenced commercial production. Therefore, the interest expense in relation
to the Xinjiang facilities increased $2 million in the first quarter of 2013.
In the first quarter of 2013, the interest expense related to Wanzhou
facilities decreased by $0.3 million due to a decrease in average outstanding
loan balance.

Income tax expense / benefit

Income tax expense was $nil for the first quarter of 2013, compared to income
tax expense of $19.9 million in the fourth quarter of 2012 and income tax
benefit of $1.6 million in the first quarter of 2012.

Net loss attributable to our shareholders and earnings per share

As a result of the aforementioned, net loss attributable to Daqo New Energy
Corp. shareholders was $18.7 million in the first quarter of 2013, compared to
$75.6 million in the fourth quarter of 2012 and $13.7 million in the first
quarter of 2012.

Earnings per fully diluted ADS were negative $2.70 in the first quarter of
2013, compared to negative $10.90 in the fourth quarter of 2012, and negative
$1.95 in the first quarter of 2012.

Financial Condition

As of March 31, 2013, the Company had $11.7 million in cash and cash
equivalents and restricted cash, compared to $17.3 million as of December 31,
2012.

As of March 31, 2013, the accounts receivable balance was $19.3 million,
compared to $27.8 million as of December 31, 2012. As of March 31, 2013, the
notes receivable balance was $13.9 million, compared to $4.6 million as of
December 31, 2012.

As of March 31, 2013, total borrowings were $301.5 million, of which $178.7
million were long-term borrowings, compared to total borrowings of $307.8
million, including $187.5 million long-term borrowings as of December 31,
2012.

Outlook for Second Quarter 2013

For the second quarter of 2013, the Company expects to ship 920 MT of
polysilicon. The Company also expects to ship approximately 6.5 million pieces
of wafer and 25 MT of multi-crystal silicon ingots and blocks. This outlook
reflects our current and preliminary view and may be subject to change. Our
ability to achieve this projection is subject to risks and uncertainties. See
"Safe Harbor Statement" at the end of this press release.

Conference Call

The Company has scheduled a conference call to discuss the results at 8:00 AM
Eastern Time on June 7, 2013.

The dial-in details for the live conference call are as follows:

United States: + 1-800-860-2442
International: + 1-412-858-4600
China(N):      10-800-712-2304
China(S):      10-800-120-2304

Hong Kong:     800-962475

The conference ID number is 10029645

You can also listen to the conference call via Webcast through the URL:

http://www.visualwebcaster.com/event.asp?id=94371

A replay of the call will be available 1 hour after the end of the conference
through June 17, 2013 at 9:00am ET.

The conference call replay numbers are as follows:

United States: + 1-877-344-7529
International: + 1-412-317-0088

The conference ID number for accessing the recording is 10029645.

Investors will also have the opportunity to listen to the replay over the
Internet through the investor relations section of Daqo New Energy's web site
at: www.dqsolar.com

About Daqo New Energy Corp.

Daqo New Energy Corp. (NYSE: DQ) is a leading polysilicon manufacturer based
in China. Daqo New Energy primarily manufactures and sells high-quality
polysilicon to photovoltaic product manufacturers. It also manufactures and
sells photovoltaic wafers. For more information about Daqo New Energy, please
visit www.dqsolar.com.

Safe Harbor Statement

This announcement 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," "anticipates," "future,"
"intends," "plans," "believes," "estimates" and similar statements. Among
other things, the outlook for the second quarter of 2013 and quotations from
management in this announcement, as well as Daqo New Energy's strategic and
operational plans, contain forward-looking statements. The Company may also
make written or oral forward-looking statements in its reports filed or
furnished to the U.S. Securities and Exchange Commission, in its annual
reports to shareholders, in press releases and other written materials and in
oral statements made by its officers, directors or employees to third parties.
Statements that are not historical facts, including statements about the
Company's beliefs and expectations, are forward-looking statements.
Forward-looking 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, including but not limited to the
following: the demand for photovoltaic products and the development of
photovoltaic technologies; global supply and demand for polysilicon;
alternative technologies in cell manufacturing; our ability to significantly
expand our polysilicon production capacity and output; the reduction in or
elimination of government subsidies and economic incentives for solar energy
applications; and our ability to successfully implement our vertical
integration strategy. Further information regarding these and other risks is
included in the reports or documents we have filed with, or furnished to, the
Securities and Exchange Commission. Daqo New Energy does not undertake any
obligation to update any forward-looking statement, except as required under
applicable law. All information provided in this press release and in the
attachments is as of the date of this press release, and Daqo New Energy
undertakes no duty to update such information, except as required under
applicable law.



Daqo New Energy Corp.
Unaudited Preliminary Condensed Consolidated Statement of Operations and
Comprehensive Income
(US dollars in thousands, except ADS and per ADS data)
                                Three months Ended
                                  Mar 31, 2013    Dec 31, 2012   Mar 31, 2012
Revenues                          $14,485         $6,193         $31,965
Cost of revenues                  (27,376)        (17,245)       (41,846)
Gross (loss)/profit               (12,891)        (11,052)       (9,881)
Operating expenses
Selling, general and                                           
 administrative expenses
                                  (4,126)         (1,806)        (2,427)
Research and                                                   
 development expenses
                                  (436)           (2,793)        (611)
Other operating income            832             2,516          2,105
Impairment of long-lived          -               (42,754)       -
assets
Total operating expenses          (3,730)         (44,837)       (933)
(Loss) / income from              (16,621)        (55,889)       (10,814)
operations
Interest expense                  (5,278)         (3,573)        (3,965)
Interest income                   25              197            327
Foreign exchange gain             1               (55)           (39)
(loss)
(Loss) / Income before            (21,873)        (59,320)       (14,491)
income taxes
Income tax                        -               (19,917)     * 1,567
benefit/(expense)
Net (loss) / income from          (21,873)        (79,237)       (12,924)
continuing operations
Loss from discontinued           -               -              (1,385)
operations
Net (loss) income                 (21,873)        (79,237)       (14,309)
Net (loss) / income                                           
attributable to
 noncontrolling interest         (3,209)         (3,645)        (584)
Net (loss) / income                              
 attributable to Daqo New                                       $(13,725)
 Energy Corp. shareholders       $(18,664)       $(75,592)
Net (loss) income                 (21,873)        (79,237)       (14,309)
Other comprehensive
income:
Foreign currency translation                                   
 adjustments
                                  1,198           2,696          657
Total other comprehensive         1,198           2,696          657
income
Comprehensive                     (20,675)        (76,541)       (13,652)
(loss) / income
Comprehensive                                    
(loss) / income attributable                                     (372)
to noncontrolling interest        (2,691)         (2,458)
Comprehensive                                                  
(loss) / income attributable
to Daqo New Energy Corp.                                       
shareholders
                                  $(17,984)       $(74,083)      $(13,280)
(Loss)/Earnings per ADS
--Continuing operations          (2.70)          (10.90)        (1.75)
--Discontinued operations        -               -              (0.20)
Basic                            (2.70)          (10.90)        (1.95)
--Continuing operations          (2.70)          (10.90)        (1.75)
--Discontinued operations        -               -              (0.20)
Diluted                          (2.70)          (10.90)        (1.95)
Weighted average ADS
outstanding
Basic                             6,915,097       6,936,852      7,028,564
Diluted                           6,915,097       6,936,852      7,028,564



Daqo New Energy Corp.
Unaudited Consolidated Balance Sheet
(US dollars in thousands)
                                    Mar 31, 2013   Dec 31, 2012   Mar 31, 2012
ASSETS:
Current Assets:
Cash and cash equivalents           5,539          6,679          99,309
Restricted cash                     6,147          10,650         15,278
Accounts receivable, net            19,305         27,823         31,889
Note Receivable                     13,907         4,631          7,642
Prepaid expenses and other          24,265         23,934         15,519
current assets
Advances to suppliers               1,820          738            1,747
Inventories                         19,305         15,136         19,258
Amount due from related party       6,944          6,562          9,812
Deferred tax assets-current         360            358            5,796
Total current assets                97,592         96,511         206,250
Property, plant and equipment,      673,499        677,895        651,958
net
Prepaid land use right              36,105         36,158         35,827
Deferred tax assets                 1,061          1,057          18,058
Other non-current assets            4,633          4,687          7,065
TOTAL ASSETS                        812,890        816,308        919,158
Current liabilities:
Short-term borrowings, including                                 
current portion of                                 120,280
 long-term borrowings            122,834                       104,829
Accounts payable                    13,544         12,346         12,800
Note payable                        10,671         21,334         8,466
Advances from customers             29,439         29,396         26,780
Payables for purchases of           48,737         45,469         39,847
property, plant and equipment
Accrued expenses and other          6,560          7,618          8,474
current liabilities
Amount due to related party         54,160         23,708         12,813
Income tax payable                161            160            15,857
Total current liabilities           286,106        260,311        229,866
Long-term borrowings                178,652        187,521        211,961
Accrued warranty cost               -              -              467
Advance from customers – long       -              -              7,302
term portion
Payables for Purchases of           1,131          1,126          4,164
Property, Plant and Equipment
Other long Term Liabilities         26,453         26,472         26,108
TOTAL LIABILITIES                   492,342        475,430        479,868


EQUITY:
Ordinary shares                     17             17             18
Treasury stock                      (495)          (495)          -
Additional paid-in capital          145,101        144,756        143,426
Retained earnings                   19,612         38,276         136,480
Accumulated other comprehensive     20,232         19,552         18,890
income
Total Daqo New Energy Corp.'s       184,467        202,106        298,814
shareholders' equity
Noncontrolling interest             136,081        138,772        140,476
Total equity                        320,548        340,878        439,290
TOTAL LIABILITIES & EQUITY          812,890        816,308        919,158

For further information, please contact:

Daqo New Energy Corp.
Kevin He, Investor Relations
Phone: +86-23-6486-6556
Email: Kevin.he@daqo.com

SOURCE Daqo New Energy Corp.

Website: http://www.visualwebcaster.com/event.asp?id=94371
Website: http://www.dqsolar.com