Daqo New Energy Corp. Q1 FY2026 earnings call

Market conditions in the first quarter of 2026 for solar PV were cautious with seasonal weakness, high inventory, etc. The company maintained a robust balance sheet with $2 billion in assets convertible to cash. Operationally, pulse system segment had a capacity utilization rate of ~57%, production volume exceeded guidance. Adhered to self-regulation guidelines by not selling below cost. Anticipated second quarter production volume 35,000 - 40,000 metric tons and full year 140,000 - 170,000 metric tons. Government departments held symposium to strengthen industry governance, solar PV has long-term growth prospects, company to enhance competitiveness via tech and digital transformation.

In the first quarter of 2026, the solar PV industry market sentiment was cautious. For DACO New Energy's pulse system segment, total production volume in the quarter was 43,402 metric tons, exceeding the guidance range of 35,000 - 40,000 metric tons. Sales volume dropped to 4,482 metric tons, while average selling price increased 2.3% sequentially to $5.96 per kilogram. Revenue for the first quarter was $26.7 million. Gross loss was $139.4 million with a gross margin of negative 521%. Total production and cash costs increased marginally sequentially, but manufacturing costs in RMB terms declined slightly reflecting improved manufacturing efficiencies.

Expects second quarter 2026 total production volume to be approximately 35,000 to 40,000 metric tons. Full year 2026 production volume expected to remain in the range of 140,000 to 170,000 metric tons. Government authorities to strengthen anti-involution policies, and relevant departments held symposium on regulating solar PV sector to promote high-quality development.

Market sentiment caution, raw material price fluctuations, geopolitical impact on demand, industry overcapacity leading to policy and price pressure, high inventory sales pressure, and uncertainty in future policy implementation.

First question from Philip Shen on state administration for market regulation proposals and impact on competition dynamics, enforcement timing, ASP and utilization expectations. Anita responded. Second question from Alan Lau on first quarter sales and revenue, industry inventory, demand recovery, and utilization strategy. Anita and others responded. Third question from Mengwen Wang on utilization strategy, policy timing, and cash cost guidance. Relevant personnel responded.