Daqo New Energy outlines $100M share repurchase and forecasts 110,000–130,000 MT 2025 production amid regulatory shifts

Earnings Call Insights: Daqo New Energy Corp. (DQ) Q2 2025

MANAGEMENT VIEW

* CEO Xiang Xu, through remarks translated by Deputy CEO Anita Zhu, addressed the persistent challenges in the solar PV industry, citing continued price declines across the value chain, overcapacity, and high inventory levels. The company operated at a reduced utilization rate of 34% in Q2, resulting in operating and net losses, but emphasized, "we maintain a strong and healthy balance sheet with no financial debt. As of June 30, 2025, the company had a cash balance of $599 million, short-term investments of $419 million, bank notes receivables of $49 million and total fixed term bank deposit balance of $994 million."
* Xu noted, "our solid financial position brings us confidence and strategic resilience to navigate the current market downturn and remain well positioned for long-term opportunities."
* The company proactively scaled back new sales orders towards the end of the quarter to anticipate future price recovery, leading to a decrease in sales volume to 18,126 metric tonnes from 28,008 metric tonnes in Q1.
* Daqo New Energy announced a $100 million share repurchase program through the end of next year, with Xu stating, "we are optimistic about the future of the industry and we believe we could see a turning point soon."
* CFO Ming Yang reported, "Revenues were $75.2 million compared to $123.9 million in the first quarter of 2025 and $219.9 million in the same quarter of 2024."

OUTLOOK

* The company expects total polysilicon production volume in Q3 2025 to be approximately 27,000 to 30,000 metric tonnes and for full year 2025 between 110,000 and 130,000 metric tonnes.
* Management reiterated confidence in the long-term prospects of the solar PV industry and highlighted the importance of anti-involution policies and government regulation to curb irrational competition and promote sustainable growth.
* The company signaled that future sales strategy and utilization rates will be closely tied to how new government regulations and industry consolidation initiatives are implemented in the coming months.

FINANCIAL RESULTS

* Gross loss stood at $81.4 million, nearly unchanged from Q1, while gross margin declined further to negative 108% from negative 65.8% in Q1.
* Operating loss was reported at $115 million with an operating margin of negative 153%.
* Net loss attributable to shareholders was $76.5 million, with loss per basic ADS at $1.14.
* Adjusted net loss, excluding noncash share-based costs, was $57.9 million. Adjusted loss per basic ADS was $0.86.
* EBITDA was negative $48 million. Cash, cash equivalents, and restricted cash declined to $599 million from $792 million in Q1.
* SG&A expenses fell to $32.1 million, with noncash share-based compensation remaining flat at $18.6 million.
* Cash cost per kilogram of polysilicon improved 4% sequentially to $5.12/kg, with total production cost down to $7.26/kg.

Q&A

* W. L. Hon, JPMorgan: Asked about policy developments and polysilicon price trends. Anita Zhu responded that recent government meetings focused on "curb[ing] the irrational composition of selling below cost" and standardizing quality, adding, "it will really depend on how this buyout SPV will roll out because we're still under the progress of working out the details."
* Matthew Ingraham, ROTH: Queried price sustainability and industry volume. Zhu stated, "there has been consensus that selling below cash cost is unsustainable and very detrimental to the overall industry development," and that production levels would remain around 100,000 to 110,000 metric tonnes per month.
* Siu Lun Lau, Jefferies: Asked about the $100 million buyback and shareholding strategy. Xu explained, "we want to strengthen the confidence of our shareholders as well," noting the buyback is the first move to boost market confidence. When asked about potential A-share reductions to fund U.S. buybacks, Zhu confirmed, "selling our A share to repurchase on the U.S. is definitely back on the table."
* Mengwen Wang, Goldman Sachs: Requested clarity on price regulation and cost benchmarks. Yang stated, "the industry overall, I would say the average production cost probably in the mid-40-ish range" (RMB). Wang also asked about inventory management if prices stay high; Zhu replied, "the direction is to manage the utilization rates of the company so that will not be over demand going forward."
* Gordon Lee Johnson, GLJ Research: Questioned sales volume intent and pricing. Zhu confirmed sales were held back due to unprofitable prices, and future strategy depends on policy clarity. Yang said, "we will sell at below -- above our production cost for sure" and aim to reduce inventory, clarifying price calculations include a 13% VAT.

SENTIMENT ANALYSIS

* Analysts frequently expressed skepticism about sustainability of pricing, industry consolidation timelines, and the effectiveness of upcoming regulatory actions. The tone was neutral to slightly negative, pressing for details on policy execution and price outlook.
* Management maintained a confident and resilient tone during both prepared remarks and Q&A, emphasizing strategic discipline and financial strength. Defensive language appeared in policy-related answers, with phrases like, "it will really depend on how the regulations will come out" and "we are working towards a results or proposal coming out."
* Compared to the previous quarter, management's tone shifted from caution to more proactive optimism, underpinned by new policy actions and the share repurchase announcement, while analysts remained consistently cautious.

QUARTER-OVER-QUARTER COMPARISON

* Revenue, gross margin, and net loss all deteriorated sequentially as market conditions worsened, with gross margin moving deeper into negative territory.
* Daqo New Energy lowered its utilization rate slightly from 33% to 34% and cut sales volume sharply to preserve price discipline, diverging from Q1 when sales outpaced production to reduce inventory.
* Strategic focus shifted this quarter to more aggressive inventory management, participation in policy-driven industry consolidation, and capital return through the share repurchase.
* Analysts maintained focus on industry overcapacity, pricing, and government intervention in both quarters, but this quarter saw greater attention to policy timelines and the implications for near-term financials.
* Management's confidence appeared more pronounced, particularly around the impact of government initiatives and the buyback program, compared to the defensive posture of Q1.

RISKS AND CONCERNS

* Management highlighted persistent overcapacity, low selling prices below cash cost, and high industry inventory as ongoing risks.
* The company cited regulatory uncertainty, especially regarding details and timing of new anti-involution policies and consolidation initiatives, as key unknowns.
* Analyst questions reflected concerns about the sustainability of price increases, the pace and effectiveness of consolidation, and the risk of inventory build if market absorption lags policy intervention.
* Management’s mitigation approach centers on maintaining reduced utilization, dynamic sales strategies, hedging through futures markets, and leveraging financial strength.

FINAL TAKEAWAY

Daqo New Energy navigated a challenging second quarter by tightening operational discipline, scaling back sales to support industry price recovery, and announcing a $100 million share repurchase program to reinforce shareholder confidence. While financial results weakened further and industry uncertainties persist, management emphasized the company’s strong liquidity, proactive cost controls, and strategic alignment with emerging policy reforms as foundations for resilience and future growth. The full-year production outlook remains 110,000 to 130,000 metric tonnes, with near-term sales and utilization decisions contingent on regulatory developments and evolving market dynamics.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/dq/earnings/transcripts]

MORE ON DAQO NEW ENERGY

* Daqo New Energy Corp. (DQ) Q2 2025 Earnings Call Transcript [https://seekingalpha.com/article/4816942-daqo-new-energy-corp-dq-q2-2025-earnings-call-transcript]
* Daqo New Energy: Stock Is A Hold Despite Low Production Guidance In 2025 [https://seekingalpha.com/article/4791590-daqo-new-energy-stock-is-a-hold-despite-low-production-guidance-in-2025]
* DAQO New Energy Q2 2025 Earnings Preview [https://seekingalpha.com/news/4488843-daqo-new-energy-q2-2025-earnings-preview]
* China’s solar installations fall in June as new rules take hold [https://seekingalpha.com/news/4470354-chinas-solar-installations-fall-in-june-as-new-rules-take-hold]
* Seeking Alpha’s Quant Rating on DAQO New Energy [https://seekingalpha.com/symbol/DQ/ratings/quant-ratings]