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Daqo New Energy Announces Unaudited First Quarter 2022 Results

Apr 21, 2022

Shanghai,China—April 21, 2022—Daqo New Energy Corp. (NYSE: DQ) ("Daqo NewEnergy", the "Company" or “we”), a leading manufacturer ofhigh-purity polysilicon for the global solar PV industry, today announced itsunaudited financial results for the first quarter of 2022.

First Quarter 2022 Financial andOperating Highlights

· Polysilicon production volume was 31,383 MTin Q1 2022, compared to 23,616 MT in Q4 2021

· Polysilicon sales volume was 38,839 MT in Q12022, compared to 11,642 MT in Q4 2021

· Polysilicon average total production cost⁽¹⁾was $10.09/kg in Q1 2022, compared to $14.11/kg in Q4 2021

· Polysilicon average cash cost⁽¹⁾was $9.19/kg in Q1 2022, compared to $13.32/kg in Q4 2021

· Polysilicon average selling price (ASP) was $32.76/kgin Q1 2022, compared to $33.91/kg in Q4 2021

· Revenue was $1,280.3million in Q1 2022, compared to $395.5 million in Q4 2021

· Gross profit was $813.6million in Q1 2022, compared to $239.8 million in Q4 2021. Gross margin was 63.5%in Q1 2022, compared to 60.6% in Q4 2021

· Netincome attributable to Daqo New Energy Corp. shareholders was $535.8 million in Q1 2022, compared to $141.3 million inQ4 2021

· Earnings per basic American Depositary Share(ADS)⁽³⁾ was $7.17 in Q1 2022, compared to $1.90 in Q42021

· EBITDA (non-GAAP)⁽²⁾ was $826.8 million in Q1 2022, compared to $251.1 million inQ4 2021. EBITDA margin (non-GAAP)⁽²⁾ was 64.6%in Q1 2022, compared to 63.5% in Q4 2021

	Three months ended
US$ millions except as indicated otherwise	Mar 31, 2022	Dec 31, 2021	Mar 31, 2021
Revenues	1,280.3	395.5	256.1
Gross profit	813.6	239.8	118.9
Gross margin	63.5%	60.6%	46.4%
Income from operations	796.9	228.1	109.2
Net income attributable to Daqo New Energy Corp. shareholders	535.8	141.3	83.2
Earnings per basic ADS⁽³⁾ ($ per ADS)	7.17	1.90	1.13
EBITDA (non-GAAP)⁽²⁾	826.8	251.1	128.1
EBITDA margin (non-GAAP)⁽²⁾	64.6%	63.5%	50.0%
Polysilicon sales volume (MT)	38,839	11,642	21,471
Polysilicon average total production cost ($/kg)⁽¹⁾	10.09	14.11	6.29
Polysilicon average cash cost (excl. dep’n) ($/kg)⁽¹⁾	9.19	13.32	5.37

Notes:

(1) Productioncost and cash cost only refer to production in our polysilicon facilities.Production cost is calculated by the inventoriable costs relating to productionof polysilicon divided by the production volume in the period indicated. Cashcost is calculated by the inventoriable costs relating to production ofpolysilicon excluding depreciation expense, divided by the production volume inthe period indicated.

(2) Daqo NewEnergy provides EBITDA and EBITDA margins on a non-GAAP basis to providesupplemental information regarding its financial performance. For moreinformation on these non-GAAP financial measures, please see the sectioncaptioned "Use of Non-GAAP Financial Measures" and the tablescaptioned "Reconciliation of non-GAAP financial measures to comparable USGAAP measures" set forth at the end of this press release.

(3) ADSmeans American Depositary Share. One (1) ADS representing five (5) ordinaryshares.

Management Remarks

Mr. LonggenZhang, CEO of Daqo New Energy, commented, “We are very pleased to report exceptionalresults for the first quarter of 2022, the best-ever in the company’s history.I would like to thank our entire team for their hard work and dedication indelivering such excellent operational and financial performance. For thequarter, we achieved polysilicon sales volume of 38,839 MT, more than 3 timesour sales volume for the fourth quarter of 2021. We recorded $1.3 billion inrevenue, also more than 3 times of the revenue for the fourth quarter of 2021, andwe recorded operating income of $797 million, net income attributable to DaqoNew Energy shareholders of $536 million, earning per share (“EPS”) of $7.17 pershare and EBITDA of $827 million, all representing substantial sequential andyear-over-year growth. At the end of the quarter, our combined cash, short terminvestments, and bank note receivable balance reached $2.6 billion, an increaseof $1.2 billion compared to the end of 2021. This strong financial performance reflectsnot only the strength of the end market but also the trust that our customersplace in the quality and reliability of our high-purity mono-grade polysiliconproducts.”

“Last December, we began production atour new 35,000MT phase 4B polysilicon expansion project. Production ramp up wassuccessful throughout the first quarter. During the first quarter we produced31,383 MT of polysilicon, a 33% increase compared to the fourth quarter of2021, of which 97.2% was mono-grade. In the first quarter,our production cost was $10.09/kg,a significant decrease from $14.11/kg in the fourth quarter of 2021, primarilydue to the decrease in the cost of silicon powder, as well as manufacturingefficiency improvements and better economies of scale.”

“We continue to see very strong demand for solar PV productsboth in China and overseas. In the first two months of 2022, new installationsof solar PV in China were approximately 10.9 GW. According to the ChinaPhotovoltaic Industry Association, new PV installations in China are expectedto increase from 53 GW in 2021 to 75-90 GW in 2022. In the first two months of2022, based on China’s custom’s data, China’s solar PV module export volume wasapproximately 26 GW, doubled from the same period in 2021. As a result of thestronger-than-expected market demand, product pricing across the entire solarPV value chain increased consistently during the first quarter. Based onstatistics from the China Silicon Industry Association, the average market ASPs(VAT included) of small chunk mono-grade polysilicon increased from RMB 231.8/kgin the first week of January to RMB 253.3/kg in the third week of April,reflecting healthy demand from our customers and continued tight supplies. Wealso see healthy gross margin in the downstream wafer sector which indicatesthat the solar value chain is able to pass down the impact of strongpolysilicon prices to the end market.”

“Global trendscontinue to favor the solar industry, which particularly benefits the polysiliconsector. We are beginning to witness significant policy shifts to accelerateclean energy adoption and de-carbonization around the world. During the monthof March 2022, the European Union announced its RePowerEU initiative, whichcalls for an acceleration of clean energy transition under the European GreenDeal. Germany, in particular, has announced an ambitious program tosignificantly accelerate its clean energy transition, with plans to deploy 22GWof solar installations per year starting 2026, a four-fold increase from 2021installations of 5.3GW. As solar energy has already achieved grid-paritybroadly in many regions globally, the recent spike in high and volatile energyprices will further drive solar energy adoption with attractive economicreturns. All these factors will lead to additional demand for solar productswhich cannot be met by the current market supply. We believe the polysiliconsector will remain one of the most profitable sectors in the solar PV valuechain, as polysilicon will continue to be in short supply and determine theactual pace and total volume of global installations. We will continue tofocus on the efficient operation of our core business, increase our capacitybased on market needs, continue to enhance our competitiveness in quality andreliability, and further optimize our cost structure to provide consistent returnsto our shareholders.”

Outlookand guidance

The Company expects to produceapproximately 32,000MT to 34,000MT of polysilicon in the second quarter of 2022and approximately 120,000MT to 125,000MT of polysilicon in the full year of 2022,inclusive of the impact of the Company’s annual facility maintenance.

Thisoutlook reflects Daqo New Energy’s current and preliminary view as of the dateof this press release and may be subject to changes. The Company’s ability toachieve these projections is subject to risks and uncertainties. See “SafeHarbor Statement” at the end of this press release.

FirstQuarter 2022 Results

Revenues

Revenues were $1,280.3 million,compared to $395.5 million in the fourth quarter of 2021 and $256.1 million inthe first quarter of 2021. The increase in revenues as compared to the fourthquarter of 2021 was primarily due to significantly higher polysilicon salesvolume partially offset by slightly lower ASPs.

Grossprofit and margin

Gross profit was $813.6 million,compared to $239.8 million in the fourth quarter of 2021 and $118.9 million inthe first quarter of 2021. Gross margin was 63.5%, compared to 60.6% in the fourthquarter of 2021 and 46.4% in the first quarter of 2021. The increase in gross profitas compared to the fourth quarter of 2021 was primarily due to higher salesvolume. The increase in gross margin as compared to the fourth quarter of 2021was primarily due to lower production cost partially offset by lower ASPs.

Selling,general and administrative expenses

Selling,general and administrative expenses were $15.5 million, compared to $10.2million in the fourth quarter of 2021 and $9.0 million in the first quarter of 2021.The increase in SG&A expenses as compared to the fourth quarter of 2021 wasprimarily due to an increase in shipment expenses as a result of increasedsales volume. SG&A expenses during the first quarter included $2.0 million innon-cash share-based compensation costs related to the Company’s shareincentive plan.

Researchand development expenses

Research and development (R&D) expenseswere $2.1 million, compared to $1.3 million in the fourth quarter of 2021 and$1.2 million in the first quarter of 2021. Research and development expenses canvary from period to period and reflect R&D activities that take placeduring the quarter.

Incomefrom operations and operating margin

As a result of the foregoing, incomefrom operations was $796.9 million, compared to $228.1 million in the fourthquarter of 2021 and $109.2 million in the first quarter of 2021.

Operating margin was 62.2%, compared to57.7% in the fourth quarter of 2021 and 42.6% in the first quarter of 2021.

EBITDA(non-GAAP)

EBITDA (non-GAAP) was $826.8 million,compared to $251.1 million in the fourth quarter of 2021 and $128.1 million inthe first quarter of 2021. EBITDA margin (non-GAAP) was 64.6%, compared to 63.5%in the fourth quarter of 2021 and 50.0% in the first quarter of 2021.

Netincome attributable to Daqo New Energy Corp. shareholders and earnings per ADS

As a result of the aforementioned, netincome attributable to Daqo New Energy Corp. shareholders was $535.8 million,compared to $141.3 million in the fourth quarter of 2021 and $83.2 million in thefirst quarter of 2021.

Earnings per basic American DepositoryShare (ADS) was $7.17, compared to $1.90 in the fourth quarter of 2021, and $1.13in the first quarter of 2021.

FinancialCondition

Asof March 31, 2022, the Company had $1,127.7 million in cash, cash equivalentsand restricted cash, compared to $724.0 million as of December 31, 2021 and $227.8million as of March 31, 2021. As of March 31, 2022, the notes receivablebalance was $1,499.4 million, compared to $365.9 million as of December 31,2021 and $38.5 million as of March 31, 2021. The increase in notes receivablescompared to December 31, 2021 was primarily due to higher revenues and advancepayments from customers. As of March 31, 2022, total borrowings were nil,compared to nil as of December 31, 2021 and total borrowings of $222.2 million,including $100.4 million long-term borrowings, as of March 31, 2021.

Cash Flows

For the three months ended March 31, 2022,net cash provided by operating activities was $231.3 million, compared to $159.2million in the same period of 2021. The increase was primarily due to higherrevenues and gross margin.

Forthe three months ended March 31, 2022, net cash provided by investingactivities was $170.4 million, compared to net cash used in investingactivities of $79.9 million in the same period of 2021. The net cash used ininvesting activities in Q1 2021 was primarily related to the capitalexpenditures on the Company’s Phase 4B and 4A polysilicon projects. The netcash provided by investing activities in Q1 2022 was primarily due to the redemptionof short-term investments offset by the capital expenditures on the Company’sPhase 4B project and Inner Mongolia polysilicon project.

Forthe three months ended March 31, 2022, net cash provided by financingactivities was nil, compared to net cash used in financing activities of $31.7million in the same period of 2021.

Use of Non-GAAP Financial Measures

To supplement Daqo New Energy’sconsolidated financial results presented in accordance with United StatesGenerally Accepted Accounting Principles (“US GAAP”), the Company uses certainnon-GAAP financial measures that are adjusted for certain items from the mostdirectly comparable GAAP measures including earnings before interest, taxes,depreciation and amortization ("EBITDA") and EBITDA margin (which representsthe proportion of EBITDA in revenues). Our management believes that each ofthese non-GAAP measures is useful to investors, enabling them to better assesschanges in key element of the Company's results of operations across differentreporting periods on a consistent basis, independent of certain items asdescribed below. Thus, our management believes that, used in conjunction withUS GAAP financial measures, these non-GAAP financial measures provide investorswith meaningful supplemental information to assess the Company's operatingresults in a manner that is focused on its ongoing, core operating performance. Ourmanagement uses these non-GAAP measures internally to assessthe business, its financial performance, current and historical results, aswell as for strategic decision-making and forecasting future results. Given ourmanagement's use of these non-GAAP measures, the Company believes these measuresare important to investors in understanding the Company's operating results asseen through the eyes of our management. These non-GAAP measures are notprepared in accordance with US GAAP or intended to be considered in isolationor as a substitute for the financial information prepared and presented inaccordance with US GAAP; the non-GAAP measures should be reviewed together withthe US GAAP measures, and may be different from non-GAAP measures used by othercompanies.

Areconciliation of non-GAAP financial measures to comparable US GAAP measures ispresented later in this document.

Conference Call

The Company has scheduled a conference call to discussthe results at 8:00 AM Eastern Time on April 21, 2022. (8:00 PM Beijing / Hong Kong time on the sameday).

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

Participant dial in (toll free):	+1-888-346-8982
Participant international dial in:	+1-412-902-4272
China mainland toll free:	4001-201203
Hong Kong toll free:	800-905945
Hong Kong-local toll:	+852-301-84992
Participants please dial in 10 minutes before the call is scheduled to begin and ask to be joined into the Daqo New Energy Corp. call.

You can also listen to the conferencecall via Webcast through the URL:

https://services.choruscall.com/mediaframe/webcast.html?webcastid=81uk8uIG

A replay of the call will be available 1 hour after theend of the conference through April 28, 2022.

Theconference call replay numbers are as follows:

US Toll Free:	+1-877-344-7529
International Toll:	+1-412-317-0088
Canada Toll Free:	855-669-9568
Replay access code:	6420441

To access thereplay using an international dial-in number, please select the link below.

https://services.choruscall.com/ccforms/replay.html
Participants will be required to state their name and company upon entering thecall.

About Daqo New Energy Corp.

Daqo New Energy Corp.(NYSE: DQ) (“Daqo” or the “Company”) is a leading manufacturer of high-puritypolysilicon for the global solar PV industry. Founded in 2007, the Companymanufactures and sells high-purity polysilicon to photovoltaic productmanufactures, who further process the polysilicon into ingots, wafers, cellsand modules for solar power solutions. The Company has a total polysiliconnameplate capacity of 105,000 metric tons and is one of the world's lowest costproducers of high-purity polysilicon.

Safe Harbor Statement

This announcement containsforward-looking statements. These statements are made under the “safe harbor”provisions of the U.S. Private Securities Litigation Reform Act of 1995. Theseforward-looking statements can be identified by terminology such as “will,”“expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates”,“might” and “guidance” and similar statements. Among other things, the outlookfor the second quarter and the full year of 2022 and quotations from managementin these announcements well as Daqo New Energy’s strategic and operationalplans, contain forward-looking statements. The Company may also make written ororal forward-looking statements in its reports filed or furnished to the U.S.Securities and Exchange Commission, in its annual reports to shareholders, inpress releases and other written materials and in oral statements made by itsofficers, directors or employees to third parties. Statements that are nothistorical facts, including statements about the Company’s beliefs andexpectations, are forward-looking statements. Forward-looking statementsinvolve inherent risks and uncertainties, all of which are difficult orimpossible to predict accurately and many of which are beyond the Company’scontrol. A number of factors could cause actual results to differ materiallyfrom those contained in any forward-looking statement, including but notlimited to the following: the demand for photovoltaic products and thedevelopment of photovoltaic technologies; global supply and demand forpolysilicon; alternative technologies in cell manufacturing; the Company’sability to significantly expand its polysilicon production capacity and output;the reduction in or elimination of government subsidies and economic incentivesfor solar energy applications; the Company’s ability to lower its productioncosts; changes in political and regulatory environment; and theduration of COVID-19 outbreaks in China and many other countries and the impactof the outbreaks and the quarantines and travel restrictions instituted byrelevant governments on economic and market conditions, including potentiallyweaker global demand for solar PV installations that could adversely affect theCompany’s business and financial performance.Further information regarding these and other risks is included in the reportsor documents the Company has filed with, or furnished to, the U.S. Securitiesand Exchange Commission. All information provided in this press release is asof the date hereof, and the Company undertakes no duty to update suchinformation or any forward-looking statement, except as required underapplicable law.

Daqo New Energy Corp.

Unaudited Condensed Consolidated Statement of Operations

(USdollars in thousands, except ADS and per ADS data)

	Three months Ended
		Mar 31, 2022	Dec 31, 2021	Mar 31, 2021

Revenues		$1,280,323	$395,547	$256,095
Cost of revenues		(466,767)	(155,719)	(137,151)
Gross profit		813,556	239,828	118,944
Operating expenses
Selling, general and administrative expenses		(15,483)	(10,249)	(9,033)
Research and development expenses		(2,079)	(1,269)	(1,197)
Other operating income / (expenses)		938	(217)	479
Total operating expenses		(16,624)	(11,735)	(9,751)
Income from operations		796,932	228,093	109,193
Interest expense, net		(1,468)	(2,002)	(7,543)
Investment income		1,495	3,317	-
Income before income taxes		796,959	229,408	101,650
Income tax expense		(129,908)	(50,394)	(14,487)
Net income		667,051	179,014	87,163
Net income attributable to non-controlling interest		131,208	37,738	3,944
Net income attributable to Daqo New Energy Corp. shareholders		$535,843	$141,276	$83,219

Earnings per ADS
Basic		7.17	1.90	1.13
Diluted		6.99	1.84	1.08

Weighted average ADS outstanding
Basic		74,710,994	74,377,874	73,338,969
Diluted		76,631,999	76,713,053	76,744,468

Daqo New Energy Corp.

UnauditedConsolidated Balance Sheets

(US dollars in thousands)

	Mar 31, 2022	Dec 31, 2021	Mar 31, 2021

ASSETS:
Current Assets:
Cash, cash equivalents and restricted cash	1,127,735	723,966	227,849
Short-term investments	10,411	280,251	7,631
Notes receivable	1,499,425	365,911	38,547
Inventories	100,313	327,771	34,064
Other current assets	14,412	45,081	15,343
Total current assets	2,752,296	1,742,980	323,434
Property, plant and equipment, net	1,619,217	1,559,110	1,081,352
Prepaid land use right	40,592	40,741	30,534
Other non-current assets	800	820	3,794
TOTAL ASSETS	4,412,905	3,343,651	1,439,114

Current liabilities:
Short-term borrowings, including current portion of long-term borrowings	-	-	121,822
Accounts payable and notes payable	56,422	81,469	78,622
Advances from customers-short term portion	465,973	202,958	64,640
Payables for purchases of property, plant and equipment	104,160	142,937	34,778
Other current liabilities	297,507	123,135	47,691
Total current liabilities	924,062	550,499	347,553
Long-term borrowings	-	-	100,422
Advance from customers – long term portion	99,409	90,661	77,494
Other non-current liabilities	49,262	38,661	28,406
TOTAL LIABILITIES	1,072,733	679,821	553,875
EQUITY:
Total Daqo New Energy Corp.’s shareholders’ equity	2,705,856	2,161,959	849,659
Non-controlling interest	634,316	501,871	35,580
Total equity	3,340,172	2,663,830	885,239
TOTAL LIABILITIES & EQUITY	4,412,905	3,343,651	1,439,114

Daqo New Energy Corp.

UnauditedConsolidated Statements of Cash Flows

(US dollars in thousands)

	For the three months ended March 31,
		2022	2021
Operating Activities:
Net income		$667,051	$87,163
Adjustments to reconcile net income to net cash provided by operating activities		31,837	22,035
Changes in operating assets and liabilities		(467,544)	49,980
Net cash provided by operating activities		231,344	159,178

Investing activities:
Purchases of property, plant and equipment		(101,263)	(72,179)
Purchase of short-term investments		(858)	(7,712)
Redemption of short-term investments		272,501	-
Net cash provided by / (used in) investing activities		170,380	(79,891)

Financing activities:
Net cash provided by financing activities		-	31,740
Non-cash transactions
Effect of exchange rate changes		2,045	(1,582)
Net increase in cash, cash equivalents and restricted cash		403,769	109,445
Cash, cash equivalents and restricted cash at the beginning of the period		723,966	118,404
Cash, cash equivalents and restricted cash at the end of the period		1,127,735	227,849

Daqo New Energy Corp.

Reconciliation of non-GAAP financial measures to comparableUS GAAP measures

(US dollars in thousands)

	Three months Ended
		Mar. 31, 2022	Dec. 31, 2021	Mar. 31, 2021
Net income		667,051	179,014	87,163
Income tax expense		129,908	50,394	14,487
Interest expense, net		1,468	2,002	7,543
Depreciation & amortization		28,359	19,739	18,914
EBITDA (non-GAAP)		826,786	251,149	128,107
EBIDTA margin (non-GAAP)		64.6%	63.5%	50.0%

Formore information, please visit www.dqsolar.com

Daqo New Energy Corp.

Investor Relations

Email: dqir@daqo.com

Christensen

In China

Mr. Rene Vanguestaine

Phone:+86 178 1749 0483

rvanguestaine@christensenir.com

Inthe U.S.

Ms.Linda Bergkamp

Phone: +1-480-614-3004
Email: lbergkamp@Christensenir.com