PR Newswire | Mar 9, 2021 05:32AM EST

03/09 04:31 CST

Daqo New Energy Announces Unaudited Fourth Quarter and Fiscal Year 2020 Results SHANGHAI, March 9, 2021

SHANGHAI, March 9, 2021 /PRNewswire/ -- Daqo New Energy Corp. (NYSE: DQ) ("Daqo New Energy", the "Company" or "we"), a leading manufacturer of high-purity polysilicon for the global solar PV industry, today announced its unaudited financial results for the fourth quarter and fiscal year of 2020.

Fourth Quarter 2020 Financial and Operating Highlights

* Polysilicon production volume was 21,008 MT in Q4 2020, compared to 18,406 MT in Q3 2020 * Polysilicon sales volume was 23,186 MT in Q4 2020, compared to 13,643 MT in Q3 2020 * Polysilicon average total production cost(1) was $5.92/kg in Q4 2020, compared to $5.82/kg in Q3 2020 * Polysilicon average cash cost(1) was $5.04/kg in Q4 2020, compared to $4.88/kg in Q3 2020 * Polysilicon average selling price (ASP) was $10.79/kg in Q4 2020, compared to $9.13/kg in Q3 2020 * Revenue was $247.7 million in Q4 2020, compared to $125.5 million in Q3 2020 * Gross profit was $109.5 million in Q4 2020, compared to $45.3 million in Q3 2020. Gross margin was 44.2% in Q4 2020, compared to 36.0% in Q3 2020 * Net income attributable to Daqo New Energy Corp. shareholders was $72.8 million in Q4 2020, compared to $20.8 million in Q3 2020 * Earnings per basic American Depositary Share (ADS)(3) was $1.01 in Q4 2020, compared to $0.29 in Q3 2020 * EBITDA (non-GAAP)(2) was $115.1 million in Q4 2020, compared to $51.6 million in Q3 2020. EBITDA margin (non-GAAP)(2) was 46.5% in Q4 2020, compared to 41.1% in Q3 2020 * Adjusted net income (non-GAAP)(2) attributable to Daqo New Energy Corp. shareholders was $77.3 million in Q4 2020, compared to $25.2 million in Q3 2020 * Adjusted earnings per basic ADS(3) (non-GAAP)(2) was $1.07 in Q4 2020, compared to $0.35 in Q3 2020

Three months ended

US$ millions Dec 31, Sep 30, Dec 31, 2020 2020 2019except as indicated otherwise

Revenues 247.7 125.5 118.9

Gross profit 109.5 45.3 35.1

Gross margin 44.2% 36.0% 29.5%

Income from operations 98.0 33.3 30.1

Net income attributable to Daqo New Energy Corp. 72.8 20.8 20.1shareholders

Earnings per basic ADS^(3) ($ per ADS) 1.01 0.29 0.29

Adjusted net income (non-GAAP)^(2) attributable to 77.3 25.2 24.5Daqo New Energy Corp. shareholders

Adjusted earnings per basic ADS^(3) (non-GAAP)^(2) 1.07 0.35 0.35($ per ADS)

EBITDA (non-GAAP)^(2) 115.1 51.6 45.4

EBITDA margin (non-GAAP)^(2) 46.5% 41.1% 38.2%

Polysilicon sales volume (MT) 23,186 13,643 13,291

Polysilicon average total production cost ($/kg)^(1) 5.92 5.82 6.38

Polysilicon average cash cost (excl. dep'n) ($/kg)^(1) 5.04 4.88 5.47

Full Year 2020 Financial and Operating Highlights

* Polysilicon production volume was 77,288 MT in 2020, compared to 41,556 MT in 2019 * Polysilicon sales volume was 74,812 MT in 2020, compared to 38,110 MT in 2019 * Revenue was $675.6 million in 2020, compared to $350.0 million in 2019 * Gross profit was $234.0 million in 2020, compared to $80.1 million in 2019. Gross margin was 34.6% in 2020, compared to 22.9% in 2019 * EBITDA (non-GAAP)(2) was $256.5 million in 2020, compared to $95.3 million in 2019 * EBITDA margin (non-GAAP)(2) was 38.0% in 2020, compared to 27.2% in 2019 * Net income attributable to Daqo New Energy Corp. shareholders was $129.2 million in 2020, compared to $29.5 million in 2019 * Earnings per basic ADS was $1.82 in 2020, compared to $0.43 in 2019 * Adjusted net income (non-GAAP)(2) attributable to Daqo New Energy Corp. shareholders was $147.1 million in 2020, compared to $47.4 million in 2019 * Adjusted earnings per basic ADS(3) (non-GAAP)(2) was $2.07 in 2020, compared to $0.70 in 2019

Notes:

(1) Production cost and cash cost only refer to production in our Xinjiangpolysilicon facilities. Production cost is calculated by theinventoriable costs relating to production of polysilicon in Xinjiang dividedby the production volume in the period indicated. Cash costis calculated by the inventoriable costs relating to production of polysiliconexcluding depreciation expense, divided by the productionvolume in the period indicated.

(2) Daqo New Energy provides EBITDA, EBITDA margins, adjusted net incomeattributable to Daqo New Energy Corp. shareholders andadjusted earnings per basic ADS on a non-GAAP basis to provide supplementalinformation regarding its financial performance. Formore information on these non-GAAP financial measures, please see the sectioncaptioned "Use of Non-GAAP Financial Measures"and the tables captioned "Reconciliation of non-GAAP financial measures tocomparable US GAAP measures" set forth at the end ofthis press release.

(3) ADS means American Depositary Share. On November 17, 2020, the Companyeffected a change of the ratio of its ADSs to ordinaryshares from one (1) ADS representing twenty-five (25) ordinary shares to one(1) ADS representing five (5) ordinary shares. Theearnings per ADS and number of ADS information has been retrospectivelyadjusted to reflect the change for all periods presented.

Management Remarks

Mr. Longgen Zhang, CEO of Daqo New Energy, commented, "We are very pleased to report a strong quarter in terms of operational and financial results to bring a successful close of the year 2020. I would like to thank our entire team for their hard work, commitment and dedication in achieving these excellent results. During the quarter we produced 21,008 MT of polysilicon, a record-high in our company's history. Our production cost was reduced by 2.7% in RMB terms, primarily due to our efforts in additional energy savings, offset by a higher than expected rise in the cost of silicon raw material in the fourth quarter. The increase in our cost in US dollar terms compared to the third quarter was the result of exchange rate fluctuations due to the RMB appreciation. In 2021, we will continue our efforts to reduce cost, as we begin to benefit from our newly implemented digital manufacturing system to maximize our output, optimize our production process and further improve our operational stability and product quality."

"During the months of November and December 2020, we saw significant pick-up in polysilicon demand from our customers to meet their increasing production needs to serve the growing solar end-market. During the fourth quarter, we sold 23,186 MT of polysilicon, which is the highest quarterly sales volume the company ever achieved. Since the beginning of 2021, we continue to see rising polysilicon market prices, and most recently market poly ASP has reached a range of $15/kg to $16/kg. As our mono-wafer customers continue their capacity expansion plans supported by robust downstream market demand, we believe that the supply of polysilicon will continue to be very tight throughout the year given very limited additional polysilicon supply this year."

"Regarding the status of the proposed initial public offering of our Xinjiang Daqo subsidiary on China's STAR market, the stock listing committee of the Shanghai Stock Exchange STAR Market reviewed Xinjiang Daqo's application in February 2021 and determined that Xinjiang Daqo had already met the offering, listing and disclosure requirements related to its potential STAR Market IPO. As a next step, Xinjiang Daqo will need to go through the registration process with the China Securities Regulatory Commission before its STAR Market IPO can take place. The proceeds of this potential IPO will be used to fund our Phase 4B polysilicon project with an annual capacity of 35,000 MT. We have already started the preparation works for Phase 4B including the design and procurement process. We plan to start the construction in mid-March and expect to complete the project by the end of 2021 and ramp it up to full capacity by the end of Q1 2022."

"I have been in the solar industry for over a decade, and the prospects for the solar industry have never been brighter. Driven by the dual trends of solar grid parity and the urgent need to address climate change, the industry is on the cusp of undergoing tremendous growth over the next few years without the need for government subsidies. Solar energy is now one of the most competitive form of power generation even compared to fossil fuel, and we are beginning to see real world applications where solar is the optimal choice to meet growing energy needs and to replace legacy carbon-based generation. Major economies around the world have also begun to implement ambitious policies and initiatives to support and mandate the use of renewable energy for power generation. The European Union has announced its Green Deal to fight climate change through progressive policies for a climate-neutral and sustainable EU with the goal of no net emissions of greenhouse gases by 2050 and to de-carbonize the energy sector. Over the next few years, the European Climate Law is expected to turn this political commitment into a legal obligation. In China, President Xi Jinping has announced China will aim to hit peak emissions before 2030 and reach carbon neutrality by 2060 and we expect various government agencies including the NEA and the NDRC to introduce and implement policies to mandate and support the use of renewable energy. For 2021, the NEA has indicated its intention to accelerate the development and deployment of wind and solar energy, with a goal of adding a combined 120GW of wind and solar in 2021. In the U.S., with the Biden administration's commitment to fight climate change and plan for clean energy revolution with the goal of achieving a 100% clean energy economy and reaching net-zero emissions no later than 2050, we believe favorable policies are forthcoming to support renewable energy's growth in the U.S."

"We are standing at the beginning of a new era that will demand more and more clean, renewable and cost effective energy resources among which solar PV is one of the most competitive. We will focus on our core business, continue to expand capacity and further improve quality to better serve the fast growing solar PV market."

Outlook and guidance

The Company expects to produce approximately 19,500MT to 20,500MT of polysilicon and sell approximately 20,000MT to 21,000MT of polysilicon to external customers during the first quarter of 2021. For the full year of 2021, the Company expects to produce approximately 80,000 to 81,000 MT of polysilicon, inclusive of the impact of the Company's annual facility maintenance.

This outlook reflects Daqo New Energy's current and preliminary view as of the date of this press release and may be subject to changes. The Company's ability to achieve these projections is subject to risks and uncertainties. See "Safe Harbor Statement" at the end of this press release.

Fourth Quarter 2020 Results

Revenues

Revenues were $247.7 million, compared to $125.5 million in the third quarter of 2020 and $118.9 million in the fourth quarter of 2019. The increase in revenues was primarily due to higher polysilicon sales volume and higher ASPs.

Gross profit and margin

Gross profit was $109.5 million, compared to $45.3 million in the third quarter of 2020 and $35.1 million in the fourth quarter of 2019. Gross margin was 44.2%, compared to 36% in the third quarter of 2020 and 29.5% in the fourth quarter of 2019. The increase in gross margin was primarily due to higher ASPs.

Selling, general and administrative expenses

Selling, general and administrative expenses were $11.2 million, compared to $9.2 million in the third quarter of 2020 and $9.0 million in the fourth quarter of 2019. The increase was primarily due to an increase in shipping costs as a result of higher sales volume, as well as an increase in personnel cost. SG&A expenses during the quarter included $4.5 million in non-cash share-based compensation costs related to the Company's share incentive plan.

Research and development expenses

Research and development (R&D) expenses were $1.5 million, compared to $1.7 million in the third quarter of 2020 and $1.2 million in the fourth quarter of 2019. Research and development expenses can vary from period to period and reflect R&D activities that take place during the quarter.

Income from operations and operating margin

As a result of the foregoing, income from operations was $98.0 million, compared to $33.3 million in the third quarter of 2020 and $30.1 million in the fourth quarter of 2019.

Operating margin was 39.6%, compared to 26.6% in the third quarter of 2020 and 25.3% in the fourth quarter of 2019.

Interest expense

Interest expense was $8.3 million, compared to $5.4 million in the third quarter of 2020 and $3.9 million in the fourth quarter of 2019. The increase was primarily due to an increase in interest expense for discounted bank notes.

EBITDA (non-GAAP)

EBITDA (non-GAAP) was $115.1 million, compared to $51.6 million in the third quarter of 2020 and $45.4 million in the fourth quarter of 2019. EBITDA margin (non-GAAP) was 46.5%, compared to 41.1% in the third quarter of 2020 and 38.2% in the fourth quarter of 2019.

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

As a result of the aforementioned, net income attributable to Daqo New Energy Corp. shareholders was $72.8 million, compared to $20.8 million in the third quarter of 2020 and $20.1 million in the fourth quarter of 2019.

Earnings per basic American Depository Share (ADS) was $1.01, compared to $0.29 in the third quarter of 2020, and $0.29 in the fourth quarter of 2019.

Financial Condition

As of December 31, 2020, the Company had $118.4 million in cash and cash equivalents and restricted cash, compared to $109.8 million as of September 30, 2020 and $115.3 million as of December 31, 2019. As of December 31, 2020, the notes receivable balance was $0.2 million, compared to $1.9 million as of September 30, 2020 and $5.6 million as of December 31, 2019. As of December 31, 2020, total borrowings were $193.7 million, of which $123.2 million were long-term borrowings, compared to total borrowings of $271.0 million, including $140.0 million long-term borrowings, as of September 30, 2020 and total borrowings of $280.1 million, including $151.5 million long-term borrowings, as of December 31, 2019.

Cash Flows

For the twelve months ended December 31, 2020, net cash provided by operating activities was $209.7 million, compared to $181.0 million in the same period of 2019.

For the twelve months ended December 31, 2020, net cash used in investing activities was $118.5 million, compared to $261.8 million in the same period of 2019. The net cash used in investing activities in 2020 and 2019 was primarily related to the capital expenditures on the Company's Phase 4A polysilicon projects.

For the twelve months ended December 31, 2020, net cash used in financing activities was $95.5 million, compared to net cash provided by financing activities of $102.3 million in the same period of 2019.

Full Year 2020 Results

Revenues

Revenues were $675.6 million, compared to $350.0 million in 2019. The increase was primarily due to higher polysilicon sales volume and partially offset by slightly lower ASPs.

Gross profit and margin

Gross profit was $234.0 million, compared to $80.1 million in 2019. Gross margin was 34.6%, compared to 22.9% in 2019. The increase was primarily due to lower production cost partially offset by slightly lower ASPs.

Selling, general and administrative expenses

Selling, general and administrative expenses were $39.5 million, compared to $32.9 million in 2019. The increase was primarily due to an increase in shipping costs as a result of higher sales volume, as well as an increase in personnel cost.

Research and development expenses

Research and development (R&D) expenses were $6.9 million, compared to $5.3 million in 2019. Research and development expenses can vary from period to period and reflect R&D activities that took place during the period.

Income from operations and operating margin

As a result of the foregoing, income from operations was $187.9 million, compared to $47.5 million in 2019. Operating margin was 27.8%, compared to 13.6% in 2019.

Interest expense

Interest expense was $26.6 million, compared to $10.4 million in 2019. The increase was primarily due to a decrease of capitalized interest expense.

Income tax expense

Income tax expense was $28.2 million, compared to $9.6 million in 2019. The increase was primarily due to higher income before income taxes.

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

Net income attributable to Daqo New Energy Corp. shareholders was $129.2 million, compared to $29.5 million in 2019. Earnings per basic ADS was $1.82, compared to $0.43 in 2019.

Adjusted net income (non-GAAP) attributable to Daqo New Energy Corp. shareholders was $147.1 million, compared to $47.4 million in 2019. Adjusted earnings per basic ADS (non-GAAP) was $2.07, compared to $0.70 in 2019.

Use of Non-GAAP Financial Measures

To supplement Daqo New Energy's consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles ("US GAAP"), the Company uses certain non-GAAP financial measures that are adjusted for certain items from the most directly comparable GAAP measures including earnings before interest, taxes, depreciation and amortization ("EBITDA") and EBITDA margin; adjusted net income attributable to Daqo New Energy Corp. shareholders and adjusted earnings per basic and diluted ADS. Our management believes that each of these non-GAAP measures is useful to investors, enabling them to better assess changes in key element of the Company's results of operations across different reporting periods on a consistent basis, independent of certain items as described below. Thus, our management believes that, used in conjunction with US GAAP financial measures, these non-GAAP financial measures provide investors with meaningful supplemental information to assess the Company's operating results in a manner that is focused on its ongoing, core operating performance. Our management uses these non-GAAP measures internally to assess the business, its financial performance, current and historical results, as well as for strategic decision-making and forecasting future results. Given our management's use of these non-GAAP measures, the Company believes these measures are important to investors in understanding the Company's operating results as seen through the eyes of our management. These non-GAAP measures are not prepared in accordance with US GAAP or intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with US GAAP; the non-GAAP measures should be reviewed together with the US GAAP measures, and may be different from non-GAAP measures used by other companies.

The Company uses EBITDA, which represents earnings before interest, taxes, depreciation and amortization, and EBITDA margin, which represents the proportion of EBITDA in revenues. Adjusted net income attributable to Daqo New Energy Corp. shareholders and adjusted earnings per basic and diluted ADS exclude costs related to share-based compensation. Share-based compensation is a non-cash expense that varies from period to period. As a result, our management excludes this item from our internal operating forecasts and models. Our management believes that this adjustment for share-based compensation provides investors with a basis to measure the Company's core performance, including compared with the performance of other companies, without the period-to-period variability created by share-based compensation.

A reconciliation of non-GAAP financial measures to comparable US GAAP measures is presented later in this document.

Conference Call

The Company has scheduled a conference call to discuss the results at 8:00 AM Eastern Time on March 9, 2021. (9:00 PM Beijing / Hong Kong time on the same day).

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

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 beginand ask to bejoined into the Daqo New Energy Corp. call.

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

https://services.choruscall.com/links/dq210309.html

A replay of the call will be available 1 hour after the end of the conference through March 16, 2021.

The conference 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: 10152748

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

https://services.choruscall.com/ccforms/replay.htmlParticipants will be required to state their name and company upon entering the call.

About Daqo New Energy Corp.

Daqo New Energy Corp. (NYSE: DQ) ("Daqo" or the "Company") is a leading manufacturer of high-purity polysilicon for the global solar PV industry. Founded in 2007, the Company is one of the world's lowest cost producers of high-purity polysilicon. Daqo's highly-efficient and technically advanced manufacturing facility in China currently has a nameplate annual polysilicon production capacity of 70,000 metric tons.

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 first quarter and the full year of 2021 and quotations from management in this announcement, Xinjiang Daqo's IPO plan 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; the Company's ability to significantly expand its polysilicon production capacity and output; the reduction in or elimination of government subsidies and economic incentives for solar energy applications; the Company's ability to lower its production costs; and the duration of COVID-19 outbreaks in China and many other countries and the impact of the outbreaks and the quarantines and travel restrictions instituted by relevant governments on economic and market conditions, including potentially weaker global demand for solar PV installations that could adversely affect the Company's business and financial performance. Further information regarding these and other risks is included in the reports or documents the Company has filed with, or furnished to, the U.S. Securities and Exchange Commission. All information provided in this press release is as of the date hereof, and the Company undertakes no duty to update such information or any forward-looking statement, except as required under applicable law.

Daqo New Energy Corp.

Unaudited Condensed Consolidated Statement of Operations and ComprehensiveIncome

(US dollars in thousands, except ADS and per ADS data)

Three months Ended Year Ended Dec 31,

Dec 31, Sep 30, Dec 31, 2020 2019 2020 2020 2019

Revenues $247,725 $125,529 $118,918 $675,602 $349,991

Cost of revenues (138,238) (80,276) (83,800) (441,610) (269,887)

Gross profit 109,487 45,253 35,118 233,992 80,104

Operating expenses

Selling, general and administrative expenses (9,223) (39,472) (11,236) (8,987) (32,907)

Research and development expenses (1,498) (1,746) (1,206) (6,856) (5,258)

Other operating income 1,226 (954) 5,164 191 5,546

Total operating (11,508) (11,923) (5,029) (46,137) (32,619)(expenses) / income

Income from operations 97,979 33,330 30,089 187,855 47,485

Interest expense (8,254) (5,438) (3,936) (26,632) (10,397)

Interest income 187 200 208 907 983

Foreign exchange gain / (loss) - - 4 0 (185)

Income before income taxes 89,912 28,092 26,365 162,130 37,886

Income tax expense (13,606) (6,193) (5,972) (28,182) (9,623)

Net income from continuing operations 76,306 21,899 133,948 20,393 28,263

Net (loss) / income from discontinued operations - - (141) (306) 1,261

Net income 76,306 21,899 20,087 133,807 29,524

Net (loss) / income attributable to non-controlling interest 3,480 1,142 4,612 (1) (1)

Net income attributable to Daqo New Energy Corp. $72,826 $20,757 $20,088 $129,195 $29,525 shareholders

Net income 76,306 21,899 20,087 133,807 29,524

Other comprehensive income /(loss):

Foreign currency translation adjustments 31,107 25,937 13,892 48,438 (6,702)

Total other comprehensive income / (loss) 31,107 25,937 13,892 48,438 (6,702)

Comprehensive income / (loss) 107,413 47,836 33,979 182,245 22,822

Comprehensive income attributable to non-controlling 5,698 1,163 2 6,845 2 interest

Comprehensive income / (loss) attributable to Daqo New Energy Corp. shareholders $101,715 $46,673 $33,977 $175,400 $22,820

Earnings / (Loss) per ADS

-Continuing operations 1.01 0.29 0.29 1.82 0.41

-Discontinued operations 0.00 0.00 0.00 0.00 0.02

Basic 1.01 0.29 0.29 1.82 0.43

-Continuing operations 0.96 0.27 0.26 1.72 0.39

-Discontinued operations 0.00 0.00 0.00 0.00 0.02

Diluted 0.96 0.27 0.26 1.72 0.41

Weighted average ADSoutstanding

Basic 72,147,808 71,281,184 69,186,250 71,017,403 67,914,211

Diluted 76,065,033 76,626,371 75,927,961 75,003,430 71,466,701

Daqo New Energy Corp.

Unaudited Consolidated Balance Sheets

(US dollars in thousands)

Dec 31, 2020 Sep 30, 2020 Dec 31, 2019

ASSETS:

Current Assets:

Cash and cash equivalents 76,596 70,150 $51,840

Restricted cash 41,808 39,640 62,609

Accounts receivable, net - 42 13

Notes receivable 153 1,908 5,644

Prepaid expenses and other current assets 11,477 12,972 15,344

Advances to suppliers 7,949 1,229 1,544

Inventories 42,159 53,640 36,391

Amount due from related parties 129 213 17

Current assets associated with discontinued operation - - 926

Total current assets 180,271 179,794 174,328

Property, plant and equipment, net 1,027,086 987,295 995,027

Prepaid land use right 30,829 29,815 29,593

Deferred tax assets - 1,386 1,352

Investment in affiliate 685 658 642

Operating lease right-of-use assets 119 137 197

Other non-current assets 153 147 -

Non-current asset associated with discontinued operation - - 217

TOTAL ASSETS 1,239,143 1,199,232 1,201,356

Current liabilities:

Short-term borrowings, includingcurrent portion of long-term borrowings 70,431 131,064

128,612

Accounts payable 18,953 19,739 12,713

Notes payable 49,355 62,128 101,171

Advances from customers-short term portion 37,783 17,544 33,028

Payables for purchases of property, 49,555 76,158 112,538plant and equipment

Accrued expenses and other current liabilities 30,148 16,616 12,222

Amount due to related parties 5,150 4,820 38,825

Income tax payable 22,678 7,314 4,789

Lease liabilities - short term portion 82 78 85

Current liabilities associated with discontinued operation - - 1,165

Total current liabilities 284,135 335,461 445,148

Long-term borrowings 123,222 139,967 151,518

Advance from customers - long term portion 3,265 1,266 2,154

Amount due to related parties - long term portion 4,238 10,897 7,899

Deferred government subsidies 21,907 21,157 21,034

Deferred Tax Liabilities 3,461 5,647 6,368

Lease liabilities - long term portion - - 77

TOTAL LIABILITIES 440,228 514,395 634,198



EQUITY:

Ordinary shares 37 36 35

Treasury stock (1,749) (1,749) (1,749)

Additional paid-in capital 412,450 405,784 387,371

Accumulated gains 330,118 257,292 200,922

Accumulated other comprehensive income/(loss) 26,267 (2,622) (19,937)

Total Daqo New Energy Corp.'s shareholders' equity 767,123 658,741 566,642

Non-controlling interest 31,792 26,096 516

Total equity 798,915 684,837 567,158

TOTAL LIABILITIES & EQUITY 1,239,143 1,199,232 1,201,356

Daqo New Energy Corp.

Unaudited Consolidated Statements of Cash Flows

(US dollars in thousands)

For the year ended December 31,

2020 2019

Operating Activities:

Net income $ 133,807 $ 29,524

Less: (Loss)/ income from discontinued operations, net of tax (141) 1,261

Net income from continuing operations 133,948 28,263

Adjustments to reconcile net income to net cash provided by 90,269 65,644operating activities:

Changes in operating assets and liabilities (14,464) 86,076

Net cash provided by operating activities-continuing operations 209,753 179,983

Net cash (used in)/ provided by operation activities-discontinued (50) 1,010operations

Net cash provided by operating activities 209,703 180,993

Investing activities:

Net cash used in investing activities-continuing operations (118,292) (263,284)

Net cash (used in)/ provided by investing activities-discontinuing (195) 1,457operations

Net cash used in investing activities (118,487) (261,827)

Financing activities:

Net cash (used in)/ provided by financing activities - continuing (95,470) 104,979operations

Net cash used in financing activities - discontinued operations - (2,651)

Net cash (used in)/provided by financing activities (95,471) 102,328



Non-cash transactions

Effect of exchange rate changes 7,364 (1,320)

Net increase in cash, cash equivalents and restricted cash 3,110 20,174

Cash, cash equivalents and restricted cash at the beginning of the 115,294 95,120year

Cash, cash equivalents and restricted cash at the end of the year 118,404 115,294

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the statement of financial position that sum to the total of the same such amounts shown in the statement of cash flows.

Dec 31, Dec 31, 2020 2019

Cash and cash equivalents 76,596 52,685

Restricted cash 41,808 62,609

Total cash, cash equivalents, and restricted cashshown in the 118,404 115,294statement of cash flows

Daqo New Energy Corp.

Reconciliation of non-GAAP financial measures to comparable US GAAP measures

(US dollars in thousands)

Three months Ended Year ended

Dec. 31, Sep. 30, Dec. 31, Dec. 31, Dec. 31, 2020 2020 2019 2020 2019

Net income from continuing operations 76,306 21,899 133,948 20,393 28,263

Income tax expense 13,606 6,193 5,972 28,182 9,623

Interest expense 8,254 5,438 3,936 26,632 10,397

Interest income (187) (200) (208) (907) (983)

Depreciation & amortization 17,118 18,289 15,281 68,686 48,003

EBITDA (non-GAAP) 115,097 51,619 45,374 256,541 95,303

EBIDTA margin (non-GAAP) 46.5% 41.1% 38.2% 38.0% 27.2%

Three months Ended Year ended

Dec. 31, Sep. 30, Dec. 31, Dec. 31, Dec. 31, 2020 2020 2019 2020 2019

Net income / (loss) attributable to Daqo New 72,826 20,757 20,088 129,195 29,525 Energy Corp. shareholders

Share-based compensation 4,478 4,478 4,461 17,908 17,897

Adjusted net income (non- GAAP) attributable to Daqo 77,304 25,235 24,549 147,103 47,422 New Energy Corp. shareholders

Adjusted earnings per basic ADS (non-GAAP) $1.07 $0.35 $0.35 $2.07 $0.70

Adjusted earnings per diluted $1.02 $0.33 $0.32 $1.96 $0.66 ADS (non-GAAP)

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SOURCE Daqo New Energy Corp.