管理層發言
Thank you for standing by. My name is Carly, and I will be your conference operator today. At this time, I would like to welcome everyone to the TOYO Co., Ltd. Second Quarter 2026 Earnings Conference Call. I would now like to turn the call over to Crocker Coulson, Investor Relations for TOYO. Mr. Coulson, please go ahead.
Thank you, Carly. Hello, everyone. Thank you so much for joining us to review TOYO's second quarter and first half 2026 results. This morning, TOYO posted both the earnings release and a related investor presentation covering those results to our website, which you can find at investors.toyo-solar.com. I'm pleased to say that with us on the call today, we have Mr. Takahiko Onozuka, TOYO's Chairman and Chief Executive Officer; we have Rhone Resch, the company's Chief Strategy Officer; and we also have Mr. Yasunari Harada, TOYO's Chief Financial Officer. After their prepared remarks are concluded, we're going to open up the floor for any questions that you have today. But before we begin, I'd like to point out the financial results discussed on this call for the second quarter 2026 and first half of 2026 and the corresponding periods in 2025 are unaudited and some of the statements in this teleconference are forward-looking within the meanings of federal securities laws.
Although we believe these statements are reasonable, we can provide no assurance that they will prove to be accurate because they are prospective in nature. During this call, we're also going to discuss certain non-GAAP financial measures such as EBITDA, adjusted EBITDA and adjusted net income. We believe these measures provide meaningful supplemental information regarding our operational performance by excluding noncash items and one-time charges that may not be indicative of our core business performance. Actual results could differ materially from those we discuss today. We, therefore, encourage you to review our most recent annual report on Form 20-F, 6-K and other SEC filings for risk factors that could materially impact our results. With those formalities now out of the way, it's my great pleasure to turn this call over to Onozuka-san, TOYO's Chairman and CEO. Onozuka-san, please take it away.
Thank you, Crocker. We are very pleased with our first half 2026 results, which reflect the continued strength in our global manufacturing platform and the growing demand we are seeing across our markets. Let me walk you through the headline numbers at a high level. Revenue for the first half of 2026 was approximately $261.0 million, an increase of 87.6% year-over-year from $139.1 million in the first half of 2025. The increase was primarily driven by higher solar cell and module sales, together with the commencement of OEM services. Revenue from end customers in the United States increased 153.9% to approximately $210.5 million and represented 80.7% of first half revenue. Gross margin for the first half of 2026 expanded to 32.5%, up from 16.6% in the prior year period, reflecting expanded production capacity, improved production efficiency and a greater mix of higher average selling price U.S. sales.
Net income for the first half of 2026 was approximately $45.8 million compared to $2.5 million in the first half of 2025. Earnings per share, basic and diluted, were $1.21 and $1.20, respectively, compared to $0.08 in the first half of 2025. For the second quarter of 2026, revenue was $118.2 million, up 35% year-over-year with net income for the second quarter of 2026 of approximately $17.4 million compared to $6.2 million in the second quarter of last year. The recent Section 232 determination by the Administration on polysilicon and its derivatives is, on balance, a positive development for TOYO and U.S. solar manufacturing. We expect it to support stronger module pricing and we anticipate that solar cells produced at our Ethiopia facility will be eligible for the relief once the framework is finalized. We are engaged with the Department of Commerce as those terms are finalized. While we are optimistic about the net effect on our second half and year-end 2026 results, we are not yet in a position to quantify it.
We will provide further updates as more clarity emerges. As you see in our results, trade policy uncertainty also affected the pace of some shipments from our Ethiopia facility during the quarter. Rhone will speak to that in a moment, but I want to be clear upfront that this reflects a timing issue tied to an active regulatory process and, in our view, not a change in the underlying customer demand. At the same time, we are excited to move forward with the expansion of heterojunction, or HJT, solar cell capacity in Humble, Texas, a project we believe will be crucial not just for TOYO, but for the broader push to build a secure competitive U.S. solar manufacturing base. I will now turn the call over to our Chief Strategy Officer, Rhone Resch, to walk through that project in more detail along with our broader strategy and the policy environment.
Thank you very much, Onozuka-san, and good morning, everyone. This morning, I'd like to address the Section 232 proclamation, which, as you know, is less than two weeks old, and specifically mention how it reinforces our U.S. strategy. I want to talk a little bit about our HJT expansion and our broader U.S. manufacturing platform and then provide an update on Customs and Border Protection (CBP) and the Ethiopia anti-circumvention inquiry. On August 6, the President issued proclamation 11052, addressing imports of polysilicon and its derivatives. The proclamation establishes minimum import prices for polysilicon, ingots and wafers, solar cells and modules, together with an additional tariff on specified downstream products. These measures take effect on December 4, 2026. We believe the proclamation validates the strategy TOYO has been pursuing: increasing our use of U.S.-produced inputs, developing a transparent allied-nation supply chain and investing directly in U.S. advanced manufacturing.
Importantly, the proclamation creates an investment-linked onshoring program that can effectively offset the new Section 232 duties for qualified companies. Under an approved company-specific plan, Commerce may authorize duty-free imports of necessary production equipment and covered products in volumes it determines are commensurate with the company's U.S. investment. The proclamation also recognizes the importance of U.S.-produced polysilicon. Commerce may vary the benefits available under an approved onshoring plan based in part on the use of U.S.-produced polysilicon. That is particularly relevant to TOYO because approximately 70% of our polysilicon currently used for our Ethiopian production is supplied by a U.S. producer. The remaining 30% is produced by OCI in Malaysia, and we are working towards 100% U.S. polysilicon at the Ethiopian facility by the fourth quarter of this year. We intend to pursue an onshoring plan initially centered on our announced $357 million HJT cell facility in Humble, Texas.
Our strategy is to use the economic value created by approved duty offsets, including lower import costs and preserved working capital, to help fund the construction and expansion of our U.S. manufacturing facilities. In the near term, eligible imports would support our operating U.S. business model. Over time, the resulting economic benefit would help accelerate domestic cell production and potential upstream manufacturing. This structure creates a reinforced investment cycle. First, TOYO imports compliant cells made with U.S.-produced polysilicon to supply our American module operations. Second, if Commerce approves our onshoring plan, the resulting duty offsets would preserve capital that can help fund our U.S. factory expansions. And finally, as those factories come online, TOYO will progressively move more cell and upstream manufacturing into the United States. The minimum import prices established by the proclamation are above recent market benchmarks for cells and modules, and we believe this framework could support a stronger and more rational U.S. pricing environment.
TOYO may be particularly well-positioned because an approved onshoring plan could offset Section 232 duties on eligible imports, and Commerce may provide greater benefits for products incorporating U.S.-produced polysilicon. If approved and implemented as intended, this combination would allow TOYO to benefit from stronger market pricing while mitigating a significant portion of the associated import costs. That could improve our unit economics and support gross margins while preserving additional capital to help fund the construction and expansion of our U.S. facilities. The ultimate financial effect will depend on Commerce's approval, the volume and duration of any offsets, market conditions, customer contracts and our cost structure. But we believe our significant U.S. investment, substantial use of U.S.-produced polysilicon and commitment to additional domestic manufacturing positions TOYO well under the onshoring framework.
Approval, eligible products, import volumes, timings and conditions will ultimately be determined by Commerce, but the structure of the program is closely aligned with the strategy TOYO is already executing. I now want to turn to our HJT project that I mentioned. TOYO plans to invest approximately $357 million in an advanced heterojunction solar cell facility in Humble, Texas, which is just outside of Houston. The initial phase is designed for approximately 1.5 gigawatts of annual production capacity. We selected HJT technology because customers increasingly value its higher efficiency, strong energy yield and performance across a range of operating conditions. HJT also provides TOYO with an advanced manufacturing platform that can support the future development and production of perovskite silicon tandem cells, positioning us to serve evolving customer needs and participate in the next generation of high-performance solar technology.
We are targeting pilot production in the last quarter of 2027 or the first quarter of 2028 and expect the facility to support approximately 400 direct jobs at full operation. We have secured the principal equipment and are advancing permitting, contractor selection, engineering and other development work. This facility is intended to bring next-generation cell manufacturing and R&D to the same U.S. campus as our module operations. Our Houston module facility remains on track to reach approximately 2 gigawatts of annual capacity in September of this year, building on the capacity already operating today. Together, these investments are building an increasingly integrated U.S. platform. We are using U.S. polysilicon today, expanding domestic module capacity to approximately 2 gigawatts, developing advanced HJT cell manufacturing and R&D capabilities and building a foundation for future perovskite silicon tandem cell production.
This represents a long-term commitment to American solar manufacturing. Based on the third-party analysis announced on July 21, TOYO Solar Texas expects to qualify for Section 45 advanced manufacturing production credits for tax year 2025, and we are in the process of obtaining a similar third-party tax compliance report covering our 2026 tax credits. We will quantify that potential benefit only after the relevant tax, legal and accounting work is complete. As Onozuka-san mentioned, the timing of certain imports was affected during the quarter by CBP reviews. These documentation and admissibility reviews are part of the trade compliance environment for all solar products entering the United States. We are working closely with CBP and have provided the information requested to verify our supply chain. TOYO maintains detailed records designed to trace materials from the original polysilicon source through wafer conversion, cell production and the applicable U.S. entry.
Based on the strength of our sourcing controls and documentation, we remain confident in our compliance approach. Separately, Commerce has initiated a countrywide anti-circumvention inquiry concerning certain solar cells and modules completed in Ethiopia using parts or components manufactured in China. TOYO is participating fully and will provide Commerce with the relevant information concerning our sourcing, investment, manufacturing operations and value-added in Ethiopia. I want to be clear about our current production: TOYO does not use Chinese-origin wafers in its Ethiopian cell manufacturing. Our 2026 wafer supply comes from non-China production, including a designated facility in Indonesia. In addition, 100% of the polysilicon for this production is sourced outside of China, as I mentioned before, with approximately 70% currently coming from a U.S. producer and approximately 30% from OCI's Malaysian production.
Our Ethiopia facility is a substantial manufacturing platform. It employs approximately 1,800 people and performs the full wafer-to-cell production process. We believe these facts position TOYO well while recognizing that Commerce's review remains ongoing. We will continue to cooperate and we'll update investors when appropriate. Our objective is to become a trusted U.S. manufacturer built around advanced Japanese technology, verifiable non-China sourcing and increasing the use of American inputs and expanding production in the United States: engineered in Japan, built in America. I will now turn the call over to our CFO, Yasunari Harada, to review our financial results in more detail.
Yes. Thank you, Rhone-san. Before I begin, I'd like to say that I'm very glad you are joining today's call. This is my first earnings call since joining TOYO as CFO on July 1, and I look forward to getting to know many of you on the line. Let me start with the second quarter of 2026. Revenue for Q2 2026 was approximately $118.2 million, representing year-over-year growth of 35.0% from $87.6 million in Q2 2025. The increase was primarily driven by increased solar module sales and OEM service revenue, partially offset by lower cell sales during the quarter. Cost of revenue was approximately $81.2 million in Q2 2026 compared to $69.3 million in Q2 2025. Gross profit was approximately $37.0 million, an increase of 102.2% from $18.3 million in Q2 2025. Gross margin improved to 31.3% in Q2 2026 from 20.9% in Q2 2025. Total operating expenses for Q2 2026 were approximately $14.4 million compared to $7.3 million in Q2 2025, including $1.6 million in selling and marketing expenses for Q2 2026, compared to $2.1 million for Q2 2025, and $12.8 million in general and administrative expenses for Q2 2026 compared to $5.3 million for Q2 2025.
Net income for Q2 2026 was approximately $17.4 million compared to $6.2 million in Q2 2025. Earnings per share basic and diluted for Q2 2026 were $0.46 and $0.45, respectively, compared to $0.16 for both basic and diluted in Q2 2025. Turning to the first half of 2026: Revenue was approximately $261.0 million for the first half of 2026, representing year-over-year growth of 87.6% from $139.1 million in the first half of 2025. The increase was primarily driven by higher solar cell sales, solar module sales and OEM service revenue. Cost of revenue was approximately $176.2 million for the first half of 2026 compared to $116.0 million in the first half of 2025. Gross profit was approximately $84.7 million for the first half of 2026, an increase of 267% from $23.1 million in the first half of 2025. Gross margin nearly doubled to 32.5% for the first half of 2026 from 16.6% for the first half of 2025.
Total operating expenses for the first half of 2026 were approximately $25.9 million compared to $13.4 million for the first half of 2025, including $3.6 million in selling and marketing expenses and $22.3 million in general and administrative expenses. The increase in general and administrative expenses primarily reflects the scale-up of operations at our Houston, Texas solar module facility and an increase in headcount to support growth. Non-GAAP EBITDA for the first half of 2026 was $82.1 million compared to $21.5 million in the first half of 2025. The improvement was driven by our revenue scale-up and the gross margin increase from 16.6% to 32.5%. Non-GAAP adjusted EBITDA for the first half of 2026 was $82.3 million compared to $22.8 million for the first half of 2025. Net income for the first half of 2026 was approximately $45.8 million compared to $2.5 million in the first half of 2025.
Net income attributable to TOYO shareholders was $45.8 million for the first half of 2026 compared to $3.5 million in the first half of 2025. Non-GAAP adjusted net income for the first half of 2026 was $46.0 million compared to $3.9 million in the first half of 2025. Earnings per share, basic and diluted, for the first half of 2026 were $1.21 and $1.20, respectively, compared to $0.08 in the first half of 2025. As of June 30, 2026, the company held $123.4 million in cash and restricted cash, including noncurrent restricted cash. This compares to $85.9 million as of December 31, 2025. Our working capital turned positive at $29.8 million compared with a deficit of $123.9 million at December 31, 2025, primarily reflecting a loan extension agreed with a related party in June. We generated cash from operations of $61.4 million and incurred capital expenditure of $27.8 million for the first half of 2026.
During the first half of 2026, we raised approximately $52.6 million in net proceeds, $47.1 million from a registered direct offering that closed on June 25 and approximately $5.5 million from an at-the-market offering. Separately, following the June 2026 Russell Index reconstitution, TOYO was added to both the Russell 3000 Index and the Russell Microcap Index, which we view as a meaningful step toward broader institutional visibility. That concludes our financial review.
Great. Thank you, Harada-san. So operator, I think we're now ready for Q&A. If you could provide the listeners with instructions on how they can ask their questions, we'll be happy to address any questions.
分析師問答
Your first question is from Philip Shen with ROTH Capital Partners.
I wanted to get some additional color on the CBP situation. When did the detentions start? How long do you expect them to continue? And then what could the impact be for Q3 and Q4? We're halfway through the third quarter at this point, so I was wondering, should we expect similar levels of revenue and shipments for Q3? Or do you think they could be meaningfully lower? And if you can, put this all in the context of your previously issued full-year 2026 guidance?
Rhone, do you want to take the first part of that with respect to the status on the CBP?
Yes. CBP monitors Uyghur Forced Labor Prevention Act compliance for all module manufacturers. They began reviews earlier this year in Q2, which resulted in some initial detentions. The total amount detained is not very large, but our approach as a company is to work closely with CBP and provide them with all the information requested. As we go through the process, they want to know where our polysilicon comes from. As I mentioned, roughly 70% is U.S.-sourced and 30% from OCI in Malaysia, but CBP requests traceability up to where the quartzite was mined. We have provided that information. Over time, CBP develops relationships with manufacturers and suppliers and, after several reviews, implements an expedited path for trusted importers. We are going through that process and have had open, constructive dialogue with CBP. We are optimistic that the detentions will be released in this quarter, but the exact timing is unclear because it's an administrative process and sometimes takes longer than we would like. We have provided them with all the information they requested.
So maybe, Sachko, do you want to translate the question just so we're clear on the anticipated impact on Q3 and Q4 results and why the company has not explicitly reaffirmed guidance on this call?
Thank you for your question. Given the near-term uncertainty of the situation with CBP, we believe the outlook remains uncertain, and we have not reached the point where it is appropriate to update or reaffirm guidance. Although we cannot say precisely what the effect of the situation will be on our guidance currently, we will provide updates as we know more and when it is appropriate to do so.
So I think in summary, we have a couple of near-term events. One is resolving the situation with CBP. And the other is the potentially positive negotiations with respect to Section 232. The company wants to get through these issues before providing more clarity on the second half of the year.
Is it fair to say that the previously issued 2026 guidance is off the table?
Sorry, can you repeat the last word? I couldn't hear you.
Is the previously issued guidance no longer relevant?
We have not reaffirmed it on the call today, and we're waiting for some clarity before we come back with an update to investors.
Moving on to Section 232: When might Commerce approve your ability to access the tariff rebate program based on your anticipated CapEx in Humble, Texas?
Rhone, why don't you take that one and explain where we are in that process, without making any promises for the administration.
The Section 232 proclamation was released less than two weeks ago, and Commerce is still establishing the process by which it will meet with companies and evaluate plans. The proclamation makes clear that projects need to begin construction by January 20, 2029. We have met with Commerce multiple times over this process; they are familiar with the company and our initial plans. We expect preliminary meetings in the coming week and then more substantive company-specific discussions after Labor Day. The program does not take effect until December 4, so I expect companies will be negotiating with Commerce through the fall to develop individual plans. The key is not rushing but ensuring a comprehensive plan that lays out our vision through January 20, 2029, when we sit down with Commerce. Companies should present a full vision of their planned activities and investments during that time period.
Regarding customer conversations following the Section 232 proclamation: How are those conversations going? Are customers willing to sign agreements today, or do they want more clarity on implementation? Have you seen pricing move higher for modules and cells, and if so, by what amount?
The Section 232 measures do not take effect until December 4, so there are no immediate duties being imposed. Contracts signed before the proclamation remain in place, but adjustments may be required based on company-specific discussions with Commerce. Customers need time to digest the implications and for manufacturers to develop solutions that fit customer needs. It is still too early to define a new pricing structure. The minimum import price for modules at $0.38 per watt is likely a floor, but the eventual pricing impact will be company-dependent and will depend on the specific arrangements each manufacturer negotiates with Commerce. We will provide material updates as they develop.
How long will the market need to digest this? Is it past December 4, or do things settle in the next few weeks, or does it take a few months?
For manufacturers, it will take a few weeks to months. Much depends on the agreements companies reach with Commerce. The onshoring offsets are designed to encourage investment in wafers, ingots and cells. For pure importers, the minimum import price likely becomes the market floor. For manufacturers like TOYO, who are investing and producing, there is more flexibility. We expect many forecasts and analyst models in the coming weeks, but we won't see the full pricing impact until early December when implementation begins and Commerce's determinations are clearer. Commerce can also adjust the minimum import price structure before December, so there may be changes between now and then.
When we saw the proclamation, we were encouraged that the substance of our discussions with policymakers was reflected in some of the policies included.
Yes. We've worked closely with Commerce to help them understand what it takes to manufacture in the United States. The structure is closely aligned with TOYO's onshoring strategy. We already manufacture cells that can be imported into the United States, and equipment for expanded manufacturing can also be offset. Our use of U.S. polysilicon positions us favorably in discussions with Commerce compared to other manufacturers. The proclamation's intent is to support domestic polysilicon production, and by moving toward 100% U.S. polysilicon for Ethiopia later this year, we demonstrate alignment with the administration's goals.
As it relates to imports of your Ethiopian cells into the U.S., is it fair to say that you are not importing any product now — meaning shipments are basically on hold until you get through this review process?
No, that is not correct. We have had several detentions, but it is not a full stop of all our product. We are providing CBP with full traceability, including data up to the quartzite mining. The strength of our response is that we do not use Chinese polysilicon or wafers in our Ethiopian cell manufacturing. We perform full processing of cells in Ethiopia, and CBP has recognized that. The conversations have been productive. While the timing of resolution is hard to predict, we believe the detentions will be resolved and expect to be identified as a compliant, trusted importer over time.
Your next question is from Amit Dayal with H.C. Wainwright.
The Section 232 decision: Could this impact your CapEx plans and expansion plans for the U.S.? Or are you pressing ahead regardless?
Rhone, why don't you go ahead and describe where we are today on HJT and other considerations under evaluation.
We view the 232 decision as validation of our U.S. manufacturing strategy and it encourages us to think bigger and move faster. Our HJT plant remains on schedule with a 20-month build-out. We expect pilot operation at the end of Q4 2027 or the beginning of Q1 2028. Our experience designing, building and ramping cell facilities around the world enables this timeline. The HJT plant is our primary announced project and it is moving forward on schedule. In our conversations with Commerce, they have been clear that the U.S. supply chain — wafers, ingots and cells — is critical. The 232 encourages companies like TOYO to consider upstream capacity and integrated manufacturing when discussing potential offsets.
For now, we will leave it at that. We encourage everyone to attend our Investor Day on October 6 in Humble, Texas, where we will provide more on our long-term roadmap.
With current positioning relative to available capacity and potential Section 232 decisions, do you think the second half could be better or similar to the first half? I know you're not providing guidance, but what does the setup look like and could credits support cash flow improvements in the second half?
We have two areas of uncertainty: how fast the CBP issues get resolved and the timing of finalizing any Section 232 arrangements with Commerce. Both are timing-dependent, and we will provide updates when we have more clarity on both items.
Your next question is from Paul Swing, private investor.
My question is why there was a sequential decline in Q2 even after the Ethiopian facility was said to be sold out for the year. Why is the company lacking execution? The facility started eight months ago, and Q2 results were very unexpected.
Rhone, do you want to take that? Or should we have Harada-san address it?
I'll defer to Harada-san to address the sequential revenue question.
Sachko, can you translate for Harada-san? The investor asked about the reason for the sequential decline in revenues from Q1 2026 to Q2 2026.
Thank you. The sequential decline reflects a change in product mix between the quarters. In Q1, revenues were more weighted toward cell sales, while in Q2 we had more module sales. Cells and modules have different average selling prices and timing of shipments, and the mix shift contributed to the sequential change in revenue.
To add: while year-over-year sales increased, cell sales decreased sequentially, which contributed to the quarter-to-quarter revenue decline. The mix between cells and modules affects both revenue and margins, and that mix shift explains the sequential variation.
I don't think that was exactly the question. The question was the reason for the decline in revenues in Q2 versus Q1; he was not asking about margins.
Understood. To clarify: Q1 had stronger cell revenues, and Q2 saw lower cell volumes and higher module volumes. That difference in product mix resulted in the sequential revenue decline.
Okay. So operator, I think we've reached the end of the time for the call. First, thank you to everyone for listening and for your questions. As you can tell, despite some near-term uncertainties, the team is very excited about what's ahead for TOYO. Again, we encourage everyone who's interested to come to our Analyst Day on October 6 in Humble, Texas. Feel free to reach out to us with any questions for management that we couldn't cover on today's call. Thank you very much.
Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect. Portions of this transcript that are marked Interpreted were spoken by an interpreter present on the live call.