TOYO Co., Ltd. Q2 FY2025 earnings call

• Announced acquisition of the VSUN brand from sister company to streamline and unify TOYO's operations.
• Ethiopian solar cell manufacturing facility operating at 2 gigawatt capacity, with plan to double to 4 gigawatts by October 2025.
• Commenced trial production at new module facility in Houston metropolitan area, aligning with made in U.S.A. for the USA strategy.
• Redirecting output from Vietnam operations to high-growth markets not impacted by elevated U.S. tariffs.
• Launch of U.S. production marks start of strategic consolidation of VSUN brand, sales channels, and customer base into TOYO.

In the first half of 2025, TOYO delivered 1.6 gigawatts of solar cells, up from 985 megawatts in the same period last year. Revenue was approximately $139 million, an increase of 0.7% from $138.1 million in the same period last year. Cost of revenue was approximately $160 million for the first half of 2025 compared to $111.4 million for the same period last year. Gross profit margin was 16.6% for the first half of 2025, down from 19.3% in the same period last year. Non-GAAP adjusted EBITDA was approximately $23 million for the first half of 2025, compared to $33 million in the same period last year. Net income attributable to shareholders was approximately $4 million, down from $19.6 million in the same period last year. As of June end 2025, cash and current restricted cash totaled approximately $30 million, up from $15.1 million as of December end 2024.

• Expect to exceed previous guidance of 3.5 gigawatt solar cell shipment for full year 2025, projecting 4.2 gigawatts to 4.4 gigawatts.
• Anticipate revenue in range of approximately $375 million to $400 million for full year 2025.
• Projected net income between approximately $39 million and $45 million for full year 2025.

• Shifting tariff structures in the renewable energy sector.
• Evolving global supply chain challenges.
• Impact of U.S. tariffs on market segments.
• Changes in fair value of contingent consideration payable related to earn-out shares.

Q: Congratulations on the good quarter and first half of the year. My question was relating to gross profit margin you guys discussed. I saw that it briefly declined -- or very marginally declined year-over-year. But as the Ethiopia facility reaches scale and Houston production comes online, do you see any way where those gross margins start trending back higher up to where they were in the first half of '24? Or are some of these tariff-related costs sort of weighing on that and putting a cap on that?

A: Justin, thank you for the question. Yes, our gross margin decreased slightly for the first half of the year, mainly for two reasons. Number one, the blend of the product destination for our product shift earlier this year was changed from last year. Last year, over 80% actually were shipped to U.S., and for the first half of the year, we have only 44% going to U.S. And with the change of the product blend, our margin was slightly affected. Secondly, also because we were in the process of ramping up of the production in Ethiopia so the overall cost, the cost of the products, were still in the process of being refined. So that's why -- that's the two main reasons our gross margin is slightly slower -- sorry, lower than what it was last year. And going forward, with our efforts to refine our cost structure and sourcing strategy, we do hope to see our gross margin level to at least go back to the -- what it was last year, Justin.